0000933141 us-gaap:OperatingSegmentsMember us-gaap:MortgageBankingMember ibkc:IBERIABANKMember 2018-04-01 2018-06-30



 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q




x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20182019
¨

☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from


to
 
Commission File Number 001-37532
 
IBERIABANK CorporationCorporation
(Exact name of registrant as specified in its charter)
 
Louisiana 72-1280718
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
200 West Congress Street  
Lafayette,Louisiana 70501
(Address of principal executive office) (Zip Code)
(337) (337) 521-4003
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x☒    No  ¨☐
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  x☒    No  ¨☐







Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer x☒  Accelerated Filer ¨☐
    
Non-accelerated Filer ¨☐  Smaller Reporting Company ¨☐
       
    Emerging Growth Company ¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨☐    No  x☒


Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock (par value $1.00 per share)IBKCThe NASDAQ Stock Market, LLC
Depositary Shares, Each Representing a 1/400th Interest inIBKCPThe NASDAQ Stock Market, LLC
a Share of 6.625% Perpetual Preferred Stock, Series B
Depositary Shares, Each Representing a 1/400th Interest inIBKCOThe NASDAQ Stock Market, LLC
a Share of 6.60% Perpetual Preferred Stock, Series C
Depositary Shares, Each Representing a 1/400th InterestIBKCNThe NASDAQ Stock Market, LLC
a Share of 6.100% Perpetual Preferred Stock, Series D
At OctoberJuly 31, 2018,2019, the Registrant had 55,544,03552,656,199 shares of common stock, $1.00 par value, which were issued and outstanding.
 







IBERIABANK CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS


  
 Page
Part I. Financial Information 
  
Item 1.       Financial Statements (unaudited) 
Consolidated Balance Sheets as of SeptemberJune 30, 20182019 and December 31, 20172018
4
Consolidated Statements of Comprehensive Income for the three and ninesix months ended SeptemberJune 30, 20182019 and 20172018
5
Consolidated Statements of Shareholders’ Equity for the ninethree and six months ended SeptemberJune 30, 20182019 and 20172018
7
Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20182019 and 20172018
89
Notes to Unaudited Consolidated Financial Statements
1011
  
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations
5954
  
Item 3.       Quantitative and Qualitative Disclosures About Market Risk
9184
  
Item 4.       Controls and Procedures
9184
  
Part II. Other Information
9285
  
Item 1.       Legal Proceedings
9285
  
Item 1A.     Risk Factors
9285
  
Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds
9386
  
Item 3.       Defaults Upon Senior Securities
9387
  
Item 4.       Mine Safety Disclosures
9387
  
Item 5.       Other Information
9387
  
Item 6.       Exhibits
9488
  
Signatures
9589





Part I. FINANCIAL INFORMATION
Item 1. Financial Statements


IBERIABANK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)  (unaudited)  
(Dollars in thousands, except share data)September 30, 2018 December 31, 2017
(in thousands, except share data)June 30, 2019 December 31, 2018
Assets      
Cash and due from banks$291,083
 $319,156
$289,502
 $294,186
Interest-bearing deposits in other banks184,852
 306,568
499,813
 396,267
Total cash and cash equivalents475,935
 625,724
789,315
 690,453
Securities available for sale, at fair value4,634,124
 4,590,062
4,455,308
 4,783,579
Securities held to maturity (fair values of $207,309 and $227,964, respectively)213,561
 227,318
Securities held to maturity (fair values of $198,012 and $204,277, respectively)192,917
 207,446
Mortgage loans held for sale, at fair value42,976
 134,916
187,987
 107,734
Loans and leases, net of unearned income22,343,906
 20,078,181
23,355,311
 22,519,815
Allowance for loan and lease losses(136,950) (140,891)(146,386) (140,571)
Loans and leases, net22,206,956
 19,937,290
23,208,925
 22,379,244
Premises and equipment, net304,605
 331,413
295,897
 300,507
Goodwill1,220,903
 1,188,902
1,235,533
 1,235,533
Other intangible assets92,575
 88,562
81,618
 88,736
Other assets926,752
 779,942
999,032
 1,039,783
Total Assets$30,118,387
 $27,904,129
$31,446,532
 $30,833,015
Liabilities      
Deposits:      
Non-interest-bearing$6,544,926
 $6,209,925
$6,474,394
 $6,542,490
Interest-bearing16,648,520
 15,256,792
17,820,937
 17,220,941
Total deposits23,193,446
 21,466,717
24,295,331
 23,763,431
Short-term borrowings1,242,719
 991,297
997,507
 1,482,882
Long-term debt1,466,810
 1,495,835
1,374,759
 1,166,151
Other liabilities273,051
 253,489
540,935
 364,274
Total Liabilities26,176,026
 24,207,338
27,208,532
 26,776,738
Shareholders’ Equity      
Preferred stock, $1 par value - 5,000,000 shares authorized      
Non-cumulative perpetual, liquidation preference $10,000 per share; 13,750 and 13,750 shares issued and outstanding, respectively, including related surplus132,097
 132,097
Common stock, $1 par value - 100,000,000 shares authorized; 56,006,818 and 53,872,272 shares issued and outstanding, respectively56,007
 53,872
Non-cumulative perpetual, liquidation preference $10,000 per share; 23,750 and 13,750 shares issued and outstanding, respectively, including related surplus228,485
 132,097
Common stock, $1 par value - 100,000,000 shares authorized; 52,805,461 and 54,796,231 shares issued and outstanding, respectively52,805
 54,796
Additional paid-in capital2,950,964
 2,787,484
2,714,074
 2,869,416
Retained earnings936,657
 769,226
1,195,546
 1,042,718
Accumulated other comprehensive income (loss)(133,364) (45,888)47,090
 (42,750)
Total Shareholders’ Equity3,942,361
 3,696,791
4,238,000
 4,056,277
Total Liabilities and Shareholders’ Equity$30,118,387
 $27,904,129
$31,446,532
 $30,833,015
The accompanying Notes are an integral part of these Consolidated Financial Statements.



IBERIABANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(unaudited)
Three Months Ended
September 30,
 Nine Months Ended September 30,
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(Dollars in thousands, except per share data)2018 2017 2018 2017
Interest and Dividend Income       
Loans, including fees$283,125
 $216,888
 $791,670
 $565,130
(in thousands, except per share data)2019 2018 2019 2018
Interest and dividend income       
Loans and leases, including fees$296,686
 $270,476
 $581,565
 $508,545
Mortgage loans held for sale, including fees1,037
 1,209
 3,027
 3,429
1,588
 836
 2,642
 1,990
Investment securities:       
Taxable interest27,113
 24,067
 79,058
 62,177
Tax-exempt interest2,680
 2,179
 8,154
 6,303
Taxable securities31,662
 26,617
 65,578
 51,945
Tax-exempt securities2,141
 2,708
 4,350
 5,474
Other3,112
 2,629
 9,524
 7,041
3,890
 3,186
 7,916
 6,412
Total interest and dividend income317,067
 246,972
 891,433
 644,080
335,967
 303,823
 662,051
 574,366
Interest Expense              
Deposits:       
NOW and MMDA31,367
 15,633
 79,128
 38,940
Savings550
 401
 1,503
 1,050
Time deposits12,484
 5,766
 28,173
 14,980
Deposits65,866
 36,159
 126,101
 64,403
Short-term borrowings4,727
 4,152
 10,578
 4,655
5,197
 3,327
 10,913
 5,851
Long-term debt8,714
 4,137
 23,824
 11,111
9,565
 8,224
 19,214
 15,110
Total interest expense57,842
 30,089
 143,206
 70,736
80,628
 47,710
 156,228
 85,364
Net interest income259,225
 216,883
 748,227
 573,344
255,339
 256,113
 505,823
 489,002
Provision for loan and lease losses11,097
 18,514
 26,678
 36,718
Net interest income after provision for loan and lease losses248,128
 198,369
 721,549
 536,626
Non-interest Income       
Provision for credit losses10,755
 7,696
 24,518
 15,907
Net interest income after provision for credit losses244,584
 248,417
 481,305
 473,095
Non-interest income       
Mortgage income12,732
 16,050
 36,048
 49,895
18,444
 13,721
 30,293
 23,316
Service charges on deposit accounts13,520
 12,534
 39,378
 35,097
12,847
 12,950
 25,657
 25,858
Title revenue6,280
 5,643
 18,153
 16,574
6,895
 6,846
 12,120
 11,873
Broker commissions2,627
 2,094
 7,244
 7,203
2,044
 2,396
 3,997
 4,617
ATM/debit card fee income2,470
 2,486
 8,028
 7,615
ATM and debit card fee income3,032
 2,925
 5,614
 5,558
Credit card and merchant-related income3,114
 2,848
 9,347
 7,873
3,226
 3,326
 6,637
 6,233
Trust department income3,993
 2,686
 11,662
 6,625
4,388
 4,243
 8,555
 7,669
Income from bank owned life insurance1,744
 1,263
 4,287
 3,815
1,750
 1,261
 3,547
 2,543
Gain (loss) on sale of available for sale securities—
 (242) (56) (183)
Securities (losses) gains, net(1,014) 3
 (1,014) (56)
Commission income2,963
 1,970
 7,627
 3,508
Other non-interest income6,607
 5,481
 17,502
 15,291
4,250
 4,299
 8,301
 7,387
Total non-interest income53,087
 50,843
 151,593
 149,805
58,825
 53,940
 111,334
 98,506
Non-interest Expense       
Non-interest expense       
Salaries and employee benefits101,159
 106,970
 313,190
 275,140
103,375
 107,445
 201,671
 212,031
Net occupancy and equipment18,889
 19,139
 58,867
 51,452
18,999
 19,931
 37,563
 39,978
Communication and delivery3,773
 3,533
 11,888
 9,534
3,597
 4,213
 7,297
 8,115
Marketing and business development4,068
 3,706
 13,715
 10,368
3,370
 4,895
 7,488
 9,647
Data processing9,036
 12,300
 30,738
 25,374
Computer services expense9,383
 9,309
 18,540
 21,702
Professional services5,519
 22,550
 20,070
 39,104
6,244
 7,160
 10,694
 14,551
Credit and other loan related expense5,117
 7,532
 14,925
 15,838
4,141
 5,089
 7,000
 9,482
Insurance6,536
 6,264
 20,587
 15,279
4,265
 6,946
 8,451
 14,051
Travel and entertainment1,846
 2,601
 7,880
 7,837
2,738
 2,797
 5,168
 6,034
Amortization of acquisition intangibles5,382
 4,527
 16,595
 7,948
4,786
 6,111
 9,795
 11,213
Errors, fines, and losses467
 4,714
 24,924
 7,916
Impairment of long-lived assets and other losses496
 15,700
 1,560
 24,457
Other non-interest expense7,557
 6,926
 21,143
 19,148
8,224
 7,180
 13,144
 13,586
Total non-interest expense169,349
 200,762
 554,522
 484,938
169,618
 196,776
 328,371
 384,847
Income before income tax expense131,866
 48,450
 318,620
 201,493
133,791
 105,581
 264,268
 186,754
Income tax expense30,401
 18,806
 78,410
 69,358
32,193
 30,457
 62,539
 48,009
Net Income101,465
 29,644
 240,210
 132,135
Net income101,598
 75,124
 201,729
 138,745
Less: Preferred stock dividends3,599
 3,598
 8,146
 8,146
949
 949
 4,547
 4,547
Net Income Available to Common Shareholders$97,866
 $26,046
 $232,064
 $123,989
Net income available to common shareholders$100,649
 $74,175
 $197,182
 $134,198
              


Income available to common shareholders - basic$97,866
 $26,046
 $232,064
 $123,989
$100,649
 $74,175
 $197,182
 $134,198
Less: Earnings allocated to unvested restricted stock908
 283
 2,341
 1,052
999
 767
 1,931
 1,409
Earnings allocated to common shareholders$96,958
 $25,763
 $229,723
 $122,937
$99,650
 $73,408
 $195,251
 $132,789
Earnings per common share - Basic$1.74
 $0.49
 $4.17
 $2.47
Earnings per common share - Diluted1.73
 0.49
 4.14
 2.45
Earnings per common share - basic$1.87
 $1.31
 $3.63
 $2.42
Earnings per common share - diluted1.86
 1.30
 3.61
 2.41
Cash dividends declared per common share0.39
 0.37
 1.15
 1.09
0.43
 0.38
 0.86
 0.76
Comprehensive Income       
Net Income$101,465
 $29,644
 $240,210
 $132,135
Comprehensive income       
Net income$101,598
 $75,124
 $201,729
 $138,745
Other comprehensive income (loss), net of tax:              
Unrealized gains (losses) on securities:              
Unrealized holding gains (losses) arising during the period (net of tax effects of $5,906, $472, $24,578, and $7,430, respectively)(22,220) 877
 (92,460) 13,799
Less: Reclassification adjustment for gains (losses) included in net income (net of tax effects of $0, $85, $12, and $64, respectively)—
 (157) (44) (119)
Unrealized holding gains (losses) arising during the period (net of tax effects of $14,836, $4,449, $25,511, and $18,672, respectively)45,108
 (16,734) 86,516
 (70,240)
Less: Reclassification adjustment for gains (losses) included in net income (net of tax effects of $251, $1, $251, and $12, respectively)(763) 2
 (763) (44)
Unrealized gains (losses) on securities, net of tax(22,220) 1,034
 (92,416) 13,918
45,871
 (16,736) 87,279
 (70,196)
Fair value of derivative instruments designated as cash flow hedges:              
Change in fair value of derivative instruments designated as cash flow hedges during the period (net of tax effects of $217, $24, $1,266, and $314, respectively)818
 (158) 4,762
 (1,081)
Less: Reclassification adjustment for gains (losses) included in net income (net of tax effects of $6, $55, $47, and $134, respectively)(22) (101) (178) (249)
Change in fair value of derivative instruments designated as cash flow hedges during the period (net of tax effects of $1,461, $371, $990, and $1,048, respectively)4,441
 1,395
 2,256
 3,944
Less: Reclassification adjustment for gains (losses) included in net income (net of tax effects of $26, $11, $100, and $42, respectively)(78) (40) (305) (156)
Fair value of derivative instruments designated as cash flow hedges, net of tax840
 (57) 4,940
 (832)4,519
 1,435
 2,561
 4,100
Other comprehensive income (loss), net of tax(21,380) 977
 (87,476) 13,086
50,390
 (15,301) 89,840
 (66,096)
Comprehensive income$80,085
 $30,621
 $152,734
 $145,221
$151,988
 $59,823
 $291,569
 $72,649
The accompanying Notes are an integral part of these Consolidated Financial Statements.





IBERIABANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity
(unaudited)
         Additional Paid in Capital Retained Earnings Accumulated
Other Comprehensive Income (Loss)		 Total
 Preferred Stock Common Stock    
(In thousands, except share and per share data)Shares Amount Shares Amount    
Balance, December 31, 201613,750
 $132,097
 44,795,386
 $44,795
 $2,084,446
 $704,391
 $(26,035) $2,939,694
Net income—
 —
 —
 —
 —
 132,135
 —
 132,135
Other comprehensive income/(loss)—
 —
 —
 —
 —
 —
 13,086
 13,086
Cash dividends declared, $1.09 per share—
 —
 —
 —
 —
 (56,683) —
 (56,683)
Preferred stock dividends—
 —
 —
 —
 —
 (8,146) —
 (8,146)
Common stock issued under incentive plans, net of shares surrendered in payment—
 —
 358,560
 359
 (1,964) —
 —
 (1,605)
Common stock issued—
 —
 8,710,304
 8,710
 688,084
 —
 —
 696,794
Share-based compensation cost—
 —
 —
 —
 11,499
 —
 —
 11,499
Balance, September 30, 201713,750
 $132,097
 53,864,250
 $53,864
 $2,782,065
 $771,697
 $(12,949) $3,726,774
                
Balance, December 31, 201713,750
 $132,097
 53,872,272
 $53,872
 $2,787,484
 $769,226
 $(45,888) $3,696,791
Cumulative-effect adjustment due to the adoption of ASU 2016-01 (1)
—
 —
 —
 —
 —
 (345) —
 (345)
Net income—
 —
 —
 —
 —
 240,210
 —
 240,210
Other comprehensive income/(loss)—
 —
 —
 —
 —
 —
 (87,476) (87,476)
Cash dividends declared, $1.15 per share—
 —
 —
 —
 —
 (64,288) —
 (64,288)
Preferred stock dividends—
 —
 —
 —
 —
 (8,146) —
 (8,146)
Common stock issued under incentive plans, net of shares surrendered in payment—
 —
 109,983
 110
 (3,252) —
 —
 (3,142)
Common stock issued for acquisitions—
 —
 2,787,773
 2,788
 211,871
 —
 —
 214,659
Common stock repurchases—
 —
 (763,210) (763) (60,283)     (61,046)
Share-based compensation cost—
 —
 —
 —
 15,144
 ���
 —
 15,144
Balance, September 30, 201813,750
 $132,097
 56,006,818
 $56,007
 $2,950,964
 $936,657
 $(133,364) $3,942,361
 
(1) Cumulative-effect adjustment to beginning retained earnings for fair value adjustments related to the reclassification of certain equity investments in accordance with ASU 2016-01, adopted as of January 1, 2018.
 For the Six Months Ended
         Additional Paid-In Capital Retained Earnings Accumulated
Other Comprehensive Income (Loss)		 Total
 Preferred Stock Common Stock    
(in thousands, except share and per share data)Shares Amount Shares Amount    
Balance, December 31, 201713,750
 $132,097
 53,872,272
 $53,872
 $2,787,484
 $769,226
 $(45,888) $3,696,791
Cumulative-effect adjustment due to the adoption of ASU 2016-01 (1)
—
 —
 —
 —
 —
 (345) —
 (345)
Net income—
 —
 —
 —
 —
 138,745
 —
 138,745
Other comprehensive income (loss)—
 —
 —
 —
 —
 —
 (66,096) (66,096)
Cash dividends declared, $0.76 per share—
 —
 —
 —
 —
 (43,006) —
 (43,006)
Preferred stock dividends—
 —
 —
 —
 —
 (4,547) —
 (4,547)
Common stock issued under incentive plans, net of shares surrendered in payment—
 —
 130,342
 130
 (2,232) —
 —
 (2,102)
Common stock issued for acquisitions—
 —
 2,787,773
 2,788
 211,871
 —
 —
 214,659
Common stock repurchases—
 —
 (400,000) (400) (30,270) —
 —
 (30,670)
Share-based compensation expense—
 —
 —
 —
 9,980
 —
 —
 9,980
Balance, June 30, 201813,750
 $132,097
 56,390,387
 $56,390
 $2,976,833
 $860,073
 $(111,984) $3,913,409
                
Balance, December 31, 201813,750
 $132,097
 54,796,231
 $54,796
 $2,869,416
 $1,042,718
 $(42,750) $4,056,277
Cumulative-effect adjustment due to the adoption of ASU 2016-02 (2)
—
 —
 —
 —
 —
 1,847
 —
 1,847
Net income—
 —
 —
 —
 —
 201,729
 —
 201,729
Other comprehensive income (loss)—
 —
 —
 —
 —
 —
 89,840
 89,840
Cash dividends declared, $0.86 per share—
 —
 —
 —
 —
 (46,201) —
 (46,201)
Preferred stock dividends—
 —
 —
 —
 —
 (4,547) —
 (4,547)
Preferred stock issued10,000
 96,388
 —
 —
 —
 —
 —
 96,388
Common stock issued under incentive plans, net of shares surrendered in payment—
 —
 157,000
 157
 (4,605) —
 —
 (4,448)
Common stock repurchases—
 —
 (2,147,770) (2,148) (162,576) —
 —
 (164,724)
Share-based compensation expense—
 —
 —
 —
 11,839
 —
 —
 11,839
Balance, June 30, 201923,750
 $228,485
 52,805,461
 $52,805
 $2,714,074
 $1,195,546
 $47,090
 $4,238,000

(1)
Cumulative-effect adjustment to beginning retained earnings for fair value adjustments related to the reclassification of certain equity investments in accordance with ASU 2016-01, adopted as of January 1, 2018.
(2)
Cumulative-effect adjustment to beginning retained earnings related to the recognition of pre-existing lease liabilities and previously deferred gains on sale-leaseback transactions in accordance with ASU 2016-02, adopted as of January 1, 2019.



The accompanying Notes are an integral part of these Consolidated Financial Statements.











 For the Three Months Ended
         Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total
 Preferred Stock Common Stock    
(in thousands, except share and per share data)Shares Amount Shares Amount    
Balance, March 31, 201813,750
 $132,097
 56,778,841
 $56,779
 $3,001,389
 $807,325
 $(96,683) $3,900,907
Net income—
 —
 —
 —
 —
 75,124
 —
 75,124
Other comprehensive income (loss)—
 —
 —
 —
 —
 —
 (15,301) (15,301)
Cash dividends declared, $0.38 per share—
 —
 —
 —
 —
 (21,427) —
 (21,427)
Preferred stock dividends—
 —
 —
 —
 —
 (949) —
 (949)
Common stock issued under incentive plans, net of shares surrendered in payment—
 —
 11,546
 11
 468
 —
 —
 479
Common stock repurchases—
 —
 (400,000) (400) (30,270) —
 —
 (30,670)
Share-based compensation expense—
 —
 —
 —
 5,246
 —
 —
 5,246
Balance, June 30, 201813,750
 $132,097
 56,390,387
 $56,390
 $2,976,833
 $860,073
 $(111,984) $3,913,409
                
Balance, March 31, 201913,750
 $132,097
 54,551,264
 $54,551
 $2,840,842
 $1,117,641
 $(3,300) $4,141,831
Net income—
 —
 —
 —
 —
 101,598
 —
 101,598
Other comprehensive income (loss)—
 —
 —
 —
 —
 —
 50,390
 50,390
Cash dividends declared, $0.43 per share—
 —
 —
 —
 —
 (22,744) —
 (22,744)
Preferred stock dividends—
 —
 —
 —
 —
 (949) —
 (949)
Preferred stock issued10,000
 96,388
 —
 —
 —
 —
 —
 96,388
Common stock issued under incentive plans, net of shares surrendered in payment—
 —
 14,046
 14
 (17) —
 —
 (3)
Common stock repurchases—
 —
 (1,759,849) (1,760) (133,018) —
 —
 (134,778)
Share-based compensation expense—
 —
 —
 —
 6,267
 —
 —
 6,267
Balance, June 30, 201923,750
 $228,485
 52,805,461
 $52,805
 $2,714,074
 $1,195,546
 $47,090
 $4,238,000
 


The accompanying Notes are an integral part of these Consolidated Financial Statements.





IBERIABANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
For the Nine Months Ended September 30,For the Six Months Ended June 30,
(Dollars in thousands)2018 2017
(in thousands)2019 2018
Cash Flows from Operating Activities      
Net income$240,210
 $132,135
$201,729
 $138,745
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation, amortization, and accretion, including amortization of purchase accounting adjustments and market value adjustments(1,644) 1,060
4,811
 (562)
Provision for loan and lease losses26,678
 36,718
Share-based compensation cost - equity awards15,144
 11,499
Loss (gain) on sale of OREO and long-lived assets, net of impairment6,831
 675
Loss (gain) on sale of available for sale securities56
 183
(Gain) loss on early termination of FDIC loss share agreements(2,708) —
Cash paid for early termination of FDIC loss share agreements(5,637) —
Expense (benefit) for deferred income taxes31,348
 12,438
Provision for credit losses24,518
 15,907
Share-based compensation expense - equity awards11,839
 9,980
(Gain) loss on sale of OREO and long-lived assets, net of impairment(1,270) 5,131
Securities losses, net1,014
 56
Deferred income tax expense35,044
 11,715
Originations of mortgage loans held for sale(1,139,117) (1,415,447)(864,324) (774,849)
Proceeds from sales of mortgage loans held for sale1,260,962
 1,475,038
815,728
 848,116
Realized and unrealized (gain) loss on mortgage loans held for sale, net(35,244) (48,944)
Realized and unrealized (gain) on mortgage loans held for sale, net(29,425) (22,688)
Other operating activities, net(35,778) 14,062
164,193
 13,977
Net Cash Provided by Operating Activities361,101
 219,417
363,857
 245,528
Cash Flows from Investing Activities      
Proceeds from sales of available for sale securities18,867
 577,891
299,513
 18,867
Proceeds from maturities, prepayments and calls of available for sale securities493,095
 410,419
316,982
 311,340
Purchases of available for sale securities, net of available for sale securities acquired(711,258) (1,312,762)(186,554) (511,074)
Proceeds from maturities, prepayments and calls of held to maturity securities11,464
 6,714
13,123
 4,746
Purchases of held to maturity securities—
 (94,179)
Purchases of equity securities, net of equity securities acquired(21,090) (40,749)(15,154) (11,545)
Proceeds from sales of equity securities70,371
 6,119
3,637
 70,371
Increase in loans, net of loans acquired(767,715) (699,684)(824,675) (501,618)
Proceeds from sales of premises and equipment5,698
 2,750
101
 2,003
Purchases of premises and equipment, net of premises and equipment acquired(11,575) (31,522)(7,819) (8,304)
Proceeds from dispositions of OREO12,166
 11,653
8,247
 11,431
Cash paid for additional investment in tax credit entities(6,059) (7,160)(4,790) (1,831)
Cash received (paid) for acquisition of a business, net of cash paid99,318
 (490,509)
Cash received for acquisition of a business, net of cash paid—
 99,318
Purchase of bank owned life insurance policies(50,000) —
—
 (50,000)
Other investing activities, net595
 893
249
 554
Net Cash Used in Investing Activities(856,123) (1,660,126)(397,140) (565,742)
Cash Flows from Financing Activities      
Increase (decrease) in deposits, net of deposits acquired662,680
 (456,350)
Net change in short-term borrowings, net of borrowings acquired251,422
 494,029
Increase in deposits, net of deposits acquired531,900
 899,752
Net change in short-term borrowings(485,375) 62,916
Proceeds from long-term debt, net of long-term debt acquired927,884
 516,620
400,000
 440,299
Repayments of long-term debt(1,361,482) (17,342)(191,123) (902,262)
Cash dividends paid on common stock(62,937) (52,841)(45,926) (41,508)
Cash dividends paid on preferred stock(8,146) (8,146)(4,547) (4,547)
Net share-based compensation stock transactions(3,142) (1,922)(4,448) (2,102)
Payments to repurchase common stock(61,046) —
(164,724) (30,670)
Net proceeds from issuance of common stock—
 485,751
Net proceeds from issuance of preferred stock96,388
 —
Net Cash Provided by Financing Activities132,145
 421,878
Net Increase In Cash and Cash Equivalents98,862
 101,664
Cash and Cash Equivalents at Beginning of Period690,453
 625,724


Net Cash Provided by Financing Activities345,233
 959,799
Net Increase (Decrease) In Cash and Cash Equivalents(149,789) (480,910)
Cash and Cash Equivalents at Beginning of Period625,724
 1,362,126
Cash and Cash Equivalents at End of Period$475,935
 $881,216
$789,315
 $727,388
   
   
Supplemental Schedule of Non-cash Activities      
Acquisition of real estate in settlement of loans$13,066
 $6,873
$5,055
 $2,722
Common stock issued in acquisitions$214,659
 $211,043
$—
 $214,659
Supplemental Disclosures      
Cash paid for:   
Cash paid (received) for:   
Interest on deposits and borrowings, net of acquired$137,727
 $69,057
$149,638
 $83,057
Income taxes, net$34,604
 $67,434
$(152,950) $19,006
The accompanying Notes are an integral part of these Consolidated Financial Statements.



IBERIABANK CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 1 - BASIS OF PRESENTATION
General
IBERIABANK Corporation is a financial holding company withbased in Lafayette, Louisiana. The accompanying unaudited consolidated financial statements include the accounts of IBERIABANK Corporation and its consolidated subsidiaries (the "Company"). Through its subsidiaries, the Company provides a full range of commercial and consumer banking services, including private banking, small business, wealth and trust management, retail brokerage, mortgage, commercial leasing and equipment financing, and title insurance services through locations in Louisiana, Arkansas, Tennessee, Alabama, Texas, Florida, Georgia, South Carolina, North Carolina, Mississippi, Missouri, and New York offering commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, mortgage, and title insurance services. The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts reported in prior periods have been reclassified to conform to the current period presentation. These reclassifications did not have a material effect on previously reported consolidated financial statements.York.
The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information or footnotes required by GAAPand notes necessary for complete financial statements.statements in accordance with GAAP. In the opinion of management, the accompanying unaudited consolidated financial statements contain all the significant adjustments, consisting of normal and recurring items, considered necessary for a fair presentation of the consolidated financial statements have been made.presentation. These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements and footnote disclosures for the Company previously filed with the SECnotes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 ("2017 10-K").2018. Operating results for the interim period ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.full year.
When we referAll significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts reported in prior periods have been reclassified to conform to the “Company,” “we,” “our,” or “us” in this Report, we mean IBERIABANK Corporation and subsidiaries (consolidated). When we refer to the “Parent,” we mean IBERIABANK Corporation.current period presentation. See the Glossary of Defined Terms at the end ofincluded in this Report for terms used throughout this Report.herein.
Concentrations of Credit Risk
Most of the Company’s business activity is with customers located in the southeastern United States. The Company’s lending activity is concentrated in its market areas within those states. The Company has emphasized originations of commercial loans and private banking loans, defined as loans to higher net worth clients. Repayments on loans are expected to come from cash flows of the borrower and/or guarantor. Losses on secured loans are limited by the net realizable value of the collateral upon default of the borrowers and guarantor support. The Company believes it does not have any excessive concentrations to any one industry, loan type, or customer.




NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS
Pronouncements adopted during the ninesix months ended SeptemberJune 30, 2018:2019:
ASU No. 2014-09
In May 2014, the FASB issued2016-02, ASU No. 2014-09, Revenue from Contracts with Customers, which implements a common revenue standard and clarifies the principles used for recognizing revenue. The amendments in the ASU clarify that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Revenue from Contracts with Customers
The majority of the Company’s income streams (e.g., interest and dividend income and mortgage income) are accounted for in accordance with GAAP literature outside the scope of ASC 606, Revenue from Contracts with Customers. Details regarding income recognition for interest and non-interest streams can be found throughout the Company’s 2017 10-K (including Note 1 - Summary of Significant Accounting Policies). Impairment losses recognized against certain receivables (e.g., NSF fees) and capitalized costs (e.g., sales commissions) associated with contracts within the scope of ASC 606 are immaterial.
Non-interest income from service charges on deposit accounts, broker commissions, ATM/debit card fee income, credit card and merchant-related income (e.g., interchange fees), and transactional income from traditional banking services (part of other non-interest income) are the significant income streams within the scope of ASC 606 associated with the IBERIABANK reportable segment. Non-interest income from title revenue is associated with the LTC reportable segment.
Recognition of Revenue from Contracts with Customers
The Company enters into various contracts with customers to provide traditional banking services, including asset management, on a routine basis. The Company’s performance obligations are generally service-related and provided on a daily or monthly basis. The Company does not typically have performance obligations which extend beyond a reporting period. The performance obligations are generally satisfied upon completion of service (i.e., as services are rendered) and the fees are collected at such time, or shortly thereafter. The fees are readily determinable and allocated individually to each service. It is not typical for contracts to require significant judgment to determine the transaction price. Some contracts contain variable consideration; however, the variable consideration is generally constrained (not estimable) as it is based on the occurrence or nonoccurence of a contingent event (or another constraint in some circumstances). The Company generally records the variable consideration when the contingent event occurs and the fee is determinable.
The Company provides some services for customers in which it acts in an agent capacity, but generally acts in a principal capacity. Payment terms and conditions vary slightly amongst services; however, amounts are generally invoiced and due or collected by the Company within 30 days, although some fees may be prepaid. The Company bills the customer periodically as performance obligations are satisfied for most services. Therefore, revenue for services provided is generally recognized in the amount invoiced (except in circumstances of prepayment) as that amount corresponds directly to the value of the Company’s performance. In the normal course of business, the Company does not generally grant refunds for services provided. As such, the Company does not establish provisions for estimated returns.
Title revenue associated with services provided by LTC, as well as broker commissions, ATM/debit card fee income, credit card and merchant-related income (e.g., interchange fees), and transactional fees from traditional banking services generated within IBERIABANK are generally recognized at the point-in-time the services are provided. The Company has determined this recognition to be appropriate as, upon completion of services, the Company has completed its performance obligations, has a present right to payment (or has collected the cash), and the customer is able to obtain (or has obtained) substantially all of the benefits from the performance obligation (i.e., the provided services). Revenues from service charges on deposit accounts are recognized at the end of the monthly service period (e.g., account service charges) or the date the performance obligation is satisfied (e.g., NSF, stop payment, wire transfer, etc.), except for deposit account services performed by Treasury Management which are recognized on a monthly basis, as these services are performed over that time. Asset management fees (e.g., trust fees) are generally recognized at the end of the monthly service period, but fees are not collected until the beginning of the subsequent month, although some contracts may have quarterly terms and/or be prepaid. NSF fees which are not initially paid are subsequently recorded as “loans” (along with the overdraft balance) and remain classified as such until the amount is paid or charged-off (generally after 60 days).




Adoption of ASC 606
The Company adopted ASC 606 as of January 1, 2018 for all contracts as of the effective date. Prior period amounts have been reclassified to conform to current guidance requirements related to the net presentation of certain costs associated with interchange fees and rewards programs. The reclassification of prior period amounts reduced non-interest income and non-interest expense by an immaterial amount (approximately $2.2 million and $6.6 million for the three and nine months ended September 30, 2017, respectively) and had no impact on net income. There was no cumulative adjustment made to opening retained earnings as of January 1, 2018.
2018-11, ASU No. 2016-012018-20, and ASU 2019-01
In JanuaryFebruary 2016, the FASB issued ASU No. 2016-01, Financial Statements - Overall (Subtopic 825-10): Recognition2016-02, Leases (ASC 842) which requires lessees to recognize ROU assets and Measurement of Financial Assets and Financial Liabilities, which impacts how the Company measures certain equity investments and discloses and presents certain financial instruments through the application of the “exit price” notion.
The Company adopted the amendments beginning January 1, 2018. Under the new guidance, equity investments can no longer be classified as trading or available for sale (AFS), and related unrealized holding gains and losses can no longer be recognized in OCI. Per the ASU, such equity investments should be measured at fair value, with adjustments recognized in earnings at the end of each reporting period. As such, the Company reclassified its portfolio of equity investments (which were insignificant at the adoption date and at September 30, 2018) previously classified as AFS investment securities to “other assets.” As these equity investments were previously measured at fair value, implementation of the ASU did not impact the Company’s valuation method. In accordance with the adoption of the ASU, the Company recorded a cumulative-effect adjustment to retained earnings for previously recorded fair value adjustments related to these equity investments, which was insignificant.
The Company elected the practical expedient measurement alternative to prospectively account for other equity investments that do not have readily determinable fair values at cost less impairment plus or minus observable price changes in orderly transactions for an identical or similar investment of the same issuer. These investments are insignificant overall and are classified within “other assets”lease liabilities on the Company’s consolidated balance sheets.
The Company also modified its fair value methodology for loans measured at amortized cost whose fair values were previously disclosed using an “entry price” methodology to an “exit price” methodology, in accordance with the ASU. The Company’s “exit price” methodology estimates the fair value of these loans based on the present value of the future cash flows using the interest rate that would be charged for a similar loan to a borrower with similar risk at the indicated balance sheet date, adjusted for a liquidity discount based on the estimated time period to complete a sale transaction with a market participant.
ASU No. 2016-15
In August 2016,most leases, including operating leases. The lessor accounting model was relatively unchanged by this ASU. Additional quantitative and qualitative disclosures are also required. During 2018 and early 2019, the FASB issued ASU No. 2016-15, Statement2018-11, Targeted Improvements, ASU No. 2018-20, Narrow-Scope Improvements for Lessors, and ASU No. 2019-01, Codification Improvements, which clarified certain implementation issues, provided an additional optional transition method and clarified the disclosure requirements during the period of Cash Flows (ASC 230): Classification of Certain Cash Receipts and Cash Payments, in order to reduce current diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows.adopting ASC 842, among others.
The Company retrospectivelyadopted ASU No. 2016-02 and the related ASUs discussed above effective January 1, 2019 using the optional transition method. The Company elected the package of practical expedients that does not require the reassessment of whether expired or existing contracts contain leases, the reassessment of the lease classification for any expired or existing leases, or the reassessment of initial direct costs for existing leases. Additionally, the Company did not elect the hindsight practical expedient.
The Company conducted a review of all existing lease contracts and service contracts which might contain embedded leases. Some of the Company’s leases contain variable lease payments, the majority of which depend on an index or rate, such as the Consumer Price Index. At transition, the present value of variable payments was based on the index or rate as of January 1, 2019. To determine the present value of lease payments at transition, the Company applied a portfolio approach utilizing an FHLB Advance rate based on the weighted average remaining term of the Company’s existing leases as of January 1, 2019. As a result of adopting ASC 842, the Company established an ROU asset and a lease liability as of January 1, 2019 of $94.2 million and $118.9 million, respectively. Additionally, as part of the adoption of ASC 842, $24.7 million in pre-existing liabilities were reclassified to the ROU asset on January 1, 2019. This resulted in a gross-up of the balance sheet of $94.2 million as a result of recognizing lease liabilities and corresponding right-of-use assets for operating leases. The adoption of ASC 842 also required the recognition of previously deferred gains on sale-leaseback transactions which resulted in an insignificant increase to retained earnings on January 1, 2019. The related impact on the Company’s regulatory capital ratios was not significant. The Company does not expect material changes to the recognition of lease expense in future periods as a result of the adoption of ASC 842. See Note 8, Leases, for additional disclosures required by ASC 842.
ASU No. 2018-16
In October 2018, the FASB released ASU No. 2018-16, Derivatives and Hedging (ASC 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes, which permits the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under ASC 815 in addition to the interest rates on direct Treasury obligations of the UST, the LIBOR swap rate, the OIS Rate based on the Fed Funds Effective Rate, and the SIFMA Municipal Swap Rate.
The required effective date of this ASU was dependent upon when an entity adopted the amendmentsprovisions of ASU No. 2017-12. The Company adopted ASU No. 2018-16 effective January 1, 2019 on a prospective basis for qualifying new or redesignated hedging relations as ASU No. 2017-12 had previously been adopted on January 1, 2018. The adoptionimplementation of these amendmentsthis ASU did not have a significant impact on the Company’s consolidated statements of cash flows.financial statements.
ASU No. 2017-042017-08
In JanuaryMarch 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill2017-08, Receivables-Nonrefundable Fees and Other (ASC 350)Costs (Subtopic 310-20): SimplifyingPremium Amortization on Purchased Callable Debt Securities, which shortens the Testamortization period for Goodwill Impairment, which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Therefore, any carrying amount which exceeds the reporting unit’s fair value (upcallable debt securities held at a premium to the amountearliest call date instead of goodwill recorded)the maturity date. The amendments do not require an accounting change for securities held at a discount, which will continue to be recognized as an impairment loss.
The ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those periods. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.amortized to the maturity date.
The Company elected to early adopt the guidance,adopted ASU No. 2017-08 effective September 30, 2018.January 1, 2019. The adoption of the guidanceASU did not have a material impact to the Company’s consolidated financial statements in the current period. The Company will apply the guidance prospectively, beginning with its annual impairment test as of October 1, 2018.statements.









ASU No. 2017-12
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (ASC 815): Targeted Improvements to Accounting for Hedging Activities, which amends the hedge accounting model to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results.
The Company elected to early adopt the amendments effective January 1, 2018. The modified-retrospective adoption of the amendments did not impact the Company’s consolidated financial statements in the current or prior periods.
ASU 2018-15
In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The guidance requires customers in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. ASC 350-40 requires the capitalization of certain costs incurred only during the application development stage (e.g., costs of integration with on-premises software, coding, configuration, and customization). ASC 350-40 also requires entities to expense costs during the preliminary project and post-implementation stages (e.g., costs of project planning, training, maintenance after implementation, data conversion) as they are incurred. The accounting for the service element of the arrangement is not affected by the ASU.
Capitalized implementation costs related to a hosting arrangement that is a service contract should be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The expense related to the capitalized implementation costs should be presented in the same line item in the income statement as the fees associated with the hosting element of the arrangement. Capitalized implementation costs should be presented in the same line item in the statement of financial position that a prepayment of the fees for the associated hosting arrangement would be presented. Payments for capitalized implementation costs should be classified in the statement of cash flows in the same manner as payments of the fees for the service component of the hosting arrangement (typically operating cash flows). The amendments further require entities to disclose the nature of their hosting arrangements that are service contracts and make the disclosures in ASC 360-10 as if the capitalized implementation costs were a separate major class of depreciable asset.
The ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. Entities have the option to apply the guidance retrospectively or prospectively to all implementation costs incurred after the date of adoption.
The Company elected to early adopt the guidance prospectively, effective August 31, 2018. The adoption of the guidance did not impact the Company’s consolidated financial statements in the current period.


Pronouncements issued but not yet adopted:
ASU No. 2016-022016-13, ASU No. 2019-04 (portion related to ASC 326), and ASU No. 2018-112019-05
In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC 842). A significant amendment to existing GAAP from this ASU is the recognition of lease assets (i.e., right of use assets) and liabilities on the balance sheet for leases that are classified as operating leases by lessees. The lessor model remains similar to the current accounting model in existing GAAP. Additional amendments include, but are not limited to, the elimination of leveraged leases; modification to the definition of a lease; amendments on sale and leaseback transactions; and disclosure of additional quantitative and qualitative information.
ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted.
In July 2018, the FASB issued ASU No. 2018-11, Leases (ASC 842): Targeted Improvements. The amendments include an optional transition method to apply ASU 2016-02 on a prospective basis as of the effective date, with a cumulative effect adjustment to retained earnings in the period of adoption, instead of applying the guidance using a modified retrospective approach as originally required under ASU 2016-02. ASU 2018-11 also provides lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component under certain circumstances, and clarifies which guidance (ASC 842 or ASC 606) to apply to combined lease and nonlease components.



The Company occupies certain banking offices and equipment under operating lease agreements, which currently are not recognized on the consolidated balance sheets. Based on the Company’s preliminary analysis of its current portfolio, the impact to the Company’s consolidated balance sheets is estimated to result in less than a 1% increase in assets and liabilities. The Company has developed an implementation plan and selected a third-party vendor to assist in the implementation and subsequent accounting for leases under the ASUs. The Company will elect the optional transition method and adopt ASU 2016-02 and ASU No. 2018-11 on January 1, 2019. The Company is still assessing other practical expedients it may elect at adoption, the final determination of the incremental borrowing rate, and the impact to regulatory capital ratios, amongst other matters associated with the ASUs.
The adjustment to retained earnings is not expected to be significant based on the transition guidance associated with current sale-leaseback agreements. The Company also anticipates additional disclosures to be provided at adoption.
ASU No. 2016-13
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments. The amendments introduceguidance introduces an impairment model that is based on expected credit losses (“ECL”)(ECL), rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g.,such as loans and held-to-maturity securities),securities, including certain off-balance sheet financial instruments (e.g.,such as loan commitments).commitments. The measurement of ECL should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. Financial instruments with similar risk characteristics must be grouped together when estimating ECL.
The ASU also expands credit quality disclosures.
Additionally, ASU No. 2016-13 amends the current AFS security impairment model for debt securities. The new model will require an estimate of ECL when the fair value is below the amortized cost of the asset through the use ofasset. The credit-related impairment (and subsequent recoveries) are recognized as an allowance on the balance sheet with a corresponding adjustment to record estimated credit losses (and subsequent recoveries).the income statement. Non-credit related losses will continue to be recognized through OCI.
In addition, the amendments provideASU No. 2016-13 provides for a simplified accounting model for purchased financial assets with a more-than-insignificant amount of credit deterioration since their origination. The initial estimate of expected credit losses would be recognized through an ALLL with an offset (i.e., increase) to the cost basis of the related financial asset at acquisition.
ASU No. 2016-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods. The amendmentsThis ASU will be applied through a modified-retrospective approach, resulting in a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. A prospective transition approach is required for debt securities for which OTTI had been recognized before the effective date. Amounts previously recognized in AOCI as of the date of adoption that relate to improvements in cash flows expected to be collected should continue to be accreted into income over the remaining life of the asset. Recoveries of amounts previously written off relating to improvements in cash flows after the date of adoption should be recorded in earnings when received.
During 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Financial Instruments-Credit Losses (ASC 326), Derivatives and Hedging (ASC 815), and Financial Instruments (ASC 825), which clarified the scopeof ASU No. 2016-13 and addressed various issues, including accrued interest receivable balances, recoveries, variable interest rates and prepayments, and ASU No. 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, which clarified certain implementation issues. The effective date for the portion of ASU No. 2019-04 related to credit losses and ASU No. 2019-05 are the same as ASU No. 2016-13.
The Company has established a cross-function implementation team and engaged third-party consultants who have jointly developed a project plan to provide implementation oversight. Implementation efforts are underway, including model development, fulfillment of additional data needs for new disclosure and reporting requirements, and drafting of accounting policies. Substantial progress has been made in model development. Model validation commenced in the second quarter of 2019. User acceptance testing and parallel runs are scheduled to begin in the third quarter of 2019. The Company expects that these ASUs will result in an increase to ACL as of January 1, 2020 given the requirement to estimate lifetime expected credit losses for the loan portfolio, although the extent of the increase to ACL is currently evaluatingnot yet known. The transition adjustment to increase ACL is expected to result in a decrease to shareholders' equity and to a lesser extent, discounts on acquired loans. While these ASUs are expected to increase ACL, they do not change the overall credit risk in the Company's loan and lease portfolios or the ultimate losses therein. The ultimate impact of the ASUadoption of these ASUs will depend on the Company’s consolidated financial statements. The Company has engaged third-party consultants to assist withcomposition of the ASUloan, lease and has developed an implementation plan.securities portfolios, finalization of credit loss models, macroeconomic conditions and forecasts at the adoption date.
ASU No. 2018-13
In August 2018, the FASB released ASU No. 2018-13, Fair Value Measurement (ASC 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements.
The amendments to the guidance on fair value disclosures eliminate the requirements for all entities to disclose (i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (ii) the entity’s policy for the timing of transfers between levels of the fair value hierarchy, and (iii) the entity’s valuation processes for Level 3 fair value measurements.
New disclosure requirements for public entities per the ASU include (i) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements of instruments held at the end of the reporting period, and (ii) the range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated for recurring and nonrecurring Level 3 fair value measurements, with certain exceptions. For derivative instruments and certain other assets and liabilities, entities are permitted to disclose other quantitative information (such as the median or arithmetic average) if doing so provides a more reasonable and rational reflection of the distribution of unobservable inputs used to develop Level 3 fair value measurements.



The amendments also modified disclosure guidance within ASC 820 to clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date, rather than a point in the future. Further, entities that use the practical expedient to measure the fair value of certain investments at their net asset values are required to disclose (i) the timing of liquidation of an investee’s assets, and (ii) the date when redemption restrictions will lapse only if the investee has communicated this information to the entity or announced the timing publicly.
ASU 2018-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods. The guidance on changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 measurements, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty is applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods, presented upon their effective date. Earlywith early adoption is permitted, including interim periods, and entities may elect to early adopt either (i) the entire standard, or (ii) only the provisions that eliminate or modify disclosure requirements.permitted.
The Company is currently evaluating the impact of the ASU. While adoption of this ASU on the Company’s consolidated financial statements.

ASU No. 2018-16
In October 2018, the FASB released ASU No. 2018-16, Derivatives and Hedging (ASC 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes, which permits the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under ASC 815will result in additionchanges to the interest rates on direct Treasury obligations of the U.S. government (UST), the London Interbank Offered Rate (LIBOR) swap rate, the OIS Rate based on the Fed Funds Effective Rate, and the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Rate.

For entities that have not already adopted ASU No. 2017-12, Derivatives and Hedging (ASC 815): Targeted Improvements to Accounting for Hedging Activities, ASU 2018-16 is required to be adopted concurrently with the amendments in ASU 2017-12. For entities that already have adopted ASU 2017-12, ASU 2018-16 will be effective for fiscal years beginning after December 15, 2018, including interim periods. Early adoption is permitted in any interim period upon issuance of ASU 2018-16 if an entity already has adopted ASU 2017-12. The amendments should be adopted on a prospective basis for qualifying new or redesignated hedging relationships entered into, on, or after the date of adoption. The implementation of the amendmentsexisting disclosures, it will not have a significantan impact on the Company’s consolidated financial statements based upon its current hedging strategies.position or results of operations.






ASU No. 2018-17
In October 2018, the FASB released ASU No. 2018-17, Consolidation (ASC 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities, which improves the consistency of the application of the variable interest entity (VIE) related party guidance for common control arrangements. The amendments requireThis ASU requires reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in GAAP) when determining whether a decision-making fee is a variable interest.
ASU No. 2018-17 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. The amendments shouldguidance will be applied retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented.
The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.


ASU No. 2019-04
NOTE 3 –ACQUISITION ACTIVITY
In April 2019, the FASB released ASU No. 2019-04, Codification Improvements to Financial Instruments-Credit Losses (ASC 326), Derivatives and Hedging (ASC 815), and Financial Instruments (ASC 825). The acquisitions discussed below qualify as business combinations. The Company accounts for business combinations under the acquisition method in accordance with ASC Topic 805, Business Combinations. See Note 1, Summary of Significant Accounting Policies,amendments in the 2017 10-K for a descriptionASU improve the Codification by eliminating inconsistencies and providing clarifications. The amendments related to the credit losses standard are discussed above under ASU 2016-13.

With respect to hedge accounting, the ASU addresses partial-term fair value hedges, fair value hedge basis adjustments, and certain transition requirements, among other things. For recognizing and measuring financial instruments, the ASU addresses the scope of the Company'sguidance, the requirement for re-measurement under ASC 820 when using the measurement alternative, certain disclosure requirements and which equity securities have to be re-measured at historical exchange rates.

Since the Company early adopted the guidance in ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities in 2018, the amended hedge accounting for business combinations.guidance in ASU No. 2019-04 will be effective as of the beginning of the first annual reporting period beginning after April 25, 2019 with early adoption permitted on any date after the issuance of this ASU.
2018 Acquisitions
Acquisition of Gibraltar
The Company completedis currently evaluating the acquisition of Gibraltar Private Bank & Trust Co. ("Gibraltar") on March 23, 2018. The acquisition added $1.5 billion in loans and $1.1 billion in deposits, based on preliminary purchase accounting adjustments. Gibraltar operated eight offices in total, with seven located in the Florida metropolitan statistical areas of Miami, Key West, and Naples and one in New York City.
Under the termsimpact of the Agreement and Plan of Merger, Gibraltar common shareholders received 1.9749 shares of IBERIABANK Corporation common stock for each outstanding share of Gibraltar common stock. BasedASU on the Company's closing common stock price of $77.00 per share on March 23, 2018, the aggregate value of the acquisition consideration paid at the time of closing was approximately $214.7 million.
During the first quarter of 2018, the Company recorded preliminary purchase price allocations related to Gibraltar. Throughout the second and third quarters of 2018, the Company continued to analyze the valuations assigned to the acquired assets and liabilities assumed. Based on new information relating to events or circumstances existing at the acquisition date and revised valuations, the Company updated estimated fair values decreasing goodwill by $2.9 million to $49.6 million during the third quarter of 2018. This decrease is primarily a result of an adjustment to the acquired lease liability. As of September 30, 2018, the Company continues to review its fair value estimates and additional adjustments may be required. The following table summarizes the consideration paid for Gibraltar's net assets and the preliminary fair value estimates of the identifiable assets acquired and liabilities assumed as of the acquisition date.
(Dollars in thousands)Number of Shares Amount
Equity consideration   
Common stock issued2,787,773
 $214,659
Total equity consideration  214,659
Non-equity consideration   
Cash  7
Total consideration paid  214,666
Fair value of net assets assumed including identifiable intangible assets  165,044
Goodwill  $49,622
(Dollars in thousands)Gibraltar Fair Value (Preliminary)
Assets 
Cash and cash equivalents$102,575
Investment securities19,169
Equity securities27,519
Loans1,465,278
Core deposit intangible assets18,529
Other assets12,005
Total assets acquired$1,645,075
Liabilities 
Deposit liabilities$1,064,803
Long-term borrowings405,107
Deferred tax liability, net5,960
Other liabilities4,161
Total liabilities assumed$1,480,031

The following is a description of the methods used to determine the fair values of significant assets acquired and liabilities assumed presented above.

Cash and Cash Equivalents: The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.

Investment Securities: Fair values for securities were based on quoted market prices from multiple bond dealers. The simple average of the prices received was used to calculate the adjustments.

Equity Securities: The carrying amount of these securities is a reasonable estimate of fair value based on the short-term nature of these assets.

Loans: Fair values for loans were based on a discounted cash flow methodology that considered factors including loan type, classification status, remaining term of the loan, fixed or variable interest rate, amortization status and current discount rates. The discount rates used for loans were based on current market rates for new originations of comparable loans and included adjustments for any liquidity concerns. The discount rate did not include an explicit factor for credit losses, as that was included as a reduction to the estimated cash flows.

Core Deposit Intangible Assets ("CDI"): The fair value for CDI was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, net maintenance cost of the deposit base, alternative costs of funds, and the interest costs associated with the customer deposits. The CDI is being amortized over its estimated useful life of approximately ten years utilizing an accelerated method.

Deposit Liabilities: The fair values used for the demand and savings deposits by definition equal the amount payable on demand at the acquisition date. Fair values for time deposits were estimated using a discounted cash flow analysis, that applied interest rates currently being offered to the contractual interest rates on such time deposits.

Long-term Borrowings: The carrying amount of long-term borrowings at the acquisition date approximated fair value, as the Company immediately paid off the debt upon acquisition.
Acquisition of SolomonParks
On January 12, 2018, the Company's subsidiary, Lenders Title Company ("LTC"), acquired SolomonParks Title & Escrow, LLC ("SolomonParks"). Under the terms of the agreement, LTC paid $3.3 million in cash to acquire eight title offices in the Nashville, Tennessee area, which resulted in goodwill of $3.4 million. In addition, the agreement provides for potential additional cash consideration of up to $750 thousand based on gross revenues over a two-year period after the acquisition.

Information regarding the preliminary allocation of goodwill recorded as a result of these acquisitions to the Company's reportable segments is provided in Note 7 "Goodwill and Other Intangible Assets." The goodwill recorded as a result of these acquisitions is not deductible for tax purposes.
2017 Acquisition
Acquisition of Sabadell United

The Company completed the acquisition of Sabadell United Bank, N.A. ("Sabadell United") from Banco de Sabadell, S.A. ("Banco Sabadell") on July 31, 2017. The acquisition added $4.0 billion in loans and $4.4 billion in deposits after fair value adjustments. The acquisition expanded the Company's presence in Southeast Florida adding 25 offices serving the Miami metropolitan area and three offices in Naples, Sarasota and Tampa.

Under the terms of the Stock Purchase Agreement, Banco Sabadell received $809.2 million in cash and 2,610,304 shares of IBERIABANK Corporation common stock in exchange for 100 percent of Sabadell United's common stock. The cash consideration was financed through two public common stock offerings completed on December 7, 2016, and March 7, 2017.




During the third quarter of 2017, the Company recorded preliminary purchase price allocations related to Sabadell United. Throughout the remainder of 2017 and the first six months of 2018, the Company continued to analyze the valuations assigned to the acquired assets and liabilities assumed. Based on new information relating to events or circumstances existing at the acquisition date and revised valuations, the Company updated estimated fair values decreasing goodwill by $21.0 million to $441.0 million during the first six months of 2018. This decrease was primarily a result of a change in the estimated fair value of the acquired loans and deferred tax asset. The valuation of the Sabadell United acquisition was final as of June 30, 2018, therefore there were no measurement period adjustments made during the third quarter of 2018.
The following table summarizes the consideration paid for Sabadell United's net assets and the fair value estimates of identifiable assets acquired and liabilities assumed as of the acquisition date. See Note 3, Acquisition Activity, in the 2017 10-K for a description of the methods used to determine the fair values of significant assets acquired and liabilities assumed presented below.
(Dollars in thousands)Number of Shares Amount
Equity consideration   
Common stock issued2,610,304
 $211,043
Total equity consideration  211,043
Non-equity consideration   
Cash  809,159
Total consideration paid  1,020,202
Fair value of net assets assumed including identifiable intangible assets  579,157
Goodwill  $441,045
(Dollars in thousands)Sabadell United Fair Value
Assets 
Cash and cash equivalents$318,819
Investment securities964,123
Loans4,030,777
Core deposit intangible assets66,600
Deferred tax asset, net44,480
Other assets92,820
Total assets acquired$5,517,619
Liabilities 
Deposit liabilities$4,382,780
Short-term borrowings520,539
Other liabilities35,143
Total liabilities assumed$4,938,462

Information regarding the allocation of goodwill recorded as a result of the acquisition to the Company's reportable segments is provided in Note 7 "Goodwill and Other Intangible Assets." The goodwill recorded as a result of the acquisition is not deductible for tax purposes.

The Company'sCompany’s consolidated financial statements as of and for the period ended September 30, 2018 include the operating results of the acquired assets and liabilities assumed. Due to the system conversion of Sabadell United in October 2017 and subsequent streamlining and integration of the operating activities into those of the Company, historical reporting for the former Sabadell United operations is impracticable and thus disclosure of the revenue from the assets acquired and income before income taxes is impracticable for the period subsequent to acquisition.statements.
The following table presents unaudited pro forma information as if the acquisition occurred on January 1, 2016. The pro forma information does not necessarily reflect the results of operations that would have occurred had the Company acquired Sabadell United on January 1, 2016. Furthermore, cost savings and other business synergies related to the acquisition are not reflected in the pro forma amounts.




    Unaudited Pro Forma Information for the
(Dollars in thousands)   
Three months ended
September 30, 2017
 
Nine months ended
September 30, 2017
Net interest income   $232,828
 $688,846
Non-interest income   54,511
 164,360
Net income   30,825
 163,968

This pro forma information combines the historical consolidated results of operations of IBERIABANK and Sabadell United for the periods presented and gives effect to the following non recurring adjustments:
Fair value adjustments: Pro forma adjustment to net interest income of $3.0 million for the three months ended September 30, 2017 and $20.3 million for the nine months ended September 30, 2017 to record estimated amortization of premiums and accretion of discounts on acquired loans, securities, and deposits.
Sabadell United accretion / amortization: Pro forma adjustment to net interest income of $22.3 thousand for the three months ended September 30, 2017 and $1.3 million for the nine months ended September 30, 2017 to eliminate Sabadell United's amortization of premiums and accretion of discounts on previously acquired loans, securities, FDIC indemnification asset, and deposits.
Sabadell United provision for loan losses: Pro forma adjustments were made to provision for loan losses of $918.3 thousand for the three months ended September 30, 2017 and $6.4 million for the nine months ended September 30, 2017 to eliminate the reversal (benefit) of Sabadell United's release of provision for loan losses and to account for the provision for loan losses on new loans originated during the period presented.

Amortization of acquired intangibles: Pro forma adjustment to non-interest expense of $846.6 thousand for the three months ended September 30, 2017 and $5.9 million for the nine months ended September 30, 2017 to record estimated amortization of acquired intangible assets.

Other adjustments: Pro forma results also include adjustments related to the removal of benefit from release of reserve for unfunded lending commitments, removal of FDIC clawback liability expense, adjustments to FDIC insurance and other regulatory assessment expenses and related income tax effects.





NOTE 43 – INVESTMENT SECURITIES
The amortized cost and fair values of investment securities, with gross unrealized gains and losses, consist of the following:
September 30, 2018June 30, 2019
(Dollars in thousands)Amortized
Cost		 Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Estimated
Fair
Value
(in thousands)Amortized
Cost		 Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Estimated
Fair
Value
Securities available for sale:              
U.S. Government-sponsored enterprise obligations$40,996
 $5
 $(740) $40,261
$39,859
 $341
 $—
 $40,200
Obligations of state and political subdivisions265,565
 694
 (4,852) 261,407
172,160
 6,698
 —
 178,858
Mortgage-backed securities:              
Residential agency3,654,417
 68
 (140,816) 3,513,669
3,341,602
 32,909
 (6,364) 3,368,147
Commercial agency721,899
 —
 (26,513) 695,386
742,760
 17,383
 (1,107) 759,036
Other securities126,098
 —
 (2,697) 123,401
105,620
 3,539
 (92) 109,067
Total securities available for sale$4,808,975
 $767
 $(175,618) $4,634,124
$4,402,001
 $60,870
 $(7,563) $4,455,308
Securities held to maturity:              
Obligations of state and political subdivisions$194,382
 $349
 $(5,277) $189,454
$175,281
 $5,407
 $—
 $180,688
Mortgage-backed securities:              
Residential agency19,179
 28
 (1,352) 17,855
17,636
 30
 (342) 17,324
Total securities held to maturity$213,561
 $377
 $(6,629) $207,309
$192,917
 $5,437
 $(342) $198,012




 December 31, 2018
(in thousands)Amortized
Cost		 Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Estimated
Fair
Value
Securities available for sale:       
U.S. Government-sponsored enterprise obligations$995
 $3
 $—
 $998
Obligations of state and political subdivisions177,566
 2,045
 (723) 178,888
Mortgage-backed securities:       
           Residential agency3,837,584
 8,886
 (57,073) 3,789,397
           Commercial agency730,148
 2,363
 (14,799) 717,712
Other securities97,020
 351
 (787) 96,584
Total securities available for sale$4,843,313
 $13,648
 $(73,382) $4,783,579
Securities held to maturity:       
Obligations of state and political subdivisions$188,684
 $309
 $(2,497) $186,496
Mortgage-backed securities:       
          Residential agency18,762
 30
 (1,011) 17,781
Total securities held to maturity$207,446
 $339
 $(3,508) $204,277
 December 31, 2017
(Dollars in thousands)Amortized
Cost		 Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Estimated
Fair
Value
Securities available for sale:       
U.S. Government-sponsored enterprise obligations$41,003
 $18
 $(406) $40,615
Obligations of state and political subdivisions271,451
 4,246
 (1,493) 274,204
Mortgage-backed securities:       
           Residential agency3,675,367
 1,233
 (52,090) 3,624,510
           Commercial agency546,105
 228
 (8,938) 537,395
Other securities114,005
 247
 (914) 113,338
Total securities available for sale$4,647,931
 $5,972
 $(63,841) $4,590,062
Securities held to maturity:       
Obligations of state and political subdivisions$206,736
 $1,530
 $(275) $207,991
Mortgage-backed securities:       
          Residential agency20,582
 41
 (650) 19,973
Total securities held to maturity$227,318
 $1,571
 $(925) $227,964

Securities with carrying values of $2.3$2.2 billion and $2.4 billion were pledged to support repurchase transactions, public funds deposits, and certain long-term borrowings at SeptemberJune 30, 2018 compared to $2.1 billion at2019 and December 31, 2017.2018, respectively.




Information pertaining to securities with gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position, iswas as follows:
September 30, 2018June 30, 2019
Less Than Twelve Months Twelve Months or More TotalLess Than Twelve Months Twelve Months or More Total
(Dollars in thousands)Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value
(in thousands)Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value
Securities available for sale:                      
U.S. Government-sponsored enterprise obligations$—
 $—
 $(740) $39,259
 $(740) $39,259
Obligations of state and political subdivisions(839) 107,014
 (4,013) 90,761
 (4,852) 197,775
Mortgage-backed securities:                      
Residential agency(23,673) 1,009,754
 (117,143) 2,482,730
 (140,816) 3,492,484
$—
 $—
 $(6,364) $1,026,095
 $(6,364) $1,026,095
Commercial agency(4,657) 268,207
 (21,856) 418,295
 (26,513) 686,502
—
 —
 (1,107) 122,450
 (1,107) 122,450
Other securities(1,310) 93,529
 (1,387) 29,872
 (2,697) 123,401
—
 —
 (92) 5,015
 (92) 5,015
Total securities available for sale$(30,479) $1,478,504
 $(145,139) $3,060,917
 $(175,618) $4,539,421
$—
 $—
 $(7,563) $1,153,560
 $(7,563) $1,153,560
                      
Securities held to maturity:                      
Obligations of state and political subdivisions$(3,725) $115,138
 $(1,552) $40,960
 $(5,277) $156,098
Mortgage-backed securities:                      
Residential agency—
 —
 (1,352) 17,544
 (1,352) 17,544
$—
 $—
 $(342) $17,039
 $(342) $17,039
Total securities held to maturity$(3,725) $115,138
 $(2,904) $58,504
 $(6,629) $173,642
$—
 $—
 $(342) $17,039
 $(342) $17,039

 December 31, 2018
 Less Than Twelve Months Twelve Months or More Total
(in thousands)Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value
Securities available for sale:           
Obligations of state and political subdivisions$(9) $4,112
 $(714) $30,268
 $(723) $34,380
Mortgage-backed securities:           
           Residential agency(816) 197,057
 (56,257) 2,193,862
 (57,073) 2,390,919
           Commercial agency(43) 18,190
 (14,756) 483,565
 (14,799) 501,755
Other securities(94) 18,025
 (693) 32,577
 (787) 50,602
Total securities available for sale$(962) $237,384
 $(72,420) $2,740,272
 $(73,382) $2,977,656
            
Securities held to maturity:           
Obligations of state and political subdivisions$(3) $2,059
 $(2,494) $151,699
 $(2,497) $153,758
Mortgage-backed securities:           
          Residential agency—
 —
 (1,011) 17,478
 (1,011) 17,478
Total securities held to maturity$(3) $2,059
 $(3,505) $169,177
 $(3,508) $171,236










 December 31, 2017
 Less Than Twelve Months Twelve Months or More Total
(Dollars in thousands)Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value
Securities available for sale:           
U.S. Government-sponsored enterprise obligations$(254) $29,744
 $(152) $9,848
 $(406) $39,592
Obligations of state and political subdivisions(326) 31,601
 (1,167) 68,609
 (1,493) 100,210
Mortgage-backed securities:           
           Residential agency(22,760) 2,366,569
 (29,330) 1,061,588
 (52,090) 3,428,157
           Commercial agency(3,503) 310,769
 (5,435) 164,470
 (8,938) 475,239
Other securities(914) 75,302
 —
 —
 (914) 75,302
Total securities available for sale$(27,757) $2,813,985
 $(36,084) $1,304,515
 $(63,841) $4,118,500
            
Securities held to maturity:           
Obligations of state and political subdivisions$(263) $65,817
 $(12) $3,031
 $(275) $68,848
Mortgage-backed securities:           
          Residential agency(2) 333
 (648) 19,269
 (650) 19,602
Total securities held to maturity$(265) $66,150
 $(660) $22,300
 $(925) $88,450





The Company assessed the nature of the unrealized losses in its portfolio as of September 30, 2018 and December 31, 2017 to determine if there are losses that should be deemed other-than-temporary. In its analysis of theseheld certain investment securities management considered numerous factors to determine whether there were instances where the amortized cost basis of the debt securities would not be fully recoverable, including, but not limited to:
The length of time and extent to which the estimatedexceeded fair value, of the securities was less than their amortized cost;
Whether adverse conditions were presentresulting in unrealized loss positions, as shown in the operations, geographic area,tables above. Management evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or industry ofmarket concerns warrant such evaluation. Impairment is considered to be other-than-temporary if the issuer;
The payment structure ofCompany (1) intends to sell the security, including scheduled interest and principal payments, the issuer’s failures to make scheduled payments, if any, and the likelihood of failure to make scheduled payments in the future;
Changes to the rating of the security by a rating agency; and
Subsequent recoveries or additional declines in fair value after the balance sheet date.
Management believes it has considered these factors, as well as all relevant information available, when determining the expected future cash flows of the securities in question. In each instance, management has determined the cost basis of the securities would be fully recoverable. Management also has the intent to hold debt securities until their maturity or anticipated recovery if the security is classified as available for sale. In addition, management does(2) more likely than not believe the Company will be required to sell debt securitiesthe security before recovering its cost, or (3) does not expect to recover the anticipated recovery of thesecurity's entire amortized cost basisbasis. As of June 30, 2019, the security. As a resultCompany did not intend to sell any of the Company's analysis, no declines in the estimated fair value of the Company's investmentthese securities, were deemeddid not expect to be other-than-temporary at September 30, 2018 or December 31, 2017.required to sell these securities, and expected to recover the entire amortized cost of all these securities.
At SeptemberJune 30, 2018, 7192019, 189 debt securities had unrealized losses of 3.72%0.67% of the securities’ amortized cost basis. At December 31, 2017, 5442018, 488 debt securities had unrealized losses of 1.52%2.38% of the securities’ amortized cost basis. The unrealized losses for each of the securities related to market interest rate changes and not credit concerns of the issuers. Additional information on securities that have beenwere in a continuous loss position for over twelve months at SeptemberJune 30, 20182019 and December 31, 20172018 is presented in the following table:table.
(in thousands)June 30, 2019 December 31, 2018
Number of securities   
Mortgage-backed securities:   
          Residential agency159
 302
          Commercial agency26
 72
Obligations of state and political subdivisions—
 60
Other securities4
 7
 189
 441
Amortized Cost Basis   
Mortgage-backed securities:   
          Residential agency$1,049,840
 $2,268,608
          Commercial agency123,557
 498,321
Obligations of state and political subdivisions—
 185,175
Other securities5,107
 33,270
 $1,178,504
 $2,985,374
Unrealized Loss   
Mortgage-backed securities:   
          Residential agency$6,706
 $57,268
          Commercial agency1,107
 14,756
Obligations of state and political subdivisions—
 3,208
Other securities92
 693
 $7,905
 $75,925

(Dollars in thousands)September 30, 2018 December 31, 2017
Number of securities:   
Mortgage-backed securities:   
          Residential agency336
 153
          Commercial agency65
 28
Obligations of state and political subdivisions53
 28
U.S. Government-sponsored enterprise obligations3
 1
Other securities7
 —
 464
 210
Amortized Cost Basis:   
Mortgage-backed securities:   
          Residential agency$2,618,769
 $1,110,834
          Commercial agency440,151
 169,905
Obligations of state and political subdivisions137,286
 72,820
U.S. Government-sponsored enterprise obligations39,999
 10,000
Other securities31,259
 —
 $3,267,464
 $1,363,559
Unrealized Loss:   
Mortgage-backed securities:   
          Residential agency$118,495
 $29,977
          Commercial agency21,856
 5,435
Obligations of state and political subdivisions5,565
 1,180
U.S. Government-sponsored enterprise obligations740
 152
Other securities1,387
 —
 $148,043
 $36,744


The Fannie Mae, Freddie Mac, and Ginnie Mae securities noted above carry a rating of AA+/Aaa by S&P and Moody's.
The amortized cost and estimated fair value of investment securities by maturity at SeptemberJune 30, 20182019 are presented in the following table. Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. Accordingly, actual maturities may differ from contractual maturities. Weighted average yields are calculated on the basis of the yield to maturity based on the amortized cost of each security.
 Securities Available for Sale Securities Held to Maturity
(in thousands)Weighted
Average
Yield		 Amortized
Cost		 Estimated
Fair
Value		 Weighted
Average
Yield		 Amortized
Cost		 Estimated
Fair
Value
Within one year or less3.67% $1,554
 $1,558
 2.34% $952
 $955
One through five years2.66
 112,248
 113,915
 2.63
 4,484
 4,524
After five through ten years2.72
 769,216
 789,351
 2.43
 45,338
 46,508
Over ten years2.84
 3,518,983
 3,550,484
 2.60
 142,143
 146,025
 2.82% $4,402,001
 $4,455,308
 2.56% $192,917
 $198,012

 Securities Available for Sale Securities Held to Maturity
(Dollars in thousands)Weighted
Average
Yield		 Amortized
Cost		 Estimated
Fair
Value		 Weighted
Average
Yield		 Amortized
Cost		 Estimated
Fair
Value
Within one year or less1.90% $19,161
 $19,056
 4.00% $435
 $436
One through five years2.25
 150,119
 147,472
 2.80
 8,776
 8,751
After five through ten years2.47
 1,104,969
 1,069,983
 2.58
 45,368
 44,690
Over ten years2.45
 3,534,726
 3,397,613
 2.60
 158,982
 153,432
 2.44% $4,808,975
 $4,634,124
 2.61% $213,561
 $207,309


The following is a summary of realized gains and losses from the sale of securities classified as available for sale. Gains or losses on securities sold are recorded on the trade date, using the specific identification method.
 Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2019 2018 2019 2018
Realized gains$1,297
 $30
 $1,297
 $39
Realized losses(2,311) (27) (2,311) (95)
 $(1,014) $3
 $(1,014) $(56)
 Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands)2018 2017 2018 2017
Realized gains$—
 $667
 $39
 $909
Realized losses—
 (909) (95) (1,092)
 $—
 $(242) $(56) $(183)

In addition to the gains above, the Company realized certain gains on calls of securities held to maturity that were not significant to the consolidated financial statements.
Other Equity Securities
The Company accounts for the following securities at cost less impairment plus or minus any observable price changes, which approximates fair value, with the exception of CRA and Community Development Investment Funds, which are recorded at fair value. Other Equity Securities,equity securities, which are presented in “other assets”other assets on the consolidated balance sheets, arewere as follows:
(in thousands)June 30, 2019 December 31, 2018
Federal Home Loan Bank stock$108,396
 $95,213
Federal Reserve Bank stock85,630
 85,630
CRA and Community Development Investment Funds2,192
 1,884
Other investments15,319
 9,709
 $211,537
 $192,436


(Dollars in thousands)September 30, 2018 December 31, 2017
Federal Home Loan Bank (FHLB) stock$102,508
 $95,171
Federal Reserve Bank (FRB) stock85,630
 79,191
CRA and Community Development Investment Funds1,866
 —
Other investments9,838
 3,008
 $199,842
 $177,370


NOTE 54 – LOANS AND LEASES
Loans and leases by portfolio segment and class consist of the following for the periods indicated:
(Dollars in thousands)September 30, 2018 December 31, 2017
(in thousands)June 30, 2019 December 31, 2018
Commercial loans and leases:      
Real estate - construction$1,127,988
 $1,240,396
$1,342,984
 $1,196,366
Real estate - owner-occupied2,458,964
 2,375,321
2,373,143
 2,395,822
Real estate - non-owner-occupied5,794,931
 5,322,513
6,102,143
 5,796,117
Commercial and industrial (1)
5,581,040
 5,135,067
6,161,759
 5,737,017
14,962,923
 14,073,297
   
Total commercial loans and leases15,980,029
 15,125,322
Residential mortgage loans4,300,163
 3,056,352
4,538,194
 4,359,156


  
Consumer loans:   
Consumer and other loans:   
Home equity2,350,176
 2,292,275
2,147,897
 2,304,694
Other730,644
 656,257
689,191
 730,643
3,080,820
 2,948,532
Total$22,343,906
 $20,078,181
Total consumer and other loans2,837,088
 3,035,337
Total loans and leases$23,355,311
 $22,519,815
(1) 
Includes equipment financing leases
Net deferred loan origination fees were $29.6$30.1 million and $29.3$30.2 million at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively. Total net discount on the Company's loans was $143.2$114.3 million and $159.3$136.8 million at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively, of which $75.6$71.6 million and $94.7$81.6 million was related to non-impaired loans. Net loan discounts include preliminary discounts recorded on Gibraltar loans, which are subject to change upon receipt of final fair value estimates during the measurement period.
In addition to loans issued in the normal course of business, the Company considers overdrafts on customer deposit accounts to be loans and reclassifies these overdrafts as loans in its consolidated balance sheets. At SeptemberJune 30, 20182019 and December 31, 2017,2018, overdrafts of $6.3$5.6 million and $7.4$9.2 million, respectively, havehad been reclassified to loans.
Loans with carrying values of $7.5$8.0 billion and $6.6$7.6 billion were pledged as collateral for borrowings at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively.


Aging Analysis
The following tables provide an analysis of the aging of loans and leases as of SeptemberJune 30, 20182019 and December 31, 2017.2018. Past due and non-accrual loan amounts exclude acquired impaired loans, even if contractually past due or if the Company does not expect to receive payment in full, as the Company is currently accreting interest income over the expected life of the loans. For additional information on the determination of past due status and the Company's policies for recording payments received, placing loans and leases on non-accrual status, and the resumption of interest accrual on non-accruing loans and leases, see Note 1, Summary of Significant Accounting Policies, in the 2018 10-K.


 June 30, 2019
 Accruing      
(in thousands)Current or Less Than 30 days Past Due 30-59 days 60-89 days > 90 days Total Past Due 
Non-accrual (1)
 Acquired Impaired Total
Real estate- construction$1,322,728
 $207
 $—
 $—
 $207
 $1,188
 $18,861
 $1,342,984
Real estate- owner-occupied2,285,316
 7,274
 —
 —
 7,274
 15,789
 64,764
 2,373,143
Real estate- non-owner-occupied6,007,594
 2,456
 6,345
 —
 8,801
 22,028
 63,720
 6,102,143
Commercial and industrial6,086,983
 3,035
 437
 —
 3,472
 48,747
 22,557
 6,161,759
Residential mortgage4,393,649
 4,914
 5,941
 851
 11,706
 50,046
 82,793
 4,538,194
Consumer - home equity2,067,280
 7,123
 1,616
 —
 8,739
 18,646
 53,232
 2,147,897
Consumer - other680,595
 2,972
 701
 —
 3,673
 2,548
 2,375
 689,191
Total$22,844,145
 $27,981
 $15,040
 $851
 $43,872
 $158,992
 $308,302
 $23,355,311

(1)
Of the total non-accrual loans at June 30, 2019, $11.3 million were past due 30-59 days, $4.2 million were past due 60-89 days, and $68.6 million were past due more than 90 days.

September 30, 2018December 31, 2018
Accruing      Accruing      
(Dollars in thousands)Current or Less Than 30 days Past Due 30-59 days 60-89 days > 90 days Total Past Due Non-accrual Acquired Impaired Total
(in thousands)Current or Less Than 30 days Past Due 30-59 days 60-89 days > 90 days Total Past Due 
Non-accrual (1)
 Acquired Impaired Total
Real estate- construction$1,105,488
 $75
 $830
 $—
 $905
 $1,122
 $20,473
 $1,127,988
$1,167,795
 $1,054
 $—
 $—
 $1,054
 $1,094
 $26,423
 $1,196,366
Real estate- owner-occupied2,353,176
 1,792
 872
 2,930
 5,594
 19,089
 81,105
 2,458,964
2,305,743
 7,167
 —
 —
 7,167
 10,260
 72,652
 2,395,822
Real estate- non-owner-occupied5,678,485
 10,995
 4,266
 505
 15,766
 20,497
 80,183
 5,794,931
5,703,131
 7,473
 360
 —
 7,833
 15,898
 69,255
 5,796,117
Commercial and industrial5,474,922
 8,083
 3,568
 614
 12,265
 66,815
 27,038
 5,581,040
5,645,304
 5,139
 1,320
 553
 7,012
 57,860
 26,841
 5,737,017
Residential mortgage4,132,941
 4,597
 18,915
 8,403
 31,915
 15,898
 119,409
 4,300,163
4,218,146
 2,768
 13,063
 1,575
 17,406
 30,396
 93,208
 4,359,156
Consumer - home equity2,246,693
 8,727
 2,963
 —
 11,690
 17,854
 73,939
 2,350,176
2,200,517
 10,283
 2,409
 —
 12,692
 18,830
 72,655
 2,304,694
Consumer - other720,666
 3,934
 1,007
 —
 4,941
 2,320
 2,717
 730,644
719,122
 4,695
 1,601
 —
 6,296
 2,846
 2,379
 730,643
Total$21,712,371
 $38,203
 $32,421
 $12,452
 $83,076
 $143,595
 $404,864
 $22,343,906
$21,959,758
 $38,579
 $18,753
 $2,128
 $59,460
 $137,184
 $363,413
 $22,519,815
(1)
Of the total non-accrual loans at December 31, 2018, $7.0 million were past due 30-59 days, $3.7 million were past due 60-89 days, and $66.9 million were past due more than 90 days.


 December 31, 2017
 Accruing      
(Dollars in thousands)Current or Less Than 30 days Past Due 30-59 days 60-89 days > 90 days Total Past Due Non-accrual Acquired Impaired Total
Real estate- construction$1,197,766
 $269
 $—
 $458
 $727
 $2,635
 $39,268
 $1,240,396
Real estate- owner-occupied2,243,923
 1,631
 659
 74
 2,364
 24,457
 104,577
 2,375,321
Real estate- non-owner-occupied5,220,648
 2,086
 6,405
 887
 9,378
 6,811
 85,676
 5,322,513
Commercial and industrial5,014,438
 5,788
 5,726
 146
 11,660
 77,823
 31,146
 5,135,067
Residential mortgage2,877,048
 10,083
 8,136
 5,317
 23,536
 17,387
 138,381
 3,056,352
Consumer - home equity2,186,554
 11,675
 2,947
 18
 14,640
 12,365
 78,716
 2,292,275
Consumer - other642,244
 5,286
 1,026
 —
 6,312
 3,910
 3,791
 656,257
Total$19,382,621
 $36,818
 $24,899
 $6,900
 $68,617
 $145,388
 $481,555
 $20,078,181

Acquired Loans
As discussed in Note 3, during the third quarter of 2017, theThe Company acquired loans with fair values of $4.0 billion from Sabadell United. Certain loans that were acquired in this transaction were covered by loss share agreements between the FDIC and Sabadell United, which were assumed in connection with the Company's acquisition of Sabadell United and afforded IBERIABANK loss protection. In September 2018, the Company terminated its loss share agreements with the FDIC. As a result, there were no covered loans at September 30, 2018. Covered loans were $158.6 million at December 31, 2017. Certain acquiredcertain loans from Sabadell United were to customers with addresses outside of the United States. Foreign loans, denominated in U.S. dollars, totaled $228.2$200.9 million and $325.5$202.6 million at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively.
During the first quarter of 2018, the Company acquired loans with fair values of $1.5 billion from Gibraltar based on preliminary purchase accounting adjustments.






Of the total loans acquired from Gibraltar, $1.46 billion were determined to have no evidence of deteriorated credit quality and are accounted for under ASC Topics 310-10 and 310-20. The remaining $10.2 million were determined to exhibit deteriorated credit quality since origination under ASC 310-30. The tables below show the fair value estimates of loans acquired from Gibraltar for these two subsections of the portfolio as of the acquisition date. These amounts are subject to change due to the finalization of purchase accounting adjustments.
(Dollars in thousands)Acquired Non-Impaired Loans
Contractually required principal and interest at acquisition$1,695,918
Expected losses and foregone interest(19,952)
Cash flows expected to be collected at acquisition1,675,966
Fair value of acquired loans at acquisition$1,455,044
(Dollars in thousands)Acquired Impaired Loans
Contractually required principal and interest at acquisition$43,779
Non-accretable difference (expected losses and foregone interest)(31,174)
Cash flows expected to be collected at acquisition12,605
Accretable yield(2,371)
Basis in acquired loans at acquisition$10,234
The following is a summary of changes in the accretable difference for all loans accounted for under ASC 310-30 during the ninesix months ended SeptemberJune 30:
(Dollars in thousands) 2018 2017
(in thousands) 2019 2018
Balance at beginning of period $152,623
 $175,054
 $133,342
 $152,623
Additions 2,371
 32,937
 —
 2,371
Transfers from non-accretable difference to accretable yield (4) 4,977
 (2,563) (467)
Accretion (37,115) (42,435) (19,580) (25,140)
Changes in expected cash flows not affecting non-accretable differences (1)
 21,092
 (242) (4,341) 7,597
Balance at end of period $138,967
 $170,291
 $106,858
 $136,984


(1) 
Includes changes in cash flows expected to be collected due to the impact of changes in actual or expected timing of liquidation events, modifications, changes in interest rates and changes in prepayment assumptions.
























Troubled Debt Restructurings
Information about the Company’s troubled debt restructurings ("TDRs")TDRs at SeptemberJune 30, 20182019 and 20172018 is presented in the following tables. Modifications of loans that are accounted for within a pool under ASC Topic 310-30 are excluded as TDRs. Accordingly, such modifications do not result in the removal of those loans from the pool, even if the modification of those loans would otherwise be considered a TDR. As a result, all such acquired loans that would otherwise meet the criteria for classification as a TDR are excluded from the tables below.
TDRs totaling $46.0$37.4 million and $51.5$46.7 million occurred during the ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, respectively, through modification of the original loan terms.
The following table provides information on how the TDRs were modified during the periods indicated:
Three Months Ended September 30 Nine Months Ended September 30,Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands)2018 2017 2018 2017
(in thousands)2019 2018 2019 2018
Extended maturities$3,658
 $3,184
 $10,020
 $18,177
$7,633
 $1,790
 $11,175
 $7,193
Maturity and interest rate adjustment267
 204
 368
 5,151
224
 —
 617
 102
Movement to or extension of interest-rate only payments—
 3,560
 48
 3,692
1,771
 1,316
 1,783
 1,364
Interest rate adjustment—
 —
 101
 25
74
 —
 74
 103
Forbearance802
 841
 14,386
 5,528
—
 1,405
 5,742
 13,936
Other concession(s) (1)
1,810
 16,797
 21,031
 18,944
10,950
 15,597
 18,018
 23,993
Total$6,537
 $24,586
 $45,954
 $51,517
$20,652
 $20,108
 $37,409
 $46,691
(1) 
Other concessions may include covenant waivers, forgiveness of principal or interest associated with a customer bankruptcy, or a combination of any of the above concessions.




























Of the $46.0$37.4 million of TDRs occurring during the ninesix months ended SeptemberJune 30, 2018, $20.22019, $13.9 million arewere on accrual status and $25.8$23.5 million arewere on non-accrual status. Of the $51.5$46.7 million of TDRs occurring during the ninesix months ended SeptemberJune 30, 2017, $40.52018, $20.6 million were on accrual status and $11.0$26.1 million were on non-accrual status. The following table presents the end of period balance for loans modified in a TDR during the periods indicated:


Three Months Ended September 30,Three Months Ended June 30,
2018 20172019 2018
(In thousands, except number of loans)Number of Loans Pre-modification Outstanding Recorded Investment Post-modification Outstanding Recorded Investment Number of Loans Pre-modification Outstanding Recorded Investment Post-modification Outstanding Recorded Investment
Real estate- construction—
 $—
 $—
 2
 $1,166
 $1,164
(in thousands, except number of loans)Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment
Real estate- owner-occupied1
 2,312
 2,312
 3
 717
 713
4
 $339
 $338
 5
 $2,230
 $2,201
Real estate- non-owner-occupied6
 1,818
 1,790
 10
 5,306
 5,298
7
 4,687
 4,628
 5
 823
 780
Commercial and industrial9
 829
 804
 11
 11,650
 12,502
19
 13,757
 13,607
 16
 21,103
 13,618
Residential mortgage3
 257
 255
 7
 409
 392
10
 847
 836
 7
 688
 633
Consumer - home equity15
 1,152
 1,124
 38
 3,495
 3,479
22
 1,159
 1,056
 19
 2,361
 2,350
Consumer - other11
 352
 252
 36
 1,078
 1,038
20
 210
 187
 35
 556
 526
Total45
 $6,720
 $6,537
 107
 $23,821
 $24,586
82
 $20,999
 $20,652
 87
 $27,761
 $20,108


Nine Months Ended September 30,Six Months Ended June 30,
2018 20172019 2018
(In thousands, except number of loans)Number of Loans Pre-modification Outstanding Recorded Investment Post-modification Outstanding Recorded Investment Number of Loans Pre-modification Outstanding Recorded Investment Post-modification Outstanding Recorded Investment
(in thousands, except number of loans)Number of Loans Pre-modification Outstanding Recorded Investment Post-modification Outstanding Recorded Investment Number of Loans Pre-modification Outstanding Recorded Investment Post-modification Outstanding Recorded Investment
Real estate- construction1
 $1,950
 $976
 2
 $1,166
 $1,164
1
 $39
 $37
 1
 $1,950
 $1,013
Real estate- owner-occupied8
 15,233
 13,373
 5
 2,447
 2,411
6
 1,435
 1,402
 7
 12,921
 11,290
Real estate- non-owner-occupied13
 3,228
 3,064
 21
 9,645
 11,505
13
 7,756
 7,651
 14
 1,912
 1,854
Commercial and industrial32
 32,827
 22,769
 44
 18,743
 19,399
38
 29,785
 20,670
 32
 35,338
 26,684
Residential mortgage9
 898
 837
 16
 1,126
 1,030
19
 1,687
 1,669
 7
 688
 633
Consumer - home equity47
 4,130
 4,047
 99
 13,573
 13,471
54
 5,312
 5,137
 33
 4,170
 4,133
Consumer - other53
 1,056
 888
 106
 2,745
 2,537
51
 918
 843
 51
 1,126
 1,084
Total163
 $59,322
 $45,954
 293
 $49,445
 $51,517
182
 $46,932
 $37,409
 145
 $58,105
 $46,691










Information detailing TDRs that defaulted during the three-month and nine-monthsix-month periods ended SeptemberJune 30, 20182019 and 2017,2018, and were modified in the previous twelve months (i.e., the twelve months prior to the default) is presented in the following tables. The Company has defined a default as any loan with a payment that is currently past due greater than 30 days, or was past due greater than 30 days at any point during the respective periods, or since the date of modification, whichever is shorter.
Three Months Ended September 30,Three Months Ended June 30,
2018 20172019 2018
(In thousands, except number of loans)Number of Loans Recorded Investment Number of Loans Recorded Investment
(in thousands, except number of loans)Number of Loans Recorded Investment Number of Loans Recorded Investment
Real estate- construction—
 $—
 2
 $1,164
1
 $37
 —
 $—
Real estate- owner-occupied1
 929
 4
 1,304
4
 1,232
 5
 461
Real estate- non-owner-occupied1
 7
 11
 2,206
11
 2,341
 9
 1,448
Commercial and industrial2
 127
 16
 1,008
17
 5,475
 8
 1,437
Residential mortgage—
 —
 13
 819
12
 1,012
 7
 775
Consumer - home equity4
 380
 23
 2,150
17
 1,411
 11
 1,129
Consumer - other6
 86
 49
 795
34
 515
 21
 232
Total14
 $1,529
 118
 $9,446
96
 $12,023
 61
 $5,482

 Six Months Ended June 30,
 2019 2018
(in thousands, except number of loans)Number of Loans Recorded Investment Number of Loans Recorded Investment
Real estate- construction1
 $37
 —
 $—
Real estate- owner-occupied6
 1,232
 6
 9,455
Real estate- non-owner-occupied17
 2,913
 15
 1,813
Commercial and industrial25
 6,152
 21
 7,100
Residential mortgage21
 1,597
 10
 1,081
Consumer - home equity27
 2,401
 26
 2,242
Consumer - other41
 591
 48
 1,003
Total138
 $14,923
 126
 $22,694



 Nine Months Ended September 30,
 2018 2017
(In thousands, except number of loans)Number of Loans Recorded Investment Number of Loans Recorded Investment
Real estate- construction—
 $—
 2
 $1,164
Real estate- owner-occupied6
 10,101
 8
 3,234
Real estate- non-owner-occupied6
 1,084
 16
 4,929
Commercial and industrial12
 3,632
 31
 5,939
Residential mortgage8
 912
 18
 1,243
Consumer - home equity17
 1,978
 34
 3,215
Consumer - other39
 488
 65
 1,264
Total88
 $18,195
 174
 $20,988



NOTE 65 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY
Allowance for Credit Losses Activity
A summary of changes in the allowance for credit losses for the ninesix months ended SeptemberJune 30 is as follows:
(Dollars in thousands) 2018 2017
Allowance for credit losses    
(in thousands) 2019 2018

    
Allowance for loan and lease losses at beginning of period $140,891
 $144,719
 $140,571
 $140,891
Provision for loan and lease losses 26,678
 36,718
 24,067
 15,581
Transfer of balance to OREO and other (5,709) 963
 (2,863) (3,943)
Charge-offs (34,740) (49,939) (19,194) (22,734)
Recoveries 9,830
 4,167
 3,805
 6,781
Allowance for loan and lease losses at end of period $136,950
 $136,628
 $146,386
 $136,576
        
Reserve for unfunded commitments at beginning of period $13,208
 $11,241
 $14,830
 $13,208
Balance created in acquisition accounting 900
 7,626
 —
 900
Provision for unfunded lending commitments 613
 2,165
 451
 325
Reserve for unfunded commitments at end of period $14,721
 $21,032
 $15,281
 $14,433
Allowance for credit losses at end of period $151,671
 $157,660
 $161,667
 $151,009
A summary of changes in the allowance for credit losses, by loan portfolio type, for the ninesix months ended SeptemberJune 30 is as follows:
20182019
(Dollars in thousands)Commercial Real Estate Commercial and Industrial Residential Mortgage Consumer Total
(in thousands)Commercial Real Estate Commercial and Industrial Residential Mortgage Consumer and Other Total
Allowance for loan and lease losses at beginning of period$54,201
 $53,916
 $9,117
 $23,657
 $140,891
$51,806
 $54,096
 $12,998
 $21,671
 $140,571
Provision for (Reversal of) loan and lease losses(4,020) 20,372
 2,318
 8,008
 26,678
15,204
 5,077
 (584) 4,370
 24,067
Transfer of balance to OREO and other(1,556) (814) (45) (3,294) (5,709)(256) (1) (2,862) 256
 (2,863)
Charge-offs(1,281) (22,447) (365) (10,647) (34,740)(641) (11,880) (168) (6,505) (19,194)
Recoveries1,019
 5,665
 53
 3,093
 9,830
318
 1,796
 157
 1,534
 3,805
Allowance for loan and lease losses at end of period$48,363
 $56,692
 $11,078
 $20,817
 $136,950
$66,431
 $49,088
 $9,541
 $21,326
 $146,386
                  
Reserve for unfunded commitments at beginning of period$4,531
 $5,309
 $555
 $2,813
 $13,208
$4,869
 $6,198
 $866
 $2,897
 $14,830
Balance created in acquisition accounting129
 81
 —
 690
 900
Provision for (Reversal of) unfunded commitments(134) 169
 246
 332
 613
603
 (313) (206) 367
 451
Reserve for unfunded commitments at end of period$4,526
 $5,559
 $801
 $3,835
 $14,721
$5,472
 $5,885
 $660
 $3,264
 $15,281
Allowance on loans individually evaluated for impairment$2,650
 $10,471
 $154
 $2,973
 $16,248
$4,673
 $7,656
 $349
 $3,176
 $15,854
Allowance on loans collectively evaluated for impairment40,519

44,727
 5,063
 17,661
 107,970
56,251

39,854
 5,127
 18,008
 119,240
Allowance on loans acquired with deteriorated credit quality5,194
 1,494
 5,861
 183
 12,732
5,507
 1,578
 4,065
 142
 11,292
Loans and leases, net of unearned income:                  
Balance at end of period$9,381,883
 $5,581,040
 $4,300,163
 $3,080,820
 $22,343,906
$9,818,270
 $6,161,759
 $4,538,194
 $2,837,088
 $23,355,311
Balance at end of period individually evaluated for impairment73,469
 75,625
 6,230
 33,863
 189,187
74,331
 54,860
 41,363
 39,127
 209,681
Balance at end of period collectively evaluated for impairment9,126,653
 5,478,377
 4,174,524
 2,970,301
 21,749,855
9,596,594
 6,084,342
 4,414,038
 2,742,354
 22,837,328
Balance at end of period acquired with deteriorated credit quality181,761
 27,038
 119,409
 76,656
 404,864
147,345
 22,557
 82,793
 55,607
 308,302


20172018
(Dollars in thousands)Commercial Real Estate Commercial and Industrial Residential Mortgage Consumer Total
Allowance for loan losses at beginning of period$49,231
 $60,939
 $11,249
 $23,300
 $144,719
(in thousands)Commercial Real Estate Commercial and Industrial Residential Mortgage Consumer and Other Total
Allowance for loan and lease losses at beginning of period$54,201
 $53,916
 $9,117
 $23,657
 $140,891
Provision for (Reversal of) loan and lease losses4,888
 23,574
 (1,333) 9,589
 36,718
(3,404) 10,083
 1,112
 7,790
 15,581
Transfer of balance to OREO and other879
 (69) 2
 151
 963
(506) (18) 6
 (3,425) (3,943)
Charge-offs(1,410) (37,110) (265) (11,154) (49,939)(1,258) (13,575) (196) (7,705) (22,734)
Recoveries668
 605
 148
 2,746
 4,167
384
 4,403
 44
 1,950
 6,781
Allowance for loan losses at end of period$54,256
 $47,939
 $9,801
 $24,632
 $136,628
Allowance for loan and lease losses at end of period$49,417
 $54,809
 $10,083
 $22,267
 $136,576
                  
Reserve for unfunded commitments at beginning of period$3,207
 $4,537
 $657
 $2,840
 $11,241
$4,531
 $5,309
 $555
 $2,813
 $13,208
Balance created in acquisition accounting1,358
 4,903
 1,303
 62
 7,626
129
 81
 —
 690
 900
Provision for (Reversal of) unfunded commitments1,239
 752
 (30) 204
 2,165
467
 (306) 160
 4
 325
Reserve for unfunded commitments at end of period$5,804
 $10,192
 $1,930
 $3,106
 $21,032
$5,127
 $5,084
 $715
 $3,507
 $14,433
Allowance on loans individually evaluated for impairment$1,957
 $9,744
 $164
 $2,445
 $14,310
$2,274
 $11,946
 $168
 $3,199
 $17,587
Allowance on loans collectively evaluated for impairment30,016
 35,964
 3,801
 18,768
 88,549
40,763
 40,540
 3,816
 18,742
 103,861
Allowance on loans acquired with deteriorated credit quality22,283
 2,231
 5,836
 3,419
 33,769
6,380
 2,323
 6,099
 326
 15,128
                  
Loans, net of unearned income:         
Loans and leases, net of unearned income:         
Balance at end of period8,767,886
 5,016,437
 3,024,970
 2,985,792
 19,795,085
$9,292,304
 $5,512,416
 $4,124,538
 $3,146,525
 $22,075,783
Balance at end of period individually evaluated for impairment68,241
 85,054
 5,384
 29,140
 187,819
84,217
 66,683
 5,873
 35,550
 192,323
Balance at end of period collectively evaluated for impairment8,457,950
 4,899,842
 2,890,206
 2,877,383
 19,125,381
9,017,756
 5,415,093
 3,984,086
 3,029,027
 21,445,962
Balance at end of period acquired with deteriorated credit quality241,695
 31,541
 129,380
 79,269
 481,885
190,331
 30,640
 134,579
 81,948
 437,498

Portfolio Segment Risk Factors
Commercial real estate loans include loans to commercial customers for long-term financing of land and buildings or for land development or construction of a building. These loans are repaid through revenues from operations of the businesses, rents of properties, sales of properties and refinances. Commercial and industrial loans and leases represent loans to commercial customers to finance general working capital needs, equipment purchases and leases and other projects where repayment is derived from cash flows resulting from business operations. The Company originates commercial business loans on a secured and, to a lesser extent, unsecured basis.
Residential mortgage loans consist of loans to consumers to finance a primary residence. The vast majority of the residential mortgage loan portfolio is comprised of non-conforming 1-4 family mortgage loans secured by properties located in the Company's market areas and originated under terms and documentation that permit their sale in a secondary market.
Consumer loans are offered by the Company in order to provide a full range of retail financial services to its customers and include home equity, credit card and other direct consumer installment loans. The Company originates substantially all of its consumer loans in its primary market areas. Loans in the consumer segment are sensitive to unemployment and other key consumer economic measures.
Credit Quality Indicators
TheFor commercial loans and leases, the Company utilizes an asset riskregulatory classification systemratings to monitor credit quality. Loans with a "pass" rating are those that the Company believes will be fully repaid in accordance with guidelines established by the Federal Reserve Board as partcontractual loan terms. Commercial loans and leases that are "criticized" are those that have some weakness or potential weakness that indicate an increased probability of its efforts to monitor commercial asset quality. “Special mention”future loss. "Criticized" loans are defined asgrouped into three categories: "special mention", "substandard", and "doubtful". Special mention loans withhave potential weaknesses that, may, if not corrected,left uncorrected, may result in future deterioration of the loan. Special mention loans do not expose the Company to sufficient risk to warrant adverse classification. For problem assets with identifiedCompany's credit issues, the Company has two primary classifications: “substandard” and “doubtful.”position at some future date.


Substandard assetscommercial loans have one or more definedwell-defined weaknesses and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful assetscommercial loans have the same weaknesses ofas substandard assetsloans with the additional characteristicadded characteristics that the weaknesses make collection or liquidation in full satisfaction of the loan balance outstanding questionable, which makes probability of loss higher based on currently existing facts, conditions,is high and values. Loans classified as substandard,collection of the full amount is improbable. Substandard and doubtful and lossloans are collectively referred to as classified"classified" loans. CriticizedFor residential mortgage loans include all classifiedand consumer loans, as well as loans classified as special mention loans. Loans classified as “Pass” do not meet the criteria set forth for special mention, substandard, or doubtful classificationCompany primarily uses the loan's payment and delinquency status to monitor credit quality. These credit quality indicators are not considered criticized. Asset risk classifications are determined at origination or acquisitioncontinually updated and reviewed on an ongoing basis. Risk classifications are changed if, in the opinion of management, the risk profile of the customer has changed since the last review of the loan relationship.monitored.
The Company’srecorded investment in loans and leases by credit quality indicator is presented in the following tables. Asset risk classifications for commercial loans and leases reflect the classification as of SeptemberJune 30, 20182019 and December 31, 2017.2018. Credit quality information in the tables below includes total loans acquired (including acquired impaired loans) at the net loan balance, after the application of premiums/discounts, at September 30, 2018premiums and December 31, 2017.discounts. Loan premiums/premiums and discounts represent the adjustment of acquired loans to fair value at the acquisition date, as adjusted for income accretion and changes in cash flow estimates in subsequent periods. Loan premiums/discounts include preliminary discounts recorded on acquired Gibraltar loans, which are subject to change upon receipt of final fair value estimates during the measurement period.
Loan delinquency is the primary credit quality indicator that the Company utilizes to monitor consumer asset quality.
 September 30, 2018 December 31, 2017
(Dollars in thousands)Pass Special Mention Sub-
standard		 Doubtful Total Pass Special Mention Sub-
standard		 Doubtful Loss Total
Commercial real estate - construction$1,094,240
 $19,033
 $14,704
 $11
 $1,127,988
 $1,189,490
 $20,351
 $30,541
 $14
 $—
 $1,240,396
Commercial real estate - owner-occupied2,382,053
 31,588
 45,058
 265
 2,458,964
 2,234,151
 82,114
 56,590
 2,466
 —
 2,375,321
Commercial real estate - non-owner-occupied5,692,007
 49,121
 49,415
 4,388
 5,794,931
 5,258,638
 19,311
 42,702
 1,744
 118
 5,322,513
Commercial and industrial5,366,990
 96,303
 86,903
 30,844
 5,581,040
 4,882,554
 88,149
 128,961
 35,403
 —
 5,135,067
Total$14,535,290
 $196,045
 $196,080
 $35,508
 $14,962,923
 $13,564,833
 $209,925
 $258,794
 $39,627
 $118
 $14,073,297
 June 30, 2019 December 31, 2018
(in thousands)Pass Special Mention Sub-
standard		 Doubtful Total Pass Special Mention Sub-
standard		 Doubtful Total
Real estate - construction$1,320,007
 $12,262
 $10,715
 $—
 $1,342,984
 $1,182,554
 $1,062
 $12,740
 $10
 $1,196,366
Real estate - owner-occupied2,308,176
 25,114
 37,126
 2,727
 2,373,143
 2,328,999
 25,526
 41,297
 —
 2,395,822
Real estate - non-owner-occupied6,011,800
 48,323
 39,832
 2,188
 6,102,143
 5,687,963
 78,009
 26,512
 3,633
 5,796,117
Commercial and industrial6,018,866
 53,075
 73,667
 16,151
 6,161,759
 5,586,482
 52,632
 73,853
 24,050
 5,737,017
Total$15,658,849
 $138,774
 $161,340
 $21,066
 $15,980,029
 $14,785,998
 $157,229
 $154,402
 $27,693
 $15,125,322
 June 30, 2019 December 31, 2018
(in thousands)Current 30+ Days Past Due Total Current 30+ Days Past Due Total
Residential mortgage$4,459,706
 $78,488
 $4,538,194
 $4,290,152
 $69,004
 $4,359,156
Consumer - home equity2,113,237
 34,660
 2,147,897
 2,258,659
 46,035
 2,304,694
Consumer - other682,860
 6,331
 689,191
 721,231
 9,412
 730,643
Total$7,255,803
 $119,479
 $7,375,282
 $7,270,042
 $124,451
 $7,394,493
 September 30, 2018 December 31, 2017
(Dollars in thousands)Current 30+ Days Past Due Total Current 30+ Days Past Due Total
Residential mortgage$4,212,447
 $87,716
 $4,300,163
 $2,962,043
 $94,309
 $3,056,352
Consumer - home equity2,306,712
 43,464
 2,350,176
 2,250,205
 42,070
 2,292,275
Consumer - other723,183
 7,461
 730,644
 645,498
 10,759
 656,257
Total$7,242,342
 $138,641
 $7,380,983
 $5,857,746
 $147,138
 $6,004,884



Impaired Loans
Information on the Company’s investment in impaired loans, which include all TDRs and all other non-accrual loans evaluated or measured individually for impairment for purposes of determining the ALLL, is presented in the following tables as of and for the periods indicated.
September 30, 2018 December 31, 2017June 30, 2019 December 31, 2018
Unpaid Principal Balance Recorded Investment Related Allowance Unpaid Principal Balance Recorded Investment Related AllowanceUnpaid Principal Balance Recorded Investment Related Allowance Unpaid Principal Balance Recorded Investment Related Allowance
(Dollars in thousands) 
(in thousands)Unpaid Principal Balance Recorded Investment Related Allowance Unpaid Principal Balance Recorded Investment Related Allowance
With no related allowance recorded:            
Commercial real estate - construction$11,176
 $11,176
 $—
 $13,763
 $13,013
 $—
Commercial real estate - owner-occupied33,816
 33,816
 —
 50,867
 44,482
 —
Commercial real estate - non-owner-occupied21,996
 21,996
 —
 15,370
 14,975
 —
Real estate - construction$12,138
 $11,139
 $—
 $10,261
 $9,262
 $—
Real estate - owner-occupied27,142
 27,064
 —
 25,037
 19,044
 —
Real estate - non-owner-occupied21,234
 20,271
 —
 15,265
 14,288
 —
Commercial and industrial41,717
 41,717
 —
 103,013
 70,254
 —
33,989
 30,157
 —
 55,554
 43,886
 —
Residential mortgage1,254
 1,241
 —
 2,004
 2,001
 —
32,448
 31,645
 —
 1,244
 1,221
 —
Consumer - home equity701
 701
 —
 5,906
 5,634
 —
1,995
 1,998
 —
 4,183
 4,176
 —
Consumer - other—
 —
 —
 75
 75
 —
—
 —
 —
 —
 —
 —
                      
With an allowance recorded:                      
Commercial real estate - construction146
 146
 (11) 238
 156
 (19)
Commercial real estate - owner-occupied3,987
 3,987
 (535) 13,314
 13,287
 (949)
Commercial real estate - non-owner-occupied2,348
 2,348
 (2,104) 6,051
 5,872
 (620)
Real estate - construction140
 127
 (2) 228
 140
 (11)
Real estate - owner-occupied8,811
 8,248
 (4,061) 5,032
 4,773
 (520)
Real estate - non-owner-occupied7,683
 7,482
 (610) 6,445
 6,398
 (105)
Commercial and industrial33,894
 33,908
 (10,471) 35,306
 32,162
 (12,736)37,969
 24,703
 (7,656) 46,387
 27,915
 (12,646)
Residential mortgage5,420
 4,989
 (154) 5,179
 4,748
 (172)10,366
 9,718
 (349) 5,870
 5,358
 (145)
Consumer - home equity28,700
 28,695
 (2,469) 27,189
 26,575
 (2,358)33,194
 32,702
 (2,662) 29,284
 28,818
 (2,427)
Consumer - other4,526
 4,467
 (504) 5,354
 4,893
 (498)4,743
 4,427
 (514) 4,956
 4,446
 (488)
Total$189,681
 $189,187
 $(16,248) $283,629
 $238,127
 $(17,352)$231,852
 $209,681
 $(15,854) $209,746
 $169,725
 $(16,342)
Total commercial loans and leases$149,080
 $149,094
 $(13,121) $237,922
 $194,201
 $(14,324)$149,106
 $129,191
 $(12,329) $164,209
 $125,706
 $(13,282)
Total mortgage loans6,674
 6,230
 (154) 7,183
 6,749
 (172)
Total consumer loans33,927
 33,863
 (2,973) 38,524
 37,177
 (2,856)
Total residential mortgage loans42,814
 41,363
 (349) 7,114
 6,579
 (145)
Total consumer and other loans39,932
 39,127
 (3,176) 38,423
 37,440
 (2,915)















Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Six Months Ended June 30, 2019 Six Months Ended June 30, 2018
Average
Recorded Investment		 Interest
Income Recognized		 Average
Recorded Investment		 Interest
Income Recognized		 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income RecognizedAverage
Recorded Investment		 Interest
Income Recognized		 Average
Recorded Investment		 Interest
Income Recognized		 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized
(Dollars in thousands) 
(in thousands)Average
Recorded Investment		 Interest
Income Recognized		 Average
Recorded Investment		 Interest
Income Recognized		 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized
With no related allowance recorded:                
Commercial real estate - construction$10,806
 $164
 $2,722
 $11
 $10,371
 $460
 $2,538
 $57
Commercial real estate - owner-occupied34,118
 209
 36,850
 88
 34,505
 903
 37,185
 517
Commercial real estate - non-owner-occupied22,091
 249
 7,858
 83
 22,988
 746
 7,908
 231
Real estate - construction$21,339
 $341
 $12,952
 $198
 $21,340
 $678
 $12,597
 $393
Real estate - owner-occupied24,134
 326
 30,899
 209
 27,314
 569
 31,265
 609
Real estate - non-owner-occupied20,305
 100
 15,929
 121
 20,360
 207
 16,558
 250
Commercial and industrial43,409
 523
 64,863
 240
 40,564
 1,543
 71,611
 975
29,315
 151
 37,859
 389
 29,816
 331
 37,806
 836
Residential mortgage1,254
 9
 1,114
 13
 1,271
 36
 1,129
 36
27,129
 235
 1,272
 13
 18,804
 374
 1,280
 27
Consumer - home equity705
 2
 364
 6
 708
 16
 367
 18
1,998
 22
 1,910
 28
 1,943
 44
 1,922
 52
With an allowance recorded:                              
Commercial real estate - construction148
 —
 166
 1
 151
 1
 209
 5
Commercial real estate - owner-occupied4,006
 83
 11,154
 89
 4,044
 102
 11,206
 269
Commercial real estate - non-owner-occupied2,398
 20
 4,874
 29
 2,442
 76
 4,808
 109
Real estate - construction131
 1
 152
 —
 135
 2
 152
 —
Real estate - owner-occupied8,578
 57
 19,582
 82
 8,628
 116
 19,696
 192
Real estate - non-owner-occupied7,557
 42
 1,631
 14
 7,643
 122
 1,705
 39
Commercial and industrial40,357
 150
 55,042
 261
 47,098
 720
 57,020
 788
23,891
 177
 38,134
 158
 21,400
 371
 38,981
 357
Residential mortgage5,014
 50
 4,290
 38
 5,066
 149
 4,338
 115
9,833
 73
 4,657
 47
 9,881
 169
 4,678
 92
Consumer - home equity28,577
 305
 23,730
 254
 27,905
 892
 21,639
 690
32,885
 332
 28,595
 304
 32,341
 656
 28,173
 600
Consumer - other4,710
 65
 4,330
 64
 4,884
 208
 4,010
 180
4,533
 63
 5,220
 67
 4,597
 128
 5,267
 139
Total$197,593
 $1,829
 $217,357
 $1,177
 $201,997
 $5,852
 $223,968
 $3,990
$211,628
 $1,920
 $198,792
 $1,630
 $204,202
 $3,767
 $200,080
 $3,586
Total commercial loans and leases$157,333
 $1,398
 $183,529
 $802
 $162,163
 $4,551
 $192,485
 $2,951
$135,250
 $1,195
 $157,138
 $1,171
 $136,636
 $2,396
 $158,760
 $2,676
Total mortgage loans6,268
 59
 5,404
 51
 6,337
 185
 5,467
 151
Total consumer loans33,992
 372
 28,424
 324
 33,497
 1,116
 26,016
 888
Total residential mortgage loans36,962
 308
 5,929
 60
 28,685
 543
 5,958
 119
Total consumer and other loans39,416
 417
 35,725
 399
 38,881
 828
 35,362
 791
As of SeptemberJune 30, 20182019 and December 31, 2017,2018, the Company was not committed to lend a material amount of additional funds to any customer whose loan was classified as impaired or as a troubled debt restructuring.TDR.



NOTE 76 – GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Changes to the carrying amount of goodwill by reporting unit for the ninesix months ended SeptemberJune 30, 2018,2019, and the year ended December 31, 20172018 are provided in the following table:
(in thousands)IBERIABANK Mortgage LTC Total
Balance, December 31, 2017$1,160,559
 $23,178
 $5,165
 $1,188,902
Goodwill acquired and adjustments during the year43,251
 —
 3,380
 46,631
Balance, December 31, 2018$1,203,810
 $23,178
 $8,545
 $1,235,533
Goodwill acquired and adjustments during the year—
 —
 —
 —
Balance, June 30, 2019$1,203,810
 $23,178
 $8,545
 $1,235,533

(Dollars in thousands)IBERIABANK Mortgage LTC Total
Balance, December 31, 2016$698,513
 $23,178
 $5,165
 $726,856
Goodwill acquired during the year462,046
 —
 —
 462,046
Balance, December 31, 2017$1,160,559
 $23,178
 $5,165
 $1,188,902
Goodwill acquired during the year (preliminary allocation) and adjustments28,621
 —
 3,380
 32,001
Balance, September 30, 2018$1,189,180
 $23,178
 $8,545
 $1,220,903
On March 23,The goodwill acquired and adjustments made during 2018 were the Company completed its acquisition of Gibraltar. In connection with the acquisition, the Company recorded $49.6 million of goodwill based on preliminary fair value estimatesresult of the assets acquired and liabilities assumed in the business combination as of September 30, 2018. On January 12, 2018, the Company's subsidiary, LTC, completed its acquisition of SolomonParks. In connection with the acquisition, LTC recorded $3.4 million of goodwill based on preliminary estimates. In addition, measurement period adjustments to preliminary fair value estimates related to the acquisition of Sabadell United, Gibraltar, and SolomonParks acquisitions. There were updatedno changes to goodwill during the six months ended June 30, 2018, reducing goodwill by $21.0 million. The accounting for the acquisition of Sabadell United was complete as of June 30, 2018. See Note 3 for additional information regarding these acquisitions.2019.
The Company performed the required annual goodwill impairment test as of October 1, 2017.2018. The Company’s annual impairment test did not indicate impairment in any of the Company’s reporting units as of the testing date. Following the testing date, management evaluated the events and changes that could indicate that goodwill might be impaired and concluded that a subsequent interim test was not necessary. The Company is currently in the process of performing its annual impairment test as of October 1, 2018.
Mortgage Servicing Rights
Mortgage servicing rights are recorded at the lower of cost or market value in “otherother intangible assets”assets on the Company's consolidated balance sheets and amortized over the remaining servicing life of the loans, with consideration given to prepayment assumptions. Mortgage servicing rights had the following carrying values as of the periods indicated:
 June 30, 2019 December 31, 2018
 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
(in thousands)     
Mortgage servicing rights$16,885
 $(5,486) $11,399
 $13,612
 $(4,806) $8,806
 September 30, 2018 December 31, 2017
 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
(Dollars in thousands)     
Mortgage servicing rights$12,125
 $(4,562) $7,563
 $9,588
 $(3,931) $5,657


Title Plant
The Company held title plant assets recorded in “otherother intangible assets”assets on the Company's consolidated balance sheets totaling $6.8 million on Septemberat both June 30, 20182019 and $6.7 million on December 31, 2017. The increase in title plant assets was the result of the SolomonParks acquisition during the first quarter of 2018. No events or changes in circumstances occurred during the ninesix months ended SeptemberJune 30, 20182019 to suggest the carrying value of the title plant was not recoverable.

Intangible assets subject to amortization
In connection with the acquisition of Gibraltar, the Company recorded $18.5 million of core deposit intangible assets. Core deposit intangible assets are subject to amortization over a ten year period. In connection with the acquisition of SolomonParks, the Company recorded $156 thousand of non-compete agreement intangible assets. Non-compete agreement intangible assets are subject to amortization over a five year period. Definite-lived intangible assets had the following carrying values included in “otherother intangible assets”assets on the Company’s consolidated balance sheets as of the periods indicated:
 June 30, 2019 December 31, 2018
(in thousands)Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Core deposit intangible assets$136,183
 $(72,870) $63,313
 $136,183
 $(63,213) $72,970
Customer relationship intangible asset1,385
 (1,354) 31
 1,385
 (1,323) 62
Non-compete agreement206
 (94) 112
 206
 (72) 134
Total$137,774
 $(74,318) $63,456
 $137,774
 $(64,608) $73,166



 September 30, 2018 December 31, 2017
(Dollars in thousands)Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Core deposit intangible assets$136,183
 $(58,161) $78,022
 $127,957
 $(51,971) $75,986
Customer relationship intangible asset1,385
 (1,305) 80
 1,143
 (996) 147
Non-compete agreement206
 (60) 146
 63
 (39) 24
Total$137,774
 $(59,526) $78,248
 $129,163
 $(53,006) $76,157



NOTE 87 – DERIVATIVE INSTRUMENTS AND OTHER HEDGING ACTIVITIES
The Company enters into derivative financial instruments to manage interest rate risk, exposures related to liquidity and credit risk, and to facilitate customer transactions. The primary types of derivatives usedutilized by the Company for its risk management strategies include interest rate swap agreements, interest rate collars, interest rate floors, foreign exchange contracts, interest rate lock commitments, forward sales commitments, written and purchased options, and credit derivatives. All derivative instruments are recognized on the consolidated balance sheets as "other assets"other assets or "other liabilities"other liabilities at fair value, as required by ASC Topic 815, Derivatives and Hedging.regardless of whether a right of offset exists.
Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. The Company enters into interest rate swap agreements in a cash flow hedge to convert forecasted variable interest payments to a fixed rate on its junior subordinated debt. In addition, the Company has entered into an interest rate collarcollars and interest rate floors and designated the instrumentinstruments as a cash flow hedgehedges of the risk of fluctuations in interest rates, thereby reducing the Company's exposure to variability in cash flows from variable-rate loans.
For cash flow hedges, the effective and ineffective portions of the gain or loss related to the derivative instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings when the forecasted transaction affects earnings or when the hedge is terminated, per the Company’s early adoption of ASU No. 2017-12, Derivatives and Hedging (ASC 815): Targeted Improvements to Accounting for Hedging Activities, as of January 1, 2018.terminated. In applying hedge accounting for derivatives, the Company establishes and documents a method for assessing the effectiveness of the hedging derivative and a measurement approach for determining the ineffective aspect of the hedge upon the inception of the hedge.
For derivative instruments that are not designated as hedging instruments, changes in the fair value of the derivatives are recognized in earnings immediately.
Information pertaining to outstanding derivative instruments is as follows:
  Derivative Assets - Fair Value Derivative Liabilities - Fair Value
(in thousands) June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018
Derivatives designated as hedging instruments:        
Interest rate contracts $21,015
 $3,469
 $—
 $—
Total derivatives designated as hedging instruments $21,015
 $3,469
 $—
 $—
Derivatives not designated as hedging instruments:        
Interest rate contracts:        
       Customer swaps - upstream $24
 $474
 $5,041
 $191
       Customer swaps - downstream 76,944
 16,946
 1,760
 17,812
Foreign exchange contracts —
 18
 —
 18
Forward sales contracts 146
 630
 1,834
 750
Written and purchased options 9,574
 5,490
 3,871
 3,310
Other contracts 44
 21
 93
 43
Total derivatives not designated as hedging instruments $86,732
 $23,579
 $12,599
 $22,124
Total $107,747
 $27,048
 $12,599
 $22,124

 Balance Sheet Location Derivative Assets - Fair Value Balance Sheet Location Derivative Liabilities - Fair Value
(Dollars in thousands) September 30, 2018 December 31, 2017  September 30, 2018 December 31, 2017
Derivatives designated as hedging instruments under ASC Topic 815:           
Interest rate contractsOther assets $48
 $—
 Other liabilities $—
 $—
Total derivatives designated as hedging instruments under ASC Topic 815  $48
 $—
   $—
 $—
Derivatives not designated as hedging instruments under ASC Topic 815:           
Interest rate contractsOther assets $3,665
 $20,446
 Other liabilities $37,417
 $16,191
Foreign exchange contractsOther assets 13
 7
 Other liabilities 13
 7
Forward sales contractsOther assets 1,084
 136
 Other liabilities 44
 279
Written and purchased optionsOther assets 7,754
 10,654
 Other liabilities 5,282
 8,656
Other contractsOther assets 6
 22
 Other liabilities 8
 21
Total derivatives not designated as hedging instruments under ASC Topic 815  $12,522
 $31,265
   $42,764
 $25,154
Total  $12,570
 $31,265
   $42,764
 $25,154




   Derivative Assets - Notional Amount   Derivative Liabilities - Notional Amount
(in thousands)  June 30, 2019 December 31, 2018   June 30, 2019 December 31, 2018
Derivatives designated as hedging instruments:           
Interest rate contracts  $800,000
 $408,500
   $108,500
 $—
Total derivatives designated as hedging instruments  $800,000
 $408,500
   $108,500
 $—
            
Derivatives not designated as hedging instruments:           
Interest rate contracts:           
       Customer swaps - upstream  $375,805
 $919,653
   $1,885,919
 $701,257
       Customer swaps - downstream  1,885,919
 701,257
   375,805
 919,653
Foreign exchange contracts  —
 1,202
   —
 1,202
Forward sales contracts  46,143
 1,140
   262,566
 143,179
Written and purchased options  350,875
 229,333
   137,167
 140,645
Other contracts  54,568
 50,527
   113,396
 85,623
Total derivatives not designated as hedging instruments  $2,713,310
 $1,903,112
   $2,774,853
 $1,991,559
Total  $3,513,310
 $2,311,612
   $2,883,353
 $1,991,559

   Derivative Assets - Notional Amount   Derivative Liabilities - Notional Amount
(Dollars in thousands)  September 30, 2018 December 31, 2017   September 30, 2018 December 31, 2017
Derivatives designated as hedging instruments under ASC Topic 815:           
Interest rate contracts  $258,500
 $—
   $—
 $108,500
Total derivatives designated as hedging instruments under ASC Topic 815  $258,500
 $—
   $—
 $108,500
            
Derivatives not designated as hedging instruments under ASC Topic 815:           
Interest rate contracts  $1,489,111
 $1,218,464
   $1,489,111
 $1,218,464
Foreign exchange contracts  933
 268
   933
 268
Forward sales contracts  169,276
 82,347
   21,684
 142,578
Written and purchased options  275,473
 278,638
   143,912
 165,198
Other contracts  33,570
 29,755
   62,142
 86,744
Total derivatives not designated as hedging instruments under ASC Topic 815  $1,968,363
 $1,609,472
   $1,717,782
 $1,613,252
Total  $2,226,863
 $1,609,472
   $1,717,782
 $1,721,752


The Company has entered into risk participation agreements with counterparties to transfer or assume credit exposures related to interest rate derivatives. The notional amounts of risk participation agreements sold were $62.1$113.4 million and $86.7$85.6 million at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively. Assuming all underlying third party customers referenced in the swap contracts defaulted at SeptemberJune 30, 20182019 and December 31, 2017,2018, the exposure from these agreements would not be material based on the fair value of the underlying swaps.
The Company is party to collateral agreements with certain derivative counterparties. Such agreements require that the Company maintain collateral based on the fair values of individual derivative transactions. In the event of default by the Company, the counterparty would be entitled to the collateral.
At SeptemberJune 30, 2019 and December 31, 2018, the Company was not required to post collateral due to the Company's derivative position at the balance sheet date. At June 30, 2019 and December 31, 2017,2018, the Company was required to post $552 thousand in cash or securities as collateral for its derivative transactions, which is included in "interest-bearing deposits in banks" on the Company’s consolidated balance sheets. Effective January 3, 2017, the Chicago Mercantile Exchange and LCH.Clearnet Limited amended their rulebooks to legally characterize variation margin payments for over-the-counter derivatives they clear as settlements of the derivatives' exposure rather than collateral against the exposures. In light of changes to the aforementioned rulebooks, the Board of Governors of the Federal Reserve System, the OCC and the FDIC issued guidance effective August 14, 2017, which is consistent with the SEC's accounting guidance, that allows institutions to treat centrally-cleared derivatives as settled for purposes of the capital rule. At September 30, 2018 and December 31, 2017, the Company was required to post $44.4$78.4 million and $5.1$35.8 million, respectively, in variation margin payments for its derivative transactions, which is required to be netted against the fair value of the derivatives in "other assets/other liabilities"assets or other liabilities on the consolidated balance sheets. The Company does not anticipate additional assets will be required to be posted as collateral, nor does it believe additional assets would be required to settle its derivative instruments immediately if contingent features were triggered at SeptemberJune 30, 2018.2019. The Company’s master netting agreements represent written, legally enforceable bilateral agreements that (1) create a single legal obligation for all individual transactions covered by the master agreement and (2) in the event of default, provide the non-defaulting counterparty the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to promptly liquidate or set-off collateral posted by the defaulting counterparty. As permitted by U.S. GAAP, the Company does not offset fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral against recognized fair value amounts of derivatives executed with the same counterparty under a master netting agreement.


The following table reconciles the gross amounts presented in the consolidated balance sheets to the net amounts that would result in the event of offset.
September 30, 2018June 30, 2019
Gross Amounts Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet NetGross Amounts Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet Net
(Dollars in thousands) Derivatives 
Collateral  (1)
 
(in thousands)Gross Amounts Presented in the Balance Sheet Derivatives Collateral  Net
Derivatives subject to master netting arrangements            
Derivative assets              
Interest rate contracts designated as hedging instruments$48
 $—
 $—
 $48
$21,015
 $—
 $—
 $21,015
Interest rate contracts not designated as hedging instruments3,665
 (248) —
 3,417
76,968
 (5,129) —
 71,839
Written and purchased options5,267
 —
 —
 5,267
3,832
 —
 —
 3,832
Total derivative assets subject to master netting arrangements$8,980
 $(248) $—
 $8,732
$101,815
 $(5,129) $—
 $96,686


 

 

 



 

 

 

Derivative liabilities              
Interest rate contracts not designated as hedging instruments$37,417
 $(248) $—
 $37,169
$6,801
 $(5,129) $—
 $1,672
Written and purchased options5,267
 —
 —
 5,267
3,832
 —
 —
 3,832
Total derivative liabilities subject to master netting arrangements$42,684
 $(248) $—
 $42,436
$10,633
 $(5,129) $—
 $5,504
(1) Consists of cash collateral recorded at cost, which approximates fair value, and investment securities.
 December 31, 2017
 Gross Amounts Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet Net
(Dollars in thousands) Derivatives 
Collateral (1)
 
Derivatives subject to master netting arrangements       
Derivative assets       
Interest rate contracts not designated as hedging instruments$20,446
 $(12,469) $—
 $7,977
Written and purchased options8,610
 —
 —
 8,610
Total derivative assets subject to master netting arrangements$29,056
 $(12,469) $—
 $16,587
        
Derivative liabilities       
Interest rate contracts designated as hedging instruments$—
 $—
 $—
 $—
Interest rate contracts not designated as hedging instruments16,191
 (12,469) (552) 3,170
Total derivative liabilities subject to master netting arrangements$16,191
 $(12,469) $(552) $3,170
(1) Consists of cash collateral recorded at cost, which approximates fair value, and investment securities.
 December 31, 2018
 Gross Amounts Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet Net
(in thousands) Derivatives Collateral 
Derivatives subject to master netting arrangements       
Derivative assets       
Interest rate contracts designated as hedging instruments$3,469
 $—
 $—
 $3,469
Interest rate contracts not designated as hedging instruments17,420
 (619) —
 16,801
Written and purchased options3,285
 —
 —
 3,285
Total derivative assets subject to master netting arrangements$24,174
 $(619) $—
 $23,555
        
Derivative liabilities       
Interest rate contracts not designated as hedging instruments$18,003
 $(619) $—
 $17,384
Written and purchased options3,285
 —
 —
 3,285
Total derivative liabilities subject to master netting arrangements$21,288
 $(619) $—
 $20,669
During the ninethree and six months ended SeptemberJune 30, 20182019 and 2017,2018, the Company hasdid not reclassifiedreclassify into earnings any gain or loss as a result of the discontinuance of cash flow hedges because it was probable the original forecasted transaction would not occur by the end of the originally specified term.
At SeptemberJune 30, 2018,2019, the Company doesdid not expect to reclassify a material amount from accumulated other comprehensive income into interest income over the next twelve months for derivatives that will be settled.


At SeptemberJune 30, 20182019 and 2017,2018, and for the three and ninesix months then ended, information pertaining to the effect of the hedging instruments on the consolidated financial statements iswas as follows:
               Location of Gain (Loss) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing) Amount of Gain (Loss) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing)
   Amount of Gain (Loss) Recognized in OCI, net of taxes Location of Gain (Loss) Reclassified from Accumulated OCI into Income Amount of Gain (Loss) Reclassified from Accumulated OCI into Income, net of taxes  
       
       
      
(Dollars in thousands) For the Three Months Ended September 30,
Derivatives in ASC Topic 815 Cash Flow Hedging Relationships2018 2017  2018 2017   2018 2017
 Interest rate contracts$818
 $(158) Interest expense$(22) $(101) Interest expense $—
 $—
Total $818
 $(158)  $(22) $(101)   $—
 $—
               Location of Gain (Loss) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing) Amount of Gain (Loss) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing)
   Amount of Gain (Loss) Recognized in OCI, net of taxes Location of Gain (Loss) Reclassified from Accumulated OCI into Income Amount of Gain (Loss) Reclassified from Accumulated OCI into Income, net of taxes  
       
       
      
(Dollars in thousands) For the Nine Months Ended September 30,
Derivatives in ASC Topic 815 Cash Flow Hedging Relationships2018 2017  2018 2017   2018 2017
 Interest rate contracts$4,762
 $(1,081) Other income (expense)$(178) $(249) Other income (expense) $—
 $—
Total $4,762
 $(1,081)  $(178) $(249)   $—
 $—
   Amount of Gain (Loss) Recognized in OCI, net of taxes Location of Gain (Loss) Reclassified from AOCI into Income Amount of Gain (Loss) Reclassified from AOCI into Income, net of taxes Location of Gain (Loss) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing) Amount of Gain (Loss) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing)
       
       
   Total Including Component Excluding Component  Total Including Component Excluding Component  Total Including Component Excluding Component
(in thousands) For the Three Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships 2019   2019   2019

Interest rate contracts $4,441
 $5,982
 $(1,541) Interest expense $(78) $179
 $(257) Interest expense $—
 $—
 $—
                        
                        
  2018   2018   2018

Interest rate contracts $1,395
 $1,395
 $—
 Interest expense $(40) $(40) $—
 Interest expense $—
 $—
 $—
   Amount of Gain (Loss) Recognized in OCI, net of taxes Location of Gain (Loss) Reclassified from AOCI into Income Amount of Gain (Loss) Reclassified from AOCI into Income, net of taxes Location of Gain (Loss) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing) Amount of Gain (Loss) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing)
       
       
   Total Including Component Excluding Component  Total Including Component Excluding Component  Total Including Component Excluding Component
(in thousands) For the Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships 2019   2019   2019

Interest rate contracts $2,256
 $2,884
 $(628) Interest expense $(305) $110
 $(415) Interest expense $—
 $—
 $—
                        
                        
  2018   2018   2018

Interest rate contracts $3,944
 $3,944
 $—
 Interest expense $(156) $(156) $—
 Interest expense $—
 $—
 $—












Information pertaining to the effect of derivatives not designated as hedging instruments on the consolidated financial statements as of SeptemberJune 30, iswas as follows:
Location of Gain (Loss) Recognized in  Income on Derivatives Amount of Gain (Loss) Recognized in Income on DerivativesLocation of Gain (Loss) Recognized in Income on Derivatives Amount of Gain (Loss) Recognized in Income on Derivatives
For the Three Months Ended September 30, For the Nine Months Ended September 30,For the Three Months Ended June 30, For the Six Months Ended June 30,
(Dollars in thousands)2018 2017 2018 2017
(in thousands)Location of Gain (Loss) Recognized in Income on Derivatives 2019 2018 2019 2018
Interest rate contracts (1)
Other income $2,586
 $743
 $5,093
 $3,159
$2,513
 $1,458
 $6,694
 $2,507
Foreign exchange contractsOther income 7
 24
 17
 38
1
 5
 6
 10
Forward sales contractsMortgage income 948
 (2,007) 4,563
 (3,893)Mortgage income (3,111) 228
 (6,320) 3,615
Written and purchased optionsMortgage income (692) (462) 473
 (1,393)Mortgage income 1,660
 517
 3,523
 1,165
Other contractsOther income 1
 8
 (4) 17
Other income (18) (2) (27) (5)
Total $2,850
 $(1,694) $10,142
 $(2,072) $1,045
 $2,206
 $3,876
 $7,292
(1) Includes fees associated with customer interest rate contracts. 



NOTE 98 – INCOME TAXESLEASES


IBERIABANK as Lessee
The Company's provisionCompany leases certain branch and corporate offices, land and ATM facilities through operating leases with terms ranging from less than one year to 45 years. The Company has no financing leases (formerly capital leases). As discussed in Note 2, Recent Accounting Pronouncements, the Company adopted new guidance for income taxesleases on January 1, 2019 which requires that leases, whether classified as operating leases or financing leases, to be accounted for as the acquisition of a right-of-use asset (ROU asset) and a related lease liability recorded at the present value of the lease payments less any lease incentives. The ROU asset represents the Company’s right to use an underlying asset for the threelease term and nine months ended September 30, 2018is included in other assets on the Company’s consolidated balance sheets. The lease liability represents the Company’s obligation to make lease payments and 2017 is included in other liabilities in the Company’s consolidated balance sheets. The cost of the lease is recognized on a straight-line basis over the lease term as lease expense. Prior to January 1, 2019, operating leases were not recorded on the balance sheet. See Note 2, Recent Accounting Pronouncements, for further discussion of the adoption of this new guidance.
Subsequent to the adoption of ASC 842 on January 1, 2019, the Company reviews new lease and service contracts to determine if the contracts contain an embedded lease. For leases that do not provide an implicit rate, the Company uses the corresponding FHLB Advance rate based on the estimated annual effective tax rate, plus discrete items.

The following table presentslease term at commencement in determining the provision for income taxes andpresent value of lease payments. For leases with variable lease payments, the effective tax rates forpresent value will be determined using the periods indicated.

 Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands)2018 2017 2018 2017
Income before income tax expense$131,866
 $48,450
 $318,620
 $201,493
Income tax expense30,401
 18,806
 78,410
 69,358
Effective tax rate23.1% 38.8% 24.6% 34.4%

The difference betweenindex at the Company's effective tax rate for the three and nine months ended September 30, 2018 and 2017 and the U.S. statutory tax rates of 21% and 35%, respectively, primarily relates to tax-exempt income, non-deductible expenses, state income taxes (net of federal income tax benefit), and the recognition of tax credits. The effective tax rate may vary significantlylease commencement date. Changes in variable rent payments due to fluctuationssubsequent changes in the amount and source of pretax income, changesindex or rate do not result in amounts of non-deductible expenses, and timinga re-measurement of the recognition of tax credits. In addition, the difference between the Company's effective tax rate for the nine months ended September 30, 2018 and the U.S. statutory tax rate of 21% primarily relates to the discrete item of $6.6 million in income tax expense due to the write-down of deferred tax assets in the second quarter of 2018 associated with the finalization of the accounting for the Sabadell United acquisition and the related impact of the Tax Act on those adjustments. This adjustment increased the effective tax rate for the nine months ended September 30, 2018 by 2.1% from 22.5% to 24.6%.

Provisional amounts in effective tax rate

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (the "Tax Act") into law. Under ASC 740, the effects of changes in tax rates and lawsROU asset or lease liability, but are recognized as expense in the period in which they occur. Certain of the new legislation is enacted. InCompany’s leases contain options to either renew, extend or terminate the caselease. As of U.S. federal income taxes,June 30, 2019, no material extensions or terminations were considered reasonably certain, and as such, were not included in the enactment date ismeasurement of the datelease liability and ROU asset. The Company also has lease agreements with lease and non-lease components, which are generally accounted for separately. Non-lease components, which primarily consist of common area maintenance, utilities, and janitorial services, are based on the bill becomes law (i.e., upon presidential signature). Among other provisions,stand-alone price of the most significant toservices and expensed as incurred.
Operating lease expense for the three and six months ended June 30, 2019 totaled $6.9 million and $13.6 million, respectively. During the three and six months ended June 30, 2019, the Company ispaid $7.7 million and $14.4 million, respectively, for amounts included in the reductionmeasurement of lease liabilities and $8.0 million and $13.2 million, respectively, to obtain ROU assets.
The following summarizes the ROU asset and lease liabilities as of June 30, 2019:
(in thousands)June 30, 2019
Right-of-use assets$98,723
Lease liabilities119,463
Weighted average remaining lease term7.9 years
Weighted average discount rate3.3%


Maturities of operating lease liabilities as of June 30, 2019 were as follows:
(in thousands) 
2019$13,345
202025,055
202121,221
202218,154
202313,522
2024 and thereafter45,371
Total operating lease payments$136,668
Less: Imputed interest17,205
Total lease liabilities$119,463








As of June 30, 2019, the Company had not entered into any material leases that had not yet commenced.
IBERIABANK as Lessor
As a lessor, the Company engages in the leasing of equipment to commercial customers primarily through direct financing and sales-type leases. Direct financing and sales-type leases are similar to other forms of installment lending in that lessors generally do not retain benefits and risks incidental to ownership of the corporateproperty subject to leases. Such arrangements are essentially financing transactions that permit lessees to acquire and use property. The new guidance on leases discussed above did not have a significant impact on the lessor model of accounting. As lessor, the sum of all minimum lease payments over the lease term and the estimated residual value, less unearned interest income, tax rate from 35% to 21%. With respect tois recorded as the legislation, the Company recognized a provisional one-time increase in tax expense of $51.0 million as of December 31, 2017 due to a re-measurement of deferred tax assets and liabilities resulting from the decreasenet investment in the corporatelease on the commencement date and is included in loans and leases, net of unearned income tax rate. The Company made no adjustmentin the consolidated balance sheet. Interest income is accrued as earned over the term of the lease based on the net investment in leases. Fees incurred to originate the provisional amounts duringlease are deferred on the third quarter of 2018. During the nine months ended September 30, 2018, the Companycommencement date and recognized as an adjustment of $6.6 million in income tax expense duethe yield on the lease.
The Company’s portfolio of direct financing and sales-type leases contains terms of 4 to 20 years. Some of these leases contain options to extend the write-down of deferred tax assetsleases for up to 12 months and/or to terminate the lease within one year. These direct financing and sales-type leases typically include a payment structure set at lease inception and do not provide any additional services. Expenses associated with the finalizationleased equipment, such as maintenance and insurance, are paid by the lessee directly to third parties. The lease agreement typically contains an option for the purchase of the accounting forleased property by the Sabadell United acquisition andlessee at the related impactend of the Tax Act on those adjustments. This adjustment increasedlease term at either the year-to-date effective tax rate by 2.1% from 22.5%property’s residual value or a specified price. In all cases, the Company expects to 24.6%. The accounting forsell or re-lease the tax effectsequipment at the end of the Tax Act remained incompletelease term. Due to the nature and structure of the Company’s direct financing and sales-type leases, there is no selling profit or loss on these transactions.
At a lease’s inception, the Company determines the expected residual value of the leased property at the end of the lease term based on the type of equipment leased, location and usage, as well as the contractual return provisions in the lease agreement. Additionally, the Company utilizes multiple market sources of data to establish equipment values and in many cases engages certified appraisers to provide valuation analyses. In order to manage the risk associated with the residual value of its leased assets, lease agreements typically include various provisions designed to protect the value of the leased property, such as contractual equipment maintenance, use and return provisions; remarketing agreements; and lessee guarantees. In a few cases, the Company also obtains third-party guarantees to further manage residual risk in the portfolio. On an annual basis, leased properties with material residual values are reviewed for impairment.
The components of the Company’s net investment in leases were as follows:
(in thousands)June 30, 2019
Lease payment receivable$259,103
Unguaranteed residual assets28,903
Total net investment in leases$288,006


For the three and six months ended June 30, 2019, interest income for direct financing or sales-type leases totaled $2.3 million and $4.3 million. During the three and six months ended June 30, 2019, there was no profit or loss recognized at the commencement date for direct financing or sales-type leases.

Maturities of the Company's lease receivables as of SeptemberJune 30, 2018. The Company is in the process of analyzing certain aspects of the Tax Act, obtaining additional information, and refining its calculations, which could potentially affect the measurement of these balances. Information which could result in adjustment to the provisional amount includes, but is not limited to, the filing of the Sabadell United tax returns, elections or changes in IRS tax methods, and further analysis of tax positions. Our estimates may also be affected2019 were as we gain a more thorough understanding of the Tax Act. Consistent with the guidance provided under ASC 740, the Company recorded impacts from enactment of the Tax Act in the fourth quarter of 2017 subject to Staff Accounting Bulletin 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"). SAB 118 provides a measurement period not to extend beyond one year of the enactment date to adjust the accounting for certain elements of the tax reform.follows:

(in thousands)
2019$21,556
202042,696
202142,619
202237,866
202330,344
2024 and thereafter93,482
Total future minimum lease payments$268,563
Less: Imputed interest9,460
Lease receivables$259,103






NOTE 109 – SHAREHOLDERS' EQUITY, CAPITAL RATIOS AND OTHER REGULATORY MATTERS


Preferred Stock
On April 4, 2019, the Company issued and sold an aggregate of 4,000,000 depositary shares (the “Series D Depositary Shares”), each representing a 1/400th ownership interest in a share of the Company’s 6.100% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series D, par value $1.00 per share, (“Series D Preferred Stock”), with a liquidation preference of $10,000 per share of Series D Preferred Stock (equivalent to $25 per depositary share), which represents $100 million in aggregate liquidation preference.
Dividends will accrue and be payable on the Series D Preferred Stock, if declared by the Company's Board of Directors, and will be paid semi-annually on May 1 and November 1, in arrears, at an annual rate equal to (i) 6.100% for each period from the issuance date to May 1, 2024 and (ii) three-month LIBOR plus 3.859% for each period on or after August 1, 2024. The Company may redeem the Series D Preferred Stock at its option, subject to regulatory approval, as described in the Company’s Registration Statement on Form 8-A, filed with the Securities and Exchange Commission on April 4, 2019.
The following table presents a summary of the Company's non-cumulative perpetual preferred stock:
         June 30, 2019 December 31, 2018
 Issuance Date Earliest Redemption Date Annual Dividend Rate Liquidation Amount Carrying Amount Carrying Amount
(in thousands)   
Series B Preferred Stock8/5/2015 8/1/2025 6.625% $80,000
 $76,812
 $76,812
Series C Preferred Stock5/9/2016 5/1/2026 6.600% 57,500
 55,285
 55,285
Series D Preferred Stock4/4/2019 5/1/2024 6.100% 100,000
 96,388
 —
       $237,500
 $228,485
 $132,097
         September 30, 2018 December 31, 2017
 Issuance Date Earliest Redemption Date Annual Dividend Rate Liquidation Amount Carrying Amount Carrying Amount
(Dollars in thousands)   
Series B Preferred Stock8/5/2015 8/1/2025 6.625% $80,000
 $76,812
 $76,812
Series C Preferred Stock5/9/2016 5/1/2026 6.600% 57,500
 55,285
 55,285
       $137,500
 $132,097
 $132,097

Common Stock
During the second quarter ofIn 2018, the Company's Board of Directors authorized the repurchase of up to 1,137,5002,765,000 shares of IBERIABANK Corporation's outstanding common stock.
During the second quarter of 2019, the Company repurchased 1,759,849 common shares for approximately $134.8 million at a weighted average cost of $76.59 per share. For the six months ended June 30, 2019, the Company repurchased 2,147,770 common shares for approximately $164.7 million at a weighted average cost of $76.70 per share. During the six months ended June 30 2018, the Company repurchased 400,000 common shares for approximately $30.7 million at a weighted average cost of $76.67 per share. At June 30, 2019, the remaining common shares that could be repurchased under the plan approved by the Board in 2018 was 117,230 shares.

Subsequent to quarter-end, the Company repurchased the remaining shares available and announced in July 2019 a new Board-approved share repurchase program for up to 1,600,000 shares, or approximately 3% of total common shares outstanding at June 30, 2019. Stock repurchases under this program will be made from time to time, on the open market or in privately negotiated transactions. The timing of these repurchases will depend on market conditions and other requirements. The share repurchase program does not obligate the Company to repurchase any dollar amount or number of shares, and expires during the secondthird quarter of 2020.2021. The program may be extended, modified, suspended, or discontinued at any time.
During the first nine months of 2018, the Company repurchased 763,210 common shares for approximately $61.0 million at a weighted average cost of $79.99 per share, which included 335,000 common shares repurchased under a plan previously approved by the Board of Directors that has subsequently expired. At September 30, 2018, the remaining common shares that could be repurchased under the current Board-approved plan was 709,290 shares. Subsequent to quarter-end and through November 5, 2018,August 6, 2019, the Company repurchased the remaining307,230 common shares for approximately $52.6$23.0 million.
On March 23, 2018, as part of the Gibraltar acquisition, the Company issued 2,787,773 shares of common stock. The aggregate value of the acquisition consideration paid by the Company at the time of closing was approximately $214.7 million based on the Company's closing common stock price of $77.00 per share on March 23, 2018. Gibraltar common shareholders received 1.9749 shares of IBERIABANK Corporation common stock for each outstanding share of Gibraltar common stock. Refer to Note 3, Acquisition Activity, for further detail regarding the Gibraltar acquisition.
Regulatory Capital
The Company and IBERIABANK are subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy regulations and the regulatory framework for prompt corrective action, the Company and IBERIABANK, as applicable, must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Management believes that, as

As of SeptemberJune 30, 2018,2019, the Company and IBERIABANK met all capital adequacy requirements to which they are subject.
As of SeptemberJune 30, 2018,2019, the most recent notification from the FRB categorized IBERIABANK as well-capitalized under the regulatory framework for prompt corrective action (the prompt corrective action requirements are not applicable to the Company). To be categorized as well-capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since the notification that management believes have changed that categorization.

The Company’s and IBERIABANK’s actual capital amounts and ratios as of SeptemberJune 30, 20182019 and December 31, 20172018 are presented in the following tables:
(in thousands)June 30, 2019
Minimum Well-Capitalized Actual
Amount Ratio Amount Ratio Amount Ratio
Tier 1 Leverage           
Consolidated$1,199,612
 4.00% N/A
 N/A $2,913,362
 9.71%
IBERIABANK1,196,979
 4.00
 1,496,224
 5.00 2,857,238
 9.55
Common Equity Tier 1 (CET1)           
Consolidated$1,164,678
 4.50% N/A
 N/A $2,684,877
 10.38%
IBERIABANK1,161,409
 4.50
 1,677,591
 6.50 2,857,238
 11.07
Tier 1 Risk-Based Capital           
Consolidated$1,552,904
 6.00% N/A
 N/A $2,913,362
 11.26%
IBERIABANK1,548,546
 6.00
 2,064,728
 8.00 2,857,238
 11.07
Total Risk-Based Capital           
Consolidated$2,070,539
 8.00% N/A
 N/A $3,191,529
 12.33%
IBERIABANK2,064,728
 8.00
 2,580,910
 10.00 3,018,905
 11.70

(Dollars in thousands)September 30, 2018
Minimum Well-Capitalized Actual
Amount Ratio Amount Ratio Amount Ratio
Tier 1 Leverage           
Consolidated$1,156,436
 4.00% N/A
 N/A $2,789,740
 9.65%
IBERIABANK1,153,671
 4.00
 1,442,089
 5.00 2,768,917
 9.60
Common Equity Tier 1 (CET1) (1)
           
Consolidated$1,107,934
 4.50% N/A
 N/A $2,657,643
 10.79%
IBERIABANK1,105,391
 4.50
 1,596,676
 6.50 2,768,917
 11.27
Tier 1 Risk-Based Capital (1)
           
Consolidated$1,477,245
 6.00% N/A
 N/A $2,789,740
 11.33%
IBERIABANK1,473,855
 6.00
 1,965,140
 8.00 2,768,917
 11.27
Total Risk-Based Capital (1)
           
Consolidated$1,969,660
 8.00% N/A
 N/A $3,057,911
 12.42%
IBERIABANK1,965,140
 8.00
 2,456,425
 10.00 2,920,587
 11.89


 December 31, 2018
 Minimum Well-Capitalized Actual
 Amount Ratio Amount Ratio Amount Ratio
Tier 1 Leverage           
Consolidated$1,168,343
 4.00% N/A
 N/A $2,812,863
 9.63%
IBERIABANK1,165,537
 4.00
 1,456,921
 5.00 2,733,099
 9.38
Common Equity Tier 1 (CET1)           
Consolidated$1,125,405
 4.50% N/A
 N/A $2,680,766
 10.72%
IBERIABANK1,122,712
 4.50
 1,621,695
 6.50 2,733,099
 10.95
Tier 1 Risk-Based Capital           
Consolidated$1,500,540
 6.00% N/A
 N/A $2,812,863
 11.25%
IBERIABANK1,496,949
 6.00
 1,995,932
 8.00 2,733,099
 10.95
Total Risk-Based Capital           
Consolidated$2,000,720
 8.00% N/A
 N/A $3,084,764
 12.33%
IBERIABANK1,995,932
 8.00
 2,494,915
 10.00 2,888,500
 11.58

 December 31, 2017
 Minimum Well-Capitalized Actual
 Amount Ratio Amount Ratio Amount Ratio
Tier 1 Leverage           
Consolidated$1,073,381
 4.00% N/A
 N/A $2,509,496
 9.35%
IBERIABANK1,070,789
 4.00
 1,338,487
 5.00 2,437,275
 9.10
Common Equity Tier 1 (CET1) (1)
           
Consolidated$1,011,732
 4.50% N/A
 N/A $2,377,398
 10.57%
IBERIABANK1,009,553
 4.50
 1,458,243
 6.50 2,437,275
 10.86
Tier 1 Risk-Based Capital (1)
           
Consolidated$1,348,977
 6.00% N/A
 N/A $2,509,496
 11.16%
IBERIABANK1,346,070
 6.00
 1,794,760
 8.00 2,437,275
 10.86
Total Risk-Based Capital (1)
           
Consolidated$1,798,635
 8.00% N/A
 N/A $2,780,095
 12.37%
IBERIABANK1,794,760
 8.00
 2,243,450
 10.00 2,591,374
 11.55
(1)Minimum capital ratios are subject to a capital conservation buffer. In order to avoid limitations on distributions, including dividend payments, and certain discretionary bonus payments to executive officers, an institution must hold a capital conservation buffer above its minimum risk-based capital requirements. This capital conservation buffer is calculated as the lowest of the differences between the actual CET1 ratio, Tier 1 Risk-Based Capital Ratio, and Total Risk-Based Capital ratio and the corresponding minimum ratios. At SeptemberJune 30, 2018,2019, the required minimum capital conservation buffer was 1.875%, and will increase by 0.625% and be fully phased-in on January 1, 2019 at 2.50%. At SeptemberJune 30, 2018,2019, the capital conservation buffers of the Company and IBERIABANK were 4.42%4.33% and 3.89%3.70%, respectively.








NOTE 1110 – EARNINGS PER SHARE
Share-based payment awards that entitle holders to receive non-forfeitable dividends before vesting are considered participating securities that are included in the calculation of earnings per share using the two-class method. The two-class method is an earnings allocation formula under which earnings per share is calculated for common stock and participating securities according to dividends declared and participating rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends.
The following table presents the calculationcomputations of basic and diluted earnings per share for the periods indicated.were as follows:
 Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except per share data)2019 2018 2019 2018
Earnings Per Common Share - Basic:       
Net income$101,598
 $75,124
 $201,729
 $138,745
Less: Preferred stock dividends949
 949
 4,547
 4,547
Less: Dividends and undistributed earnings allocated to unvested restricted shares999
 767
 1,931
 1,409
Earnings allocated to common shareholders - basic$99,650
 $73,408
 $195,251
 $132,789
Weighted average common shares outstanding53,345
 55,931
 53,758
 54,780
Earnings per common share - basic$1.87
 $1.31
 $3.63
 $2.42
Earnings Per Common Share - Diluted:       
Earnings allocated to common shareholders - basic$99,650
 $73,408
 $195,251
 $132,789
Adjustment for undistributed earnings allocated to unvested restricted shares24
 (7) (21) (26)
Earnings allocated to common shareholders - diluted$99,674
 $73,401
 $195,230
 $132,763
Weighted average common shares outstanding53,345
 55,931
 53,758
 54,780
Dilutive potential common shares328
 356
 346
 353
Weighted average common shares outstanding - diluted53,674
 56,287
 54,104
 55,133
Earnings per common share - diluted$1.86
 $1.30
 $3.61
 $2.41
 Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except per share data)2018 2017 2018 2017
Earnings per common share - basic:       
Net income$101,465
 $29,644
 $240,210
 $132,135
Less: Preferred stock dividends3,599
 3,598
 8,146
 8,146
Less: Dividends and undistributed earnings allocated to unvested restricted shares908
 283
 2,341
 1,052
Net income allocated to common shareholders - basic$96,958
 $25,763
 $229,723
 $122,937
Weighted average common shares outstanding55,571
 52,424
 55,047
 49,749
Earnings per common share - basic1.74
 0.49
 4.17
 2.47
Earnings per common share - diluted:       
Net income allocated to common shareholders - basic$96,958
 $25,763
 $229,723
 $122,937
Adjustment for undistributed earnings allocated to unvested restricted shares(25) 8
 (49) —
Net income allocated to common shareholders - diluted$96,933
 $25,771
 $229,674
 $122,937
Weighted average common shares outstanding55,571
 52,424
 55,047
 49,749
Dilutive potential common shares374
 346
 360
 357
Weighted average common shares outstanding - diluted55,945
 52,770
 55,407
 50,106
Earnings per common share - diluted$1.73
 $0.49
 $4.14
 $2.45

For the three months ended SeptemberJune 30, 2018,2019 and 2017,2018, the calculations for basic shares outstanding exclude theexcluded weighted average shares owned by the RRP of 542,796521,591 and 511,562,595,856, respectively. For the ninesix months ended SeptemberJune 30 2019 and 2018, and 2017,the calculations for basic shares outstanding exclude 581,397 and 428,232excluded weighted average shares owned by the RRP of 542,769 and 601,018, respectively.
The effects from the assumed exercises of 60,931154,780 and 72,239156,988 stock options were not included in the computation of diluted earnings per share for the three months ended SeptemberJune 30, 20182019 and 2017,2018, respectively, because such amounts would have had an antidilutive effect on earnings per common share.they were antidilutive. For the ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, the effects from the assumed exerciseexercises of 147,834154,780 and 69,289156,988 stock options, respectively, were not included in the computation of diluted earnings per share because such amounts would have had an antidilutive effect on earnings per common share.they were antidilutive.



NOTE 1211 – SHARE-BASED COMPENSATION
The Company has various types of share-based compensation plans that permit the granting of awards in the form of stock options, restricted stock, restricted share units and phantom stock. These plans are administered by the Compensation Committee of the Board of Directors, which selects persons eligible to receive awards and determines the terms, conditions and other provisions of the awards. At SeptemberJune 30, 2018,2019, awards of 1,163,4143,448,650 shares could be made under approved incentive compensation plans. The Company issues shares to fulfill stock option exercises and restricted share units and restricted stock awards vesting from available authorized common shares. At SeptemberJune 30, 2018,2019, the Company believes there are adequate authorized shares to satisfy anticipated stock option exercises and restricted share unit and restricted stock award vesting.
Stock option awards
The Company issues stock options under various plans to directors, officers and other key employees. The option exercise price cannot be less than the fair value of the underlying common stock as of the date of the option grant and the maximum option term cannot exceed ten years.
The following table represents the activity related to stock options during the periods indicated:
 Number of Shares Weighted Average Exercise Price
Outstanding options, December 31, 2017686,366
 $58.24
Granted96,507
 81.99
Exercised(34,745) 53.48
Forfeited or expired(22,524) 66.80
Outstanding options, June 30, 2018725,604
 $61.36
Exercisable options, June 30, 2018505,477
 $56.55
    
Outstanding options, December 31, 2018714,420
 $61.41
Granted127,090
 70.34
Exercised(21,575) 53.98
Forfeited or expired(8,787) 70.80
Outstanding options, June 30, 2019811,148
 $62.90
Exercisable options, June 30, 2019561,789
 $58.26
 Number of Shares Weighted Average Exercise Price
Outstanding options, December 31, 2016721,538
 $55.38
Granted78,434
 85.03
Exercised(74,236) 55.77
Forfeited or expired(26,675) 68.93
Outstanding options, September 30, 2017699,061
 $58.15
Exercisable options, September 30, 2017463,326
 $55.68
    
Outstanding options, December 31, 2017686,366
 $58.24
Granted97,620
 82.02
Exercised(41,697) 53.12
Forfeited or expired(27,328) 68.19
Outstanding options, September 30, 2018714,961
 $61.41
Exercisable options, September 30, 2018500,349
 $56.70

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock option awards. The following weighted-average assumptions were used for option awards issued during the following periods:
 For the Six Months Ended June 30,
 2019 2018
Expected dividends2.3% 1.8%
Expected volatility24.5% 24.3%
Risk-free interest rate2.5% 2.7%
Expected term (in years)5.7
 5.8
Weighted-average grant-date fair value$14.44
 $18.44
 For the Nine Months Ended September 30,
 2018 2017
Expected dividends1.8% 1.7%
Expected volatility24.3% 25.0%
Risk-free interest rate2.7% 2.1%
Expected term (in years)5.8
 5.8
Weighted-average grant-date fair value$18.48
 $18.87

The assumptions above are based on multiple factors, including historical stock option exercise patterns and post-vesting employment termination behaviors, expected future exercise patterns and the expected volatility of the Company’s stock price.


The following table represents the compensation expense that is included in non-interest expense and related income tax benefits in the accompanying consolidated statements of comprehensive income related to stock options for the following periods:
For the Three Months Ended September 30, For the Nine Months Ended September 30,For the Three Months Ended June 30, For the Six Months Ended June 30,
(Dollars in thousands)2018 2017 2018 2017
(in thousands)2019 2018 2019 2018
Compensation expense related to stock options$322
 $343
 $952
 $1,131
$336
 $319
 $685
 $631
Income tax benefit related to stock options23
 46
 70
 161
24
 23
 50
 46

At SeptemberJune 30, 2018,2019, there was $2.2$2.7 million of unrecognized compensation expense related to stock options that is expected to be recognized over a weighted-average period of 2.9 years.
Restricted stock awards
The Company issues restricted stock under various plans for certain officers and directors. The restricted stock awards may not be sold or otherwise transferred until certain restrictions have lapsed. The holders of the restricted stock receive dividends and have the right to vote the shares. The compensation expense for these awards is determined based on the market price of the Company's common stock at the date of grant applied to the total number of shares granted and is recognized over the vesting period (generally three to five years). As of SeptemberJune 30, 20182019 and 2017,2018, unrecognized share-based compensation expense associated with these awards totaled $30.9$28.1 million and $35.7$35.5 million, respectively. The unrecognized compensation expense related to restricted stock awards at SeptemberJune 30, 20182019 is expected to be recognized over a weighted-average period of 1.4 years.
Restricted share units
During the first nine months of 2018 and 2017, theThe Company issuedissues restricted share units to certain of its executive officers. Restricted share units vest after the end of a three year performance period, based on satisfaction of the market and performance conditions set forth in the restricted share unit agreements. Recipients do not possess voting or investment power over the common stock underlying such units until vesting. The grant date fair value of these restricted share units is the same as the value of the corresponding number of shares of common stock, adjusted for assumptions surrounding the market-based conditions contained in the respective agreements. See Note 1, Summary of Significant Accounting Policies, in the 20172018 Annual Report on Form 10-K for the year ended December 31, 2018, for further discussion of restricted share units with market or performance conditions.
The following table represents the compensation expense that was included in non-interest expense and related income tax benefits in the accompanying consolidated statements of comprehensive income related to restricted stock awards and restricted share units for the periods indicated:
 For the Three Months Ended June 30, For the Six Months Ended June 30,
(in thousands)2019 2018 2019 2018
Compensation expense related to restricted stock awards and restricted share units$5,931
 $4,927
 $11,154
 $9,349
Income tax benefit related to restricted stock awards and restricted share units1,245
 1,035
 2,342
 1,963
 For the Three Months Ended September 30, For the Nine Months Ended September 30,
(Dollars in thousands)2018 2017 2018 2017
Compensation expense related to restricted stock awards and restricted share units$4,843
 $4,046
 $14,192
 $10,368
Income tax benefit related to restricted stock awards and restricted share units1,017
 1,416
 2,980
 3,629

The following table represents unvested restricted stock award and restricted share unit activity for the following periods:
 For the Six Months Ended June 30,
 2019 2018
Number of shares at beginning of period700,628
 738,187
Granted212,038
 224,170
Forfeited(15,199) (56,653)
Vested(199,156) (138,952)
Number of shares at end of period698,311
 766,752

 For the Nine Months Ended September 30,
 2018 2017
Number of shares at beginning of period738,187
 543,258
Granted229,181
 411,957
Forfeited(70,981) (21,272)
Vested(192,217) (191,222)
Number of shares at end of period704,170
 742,721







Phantom stock awards
The Company issues phantom stock awards to certain key officers and employees. The awards are subject to a vesting period of five years and are paid out in cash upon vesting. The amount paid per vesting period is calculated as the number of vested “share equivalents” multiplied by the closing market price of a share of the Company’s common stock on the vesting date. Share equivalents are calculated on the date of grant as the total award’s dollar value divided by the closing market price of a share of the Company’s common stock on the grant date. Award recipients are also entitled to a “dividend equivalent” on each unvested share equivalent held by the award recipient. A dividend equivalent is a dollar amount equal to the cash dividends that the participant would have been entitled to receive if the participant’s share equivalents were issued in shares of common stock. Dividend equivalents are reinvested as share equivalents that will vest and be paid out on the same date as the underlying share equivalents on which the dividend equivalents were paid. The number of share equivalents accumulated with a dividend equivalent is determined by dividing the aggregate of dividend equivalents paid on the unvested share equivalents by the closing price of a share of the Company’s common stock on the dividend payment date.
The following table indicatesrepresents compensation expense recorded for phantom stock based on the number of share equivalents vested at SeptemberJune 30 of the periods indicated and the current market price of the Company’s stock at that time:
 For the Three Months Ended June 30, For the Six Months Ended June 30,
(in thousands)2019 2018 2019 2018
Compensation expense related to phantom stock$2,451
 $2,017
 $5,645
 $5,013
 For the Three Months Ended September 30, For the Nine Months Ended September 30,
(Dollars in thousands)2018 2017 2018 2017
Compensation expense related to phantom stock$2,375
 $2,747
 $7,388
 $8,689

The following table represents phantom stock award activity during the periods indicated:
(Dollars in thousands)
Number of share equivalents (1)
 
Value of share equivalents (2)
Balance, December 31, 2016472,830
 $39,600
Granted111,119
 9,128
Forfeited share equivalents(22,956) 1,886
Vested share equivalents(158,573) 13,212
Balance, September 30, 2017402,420
 $33,059
   
(in thousands)
Number of share equivalents (1)
 
Value of share equivalents (2)
Balance, December 31, 2017393,844
 $30,523
393,844
 $30,523
Granted151,908
 12,358
140,804
 10,673
Forfeited share equivalents(59,550) 4,844
(45,821) 3,473
Vested share equivalents(130,497) 10,871
(126,019) 10,519
Balance, September 30, 2018355,705
 $28,937
Balance, June 30, 2018362,808
 $27,501
   
Balance, December 31, 2018353,407
 $22,717
Granted174,991
 13,273
Forfeited share equivalents(20,407) 1,548
Vested share equivalents(101,318) 7,647
Balance, June 30, 2019406,673
 $30,846
(1) 
Number of share equivalents includes all reinvested dividend equivalents for the periods indicated.
(2) 
Except for share equivalents at the beginning of each period, which are based on the value at that time, and vested share payments, which are based on the cash paid at the time of vesting, the value of share equivalents is calculated based on the market price of the Company’s stock at the end of the respective periods. The market price of the Company’s stock was $81.35$75.85 and $82.15$75.80 on SeptemberJune 30, 2018,2019, and 2017,2018, respectively.





NOTE 1312 – FAIR VALUE MEASUREMENTS

See Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements of the 2017 10-K for a description of valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis.
Recurring fair value measurements
The Company has segregated all financialfollowing table presents information about the Company's assets and liabilities that are measured at fair value on a recurring basis into the most appropriate levelas of June 30, 2019 and December 31, 2018 and their classification within the fair value hierarchy basedhierarchy. See Note 1, Summary of Significant Accounting Policies, in the Annual Report on Form 10-K for the inputs used to estimate theyear ended December 31, 2018, for a description of how fair value at the measurement date in the tables below.measurements are determined.
 June 30, 2019
(in thousands)Level 1 Level 2 Level 3 Total
Assets       
Securities available for sale$—
 $4,455,308
 $—
 $4,455,308
Mortgage loans held for sale—
 187,987
 —
 187,987
Mortgage loans held for investment, at fair value option—
 —
 1,945
 1,945
Derivative instruments—
 107,747
 —
 107,747
Total$—
 $4,751,042
 $1,945
 $4,752,987
Liabilities       
Derivative instruments$—
 $12,599
 $—
 $12,599
Total$—
 $12,599
 $—
 $12,599
        
 December 31, 2018
 Level 1 Level 2 Level 3 Total
Assets       
Securities available for sale$—
 $4,783,579
 $—
 $4,783,579
Mortgage loans held for sale—
 107,734
 —
 107,734
Mortgage loans held for investment, at fair value option—
 —
 3,143
 3,143
Derivative instruments—
 27,048
 —
 27,048
Total$—
 $4,918,361
 $3,143
 $4,921,504
Liabilities       
Derivative instruments$—
 $22,124
 $—
 $22,124
Total$—
 $22,124
 $—
 $22,124
 September 30, 2018
(Dollars in thousands)Level 1 Level 2 Level 3 Total
Assets       
Securities available for sale$—
 $4,634,124
 $—
 $4,634,124
CRA and Community Development Investment Funds—
 1,866
 —
 1,866
Mortgage loans held for sale—
 42,976
 —
 42,976
Mortgage loans held for investment, at fair value option—
 7,249
 —
 7,249
Derivative instruments—
 12,570
 —
 12,570
Total$—
 $4,698,785
 $—
 $4,698,785
Liabilities       
Derivative instruments$—
 $42,764
 $—
 $42,764
Total$—
 $42,764
 $—
 $42,764
        
 December 31, 2017
 Level 1 Level 2 Level 3 Total
Assets       
Securities available for sale$—
 $4,590,062
 $—
 $4,590,062
Mortgage loans held for sale—
 134,916
 —
 134,916
Mortgage loans held for investment, at fair value option—
 14,953
 —
 14,953
Derivative instruments—
 31,265
 —
 31,265
Total$—
 $4,771,196
 $—
 $4,771,196
Liabilities       
Derivative instruments$—
 $25,154
 $—
 $25,154
Total$—
 $25,154
 $—
 $25,154

During the ninesix months ended SeptemberJune 30, 2018,2019, there were no transfers between the Level 1 and Level 2 fair value categories.


Non-recurring fair value measurements
The Company has segregated allholds certain assets and liabilities that are measured at fair value, onbut only in certain circumstances, such as impairment. The following table presents information about the Company's assets that are measured at fair value and still held as of June 30, 2019 and December 31, 2018 for which a non-recurring basis into the most appropriate level within the fair value hierarchy basedadjustment was recorded during the periods then ended. See Note 1, Summary of Significant Accounting Policies, in the Annual Report on Form 10-K for the inputs used to determine theyear ended December 31, 2018, for a description of how fair value at the measurement date in the tables below.measurements are determined.
 June 30, 2019
(in thousands)Level 1 Level 2 Level 3 Total
Assets       
Impaired loans$—
 $—
 $73,003
 $73,003
OREO, net—
 —
 5,076
 5,076
Total$—
 $—
 $78,079
 $78,079
        
 December 31, 2018
(in thousands)Level 1 Level 2 Level 3 Total
Assets       
Impaired loans$—
 $—
 $65,914
 $65,914
OREO, net—
 —
 6,433
 6,433
Total$—
 $—
 $72,347
 $72,347
 September 30, 2018
(Dollars in thousands)Level 1 Level 2 Level 3 Total
Assets       
Loans$—
 $—
 $60,307
 $60,307
OREO, net—
 —
 5,148
 5,148
Total$—
 $—
 $65,455
 $65,455
        
 December 31, 2017
(Dollars in thousands)Level 1 Level 2 Level 3 Total
Assets       
Loans$—
 $—
 $71,210
 $71,210
OREO, net—
 —
 3,029
 3,029
Total$—
 $—
 $74,239
 $74,239

The tables above exclude the initial measurement of assets and liabilities that were acquired as part of the business combinations disclosed in Note 3, Acquisition Activity.combinations. These assets and liabilities were recorded at their fair value upon acquisition in accordance with U.S. GAAP and were not re-measured during the periods presented unless specifically required by U.S. GAAP. Acquisition date fair values represent either Level 2 fair value measurements (investment securities, deposits, property,and premises and equipment) or Level 3 fair value measurements (loans, core deposit intangible assets, and debt.)debt). Refer to Note 3, Acquisition Activity, in the Annual Report on Form 10-K for the year ended December 31, 2018, for further detail.
The Company did not record any liabilities at fair value for which measurement of the fair value was made on a non-recurring basis as of SeptemberJune 30, 20182019 and December 31, 2017.2018.
Fair value option
The Company has elected the fair value option for originated residential mortgage loans held for sale, which allows for a more effective offset of the changes in fair values of the loans and the derivative instruments used to hedge them without the burden of complying with the requirements for hedge accounting. The Company also has a portion of mortgage loans held for investment for which the fair value option was elected upon origination and which continue to be accounted for at fair value at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively.
The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for mortgage loans held for sale and mortgage loans held for investment measured at fair value:
 June 30, 2019 December 31, 2018
(in thousands)Aggregate Fair Value Aggregate Unpaid Principal Aggregate Fair Value Less Unpaid Principal Aggregate Fair Value Aggregate Unpaid Principal Aggregate Fair Value Less Unpaid Principal
Mortgage loans held for sale, at fair value$187,987
 $181,067
 $6,920
 $107,734
 $104,345
 $3,389
Mortgage loans held for investment, at fair value1,945
 2,099
 (154) 3,143
 3,595
 (452)

 September 30, 2018 December 31, 2017
(Dollars in thousands)Aggregate Fair Value Aggregate Unpaid Principal Aggregate Fair Value Less Unpaid Principal Aggregate Fair Value Aggregate Unpaid Principal Aggregate Fair Value Less Unpaid Principal
Mortgage loans held for sale, at fair value$42,976
 $41,848
 $1,128
 $134,916
 $131,276
 $3,640
Mortgage loans held for investment, at fair value7,249
 8,666
 (1,417) 14,953
 16,306
 (1,353)













Interest income on mortgage loans held for sale and mortgage loans held for investment at fair value option is recognized based on contractual rates and is reflected in interest income on loans held for sale in the consolidated statements of comprehensive income. The following table details net gains (losses) resulting from the change in fair value of loans that were recorded in mortgage income in the consolidated statements of comprehensive income for the three and ninesix months ended SeptemberJune 30, 20182019 and 2017.2018. The changes in fair value are mostly offset by economic hedging activities, with an insignificant portion of these changes attributable to changes in instrument-specific credit risk.
 Net Gains (Losses) Resulting From Changes in Fair Value
 For the Three Months Ended June 30, For the Six Months Ended June 30,
(in thousands)2019 2018 2019 2018
Fair value option       
      Mortgage loans held for sale, at fair value$2,879
 $(331) $3,531
 $(1,472)
      Mortgage loans held for investment, at fair value(104) (172) 87
 (921)



 Net Gains (Losses) Resulting From Changes in Fair Value
 For the Three Months Ended September 30, For the Nine Months Ended September 30,
(Dollars in thousands)2018 2017 2018 2017
Fair value option       
      Mortgage loans held for sale, at fair value$(1,041) $251
 $(2,513) $1,121
      Mortgage loans held for investment, at fair value(296) (62) (1,217) (127)



NOTE 1413 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. ASC Topic 825, Financial Instruments, excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
The carrying amount and estimated fair values of the Company’s financial instruments, as well as the level within the fair value hierarchy, of the Company’s financial instruments are included in the tables below. See Note 1, Summary of Significant Accounting Policies, and Note 2, Recent Accounting Pronouncements, in the 2017Annual Report on Form 10-K for the year ended December 31, 2018, for a description of how fair value measurements are determined, except for loans, amended upon implementation of ASU 2016-01, Financial Statements - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. See Note 2, Recent Accounting Pronouncements, in this Report for a description of how the fair value measurement is determined for loans beginning January 1, 2018.determined.
  June 30, 2019
(in thousands) Carrying  Amount Fair Value Level 1 Level 2 Level 3
Measurement Category          
Fair Value          
 Financial Assets         
 Securities available for sale$4,455,308
 $4,455,308
 $—
 $4,455,308
 $—
 Mortgage loans held for sale187,987
 187,987
 —
 187,987
 —
 Mortgage loans held for investment, at fair value option1,945
 1,945
 —
 —
 1,945
 Derivative instruments107,747
 107,747
 —
 107,747
 —
           
 Financial Liabilities         
 Derivative instruments12,599
 12,599
 —
 12,599
 —
           
Amortized Cost          
 Financial Assets         
 Cash and cash equivalents$789,315
 $789,315
 $789,315
 $—
 $—
 Securities held to maturity192,917
 198,012
 —
 198,012
 —
 Loans and leases, carried at amortized cost, net of unearned income and allowance for loan and lease losses23,206,980
 22,939,128
 —
 —
 22,939,128
           
 Financial Liabilities         
 Deposits24,295,331
 24,295,695
 —
 24,295,695
 —
 Short-term borrowings997,507
 997,507
 184,507
 813,000
 —
 Long-term debt1,374,759
 1,381,572
 —
 —
 1,381,572

  September 30, 2018
(Dollars in thousands) Carrying  Amount Fair Value Level 1 Level 2 Level 3
Measurement Category          
Fair Value          
 Financial Assets         
 Securities available for sale$4,634,124
 $4,634,124
 $—
 $4,634,124
 $—
 CRA and Community Development Investment Funds1,866
 1,866
 —
 1,866
 —
 Mortgage loans held for sale42,976
 42,976
 —
 42,976
 —
 Derivative instruments12,570
 12,570
 —
 12,570
 —
           
 Financial Liabilities         
 Derivative instruments42,764
 42,764
 —
 42,764
 —
           
Amortized Cost          
 Financial Assets         
 Cash and cash equivalents$475,935
 $475,935
 $475,935
 $—
 $—
 Securities held to maturity213,561
 207,309
 —
 207,309
 —
 Loans and leases, net of unearned income and allowance for loan and lease losses22,206,956
 22,014,886
 —
 —
 22,014,886
           
 Financial Liabilities         
 Deposits23,193,446
 23,181,429
 —
 23,181,429
 —
 Short-term borrowings1,242,719
 1,242,719
 452,719
 790,000
 —
 Long-term debt1,466,810
 1,449,018
 —
 —
 1,449,018




  December 31, 2018
(in thousands) Carrying Amount Fair Value Level 1 Level 2 Level 3
Measurement Category          
Fair Value          
 Financial Assets         
 Securities available for sale$4,783,579
 $4,783,579
 $—
 $4,783,579
 $—
 Mortgage loans held for sale107,734
 107,734
 —
 107,734
 —
 Mortgage loans held for investment, at fair value option3,143
 3,143
 —
 —
 3,143
 Derivative instruments27,048
 27,048
 —
 27,048
 —
           
 Financial Liabilities         
 Derivative instruments22,124
 22,124
 —
 22,124
 —
           
Amortized Cost          
 Financial Assets         
 Cash and cash equivalents$690,453
 $690,453
 $690,453
 $—
 $—
 Securities held to maturity207,446
 204,277
 —
 204,277
 —
 Loans and leases, carried at amortized cost, net of unearned income and allowance for loan and lease losses22,376,101
 22,088,236
 —
 —
 22,088,236
           
 Financial Liabilities         
 Deposits23,763,431
 23,752,139
 —
 23,752,139
 —
 Short-term borrowings1,482,882
 1,482,882
 315,882
 1,167,000
 —
 Long-term debt1,166,151
 1,154,062
 —
 —
 1,154,062
  December 31, 2017
(Dollars in thousands) Carrying Amount Fair Value Level 1 Level 2 Level 3
Measurement Category          
Fair Value          
 Financial Assets         
 Securities available for sale$4,590,062
 $4,590,062
 $—
 $4,590,062
 $—
 Mortgage loans held for sale134,916
 134,916
 —
 134,916
 —
 Derivative instruments31,265
 31,265
 —
 31,265
 —
           
 Financial Liabilities         
 Derivative instruments25,154
 25,154
 —
 25,154
 —
           
Amortized Cost          
 Financial Assets         
 Cash and cash equivalents$625,724
 $625,724
 $625,724
 $—
 $—
 Securities held to maturity227,318
 227,964
 —
 227,964
 —
 Loans and leases, net of unearned income and allowance for loan and lease losses19,937,290
 19,826,857
 —
 —
 19,826,857
           
 Financial Liabilities         
 Deposits21,466,717
 21,460,782
 —
 21,460,782
 —
 Short-term borrowings991,297
 991,297
 516,297
 475,000
 —
 Long-term debt1,495,835
 1,476,899
 —
 —
 1,476,899

The fair value estimates presented herein are based upon pertinent information available to management as of SeptemberJune 30, 20182019 and December 31, 2017.2018. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since these dates and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.



NOTE 1514 – BUSINESS SEGMENTS
Each of the Company’s reportable operating segments serves the specific needs of the Company’s customers based on the products and services it offers. The reportable segments are based upon those revenue-producing components for which separate financial information is produced internally and primarily reflect the manner in which resources are allocated and performance is assessed. Further, the reportable operating segments are also determined based on the quantitative thresholds prescribed within ASC Topic 280, Segment Reporting, and consideration of the usefulness of the information to the users of the consolidated financial statements.
The Company reports the results of its operations through three reportable segments: IBERIABANK, Mortgage, and LTC. The IBERIABANK segment represents the Company’s commercial and retail banking functions, including its lending, investment, and deposit activities. IBERIABANK also includes the Company’s wealth management, capital markets, and other corporate functions. The Mortgage segment represents the Company’s origination, funding, and subsequent sale of one-to-four family residential mortgage loans. The LTC segment represents the Company’s title insurance and loan closing services.
Certain expenses not directly attributable to a specific reportable segment are allocated to segments based on pre-determined methods that reflect utilization. Also within IBERIABANK are certain reconciling items that translate reportable segment results into consolidated results. The following tables present certain information regarding our operations by reportable segment, including a reconciliation of segment results to reported consolidated results for the periods presented. Reconciling items between segment results and reported results include:
Elimination of interest income and interest expense representing interest earned by IBERIABANK on interest-bearing checking accounts held by related companies, as well as the elimination of the related deposit balances at the IBERIABANK segment;
Elimination of investment in subsidiary balances on certain operating segments included in total and average segment assets; and
Elimination of intercompany due to and due from balances on certain operating segments that are included in total and average segment assets.


Three Months Ended September 30, 2018Three Months Ended June 30, 2019
(Dollars in thousands)IBERIABANK Mortgage LTC Consolidated
(in thousands)IBERIABANK Mortgage LTC Consolidated
Interest and dividend income$315,467
 $1,599
 $1
 $317,067
$334,055
 $1,912
 $—
 $335,967
Interest expense57,842
 —
 —
 57,842
80,628
 —
 —
 80,628
Net interest income257,625
 1,599
 1
 259,225
253,427
 1,912
 —
 255,339
Provision for/(reversal of) loan and lease losses11,099
 (2) —
 11,097
Provision for (reversal of) credit losses10,742
 13
 —
 10,755
Mortgage income—
 12,732
 —
 12,732
—
 18,444
 —
 18,444
Title revenue—
 —
 6,280
 6,280
—
 —
 6,895
 6,895
Other non-interest income/(expense)33,591
 (16) 500
 34,075
Allocated expenses/(income)(3,691) 2,680
 1,011
 —
Other non-interest income (expense)33,496
 (10) —
 33,486
Allocated expenses (income)(4,414) 3,250
 1,164
 —
Non-interest expense154,287
 10,223
 4,839
 169,349
151,139
 13,590
 4,889
 169,618
Income/(loss) before income tax expense129,521
 1,414
 931
 131,866
Income tax expense/(benefit)29,765
 386
 250
 30,401
Net income/(loss)$99,756
 $1,028
 $681
 $101,465
Income before income tax expense129,456
 3,493
 842
 133,791
Income tax expense31,134
 836
 223
 32,193
Net income$98,322
 $2,657
 $619
 $101,598
Total loans, leases, and loans held for sale, net of unearned income$22,302,679
 $84,203
 $—
 $22,386,882
$23,330,738
 $212,560
 $—
 $23,543,298
Total assets29,974,065
 119,322
 25,000
 30,118,387
31,165,205
 255,106
 26,221
 31,446,532
Total deposits23,179,549
 13,897
 —
 23,193,446
24,279,416
 15,915
 —
 24,295,331
Average assets29,863,742
 158,464
 24,025
 30,046,231
31,024,832
 221,891
 25,099
 31,271,822





Three Months Ended September 30, 2017Three Months Ended June 30, 2018
(Dollars in thousands)IBERIABANK Mortgage LTC Consolidated
(in thousands)IBERIABANK Mortgage LTC Consolidated
Interest and dividend income$245,166
 $1,805
 $1
 $246,972
$302,387
 $1,436
 $—
 $303,823
Interest expense30,089
 —
 —
 30,089
47,710
 —
 —
 47,710
Net interest income215,077
 1,805
 1
 216,883
254,677
 1,436
 —
 256,113
Provision for/(reversal of) loan and lease losses18,524
 (10) —
 18,514
Provision for (reversal of) credit losses7,715
 (19) —
 7,696
Mortgage income—
 16,050
 —
 16,050
—
 13,721
 —
 13,721
Title revenue—
 —
 5,643
 5,643
—
 —
 6,846
 6,846
Other non-interest income/(expense)29,163
 (9) (4) 29,150
Allocated expenses/(income)(3,881) 2,911
 970
 —
Other non-interest income (expense)33,481
 (105) (3) 33,373
Allocated expenses (income)(3,873) 2,868
 1,005
 —
Non-interest expense174,306
 22,170
 4,286
 200,762
179,831
 11,966
 4,979
 196,776
Income/(loss) before income tax expense55,291
 (7,225) 384
 48,450
Income tax expense/(benefit)21,076
 (2,424) 154
 18,806
Net income/(loss)$34,215
 $(4,801) $230
 $29,644
Income before income tax expense104,485
 237
 859
 105,581
Income tax expense30,211
 17
 229
 30,457
Net income$74,274
 $220
 $630
 $75,124
Total loans, leases, and loans held for sale, net of unearned income$19,743,749
 $192,554
 $—
 $19,936,303
$22,026,914
 $127,712
 $—
 $22,154,626
Total assets27,738,588
 217,056
 20,991
 27,976,635
29,928,360
 173,415
 24,387
 30,126,162
Total deposits21,333,190
 1,081
 —
 21,334,271
23,419,382
 11,076
 —
 23,430,458
Average assets25,869,559
 204,920
 22,442
 26,096,921
29,599,468
 148,210
 23,174
 29,770,852


Nine Months Ended September 30, 2018Six Months Ended June 30, 2019
(Dollars in thousands)IBERIABANK Mortgage LTC Consolidated
(in thousands)IBERIABANK Mortgage LTC Consolidated
Interest and dividend income$886,629
 $4,802
 $2
 $891,433
$658,699
 $3,351
 $1
 $662,051
Interest expense143,206
 —
 —
 143,206
156,228
 —
 —
 156,228
Net interest income743,423
 4,802
 2
 748,227
502,471
 3,351
 1
 505,823
Provision for/(reversal of) loan losses26,704
 (26) —
 26,678
Provision for (reversal of) credit losses24,565
 (47) —
 24,518
Mortgage income—
 36,048
 —
 36,048
—
 30,293
 —
 30,293
Title revenue—
 —
 18,153
 18,153
—
 —
 12,120
 12,120
Other non-interest income/(expense)96,978
 (83) 497
 97,392
Allocated expenses/(income)(9,043) 6,714
 2,329
 —
Other non-interest income (expense)68,959
 (22) (16) 68,921
Allocated expenses (income)(6,447) 4,750
 1,697
 —
Non-interest expense506,035
 34,105
 14,382
 554,522
294,894
 24,131
 9,346
 328,371
Income/(loss) before income tax expense316,705
 (26) 1,941
 318,620
Income tax expense/(benefit)78,516
 (7) (99) 78,410
Net income/(loss)$238,189
 $(19) $2,040
 $240,210
Total loans and loans held for sale, net of unearned income$22,302,679
 $84,203
 $—
 $22,386,882
Income before income tax expense258,418
 4,788
 1,062
 264,268
Income tax expense61,109
 1,143
 287
 62,539
Net income$197,309
 $3,645
 $775
 $201,729
Total loans, leases, and loans held for sale, net of unearned income$23,330,738
 $212,560
 $—
 $23,543,298
Total assets29,974,065
 119,322
 25,000
 30,118,387
31,165,205
 255,106
 26,221
 31,446,532
Total deposits23,179,549
 13,897
 —
 23,193,446
24,279,416
 15,915
 —
 24,295,331
Average assets29,136,369
 164,039
 23,037
 29,323,445
30,838,856
 190,205
 24,811
 31,053,872





 Six Months Ended June 30, 2018
(in thousands)IBERIABANK Mortgage LTC Consolidated
Interest and dividend income$571,162
 $3,203
 $1
 $574,366
Interest expense85,364
 —
 —
 85,364
Net interest income485,798
 3,203
 1
 489,002
Provision for (reversal of) credit losses15,931
 (24) —
 15,907
Mortgage income—
 23,316
 —
 23,316
Title revenue—
 —
 11,873
 11,873
Other non-interest income (expense)63,387
 (67) (3) 63,317
Allocated expenses (income)(5,352) 4,034
 1,318
 —
Non-interest expense351,422
 23,882
 9,543
 384,847
Income (loss) before income tax expense187,184
 (1,440) 1,010
 186,754
Income tax expense (benefit)48,751
 (393) (349) 48,009
Net income (loss)$138,433
 $(1,047) $1,359
 $138,745
Total loans, leases, and loans held for sale, net of unearned income$22,026,914
 $127,712
 $—
 $22,154,626
Total assets29,928,360
 173,415
 24,387
 30,126,162
Total deposits23,419,382
 11,076
 —
 23,430,458
Average assets28,766,655
 166,872
 22,535
 28,956,062






 Nine Months Ended September 30, 2017
(Dollars in thousands)IBERIABANK Mortgage LTC Consolidated
Interest and dividend income$638,683
 $5,395
 $2
 $644,080
Interest expense70,736
 —
 —
 70,736
Net interest income567,947
 5,395
 2
 573,344
Provision for/(reversal of) loan losses36,816
 (98) —
 36,718
Mortgage income—
 49,895
 —
 49,895
Title revenue—
 —
 16,574
 16,574
Other non-interest income/(expense)83,376
 (30) (10) 83,336
Allocated expenses/(income)(9,377) 7,057
 2,320
 —
Non-interest expense412,305
 59,754
 12,879
 484,938
Income/(loss) before income tax expense211,579
 (11,453) 1,367
 201,493
Income tax expense/(benefit)72,650
 (3,840) 548
 69,358
Net income/(loss)$138,929
 $(7,613) $819
 $132,135
Total loans and loans held for sale, net of unearned income$19,743,749
 $192,554
 $—
 $19,936,303
Total assets27,738,588
 217,056
 20,991
 27,976,635
Total deposits21,333,190
 1,081
 —
 21,334,271
Average assets23,020,324
 239,014
 23,496
 23,282,834



NOTE 1615 – COMMITMENTS AND CONTINGENCIES
Off-balance sheet commitments
In the normal course of business, to meet the financing needs of its customers, the Company is a party to credit-related financial instruments, with risk not reflected in the consolidated financial statements. These financial instruments include commitments to extend credit, standby letters of credit, and commercial letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The credit policies used for these commitments are consistent with those used for on-balance sheet instruments. The Company’s exposure to credit loss in the event of non-performance by its customers under such commitments or letters of credit represents the contractual amount of the financial instruments as indicated in the table below. At SeptemberJune 30, 2019 and December 31, 2018, the fair value of guarantees under commercial and standby letters of credit was $2.4 million compared to $2.1 million at December 31, 2017.million. This fair value will decrease as the existing commercial and standby letters of credit approach their expiration dates.
At SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively, the Company had the following financial instruments outstanding and related reserves, whose contract amounts represent credit risk:
(in thousands)June 30, 2019 December 31, 2018
Commitments to extend credit$690,267
 $642,162
Unfunded commitments under lines of credit7,149,479
 6,883,963
Commercial and standby letters of credit246,622
 240,436
Reserve for unfunded lending commitments15,281
 14,830
(Dollars in thousands)September 30, 2018 December 31, 2017
Commitments to extend credit$824,472
 $342,305
Unfunded commitments under lines of credit6,610,843
 6,060,034
Commercial and standby letters of credit235,730
 210,002
Reserve for unfunded lending commitments14,721
 13,208

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower. Since many of the commitments are expected to be drawn upon, the total commitment amounts generally represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral, if any, is based on management’s credit evaluation of the customer.
Unfunded commitments under commercial lines of credit, revolving credit lines, and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. Many of these types of commitments do not contain a specified maturity date and may not be drawn upon to the total extent to which the Company is committed. See Note 6,5, Allowance for Credit Losses and Credit Quality, for additional information related to the Company’s reserve for unfunded lending commitments.
Commercial and standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper issuance, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. When necessary they are collateralized, generally in the form of marketable securities and cash equivalents.
Legal proceedings
The nature of the business of the Company’s banking and other subsidiaries ordinarily results in a certain amount of claims, litigation, investigations, and legal and administrative cases and proceedings, which are considered incidental to the normal conduct of business. Some of these claims are against entities or assets of which the Company is a successor or acquired in business acquisitions. The Company has asserted defenses to these claims and, with respect to such legal proceedings, intends to continue to defend itself vigorously, litigating or settling cases according to management’s judgment as to what is in the best interest of the Company and its shareholders.












In July of 2016, the Company received a subpoena from the Office of Inspector General of the U.S. Department of Housing and Urban Development (“HUD”) requesting information on certain previously originated loans insured by the Federal Housing Administration ("FHA") as well as other documents regarding the Company's FHA-related policies and practices. After the Company complied with the subpoena, attorneys from the Department of Justice (“DOJ”) informed the Company in late March of 2017 that a civil qui tam suit had been filed against the Company in federal court involving the subject matter of the HUD subpoena. The HUD lawsuit was settled on December 11, 2017 in the amount of $11.7 million. On February 2, 2018, IBERIABANK filed a lawsuit in the United States District Court for the Eastern District of Louisiana (New Orleans) against Illinois Union Insurance Company and Travelers Casualty and Surety Company of America in an effort to recover the $11.7 million it paid to settle the HUD matter. IBERIABANK filed that lawsuit to recover the insurance proceeds to which it claims to be entitled under certain Bankers’ Professional Liability insurance policies issued by defendants Illinois Union and Travelers. More specifically, IBERIABANK alleges that the insurers have failed to honor their obligations under the policies to pay IBERIABANK’s losses in connection with the $11.7 million settlement of disputed allegations relating to IBERIABANK’s professional services in connection with certain mortgage loans insured by the FHA. The judge in the federal lawsuit granted motion for summary judgment thereby dismissing the case. The Company has appealed that decision to the United States Court of Appeals for the Fifth Circuit. The appeal seeks reversal of the summary judgment such that the case can be remanded to the district court in an effort to recover the $11.7 million the Company is suing to recover.
The Company assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, the Company records a liability in its consolidated financial statements. These legal reserves may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of loss is not estimable, the Company does not accrue legal reserves. While the outcome of legal proceedings is inherently uncertain, based on information currently available and available insurance coverage, the Company’s management believes that it has established appropriate legal reserves. Any incremental liabilities arising from pending legal proceedings are not expected to have a material adverse effect on the Company’s consolidated financial position, consolidated results of operations, or consolidated cash flows. However, it is possible that the ultimate resolution of these matters, if unfavorable, may be material to the Company’s consolidated financial position, consolidated results of operations, or consolidated cash flows.
As of the date of this filing, the Company believes the amount of losses associated with legal proceedings that it is reasonably possible to incur above amounts already accrued and reported as of SeptemberJune 30, 20182019 is not material.



NOTE 1716 – RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Company may execute transactions with various related parties. Examples of such transactions may include lending or deposit arrangements, transfers of financial assets, services for administrative support, and other miscellaneous items.
The Company has granted loans to executive officers and directors and their affiliates. These loans, including the related principal additions, principal payments, and unfunded commitments are not material to the consolidated financial statements at SeptemberJune 30, 20182019 and December 31, 2017.2018. There were no outstanding loans to such related parties classified as non-accrual, past due, or troubled debt restructurings at SeptemberJune 30, 2018.2019.
Deposits from related parties held by the Company were not material at SeptemberJune 30, 20182019 and December 31, 2017.2018.



Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is intended to assist readers in understanding the consolidated financial condition and results of operations of IBERIABANK Corporation and its wholly ownedwholly-owned subsidiaries (collectively, the “Company”) as of and for the period ended SeptemberJune 30, 2018,2019, and updates the Annual Report on Form 10-K for the year ended December 31, 2017.2018. This discussion should be read in conjunction with the unaudited consolidated financial statements, accompanying footnotes and supplemental financial data included herein. The emphasis of this discussion will be amounts as of SeptemberJune 30, 20182019 compared to December 31, 20172018 for the balance sheets and the three and ninesix months ended SeptemberJune 30, 20182019 compared to SeptemberJune 30, 20172018 for the statements of comprehensive income. Certain amounts in prior year presentations have been reclassified to conform to the current year presentation.
When we refer to the “Company,” “we,” “our” or “us” in this Report, we mean IBERIABANK Corporation and subsidiaries (consolidated). When we refer to the “Parent,” we mean IBERIABANK Corporation. See the Glossary of Defined Terms at the end of this Report for terms used throughout this Report.
CAUTION ABOUT FORWARD-LOOKING STATEMENTS
To the extent that statements in this Report relate to future plans, objectives, financial results or performance of the Company, these statements are deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, which are based on management’s current information, estimates and assumptions and the current economic environment, are generally identified by use of the words “may,” “plan,” “believe,” “expect,” “intend,” “will,” “should,” “continue,” “potential,” “anticipate,” “estimate,” “predict,” “project” or similar expressions, or the negative of these terms or other comparable terminology. The Company’s actual strategies and results in future periods may differ materially from those currently expected due to various risks and uncertainties.
Forward-looking statements represent management’s beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements. Factors that could cause or contribute to such differences include, but are not limited to: the level of market volatility, our ability to execute our growth strategy, including the availability of future bank acquisition opportunities, our ability to execute on our revenue and efficiency improvement initiatives, unanticipated delays, losses, business disruptions and diversion of management time related to the completion and integration of mergers and acquisitions, refinements to purchase accounting adjustments for acquired businesses and assets and assumed liabilities in these transactions, adjustments of fair values of acquired assets and assumed liabilities and of deferred taxes in acquisitions, actual results deviating from the Company’s current estimates and assumptions of timing and amounts of cash flows, credit risk of our customers, effects of low energy and commodity prices, effects of residential real estate prices and levels of home sales, our ability to satisfy capital and liquidity standards, sufficiency of our allowance for loancredit losses, changes in interest rates, access to funding sources, reliance on the services of executive management, competition for loans, deposits and investment dollars, competition from competitors with greater financial resources than the Company, threats of fintech innovation, reputational risks and social factors, changes in government regulations and legislation, increases in FDIC insurance assessments, geographic concentration of our markets, economic or business conditions in our markets or nationally, rapid changes in the financial services industry, significant litigation, cyber-security risks including dependence on our operational, technological, and organizational systems and infrastructure and those of third party providers of those services, hurricanes and other adverse weather events, and valuation of intangible assets.

Factors that may cause actual results to differ materially from these forward-looking statements are discussed in the Company’s Annual Report on Form 10-K and other filings with the Securities and Exchange Commission (the “SEC”), available at the SEC’s website, www.sec.gov, and the Company’s website, www.iberiabank.com, under the heading “Investor Relations” and then “Financial Information.” All information is as of the date of this Report.Report unless otherwise noted. Except to the extent required by applicable law or regulation, the Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason.





EXECUTIVE SUMMARY
Corporate Profile
The CompanyIBERIABANK Corporation is a$30.1 billion financial holding company withbased in Lafayette, Louisiana. Through its subsidiaries, the Company provides a full range of commercial and consumer banking services, including private banking, small business, wealth and trust management, retail brokerage, mortgage, commercial leasing and equipment financing, and title insurance services through locations in Louisiana, Arkansas, Tennessee, Alabama, Texas, Florida, Georgia, South Carolina, North Carolina, Mississippi, Missouri, and New York offering commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, mortgage, and title insurance services.York.
A summary of the Company's financial position and results of operations as of and for the three and nine months ended September 30, 2018 is provided below, with further detail provided in subsequent sections of Management's Discussion and Analysis.Quarterly Financial Performance Summary:
Results in 2018 were impacted by the following significant items:
The Company acquired Sabadell United on July 31, 2017 for total consideration of $1.0 billion. The acquisition added $4.0 billion in loans and $4.4 billion in deposits (including approximately $0.9 billion of non-interest bearing deposits), and significantly impacted results in the first nine months of 2018 when compared to the same period of 2017. Acquired earning assets, offset by a lesser amount of acquired interest-bearing liabilities, resulted in higher net interest income. The acquisition benefited certain non-interest income streams, such as service charges on deposit accounts and trust department income, while additional associates and acquired locations increased salaries and employee benefits and net occupancy and equipment expenses.
The Company acquired Gibraltar on March 23, 2018 for total consideration of $214.7 million. The acquisition added $1.5 billion in loans and $1.1 billion in deposits. The Company incurred approximately $1.0 million and $31.5 million in pre-tax merger-related expenses during the three and nine months ended September 30, 2018, resulting in a $0.01 and $0.44 reduction to GAAP EPS, respectively.
On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (the "Tax Act") into law. Among other provisions, the most significant to the Company is the reduction of the corporate income tax rate from 35% to 21%, effective January 1, 2018. The reduction in the corporate tax rate resulted in an estimated $0.23 benefit to GAAP EPS in the third quarter of 2018 and an estimated $0.56 benefit to GAAP EPS for the nine months ended September 30, 2018. The impact on EPS includes the federal statutory income tax rate change from 35% to 21% and eliminating the deduction for FDIC insurance.
The following summarizes third quarter 2018 results compared to third quarter 2017 results:
Net income available to common shareholders for the three months ended September 30, 2018 totaled $97.9 million, or $1.73 diluted EPS, compared to $26.0 million, or $0.49 diluted EPS, for the same period of 2017. Non-GAAP core EPS, which excludes merger-related costs and other items (disclosed in Table 17 - Non-GAAP measures), was $1.74 in the third quarter of 2018 compared to $1.00 for the same period of 2017.
•
Net income available to common shareholders for the quarter ended June 30, 2019 totaled $100.6 million, or $1.86 diluted EPS, compared to $74.2 million, or $1.30 diluted EPS, for the same period of 2018. Non-GAAP core EPS, which excludes merger-related costs and other items disclosed in Table 17 - Non-GAAP measures, was $1.87 for the second quarter of 2019 compared to $1.71 for the same period of 2018.
Net interest income was $259.2$255.3 million for the thirdsecond quarter of 2018,2019, a $42.3$0.8 million, or 20%0.3%, increasedecrease compared to the same quarter of 2017. The increase in net interest income was primarily volume-related due to the Sabadell United and Gibraltar acquisitions, but was also impacted by higher earning asset yields offset by higher funding costs, ultimately resulting in a 10 basis points increase to net2018. Net interest margin on a tax-equivalent basis decreased 19 basis points to 3.74%3.57% from 3.64%.
Non-interest income for3.76%, primarily attributable to a higher cost of funds in the thirdsecond quarter of 2018 increased $2.2 million, or 4%, when compared to the same period of 2017, primarily driven by increases in client derivative activity, services charges on deposit accounts and trust department income, offset by a decrease in mortgage income.
Non-interest expense for the third quarter of 2018 decreased $31.4 million, or 16%, to $169.3 million compared to the same period of 2017, largely due to lower acquisition-related expenses and a decrease in legal fees from the HUD litigation accrual which was recorded in the third quarter of 2017.2019.
The Company recorded a provision for loan and leasecredit losses of $11.1$10.8 million for the quarter ended SeptemberJune 30, 2018,2019, a $7.4$3.1 million or 40%, decreaseincrease from the provision recorded for the same period of 2017,2018, primarily driven by an improvement in asset quality.loan growth when comparing the periods.

Non-interest income increased $4.9 million, or 9%, to $58.8 million during the quarter ended June 30, 2019. This increase was primarily driven by higher mortgage income when comparing the periods.


Income before income taxNon-interest expense increased $83.4 million to $131.9 million for the three months ended September 30, 2018,second quarter of 2019 decreased $27.2 million, or 14%, to $169.6 million compared to the same period of 2017; however,2018. This decrease was primarily the result of a decrease in impairment of long-lived assets and other losses due to branch consolidations and closures that took place during the second quarter of 2018 and a decline in salaries and employee benefits expense.
The Company recorded income tax expense only increased $11.6of $32.2 million to $30.4and $30.5 million, respectively, for the third quarter of 2018. Income tax expense was impactedquarters ended June 30, 2019 and 2018, which resulted in 2018 by the reduction of the corporatean effective income tax rate from 35% to 21%of 24.1% and 28.8%, effective January 1, 2018. The effective tax rate was 23.1% and 38.8%, respectively, for the three months ended September 30, 2018 and 2017.respectively.
The following summarizes year-to-date 2018 results compared to 2017 results:Year-to-Date Financial Performance Summary:
Net income available to common shareholders for the nine months ended September 30, 2018 totaled $232.1 million, or $4.14 diluted EPS, compared to $124.0 million, or $2.45 diluted EPS, for the same period of 2017. Non-GAAP core EPS, which excludes merger-related costs and other items (disclosed in Table 17 - Non-GAAP measures), was $4.83 in the first nine months of 2018 compared to $3.13 for the same period of 2017.
•
Net income available to common shareholders for the six months ended June 30, 2019 totaled $197.2 million, or $3.61 diluted EPS, compared to $134.2 million, or $2.41 diluted EPS, for the same period of 2018. Non-GAAP core EPS, which excludes merger-related costs and other items disclosed in Table 17 - Non-GAAP measures, was $3.59 in the first half of 2019 compared to $3.09 for the same period of 2018.
Net interest income was $748.2$505.8 million for the first nine monthshalf of 2018,2019, a $174.9$16.8 million, or 31%3%, increase compared to the same period of 2017. The increase in net interest income was primarily volume-related due to the Sabadell United and Gibraltar acquisitions, but was also impacted by higher earning asset yields offset by higher funding costs.2018. Net interest margin on a tax-equivalent basis increased 9decreased 14 basis points to 3.72%3.58% from 3.63%.
Non-interest income increased $1.8 million, or 1%3.72%, primarily attributable to $151.6 million during the nine months ended September 30, 2018, primarily due to increasesa higher cost of funds in certain of the Company's fee income businesses, offset by a decrease in mortgage income.
Non-interest expense for the first nine months of 2018 increased $69.6 million, or 14%, to $554.5 million compared to the same period of 2017, largely due to acquisition-related increases in salaries and employee benefits expense, branch closure expenses, amortization of intangibles, net occupancy and equipment expenses, and other merger and conversion-related expenses.2019.
The Company recorded a provision for loan and leasecredit losses of $26.7$24.5 million for the first nine monthshalf of 2018, a $10.02019, an $8.6 million or 27%, decreaseincrease from the provision recorded for the same period of 2017,2018, primarily driven by an improvement in asset quality inloan growth when comparing the periods.
Non-interest income increased $12.8 million, or 13%, to $111.3 million during the six months ended June 30, 2019. This increase was primarily driven by higher mortgage income and customer swap commissions income.
Non-interest expense for the first ninesix months 2018.
Income before income tax expense increased $117.1of 2019 decreased $56.5 million, or 15%, to $318.6$328.4 million for the nine months ended September 30, 2018 compared to the same period of 2017; however,2018. This decrease was primarily attributable to a decrease in impairment of long-lived assets and other losses due to branch consolidations and closures that took place during the first six months of 2018 and lower salaries and employee benefits expense due to merger-related costs in 2018.
The Company recorded income tax expense only increased $9.1of $62.5 million to $78.4and $48.0 million, respectively, for the first ninesix months of 2018. Income tax expense was impactedended June 30, 2019 and 2018, which resulted in 2018 by the reduction of the corporatean effective income tax rate of 23.7% and 25.7%, respectively.


Financial Condition Summary:
Total assets at June 30, 2019 were $31.4 billion, up $613.5 million, or 2%, from 35%December 31, 2018.
Loans increased $835.5 million, or 4%, from December 31, 2018, driven by strong growth in the Energy and Corporate Asset Finance Groups and the Dallas and Atlanta markets.
Total deposits increased $531.9 million, or 2%, from December 31, 2018.
Credit quality remained strong and stable. Non-performing assets to 21%total assets were 0.60% at June 30, 2019 compared to 0.55% at December 31, 2018. Net charge-offs to average loans and leases, on an annualized basis, decreased one basis point to 0.14% for the six months ended June 30, 2019 compared to 0.15% for the comparable 2018 period.
Shareholders’ equity increased $181.7 million, or 4%, effective January 1,from year-end 2018. This was partially offset by a $6.6On April 4, 2019, the Company issued and sold 4.0 million write-downdepositary shares of deferred tax assetsnon-cumulative perpetual preferred stock for $96.4 million in net proceeds.
During the second quarter of 2018 associated with the finalization of the accounting for the Sabadell United acquisition and the related adjustment to provisional amounts recorded upon enactment of the Tax Act. The effective tax rate was 24.6% and 34.4%, respectively, for the nine months ended September 30, 2018 and 2017.
Summary of Financial Condition at September 30, 2018 Compared to December 31, 2017:
Total assets at September 30, 2018 were $30.1 billion, up $2.2 billion, or 8%, from December 31, 2017, driven by $1.6 billion of assets acquired through the Gibraltar acquisition and organic growth.
Loans increased $2.3 billion, or 11%, in 2018, driven by $1.5 billion of loans acquired from Gibraltar and organic growth.
Total deposits increased $1.7 billion, or 8%, in 2018, driven by $1.1 billion of deposits acquired from Gibraltar and organic growth.
Asset quality and credit metrics improved as non-performing loans to total loans were 0.70% at September 30, 2018 compared to 0.76% at December 31, 2017. In addition, classified assets to total loans were 1.09% at September 30, 2018 compared to 1.45% at December 31, 2017.
Shareholders’ equity increased $245.6 million, or 7%, from year-end 2017, primarily driven by the issuance of 2.8 million shares of common stock in March 2018 as part of consideration for the Gibraltar acquisition.
On May 10, 2018, the Board of Directors of the Company authorized the repurchase of up to 1,137,500 shares of the Company's common stock. During the second and third quarters of 2018,2019, the Company repurchased 763,2101.8 million common shares for $134.8 million at a weighted average price of $79.99$76.59 per common share.


Outlook
2018 Financial Guidance:
On October 19, 2018, For the six months ended June 30, 2019, the Company announced the following updates to the previously provided financial guidancerepurchased 2.1 million common shares for 2018, as management narrows ranges as we begin fourth quarter. Management believes third quarter 2018 results are in-line with full year 2018 expectations.$164.7 million at a weighted average cost of $76.70 per share.
The following further details management's expectations for 2018:
Average earning assets of approximately $27.2 billion to $27.4 billion;
Consolidated annualized loan growth of 12% to 13.5%;

Consolidated annualized deposit growth of 9% to 10%;
Provision expense of approximately $34 million to $37 million;
Non-interest income, on a non-GAAP core basis, of approximately $198 million to $203 million;
Non-interest expense, on a non-GAAP core basis, of approximately $682 million to $686 million;
An effective tax rate of approximately 22% to 23%;
Net interest margin of approximately 3.70% to 3.71%;
Pre-tax one time charges of approximately $41 million to $42 million; and
Stable credit quality.
Management also noted the following additional details regarding the 2018 financial guidance:
Pre-tax one time charges were updated to include the previously announced 2018 branch closures;
The updated 2018 financial guidance above assumes one additional federal funds rate increases in late 2018;
Management anticipates share repurchases of approximately $30 million to $35 million for the fourth quarter of 2018; and
The expected effective tax rate for the year excludes the income tax effects of merger and other pre-tax non-core adjustments, as well as other income tax adjustments.
Fourth Quarter 2018 Special Items:
In connection with filing its 2017 income tax returns, the Company anticipates recognizing a non-core, permanent net income tax benefit of approximately $55 million in the fourth quarter of 2018. This anticipated benefit is based on the repricing of its current and deferred income tax position associated with the Tax Act following the filing of the Company’s remaining state income tax returns and the receipt of written consent from the IRS on a tax accounting method change.  The Company expects these items to be finalized in the fourth quarter of 2018.







2020 Strategic Goals:
In addition, on April 19, 2018, the Company announced its 2020 Strategic Goals, which provide financial and operating targets for Company performance to meet or exceed by the end of 2020.
The 2020 Strategic Goals are as follows:
Core EPS growth of greater than 10%;
Core Return on Average Assets of greater than 1.30%;
Core Return on Average Tangible Common Equity of greater than 15%; and
Core Tangible Efficiency Ratio of less than 55%.
See the Non-GAAP measures section of Management's Discussion and Analysis for a discussion of how non-GAAP core measures differ from GAAP, and how management uses these non-GAAP measures.


FINANCIAL OVERVIEW
The following table sets forth selected financial ratios and other relevant data used by management to analyze the Company's performance.
TABLE 1—SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
As of and For the Three Months Ended September 30,As of and For the Three Months Ended June 30,
2018 20172019 2018
Key Ratios (1)
      
Return on average assets1.34% 0.45%1.30% 1.01%
Core return on average assets (Non-GAAP) (2)
1.35
 0.87
1.31
 1.32
Return on average common equity10.21
 2.92
10.05
 7.87
Core return on average tangible common equity (Non-GAAP) (2) (3)
16.34
 8.95
15.58
 16.70
Equity to assets at end of period13.09
 13.32
13.48
 12.99
Earning assets to interest-bearing liabilities at end of period143.56
 142.14
142.78
 145.38
Interest rate spread (4)
3.37
 3.42
3.09
 3.44
Net interest margin (TE) (4) (5)
3.74
 3.64
3.57
 3.76
Non-interest expense to average assets (annualized)2.24
 3.05
2.18
 2.65
Efficiency ratio (6)
54.2
 75.0
54.0
 63.5
Core tangible efficiency ratio (TE) (Non-GAAP) (2) (3) (5) (6)
52.0
 57.9
52.0
 54.3
Common stock dividend payout ratio21.8
 76.5
22.6
 28.9
Asset Quality Data      
Non-performing assets to total assets at end of period (7)
0.63% 0.63%0.60% 0.54%
Allowance for credit losses to non-performing loans at end of period (7)
97.20
 106.76
101.14
 107.50
Allowance for credit losses to total loans at end of period0.68
 0.80
0.69
 0.68
Consolidated Capital Ratios      
Tier 1 leverage ratio9.65% 10.17%9.71% 9.54%
Common Equity Tier 1 (CET1)10.79
 10.93
Common equity tier 1 (CET1)10.38
 10.72
Tier 1 risk-based capital ratio11.33
 11.53
11.26
 11.27
Total risk-based capital ratio12.42
 12.78
12.33
 12.37
(1) 
With the exception of end-of-period ratios, all ratios are based on average daily balances during the respective periods.
(2) 
See Table 17 for GAAP to Non-GAAP reconciliations.
(3) 
Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding amortization expense on a tax-effected basis where applicable.
(4) 
Interest rate spread represents the difference between the weighted average yield on earning assets and the weighted average cost of interest-bearing liabilities. Net interest margin represents net interest income as a percentage of average earning assets.
(5) 
Fully taxable equivalent ("TE") calculations include the tax benefit associated with related income sources that are tax-exempt using a rate of 21% in 2018 and 35% in 2017..
(6) 
The efficiency ratio represents non-interest expense as a percentage of total revenues. Total revenues are the sum of net interest income and non-interest income.
(7) 
Non-performing loans consist of non-accruing loans and accruing loans 90 days or more past due. Non-performing assets consist of non-performing loans and other real estate owned, including repossessed assets.



ANALYSIS OF RESULTS OF OPERATIONS
Net Interest Income/Net Interest margin
Net interest income is the difference between interest realized on earning assets and interest paidaccrued on interest-bearing liabilities and is also the largest driver of earnings. As such, it is subject to constant scrutiny by management. The rate of return and relative risk associated with earning assets are weighed to determine the appropriateness and mix of earning assets. Additionally, the need for lower cost funding sources is weighed against relationships with clients and future growth opportunities. The Company’s net interest spread, which is the difference between the yields earned on average earning assets and the rates paid on average interest-bearing liabilities, was 3.37%3.09% and 3.42%3.44%, during the three months ended SeptemberJune 30, 20182019 and 2017,2018, respectively, and 3.40%3.12% and 3.41%3.42% for the ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, respectively. The Company’s net interest margin on a taxable equivalent (“TE”) basis, which is net interest income (TE) as a percentage of average earning assets, was 3.74%3.57% and 3.64%3.76%, respectively, for the three months ended SeptemberJune 30, 2019 and 2018, and 2017,3.58% and 3.72% and 3.63%, respectively, for the ninesix months ended SeptemberJune 30, 20182019 and 2017.2018.



The following table sets forth information regarding (i) the total dollar amount of interest income from earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) net interest spread; and (v) net interest margin. Information is based on average daily balances during the indicated periods. Investment security market value adjustments and trade-date accounting adjustments are not considered to be earning assets and, as such, the net effect of these adjustments is included in non-earning assets.
TABLE 2—QUARTERLY AVERAGE BALANCES, NET INTEREST INCOME AND INTEREST YIELDS / RATES
Three Months Ended September 30,Three Months Ended June 30,
2018 20172019 2018
(Dollars in thousands)Average
Balance		 
Interest
Income/Expense (1)
 
Yield/ Rate (TE)(2)
 Average
Balance		 
Interest
Income/Expense (1)
 
Yield/ Rate (TE)(2)
(in thousands)Average
Balance		 
Interest
Income/Expense (1)
 
Yield/ Rate (TE)(2)
 Average
Balance		 
Interest
Income/Expense (1)
 
Yield/ Rate (TE)(2)
Earning Assets:                      
Loans and leases:                      
Commercial loans and leases$14,825,572
 $191,014
 5.13% $12,951,243
 $146,003
 4.52%$15,766,423
 $205,093
 5.24% $14,631,985
 $178,830
 4.92%
Residential mortgage loans4,230,471
 48,145
 4.55% 2,464,348
 28,645
 4.65%4,482,150
 49,388
 4.41% 4,041,259
 47,215
 4.67%
Consumer and other loans3,106,330
 43,966
 5.62% 2,925,563
 42,240
 5.73%2,872,116
 42,205
 5.89% 3,157,476
 44,431
 5.64%
Total loans and leases22,162,373
 283,125
 5.09% 18,341,154
 216,888
 4.73%23,120,689
 296,686
 5.16% 21,830,720
 270,476
 4.98%
Mortgage loans held for sale87,823
 1,037
 4.72% 132,309
 1,209
 3.66%159,931
 1,588
 3.97% 72,917
 836
 4.59%
Investment securities(3)
5,016,163
 29,793
 2.43% 4,709,526
 26,246
 2.32%4,853,858
 33,803
 2.83% 4,958,769
 29,325
 2.42%
Other earning assets456,120
 3,112
 2.71% 789,223
 2,629
 1.32%639,232
 3,890
 2.44% 580,477
 3,186
 2.20%
Total earning assets27,722,479
 317,067
 4.57% 23,972,212
 246,972
 4.14%28,773,710
 335,967
 4.70% 27,442,883
 303,823
 4.46%
Allowance for loan and lease losses(139,075)     (147,046)    (145,854)     (145,565)    
Non-earning assets2,462,827
     2,271,755
    2,643,966
     2,473,534
    
Total assets$30,046,231
     $26,096,921
    $31,271,822
     $29,770,852
    
Interest-bearing liabilities                      
Deposits:                      
NOW accounts$4,296,392
 $8,841
 0.82% $3,203,657
 $4,384
 0.54%$4,488,691
 $11,623
 1.04% $4,494,064
 $8,620
 0.77%
Savings and money market accounts9,237,614
 23,076
 0.99% 8,566,873
 11,650
 0.54%9,014,822
 30,845
 1.37% 9,146,302
 18,434
 0.81%
Time deposits3,023,180
 12,484
 1.64% 2,413,727
 5,766
 0.95%4,156,974
 23,398
 2.26% 2,719,627
 9,105
 1.34%
Total interest-bearing deposits (4)
16,557,186
 44,401
 1.06% 14,184,257
 21,800
 0.61%17,660,487
 65,866
 1.50% 16,359,993
 36,159
 0.89%
Short-term borrowings1,196,165
 4,727
 1.57% 1,619,242
 4,152
 1.02%996,606
 5,197
 2.09% 1,037,473
 3,327
 1.29%
Long-term debt1,381,010
 8,714
 2.50% 742,765
 4,137
 2.21%1,465,685
 9,565
 2.62% 1,381,625
 8,224
 2.39%
Total interest-bearing liabilities19,134,361
 57,842
 1.20% 16,546,264
 30,089
 0.72%20,122,778
 80,628
 1.61% 18,779,091
 47,710
 1.02%
Non-interest-bearing deposits6,684,343
     5,601,071
    6,442,217
     6,795,878
    
Non-interest-bearing liabilities292,445
     273,163
    463,803
     281,820
    
Total liabilities26,111,149
     22,420,498
    27,028,798
     25,856,789
    
Shareholders’ equity3,935,082
     3,676,423
    4,243,024
     3,914,063
    
Total liabilities and shareholders’ equity$30,046,231
     $26,096,921
    $31,271,822
     $29,770,852
    
Net earning assets$8,588,118
     $7,425,948
    $8,650,932
     $8,663,792
    
Net interest income/ Net interest spread  $259,225
 3.37%   $216,883
 3.42%  $255,339
 3.09%   $256,113
 3.44%
Net interest income (TE) /
Net interest margin (TE) (1)
  $260,727
 3.74%   $219,463
 3.64%  $256,677
 3.57%   $257,562
 3.76%


(1) 
Interest income includes loan fees of $0.8 million and $0.9 million for the three-month periods ended SeptemberJune 30, 20182019 and 2017, respectively.2018.
(2) 
TaxableFully taxable equivalent yields(TE) calculations include the tax benefit associated with related income sources that are calculatedtax-exempt using a rate of 21% for 2018 and a rate of 35% for 2017..
(3) 
Balances exclude unrealized gains or losses on securities available for sale and the impact of trade date accounting.
(4) 
Total deposit costs for the quartersthree months ended SeptemberJune 30, 2019 and 2018 were 1.10% and 2017 were 0.76% and 0.44%0.63%, respectively.



TABLE 3—YEAR-TO-DATE AVERAGE BALANCES, NET INTEREST INCOME AND INTEREST YIELDS / RATES
Nine Months Ended September 30,Six Months Ended June 30,
2018 20172019 2018
(Dollars in thousands)Average Balance 
Interest
Income/Expense (1)
 
Yield/ Rate (TE)(2)
 Average Balance 
Interest
Income/Expense (1)
 
Yield/ Rate (TE)(2)
(in thousands)Average Balance 
Interest
Income/Expense (1)
 
Yield/ Rate (TE)(2)
 Average Balance 
Interest
Income/Expense (1)
 
Yield/ Rate (TE)(2)
Earning Assets:                      
Loans and leases:                      
Commercial loans and leases$14,517,767
 $534,504
 4.94% $11,676,048
 $392,909
 4.55%$15,511,456
 $399,603
 5.22% $14,361,314
 $343,490
 4.84%
Residential mortgage loans3,811,786
 129,854
 4.54% 1,689,905
 55,838
 4.41%4,434,159
 97,217
 4.38% 3,598,974
 81,709
 4.54%
Consumer and other loans3,069,198
 127,312
 5.55% 2,869,756
 116,383
 5.42%2,916,013
 84,745
 5.86% 3,050,324
 83,346
 5.51%
Total loans and leases21,398,751
 791,670
 4.96% 16,235,709
 565,130
 4.69%22,861,628
 581,565
 5.14% 21,010,612
 508,545
 4.89%
Mortgage loans held for sale89,845
 3,027
 4.49% 150,873
 3,429
 3.03%127,937
 2,642
 4.13% 90,873
 1,990
 4.38%
Investment securities(3)
4,940,093
 87,212
 2.41% 4,163,596
 68,480
 2.30%4,952,840
 69,928
 2.87% 4,901,427
 57,419
 2.40%
Other earning assets571,346
 9,524
 2.23% 852,908
 7,041
 1.11%586,780
 7,916
 2.72% 629,915
 6,412
 2.05%
Total earning assets27,000,035
 891,433
 4.43% 21,403,086
 644,080
 4.07%28,529,185
 662,051
 4.69% 26,632,827
 574,366
 4.36%
Allowance for loan and lease losses(142,960)     (146,280)    (143,398)     (144,934)    
Non-earning assets2,466,370
     2,026,028
    2,668,085
     2,468,169
    
Total assets$29,323,445
     $23,282,834
    $31,053,872
     $28,956,062
    
Interest-bearing liabilities                      
Deposits:                      
NOW accounts$4,384,425
 $24,542
 0.75% $3,188,866
 $10,981
 0.46%$4,473,746
 $23,020
 1.04% $4,429,171
 $15,701
 0.71%
Savings and money market accounts9,018,101
 56,089
 0.83% 7,624,362
 29,009
 0.51%9,051,755
 59,606
 1.33% 8,906,526
 33,013
 0.75%
Time deposits2,740,119
 28,173
 1.37% 2,155,112
 14,980
 0.93%4,008,986
 43,475
 2.19% 2,596,241
 15,689
 1.22%
Total interest-bearing deposits (4)
16,142,645
 108,804
 0.90% 12,968,340
 54,970
 0.57%17,534,487
 126,101
 1.45% 15,931,938
 64,403
 0.82%
Short-term borrowings1,073,296
 10,578
 1.32% 798,553
 4,655
 0.78%1,073,485
 10,913
 2.05% 1,010,843
 5,851
 1.17%
Long-term debt1,380,000
 23,824
 2.31% 663,752
 11,111
 2.24%1,464,779
 19,214
 2.65% 1,379,487
 15,110
 2.21%
Total interest-bearing liabilities18,595,941
 143,206
 1.03% 14,430,645
 70,736
 0.66%20,072,751
 156,228
 1.57% 18,322,268
 85,364
 0.94%
Non-interest-bearing deposits6,587,729
     5,192,491
    6,357,237
     6,538,622
    
Non-interest-bearing liabilities283,438
     232,130
    449,240
     278,861
    
Total liabilities25,467,108
     19,855,266
    26,879,228
     25,139,751
    
Shareholders’ equity3,856,337
     3,427,568
    4,174,644
     3,816,311
    
Total liabilities and shareholders’ equity$29,323,445
     $23,282,834
    $31,053,872
     $28,956,062
    
Net earning assets$8,404,094
     $6,972,441
    $8,456,434
     $8,310,559
    
Net interest income/ Net interest spread  $748,227
 3.40%   $573,344
 3.41%  $505,823
 3.12%   $489,002
 3.42%
Net interest income (TE) /
Net interest margin (TE) (1)
  $752,709
 3.72%   $580,887
 3.63%  $508,502
 3.58%   $491,912
 3.72%


(1) 
Interest income includes loan fees of $2.4$1.8 million and $2.3$1.6 million for the nine-monthsix-month periods ended SeptemberJune 30, 20182019 and 2017,2018, respectively.
(2) 
TaxableFully taxable equivalent yields(TE) calculations include the tax benefit associated with related income sources that are calculatedtax-exempt using a rate of 21% for 2018 and a rate of 35% for 2017..
(3) 
Balances exclude unrealized gains or losses on securities available for sale and the impact of trade date accounting.
(4) 
Total deposit costs for the ninesix months ended SeptemberJune 30, 2019 and 2018 were 1.06% and 2017 were 0.64% and 0.40%0.58%, respectively.





Net interest income increased $42.3decreased $0.8 million to $259.2$255.3 million in the thirdsecond quarter of 20182019 when compared to the same quarter of 2017. Volume changes contributed to 85% of this increase and 15% of the increase was driven by changes in rates. The primarily volume-driven increase in net interest income for the third quarter of 2018 is the result of a $3.8 billion, or 16%, increase in average earning assets, primarily due to the Sabadell United and Gibraltar acquisitions, and a 43 basis points, or 10%, increase in earning asset yield. This increase is partially offset by a $2.6 billion, or 16%, increase in average interest-bearing liabilities compared to the third quarter of 2017, and a 48 basis points, or 67%, increase in associated costs. The total cost of funding in the third quarter of 2018 was 89 basis points, compared to 54 basis points in the third quarter of 2017. The net2018. Net interest margin on a tax-equivalent basis increased 10decreased 19 basis points to 3.74%3.57% from 3.64%3.76% when comparing the periods.
Net interest income increased $174.9$16.8 million, or 3%, to $748.2$505.8 million in the nine monthsfirst half of 20182019 when compared to the same period of 2017. Volume changes contributed to 89% of this increase while 11% was rate-driven. The primarily volume-driven increase in net interest income for the first nine months of 2018 is the result of a $5.6 billion, or 26%, increase in average earning assets, primarily due to the Sabadell United and Gibraltar acquisitions, and a 36 basis points, or 9%, increase in earning asset yield. This increase was partially offset by a $4.2 billion, or 29%, increase in average interest-bearing liabilities compared to the first nine months of 2017, and a 37 basis points, or 56%, increase in associated costs. The total cost of funding in the first nine months of 2018 was 76 basis points, compared to 48 basis points in the same period of 2017.2018. Net interest margin on a tax-equivalent basis increased 9decreased 14 basis points to 3.58% from 3.72% when comparing the year-to-date periods. Earning asset yields and funding costs were impacted by four FOMC interest rate increases of 25 basis points each from 3.63%March 2018 through June 2019.
Interest income increased $32.1 million in the second quarter of 2019 when compared to the same quarter of 2018. Rate changes contributed to 58% of this increase, as the yield on average earning assets rose 24 basis points to 4.70% from 4.46% when comparing the periods. The remaining 42% of the increase was volume-driven from a $1.3 billion, or 5%, increase in average earning assets. Total interest income increased $87.7 million in the first six months of 2019 when compared to the same period of 2018. Rate changes contributed to 54% of this increase, as the yield on average earning assets rose 33 basis points to 4.69% from 4.36% when comparing the periods. See Table 4 below for additional information regardingThe remaining 46% of the changes in net interest income.
Average loans made up 80% and 77% of average earning assets in the third quarters of 2018 and 2017, respectively, and 79% and 76% for the first nine months of 2018 and 2017, respectively. Average loans increased $3.8increase was volume-driven from a $1.9 billion, when comparing the third quarters of 2018 and 2017, and increased $5.2 billion when comparing the nine months ended September 30, 2018 and 2017. The associated taxable-equivalent yield increased 36 basis points when comparing the third quarters of 2018 and 2017, and increased 27 basis points when comparing the nine months ended September 30, 2018 and 2017. Theor 7%, increase in average loans was primarily attributable toearning assets. The drivers of the $4.0 billion and $1.5 billion in loans acquired through the Sabadell United and Gibraltar acquisitions, respectively, as well as growth within the legacy loan portfolio. The increases in earning asset yields for both the average loan yields were primarily driven bythree and six months ended June 30, 2019 included the repricing of variable rate legacy loans and origination coupons above existing portfolio rates.
Average loans and leases made up 80% of average earning assets for the second quarters of 2019 and 2018, and 80% and 79% for the first six months of 2019 and 2018, respectively. Loan interest income increased $26.2 million, as average loans and leases increased $1.3 billion, or 6%, when comparing the second quarters of 2019 and 2018. On a year-to-date basis, loan interest income increased $73.0 million, as average loans and leases increased $1.9 billion, or 9%. The increases when comparing the quarterly and year-to-date periods were driven by both organic and acquired loan growth. Average loan yields increased 18 basis points when comparing the second quarters of 2019 and 2018 and increased 25 basis points when comparing the year-to-date periods. The increase in loan yields was primarily driven by higher recoveries in the acquired loan portfolio as well as rate increases on variable rate loans.
Average investment securities were 17% and 18% of average earning assets during the three and six months ended June 30, 2019 and 2018, respectively. Interest income from investmentsincreased $0.3$4.5 million when comparing the second quarters of 2019 and 2018, and increased $12.5 million when comparing the year-to-date periods.
Interest expense increased $32.9 million when comparing the second quarters of 2019 and 2018, primarily due to a $29.7 million increase in interest expense on deposits. Interest expense increased $70.9 million when comparing the first half of 2019 and 2018, primarily due to a $61.7 million increase in interest expense on deposits. The increases in interest expense were primarily a result of a 61 basis point increase in the rate paid on deposits when comparing the second quarters of 2019 and 2018 and a 63 basis point increase when comparing the year-to-date periods. Deposit costs were driven upward by the repricing of deposits as well as higher rates paid on promotional deposit offerings as a result of market competition. Deposit costs also increased from the impact of acquired Gibraltar deposits, which tended to be higher relative to the Company's legacy business. The Company realized growth of $1.3 billion when compared to the same quarter of 20172018 and increased $0.8$1.6 billion when compared to the nine months ended September 30, 2017, driven by improved purchase yields within the investment securities portfolio.
Average interest-bearing deposits made up 87% and 86%first half of average interest-bearing liabilities2018 in the third quarters of 2018 and 2017, respectively, and 87% and 90% for the nine months ended September 30, 2018 and 2017, respectively. The average balance of interest-bearing deposits, increased $2.4 billionprimarily due to time deposit issuances, market growth, and the aforementioned Gibraltar acquired accounts.
Interest expense on the Company's borrowings increased $3.2 million when comparing the thirdsecond quarters of 2019 and 2018, and 2017, and increased $3.2 billion when comparing the nine months ended September 30, 2018 and 2017, primarily related to the Sabadell United and Gibraltar acquisitions. The rate paid for interest-bearing deposits increased by 45 basis points when comparing the third quarters of 2018 and 2017, and increased 33 basis points $9.2 million when comparing the first nine monthshalf of 20182019 and 2017.2018. The totalincreases were a result of both an increase in average borrowings and basis point increases in the cost of average interest-bearing liabilities increased 48 basis pointsborrowings when comparing the third quarters of 2018 and 2017, and increased 37 basis points when comparing the first nine months of 2018 and 2017. In addition to the impact of higher core deposits from recent acquisitions, the total cost of interest-bearing liabilities rose due to an upward repricing of deposits, higher yields on promotional deposit offerings, greater reliance on brokered wholesale CD funding, and increases in the average rate paid on short-term and long-term FHLB advances.periods.
The increases in both earning asset yields and funding costs were impacted by the FOMC's interest rate increases of 25 basis points in December 2017, March 2018, June 2018, and September 2018.


The following table displays the dollar amount of changes in interest income and interest expense for major components of earning assets and interest-bearing liabilities. The table distinguishes between (i) changes attributable to volume (changes in average volume between periods times the average yield/rate for the two periods), (ii) changes attributable to rate (changes in average rate between periods times the average volume for the two periods), and (iii) total increase (decrease). Changes attributable to both volume and rate are allocated ratably between the volume and rate categories.
TABLE 4 - SUMMARY OF CHANGES IN NET INTEREST INCOME
Three months ended September 30, 2018 compared to September 30, 2017 Nine months ended September 30, 2018 compared to September 30, 2017Three months ended June 30, 2019 compared to June 30, 2018 Six months ended June 30, 2019 compared to June 30, 2018
  
Change Attributable To   Change Attributable To  Change Attributable To   Change Attributable To  
(Dollars in thousands)Volume Rate Net Increase
(Decrease)		 Volume Rate Net Increase
(Decrease)
(in thousands)Volume Rate Net Increase
(Decrease)		 Volume Rate Net Increase
(Decrease)
Earning assets:                      
Loans and leases:                      
Commercial loans and leases$20,227
 $24,784
 $45,011
 $96,118
 $45,477
 $141,595
$11,818
 $14,445
 $26,263
 $24,693
 $31,420
 $56,113
Residential mortgage loans20,112
 (612) 19,500
 72,233
 1,783
 74,016
4,958
 (2,785) 2,173
 18,395
 (2,887) 15,508
Consumer and other loans2,831
 (1,105) 1,726
 8,917
 2,012
 10,929
(3,955) 1,729
 (2,226) (3,598) 4,997
 1,399
Mortgage loans held for sale(470) 298
 (172) (1,692) 1,290
 (402)878
 (126) 752
 771
 (119) 652
Investment securities1,765
 1,782
 3,547
 13,430
 5,302
 18,732
(652) 5,130
 4,478
 585
 11,924
 12,509
Other earning assets(1,472) 1,955
 483
 (2,393) 4,876
 2,483
360
 344
 704
 (289) 1,793
 1,504
Net change in income on earning assets42,993
 27,102
 70,095
 186,613
 60,740
 247,353
13,407
 18,737
 32,144
 40,557
 47,128
 87,685
Interest-bearing liabilities:                      
Deposits:                      
NOW accounts1,799
 2,658
 4,457
 5,082
 8,479
 13,561
(10) 3,013
 3,003
 160
 7,159
 7,319
Savings and money market accounts958
 10,468
 11,426
 6,560
 20,520
 27,080
(226) 12,637
 12,411
 624
 25,969
 26,593
Time deposits1,729
 4,989
 6,718
 4,771
 8,422
 13,193
6,245
 8,048
 14,293
 11,295
 16,491
 27,786
Borrowings2,526
 2,626
 5,152
 14,810
 3,826
 18,636
1,222
 1,989
 3,211
 3,342
 5,824
 9,166
Net change in expense on interest-bearing liabilities7,012
 20,741
 27,753
 31,223
 41,247
 72,470
7,231
 25,687
 32,918
 15,421
 55,443
 70,864
Change in net interest income$35,981
 $6,361
 $42,342
 $155,390
 $19,493
 $174,883
$6,176
 $(6,950) $(774) $25,136
 $(8,315) $16,821


Provision for Loan and LeaseCredit Losses
The provision for loan and leasecredit losses represents the expense necessary to maintain the ALLLACL at a level that in management's judgment is appropriate to absorb probable losses inherent in the portfolio at the balance sheet date.
The provision for loan and leasecredit losses totaled $11.1$10.8 million for the thirdsecond quarter of 2018,2019, a $7.4$3.1 million, or 40%, decreaseincrease compared to the same period in 2017.2018. For the six months ended June 30 2019, the provision for credit losses of $24.5 million was an $8.6 million increase from the comparable 2018 period. The increase in the provision for credit losses was largely due to non-acquisition related loan growth when comparing the periods.
The Company's provision for loan and lease losses totaled $26.7 million forcovered 156% of net charge-offs in the first ninesix months of 2018, a $10.0 million, or 27%, decrease2019 compared to 98% coverage for the same period in 2017. The decrease in the provision for loan and lease losses was primarily due to an improvement in asset quality, as both non-performing loans and classified loans as a percentage of total loans declined when compared to 2017. In addition, net charge-offs were lower than in 2017. The Company's provision in 2018 was also limited by asset resolutions and cash flow events on acquired loans that reduced the required ALLL for that portfolio.2018.
Refer to the "Asset Quality" section for further discussion on past due loans, non-performing assets, troubled debt restructurings and the allowance for credit losses.



Non-interest Income
Non-interest income totaled $53.1 millionThe Company's operating results for the three months ended SeptemberJune 30, 2019 included non-interest income of $58.8 million compared to $53.9 million for the same period of 2018, a $2.2$4.9 million, or 9%, increase. The increase was primarily attributable to a $4.7 million increase in mortgage income, driven by both an increase in sales volume and favorable fair value adjustments during the second quarter of 2019. Additionally, commission income increased $1.0 million due to an increase in customer swap income. These increases were partially offset by $1.0 million in losses on sales of available-for-sale securities.
On a year-to-date basis, non-interest income totaled $111.3 million compared to $98.5 million for the same period of 2018, a $12.8 million, or 13%, increase. The increase was primarily driven by a $7.0 million increase in mortgage income, the result of both higher margins on the sale of mortgage loans and favorable fair value adjustments. Additionally, commission income increased $4.1 million due to an increase in customer swap income of $4.2 million and an increase in income from bank owned life insurance which increased $1.0 million as a result of additional policies purchased in the third quarter of 2018. These increases were partially offset by $1.0 million in losses on sales of available-for-sale securities.

Non-interest Expense
The Company's operating results for the second quarter of 2019 included non-interest expense of $169.6 million, a decrease of $27.2 million, or14%, when compared to the same period of 2017. Increases in non-interest income during the quarter included $1.3 million in trust department income, $1.0 million in service charges on deposit accounts, and $0.6 million in title revenue, which were primarily driven by recent acquisitions. In addition, swap commissions increased $1.1 million due to an increase in client derivative activity. These increases were partially offset by a $3.3 million decrease in mortgage income, resulting from a $132.0 million decline in originations and a $97.0 million decrease in sales volume. An unfavorable fair value adjustment on mortgage loans held for sale, which are accounted for under the fair value option, also impacted mortgage income during the third quarter of 2018.
Non-interest income totaled $151.6 million for the nine months ended September 30, 2018, a $1.8 million increase compared to the same period of 2017. Increases in non-interest income during the first nine months of 2018 included $5.0 million in trust department income, $4.3 million in service charges on deposit accounts, $1.6 million in title revenue and $1.5 million in credit card and merchant-related income, which were primarily driven by recent acquisitions. In addition, swap commissions increased other non-interest income by $2.2 million due to an increase in client derivative activity. These increases were partially offset by a $13.8 million decrease in mortgage income, resulting from a $276.3 million decline in originations and a $214.1 million decrease in sales volume. The Company's focus on originating mortgage loans held for sale has partially shifted with a mix of new products that entered the portfolio in 2017 and 2018. Mortgage income was also negatively impacted by unfavorable fair value adjustments compared to the first nine months of 2017.
Non-interest Expense
The Company’s results for the third quarter of 2018 included non-interest expense of $169.3 million, a decrease of $31.4 million compared to the same quarter of 2017, largely due to Sabadell United-related merger, conversion, compensation and professional services expenses incurred during the third quarter of 2017. For the quarter, the Company’s efficiency ratio was 54.2%54.0%, compared to 75.0%63.5% in the thirdsecond quarter of 2017.2018.
Professional servicesImpairment of long-lived assets and other losses decreased $17.0$15.2 million, or 76%,primarily due to branch consolidations and closures that took place in the thirdsecond quarter of 20182018.
In addition, salaries and employee benefits decreased $4.1 million in the second quarter of 2019 when compared to the same period of 2017, primarily due to $11.6 million of merger-related legal and professional expenses2018, as a result of the Sabadell United acquisition, as well as a $5.7 million HUD litigation accrual recorded in the third quarter of 2017.
Salaries and employee benefitsfull-time equivalent employees decreased $5.8 million in the third quarter of 2018 when compared to the same period of 2017.by 125 from efficiency initiatives. Severance, retention, and other merger-related compensation expenses decreased $4.7$5.9 million, driven by the Gibraltar acquisition in 2018 and efficiency initiatives. These decreases were offset by merit raises and off-cycle pay increases, higher annual bonus accruals, and higher share-based compensation expense from current period grants.
Other significant decreases in non-interest expense when comparing the second quarter of 2019 to the second quarter of 2018 included:
$2.7 million in insurance expense, driven by the removal of a large bank surcharge assessment by the FDIC and a lower assessment rate in 2019;
$1.5 million in marketing and business development expense, primarily driven by the Sabadell United acquisition during the third quarter of 2017. Full-time equivalent employees decreased 217 over that period, driven by efficiency initiatives, which decreased compensation and related benefits expenses. Merit raises, off cycle pay increases, and incentive expenses partially offset the favorable variations between periods.
The following expenses also drove thea decrease in non-interest expenseCRA expenses; and
$1.3 million in the third quarteramortization of 2018 compared to the third quarter of 2017:
Errors, fines, and losses decreased $4.2 million, primarily due to the gain recognized in the third quarter of 2018 on the early termination of loss share agreements acquired through the Sabadell United acquisition;
Data processing decreased $3.3 million; and
Credit and other loan related expense decreased $2.4 million.acquisition intangibles.
Non-interest expense for the first ninesix months of 2019 totaled $328.4 million, a decrease of $56.5 million, or 15%, from the same period of 2018. On a year-to-date basis, the Company's efficiency ratio decreased from 65.5% in 2018 increased $69.6to 53.2% in 2019.
Impairment of long-lived assets and other losses decreased $22.9 million to $554.5 million, when compareddue to the first nine months of 2017, primarily driven by mergerbranch consolidations and compensation-related expenses from acquisition activity.closures in 2018.
Salaries and employee benefits increased $38.1decreased $10.4 million in the first nine monthshalf of 20182019 when compared to the same period of 2017, primarily related to associates brought over from the recent acquisitions, which increased compensation and related benefits expenses. Severance,2018 as severance, retention, and other merger-related compensation expenses increased $6.9 million, primarily driven by the Gibraltar acquisition. Also,decreased $10.6 million. Additionally, in the first quarter of 2018, the Company rewardedawarded certain associates a one-time cash bonus of $2.3 million following the enactment of tax reform legislation, increasinglegislation. These decreases were offset by higher annual bonus accruals and higher share-based compensation expense.
Insurance expense decreased $5.6 million, driven by $2.3 million. In addition, merit raises, off cycle pay increases, incentivethe removal of a large bank surcharge assessment by the FDIC and a lower assessment rate in 2019. Decreases of $3.9 million in professional services, $3.2 million in computer services expense, and restricted stock grants contributed to the increase$2.4 million in salaries and employee benefits between the periods.




The following acquisition-related expenses also drove the increase in non-interest expense in the first nine months of 2018 compared to the same period of 2017:
Errors, fines, and losses increased $17.0 million, primarily due to branch consolidations/closures;
Amortization of acquisition intangibles increased $8.6 million;
Netnet occupancy and equipment increased $7.4expense were the result of system conversion and other merger-related expenses in 2018. Credit and other loan-related expense decreased $2.5 million primarily due to acquired locations;from lower loan collection expenses, lower mortgage loan servicing fees, and lower credit bureau expenses.
Data processing increased $5.4 million, primarily conversion related; and
Insurance expenses increased $5.3 million, due to an increase in FDIC Deposit Insurance premiums.
These increases in non-interest expense were offset by a decrease in professional services of $19.0 million. The decrease was primarily driven by the $11.7 million HUD litigation accrual recorded in the first nine months of 2017. The remaining decrease was due to merger-related legal expenses incurred during the acquisition of Sabadell United in the third quarter of 2017.


Income Taxes
For the three months ended SeptemberJune 30, 20182019 and 2017,2018, the Company recorded income tax expense of $30.4$32.2 million and $18.8$30.5 million, respectively, which resulted in an effective income tax rate of 23.1%24.1% and 38.8%28.8%, respectively. For the ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, the Company recorded income tax expense of $78.4$62.5 million and $69.4$48.0 million, respectively, which resulted in an effective income tax rate of 24.6%23.7% for the first nine monthshalf of 20182019 and 34.4%25.7% for the same period of 2017.2018. The decrease in the effective income tax rate iswas primarily related to the reductiondiscrete item of $6.6 million in income tax expense recorded during the second quarter of 2018, due to the write-down of deferred tax assets associated with the finalization of purchase accounting for the Sabadell United acquisition and the related impact of the corporate income tax rate from 35% to 21%, effective January 1, 2018.Tax Act on those adjustments.


The difference between the Company's effective tax rate for the three and ninesix months ended SeptemberJune 30, 20182019 and 20172018 and the U.S. statutory tax rates of 21% and 35%, respectively, primarily relates to tax-exempt income, non-deductible expenses, state income taxes (net of federal income tax benefit), and the recognition of tax credits. The effective tax rate may vary significantly due to fluctuations in the amount and source of pretax income, changes in amounts of non-deductible expenses, and timing of the recognition of tax credits. In addition,

The Company is currently under audit by the difference between the Company's effective tax rateInternal Revenue Service for the nine months ended September 30, 2018 and the U.S. statutory tax rate of 21% primarily relatesyears 2014 to the discrete item of $6.6 million in income tax expense due to the write-down of deferred tax assets in the second quarter of 2018 associated with the finalization of the accounting for the Sabadell United acquisition and the related impact of the Tax Act on those adjustments. This adjustment increased the effective tax rate for the nine months ended September 30, 2018 by 2.1% from 22.5% to 24.6%.2017.

ANALYSIS OF FINANCIAL CONDITION
The following discussion highlights the Company’s major categories of earning assets.
Loans and Leases
The Company had total loans and leases of $22.3$23.4 billion at SeptemberJune 30, 2018,2019, an increase of $2.3 billion$835.5 million, or 4%, from December 31, 2017.2018. The increase was a result of $1.5 billion acquired in the first quarter of 2018 from Gibraltar and legacy loan growth of $1.9$1.4 billion, or 8%, offset by pay-downs and pay-offs on loans, primarily from prior period acquisitions.
The Company’s loan to deposit ratio was 96% at September 30, 2018 and 94% at December 31, 2017. The percentage of fixed-rate loans to total loans was 40% at September 30, 2018 compared to 41% at the end of 2017.

The major categories of loansLoans and leases outstanding at SeptemberJune 30, 20182019 and December 31, 20172018 are presented in the following table.
TABLE 5—SUMMARY OF LOANS
September 30, 2018 December 31, 2017 $ Change % ChangeJune 30, 2019 December 31, 2018 $ Change % Change
(Dollars in thousands)Balance Mix Balance Mix    
(in thousands)Balance Mix Balance Mix    
Commercial loans and leases:                      
Real estate- construction$1,127,988
 5% $1,240,396
 6% (112,408) (9)$1,342,984
 6% $1,196,366
 5% 146,618
 12
Real estate- owner-occupied2,458,964
 11
 2,375,321
 12
 83,643
 4
2,373,143
 10
 2,395,822
 11
 (22,679) (1)
Real estate- non-owner occupied5,794,931
 26
 5,322,513
 26
 472,418
 9
6,102,143
 26
 5,796,117
 26
 306,026
 5
Commercial and industrial (1)
5,581,040
 25
 5,135,067
 26
 445,973
 9
6,161,759
 26
 5,737,017
 25
 424,742
 7
Total commercial loans and leases14,962,923
 67
 14,073,297
 70
 889,626
 6
15,980,029
 68
 15,125,322
 67
 854,707
 6
                      
Residential mortgage loans4,300,163
 19
 3,056,352
 15
 1,243,811
 41
4,538,194
 20
 4,359,156
 19
 179,038
 4
                      
Consumer loans:           
Consumer and other loans:           
Home equity2,350,176
 11
 2,292,275
 12
 57,901
 3
2,147,897
 9
 2,304,694
 10
 (156,797) (7)
Other730,644
 3
 656,257
 3
 74,387
 11
689,191
 3
 730,643
 4
 (41,452) (6)
Total consumer loans3,080,820
 14
 2,948,532
 15
 132,288
 4
Total consumer and other loans2,837,088
 12
 3,035,337
 14
 (198,249) (7)
Total loans and leases$22,343,906
 100% $20,078,181
 100% 2,265,725
 11
$23,355,311
 100% $22,519,815
 100% 835,496
 4
(1)Includes equipment financing leases


Loan Portfolio ComponentsSegments
The Company believes its loan portfolio is diversified by product and geography throughout its footprint. With the Gibraltar acquisition, the Company added $1.5 billion of loans and expanded its presence in Southeast Florida and entered New York. Excluding acquired loans, loanLoan growth thus far in 20182019 was strongest in the the Energy Group (reserve-based(primarily reserve-based and midstream lending), Corporate Asset Finance divisionGroup (equipment financing and leasing business), and the New OrleansDallas and Atlanta markets. Loans in the Energy Group increased $316.6$284.0 million, or 73%31% since December 31, 2017.2018. The Corporate Asset Finance division, which was created in 2017,Group grew loans and leases $199.8$178.0 million, or 74%35%, thus far in 2018.2019. The New OrleansDallas market had loan growth of $99.2 million, or 15%, and the Atlanta marketsmarket had growth of $155.0$95.6 million, and $102.9 million, respectively,or 7%, in the first ninesix months of 2019.
The Company’s loan to deposit ratio was 96% at June 30, 2019 and 95% at December 31, 2018. The percentage of fixed-rate loans to total loans was 37% at June 30, 2019 compared to 39% at the end of 2018.
In order to assess the risk characteristics of the loan portfolio, the Company considers the current U.S. economic environment and that of its primary market areas. See Note 5, Allowance for Credit Losses, to the unaudited consolidated financial statements for credit quality factors by loan portfolio segment.
Commercial Loans and Leases
Total commercial loans and leases increased $889.6$854.7 million, or 6%, from December 31, 2017.2018. Commercial loans and leases decreasedincreased to 67%68% of the total portfolio at SeptemberJune 30, 20182019 compared to 70%67% at December 31, 2017, primarily due to a mix-shift from the acquisition of a relatively large residential mortgage portfolio from Gibraltar.2018. Unfunded commitments on commercial loans including approved loan commitments not yet funded were $5.9$6.3 billion at SeptemberJune 30, 2018,2019, an increase of $869.9$266.7 million, or 17%4%, when compared to the end of the prior year.


Commercial real estate loans include loans to commercial customers for long-termmedium-term financing of land and buildings or for land development or construction of a building. These loans are repaid from revenues through operations of the businesses, rents of properties, sales of properties and refinances. The Company’sCompany's underwriting standards generally provide for loan terms of three to seven years, with amortization schedules of generally no more than twenty-five years. Low loan-to-value ratios are generally maintained and usually limited to no more than 80% at the time of origination. The commercial real estate portfolio is comprised of approximately 12%14% construction loans, 26%24% owner-occupied loans, and 62% non-owner-occupied loans as of SeptemberJune 30, 2018,2019, relatively consistent with 14%13%, 27%25%, and 59%62%, respectively, at December 31, 2017.2018. Commercial real estate loans increased $443.7$430.0 million, or 5%, during the first ninesix months of 2018,2019, from loan growth across multiple markets, primarily from $292.5 million acquired from Gibraltar.

in the Atlanta, Dallas, South Florida, Naples, and New Orleans markets.
Commercial and industrial ("C&I") loans and leases represent loans to commercial customers to finance general working capital needs, equipment purchases and leases and other projects where repayment is derived from cash flows resulting from business operations. The Company originates commercial businessC&I loans and leases on a secured and, to a lesser extent, unsecured basis. The Company’s commercial businessC&I loans may be term loans or revolving lines of credit. Term loans are generally structured with terms of no more than three to seven years, with amortization schedules of generally no more than fifteen years. Commercial businessC&I term loans and leases are generally secured by equipment, machinery, or other corporate assets. The Company also provides for revolvingRevolving lines of credit are generally structured as advances upon perfected security interests in accounts receivable and inventory. Revolving lines of creditinventory and generally have annual maturities. The Company obtains personal guarantees of the principals as additional security for most commercial business loans.
As of SeptemberJune 30, 2018,2019, commercial and industrial loans and leases totaled $5.6$6.2 billion, a $446.0$424.7 million, or 9%7%, increase from December 31, 2017, which includes approximately $43.1 million2018, driven by growth in loans acquired from Gibraltar.the Company's Energy and Corporate Assets Finance Groups. Commercial and industrial loans and leases comprised 25%26% of the total portfolio at SeptemberJune 30, 20182019 and 26%25% at December 31, 2017.2018.


The following table details the Company’s commercial loans and leases by state.
TABLE 6—COMMERCIAL LOANS AND LEASES BY STATE OF ORIGINATION
(Dollars in thousands)September 30, 2018 December 31, 2017 $ Change % Change
(in thousands)June 30, 2019 December 31, 2018 $ Change % Change
Louisiana$3,379,624
 $3,472,648
 (93,024) (3)$3,539,355
 $3,521,596
 17,759
 1
Florida4,888,284
 4,671,023
 217,261
 5
4,806,650
 4,756,957
 49,693
 1
Alabama1,278,237
 1,238,482
 39,755
 3
1,354,424
 1,289,146
 65,278
 5
Texas(1)2,295,472
 1,961,832
 333,640
 17
2,666,869
 2,310,642
 356,227
 15
Georgia1,076,015
 1,023,600
 52,415
 5
1,139,602
 1,078,983
 60,619
 6
Arkansas711,778
 704,283
 7,495
 1
773,333
 711,484
 61,849
 9
Tennessee595,493
 576,538
 18,955
 3
548,361
 584,119
 (35,758) (6)
New York42,076
 —
 42,076
 100
51,003
 44,026
 6,977
 16
South Carolina and North Carolina80,232
 20,246
 59,986
 296
136,458
 92,800
 43,658
 47
Other (1)(2)
615,712
 404,645
 211,067
 52
963,974
 735,569
 228,405
 31
Total$14,962,923
 $14,073,297
 889,626
 6
$15,980,029
 $15,125,322
 854,707
 6


(1) 
Texas loans include $1.2 billion and $911.5 million in Energy Group loans at June 30, 2019 and December 31, 2018, respectively.
(2)
Other loans include primarily equipment financing and corporate asset financing leases, which the Company does not classify by state.

Residential Mortgage Loans
Residential mortgage loans consist of loans to consumers to finance a primary residence. The residential mortgage loan portfolio is comprised of non-conforming 1-4 family mortgage loans secured by properties located in the Company's market areas andareas. The residential mortgage loan portfolio is originated under terms and documentation that permit their sale in a secondary market, as well asmarket. The larger mortgage loans of current and prospective private banking clients. These mortgage loansclients are generally retained to enhance relationships, but also tend to be more profitable due to the expected shorter durations and relatively lower servicing costs associated with loans of this size. The Company does not originate or hold high loan-to-value, negative amortization, option ARM, or other exotic mortgage loans in its portfolio. The Company makes insignificant investments in loans that would be considered sub-prime (e.g., loans with a credit score of less than 620) in order to facilitate compliance with relevant Community Reinvestment Act regulations.
Total residential mortgage loans increased $1.2 billion,$179.0 million, or 41%4%, compared to December 31, 2017,2018, primarily the result of approximately $929.6 milliongrowth in acquired Gibraltar residential mortgage loans.the Houston, New Orleans, Atlanta, and Tampa markets.
Consumer and Other Loans
The Company offers consumer loans in order to provide a full range of retail financial services to customers in the communities in which it operates. The Company originates substantially all of its consumer loans in its primary market areas. At SeptemberJune 30, 2018, $3.12019, $2.8 billion, or 14%12%, of the total loan and lease portfolio was comprised of consumer loans, compared to $2.9$3.0 billion, or 15%14%, at the end of 2017.

2018.
The majority of the consumer loan portfolio is comprised of home equity loans. Home equity lending allowsloans, which allow customers to borrow against the equity in their home and isare secured by a first or second mortgage on the borrower’s residence. Real estate market values at the time the loan is secured affect the amount of credit extended. Changes in these values may impact the extent of potential losses. Home equity loans were $2.4$2.1 billion at SeptemberJune 30, 2018, an increase2019, a decrease of $57.9$156.8 million from December 31, 2017.2018. Unfunded commitments related to home equity loans and lines were $1.0$1.1 billion at SeptemberJune 30, 2018,2019, an increase of $126.0$37.5 million, or 14%4%, from the end of 2017.2018.
All other consumer loans, which consist of credit card loans, automobile loans and other personal loans, increased $74.4decreased $41.5 million, or 11%6%, from December 31, 2017,2018, primarily from an increase of $119.1 milliondecreases in other personal loans $24.9 million of which was acquired from Gibraltar, partially offset by a decrease inand indirect automobile loans, a product that is no longer offered.
In order to assess the risk characteristics of the loan portfolio, the Company considers the current U.S. economic environment and that of its primary market areas. See Note 6, Allowance for Credit Losses, to the unaudited consolidated financial statements for credit quality factors by loan portfolio segment.

Additional information on the Company’s consumer loan portfolio is presented in the following tables. For the purposes of Table 7,8, unscoreable consumer loans have been included with loans with credit scores below 660. Credit scores reflect the most recent information available as of the dates indicated.
TABLE 7—CONSUMER LOANS BY STATE OF ORIGINATION
(Dollars in thousands)September 30, 2018 December 31, 2017 $ Change % Change
(in thousands)June 30, 2019 December 31, 2018 $ Change % Change
Louisiana$1,081,363
 $1,119,462
 (38,099) (3)$1,041,315
 $1,072,628
 (31,313) (3)
Florida971,347
 805,453
 165,894
 21
870,063
 956,159
 (86,096) (9)
Alabama282,789
 277,601
 5,188
 2
246,993
 268,998
 (22,005) (8)
Texas120,163
 131,942
 (11,779) (9)107,882
 126,562
 (18,680) (15)
Georgia138,714
 131,910
 6,804
 5
142,027
 142,067
 (40) —
Arkansas226,841
 237,627
 (10,786) (5)206,461
 216,817
 (10,356) (5)
Tennessee80,153
 89,383
 (9,230) (10)69,349
 78,013
 (8,664) (11)
New York46,088
 —
 46,088
 100
43,139
 46,146
 (3,007) (7)
South Carolina and North Carolina85
 4
 81
 2,025
1,537
 214
 1,323
 618
Other (1)
133,277
 155,150
 (21,873) (14)108,322
 127,733
 (19,411) (15)
Total$3,080,820
 $2,948,532
 132,288
 4
$2,837,088
 $3,035,337
 (198,249) (7)
(1) 
Other loans include primarily credit card and indirect consumer loans, which the Company does not classify by state.
TABLE 8—CONSUMER LOANS BY CREDIT SCORE
(Dollars in thousands)September 30, 2018 December 31, 2017
(in thousands)June 30, 2019 December 31, 2018
Above 720$1,790,195
 $1,666,261
$1,638,048
 $1,708,417
660-720709,361
 702,118
599,563
 666,132
Below 660581,264
 580,153
599,477
 660,788
Total consumer loans$3,080,820
 $2,948,532
$2,837,088
 $3,035,337


Mortgage Loans Held for Sale
Mortgage loans held for sale totaled $188.0 million at June 30, 2019, an increase of $80.3 million, or 74%, from $107.7 million at year-end 2018, as originations have outpaced sales activity during the first two quarters of 2019. The Company continues to sell the majority of conforming mortgage loan originations in the secondary market rather than assume the interest rate risk associated with these longer term assets. Upon the sale, the Company retains servicing on a limited portion of these loans. Loans held for sale totaled $43.0 million at September 30, 2018, a decrease of $91.9 million, or 68%, from $134.9 million at year-end 2017, as sales activity has outpaced originations during the first three quarters of 2018. Origination and sales volumes have decreased from the comparable 2017 period from reduced activity due to higher interest rates.

Loans held for sale have primarily been fixed-rate single-family residential mortgage loans under contracts to be sold in the secondary market. In most cases, loans in this category are sold within thirty days of closing. Buyers generally have recourse to return a purchased loan to the Company under limited circumstances.
See Note 1, Summary of Significant Accounting Policies, in the Annual Report on Form 10-K for the year ended December 31, 2017,2018, for further discussion.
Investment Securities
Investment securities increased $30.3decreased $342.8 million, or 1%7%, since December 31, 20172018 to $4.8$4.6 billion at SeptemberJune 30, 2018,2019, primarily due to purchasessales of investmentavailable-for-sale securities, partially offset by an unfavorable market valuation on available for sale securities.favorable fair value adjustments. Approximately 96% of the Company's investment portfolio is in available for saleavailable-for-sale securities, which experience unrealized losses asgains when interest rates rise.fall. Investment securities approximated 16%15% and 17%16% of total assets at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively.


All of the Company's mortgage-backed securities were issued by government-sponsored enterprises at SeptemberJune 30, 20182019 and December 31, 2017.2018. The Company does not hold any Fannie Mae or Freddie Mac preferred stock, corporate equity, collateralized debt obligations, collateralized loan obligations, or structured investment vehicles, nor does it hold any private label collateralized mortgage obligations, subprime, Alt-A, sovereign debt, or second lien elements in its investment portfolio. At SeptemberJune 30, 20182019 and December 31, 2017,2018, the Company's investment portfolio did not contain any securities that are directly backed by subprime or Alt-A mortgages.
Funds generated as a result of sales and prepayments of investment securities are used to fund loan growth and purchase other securities. The Company continues to monitor market conditions and take advantage of market opportunities with appropriate risk and return elements.
Short-term Investments
Short-term investments primarily result from excess funds invested overnight in interest-bearing deposit accounts at the FRB and the FHLB of Dallas. These balances fluctuate daily depending on the funding needs of the Company and earn interest at the current FRB and FHLB discount rates. The balance in interest-bearing deposits at other institutions decreased $121.7 million, or 40%, from December 31, 2017 to $184.9 million at September 30, 2018, primarily due to deposit decreases and net loan growth. The Company’s cash activity is further discussed in the “Liquidity and Other Off-Balance Sheet Activities” section below.
Asset Quality
The lending activities of the Company are governed by underwriting policies established by management and approved by the Board Risk Committee of the Board of Directors. Commercial risk personnel, in conjunction with senior lending personnel, underwrite the vast majority of commercial loans. The Company provides centralizedFor additional information on loan underwriting, of substantially all residential mortgage, small business and consumer loans. Established loan origination, procedures require appropriate documentation, including financial datamonitoring of loan payment performance, loan review, and credit reports. Forthe determination of past due and non-accrual status, as well as the Company's policies for recording payments received, placing loans and leases secured by real property, the Company generally requires property appraisals, title insurance or a title opinion, hazard insurance, and flood insurance, where appropriate.
Loan payment performance is monitored and late charges are generally assessed on past due accounts. Delinquent and problem loans are administered by functional teams of specialized risk officers. Risk ratings on commercial exposures (as described below) are reviewed on an ongoing basis and are adjusted as necessary based on the obligor’s risk profile and debt capacity. The loan review department is responsible for independently assessing and validating risk ratings assigned to commercial exposures through a periodic sampling process.All other loans are also subject to loan reviews through a similar periodic sampling process.
The Company utilizes an asset risk classification system in accordance with guidelines established by the FRB as part of its efforts to monitor commercial asset quality. In connection with their examinations of insured institutions, both federal and state examiners also have the authority to identify problem assets and, if appropriate, reclassify them. There are three classifications for problem assets: “substandard,” “doubtful,” and “loss”, all of which are considered adverse classifications. Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the Company will sustain some loss if the weaknesses are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full questionable, and there is a high probability of loss based on currently existing facts, conditions and values. An asset classified as loss is considered not collectible and of such little value that continuance as an asset of the Company is not warranted. The Company exercises judgment in determining the risk classification of its commercial exposures.

Commercial loans are placed on non-accrual status, when anyand the resumption of interest accrual on non-accruing loans and leases, see Note 1, Summary of Significant Accounting Policies, and the following occur: 1) the loan is maintained on a cash basis because"Asset Quality" section of deteriorationMD&A in the financial condition ofAnnual Report on Form 10-K for the borrower; 2) collection of the full contractual amount of principal or interest is not expected (even if the loan is currently paying as agreed); or 3) when principal or interest has been in default for a period of 90 days or more, unless the loan is both well secured and in the process of collection. Factors considered in determining the collection of the full contractual amount of principal or interest include assessment of the borrower’s cash flow, valuation of underlying collateral, and the ability and willingness of guarantors to provide credit support.  Certainyear ended December 31, 2018.
For commercial loans are also placed on non-accrual status when payment is not past due and full paymentleases, the Company utilizes regulatory classification ratings to monitor credit quality. For further discussion of principal and interest is expected, but there is doubt about the borrower’s ability to comply with existing repayment terms. Consideration will be given to placing a loan on non-accrual dueregulatory classification ratings, see Note 5, Allowance for Credit Losses, to the deterioration ofunaudited consolidated financial statements. For residential mortgage loans and consumer loans, the debtor’s repayment ability,Company primarily uses the repayment of the loan becoming dependent on the liquidation of collateral, an existing collateral deficiency, the loan being classified as "doubtful" or "loss", the client filing for bankruptcy, and/or foreclosure being initiated. Regarding all classes within the C&Iloan's payment and CRE portfolios, the determination of a borrower’s abilitydelinquency status to make the required principalmonitor credit quality. These credit quality indicators are continually updated and interest payments is based on an examination of the borrower’s current financial statements, industry, management capabilities, and other qualitative factors.
When a loan is placed on non-accrual status, the accrual of interest income ceases and accrued but unpaid interest is generally reversed against interest income.monitored.
Real estate acquired by the Company through foreclosure or by deed-in-lieu of foreclosure is classified as OREO, and is recorded at the lesser of the related loan balance (the pro-rata carrying value for acquired loans) or estimated fair value less costs to sell. Closed bank branches are also classified as OREO and recorded at the lower of cost or market value.
Under GAAP, certain loan modifications or restructurings are designated as TDRs. In general, the modification or restructuring of a debt constitutes a TDR if the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider under current market conditions. See Note 1, Summary of Significant Accounting Policies, in the 20172018 10-K for further details.
Non-performing Assets and Troubled Debt Restructurings
The Company defines non-performing assets as non-accrual loans, accruing loans more than 90 days past due, OREO, and foreclosed property. Management continuously monitors and transfers loans to non-accrual status when warranted.
The Company accounts for loans currently or formerly covered by loss sharing agreements with the FDIC, other loans acquired with deteriorated credit quality, as well as all loans acquired with significant discounts that did not exhibit deteriorated credit quality at acquisition, in accordance with ASC Topic 310-30. Collectively, all loans accounted for under ASC 310-30 are referred to as "acquired impaired loans." Application of ASC Topic 310-30 results in significant accounting differences, compared to loans originated or acquired by the Company that are not accounted for under ASC 310-30. See Note 1, Summary of Significant Accounting Policies, in the 20172018 10-K for further details.
Due to the significant difference in accounting for acquired impaired loans, the Company believes inclusion of these loans in certain asset quality ratios that reflect non-performing assets in the numerator or denominator (or both) results in significant distortion to these ratios. In addition, because loan-level charge-offs related to acquired impaired loans are not recognized inratios, as the financial statements until the cumulative amounts exceed the original loss projections on a pool basis, the net charge-off ratio for acquired loans is not consistent with the net charge-off ratio for other loan portfolios. The inclusion of these loans in certain asset quality ratios could result in a lack of comparability across quarters or years, and could impact comparability with other portfolios that were not impacted by acquired impaired loan accounting. The Company believes that the presentation of certain asset quality measures excluding acquired impaired loans, as indicated below, and related amounts from both the numerator and denominator provides better perspective into underlying trends related to the quality of its loan portfolio. Accordingly, the asset quality measures in the tables below present asset quality information excluding acquired impaired loans, as indicated within each table, and related amounts.


The following table sets forth the composition of the Company’s non-performing assets and TDRs for the periods indicated.
TABLE 9—NON-PERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS
(Dollars in thousands)September 30, 2018 December 31, 2017 $ Change % Change
(in thousands)June 30, 2019 December 31, 2018 $ Change % Change
Non-accrual loans and leases:              
Commercial$107,523
 $111,726
 (4,203) (4)$87,752
 $85,112
 2,640
 3
Mortgage15,898
 17,387
 (1,489) (9)50,046
 30,396
 19,650
 65
Consumer and credit card20,174
 16,275
 3,899
 24
Consumer and other21,194
 21,676
 (482) (2)
Total non-accrual loans and leases143,595
 145,388
 (1,793) (1)158,992
 137,184
 21,808
 16
Accruing loans and leases 90 days or more past due12,452
 6,900
 5,552
 80
851
 2,128
 (1,277) (60)
Total non-performing loans and leases (1) (4)
156,047
 152,288
 3,759
 2
Total non-performing loans and leases (2) (3)
159,843
 139,312
 20,531
 15
OREO and foreclosed property (2)(1)
32,418
 26,533
 5,885
 22
28,106
 30,394
 (2,288) (8)
Total non-performing assets (1)
188,465
 178,821
 9,644
 5
187,949
 169,706
 18,243
 11
Performing troubled debt restructurings (3)
70,869
 81,291
 (10,422) (13)75,614
 80,807
 (5,193) (6)
Total non-performing assets and performing troubled debt restructurings (1)
$259,334
 $260,112
 (778) —
$263,563
 $250,513
 13,050
 5
Non-performing loans and leases to total loans (1) (4)
0.70% 0.76%    
Non-performing loans and leases to total loans and leases (3)
0.68% 0.62%    
Non-performing assets to total assets (1)
0.63% 0.64%    0.60% 0.55%    
Non-performing assets and performing troubled debt restructurings to total assets (1)
0.86% 0.93%    0.84% 0.81%    
Allowance for credit losses to non-performing loans and leases97.20% 101.19%    101.14% 111.55%    
Allowance for credit losses to total loans and leases0.68% 0.77%    0.69% 0.69%    


(1) 
Non-performing loans and non-performing assets include accruing loans 90 days or more past due.
(2)
OREO and foreclosed property at SeptemberJune 30, 20182019 and December 31, 20172018 include $13.9$4.4 million and $4.5$9.0 million, respectively, of former bank properties held for development or resale.
(3)(2) 
Performing troubled debt restructuringsTotal non-performing loans and leases for SeptemberJune 30, 20182019 and December 31, 2017 exclude $69.72018 include $57.9 million and $68.5$61.5 million, respectively, inof non-performing troubled debt restructurings that meet non-performing asset criteria.restructurings.
(4)(3) 
Non-performing loans exclude acquired impaired loans, even if contractually past due or if the Company does not expect to receive payment in full, as the Company is currently accreting interest income over the expected life of the loans.
Total non-performing assets increased $9.6$18.2 million, or 5%11%, compared to December 31, 2017,2018, as non-performing loans and leases increased $3.8$20.5 million and OREO and foreclosed property increased $5.9decreased $2.3 million. Former bank properties increased $9.4 million in 2018 as branches closed were moved out of service and into former bank properties. The increase was partially offset by the sale of OREO properties during the year. Non-performing loans and leases increased 2%15% primarily driven by an increase in accruingnon-accrual mortgage loans, past due more than 90 days, which wasas a result of a limitedsmall number of credits movingmortgage loans moved to past due. The decreasenon-accrual in non-accrual loans was primarily related to payments and charge-offs of non-accrual loans since December 31, 2017.2019.
Non-performing loans and leases were 0.70%0.68% of the total loansportfolio at SeptemberJune 30, 2018, six2019, 6 basis points lowerhigher than at December 31, 2017.2018. Total non-performing assets were 0.63%0.60% of total assets at SeptemberJune 30, 2018, one2019, 5 basis point lowerpoints higher than at December 31, 2017. Including TDRs that are in compliance with their modified terms, total non-performing assets and TDRs decreased $0.8 million during the first nine months of 2018.
At September 30, 2018, the Company had $196.1 million of commercial assets classified as substandard and $35.5 million of commercial assets classified as doubtful. Accordingly, the aggregate of theThe Company’s classified commercial assets was $231.6loans totaled $182.4 million, or 0.78%0.58% of assets and 1.55%1.14% of total commercial loans. At December 31, 2017,2018, classified commercial assetsloans totaled $298.5$182.1 million, or 1.07%0.59% of assets and 2.12%1.20% of total commercial loans. The $66.9 million decrease in commercial classified assets over the past nine months is primarily due to payments on these classified assets.
In addition to the problem loans described above, there were $196.0$138.8 million of commercial loans classified as special mention at SeptemberJune 30, 2018.2019, which in management’s opinion were subject to potential future rating downgrades. Special mention loans are defined as loans withhave potential weaknesses that, may, if not corrected,left uncorrected, may result in future deterioration of the loan.Company's credit position at some future date. Special mention loans decreased $18.5 million, or 12%, from year end 2019, and were 1.31%0.87% of total commercial loans at SeptemberJune 30, 20182019 and 1.49%1.04% at December 31, 2017. Special mention loans at September 30, 2018 decreased $13.9 million, or 7%, from December 31, 2017, primarily from upgrades to a limited number of customer relationships during the first three quarters of 2018.



Past Due and Non-accrual Loans
Past due status is based on the contractual terms of loans. Total past due and non-accrual loans were 1.01%0.87% of total loans and leases at SeptemberJune 30, 20182019 compared to 1.07%0.87% at December 31, 2017.2018. Additional information on past due loans and leases is presented in the following table.
TABLE 10—PAST DUE AND NON-ACCRUAL LOAN SEGREGATION (1) 
September 30, 2018 December 31, 2017  June 30, 2019 December 31, 2018  
(Dollars in thousands)Amount % of
Outstanding
Balance		 Amount % of
Outstanding
Balance		 $ Change % Change
Accruing:           
(in thousands)Amount % of
Outstanding
Balance		 Amount % of
Outstanding
Balance		 $ Change % Change
Accruing loans and leases           
30-59 days past due$38,203
 0.17
 $36,818
 0.18
 1,385
 4
$27,981
 0.12
 $38,579
 0.17
 (10,598) (27)
60-89 days past due32,421
 0.15
 24,899
 0.12
 7,522
 30
15,040
 0.07
 18,753
 0.08
 (3,713) (20)
90-119 days past due9,142
 0.04
 5,986
 0.03
 3,156
 53
851
 0.00
 2,128
 0.01
 (1,277) (60)
120 days past due or more3,310
 0.01
 914
 0.01
 2,396
 262
—
 —
 —
 —
 —
 —
83,076
 0.37
 68,617
 0.34
 14,459
 21
43,872
 0.19
 59,460
 0.26
 (15,588) (26)
Non-accrual:143,595
 0.64
 145,388
 0.73
 (1,793) (1)
Total past due and non-accrual loans$226,671
 1.01
 $214,005
 1.07
 12,666
 6
Non-accrual loans and leases158,992
 0.68
 137,184
 0.61
 21,808
 16
Total past due and non-accrual loans and leases$202,864
 0.87
 $196,644
 0.87
 6,220
 3


(1) 
Past due and non-accrual loan amounts exclude acquired impaired loans, even if contractually past due or if the Company does not expect to receive payment in full, as the Company is currently accreting interest income over the expected life of the loans.
Total past due and non-accrual loans and leases increased $12.7$6.2 million from December 31, 20172018 to $226.7$202.9 million at SeptemberJune 30, 2018.2019. The change was due to an increase of $21.8 million in non-accrual loans, primarily from mortgage loans, largely offset by a $14.5$15.6 million increasedecrease in accruing past due loans, offset by a decrease of $1.8 million in non-accrual loans. The increasedecrease in accruing past due loans was primarily a result of a limited number of commercial credits that movedpayments on loans 30-59 days past due at September 30, 2018.due. Of the total accruing past due loans, 46%64% were past due less than 60 days (comparedcompared to 54%65% at December 31, 2017),2018, and 85%98% were past due less than 90 days (comparedcompared to 90%96% at year-end 2017).2018.
Allowance for Credit Losses
The allowance for credit losses represents management’s best estimate of probable credit losses inherent at the balance sheet date. Determination of the allowance for credit losses involves a high degree of complexity and requires significant judgment. Several factors are taken into consideration in the determination of the overall allowance for credit losses. Based on facts and circumstances available, management of the Company believes that the allowance for credit losses was appropriate at SeptemberJune 30, 20182019 to cover probable losses in the Company’s loan portfolio. However, future adjustments to the allowance may be necessary, and the results of operations could be adversely affected, if circumstances differ substantially from the assumptions used by management in determining the allowance for credit losses. See the “Application of Critical Accounting Policies and Estimates” included in MD&A and Note 1, Summary of Significant Accounting Policies, in the Annual Report on Form 10-K for the year ended December 31, 20172018 for more information.


The following table sets forth the activity in the Company’s allowance for credit losses for the nine-monthsix-month periods ended SeptemberJune 30, 20182019 and 2017.2018.
TABLE 11—SUMMARY OF ACTIVITY IN THE ALLOWANCE FOR CREDIT LOSSES
      
(Dollars in thousands)September 30, 2018 September 30, 2017
(in thousands)June 30, 2019 June 30, 2018
Allowance for loan and lease losses at beginning of period$140,891
 $144,719
$140,571
 $140,891
Provision for loan and lease losses26,678
 36,718
24,067
 15,581
Transfer of balance to OREO and other(5,709) 963
(2,863) (3,943)
Charge-offs(34,740) (49,939)(19,194) (22,734)
Recoveries9,830
 4,167
3,805
 6,781
Allowance for loan and lease losses at end of period136,950
 136,628
146,386
 136,576
      
Reserve for unfunded commitments at beginning of period13,208
 11,241
14,830
 13,208
Balance created in acquisition accounting900
 7,626
—
 900
Provision for unfunded lending commitments613
 2,165
451
 325
Reserve for unfunded lending commitments at end of period14,721
 21,032
15,281
 14,433
Allowance for credit losses at end of period$151,671
 $157,660
$161,667
 $151,009
The allowance for credit losses totaled $151.7$161.7 million at SeptemberJune 30, 2018, or 0.68% of total loans and leases,2019 compared to $154.1$155.4 million or 0.77%at December 31, 2018. The allowance for credit losses was 0.69% of total loans and leases at both June 30, 2019 and December 31, 2017.2018. The decreaseincrease in the allowance for credit losses as a percentage of loans and leases was primarily the result of organic loan growth during the acquired Gibraltar loans, as those acquired loans are recorded at estimated fair value as of the acquisition date, which includes an estimate of expected losses in this portfolio, and as a result, no allowance for loan losses was established as of the acquisition date. Additionally, recoveries on acquired loans during 2018 reduced the required allowance for credit losses for that portfolio.current period.
Net charge-offs during the third quarter of 2018six months ended June 30, 2019 were $9.0$15.4 million, a decrease of $19.9$0.6 million from the comparable 20172018 period. Net charge-offs were 0.16%0.14% of average loans and leases on an annualized basis for the third quarter of 2018six months ended June 30 2019 compared to 0.62%0.15% for the comparable 20172018 period. The decrease in net charge-off percentage is due to both an increase in average loans and leases between periods and higher energy-related charge-offs in the third quarter of 2017 on a limited number of customer relationships.
Net charge-offs during the first nine months of 2018 were $24.9 million, or 0.16% of average loans and leases on an annualized basis, as compared to net charge-offs of $45.8 million, or 0.38% annualized, for the first nine months of 2017. The decline in net charge-offs was the result of a $15.2 million decrease in gross charge-offs and a $5.7 million increase in recoveries, primarily from one large commercial recovery of $3.3 million in 2018. The provision for loan and lease losses covered 107.1%156% and 80.2%98% of net charge-offs for the first ninesix months of 20182019 and 2017,2018, respectively.
At SeptemberJune 30, 20182019 and December 31, 2017,2018, the ALLL covered 87.8%92% and 92.5%101% of total non-performing loans and leases, respectively.
FUNDING SOURCES
Deposits, both those obtained from clients in its primary market areas and those acquired, through acquisitions, are the Company’sCompany's principal source of funds for use in lending and other business purposes. The Company attracts local deposit accounts by offering a wide variety of products, competitive interest rates and convenient branch office locations and service hours, as well as on-line banking services at www.iberiabank.com and www.virtualbank.com. Increasing core deposits is a continuing focus of the Company and has been accomplished through the development of client relationships and acquisitions. Short-term and long-term borrowings are also important funding sources for the Company. Other funding sources include subordinated debt and shareholders’ equity. Refer to the “Liquidity and Other Off-Balance Sheet Activities” section below for further discussion of the Company’s sources and uses of funding. The following discussion highlights the major changes in the mix of deposits and other funding sources during the first ninesix months of 2018.


2019.
Deposits
The Company’s ability to attract and retain customer deposits is critical to the Company’s continued success. Total deposits increased $1.7 billion,$531.9 million, or 8%2%, to $23.2$24.3 billion at SeptemberJune 30, 2018,2019, from $21.5$23.8 billion at December 31, 2017,2018, primarily driven by $1.1 billion of deposits acquired from Gibraltara $581.1 million increase in March of 2018brokered and organic growth. Excluding acquired deposits, deposit growth during 2018 was strongest in the Virtual Bank division (digital banking) and the Southwest Louisiana and Dallas markets.reciprocal deposits.


The following table sets forth the composition of the Company’s deposits as of the dates indicated.
TABLE 12—DEPOSIT COMPOSITION BY PRODUCT
September 30, 2018 December 31, 2017    June 30, 2019 December 31, 2018    
(Dollars in thousands)Ending Balance Mix Ending Balance Mix $ Change % Change
(in thousands)Ending Balance Mix Ending Balance Mix $ Change % Change
Non-interest-bearing deposits$6,544,926
 28% $6,209,925
 29% 335,001
 5
$6,474,394
 26% $6,542,490
 28% (68,096) (1)
NOW accounts4,247,533
 18
 4,348,939
 20
 (101,406) (2)4,610,577
 19
 4,514,113
 19
 96,464
 2
Money market accounts8,338,682
 36
 7,674,291
 36
 664,391
 9
8,192,752
 34
 8,237,291
 35
 (44,539) (1)
Savings accounts820,354
 4
 846,074
 4
 (25,720) (3)702,711
 3
 828,914
 3
 (126,203) (15)
Time deposits3,241,951
 14
 2,387,488
 11
 854,463
 36
4,314,897
 18
 3,640,623
 15
 674,274
 19
Total deposits$23,193,446
 100% $21,466,717
 100% 1,726,729
 8
$24,295,331
 100% $23,763,431
 100% 531,900
 2
Short-term Borrowings
The Company may obtain advances from the FHLB of Dallas based upon its ownership of FHLB stock and certain pledges of its real estate loans and investment securities, provided certain standards related to the Company’s creditworthiness have been met. These advances are made pursuant to several credit programs, each of which has its own interest rate and range of maturities. The level of short-term borrowings can fluctuate significantly on a daily basis depending on funding needs and the source of funds chosen to satisfy those needs.
The Company also enters into repurchase agreements to facilitate customer transactions that are accounted for as secured borrowings. These transactions typically involve the receipt of deposits from customers that the Company collateralizes with its investment portfolio and havehad an average rate of 45.542.4 basis points.points as of June 30, 2019.
Total short-term borrowings increased $251.4decreased $485.4 million, or 25%33%, from December 31, 2017,2018, to $1.2$1.0 billion at SeptemberJune 30, 2018. An increase of $315.0 million in outstanding short-term FHLB advances was partially offset by a decrease of $63.6 million in repurchase transactions. The increase in short-term FHLB advances was2019, primarily due to additional advances made in the second and third quarters of 2018, causing the average ratenet advance repayments on short-term FHLB advances. On a period-end basis, short-term borrowings were 4% of total liabilities and 42% of total borrowings at June 30, 2019 compared to rise as maturing advances had lower rates.6% and 56%, respectively, at December 31, 2018.
On a quarter-to-date average basis, short-term borrowings decreased $423.1$40.9 million, or 26%4%, from the thirdsecond quarter of 2017, mostly due to short-term borrowings that matured in the fourth quarter of 2017 and the first quarter of 2018, partially offset by additional short-term advances made in the second and third quarters of 2018.
Total short-term borrowings were 5% of total liabilities and 46% of total borrowings at September 30, 2018 compared to 4% and 40%, respectively, at December 31, 2017. On a quarter-to-date average basis, short-term borrowings were 5%4% of total liabilities and 46%40% of total borrowings in the thirdsecond quarter of 2018,2019, compared to 7%4% and 69%43%, respectively, during the same period of 2017.2018.
Long-term Debt
Long-term debt decreased $29.0increased $208.6 million, or 2%18%, from December 31, 2017,2018, to $1.5$1.4 billion at SeptemberJune 30, 2018, which included $405.1 million in acquired2019, primarily due to additional long-term FHLB advances from Gibraltar which was immediately paid off upon acquisition duringmade in the first quarter of 2018. The Company made an additional $956.3 million in repayments, partially offset by $922.0 million of long-term FHLB advances and $5.9 million of additional notes payable in the first nine months of 2018.2019. On a period-end basis, long-term debt was 6%5% and 4% of total liabilities at SeptemberJune 30, 20182019 and December 31, 2017.2018, respectively.
On a quarter-to-date average basis, long-term debt increased to $1.4$1.5 billion in the thirdsecond quarter of 2018, $638.22019, $84.1 million, or 86%6%, higher than the thirdsecond quarter of 2017, primarily from additional2018, mainly due to higher levels of long-term FHLB advances held by the Company in the fourth quarterfirst half of 2017 to improve liquidity and to take advantage of attractive rates.2019. Average long-term debt was 5% of average total liabilities during the thirdsecond quarter of 2018 compared to 3% during the same period of 2017.

both 2019 and 2018.
Long-term debt at SeptemberJune 30, 20182019 included $1.3$1.2 billion in fixed-rate advances from the FHLB of Dallas that cannot be prepaid without incurring substantial penalties. The remaining debt consisted of $120.1 million of the Company’s junior subordinated debt and $50.0$60.0 million in notes payable on investments in new market tax credit entities. Interest on the junior subordinated debt is payable quarterly and may be deferred at any time at the election of the Company for up to 20 consecutive quarterly periods. During any deferral period, the Company is subject to certain restrictions, including being prohibited from declaring dividends to its common shareholders. The junior subordinated debt is redeemable by the Company in whole or in part.


CAPITAL RESOURCES


Common StockShareholders' Equity


Shareholders' equity increased $245.6$181.7 million, or 7%4%, during the first three quartershalf of 2018, primarily from2019. Shareholders' equity at June 30, 2019 includes undistributed income to common shareholders of $151.0 million during the Company's issuanceperiod. In addition, during the second quarter of 2.8 million2019, the Company issued and sold an aggregate of 4,000,000 depositary shares, of common stock ateach representing a price of $77.00 per common1/400th ownership interest in a share on March 23, 2018 as part of the Gibraltar acquisition. TheCompany’s 6.100% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series D, par value $1.00 per share, for $96.4 million in net increase to equity from the offering was $214.7 million.proceeds. See Note 10,9, Shareholders' Equity, Capital Ratios, and Other Regulatory Matters, to the unaudited consolidated financial statements for more information.

The Shareholders' equity also increased during the period from an increase in shareholders' equity was also a result of undistributed income to common shareholders of $167.8 million, but was negatively impacted by a $87.5 million decrease in accumulated other comprehensive income of $89.8 million, primarily resulting from a lower valuation ofunrealized gains on the Company's available for sale investmentavailable-for-sale securities from rising short-term interest rates.portfolio.
In 2018, the Company's Board of Directors authorized a share repurchase program of up to 1,137,5002,765,000 shares of IBERIABANK Corporation common stock. During the first ninesix months of 2018,2019, the Company repurchased 763,2102,147,770 common shares for $61.0$164.7 million at a weighted average cost of $79.99$76.70 per share, which included 335,000 common shares repurchased under a plan previously approved by the Board of Directors that has subsequently expired.share. At SeptemberJune 30, 2018,2019, the remaining common shares that could be repurchased under the current Board-approved plan was 709,290117,230 shares. Subsequent to SeptemberJune 30, 2018 and through November 5, 2018,2019, the Company repurchased the remaining shares available and announced in July 2019 a new Board-approved share repurchase program for up to 1,600,000 shares, or approximately 3% of total common stock for approximately $52.6 million.shares outstanding at June 30, 2019.
The Company's quarterly dividend to common shareholders was $0.39$0.43 per common share in the thirdsecond quarter of 20182019 compared to $0.37$0.38 in the thirdsecond quarter of 2017. On a year-to-date basis, dividends paid to common shareholders2018. For the six months ended June 30, 2019, the Company's dividend of $1.15 is 6% higher than the $1.09 paid$0.86 per common share was an increase of $0.10 compared to $0.76 for the nine-monthcomparable six-month period of 2017. The2018, which equated to a dividend payout ratio was 27.7%of 23.4% for the current year, down from 45.7%32.0% in the comparable period of 2017.2018.
Regulatory Capital


Federal regulations impose minimum regulatory capital requirements on all institutions with deposits insured by the FDIC. The FRB imposes similar capital regulations on bank holding companies. Compliance with bank and bank holding company regulatory capital requirements, which include leverage and risk-based capital guidelines, are monitored by the Company on an ongoing basis. Under the risk-based capital method, a risk weight is assigned to balance sheet and off-balance sheet items based on regulatory guidelines.
At SeptemberJune 30, 20182019 and December 31, 2017,2018, the Company exceeded all required regulatory capital ratios, and the regulatory capital ratios of IBERIABANK were in excess of the levels established for “well-capitalized” institutions, as shown in the following table.
TABLE 13—REGULATORY CAPITAL RATIOS
Ratio Entity Well- Capitalized Minimums September 30, 2018 December 31, 2017 Entity Well- Capitalized Minimums June 30, 2019 December 31, 2018
Actual ActualActual Actual
Tier 1 Leverage IBERIABANK Corporation N/A
 9.65% 9.35% IBERIABANK Corporation N/A
 9.71% 9.63%
 IBERIABANK 5.00% 9.60
 9.10
 IBERIABANK 5.00% 9.55
 9.38
Common Equity Tier 1 (CET1) IBERIABANK Corporation N/A
 10.79
 10.57
 IBERIABANK Corporation N/A
 10.38
 10.72
 IBERIABANK 6.50% 11.27
 10.86
 IBERIABANK 6.50% 11.07
 10.95
Tier 1 risk-based capital IBERIABANK Corporation N/A
 11.33
 11.16
Tier 1 Risk-Based Capital IBERIABANK Corporation N/A
 11.26
 11.25
 IBERIABANK 8.00% 11.27
 10.86
 IBERIABANK 8.00% 11.07
 10.95
Total risk-based capital IBERIABANK Corporation N/A
 12.42
 12.37
Total Risk-Based Capital IBERIABANK Corporation N/A
 12.33
 12.33
 IBERIABANK 10.00% 11.89
 11.55
 IBERIABANK 10.00% 11.70
 11.58
Minimum capital ratios are subject to a capital conservation buffer. In order to avoid limitations on distributions, including dividend payments, and certain discretionary bonus payments to executive officers, an institution must hold a capital conservation buffer above its minimum risk-based capital requirements. This capital conservation buffer is calculated as the lowest of the differences between the actual CET1 ratio, Tier 1 Risk-Based Capital Ratio, and Total Risk-Based Capital ratio and the corresponding minimum ratios. At SeptemberJune 30, 2018,2019, the required minimum capital conservation buffer was 1.875%, which will increase by 0.625% and be fully phased-in on January 1, 2019 at 2.50%. At SeptemberJune 30, 2018,2019, the capital conservation buffers of the Company and IBERIABANK were 4.42%4.33% and 3.89%3.70%, respectively. Management believes that at September 30, 2018, the Company and IBERIABANK would have met all capital adequacy requirements on a fully phased-in basis if such requirements were then effective.
Capital ratios at September 30, 2018 were impacted by the Gibraltar acquisition, as the common stock issued in 2018 resulted in an increase in the Company's risk-based capital ratios.


LIQUIDITY AND OTHER OFF-BALANCE SHEET ACTIVITIES
Liquidity refers to the Company’s ability to generate sufficient cash flows to support its operations and to meet its obligations, including the withdrawal of deposits by customers, commitments to originate loans, and its ability to repay its borrowings and other liabilities. Liquidity risk is the risk to earnings or capital resulting from the Company’s inability to fulfill its obligations as they become due. Liquidity risk also develops from the Company’s failure to timely recognize or address changes in market conditions that affect the ability to liquidate assets in a timely manner or to obtain adequate funding to continue to operate on a profitable basis.
The primary sources of funds for the Company are deposits and borrowings. Other sources of funds include repayments and maturities of loans and investment securities, securities sold under agreements to repurchase, and, to a lesser extent, off-balance sheet borrowing availability. Time deposits scheduled to mature in one year or less at SeptemberJune 30, 20182019 totaled $2.0$3.6 billion. Based on past experience, management believes that a significant portion of maturing deposits will remain with the Company. Additionally, the majority of the investment securities portfolio is classified as available for sale, which provides the ability to liquidate unencumbered securities as needed. Of the $4.8$4.6 billion in the investment securities portfolio, $2.5$2.4 billion is unencumbered and $2.3$2.2 billion has been pledged to support repurchase transactions, public funds deposits and certain long-term borrowings. Due to the relatively short implied duration of the investment securities portfolio, the Company has historically experienced consistent cash inflows on a regular basis. Securities cash flows are highly dependent on prepayment speeds and could change materially as economic or market conditions change. 
Scheduled cash flows from the amortization and maturities of loans and securities are relatively predictable sources of funds. Conversely, deposit flows, prepayments of loan and investment securities, and draws on customer letters and lines of credit are greatly influenced by general interest rates, economic conditions, competition, and customer demand. The FHLB of Dallas provides an additional source of liquidity to make funds available for general requirements and also to assist with the variability of less predictable funding sources. At SeptemberJune 30, 2018,2019, the Company had $2.1$2.0 billion of outstanding FHLB advances, $790.0$813.0 million of which was short-term and $1.3$1.2 billion that was long-term. Additional FHLB borrowing capacity available at SeptemberJune 30, 20182019 amounted to $7.1$7.5 billion. At SeptemberJune 30, 2018,2019, the Company also had various funding arrangements with the Federal Reserve Bank's discount window and commercial banks providing up to $301.3$334.1 million in the form of federal funds and other lines of credit. At SeptemberJune 30, 2018,2019, there were no balances outstanding on these lines and all of the funding was available to the Company.
Liquidity management is both a daily and long-term function of business management. The Company manages its liquidity with the objective of maintaining sufficient funds to respond to the predicted needs of depositors and borrowers and to take advantage of investments in earning assets and other earnings enhancement opportunities. Excess liquidity is generally invested in short-term investments such as overnight deposits. On a longer-term basis, the Company maintains a strategy of investing in various lending and investment security products. The Company uses its sources of funds primarily to fund loan commitments and to meet its ongoing commitments associated with its operations. Based on its available cash at SeptemberJune 30, 20182019 and current deposit modeling, the Company believes it has adequate liquidity to fund ongoing operations. The Company has adequate availability of funds from deposits, borrowings, repayments and maturities of loans and investment securities to provide the Company additional working capital if needed.
In the normal course of business, the Company is a party to a number of activities that contain credit, market and operational risk that are not reflected in whole or in part in the Company’s consolidated financial statements. Such activities include traditional off-balance sheet credit-related financial instruments. The Company provides customers with off-balance sheet credit support through loan commitments, lines of credit, and standby letters of credit. Many of the commitments are expected to expire unused or be only partially used; therefore, the total amount of commitments does not necessarily represent future cash requirements. Based on its available liquidity and available borrowing capacity, the Company anticipates it will continue to have sufficient funds to meet its current commitments.




ASSET/LIABILITY MANAGEMENT, MARKET RISK AND COUNTERPARTY CREDIT RISK
The principal objective of the Company’s asset and liability management function is to evaluate the Company's interest rate risk included in certain balance sheet accounts, determine the appropriate level of risk given the Company’s business focus, operating environment, capital and liquidity requirements, and performance objectives, establish prudent asset concentration guidelines and manage the risk consistent with Board approved guidelines. Through such management, the Company seeks to reduce the vulnerability of its operations to changes in interest rates. The Company’s actions in this regard are taken under the guidance of the Asset and Liability Committee. The Asset and Liability Committee normally meets monthly to review,reviews, among other things, the sensitivity of the Company’s assets and liabilities to interest rate changes, local and national market conditions, and interest rates. In connection therewith, the Asset and Liability Committee generally reviews the Company’s liquidity, cash flow needs, composition of investments, deposits, borrowings, and capital position.
The objective of interest rate risk management is to control the effects that interest rate fluctuations have on net interest income and on the net present value of the Company’s earning assets and interest-bearing liabilities. Management and the Board are responsible for managing interest rate risk and employing risk management policies that monitor and limit this exposure. Interest rate risk is measured using net interest income simulation and asset/liability net present value sensitivity analyses. The Company uses financial modeling to measure the impact of changes in interest rates on the net interest margin and to predict market risk. Estimates are based upon numerous assumptions including the nature and timing of interest rate levels including yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and others. These analyses provide a range of potential impacts on net interest income and portfolio equity caused by interest rate movements.
Included in the modeling are instantaneous parallel rate shift scenarios, which are utilized to establish exposure limits. These scenarios are known as “rate shocks” because all rates are modeled to change instantaneously by the indicated shock amount, rather than a gradual rate shift over a period of time.
The Company’s interest rate risk model indicates that the Company is asset sensitive in terms of net interest incomerate sensitivity. Based on the Company’s interest rate risk model at SeptemberJune 30, 2018,2019, the table below illustrates the impact of an immediate and sustained 100 and 200 basis points parallel increase or decrease in interest rates on net interest income over the next twelve months.
TABLE 14—INTEREST RATE SENSITIVITY
Shift in Interest Rates
(in bps)		 % Change in Projected
Net Interest Income		 % Change in Projected
Net Interest Income
+200 +1.8% +3.4%
+100 +1.1% +2.3%
-100 (3.4)% -5.4%
-200 (10.6)% -12.2%
The influence of using the forward curve as of SeptemberJune 30, 20182019 as a basis for projecting the interest rate environment would approximate a 0.8% increase0.9% decrease in net interest income over the next 12 months. The computations of interest rate risk shown above are performed on a static balance sheet and do not necessarily include certain actions that management may undertake to manage this risk in response to unanticipated changes in interest rates and other factors to include shifts in deposit behavior.
The short-term interest rate environment is primarily a function of the monetary policy of the FRB. The principal tools of the FRB for implementing monetary policy are open market operations, or the purchases and sales of U.S. Treasury and Federal agency securities, as well as the establishment of a short-term target rate. The FRB’s objective for open market operations has varied over the years, but the focus has gradually shifted toward attaining a specified level of the Federal funds rate to achieve the long-run goals of price stability and sustainable economic growth. The Federal funds rate is the basis for overnight funding and drives the short end of the yield curve. Longer maturities are influenced by the market’s expectations for economic growth and inflation, but can also be influenced by FRB purchases and sales and expectations of monetary policy going forward.



On September 27, 2018,
The FOMC of the Federal Open Market Committee (“FOMC”)FRB, in an attempt to stimulate the overall economy, has, among other things, kept interest rates low through its targeted federal funds rate. In December 2016, the FOMC voted to raise the target federal funds rate by 0.25%for only the second time since 2006. The FOMC voted to a range of 2.00%-2.25%.raise the target federal funds rate multiple times in both 2017 and 2018. The FOMC has now raised rates by twotwo-and-a-quarter percentage points since the financial crisis in 2008, a sign of its increased confidence in the health of the economy. TheWhile the FOMC expects thatcontinues to observe sustained economic activity, strong labor market conditions, will continueand stable inflation, it has signaled a pause in its recent efforts to evolve inincrease the federal funds rate. As a manner that will warrantresult, the potential for additional gradual increases in the federal funds rate in 20182019 is uncertain, and beyond. In additionrecent FOMC rhetoric has pointed to lowering the FOMC increasing the target federal funds rate the FRB also began to remove accommodationgiven low inflation measures and overall global economic headwinds. Additional increases in 2017 by reducing the amount of debt held on its balance sheet. The FRB is expected to continue to wind-down its asset purchase program throughout 2018 and over the next several years. As the FOMC increases the federal funds rate and the FRB reducesunwinding of its debt, it is possible thatbalance sheet could cause overall interest rates couldto rise, which may negatively impact the housingU.S. real estate markets and the U.S. economy as a whole.affect deposit growth and pricing. In addition, deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of collateral securing loans, which could negatively affect our financial performance. Decreases in the federal funds rate could cause overall interest rates to fall, which may negatively impact financial performance from greater borrower refinancing incentives.


The Company’s commercial loan portfolio is also impacted by fluctuations in the level of one-month LIBOR, as a large portion of this portfolio reprices based on this index, and to a lesser extent Prime. Our netNet interest income may be reduced if more interest-bearing liabilities than interest-earning assets reprice or mature during a period when interest rates are rising, or if more interest-earning assets than interest-bearing liabilities reprice or mature during a period when interest rates are declining.


In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. ARRC has proposed that SOFR is the rate that represents best practice as the alternative to LIBOR for use in derivatives and other financial contracts that are currently indexed to LIBOR. ARRC has proposed a paced market transition plan to SOFR from LIBOR and organizations are currently working on industry-wide and company-specific transition plans as it relates to derivatives and cash markets exposed to LIBOR. The Company has material contracts that are indexed to LIBOR and is monitoring this activity and evaluating the related risks.

The table below presents the Company’s anticipated repricing of loans and investment securities over the next four quarters.
TABLE 15—REPRICING OF CERTAIN EARNING ASSETS (1) 
(Dollars in thousands)4Q 2018 1Q 2019 2Q 2019 3Q 2019 Total less than one year
(in thousands)3Q 2019 4Q 2019 1Q 2020 2Q 2020 Total less than one year
Investment securities$64,236
 $125,191
 $162,042
 $148,818
 $500,287
$433,879
 $300,857
 $269,431
 $279,333
 $1,283,500
Fixed rate loans747,909
 621,369
 595,070
 567,549
 2,531,897
981,459
 696,787
 662,529
 635,315
 2,976,090
Variable rate loans10,497,956
 340,845
 294,068
 275,623
 11,408,492
11,170,297
 483,461
 368,408
 345,343
 12,367,509
Total fixed and variable rate loans11,245,865
 962,214
 889,138
 843,172
 13,940,389
12,151,756
 1,180,248
 1,030,937
 980,658
 15,343,599
$11,310,101
 $1,087,405
 $1,051,180
 $991,990
 $14,440,676
$12,585,635
 $1,481,105
 $1,300,368
 $1,259,991
 $16,627,099
(1) Amounts include expected maturities, scheduled paydowns, expected prepayments, and loans subject to caps and floors and exclude the repricing of assets from prior periods, as well as non-accrual loans and market value adjustments.


As part of its asset/liability management strategy, the Company has seen greater levels of loan originations with adjustable or variable rates of interest in commercial and consumer loan products, which typically have shorter terms than residential mortgage loans. The majority of fixed-rate, long-term, agency-conforming residential loans are sold in the secondary market to avoid bearing the interest rate risk associated with longer duration assets in the current rate environment. However, the Sabadell and Gibraltar acquisitions brought a considerable amount of jumbo, non-agency-conforming residential mortgage loan exposure onto the balance sheet, both fixed rate and variable rate in nature, which has increased the overall duration of the portfolio. Considering all of this, as of SeptemberJune 30, 2018, $13.52019, $14.6 billion, or 60%63%, of the Company’s total loan portfolio had variable interest rates, of which $2.3$2.7 billion, or 10%12%, had an expected repricing date beyond the next four quarters. The Company had no significant concentration to any single borrower or industry segment at SeptemberJune 30, 2018.2019.
The Company’s strategy with respect to liabilities in recent periods has been to emphasize transaction accounts, particularly non-interest or low interest-bearing transaction accounts, which are significantly less sensitive to changes in interest rates. At SeptemberJune 30, 2018, 86%2019, 82% of the Company’s deposits were in transaction and limited-transaction accounts, compared to 89%85% at December 31, 2017.2018. Non-interest-bearing transaction accounts were 28%27% of total deposits Septemberat June 30, 20182019 compared to 29%28% at December 31, 2017.2018.
Much of the liquidity increase experienced in the past several years has been due to a significant increase in non-interest-bearing demand deposits.

The behavior of non-interest-bearing deposits and other types of demand deposits is one of the most important assumptions used in determining the interest rate and liquidity risk positions. A loss of these deposits in the future would reduce the asset sensitivity of the Company’s balance sheet as interest-bearing funds would most likely be increased to offset the loss of this favorable funding source.

The table below presents the Company’s anticipated repricing of liabilities over the next four quarters.
TABLE 16—REPRICING OF LIABILITIES (1) 
(Dollars in thousands)4Q 2018 1Q 2019 2Q 2019 3Q 2019 Total less than one year
(in thousands)3Q 2019 4Q 2019 1Q 2020 2Q 2020 Total less than one year
Time deposits$395,989
 $567,888
 $691,426
 $392,801
 $2,048,104
$811,131
 $951,196
 $1,026,345
 $815,474
 $3,604,146
Short-term borrowings1,222,719
 —
 20,000
 —
 1,242,719
872,507
 125,000
 —
 —
 997,507
Long-term debt462,942
 90,699
 100,706
 317,245
 971,592
437,391
 63,958
 55,620
 120,391
 677,360
$2,081,650
 $658,587
 $812,132
 $710,046
 $4,262,415
$2,121,029
 $1,140,154
 $1,081,965
 $935,865
 $5,279,013
(1) Amounts exclude the repricing of liabilities from prior periods.
As part of an overall interest rate risk management strategy, derivative instruments may also be used as an efficient way to modify the repricing or maturity characteristics of on-balance sheet assets and liabilities. Management may from time to time engage in such derivative instruments to effectively manage interest rate risk. These derivative instruments of the Company would modify net interest sensitivity to levels deemed appropriate.
IMPACT OF INFLATION OR DEFLATION AND CHANGING PRICES
The unaudited consolidated financial statements and related financial data presented herein have been prepared in accordance with GAAP, which generally require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation. Unlike most industrial companies, the majority of the Company’s assets and liabilities are monetary in nature. As a result, interest rates generally have a more significant impact on the Company’s performance than does the effect of inflation. Although fluctuations in interest rates are neither completely predictable nor controllable, the Company regularly monitors its interest rate position and oversees its financial risk management by establishing policies and operating limits. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services, since such prices are affected by inflation to a larger extent than interest rates. Although not as critical to the banking industry as to other industries, inflationary factors may have some impact on the Company’s growth, earnings, total assets and capital levels. Management does not expect inflation to be a significant factor in 2019.
Conversely, a period of deflation could affect our business, as well as all financial institutions and other industries. Deflation could lead to lower profits, higher unemployment, lower production and deterioration in overall economic conditions. In addition, deflation could depress economic activity, including loan demand and the ability of borrowers to repay loans, and consequently impair earnings through increasing the value of debt while decreasing the value of collateral for loans.
Management believes the most significant potential impact of inflation and deflation on financial results relates to the Company's ability to maintain a sufficient amount of capital to cushion against future losses. However, the Company could employ certain risk management tools to maintain its balance sheet strength in the event a deflationary scenario were to develop.





Non-GAAP Measures
This discussion and analysis included herein contains financial information determined by methods other than in accordance with GAAP. The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance. Non-GAAP measures include, but are not limited to, descriptions such as core, tangible, and pre-tax pre-provision. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that, in management’s opinion, can distort period-to-period comparisons of the Company’s performance. Transactions that are typically excluded from non-GAAP performance measures include realized and unrealized gains/losses on former bank owned real estate, realized gains/losses on securities, income tax gains/losses, merger related charges and recoveries, litigation charges and recoveries, and debt repayment penalties. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP disclosures are presented in Table 17, with the exception of forward-looking information. The Company is unable to estimate GAAP EPS guidance without unreasonable efforts due to the nature of one-time or unusual items that cannot be predicted, and therefore has not provided this information under Regulation S-K Item 10(e)(1)(i)(B).
TABLE 17—RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Three Months EndedThree Months Ended
September 30, 2018 September 30, 2017June 30, 2019 June 30, 2018
(Dollars in thousands, except per share amounts)Pre-tax 
After-tax 
 
Per share (2)
 Pre-tax After-tax 
Per share (2)
(in thousands, except per share amounts)Pre-tax 
After-tax 
 
Per share (2)
 Pre-tax After-tax 
Per share (2)
Net income$131,866
 $101,465
 $1.79
 $48,450
 $29,644
 $0.56
$133,791
 $101,598
 $1.88
 $105,581
 $75,124
 $1.32
Less: Preferred stock dividends—
 3,599
 0.06
 —
 3,598
 0.07
—
 949
 0.02
 —
 949
 0.02
Income available to common shareholders (GAAP)$131,866
 $97,866
 $1.73
 $48,450
 $26,046
 $0.49
$133,791
 $100,649
 $1.86
 $105,581
 $74,175
 $1.30
                      
Non-interest income adjustments (1):
                      
(Gain) loss on sale of investments and other non-interest income(1) (1) —
 242
 157
 —
Loss (gain) on sale of investments1,012
 769
 0.01
 (3) (2) —
                      
Non-interest expense adjustments (1):
                      
Merger-related expense973
 743
 0.01
 28,478
 19,255
 0.36
(10) (7) —
 14,333
 11,012
 0.20
Compensation-related expense1,104
 839
 0.01
 1,092
 710
 0.02
—
 —
 —
 1,781
 1,354
 0.02
Impairment of long-lived assets, net of (gain) loss on sale3,286
 2,497
 0.05
 3,661
 2,380
 0.04
(22) (17) —
 5,413
 4,114
 0.07
Gain on early termination of loss share agreements(2,708) (2,058) (0.04) —
 —
 —
Litigation expense—
 —
 —
 5,692
 4,696
 0.09
Other non-core non-interest expense(1,955) (1,486) (0.02) 377
 245
 —
107
 81
 —
 (95) (72) —
Total non-interest expense adjustments700
 535
 0.01
 39,300
 27,286
 0.51
75
 57
 —
 21,432
 16,408
 0.29
Income tax expense (benefit) - impact of TCJA—
 —
 —
 —
 6,572
 0.12
Core earnings (Non-GAAP)132,565
 98,400
 1.74
 87,992
 53,489
 1.00
134,878
 101,475
 1.87
 127,010
 97,153
 1.71
Provision for loan losses (1)
11,097
 8,434
   18,514
 12,034
  
Provision for credit losses (1)
10,755
 8,174
   7,696
 5,849
  
Pre-provision earnings, as adjusted (Non-GAAP)$143,662
 $106,834
   $106,506
 $65,523
  $145,633
 $109,649
   $134,706
 $103,002
  
(1) 
Excluding preferred stock dividends merger-related expense, and litigationmerger-related expense, after-tax amounts are calculated using a tax rate of 24% in 2018 and 35% in 2017,, which approximates the marginal tax rate.
(2) 
Diluted per share amounts may not appear to foot due to rounding.












Nine Months EndedSix Months Ended
September 30, 2018 September 30, 2017June 30, 2019 June 30, 2018
(Dollars in thousands, except per share amounts)Pre-tax After-tax 
Per share (2)
 Pre-tax After-tax 
Per share (2)
Pre-tax After-tax 
Per share (2)
 Pre-tax After-tax 
Per share (2)
Net income$318,620
 $240,210
 $4.29
 $201,493
 $132,135
 $2.61
$264,268
 $201,729
 $3.69
 $186,754
 $138,745
 $2.49
Less: Preferred stock dividends—
 8,146
 0.15
 —
 8,146
 0.16
—
 4,547
 0.08
 —
 4,547
 0.08
Income available to common shareholders (GAAP)$318,620
 $232,064
 $4.14
 $201,493
 $123,989
 $2.45
$264,268
 $197,182
 $3.61
 $186,754
 $134,198
 $2.41
                      
Non-interest income adjustments (1):
           
Non-interest income adjustments:           
(Gain) loss on sale of investments and other non-interest income55
 41
 —
 183
 119
 —
1,012
 769
 0.01
 56
 42
 —
                      
Non-interest expense adjustments (1):
                      
Merger-related expense31,533
 24,272
 0.44
 29,598
 20,079
 0.40
(344) (261) —
 30,560
 23,529
 0.43
Compensation-related expense4,106
 3,121
 0.06
 1,568
 1,019
 0.02
(9) (7) —
 3,002
 2,282
 0.04
Impairment of long-lived assets, net of (gain) loss on sale10,773
 8,187
 0.15
 3,784
 2,460
 0.05
964
 732
 0.01
 7,487
 5,690
 0.10
Gain on early termination of loss share agreements(2,708) (2,058) (0.04) —
 —
 —
Litigation expense—
 —
 —
 11,692
 10,177
 0.20
Other non-core non-interest expense(2,733) (2,078) (0.04) 377
 245
 0.01
(3,022) (2,297) (0.04) (778) (592) (0.01)
Total non-interest expense adjustments40,971
 31,444
 0.57
 47,019
 33,980
 0.68
(2,411) (1,833) (0.03) 40,271
 30,909
 0.56
Income tax expense (benefit) - provisional impact of TCJA (3)
—
 6,572
 0.12
 —
 —
 —
Income tax expense (benefit) - impact of TCJA—
 —
 —
 —
 6,572
 0.12
Income tax expense (benefit) - other—
 173
 —
 —
 —
 —
—
 —
 —
 —
 173
 —
Core earnings (Non-GAAP)359,646
 270,294
 4.83
 248,695
 158,088
 3.13
262,869
 196,118
 3.59
 227,081
 171,894
 3.09
Provision for loan losses (1)
26,678
 20,275
   36,718
 23,867
  
Provision for loan losses24,518
 18,634
   15,907
 12,089
  
Pre-provision earnings, as adjusted (Non-GAAP)$386,324
 $290,569
   $285,413
 $181,955
  $287,387
 $214,752
   $242,988
 $183,983
  
(1) 
Excluding preferred stock dividends merger-related expense, and litigationmerger-related expense, after-tax amounts are calculated using a tax rate of 24% in 2018 and 35% in 2017,, which approximates the marginal tax rate.
(2) 
Diluted per share amounts may not appear to foot due to rounding.
(3)
Estimated net impact of the Tax Cuts and Jobs Act ("TCJA") enacted on December 22, 2017 is subject to refinement in future periods as further information becomes available.
















































As of and For the Three Months Ended September 30,As of and For the Three Months Ended June 30,
(Dollars in thousands)2018 2017
(in thousands)2019 2018
Net interest income (GAAP)$259,225
 $216,883
$255,339
 $256,113
Taxable equivalent benefit1,502
 2,580
1,338
 1,449
Net interest income (TE) (Non-GAAP) (1)
$260,727
 $219,463
$256,677
 $257,562
      
Non-interest income (GAAP) (3)
$53,087
 $50,843
$58,825
 $53,940
Taxable equivalent benefit463
 680
465
 336
Non-interest income (TE) (Non-GAAP) (1) (3)
53,550
 51,523
Taxable equivalent revenues (Non-GAAP) (1) (3)
314,277
 270,986
Non-interest income (TE) (Non-GAAP) (1)
59,290
 54,276
Taxable equivalent revenues (Non-GAAP) (1)
315,967
 311,838
Securities (gains) losses and other non-interest income(1) 242
1,012
 (3)
Core taxable equivalent revenues (Non-GAAP) (1) (3)
$314,276
 $271,228
Core taxable equivalent revenues (Non-GAAP) (1)
$316,979
 $311,835
      
Total non-interest expense (GAAP) (3)
$169,349
 $200,762
$169,618
 $196,776
Less: Intangible amortization expense5,382
 4,527
4,786
 6,111
Tangible non-interest expense (Non-GAAP) (2) (3)
163,967
 196,235
Tangible non-interest expense (Non-GAAP) (2)
164,832
 190,665
Less: Merger-related expense973
 28,478
(10) 14,333
Compensation-related expense1,104
 1,092
—
 1,781
Impairment of long-lived assets, net of (gain) loss on sale3,286
 3,661
(22) 5,413
Gain on early termination of loss share agreements(2,708) —
Litigation expense—
 5,692
Other non-core non-interest expense(1,955) 377
107
 (95)
Core tangible non-interest expense (Non-GAAP)(2) (3)
$163,267
 $156,935
Core tangible non-interest expense (Non-GAAP)(2)
$164,757
 $169,233
      
Average assets (GAAP)$30,046,231
 $26,096,921
$31,271,822
 $29,770,852
Less: Average intangible assets, net1,309,962
 1,042,523
1,308,107
 1,332,220
Total average tangible assets (Non-GAAP) (2)
$28,736,269
 $25,054,398
$29,963,715
 $28,438,632
      
Total shareholders’ equity (GAAP)$3,942,361
 $3,726,774
$4,238,000
 $3,913,409
Less: Goodwill and other intangibles1,305,915
 1,276,241
1,305,752
 1,314,165
Preferred stock132,097
 132,097
228,485
 132,097
Tangible common equity (Non-GAAP) (2)
$2,504,349
 $2,318,436
$2,703,763
 $2,467,147
      
Average shareholders’ equity (GAAP)$3,935,082
 $3,676,423
$4,243,024
 $3,914,063
Less: Average preferred equity132,097
 132,097
225,375
 132,097
Average common equity3,802,985
 3,544,326
4,017,649
 3,781,966
Less: Average intangible assets, net1,309,962
 1,042,523
1,308,107
 1,332,220
Average tangible common shareholders’ equity (Non-GAAP) (2)
$2,493,023
 $2,501,803
$2,709,542
 $2,449,746
      
Return on average assets (GAAP)1.34 % 0.45 %1.30 % 1.01 %
Effect of non-core revenues and expenses0.01
 0.42
0.01
 0.31
Core return on average assets (Non-GAAP)1.35 % 0.87 %1.31 % 1.32 %
      
Return on average common equity (GAAP)10.21 % 2.92 %10.05 % 7.87 %
Effect of non-core revenues and expenses0.06
 3.07
0.08
 2.43
Core return on average common equity (Non-GAAP)10.27 % 5.99 %10.13 % 10.30 %
Effect of intangibles (2)
6.07
 2.96
5.45
 6.40
Core return on average tangible common equity (Non-GAAP) (2)
16.34 % 8.95 %15.58 % 16.70 %
      
Efficiency ratio (GAAP) (3)
54.2 % 75.0 %
Effect of tax benefit related to tax-exempt income (3)
(0.3) (1.0)
Efficiency ratio (TE) (Non-GAAP) (1) (3)
53.9 % 74.0 %
Efficiency ratio (GAAP)54.0 % 63.5 %
Effect of tax benefit related to tax-exempt income(0.3) (0.4)
Efficiency ratio (TE) (Non-GAAP) (1)
53.7 % 63.1 %


Effect of amortization of intangibles(1.7) (1.7)(1.5) (1.9)
Effect of non-core items(0.2) (14.4)(0.2) (6.9)
Core tangible efficiency ratio (TE) (Non-GAAP) (1) (2) (3)
52.0 % 57.9 %
Core tangible efficiency ratio (TE) (Non-GAAP) (1) (2)
52.0 % 54.3 %
      
Total assets (GAAP)$30,118,387
 $27,976,635
$31,446,532
 $30,126,162
Less: Goodwill and other intangibles1,305,915
 1,276,241
1,305,752
 1,314,165
Tangible assets (Non-GAAP) (2)
$28,812,472
 $26,700,394
$30,140,780
 $28,811,997
Tangible common equity ratio (Non-GAAP) (2)
8.69 % 8.68 %8.97 % 8.56 %
      
Cash Yield:      
Earning assets average balance (GAAP)$27,722,479
 $23,972,212
$28,773,710
 $27,442,883
Add: Adjustments143,665
 84,900
124,703
 142,013
Earning assets average balance, as adjusted (Non-GAAP)$27,866,144
 $24,057,112
$28,898,413
 $27,584,896
      
Net interest income (GAAP)$259,225
 $216,883
$255,339
 $256,113
Add: Adjustments(17,566) (17,756)(13,291) (16,954)
Net interest income, as adjusted (Non-GAAP)$241,659
 $199,127
$242,048
 $239,159
      
Yield, as reported3.74 % 3.64 %3.57 % 3.76 %
Add: Adjustments(0.27) (0.34)(0.20) (0.27)
Yield, as adjusted (Non-GAAP)3.47 % 3.30 %3.37 % 3.49 %
(1) Fully taxable-equivalent (TE) calculations include the tax benefit associated with related income sources that are tax-exempt using a rate of 21% for 2018 and a rate of 35% for 2017..
(2) Tangible calculations eliminate the effect of goodwill and acquisition-related intangibles and the corresponding amortization expense on a tax-effected basis where applicable.
(3) Certain prior period amounts have been reclassified to conform to the net presentation requirements of ASU No. 2014-09, Revenue from Contracts with Customers, which was adopted effective January 1, 2018. On average, the adoption resulted in a reduction of non-interest income and non-interest expense of approximately $2.3 million on a quarterly basis, and had no impact on net income.



Glossary of Defined Terms
TermDefinition
20172018 10-KAnnual Report on Form 10-K for the year ended December 31, 20172018
ACLAllowance for credit losses
Acquired loansLoans acquired in a business combination
AFSSecurities available for sale
ALLLAllowance for loan and lease losses
AOCIAccumulated other comprehensive income (loss)
ARRCAlternative Reference Rates Committee
ASCAccounting Standards Codification
ASUAccounting Standards Update
Banco SabadellBanco de Sabadell, S.A.
C&ICommercial and Industrial loans
CDICore deposit intangible assets
CEOChief Executive Officer
CET1Common Equity Tier 1 Capital defined by Basel III capital rules
CFOChief Financial Officer
CRECRACommercial Real Estate LoansCommunity Reinvestment Act
CompanyIBERIABANK Corporation and Subsidiaries
Covered LoansAcquired loans with loss protection provided by the FDIC
DOJDepartment of Justice
ECLExpected credit losses
EPSEarnings per common share
Exchange ActSecurities Exchange Act of 1934
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
FHAFederal Housing Administration
FHLBFederal Home Loan Bank
FOMCFederal Open Market Committee
FRBBoard of Governors of the Federal Reserve System
GAAPAccounting principles generally accepted in the United States of America
GibraltarGibraltar Private Bank & Trust Co.
HUDU.S. Department of Housing and Urban Development
IBERIABANKBanking subsidiary of IBERIABANK Corporation
Legacy loansLoans that were originated directly or otherwise underwritten by the Company
LIBORLondon Interbank Borrowing Offered Rate
LTCLenders Title Company
Non-GAAPFinancial measures determined by methods other than in accordance with GAAP
OCCOffice of the Comptroller of the Currency
OCIOther comprehensive income
OREOOther real estate owned
OTTIOther than temporary impairment
ParentIBERIABANK Corporation
ROURight-of-Use
RRPRecognition and Retention Plan
Sabadell UnitedSabadell United Bank, N.A.
SECSecurities and Exchange Commission
SIFMASecurities Industry and Financial Markets Association
SOFRSecured Overnight Financing Rate
SolomonParksSolomonParks Title & Escrow, LLC
TEFully taxable equivalent
Tax ActTax Cuts and Jobs Act
TDRTroubled debt restructuring
U.S.United States of America


USTUnited States Treasury


Item 3. Quantitative and Qualitative Disclosures About Market Risk
Quantitative and qualitative disclosures about market risk are presented at December 31, 20172018 in Part II, Item 7A of the 20172018 10-K, filed with the Securities and Exchange Commission on February 23, 2018.22, 2019. Additional information at SeptemberJune 30, 20182019 is included herein under Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
Item 4. Controls and Procedures
An evaluation of the effectiveness of the Company’s disclosure controls and procedures as of SeptemberJune 30, 20182019 was carried out under the supervision, and with the participation of, the Chief Executive Officer (“CEO”)(CEO) and Chief Financial Officer (“CFO”)(CFO). Based on that evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures are effective in alerting them in a timely manner to material information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”).
Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed by the Company under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to the Company’s management, including the CEO and the CFO, as appropriate, to allow timely decisions regarding required disclosures. Disclosure controls include review of internal controls that are designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use and transactions are properly recorded and reported. There was no significant change in the Company’s internal controls over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the internal control over financial reporting.
Any control system, no matter how well conceived and operated, can provide only reasonable assurance that its objectives are achieved. The design of a control system inherently has limitations, including the controls’ cost relative to their benefits. Additionally, controls can be circumvented. No cost-effective control system can provide absolute assurance that all control issues and instances of fraud, if any, will be detected.





Part II. Other Information
Item 1. Legal Proceedings
See the "Legal Proceedings" section of "Note 1615 – Commitments and Contingencies" of the Notes to the Unaudited Consolidated Financial Statements, incorporated herein by reference.


Item 1A. Risk Factors
For information regarding risk factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors disclosed in the "Risk Factors" section of the Company's 20172018 10-K, filed with the Securities and Exchange Commission on February 23, 2018.22, 2019.


The risk factors below relate to the acquisition of Gibraltar Private Bank & Trust Co., which we refer to as "Gibraltar," and are in addition to the risk factors previously disclosed in the Company's 2017 10-K. The Company completed its acquisition of Gibraltar on March 23, 2018.

We may fail to realize all of the anticipated benefits of the Gibraltar acquisition.



The success of the acquisition will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining our business with the business of Gibraltar. If we are not able to achieve these objectives, the anticipated benefits and cost savings of the Gibraltar acquisition may not be realized fully, or at all, or may take longer to realize than expected.

We have incurred significant transaction and acquisition-related integration costs in connection with the Gibraltar acquisition.

We have incurred significant costs associated with completing the Gibraltar acquisition and integrating Gibraltar’s operations, and are continuing to assess the impact of these costs. Although we believe that the elimination of duplicate costs, as well as the realization of other efficiencies related to the integration of Gibraltar’s business, will offset incremental transaction and merger-related costs over time, this net benefit may not be achieved in the near term, or at all.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Information concerning IBERIABANK Corporation's repurchases of its outstanding common stock during the three-month period ended SeptemberJune 30, 2018,2019, is included in the following table:
Issuer Purchases of Equity Securities
Period
Total Number of Shares Purchased(1)
Average Price Paid per Share(1)
Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
Total Number of Shares Purchased(1)
Average Price Paid per Share(1)
Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1-31, 2018363,773
83.62
363,210
709,290
August 1-31, 201815,956
84.15
—
—
September 1-30, 2018114
86.54
—
—
April 1-30, 2019130,749
79.83
130,000
1,747,079
May 1-31, 2019923,480
77.80
923,200
823,879
June 1-30, 2019706,842
74.39
706,649
117,230
Total379,843
83.65
363,210
709,290
1,761,071
76.58
1,759,849
117,230
(1) Includes shares of the Company's common stock acquired by the Company in connection with satisfaction of tax withholding obligations on vested restricted stock.
(1) Includes shares of the Company's common stock acquired by the Company in connection with satisfaction of tax withholding obligations on vested restricted stock.
(1) Includes shares of the Company's common stock acquired by the Company in connection with satisfaction of tax withholding obligations on vested restricted stock.
On May 10, 2018, IBERIABANK Corporation's BoardDuring the second quarter of Directors authorized the repurchase of up to 1,137,500 shares of the Company's outstanding common stock. On November 5, 2018,2019, the Company announced the completion of this program under which all of the authorizedrepurchased 1,759,849 common shares, were purchased at a weighted average price of $77.54$76.59 per common share. AlsoAt June 30, 2019, the Company had approximately 117,230 remaining shares to be repurchased under the Board-approved plan. Additionally, the Company repurchased 1,222 at $73.69 per common share with satisfaction of tax withholding obligations on vested restricted stock.
The Company's recently completed share repurchase program was announced on November 5, 2018 and completed on July 12, 2019. During that time, the Company announced thatpurchased 2,765,000 shares of its common stock at a weighted average price of $75.52 per share.
On July 17, 2019, the Board of Directors had authorized a new repurchase programplan of up to 2,765,0001,600,000 shares of the Company's outstanding common stock, which equatesstock. This repurchase authorization equated to approximately 5%3% of the total common shares outstanding. Stock repurchases under this new program will be made from time to time, on the open market or in privately negotiated transactions at the discretion of the management of the Company and in accordance with the limitations set forth in Rule 10b-18 of the Securities and Exchange Commission, approval by all applicable regulatory agencies, and other applicable legal requirements.Company. The timing of these repurchases will depend on market conditions and other requirements. The Company currently anticipates the share repurchase program will extend over a two-year time frame,period, or earlier if the shares have been repurchased. The share repurchase program does not obligate
Subsequent to quarter-end and through August 6, 2019, the Company to repurchase any dollar amount or number ofrepurchased 307,230 common shares and the program may be extended, modified, suspended, or discontinued at any time. For additional information regarding completion and commencement of the stock repurchase programs, see the Company's Current Report on Form 8-K filed on November 5, 2018, which is incorporated herein by reference.for approximately $23.0 million.
Restrictions on Dividends and Repurchase of Stock


Holders of IBERIABANK Corporationthe Company's common stock are only entitled to receive such dividends if, as, and when the Company's Board of Directors may declare out of funds legally available for such payments. Furthermore, holders of IBERIABANK Corporation common stock are subject to the prior dividend rights of any holders of the Company's preferred stock then outstanding. There were 13,750 shares of preferred stock outstanding at September 30, 2018.
IBERIABANK Corporation understands the importance of returning capital to shareholders. Management will continue to execute the capital planning process, including evaluation of the amount of the common stock dividend, with the Board of Directors and in conjunction with the regulators, subject to the Company's results of operations. Also, IBERIABANK Corporation is a bank holding company, and its ability to declare and pay dividends is dependent on certain federal regulatory considerations, including the guidelines of the Federal Reserve regarding capital adequacy and dividends.
On April 4, 2019, the Company issued and sold an aggregate of 4,000,000 depositary shares (the “Series D Depositary Shares”), each representing a 1/400th ownership interest in a share of the Company’s 6.100% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series D, par value $1.00 per share, (“Series D Preferred Stock”), with a liquidation preference of $10,000 per share of Series D Preferred Stock (equivalent to $25 per depositary share), which represents $100 million in aggregate liquidation preference.
Dividends will accrue and be payable on the Series D Preferred Stock, if declared by the Company's Board of Directors, and will be paid semi-annually on May 1 and November 1, in arrears, at an annual rate equal to (i) 6.100% for each period from the issuance date to May 1, 2024 and (ii) three-month LIBOR plus 3.859% for each period on or after August 1, 2024. The Company may redeem the Series D Preferred Stock at its option, subject to regulatory approval, as described in the Company’s Registration Statement on Form 8-A, filed with the Securities and Exchange Commission on April 4, 2019.


Holders of the common stock are subject to the prior dividend rights of any holders of the Company's preferred stock then outstanding. There were 23,750 shares of preferred stock outstanding at June 30, 2019. In addition, the terms of the Company’s outstanding junior subordinated debt securities prohibit it from declaring or paying any dividends or distributions on outstanding capital stock, or purchasing, acquiring, or making a liquidation payment on such stock, if the Company has elected to defer interest payments on such debt.
For additional information, see Note 9, Shareholders' Equity, Capital Ratios and Other Regulatory Matters.

Item 3. Defaults Upon Senior Securities
Not Applicable.


Item 4. Mine Safety Disclosures
Not Applicable.


Item 5. Other Information
None.





Item 6. Exhibits
Exhibit No. 31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  
Exhibit No. 31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  
Exhibit No. 32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  
Exhibit No. 32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  
Exhibit No. 101.INSXBRL Instance Document.
  
Exhibit No. 101.SCHXBRL Taxonomy Extension Schema.
  
Exhibit No. 101.CALXBRL Taxonomy Extension Calculation Linkbase.
  
Exhibit No. 101.DEFXBRL Taxonomy Extension Definition Linkbase.
  
Exhibit No. 101.LABXBRL Taxonomy Extension Label Linkbase.
  
Exhibit No. 101.PREXBRL Taxonomy Extension Presentation Linkbase.





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
     
  IBERIABANK Corporation
   
Date: November 6, 2018August 7, 2019 By: /s/ Daryl G. Byrd
  Daryl G. Byrd
  President and Chief Executive Officer
   
Date: November 6, 2018August 7, 2019 By: /s/ Anthony J. Restel
  Anthony J. Restel
  Vice Chairman and Chief Financial Officer




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