Edgar Filing: IBERIABANK CORP

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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 September 30, 2016



¨	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 Corporation

(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) 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, or a smaller reporting company (as defined in Securities Exchange Act Rule 12b-2).

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

At October 31, 2016, the Registrant had 41,074,368 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 September 30, 2016 and December 31, 2015	3
Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2016 and 2015	4
Consolidated Statements of Shareholders’ Equity for the nine months ended September 30, 2016 and 2015	5
Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015	6
Notes to Unaudited Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	55

Item 3. Quantitative and Qualitative Disclosures About Market Risk	80

Item 4. Controls and Procedures	80

Part II. Other Information	81

Item 1. Legal Proceedings	81

Item 1A. Risk Factors	81

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	81

Item 3. Defaults Upon Senior Securities	81

Item 4. Mine Safety Disclosures	82

Item 5. Other Information	82

Item 6. Exhibits	83

Signatures	84

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

IBERIABANK CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets



	(unaudited)
(Dollars in thousands, except share data)	September 30, 2016			December 31, 2015
Assets
Cash and due from banks	$	327,799		$	241,650
Interest-bearing deposits in banks	773,454			268,617
Total cash and cash equivalents	1,101,253			510,267
Securities available for sale, at fair value	2,885,413			2,800,286
Securities held to maturity (fair values of $93,410 and $100,961, respectively)	90,653			98,928
Mortgage loans held for sale, at fair value	210,866			166,247
Loans covered by loss share agreements	202,211			229,217
Non-covered loans, net of unearned income	14,722,288			14,098,211
Total loans, net of unearned income	14,924,499			14,327,428
Allowance for loan losses	(148,193		)	(138,378		)
Loans, net	14,776,306			14,189,050
FDIC loss share receivables	24,406			39,878
Premises and equipment, net	308,932			323,902
Goodwill	726,856			724,603
Other assets	663,881			650,907
Total Assets	$	20,788,566		$	19,504,068

Liabilities
Deposits:
Non-interest-bearing	$	4,787,485		$	4,352,229
Interest-bearing	11,735,032			11,826,519
Total deposits	16,522,517			16,178,748
Short-term borrowings	713,272			326,617
Long-term debt	672,438			340,447
Other liabilities	213,229			159,421
Total Liabilities	18,121,456			17,005,233

Shareholders’ Equity
Preferred stock, $1 par value - 5,000,000 shares authorized
Non-cumulative perpetual, liquidation preference $10,000 per share; 13,750 and 8,000 shares issued and outstanding, including related surplus	132,097			76,812
Common stock, $1 par value - 100,000,000 shares authorized; 41,081,701 and 41,139,537 shares issued and outstanding, respectively	41,082			41,140
Additional paid-in capital	1,797,835			1,797,982
Retained earnings	676,308			584,486
Accumulated other comprehensive income (loss)	19,788			(1,585		)
Total Shareholders’ Equity	2,667,110			2,498,835
Total Liabilities and Shareholders’ Equity	$	20,788,566		$	19,504,068

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,
(Dollars in thousands, except per share data)	2016			2015			2016			2015
Interest and Dividend Income
Loans, including fees	$	167,784		$	159,915		$	497,344		$	443,441
Mortgage loans held for sale, including fees	1,774			1,847			5,025			4,742
Investment securities:
Taxable interest	12,042			12,184			38,584			33,906
Tax-exempt interest	1,773			1,546			5,107			4,111
Amortization of FDIC loss share receivable	(3,935		)	(5,600		)	(12,484		)	(19,011		)
Other	1,066			1,185			2,558			3,018
Total interest and dividend income	180,504			171,077			536,134			470,207
Interest Expense
Deposits:
NOW and MMDA	7,840			7,968			22,508			19,409
Savings	299			217			818			525
Time deposits	4,592			5,039			13,255			14,410
Short-term borrowings	753			116			1,900			699
Long-term debt	3,603			2,620			10,080			8,566
Total interest expense	17,087			15,960			48,561			43,609
Net interest income	163,417			155,117			487,573			426,598
Provision for loan losses	12,484			5,062			39,255			19,197
Net interest income after provision for loan losses	150,933			150,055			448,318			407,401
Non-interest Income
Mortgage income	21,807			20,628			67,738			63,897
Service charges on deposit accounts	11,066			11,342			32,957			30,766
Title revenue	6,001			6,627			16,881			17,402
Broker commissions	3,797			3,839			11,332			13,462
ATM/debit card fee income	3,483			3,562			10,636			10,420
Income from bank owned life insurance	1,305			1,093			3,918			3,260
Gain on sale of available for sale securities	12			280			1,997			1,569
Other non-interest income	12,350			10,107			35,124			27,114
Total non-interest income	59,821			57,478			180,583			167,890
Non-interest Expense
Salaries and employee benefits	85,028			82,416			250,875			239,131
Net occupancy and equipment	16,526			17,987			50,246			51,613
Communication and delivery	3,041			3,420			9,381			10,164
Marketing and business development	3,200			3,260			9,844			11,003
Data processing	6,076			6,727			18,095			27,928
Professional services	5,553			5,825			14,272			18,657
Credit and other loan related expense	1,928			5,241			7,530			14,154
Insurance	4,853			4,614			13,486			12,402
Travel and entertainment	1,915			2,248			6,236			7,489
Other non-interest expense	10,019			13,230			35,130			38,789
Total non-interest expense	138,139			144,968			415,095			431,330



Income before income tax expense	72,615			62,565			213,806			143,961
Income tax expense	24,547			20,090			72,159			45,524
Net Income	48,068			42,475			141,647			98,437
Preferred stock dividends	(3,590		)	—			(7,020		)	—
Net Income Available to Common Shareholders	$	44,478		$	42,475		$	134,627		$	98,437

Income Available to Common Shareholders - Basic	$	44,478		$	42,475		$	134,627		$	98,437
Earnings Allocated to Unvested Restricted Stock	(462		)	(492		)	(1,464		)	(1,171		)
Earnings Allocated to Common Shareholders - Basic	$	44,016		$	41,983		$	133,163		$	97,266

Earnings per common share - Basic	$	1.08		$	1.04		$	3.27		$	2.60
Earnings per common share - Diluted	1.08			1.03			3.26			2.59
Cash dividends declared per common share	0.36			0.34			1.04			1.02
Comprehensive Income
Net Income	$	48,068		$	42,475		$	141,647		$	98,437
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period (net of tax effects of $3,410, $6,681, $15,605 and $5,843, respectively)	(6,334		)	12,408			28,980			10,852
Reclassification adjustment for gains included in net income (net of tax effects of $4, $98, $699 and $549, respectively)	(8		)	(182		)	(1,298		)	(1,020		)
Unrealized gains (losses) on securities, net of tax	(6,342		)	12,226			27,682			9,832
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 $78, $1,837, $3,397 and $201, respectively)	146			(3,412		)	(6,309		)	(374		)
Reclassification adjustment for losses included in net income	—			—			—			—
Fair value of derivative instruments designated as cash flow hedges, net of tax	146			(3,412		)	(6,309		)	(374		)
Other comprehensive income, net of tax	(6,196		)	8,814			21,373			9,458
Comprehensive Income	$	41,872		$	51,289		$	163,020		$	107,895

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)			Treasury Stock at Cost			Total
	Preferred Stock			Common Stock
(Dollars in thousands, except share and per share data)	Shares	Amount		Shares		Amount
Balance, December 31, 2014	—	$	—	35,262,901		$	35,263		$	1,398,633		$	496,573		$	7,525		$	(85,846	)	$	1,852,148
Net income	—	—		—		—			—			98,437			—			—			98,437
Other comprehensive income	—	—		—		—			—			—			9,458			—			9,458
Cash dividends declared, $1.02 per share	—	—		—		—			—			(40,945		)	—			—			(40,945		)
Reclassification of treasury stock under the LBCA ⁽¹⁾	—	—		(1,809,497	)	(1,809		)	(84,037		)	—			—			85,846			—
Common stock issued under incentive plans, net of shares surrendered in payment, including tax benefit	—	—		200,958		201			1,547			—			—			—			1,748
Common stock issued for acquisitions	—	—		7,474,404		7,474			467,279			—			—			—			474,753
Preferred stock issued	8,000	77,463		—		—			—			—			—			—			77,463
Share-based compensation cost	—	—		—		—			10,139			—			—			—			10,139
Balance, September 30, 2015	8,000	$	77,463	41,128,766		$	41,129		$	1,793,561		$	554,065		$	16,983		$	—		$	2,483,201

Balance, December 31, 2015	8,000	$	76,812	41,139,537		$	41,140		$	1,797,982		$	584,486		$	(1,585	)	$	—		$	2,498,835
Net income	—	—		—		—			—			141,647			—			—			141,647
Other comprehensive income	—	—		—		—			—			—			21,373			—			21,373
Cash dividends declared, $1.04 per share	—	—		—		—			—			(42,805		)	—			—			(42,805		)
Preferred stock dividends	—	—		—		—			—			(7,020		)	—			—			(7,020		)
Common stock issued under incentive plans, net of shares surrendered in payment, including tax benefit	—	—		144,670		145			87			—			—			—			232
Preferred stock issued	5,750	55,285		—		—			—			—			—			—			55,285
Common stock repurchases	—	—		(202,506	)	(203		)	(11,463		)	—			—			—			(11,666		)
Share-based compensation cost	—	—		—		—			11,229			—			—			—			11,229
Balance, September 30, 2016	13,750	$	132,097	41,081,701		$	41,082		$	1,797,835		$	676,308		$	19,788		$	—		$	2,667,110

(1)

Effective January 1, 2015, companies incorporated in Louisiana became subject to the Louisiana Business Corporation Act (“LBCA”), which eliminates the concept of treasury stock and provides that shares reacquired by a company are to be treated as authorized but unissued. Refer to Note 1, Summary of Significant Accounting Policies, in the Annual Report on Form 10-K for the year ended December 31, 2015, for further discussion.

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,
(Dollars in thousands)	2016			2015
Cash Flows from Operating Activities
Net income	$	141,647		$	98,437
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	3,414			11,839
Amortization of purchase accounting adjustments, net	(13,803		)	(14,657		)
Provision for loan losses	39,255			19,197
Share-based compensation cost - equity awards	11,229			10,139
Gain on sale of assets, net	(64		)	(2,384		)
Gain on sale of available for sale securities	(1,997		)	(1,569		)
Gain on sale of OREO, net	(5,798		)	(3,216		)
Amortization of premium/discount on securities, net	16,288			13,217
Expense for deferred income taxes	3,008			3,244
Originations of mortgage loans held for sale	(1,922,021		)	(1,880,856		)
Proceeds from sales of mortgage loans held for sale	1,940,605			1,887,468
Realized and unrealized gains on mortgage loans held for sale, net	(77,271		)	(60,109		)
Tax benefit associated with share-based payment arrangements	(115		)	(408		)
Other operating activities, net	41,427			43,010
Net Cash Provided by Operating Activities	175,804			123,352
Cash Flows from Investing Activities
Proceeds from sales of available for sale securities	197,733			212,278
Proceeds from maturities, prepayments and calls of available for sale securities	349,361			367,064
Purchases of available for sale securities	(594,143		)	(934,638		)
Proceeds from maturities, prepayments and calls of held to maturity securities	7,597			17,937
Purchases of equity securities	(31,380		)	—
Reimbursement of recoverable covered asset losses (to) from the FDIC	(7,173		)	1,429
Increase in loans, net of loans acquired	(568,844		)	(491,545		)
Proceeds from sale of premises and equipment	1,200			9,113
Purchases of premises and equipment, net of premises and equipment acquired	(9,436		)	(14,144		)
Proceeds from disposition of OREO	28,089			38,739
Cash paid for additional investment in tax credit entities	(16,817		)	(7,868		)
Cash received in excess of cash paid for acquisitions	—			425,581
Other investing activities, net	(490		)	14,695
Net Cash Used in Investing Activities	(644,303		)	(361,359		)
Cash Flows from Financing Activities
Increase in deposits, net of deposits acquired	344,130			1,092,943
Net change in short-term borrowings, net of borrowings acquired	386,655			(624,811		)
Proceeds from long-term debt	346,754			63,125
Repayments of long-term debt	(13,826		)	(200,031		)
Cash dividends paid on common stock	(42,003		)	(38,334		)
Cash dividends paid on preferred stock	(6,077		)	—
Net share-based compensation stock transactions	118			1,421
Payments to repurchase common stock	(11,666		)	—
Net proceeds from issuance of preferred stock	55,285			77,463
Tax benefit associated with share-based payment arrangements	115			408
Net Cash Provided by Financing Activities	1,059,485			372,184
Net Increase in Cash and Cash Equivalents	590,986			134,177
Cash and Cash Equivalents at Beginning of Period	510,267			548,095
Cash and Cash Equivalents at End of Period	$	1,101,253		$	682,272
Supplemental Schedule of Non-cash Activities
Acquisition of real estate in settlement of loans	$	5,813		$	14,921
Common stock issued in acquisitions	$	—		$	474,753
Supplemental Disclosures
Cash paid for:
Interest on deposits and borrowings	$	46,656		$	42,899
Income taxes, net	$	54,560		$	28,929

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

IBERIABANK CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

NOTE 1 – BASIS OF PRESENTATION

General

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 GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for a fair presentation of the consolidated financial statements have been made. These interim financial statements should be read in conjunction with the audited consolidated financial statements and footnote disclosures for the Company previously filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Operating results for the period ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

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 Acronyms at the end of this Report for terms used throughout this Report.

Principles of Consolidation

The Company’s consolidated financial statements include all entities in which the Company has a controlling financial interest under either the voting interest or variable interest model. The assessment of whether or not the Company has a controlling interest (i.e., the primary beneficiary) in a variable interest entity ("VIE") is performed on an on-going basis. All equity investments in non-consolidated VIEs are included in "other assets" in the Company’s consolidated balance sheets. The Company’s maximum exposure to loss as a result of its involvement with non-consolidated VIEs was approximately $130 million and $160 million at September 30, 2016 and December 31, 2015, respectively. The Company's maximum exposure to loss was equivalent to the carrying value of its investments and any related outstanding loans to the non-consolidated VIEs.

Investments in entities that are not consolidated are accounted for under either the equity, cost, or proportional amortization method of accounting. Investments for which the Company has the ability to exercise significant influence over the operating and financing decisions of the entity are accounted for under the equity method. Investments for which the Company does not hold such ability are accounted for under the cost method. Investments in qualified affordable housing projects, which meet certain criteria, are accounted for under the proportional amortization method.

The consolidated financial statements include the accounts of the Company and its subsidiaries, IBERIABANK; Lenders Title Company; IBERIA Capital Partners, LLC; 1887 Leasing, LLC; IBERIA Asset Management, Inc.; 840 Denning, LLC; and IBERIA CDE, LLC. All significant intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations

The Company offers commercial and retail banking products and services to customers throughout locations in seven states through IBERIABANK. The Company also operates mortgage production offices in 10 states through IMC and offers a full line of title insurance and closing services throughout Arkansas and Louisiana through LTC and its subsidiaries. ICP provides equity research, institutional sales and trading, and corporate finance services throughout the energy industry. 1887 Leasing, LLC owns an aircraft used by management of the Company. IAM provides wealth management and trust services for commercial and private banking clients. CDE is engaged in the purchase of tax credits.

Reclassifications

Certain amounts reported in prior periods have been reclassified to conform to the current period presentation. These reclassifications did not have a material net impact on previously reported consolidated net income, shareholders’ equity or cash flows.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Material estimates that are susceptible to significant change in the near term are the allowance for credit losses, valuation of and accounting for acquired loans, goodwill and other intangibles, income taxes, and fair value estimates.

Concentrations of Credit Risk

Most of the Company’s business activity is with customers located within the states of Louisiana, Florida, Arkansas, Alabama, Texas, Tennessee and Georgia. The Company’s lending activity is concentrated in its market areas in those states. The Company has emphasized originations of commercial loans and private banking loans, defined as loans to larger consumer clients. Concentrations in commercial real estate have increased as a result of the Company's recent acquisitions of CRE-focused banks. Repayments on loans are expected to come from cash flows of the borrower and/or guarantor. Losses on secured loans are limited by the value of the collateral upon default of the borrowers and guarantor support. The Company does not have any significant concentrations to any one industry or customer.

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

ASU No. 2016-02

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The most significant amendment to existing GAAP 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. Early adoption is permitted. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach.

The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements, including whether to adopt any practical expedients or policy elections from this ASU. The Company is not expecting to early adopt the ASU.

ASU No. 2016-08, No. 2016-10, and No. 2016-12

In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), to improve implementation guidance on principal versus agency considerations within Topic 606.

In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, to improve implementation guidance on identifying performance obligations and licensing aspects of Topic 606.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, to provide clarification on certain targeted aspects of Topic 606.

The amendments in ASU No. 2016-08, No. 2016-10, and No. 2016-12 will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that annual reporting period. The amendments will be applied through the election of one of two retrospective methods.

The Company is currently evaluating the impact of the ASUs on the Company’s consolidated financial statements. The Company is not expecting to early adopt the ASUs.

ASU No. 2016-09

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments will require recognition of excess tax benefits and deficiencies associated with awards which vest or settle within income tax expense or benefit in the statement of comprehensive income, with the tax effects treated as discrete items in the reporting period in which they occur. The ASU further requires entities to recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. This will eliminate the current APIC pool concept.

The amendments will also allow an accounting policy election to account for forfeitures as they occur, permit an entity to withhold up to the maximum statutory tax rates in the applicable jurisdictions while still qualifying for equity classification, and change the classification of certain cash flows associated with stock compensation.

ASU 2016-09 will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The transition method for implementing each amendment varies.

The Company expects to elect an accounting policy to account for forfeitures as they occur upon adoption. Based on the Company's current stock valuation, it does not anticipate a significant impact to the Company's consolidated financial statements at adoption.

ASU No. 2016-13

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments introduce an impairment model that is based on expected credit losses (“ECL”), rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g., loans and held-to-maturity securities), including certain off-balance sheet financial instruments (e.g., loan commitments). The 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 may be grouped together when estimating the ECL.

The ASU also 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 of an allowance to record estimated credit losses (and subsequent recoveries). Non-credit related losses will continue to be recognized through OCI.

In addition, the amendments provide 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 ALL with an offset (i.e., increase) to the cost basis of the related financial asset at acquisition.

ASU 2016-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods. The amendments 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.

The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.

ASU No. 2016-15

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 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.

ASU 2016-15 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented.

The Company is currently evaluating the impact of the ASU on the Company’s consolidated statement of cash flows.

NOTE 3 –ACQUISITION ACTIVITY

During 2015, the Company expanded its presence in Florida and Georgia through acquisitions of Florida Bank Group, Inc. on February 28, 2015, Old Florida Bancshares, Inc. on March 31, 2015, and Georgia Commerce Bancshares, Inc. on May 31, 2015. Further information on these acquisitions can be found in Note 3, Acquisition Activity, in the 2015 Annual Report on Form 10-K for the year ended December 31, 2015.

The Company accounts for business combinations under the acquisition method in accordance with ASC Topic 805, Business Combinations. Accordingly, for each transaction, the purchase price is allocated to the fair value of the assets acquired and liabilities assumed as of the date of acquisition. In conjunction with the adoption of ASU 2015-16, upon receipt of final fair value estimates during the measurement period, which must be within one year of the acquisition dates, the Company records any adjustments to the preliminary fair value estimates in the reporting period in which the adjustments are determined. During the first quarter of 2016, the Company finalized the purchase price allocations related to the Florida Bank Group and Old

Florida acquisitions. During the second quarter of 2016, the Company finalized the purchase price allocation related to the Georgia Commerce acquisition. The year-to-date impact of these adjustments was a $2.3 million increase to goodwill, with an offsetting decrease to net deferred tax assets.

The following tables summarize the consideration paid, allocation of purchase price to net assets acquired and resulting goodwill for the aforementioned acquisitions.

Acquisition of Florida Bank Group, Inc.



(Dollars in thousands)	Number of Shares	Amount
Equity consideration
Common stock issued	752,493	$	47,497
Total equity consideration		47,497
Non-Equity consideration
Cash		42,988
Total consideration paid		90,485
Fair value of net assets assumed including identifiable intangible assets		73,043
Goodwill		$	17,442



(Dollars in thousands)	As Acquired		Fair Value Adjustments				As recorded by the Company
Assets
Cash and cash equivalents	$	72,982	$	—			$	72,982
Investment securities	107,236		136			⁽¹⁾	107,372
Loans	312,902		(5,371		)	⁽²⁾	307,531
Other real estate owned	498		(75		)	⁽³⁾	423
Core deposit intangible	—		4,489			⁽⁴⁾	4,489
Deferred tax asset, net	18,151		8,569			⁽⁵⁾	26,720
Other assets	29,817		(8,949		)	⁽⁶⁾	20,868
Total Assets	$	541,586	$	(1,201	)		$	540,385
Liabilities
Interest-bearing deposits	$	282,417	$	263		⁽⁷⁾	$	282,680
Non-interest-bearing deposits	109,548		—				109,548
Borrowings	60,000		8,598			⁽⁸⁾	68,598
Other liabilities	1,898		4,618			⁽⁹⁾	6,516
Total Liabilities	$	453,863	$	13,479			$	467,342

Explanation of certain fair value adjustments:


(1)	The amount represents the adjustment of the book value of Florida Bank Group’s investments to their estimated fair value on the date of acquisition.


(2)	The amount represents the adjustment of the book value of Florida Bank Group's loans to their estimated fair values based on acquisition date interest rates and expected cash flows, which includes estimates of expected credit losses inherent in the portfolio.


(3)	The adjustment represents the adjustment of Florida Bank Group's OREO to its estimated fair value less costs to sell on the date of acquisition.


(4)	The amount represents the fair value of the core deposit intangible asset created in the acquisition.


(5)	The amount represents the deferred tax asset recognized on the fair value adjustments of Florida Bank Group acquired assets and assumed liabilities.


(6)	The amount represents the adjustment of the book value of Florida Bank Group’s property, equipment, and other assets to their estimated fair value at the acquisition date based on their appraised value.


(7)	The amount represents the adjustment of the book value of Florida Bank Group's time deposits to their estimated fair values at the date of acquisition.


(8)	The amount represents the adjustment of the book value of Florida Bank Group’s borrowings to their estimated fair value based on acquisition date interest rates and the credit characteristics inherent in the liability.


(9)	The amount is necessary to record Florida Bank Group's rent liability at fair value.

Acquisition of Old Florida Bancshares, Inc.



(Dollars in thousands)	Number of Shares	Amount
Equity consideration
Common stock issued	3,839,554	$	242,007
Total equity consideration		242,007
Non-Equity consideration
Cash		11,145
Total consideration paid		253,152
Fair value of net assets assumed including identifiable intangible assets		152,375
Goodwill		$	100,777



(Dollars in thousands)	As Acquired		Fair Value Adjustments				As recorded by the Company


Assets
Cash and cash equivalents	$	360,688	$	—			$	360,688
Investment securities	67,209		—				67,209
Loans held for sale	5,952		—				5,952
Loans	1,073,773		(10,822		)	⁽¹⁾	1,062,951
Other real estate owned	4,515		1,449			⁽²⁾	5,964
Core deposit intangible	—		6,821			⁽³⁾	6,821
Deferred tax asset, net	9,490		4,388			⁽⁴⁾	13,878
Other assets	30,549		(7,238		)	⁽⁵⁾	23,311
Total Assets	$	1,552,176	$	(5,402	)		$	1,546,774
Liabilities
Interest-bearing deposits	$	1,048,765	$	123		⁽⁶⁾	$	1,048,888
Non-interest-bearing deposits	340,869		—				340,869
Borrowings	1,528		—				1,528
Other liabilities	3,038		76			⁽⁷⁾	3,114
Total Liabilities	$	1,394,200	$	199			$	1,394,399

Explanation of certain fair value adjustments:


(1)	The amount represents the adjustment of the book value of Old Florida's loans to their estimated fair values based on acquisition date interest rates and expected cash flows, which includes estimates of expected credit losses inherent in the portfolio.


(2)	The adjustment represents the adjustment of Old Florida's OREO to its estimated fair value less costs to sell on the date of acquisition.


(3)	The amount represents the fair value of the core deposit intangible asset created in the acquisition.


(4)	The amount represents the net deferred tax asset recognized on the fair value adjustment of Old Florida acquired assets and assumed liabilities.


(5)	The amount represents the adjustment of the book value of Old Florida’s property, equipment, and other assets to their estimated fair value at the acquisition date based on their appraised value.


(6)	The amount represents the adjustment of the book value of Old Florida's time deposits to their estimated fair values on the date of acquisition.


(7)	The adjustment is necessary to record Old Florida's rent liability at fair value.

Acquisition of Georgia Commerce Bancshares, Inc



(Dollars in thousands)	Number of Shares	Amount
Equity consideration
Common stock issued	2,882,357	$	185,249
Total equity consideration		185,249
Non-Equity consideration
Cash		5,015
Total consideration paid		190,264
Fair value of net assets assumed including identifiable intangible assets		103,569
Goodwill		$	86,695



(Dollars in thousands)	As Acquired		Fair Value Adjustments				As recorded by the Company
Assets
Cash and cash equivalents	$	51,059	$	—			$	51,059
Investment securities	135,710		(807		)	⁽¹⁾	134,903
Loans held for sale	1,249		—				1,249
Loans	807,726		(15,607		)	⁽²⁾	792,119
Other real estate owned	9,795		(4,207		)	⁽³⁾	5,588
Core deposit intangible	—		6,720			⁽⁴⁾	6,720
Deferred tax asset, net	3,603		5,452			⁽⁵⁾	9,055
Other assets	28,956		(657		)	⁽⁶⁾	28,299
Total Assets	$	1,038,098	$	(9,106	)		$	1,028,992
Liabilities
Interest-bearing deposits	658,133		176			⁽⁷⁾	658,309
Non-interest-bearing deposits	249,739		—				249,739
Borrowings	13,204		—				13,204
Other liabilities	4,171		—				4,171
Total Liabilities	$	925,247	$	176			$	925,423

Explanation of certain fair value adjustments:


(1)	The amount represents the adjustment of the book value of Georgia Commerce’s investments to their estimated fair value on the date of acquisition.


(2)	The amount represents the adjustment of the book value of Georgia Commerce's loans to their estimated fair value based on acquisition date interest rates and expected cash flows, which includes estimates of expected credit losses inherent in the portfolio.


(3)	The adjustment represents the adjustment of Georgia Commerce's OREO to its estimated fair value less costs to sell on the date of acquisition.


(4)	The amount represents the fair value of the core deposit intangible asset created in the acquisition.


(5)	The amount represents the net deferred tax asset recognized on the fair value adjustment of Georgia Commerce acquired assets and assumed liabilities.


(6)	The amount represents the adjustment of the book value of Georgia Commerce’s property, equipment, and other assets to their estimated fair value at the acquisition date based on their appraised value.


(7)	The amount represents the adjustment of the book value of Georgia Commerce's time deposits to their estimated fair values at the date of acquisition.

NOTE 4 – INVESTMENT SECURITIES

The amortized cost and fair values of investment securities, with gross unrealized gains and losses, consist of the following:



	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available for sale:
U.S. Government-sponsored enterprise obligations	$	217,859	$	2,613	$	—		$	220,472
Obligations of states and political subdivisions	245,086		7,946		(127		)	252,905
Mortgage-backed securities	2,283,336		29,475		(1,743		)	2,311,068
Other securities	99,688		1,330		(50		)	100,968
Total securities available for sale	$	2,845,969	$	41,364	$	(1,920	)	$	2,885,413
Securities held to maturity:
Obligations of states and political subdivisions	$	64,898	$	2,727	$	—		$	67,625
Mortgage-backed securities	25,755		205		(175		)	25,785
Total securities held to maturity	$	90,653	$	2,932	$	(175	)	$	93,410

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available for sale:
U.S. Government-sponsored enterprise obligations	$	252,514	$	1,161	$	(1,592	)	$	252,083
Obligations of states and political subdivisions	182,541		5,429		(9		)	187,961
Mortgage-backed securities	2,272,879		8,457		(16,523		)	2,264,813
Other securities	95,496		430		(497		)	95,429
Total securities available for sale	$	2,803,430	$	15,477	$	(18,621	)	$	2,800,286
Securities held to maturity:
Obligations of states and political subdivisions	$	69,979	$	2,803	$	(101	)	$	72,681
Mortgage-backed securities	28,949		107		(776		)	28,280
Total securities held to maturity	$	98,928	$	2,910	$	(877	)	$	100,961

Securities with carrying values of $1.3 billion and $1.4 billion were pledged to secure public deposits and other borrowings at September 30, 2016 and December 31, 2015, 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, is as follows:



	September 30, 2016
	Less Than Twelve Months					Over Twelve Months					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
(Dollars in thousands)	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
Securities available for sale:
Obligations of state and political obligations	$	(127	)	$	30,222	$	—		$	—	$	(127	)	$	30,222
Mortgage-backed securities	(893		)	236,800		(850		)	94,259		(1,743		)	331,059
Other securities	(1		)	507		(49		)	3,916		(50		)	4,423
Total securities available for sale	$	(1,021	)	$	267,529	$	(899	)	$	98,175	$	(1,920	)	$	365,704
Securities held to maturity:
Obligations of states and political subdivisions	$	—		$	2,212	$	—		$	—	$	—		$	2,212
Mortgage-backed securities	—			—		(175		)	11,698		(175		)	11,698
Total securities held to maturity	$	—		$	2,212	$	(175	)	$	11,698	$	(175	)	$	13,910

	December 31, 2015
	Less Than Twelve Months					Over Twelve Months					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
(Dollars in thousands)	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
Securities available for sale:
U.S. Government-sponsored enterprise obligations	$	(1,214	)	$	177,839	$	(378	)	$	28,116	$	(1,592	)	$	205,955
Obligations of states and political subdivisions	(9		)	5,765		—			—		(9		)	5,765
Mortgage-backed securities	(11,737		)	1,279,914		(4,786		)	185,215		(16,523		)	1,465,129
Other securities	(488		)	51,975		(9		)	499		(497		)	52,474
Total securities available for sale	$	(13,448	)	$	1,515,493	$	(5,173	)	$	213,830	$	(18,621	)	$	1,729,323
Securities held to maturity:
Obligations of states and political subdivisions	$	(9	)	$	1,999	$	(92	)	$	4,162	$	(101	)	$	6,161
Mortgage-backed securities	(45		)	3,530		(731		)	17,573		(776		)	21,103
Total securities held to maturity	$	(54	)	$	5,529	$	(823	)	$	21,735	$	(877	)	$	27,264

The Company assessed the nature of the losses in its portfolio as of September 30, 2016 and December 31, 2015 to determine if there are losses that should be deemed other-than-temporary. In its analysis of these 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 estimated fair value of the securities was less than their amortized cost,


•	Whether adverse conditions were present in the operations, geographic area, or industry of the issuer,


•	The payment structure of the security, including scheduled interest and principal payments, the issuer’s failure 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 not believe the Company will be required to sell debt securities before the anticipated recovery of the amortized cost basis of the security. As a result of the Company’s analysis, no declines in the estimated fair value of the Company’s investment securities were deemed to be other-than-temporary at September 30, 2016 or December 31, 2015.

At September 30, 2016, 73 debt securities had unrealized losses of 0.55% of the securities’ amortized cost basis. At December 31, 2015, 252 debt securities had unrealized losses of 1.10% 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 been in a continuous loss position for over twelve months at September 30, 2016 and December 31, 2015 is presented in the following table.



(Dollars in thousands)	September 30, 2016		December 31, 2015
Number of securities
Issued by Fannie Mae, Freddie Mac, or Ginnie Mae	27		40
Issued by political subdivisions	—		2
Other	3		1
	30		43
Amortized cost basis
Issued by Fannie Mae, Freddie Mac, or Ginnie Mae	$	106,982	$	236,800
Issued by political subdivisions	—		4,253
Other	3,965		508
	$	110,947	$	241,561
Unrealized loss
Issued by Fannie Mae, Freddie Mac, or Ginnie Mae	$	1,025	$	5,895
Issued by political subdivisions	—		92
Other	49		9
	$	1,074	$	5,996

The Fannie Mae, Freddie Mac, and Ginnie Mae securities are rated AA+ by Standard & Poor's and Aaa by Moody’s.

The amortized cost and estimated fair value of investment securities by maturity at September 30, 2016 are shown 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
	Weighted Average Yield		Amortized Cost		Estimated Fair Value		Weighted Average Yield		Amortized Cost		Estimated Fair Value
(Dollars in thousands)	Weighted Average Yield		Amortized Cost		Estimated Fair Value		Weighted Average Yield		Amortized Cost		Estimated Fair Value
Within one year or less	2.36	%	$	19,560	$	19,658	2.42	%	$	2,059	$	2,076
One through five years	1.64	%	275,596		279,271		2.97	%	10,295		10,583
After five through ten years	2.29	%	585,382		602,194		3.07	%	18,357		19,214
Over ten years	1.97	%	1,965,431		1,984,290		2.74	%	59,942		61,537
	2.01	%	$	2,845,969	$	2,885,413	2.82	%	$	90,653	$	93,410

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 September 30,					Nine Months Ended September 30,
(Dollars in thousands)	2016		2015			2016			2015
Realized gains	$	12	$	425		$	2,947		$	1,786
Realized losses	—		(145		)	(950		)	(217		)
	$	12	$	280		$	1,997		$	1,569

In addition to the gains above, the Company realized certain immaterial gains on calls of held to maturity securities.

Other Equity Securities

The Company included the following securities, accounted for at amortized cost, which approximates fair value, in “other assets” on the consolidated balance sheets:



(Dollars in thousands)	September 30, 2016		December 31, 2015
Federal Home Loan Bank (FHLB) stock	$	47,589	$	16,265
Federal Reserve Bank (FRB) stock	48,584		48,584
Other investments	1,159		1,159
	$	97,332	$	66,008

NOTE 5 – LOANS

Loans consist of the following, segregated into legacy and acquired loans, for the periods indicated:



	September 30, 2016
(Dollars in thousands)	Legacy Loans		Acquired Loans		Total
Commercial loans:
Real estate	$	5,419,483	$	1,261,732	$	6,681,215
Commercial and industrial	3,101,472		361,525		3,462,997
Energy-related	598,279		1,362		599,641
	9,119,234		1,624,619		10,743,853

Residential mortgage loans:	840,082		430,448		1,270,530

Consumer and other loans:
Home equity	1,755,295		395,835		2,151,130
Indirect automobile	153,904		9		153,913
Other	544,855		60,218		605,073
	2,454,054		456,062		2,910,116
Total	$	12,413,370	$	2,511,129	$	14,924,499



	December 31, 2015
(Dollars in thousands)	Legacy Loans		Acquired Loans		Total
Commercial loans:
Real estate	$	4,504,062	$	1,569,449	$	6,073,511
Commercial and industrial	2,952,102		492,476		3,444,578
Energy-related	677,177		3,589		680,766
	8,133,341		2,065,514		10,198,855

Residential mortgage loans:	694,023		501,296		1,195,319

Consumer and other loans:
Home equity	1,575,643		490,524		2,066,167
Indirect automobile	246,214		84		246,298
Other	541,299		79,490		620,789
	2,363,156		570,098		2,933,254
Total	$	11,190,520	$	3,136,908	$	14,327,428

Since 2009, the Company has acquired certain assets and liabilities of six failed banks. Substantially all of the loans and foreclosed real estate that were acquired through these transactions were covered by loss share agreements between the FDIC and IBERIABANK, which afforded IBERIABANK loss protection. Covered loans, which are included in acquired loans in the tables above, were $202.2 million and $229.2 million at September 30, 2016 and December 31, 2015, respectively, of which $169.0 million and $191.7 million, respectively, were residential mortgage and home equity loans. Refer to Note 7 for additional information regarding the Company’s loss sharing agreements.

Net deferred loan origination fees were $20.9 million and $18.7 million at September 30, 2016 and December 31, 2015, respectively. 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 September 30, 2016 and December 31, 2015, overdrafts of $3.8 million and $5.1 million, respectively, have been reclassified to loans.

Loans with carrying values of $4.3 billion and $3.9 billion were pledged as collateral for borrowings at September 30, 2016 and December 31, 2015, respectively.

Aging Analysis

The following tables provide an analysis of the aging of loans as of September 30, 2016 and December 31, 2015. Due to the difference in accounting for acquired loans, the tables below further segregate the Company’s loans between loans originated by the Company (“legacy loans”) and acquired loans.



	September 30, 2016
	Legacy loans

	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 Loans		Total Loans
Commercial real estate - Construction	$	694,868	$	—	$	—	$	1,234	$	1,234	$	25	$	696,127
Commercial real estate - Other	4,704,088		1,514		445		2,389		4,348		14,920		4,723,356
Commercial and industrial	3,050,241		14,713		1,404		148		16,265		34,966		3,101,472
Energy-related	444,659		—		—		—		—		153,620		598,279
Residential mortgage	817,154		1,396		7,389		327		9,112		13,816		840,082
Consumer - Home equity	1,740,001		6,207		1,968		101		8,276		7,018		1,755,295
Consumer - Indirect automobile	150,008		2,151		405		—		2,556		1,340		153,904
Consumer - Credit card	79,588		311		115		—		426		438		80,452
Consumer - Other	459,548		2,145		994		737		3,876		979		464,403
Total	$	12,140,155	$	28,437	$	12,720	$	4,936	$	46,093	$	227,122	$	12,413,370



	December 31, 2015
	Legacy loans

	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 Loans		Total Loans
Commercial real estate - Construction	$	635,560	$	801	$	—	$	—	$	801	$	120	$	636,481
Commercial real estate - Other	3,848,584		2,687		793		95		3,575		15,422		3,867,581
Commercial and industrial	2,943,409		1,208		739		87		2,034		6,659		2,952,102
Energy-related	670,081		15		—		—		15		7,081		677,177
Residential mortgage	676,347		1,075		2,485		442		4,002		13,674		694,023
Consumer - Home equity	1,565,596		3,549		870		—		4,419		5,628		1,575,643
Consumer - Indirect automobile	242,328		2,187		518		—		2,705		1,181		246,214
Consumer - Credit card	76,360		394		113		—		507		394		77,261
Consumer - Other	460,594		1,923		752		—		2,675		769		464,038
Total	$	11,118,859	$	13,839	$	6,270	$	624	$	20,733	$	50,928	$	11,190,520



	September 30, 2016
	Acquired loans

	Accruing
(Dollars in thousands)	Current or Less Than 30 days past due		30-59 days		60-89 days		> 90 days		Total Past Due^{(1) (2)}		Non-accrual Loans		Discount/Premium			Acquired Impaired Loans		Total Loans
Commercial real estate - Construction	$	41,618	$	—	$	—	$	—	$	—	$	1,946	$	(285	)	$	37,516	$	80,795
Commercial real estate - Other	913,519		—		387		—		387		1,976		(4,991		)	270,046		1,180,937
Commercial and industrial	324,496		561		249		—		810		1,770		(705		)	35,154		361,525
Energy-related	1,369		—		—		—		—		—		(7		)	—		1,362
Residential mortgage	307,677		—		1,339		280		1,619		1,258		(5,855		)	125,749		430,448
Consumer - Home equity	301,164		419		289		17		725		1,206		(1,762		)	94,502		395,835
Consumer - Indirect automobile	9		—		—		—		—		—		—			—		9
Consumer - Credit Card	—		—		—		—		—		—		—			507		507
Consumer - Other	57,929		521		203		—		724		243		(4,758		)	5,573		59,711
Total	$	1,947,781	$	1,501	$	2,467	$	297	$	4,265	$	8,399	$	(18,363	)	$	569,047	$	2,511,129



	December 31, 2015
	Acquired loans

	Accruing
(Dollars in thousands)	Current or Less Than 30 days past due		30-59 days		60-89 days		> 90 days		Total Past Due ^{(1) (2)}		Non-accrual Loans		Discount/Premium			Acquired Impaired Loans		Total Loans
Commercial real estate - Construction	$	69,167	$	180	$	117	$	—	$	297	$	—	$	(358	)	$	56,320	$	125,426
Commercial real estate - Other	1,090,688		861		705		—		1,566		1,491		(4,479		)	354,757		1,444,023
Commercial and industrial	442,454		623		—		—		623		1,154		(2,517		)	50,762		492,476
Energy-related	2,186		—		—		—		—		170		2			1,231		3,589
Residential mortgage	365,261		7		940		—		947		1,109		(6,601		)	140,580		501,296
Consumer - Home equity	381,107		622		416		291		1,329		1,291		(7,333		)	114,130		490,524
Consumer - Indirect automobile	19		—		—		—		—		—		—			65		84
Consumer - Credit Card	—		—		—		—		—		—		—			582		582
Consumer - Other	74,385		468		127		—		595		206		(2,570		)	6,292		78,908
Total	$	2,425,267	$	2,761	$	2,305	$	291	$	5,357	$	5,421	$	(23,856	)	$	724,719	$	3,136,908


⁽¹⁾	Past due information presents acquired loans at the gross loan balance, prior to application of discounts.


⁽²⁾	Past due 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.

Loans Acquired

As discussed in Note 3, during 2015, the Company acquired loans with fair values of $0.3 billion from Florida Bank Group, $1.1 billion from Old Florida and $0.8 billion from Georgia Commerce. Of the total $2.2 billion of loans acquired, $2.1 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 $57.8 million were determined to exhibit deteriorated credit quality since origination under ASC 310-30. The tables below show the balances acquired during 2015 for these two subsections of the portfolio as of the acquisition date.



(Dollars in thousands)	Acquired Non-Impaired Loans
Contractually required principal and interest at acquisition	$	2,384,114
Expected losses and foregone interest	(15,539		)
Cash flows expected to be collected at acquisition	2,368,575
Fair value of acquired loans at acquisition	$	2,105,466



(Dollars in thousands)	Acquired Impaired Loans
Contractually required principal and interest at acquisition	$	76,445
Non-accretable difference (expected losses and foregone interest)	(11,867		)
Cash flows expected to be collected at acquisition	64,578
Accretable yield	(6,823		)
Basis in acquired loans at acquisition	$	57,755

The following is a summary of changes in the accretable difference for loans accounted for under ASC 310-30 during the nine months ended September 30:



(Dollars in thousands)	2016			2015
Balance at beginning of period	$	227,502		$	287,651
Acquisition	—			4,592
Transfers from non-accretable difference to accretable yield	5,491			7,199
Accretion	(52,603		)	(60,305		)
Changes in expected cash flows not affecting non-accretable differences ⁽¹⁾	12,743			(1,511		)
Balance at end of period	$	193,133		$	237,626


⁽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”) at September 30, 2016 and 2015 is presented in the following tables. Modifications of loans that are accounted for within a pool under ASC Topic 310-30, which include covered loans, as well as certain acquired loans 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 covered and certain acquired loans that would otherwise meet the criteria for classification as a TDR are excluded from the tables below.

TDRs totaling $218.6 million and $48.6 million occurred during the nine-month periods ended September 30, 2016 and September 30, 2015, respectively, through modification of the original loan terms. The following table provides information on how the TDRs were modified during the nine months ended September 30:



(Dollars in thousands)	2016		2015
Extended maturities	$	76,059	$	15,932
Maturity and interest rate adjustment	26,372		23,552
Forbearance	75,953		1,228
Movement to or extension of interest-rate only payments	1,689		—
Interest rate adjustment	133		—
Other concession(s) ⁽¹⁾	38,390		7,887
Total	$	218,596	$	48,599

⁽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 $218.6 million of TDRs occurring during the nine-month period ended September 30, 2016, $94.3 million are on accrual status and $124.3 million are on non-accrual status. Of the $48.6 million of TDRs occurring during the nine-month period ended September 30, 2015, $21.8 million were on accrual status and $26.8 million were on non-accrual status at September 30, 2015.

The following table presents the end of period balance for loans modified in a TDR during the nine-month periods ended September 30:



	2016					2015
(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
Commercial real estate	23	$	22,765	$	16,441	8	$	26,408	$	25,572
Commercial and industrial	49	44,144		43,083		18	19,798		19,643
Energy-related	28	143,012		145,298		1	3,434		3,384
Residential mortgage	31	4,784		4,659		—	—		—
Consumer - Home Equity	104	7,071		6,805		—	—		—
Consumer - Other	142	2,372		2,310		—	—		—
Total	377	$	224,148	$	218,596	27	$	49,640	$	48,599

Information detailing TDRs which defaulted during the nine-month periods ended September 30, 2016 and 2015, and were modified in the previous twelve months (i.e., the twelve months prior to the default) is presented in the following table. The Company has defined a default as any loan with a loan payment that is currently past due greater than 30 days, or was past due greater than 30 days at any point during the previous twelve months, or since the date of modification, whichever is shorter.



	September 30, 2016			September 30, 2015
(In thousands, except number of loans)	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
Commercial real estate	5	$	668	4	$	12,939
Commercial and industrial	21	7,476		15	13,145
Energy-related	1	1,394		1	3,384
Residential mortgage	5	364		—	—
Consumer - Home Equity	16	1,037		—	—
Consumer - Other	13	278		—	—
Total	61	$	11,217	20	$	29,468

NOTE 6 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

Allowance for Credit Losses Activity

A summary of changes in the allowance for credit losses for the nine months ended September 30 is as follows:



	2016
(Dollars in thousands)	Legacy Loans			Acquired Loans			Total
Allowance for credit losses
Allowance for loan losses at beginning of period	$	93,808		$	44,570		$	138,378
Provision for (Reversal of) loan losses before benefit attributable to FDIC loss share agreements	40,516			(2,501		)	38,015
Adjustment attributable to FDIC loss share arrangements	—			1,240			1,240
Net provision for loan losses	40,516			(1,261		)	39,255
Adjustment attributable to FDIC loss share arrangements	—			(1,240		)	(1,240		)
Transfer of balance to OREO and other	—			(2,045		)	(2,045		)
Loans charged-off	(28,559		)	(1,495		)	(30,054		)
Recoveries	3,124			775			3,899
Allowance for loan losses at end of period	$	108,889		$	39,304		$	148,193

Reserve for unfunded commitments at beginning of period	14,145			—			14,145
Provision for (Reversal of) unfunded lending commitments	(2,155		)	—			(2,155		)
Reserve for unfunded commitments at end of period	$	11,990		$	—		$	11,990
Allowance for credit losses at end of period	$	120,879		$	39,304		$	160,183



	2015
(Dollars in thousands)	Legacy Loans			Acquired Loans			Total
Allowance for credit losses
Allowance for loan losses at beginning of period	$	76,174		$	53,957		$	130,131
Provision for loan losses before benefit attributable to FDIC loss share agreements	17,743			112			17,855
Adjustment attributable to FDIC loss share arrangements	—			1,342			1,342
Net provision for loan losses	17,743			1,454			19,197
Adjustment attributable to FDIC loss share arrangements	—			(1,342		)	(1,342		)
Transfer of balance to OREO and other	—			(9,768		)	(9,768		)
Loans charged-off	(12,073		)	(952		)	(13,025		)
Recoveries	4,556			505			5,061
Allowance for loan losses at end of period	$	86,400		$	43,854		$	130,254

Reserve for unfunded commitments at beginning of period	11,801			—			11,801
Provision for unfunded lending commitments	2,724			—			2,724
Reserve for unfunded commitments at end of period	$	14,525		$	—		$	14,525
Allowance for credit losses at end of period	$	100,925		$	43,854		$	144,779

A summary of changes in the allowance for credit losses for legacy loans, by loan portfolio type, for the nine months ended September 30 is as follows:



	2016
	Commercial Real Estate			Commercial and Industrial			Energy-related			Residential Mortgage
(Dollars in thousands)	Commercial Real Estate			Commercial and Industrial			Energy-related			Residential Mortgage			Consumer			Total
Allowance for loan losses at beginning of period	$	24,658		$	23,283		$	23,863		$	3,947		$	18,057		$	93,808
Provision for (Reversal of) loan losses	(651		)	13,201			18,998			248			8,720			40,516
Loans charged off	(1,598		)	(2,418		)	(14,672		)	(240		)	(9,631		)	(28,559		)
Recoveries	766			251			—			142			1,965			3,124
Allowance for loan losses at end of period	$	23,175		$	34,317		$	28,189		$	4,097		$	19,111		$	108,889

Reserve for unfunded commitments at beginning of period	$	4,160		$	3,448		$	2,665		$	830		$	3,042		$	14,145
Provision for (Reversal of) unfunded commitments	(427		)	(46		)	(1,712		)	(148		)	178			(2,155		)
Reserve for unfunded commitments at end of period	$	3,733		$	3,402		$	953		$	682		$	3,220		$	11,990
Allowance on loans individually evaluated for impairment	$	655		$	8,996		$	14,396		$	110		$	1,053		$	25,210
Allowance on loans collectively evaluated for impairment	22,520			25,321			13,793			3,987			18,058			83,679
Loans, net of unearned income:
Balance at end of period	$	5,419,483		$	3,101,472		$	598,279		$	840,082		$	2,454,054		$	12,413,370
Balance at end of period individually evaluated for impairment	31,405			58,464			212,512			4,539			11,546			318,466
Balance at end of period collectively evaluated for impairment	5,388,078			3,043,008			385,767			835,543			2,442,508			12,094,904



	2015
	Commercial Real Estate			Commercial and Industrial			Energy-related		Residential Mortgage
(Dollars in thousands)	Commercial Real Estate			Commercial and Industrial			Energy-related		Residential Mortgage			Consumer			Total
Allowance for loan losses at beginning of period	$	26,752		$	24,455		$	5,949	$	2,678		$	16,340		$	76,174
Provision for (Reversal of) loan losses	(947		)	1,308			9,269		1,474			6,639			17,743
Loans charged off	(2,009		)	(1,048		)	—		(224		)	(8,792		)	(12,073		)
Recoveries	1,535			49			—		44			2,928			4,556
Allowance for loan losses at end of period	$	25,331		$	24,764		$	15,218	$	3,972		$	17,115		$	86,400

Reserve for unfunded commitments at beginning of period	$	3,370		$	3,733		$	1,596	$	168		$	2,934		$	11,801
Provision for (Reversal of) unfunded commitments	218			(149		)	2,037		650			(32		)	2,724
Reserve for unfunded commitments at end of period	$	3,588		$	3,584		$	3,633	$	818		$	2,902		$	14,525
Allowance on loans individually evaluated for impairment	$	883		$	817		$	—	$	—		$	—		$	1,700
Allowance on loans collectively evaluated for impairment	24,448			23,947			15,218		3,972			17,115			84,700
Loans, net of unearned income:
Balance at end of period	$	4,321,723		$	2,779,503		$	713,935	$	660,543		$	2,303,554		$	10,779,258
Balance at end of period individually evaluated for impairment	26,463			22,076			3,409		—			198			52,146
Balance at end of period collectively evaluated for impairment	4,295,260			2,757,427			710,526		660,543			2,303,356			10,727,112

A summary of changes in the allowance for credit losses for acquired loans, by loan portfolio type, for the nine months ended September 30 is as follows:



	2016
	Commercial Real Estate			Commercial and Industrial			Energy-related			Residential Mortgage
(Dollars in thousands)	Commercial Real Estate			Commercial and Industrial			Energy-related			Residential Mortgage			Consumer			Total
Allowance for loan losses at beginning of period	$	25,979		$	2,819		$	125		$	7,841		$	7,806		$	44,570
Provision for (Reversal of) loan losses	(1,952		)	216			(99		)	1,017			(443		)	(1,261		)
Decrease in FDIC loss share receivable	(34		)	(50		)	—			(833		)	(323		)	(1,240		)
Transfer of balance to OREO and other	(380		)	(467		)	—			28			(1,226		)	(2,045		)
Loans charged off	(789		)	—			—			—			(706		)	(1,495		)
Recoveries	102			217			—			33			423			775
Allowance for loan losses at end of period	$	22,926		$	2,735		$	26		$	8,086		$	5,531		$	39,304
Allowance on loans individually evaluated for impairment	$	177		$	77		$	—		$	—		$	—		$	254
Allowance on loans collectively evaluated for impairment	22,749			2,658			26			8,086			5,531			39,050
Loans, net of unearned income:
Balance at end of period	$	1,261,732		$	361,525		$	1,362		$	430,448		$	456,062		$	2,511,129
Balance at end of period individually evaluated for impairment	5,647			1,926			—			—			679			8,252
Balance at end of period collectively evaluated for impairment	948,523			324,445			1,362			304,699			354,801			1,933,830
Balance at end of period acquired with deteriorated credit quality	307,562			35,154			—			125,749			100,582			569,047



	2015
	Commercial Real Estate			Commercial and Industrial			Energy-related		Residential Mortgage
(Dollars in thousands)	Commercial Real Estate			Commercial and Industrial			Energy-related		Residential Mortgage			Consumer			Total
Allowance for loans losses at beginning of period	$	29,949		$	3,265		$	51	$	6,484		$	14,208		$	53,957
Provision for (Reversal of) loan losses	809			174			67		1,263			(859		)	1,454
(Decrease) Increase in FDIC loss share receivable	748			59			—		(277		)	(1,872		)	(1,342		)
Transfer of balance to OREO and other	(6,096		)	(282		)	—		(472		)	(2,918		)	(9,768		)
Loans charged off	—			(8		)	—		(59		)	(885		)	(952		)
Recoveries	8			116			—		4			377			505
Allowance for loans losses at end of period	$	25,418		$	3,324		$	118	$	6,943		$	8,051		$	43,854
Allowance on loans individually evaluated for impairment	$	—		$	—		$	—	$	—		$	16		$	16
Allowance on loans collectively evaluated for impairment	25,418			3,324			118		6,943			8,035			43,838
Loans, net of unearned income:
Balance at end of period	$	1,658,028		$	523,468		$	5,521	$	529,398		$	621,346		$	3,337,761
Balance at end of period individually evaluated for impairment	—			142			—		—			456			598
Balance at end of period collectively evaluated for impairment	1,205,439			465,514			5,521		385,854			493,032			2,555,360
Balance at end of period acquired with deteriorated credit quality	452,589			57,812			—		143,544			127,858			781,803

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 and refinances. Commercial and industrial loans represent loans to commercial customers to finance general working capital needs, equipment purchases 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 one-to-four family mortgage loans secured by properties located in the Company's market areas and originated under terms and documentation that permit sale in the 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

The Company utilizes an asset risk classification system in accordance with guidelines established by the Federal Reserve Board as part of its efforts to monitor commercial asset quality. "Special mention" loans are defined as loans where known information about possible credit problems of the borrower cause management to have some doubt as to the ability of these borrowers to comply with the present loan repayment terms and which may result in future disclosures of these loans as non-performing. For assets with identified credit issues, the Company has two primary classifications for problem assets: "substandard" and "doubtful".

Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of the substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full satisfaction of the loan balance outstanding questionable, which makes probability of loss based on currently existing facts, conditions, and values higher. Loans classified as "Pass" do not meet the criteria set forth for special mention, substandard, or doubtful classification and are not considered criticized. Asset risk classifications are determined at origination or acquisition 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.

The Company’s investment in loans by credit quality indicator is presented in the following tables. The tables below further segregate the Company’s loans between loans that were originated by the Company (legacy loans) and acquired loans. Loan premiums/discounts in the tables below represent the adjustment of non-covered acquired loans to fair value at the acquisition date, as adjusted for income accretion and changes in cash flow estimates in subsequent periods. Asset risk classifications for commercial loans reflect the classification as of September 30, 2016 and December 31, 2015. Credit quality information in the tables below includes loans acquired at the gross loan balance, prior to the application of premiums/discounts, at September 30, 2016 and December 31, 2015.

Loan delinquency is the primary credit quality indicator that the Company utilizes to monitor consumer asset quality.



	Legacy loans
	September 30, 2016												December 31, 2015
(Dollars in thousands)	Pass		Special Mention		Sub-standard		Doubtful		Loss		Total		Pass		Special Mention		Sub-standard		Doubtful		Loss		Total
Commercial real estate - Construction	$	694,983	$	84	$	1,060	$	—	$	—	$	696,127	$	634,889	$	160	$	1,432	$	—	$	—	$	636,481
Commercial real estate - Other	4,654,619		22,919		45,656		162		—		4,723,356		3,806,528		21,877		37,001		2,175		—		3,867,581
Commercial and industrial	2,994,661		34,249		53,951		18,611		—		3,101,472		2,911,396		14,826		19,888		5,992		—		2,952,102
Energy-related	279,404		65,263		249,640		3,972		—		598,279		531,657		67,937		74,272		3,311		—		677,177
Total	$	8,623,667	$	122,515	$	350,307	$	22,745	$	—	$	9,119,234	$	7,884,470	$	104,800	$	132,593	$	11,478	$	—	$	8,133,341



	Legacy loans
	September 30, 2016						December 31, 2015
(Dollars in thousands)	Current		30+ Days Past Due		Total		Current		30+ Days Past Due		Total
Residential mortgage	$	817,154	$	22,928	$	840,082	$	676,347	$	17,676	$	694,023
Consumer - Home equity	1,740,001		15,294		1,755,295		1,565,596		10,047		1,575,643
Consumer - Indirect automobile	150,008		3,896		153,904		242,328		3,886		246,214
Consumer - Credit card	79,588		864		80,452		76,360		901		77,261
Consumer - Other	459,548		4,855		464,403		460,594		3,444		464,038
Total	$	3,246,299	$	47,837	$	3,294,136	$	3,021,225	$	35,954	$	3,057,179



	Acquired loans
	September 30, 2016															December 31, 2015
(Dollars in thousands)	Pass		Special Mention		Sub- standard		Doubtful		Loss		Premium/(Discount)			Total		Pass		Special Mention		Sub- standard		Doubtful		Loss		Premium/(Discount)			Total
Commercial real estate-Construction	$	63,139	$	140	$	5,167	$	744	$	—	$	11,605		$	80,795	$	104,064	$	1,681	$	8,803	$	771	$	—	$	10,107		$	125,426
Commercial real estate - Other	1,145,942		21,731		46,941		1,484		23		(35,184		)	1,180,937		1,395,884		26,080		79,119		6,124		111		(63,295		)	1,444,023
Commercial and industrial	361,376		6,216		14,443		558		—		(21,068		)	361,525		473,241		8,376		16,510		1,206		43		(6,900		)	492,476
Energy-related	1,369		—		—		—		—		(7		)	1,362		2,166		55		170		1,198		—		—			3,589
Total	$	1,571,826	$	28,087	$	66,551	$	2,786	$	23	$	(44,654	)	$	1,624,619	$	1,975,355	$	36,192	$	104,602	$	9,299	$	154	$	(60,088	)	$	2,065,514



	Acquired loans
	September 30, 2016									December 31, 2015
(Dollars in thousands)	Current		30+ Days Past Due		Premium (Discount)			Total		Current		30+ Days Past Due		Premium (Discount)			Total
Residential mortgage	$	441,411	$	21,832	$	(32,795	)	$	430,448	$	506,103	$	24,752	$	(29,559	)	$	501,296
Consumer - Home equity	408,541		11,458		(24,164		)	395,835		503,635		16,381		(29,492		)	490,524
Consumer - Indirect automobile	9		1		(1		)	9		72		12		—			84
Consumer - Other	58,998		1,618		(398		)	60,218		79,732		1,475		(1,717		)	79,490
Total	$	908,959	$	34,909	$	(57,358	)	$	886,510	$	1,089,542	$	42,620	$	(60,768	)	$	1,071,394

Legacy Impaired Loans

Information on the Company’s investment in legacy impaired loans, which include all TDRs and all other non-accrual loans, is presented in the following tables as of and for the periods indicated. Legacy non-accrual mortgage and consumer loans, and commercial loans below the Company's specific threshold, are included for purposes of this disclosure although such loans are generally not evaluated or measured individually for impairment for purposes of determining the allowance for loan losses.



	September 30, 2016							December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Related Allowance			Unpaid Principal Balance		Recorded Investment		Related Allowance
(Dollars in thousands)	Unpaid Principal Balance		Recorded Investment		Related Allowance			Unpaid Principal Balance		Recorded Investment		Related Allowance
With no related allowance recorded:
Commercial real estate	$	15,447	$	14,655	$	—		$	17,002	$	16,145	$	—
Commercial business	29,162		28,722		—			14,571		14,340		—
Energy-related	168,723		163,156		—			—		—		—
Residential mortgage	—		—		—			—		—		—
Consumer - Home equity	—		—		—			730		730		—
Consumer -Other	—		—		—			66		66		—

With an allowance recorded:
Commercial real estate	17,870		17,843		(660		)	21,377		13,753		(1,253		)
Commercial and industrial	31,406		31,067		(9,012		)	7,422		6,262		(277		)
Energy-related	52,749		49,407		(14,396		)	13,474		13,444		(2,125		)
Residential mortgage	18,205		16,840		(124		)	14,806		13,743		(64		)
Consumer - Home equity	16,845		15,615		(855		)	9,486		8,559		(363		)
Consumer - Indirect automobile	2,465		1,727		(128		)	1,955		1,181		(10		)
Consumer - Credit card	438		438		(9		)	394		394		(8		)
Consumer - Other	2,711		2,573		(122		)	1,450		899		(23		)
Total	$	356,021	$	342,043	$	(25,306	)	$	102,733	$	89,516	$	(4,123	)
Total commercial loans	$	315,357	$	304,850	$	(24,068	)	$	73,846	$	63,944	$	(3,655	)
Total mortgage loans	18,205		16,840		(124		)	14,806		13,743		(64		)
Total consumer loans	22,459		20,353		(1,114		)	14,081		11,829		(404		)



	Three Months Ended September 30, 2016				Three Months Ended September 30, 2015				Nine Months Ended September 30, 2016				Nine Months Ended September 30, 2015
	Average 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)	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	$	20,345	$	220	$	16,018	$	37	$	20,633	$	663	$	16,036	$	79
Commercial and industrial	29,533		313		20,055		159		30,772		1,030		20,630		465
Energy-related	165,459		1,364		3,409		—		149,099		3,755		3,425		—
Residential mortgage	—		—		—		—		—		—		—		—
Consumer - Home equity	—		—		215		3		—		—		204		4
With an allowance recorded:
Commercial real estate	17,776		143		11,649		128		17,654		433		8,247		385
Commercial and industrial	31,859		366		2,121		—		39,087		1,211		2,634		—
Energy-related	55,947		416		99		—		42,089		1,325		106		—
Residential mortgage	16,558		49		15,008		—		16,410		177		15,100		—
Consumer - Home equity	14,632		119		5,344		—		13,696		348		5,462		—
Consumer - Indirect automobile	1,853		16		1,361		—		2,092		70		1,551		—
Consumer - Credit card	468		—		721		—		461		—		1,038		—
Consumer - Other	2,346		38		1,030		—		2,065		109		1,068		—
Total	$	356,776	$	3,044	$	77,030	$	327	334,058		9,121		$	75,501	$	933
Total commercial loans	$	320,919	$	2,822	$	53,351	$	324	$	299,334	$	8,417	$	51,078	$	929
Total mortgage loans	16,558		49		15,008		—		16,410		177		15,100		—
Total consumer loans	19,299		173		8,671		3		18,314		527		9,323		4

As of September 30, 2016 and December 31, 2015, 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.

NOTE 7 – LOSS SHARING AGREEMENTS AND FDIC LOSS SHARE RECEIVABLES

Loss Sharing Agreements

Since 2009, the Company has acquired certain assets and liabilities of six failed banks. Substantially all of the loans and foreclosed real estate acquired through these transactions are subject to loss share agreements between the FDIC and IBERIABANK, which afford IBERIABANK loss protection.

During the reimbursable loss periods, the FDIC will cover 80% of covered loan and foreclosed real estate losses up to certain thresholds for the six acquisitions, and 95% of losses that exceed contractual thresholds for three acquisitions. The reimbursable loss periods, excluding single family residential assets, ended in 2014 for three acquisitions, ended during 2015 for one acquisition and ended during the third quarter of 2016 for two acquisitions. The reimbursable loss period for single family residential assets will end in 2019 for three acquisitions, in 2020 for one acquisition, and in 2021 for two acquisitions. To the extent that loss share coverage ends prior to triggering events on covered assets that would enable the Company to collect these amounts from the FDIC, future impairments may be required.

In addition, all covered assets, excluding single family residential assets, have a three year recovery period, which begins upon expiration of the reimbursable loss period. During the recovery periods, the Company must reimburse the FDIC for its share of any recovered losses, net of certain expenses, consistent with the covered loss reimbursement rates in effect during the recovery periods.

FDIC loss share receivables

The Company recorded indemnification assets in the form of FDIC loss share receivables as of the acquisition date of each of the six banks covered by loss share agreements. At acquisition, the indemnification assets represented the fair value of the expected cash flows to be received from the FDIC under the loss share agreements. Subsequent to acquisition, the FDIC loss share receivables are updated to reflect changes in actual and expected amounts collectible, adjusted for amortization.

The following is a summary of the year-to-date activity for the FDIC loss share receivables:



	Nine Months Ended September 30,
(Dollars in thousands)	2016			2015
Balance at beginning of period	$	39,878		$	69,627
Reversal of loan loss provision recorded on FDIC covered loans	(1,240		)	(1,342		)
Amortization	(12,484		)	(19,011		)
Submission of reimbursable losses to the FDIC	(1,760		)	(4,084		)
Changes in cash flow assumptions on OREO and other adjustments	12			(1,747		)
Balance at end of period	$	24,406		$	43,443

FDIC loss share receivables collectibility assessment

The Company assesses the FDIC loss share receivables for collectibility on a quarterly basis. Based on the collectibility analysis completed as of September 30, 2016, the Company concluded that the $24.4 million FDIC loss share receivable is fully collectible as of September 30, 2016.

NOTE 8 – GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Changes to the carrying amount of goodwill by reporting unit for the nine months ended September 30, 2016, and the year ended December 31, 2015 are provided in the following table.



(Dollars in thousands)	IBERIABANK		IMC		LTC		Total
Balance, December 31, 2014	$	489,183	$	23,178	$	5,165	$	517,526
Goodwill acquired during the year	207,077		—		—		207,077
Balance, December 31, 2015	$	696,260	$	23,178	$	5,165	$	724,603
Goodwill adjustments during the period	2,253		—		—		2,253
Balance, September 30, 2016	$	698,513	$	23,178	$	5,165	$	726,856

The goodwill adjustments during the first nine months of 2016 are the result of updates to preliminary fair value estimates related to the 2015 acquisitions of Florida Bank Group, Old Florida, and Georgia Commerce, during the respective measurement periods. See Note 3 for further information on these acquisitions.

The Company performed the required annual goodwill impairment test as of October 1, 2015. 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 subsequent interim tests were not necessary. The Company is currently in the process of performing its annual impairment test as of October 1, 2016.

Mortgage Servicing Rights

Mortgage servicing rights are recorded at the lower of cost or market value in “other 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:



	September 30, 2016							December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
(Dollars in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Mortgage servicing rights	$	6,295	$	(2,945	)	$	3,350	$	6,104	$	(2,320	)	$	3,784

Title Plant

The Company held title plant assets recorded in "other assets" on the Company's consolidated balance sheets totaling $6.7 million at both September 30, 2016 and December 31, 2015. No events or changes in circumstances occurred during the nine months ended September 30, 2016 to suggest the carrying value of the title plant was not recoverable.

Intangible assets subject to amortization

Definite-lived intangible assets had the following carrying values included in “other assets” on the Company’s consolidated balance sheets as of the periods indicated:



	September 30, 2016							December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
(Dollars in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Core deposit intangibles	$	74,001	$	(50,128	)	$	23,873	$	74,001	$	(43,957	)	$	30,044
Customer relationship intangible asset	1,348		(1,013		)	335		1,348		(984		)	364
Non-compete agreement	62		(18		)	44		100		(79		)	21
Other intangible assets	—		—			—		205		(114		)	91
Total	$	75,411	$	(51,159	)	$	24,252	$	75,654	$	(45,134	)	$	30,520

NOTE 9 –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 used by the Company include interest rate swap agreements, foreign exchange contracts, interest rate lock commitments, forward sales commitments, and written and purchased options. All derivative instruments are recognized on the consolidated balance sheets as "other assets" or "other liabilities" at fair value, as required by ASC Topic 815, Derivatives and Hedging.

For cash flow hedges, the effective portion 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. The ineffective portion of the gain or loss is reported in earnings immediately. 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. The Company has designated interest rate swaps in a cash flow hedge to convert forecasted variable interest payments to a fixed rate on its junior subordinated debt and has concluded that the forecasted transactions are probable of occurring.

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:



		Asset Derivatives Fair Value					Liability Derivatives Fair Value
(Dollars in thousands)	Balance Sheet Location	September 30, 2016		December 31, 2015		Balance Sheet Location	September 30, 2016		December 31, 2015
Derivatives designated as hedging instruments under ASC Topic 815:
Interest rate contracts	Other assets	$	—	$	58	Other liabilities	$	9,649	$	—
Total derivatives designated as hedging instruments under ASC Topic 815		$	—	$	58		$	9,649	$	—
Derivatives not designated as hedging instruments under ASC Topic 815:
Interest rate contracts	Other assets	$	39,438	$	18,077	Other liabilities	$	39,563	$	18,077
Foreign exchange contracts	Other assets	44		156		Other liabilities	30		134
Forward sales contracts	Other assets	105		1,588		Other liabilities	1,680		474
Written and purchased options	Other assets	16,217		10,607		Other liabilities	8,017		6,254
Total derivatives not designated as hedging instruments under ASC Topic 815		55,804		30,428			49,290		24,939
Total		$	55,804	$	30,486		$	58,939	$	24,939



	Asset Derivatives Notional Amount				Liability Derivatives Notional Amount
(Dollars in thousands)	September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015
Derivatives designated as hedging instruments under ASC Topic 815:
Interest rate contracts	$	—	$	108,500	$	108,500	$	—
Total derivatives designated as hedging instruments under ASC Topic 815	$	—	$	108,500	$	108,500	$	—
Derivatives not designated as hedging instruments under ASC Topic 815:
Interest rate contracts	$	976,456	$	590,334	$	976,456	$	590,334
Foreign exchange contracts	4,644		4,392		4,644		4,392
Forward sales contracts	53,662		223,841		405,697		173,430
Written and purchased options	400,129		328,210		167,211		181,949
Total derivatives not designated as hedging instruments under ASC Topic 815	1,434,891		1,146,777		1,554,008		950,105
Total	$	1,434,891	$	1,255,277	$	1,662,508	$	950,105

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 September 30, 2016 and December 31, 2015, the Company was required to post $58.0 million and $20.1 million, respectively, in cash, which is included in "interest-bearing deposits in banks", or securities as collateral for its derivative transactions, on the Company’s 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 September 30, 2016. 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, 2016
	Gross Amounts Presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet
(Dollars in thousands)	Gross Amounts Presented in the Balance Sheet		Derivatives		Collateral ⁽¹⁾			Net
Derivatives subject to master netting arrangements
Derivative assets
Interest rate contracts not designated as hedging instruments	$	39,438	$	—	$	—		$	39,438
Written and purchased options	7,998		—		—			7,998
Total derivative assets subject to master netting arrangements	$	47,436	$	—	$	—		$	47,436
Derivative liabilities
Interest rate contracts designated as hedging instruments	$	9,649	$	—	$	(12,752	)	$	(3,103	)
Interest rate contracts not designated as hedging instruments	39,563		—		(45,247		)	(5,684		)
Total derivative liabilities subject to master netting arrangements	$	49,212	$	—	$	(57,999	)	$	(8,787	)


⁽¹⁾	Consists of cash collateral recorded at cost, which approximates fair value, and investment securities.



	December 31, 2015
	Gross Amounts Presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet
(Dollars in thousands)	Gross Amounts Presented in the Balance Sheet		Derivatives		Collateral ⁽¹⁾			Net
Derivatives subject to master netting arrangements
Derivative assets
Interest rate contracts designated as hedging instruments	$	58	$	—	$	—		$	58
Interest rate contracts not designated as hedging instruments	18,058		—		—			18,058
Written and purchased options	6,277		—		—			6,277
Total derivative assets subject to master netting arrangements	$	24,393	$	—	$	—		$	24,393
Derivative liabilities
Interest rate contracts not designated as hedging instruments	$	18,058	$	—	$	(20,104	)	$	(2,046	)
Total derivative liabilities subject to master netting arrangements	$	18,058	$	—	$	(20,104	)	$	(2,046	)


⁽¹⁾	Consists of cash collateral recorded at cost, which approximates fair value, and investment securities.

During the nine months ended September 30, 2016 and 2015, the Company has not reclassified 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 September 30, 2016, the Company does not expect to reclassify any amount from accumulated other comprehensive income into interest income over the next twelve months for derivatives that will be settled.

At September 30, 2016 and 2015, and for the three and nine months then ended, information pertaining to the effect of the hedging instruments on the consolidated financial statements is as follows:



													Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
			Amount of Gain (Loss) Recognized in OCI net of taxes (Effective Portion)					Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)		Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)


(Dollars in thousands)
			For the Three Months Ended September 30
Derivatives in ASC Topic 815 Cash Flow Hedging Relationships			2016		2015				2016		2015			2016		2015
	Interest rate contracts	$	146		$	(3,412	)	Other income (expense)	$	—	$	—	Other income (expense)	$	—	$	—
Total		$	146		$	(3,412	)		$	—	$	—		$	—	$	—

													Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
			Amount of Gain (Loss) Recognized in OCI net of taxes (Effective Portion)					Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)		Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)


(Dollars in thousands)
			For the Nine Months Ended September 30
Derivatives in ASC Topic 815 Cash Flow Hedging Relationships			2016		2015				2016		2015			2016		2015
	Interest rate contracts	$	(6,309	)	$	(374	)	Other income (expense)	$	—	$	—	Other income (expense)	$	—	$	—
Total		$	(6,309	)	$	(374	)		$	—	$	—		$	—	$	—

Information pertaining to the effect of derivatives not designated as hedging instruments on the consolidated financial statements is as follows:



		Amount of Gain (Loss) Recognized in Income on Derivatives
	Location of Gain (Loss) Recognized in Income on Derivatives	For the Three Months Ended September 30						For the Nine Months Ended September 30
(Dollars in thousands)	Location of Gain (Loss) Recognized in Income on Derivatives	2016			2015			2016			2015
Interest rate contracts ⁽¹⁾	Other income	$	2,215		$	1,130		$	7,509		$	3,069
Foreign exchange contracts	Other income	4			—			7			—
Forward sales contracts	Mortgage income	(2,590		)	(6,524		)	(12,720		)	1,526
Written and purchased options	Mortgage income	(2,624		)	(526		)	3,846			(1,711		)
Total		$	(2,995	)	$	(5,920	)	$	(1,358	)	$	2,884

⁽¹⁾Includes fees associated with customer interest rate contracts.

NOTE 10 –SHAREHOLDERS' EQUITY, CAPITAL RATIOS AND OTHER REGULATORY MATTERS

The Company and IBERIABANK are subject to various regulatory capital frameworks administered by federal and state 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 financial statements. Under capital adequacy guidelines 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.

On January 1, 2015, the Company and IBERIABANK became subject to revised capital adequacy standards as implemented by new final rules approved by the U.S. banking regulatory agencies, including the FRB, to address relevant provisions of the Dodd-Frank Act. Certain provisions of the new rules will be phased in from that date to January 1, 2019.

Effective January 1, 2016, the Company was subject to an additional 25% phase out of its trust preferred securities from Tier 1 Risk-Based Capital. As a result, 100% of the Company's trust preferred securities are excluded from Tier 1 Risk-Based Capital at September 30, 2016. Additionally, the Company and IBERIABANK's Common Equity Tier 1 Capital, Tier 1 Risk-Based Capital, and Total Risk-Based Capital were impacted at September 30, 2016 by an additional 20% phase out of certain intangible assets above the December 31, 2015 phase out percentage.

Management believes that, as of September 30, 2016, the Company and IBERIABANK met all capital adequacy requirements to which they are subject.

As of September 30, 2016, the most recent notification from the FDIC categorized IBERIABANK as well capitalized under the regulatory framework for prompt corrective action (the prompt corrective action requirements are not applicable to the Company) existing at the time of notification. 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 September 30, 2016 and December 31, 2015 are presented in the following table.



	September 30, 2016
	Minimum				Well Capitalized		Actual
(Dollars in thousands)	Amount		Ratio		Amount	Ratio	Amount		Ratio
Tier 1 Leverage
Consolidated	$	784,103	4.00	%	N/A	N/A	$	1,901,866	9.70	%
IBERIABANK	781,582		4.00		976,978	5.00	1,831,469		9.37
Common Equity Tier 1 (CET1)
Consolidated	$	785,140	4.50	%	N/A	N/A	$	1,769,769	10.14	%
IBERIABANK	783,333		4.50		1,131,481	6.50	1,831,469		10.52
Tier 1 Risk-Based Capital
Consolidated	$	1,046,854	6.00	%	N/A	N/A	$	1,901,866	10.90	%
IBERIABANK	1,044,444		6.00		1,392,591	8.00	1,831,469		10.52
Total Risk-Based Capital
Consolidated	$	1,395,805	8.00	%	N/A	N/A	$	2,178,549	12.49	%
IBERIABANK	1,392,591		8.00		1,740,739	10.00	1,991,651		11.44



	December 31, 2015
	Minimum				Well Capitalized		Actual
(Dollars in thousands)	Amount		Ratio		Amount	Ratio	Amount		Ratio
Tier 1 Leverage
Consolidated	$	751,798	4.00	%	N/A	N/A	$	1,790,034	9.52	%
IBERIABANK	749,226		4.00		936,532	5.00	1,691,022		9.03
Common Equity Tier 1 (CET1)
Consolidated	$	752,610	4.50	%	N/A	N/A	$	1,684,097	10.07	%
IBERIABANK	750,660		4.50		1,084,287	6.50	1,691,022		10.14
Tier 1 Risk-Based Capital
Consolidated	$	1,003,479	6.00	%	N/A	N/A	$	1,790,034	10.70	%
IBERIABANK	1,000,880		6.00		1,334,507	8.00	1,691,022		10.14
Total Risk-Based Capital
Consolidated	$	1,337,973	8.00	%	N/A	N/A	$	2,029,932	12.14	%
IBERIABANK	1,334,507		8.00		1,668,133	10.00	1,843,545		11.05

Beginning January 1, 2016, minimum CET1, Tier 1 Risk-Based Capital, and Total Risk-Based Capital ratios are subject to a capital conservation buffer of 0.625%. This capital conservation buffer will increase in subsequent years by 0.625% annually until it is fully phased in on January 1, 2019 at 2.50%. At September 30, 2016, the capital conservation buffers of the Company and IBERIABANK were 4.49% and 3.44%, respectively.

On May 9, 2016, the Company issued an aggregate of 2,300,000 depositary shares (the “Depositary Shares”), each representing a 1/400th ownership interest in a share of the Company’s 6.60% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series C, par value $1.00 per share, (“Series C Preferred Stock”), with a liquidation preference of $10,000 per share of Series C Preferred Stock (equivalent to $25 per depositary share), which represents $57,500,000 in aggregate liquidation preference.

Dividends will accrue and be payable on the Series C preferred stock, subject to declaration by the Company’s board of directors, from the date of issuance to, but excluding May 1, 2026, at a rate of 6.60% per annum, payable quarterly, in arrears, and from and including May 1, 2026, dividends will accrue and be payable at a floating rate equal to three-month LIBOR plus a spread of 492 basis points, payable quarterly, in arrears. The Company may redeem the Series C preferred stock at its option, subject to regulatory approval, as described in the Prospectus.

On May 4, 2016, the Company's Board of Directors authorized the repurchase of up to 950,000 shares of IBERIABANK Corporation's outstanding common stock. 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 Company anticipates the share repurchase program will extend over a 2-year time frame, or earlier if the shares have been repurchased. The share repurchase program does not obligate the Company to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended, or discontinued at any time. During the second quarter of 2016, the Company repurchased 202,506 common shares at a weighted average price of $57.61 per common share. The Company did not repurchase any common shares during the third quarter of 2016.

NOTE 11 – 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 calculation of basic and diluted earnings per share for the periods indicated.



	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except per share data)	2016			2015			2016			2015
Earnings per common share - basic
Net income	$	48,068		$	42,475		$	141,647		$	98,437
Preferred stock dividends	(3,590		)	—			(7,020		)	—
Dividends and undistributed earnings allocated to unvested restricted shares	(462		)	(492		)	(1,464		)	(1,171		)
Earnings allocated to common shareholders - basic	$	44,016		$	41,983		$	133,163		$	97,266
Weighted average common shares outstanding	40,618			40,514			40,699			37,436
Earnings per common share - basic	$	1.08		$	1.04		$	3.27		$	2.60
Earnings per common share - diluted
Earnings allocated to common shareholders - basic	$	44,016		$	41,983		$	133,163		$	97,266
Dividends and undistributed earnings allocated to unvested restricted shares	(4		)	(3		)	(17		)	(41		)
Earnings allocated to common shareholders - diluted	$	44,012		$	41,980		$	133,146		$	97,225
Weighted average common shares outstanding	40,618			40,514			40,699			37,436
Dilutive potential common shares - stock options	193			100			119			96
Weighted average common shares outstanding - diluted	40,811			40,614			40,818			37,532
Earnings per common share - diluted	$	1.08		$	1.03		$	3.26		$	2.59

For the three months ended September 30, 2016, and 2015, the calculations for basic shares outstanding exclude the weighted average shares owned by the Recognition and Retention Plan (“RRP”) of 434,468, and 616,307, respectively. For the nine months ended September 30, 2016, and 2015, basic shares outstanding exclude 456,921 and 606,621 shares owned by the RRP, respectively.

The effects from the assumed exercises of 73,882 and 82,310 stock options were not included in the computation of diluted earnings per share for the three months ended September 30, 2016, and 2015, respectively, because such amounts would have had an antidilutive effect on earnings per common share. For the nine months ended September 30, 2016, and 2015, the effects from the assumed exercise of 268,257 and 79,690 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.

NOTE 12 – 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, phantom stock and performance units. 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 September 30, 2016, awards of 2,468,506 shares could be made under approved incentive compensation plans.

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, 2015	813,777		$	56.99
Granted	152,209		47.63
Exercised	(72,258	)	55.28
Forfeited or expired	(49,636	)	60.06
Outstanding options, September 30, 2016	844,092		$	55.27
Exercisable options, September 30, 2016	538,751		$	56.40

Outstanding options, December 31, 2014	867,682		$	55.92
Granted	81,313		62.53
Exercised	(95,265	)	50.64
Forfeited or expired	(15,733	)	66.57
Outstanding options, September 30, 2015	837,997		$	56.96
Exercisable options, September 30, 2015	570,148		$	56.53

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 Nine Months Ended September 30
	2016			2015
Expected dividends	2.9		%	2.2		%
Expected volatility	29.1		%	35.6		%
Risk-free interest rate	1.4		%	2.0		%
Expected term (in years)	6.5			7.5
Weighted-average grant-date fair value	$	10.16		$	19.60

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 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
(Dollars in thousands)	2016		2015		2016		2015
Compensation expense related to stock options	$	513	$	455	$	1,500	$	1,400

At September 30, 2016, there was $2.5 million of unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 2.4 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. As of September 30, 2016 and 2015, unrecognized share-based compensation associated with these awards totaled $18.3 million and $22.2 million, respectively.

Restricted share units

During the first nine months of 2016 and 2015, the Company issued 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 agreement. 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.

The following table represents the compensation expense that was included in non-interest expense 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 September 30				For the Nine Months Ended September 30
(Dollars in thousands)	2016		2015		2016		2015
Compensation expense related to restricted stock awards and restricted share units	$	3,014	$	2,935	$	9,729	$	8,739

The following table represents unvested restricted stock award and restricted share unit activity for the following periods:



	For the Nine Months Ended September 30
	2016		2015
Balance at beginning of period	507,130		506,289
Granted	244,074		203,762
Forfeited	(16,890	)	(23,471	)
Earned and issued	(184,873	)	(170,513	)
Balance at end of period	549,441		516,067

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 to seven 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 acquired 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.

Performance units

During 2015, the Company issued performance units to certain of its executive officers. Performance units are tied to the value of shares of the Company’s common stock, are payable in cash, and vest in increments of one-third per year after attainment of one or more performance measures. The value of performance units is the same as the value of the corresponding number of shares of common stock.

The following table indicates compensation expense recorded for phantom stock and performance units based on the number of share equivalents vested at September 30 of the periods indicated and the current market price of the Company’s stock at that time:



	For the Three Months Ended September 30				For the Nine Months Ended September 30
(Dollars in thousands)	2016		2015		2016		2015
Compensation expense related to phantom stock and performance units	$	3,127	$	2,976	$	8,325	$	9,482

The following table represents phantom stock award and performance unit activity during the periods indicated:



(Dollars in thousands)	Number of share equivalents ⁽¹⁾		Value of share equivalents ⁽²⁾
Balance, December 31, 2015	462,430		$	25,466
Granted	200,761		13,475
Forfeited share equivalents	(27,267	)	1,830
Vested share equivalents	(158,491	)	8,161
Balance, September 30, 2016	477,433		$	32,045

Balance, December 31, 2014	475,347		$	30,826
Granted	162,740		9,473
Forfeited share equivalents	(28,728	)	1,672
Vested share equivalents	(138,678	)	8,832
Balance, September 30, 2015	470,681		$	27,398


⁽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 $67.12 and $58.21 on September 30, 2016, and 2015, respectively.

NOTE 13 – FAIR VALUE MEASUREMENTS

Recurring fair value measurements

The Company has segregated all financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to estimate the fair value at the measurement date in the tables below. See Note 1, Summary of Significant Accounting Policies, in the 2015 Annual Report on Form 10-K for the year ended December 31, 2015, for a description of how fair value measurements are determined.



	September 30, 2016
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets
Securities available for sale	$	—	$	2,885,413	$	—	$	2,885,413
Mortgage loans held for sale	—		210,866		—		210,866
Derivative instruments	—		55,804		—		55,804
Total	$	—	$	3,152,083	$	—	$	3,152,083
Liabilities
Derivative instruments	$	—	$	58,939	$	—	$	58,939
Total	$	—	$	58,939	$	—	$	58,939



	December 31, 2015
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets
Securities available for sale	$	—	$	2,800,286	$	—	$	2,800,286
Mortgage loans held for sale	—		166,247		—		166,247
Derivative instruments	—		30,486		—		30,486
Total	$	—	$	2,997,019	$	—	$	2,997,019
Liabilities
Derivative instruments	$	—	$	24,939	$	—	$	24,939
Total	$	—	$	24,939	$	—	$	24,939

During the nine months ended September 30, 2016 there were no transfers between the Level 1 and Level 2 fair value categories.

Non-recurring fair value measurements

The Company has segregated all assets and liabilities that are measured at fair value on a non-recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the tables below.



	September 30, 2016
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets
Loans	$	—	$	—	$	85,463	$	85,463
OREO, net	—		—		405		405
Total	$	—	$	—	$	85,868	$	85,868



	December 31, 2015
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets
Loans	$	—	$	—	$	31,669	$	31,669
OREO, net	—		—		1,662		1,662
Total	$	—	$	—	$	33,331	$	33,331

The tables above exclude the initial measurement of assets and liabilities that were acquired as part of the acquisitions completed in 2015. 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, property, equipment, and debt) or Level 3 fair value measurements (loans, OREO, deposits, and core deposit intangible assets).

In accordance with the provisions of ASC Topic 310, the Company records certain loans considered impaired at their estimated fair value. A loan is considered impaired if it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Fair value is measured at the estimated fair value of the collateral for collateral-dependent loans. Impaired loans with an unpaid principal balance of $120.6 million and $40.2 million were recorded at their fair value at September 30, 2016 and December 31, 2015, respectively. These loans include reserves and charge-offs of $35.2 million and $8.5 million included in the Company's allowance for credit losses at September 30, 2016 and December 31, 2015, respectively.

The Company did not record any liabilities at fair value for which measurement of the fair value was made on a non-recurring basis at September 30, 2016 and December 31, 2015.

Fair value option

The Company has elected the fair value option for certain 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. During the third quarter, an immaterial amount of mortgage loans held for sale for which the fair value option was elected were transferred from loans held for sale to loans held for investment.

The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for mortgage loans held for sale measured at fair value:



	September 30, 2016						December 31, 2015
(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	$	210,866	$	203,293	$	7,573	$	166,247	$	161,083	$	5,164

Interest income on mortgage loans held for sale is recognized based on contractual rates and is reflected in interest income on loans held for sale in the consolidated statements of comprehensive income. Net gains (losses) resulting from the change in fair value of these loans that were recorded in mortgage income in the consolidated statements of comprehensive income for the three and nine months ended September 30, 2016 totaled ($1.5 million) and $2.4 million, respectively, while net gains resulting from the change in fair value of these loans were $7 thousand and $3.7 million for the three and nine months ended September 30, 2015, respectively. The changes in fair value are mostly offset by economic hedging activities, with an immaterial portion of these changes attributable to changes in instrument-specific credit risk.

NOTE 14 – 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, 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, in the 2015 Annual Report on Form 10-K for the year ended December 31, 2015, for a description of how fair value measurements are determined.



	September 30, 2016
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	1,101,253	$	1,101,253	$	1,101,253	$	—	$	—
Investment securities	2,976,066		2,978,823		—		2,978,823		—
Loans and loans held for sale, net of unearned income and allowance for loan losses	14,987,172		15,032,960		—		210,866		14,822,094
FDIC loss share receivables	24,406		6,343		—		—		6,343
Derivative instruments	55,804		55,804		—		55,804		—

Financial Liabilities
Deposits	$	16,522,517	$	16,485,224	$	—	$	—	$	16,485,224
Short-term borrowings	713,272		713,272		353,272		360,000		—
Long-term debt	672,438		660,140		—		—		660,140
Derivative instruments	58,939		58,939		—		58,939		—

	December 31, 2015
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	510,267	$	510,267	$	510,267	$	—	$	—
Investment securities	2,899,214		2,901,247		—		2,901,247		—
Loans and loans held for sale, net of unearned income and allowance for loan losses	14,355,297		14,674,749		—		166,247		14,508,502
FDIC loss share receivables	39,878		9,163		—		—		9,163
Derivative instruments	30,486		30,486		—		30,486		—

Financial Liabilities
Deposits	$	16,178,748	$	15,696,245	$	—	$	—	$	15,696,245
Short-term borrowings	326,617		326,617		216,617		110,000		—
Long-term debt	340,447		309,847		—		—		309,847
Derivative instruments	24,939		24,939		—		24,939		—

The fair value estimates presented herein are based upon pertinent information available to management as of September 30, 2016 and December 31, 2015.

NOTE 15 – 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, IMC, 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 IMC 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, 2016
(Dollars in thousands)	IBERIABANK			IMC		LTC		Consolidated
Interest and dividend income	$	178,521		$	1,982	$	1	$	180,504
Interest expense	15,944			1,143		—		17,087
Net interest income	162,577			839		1		163,417
Provision for loan losses	12,443			41		—		12,484
Mortgage income	850			20,957		—		21,807
Service charges on deposit accounts	11,066			—		—		11,066
Title revenue	—			—		6,001		6,001
Other non-interest income	20,946			1		—		20,947
Allocated expenses	(3,914		)	3,010		904		—
Non-interest expense	127,690			5,891		4,558		138,139
Income before income tax expense	59,220			12,855		540		72,615
Income tax expense	19,282			5,048		217		24,547
Net income	$	39,938		$	7,807	$	323	$	48,068
Total loans and loans held for sale, net of unearned income	$	14,957,337		$	178,028	$	—	$	15,135,365
Total assets	20,537,304			226,906		24,356		20,788,566
Total deposits	16,513,867			8,650		—		16,522,517
Average assets	20,061,071			305,996		25,761		20,392,828



	Three Months Ended September 30, 2015
(Dollars in thousands)	IBERIABANK			IMC		LTC		Consolidated
Interest and dividend income	$	169,005		$	2,071	$	1	$	171,077
Interest expense	15,109			851		—		15,960
Net interest income	153,896			1,220		1		155,117
Provision for loan losses	5,062			—		—		5,062
Mortgage income	263			20,365		—		20,628
Service charges on deposit accounts	11,342			—		—		11,342
Title revenue	—			—		6,627		6,627
Other non-interest income	18,880			1		—		18,881
Allocated expenses	(3,518		)	2,693		825		—
Non-interest expense	124,909			15,605		4,454		144,968
Income before income tax expense	57,928			3,288		1,349		62,565
Income tax expense	18,253			1,306		531		20,090
Net income	$	39,675		$	1,982	$	818	$	42,475
Total loans and loans held for sale, net of unearned income	$	14,094,936		$	224,251	$	—	$	14,319,187
Total assets	19,242,690			264,914		26,621		19,534,225
Total deposits	16,293,681			9,384		—		16,303,065
Average assets	19,321,164			256,897		26,009		19,604,070



	Nine Months Ended September 30, 2016
(Dollars in thousands)	IBERIABANK			IMC		LTC		Consolidated
Interest and dividend income	$	530,409		$	5,723	$	2	$	536,134
Interest expense	45,380			3,181		—		48,561
Net interest income	485,029			2,542		2		487,573
Provision for loan losses	39,214			41		—		39,255
Mortgage income	856			66,882		—		67,738
Service charges on deposit accounts	32,957			—		—		32,957
Title revenue	—			—		16,881		16,881
Other non-interest income	62,999			8		—		63,007
Allocated expenses	(10,468		)	8,007		2,461		—
Non-interest expense	367,985			33,909		13,201		415,095
Income before income tax expense	185,110			27,475		1,221		213,806
Income tax expense	60,841			10,826		492		72,159
Net income	$	124,269		$	16,649	$	729	$	141,647
Total loans and loans held for sale, net of unearned income	$	14,957,337		$	178,028	$	—	$	15,135,365
Total assets	20,537,304			226,906		24,356		20,788,566
Total deposits	16,513,867			8,650		—		16,522,517
Average assets	19,705,052			289,037		26,626		20,020,715



	Nine Months Ended September 30, 2015
(Dollars in thousands)	IBERIABANK			IMC			LTC			Consolidated
Interest and dividend income	$	464,775		$	5,430		$	2		$	470,207
Interest expense	41,410			2,199			—			43,609
Net interest income	423,365			3,231			2			426,598
Provision for loan losses	19,197			—			—			19,197
Mortgage income	830			63,067			—			63,897
Service charges on deposit accounts	30,766			—			—			30,766
Title revenue	—			—			17,402			17,402
Other non-interest income	55,834			(2		)	(7		)	55,825
Allocated expenses	(11,603		)	8,685			2,918			—
Non-interest expense	373,948			44,259			13,123			431,330
Income before income tax expense	129,253			13,352			1,356			143,961
Income tax expense	39,695			5,286			543			45,524
Net income	$	89,558		$	8,066		$	813		$	98,437
Total loans and loans held for sale, net of unearned income	$	14,094,936		$	224,251		$	—		$	14,319,187
Total assets	19,242,690			264,914			26,621			19,534,225
Total deposits	16,293,681			9,384			—			16,303,065
Average assets	17,760,033			230,379			25,268			18,015,680

NOTE 16 – 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 September 30, 2016 and December 31, 2015, the fair value of guarantees under commercial and standby letters of credit was $1.7 million and $1.5 million, respectively. These amounts represent the unamortized fees associated with the guarantees and is included in “other liabilities” on the Company's consolidated balance sheets. This fair value will decrease as the existing commercial and standby letters of credit approach their expiration dates.

At September 30, 2016 and December 31, 2015, respectively, the Company had the following financial instruments outstanding and related reserves, whose contract amounts represent credit risk:



(Dollars in thousands)	September 30, 2016		December 31, 2015
Commitments to grant loans	$	398,754	$	61,240
Unfunded commitments under lines of credit	4,876,141		4,617,802
Commercial and standby letters of credit	165,365		150,281
Reserve for unfunded lending commitments	11,990		14,145

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. 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 for additional discussion related to the Company’s 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 and certain of these claims will be covered by loss sharing agreements with the FDIC. The Company has asserted defenses to these litigations 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, a subsidiary of IBERIABANK 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 subsidiary's FHA-related policies and practices. The Company is cooperating with HUD and is in the process of responding to the subpoena. Given the current status of the matter, the Company is unable to determine if its submission of the information requested will result in an additional information request by HUD and/or further proceedings by HUD or other government agencies.

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, advice of counsel, and available insurance coverage, the Company’s management believes that it has established appropriate legal reserves. Any liabilities arising from pending legal proceedings are not currently 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, or any unasserted claims, 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 is immaterial.

NOTE 17 - RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Company may execute transactions with various related parties. These transactions are consummated at terms equivalent to the prevailing market rates and terms at the time. 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 immaterial to the consolidated financial statements at September 30, 2016 and December 31, 2015. None of the related party loans were classified as non-accrual, past due, troubled debt restructurings, or potential problem loans at September 30, 2016 or December 31, 2015, with the exception of the loan discussed below.

IBERIABANK and several other financial institutions have extended credit (the “Credit Facility”) under a multi-bank syndicated credit facility to a corporation ("the Borrower"). One of the Company’s independent directors is the Chairman, President and Chief Executive Officer of the Borrower. IBERIABANK holds approximately six percent of the total commitments from twelve banks under the Credit Facility, which based on the current borrowing base, equates to $21.6 million in IBERIABANK commitments. At December 31, 2015, there was no outstanding balance to IBERIABANK under the Credit Facility. At September 30, 2016, there was approximately $20.5 million outstanding to IBERIABANK under the Credit Facility. Depending on the type of advance, IBERIABANK earns interest on its advances under the Credit Facility at the London Interbank Offered Rate (“LIBOR”) or at a rate equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate”, or (c)

LIBOR plus 1.00%. At September 30, 2016, the outstanding amount due IBERIABANK under the Credit Facility was on non-accrual status.

Deposits from related parties held by the Company were immaterial at September 30, 2016 and December 31, 2015.

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 owned subsidiaries (collectively, the “Company”) as of and for the period ended September 30, 2016, and updates the Annual Report on Form 10-K for the year ended December 31, 2015. 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 September 30, 2016 compared to December 31, 2015 for the balance sheets and the three and nine months ended September 30, 2016 compared to September 30, 2015 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 Acronyms at the end of this Report for terms used throughout this Report.

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 losses 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, resolution of assets subject to loss share agreements with the FDIC within the coverage periods, effects of low energy and commodity prices, effects of residential real estate prices and levels of home sales, our ability to satisfy new capital and liquidity standards such as those imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act and those adopted by the Basel Committee on Banking Supervision and federal banking regulators, sufficiency of our allowance for loan 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, reputational risk 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 in this discussion is as of the date of this Report. 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 Company is a $20.8 billion bank holding company primarily concentrated in commercial banking in the southeastern United States. The Company has been fulfilling the commercial and retail banking needs of our customers for 129 years through our subsidiary, IBERIABANK, with products and services currently offered in locations in seven states. The Company also operates mortgage production offices in 10 states through IBERIABANK’s subsidiary, IMC, and offers a full line of title insurance and closing services throughout Arkansas and Louisiana through LTC and its subsidiaries. ICP provides equity research, institutional sales and trading, and corporate finance services. 1887 Leasing, LLC owns an aircraft used by management of the Company and its subsidiaries. IAM provides wealth management and trust services for commercial and private banking clients. CDE is engaged in the acquisition and allocation of tax credits.

Summary of 2016 Third Quarter Results of Operations

Net income available to common shareholders for the three months ended September 30, 2016 totaled $44.5 million, a $2.0 million, or 4.7%, increase compared to $42.5 million for the same period in 2015. The primary drivers of the net $2 million increase included an $8.3 million increase in net interest income, a $2.3 million increase in non-interest income, and a $6.8 million decrease in non-interest expense, offset by a $7.4 million increase in provision expense, a $4.5 million increase in income taxes, and a $3.6 million increase in preferred dividends. The resulting earnings per diluted common share for the third quarter of 2016 were $1.08 compared to $1.03 for the same quarter of 2015.

Net interest income was $163.4 million for the third quarter of 2016, an $8.3 million, or 5.4%, increase compared to the same quarter of 2015, primarily driven by an increase in average earning assets and a decrease in average interest-bearing deposits, which helped to offset a decline in yield on loans and investment securities and a three basis point increase in overall funding costs. The net interest spread remained flat at 3.36% for both periods, and the net interest margin on an annualized basis increased three basis points to 3.53%, from 3.50%, when comparing the periods.

Non-interest income was $59.8 million in the third quarter of 2016, an increase of $2.3 million, or 4.1%, over the third quarter of 2015. The period-over-period increase included slight increases in mortgage income, treasury management income, and COLI income partially offset by a slight decrease in title revenue.

Non-interest expense for the third quarter of 2016 decreased $6.8 million, or 4.7%, to $138.1 million compared to $145.0 million during the same quarter of 2015. The third quarter of 2015 included impairment charges related to branch closures, a higher provision for unfunded lending commitments, and greater occupancy and equipment costs, which contributed to the quarter-over-quarter decrease. These decreases were partially offset by an increase in salaries and employee benefits in 2016.

The Company's GAAP efficiency ratio was 61.9% for the three months ended September 30, 2016, an improvement over the 68.2% efficiency ratio for the three months ended September 30, 2015. Including the effects of tax benefits related to tax-exempt income, and excluding amortization of intangibles and non-core revenues and expenses, the core tangible efficiency ratio on a tax-equivalent non-GAAP basis was 60.1% for the third quarter of 2016, compared to 64.8% for the third quarter of 2015. The reconciliation of the GAAP to non-GAAP measure is included in Table 18.

Provision for loan losses increased $7.4 million, or 146.6%, to $12.5 million in the third quarter of 2016, compared to $5.1 million in the third quarter of 2015. The increase is primarily related to the downward migration of energy-related credits, and to a lesser extent, loan growth in the Company's legacy portfolio. Annualized net charge-offs were 27 basis points and seven basis points of average loans during the third quarters of 2016 and 2015, respectively.

Summary of 2016 Year-to-Date Results

Net income available to common shareholders for the nine months ended September 30, 2016 totaled $134.6 million, a 36.8% increase compared to $98.4 million for the same period in 2015. Earnings for the first nine months of 2015 were impacted by $24.2 million in pre-tax merger-related expenses resulting from the acquisitions of Florida Bank Group, Old Florida and Georgia Commerce during that period. In addition, organic balance sheet growth and successful cost containment efforts contributed to the increase in net income during the first nine months of 2016.

Earnings per diluted common share for the nine months ended September 30, 2016 were $3.26, compared to $2.59 for the same period in 2015. Excluding non-core items, primarily merger-related expenses impacting 2015 results, core earnings per share on a diluted basis (Non-GAAP) were $3.27 for the nine months ended September 30, 2016, compared to $3.07 for the nine months ended September 30, 2015. See Table 18, Reconciliations of Non-GAAP Financial Measures.

Net interest income was $487.6 million for the first nine months of 2016, a $61.0 million, or 14.3%, increase compared to the same period of 2015. The net interest spread increased six basis points to 3.44%, from 3.38%, and the net interest margin on an annualized basis increased seven basis points to 3.59%, from 3.52%, when comparing the periods.

Non-interest income increased $12.7 million, or 7.6%, to $180.6 million during the first nine months of 2016, which included increases in mortgage income, sales of SBA loans, service charges on deposit accounts, client derivatives income and treasury management income. These increases were partially offset by a decrease in broker commissions income from lower ICP revenues and the realized gain on a sale-leaseback transaction that occurred in 2015.

Non-interest expense for the first nine months of 2016 was $415.1 million, $16.2 million, or 3.8%, lower than the comparable period of 2015. The primary reason for the decrease is the merger-related expenses incurred on the 2015 acquisitions, as well as a decrease in the provision for unfunded lending commitments and higher gains on sales of former bank properties. These decreases were partially offset by an increase in salaries and employee benefits expense, primarily a result of the Company’s acquisition-related growth, and an increase in FDIC insurance premiums, a result of a higher assessment base.

Provision expense was $39.3 million, up $20.1 million, or 104.5%, during the first nine months of 2016 compared to 2015. The increase is primarily due to a 239.2% increase in classified legacy commercial assets as of those respective period ends, substantially all of which was energy-related.

The Company's effective tax rate is 33.7% year-to-date in 2016, compared to 31.6% for the same period of the prior year. Compared to 2015, income tax expense has increased due to an increase in pre-tax income, operations in higher state tax rate jurisdictions resulting from the 2015 acquisitions, as well as expired tax credits.

Summary of Financial Condition at September 30, 2016

The Company’s total loan portfolio increased $597.1 million, or 4.2%, from year-end 2015 to $14.9 billion at September 30, 2016, which was driven by legacy loan growth of $1.2 billion, partially offset by a decrease of $625.8 million in acquired loans. By loan type, the increase was primarily driven by legacy commercial loan growth of $985.9 million.

From an asset quality perspective, total non-performing assets increased $171.4 million, or 187.6%, compared to December 31, 2015. The regression in asset quality from year-end is a result of loans to customers in the energy industry, which has been impacted by depressed oil and gas prices. Excluding energy-related loans, non-performing assets increased $25.1 million, or 29.8%, from year-end. The Company's total allowance for loan losses increased $9.8 million, or 7.1%, from $138.4 million at December 31, 2015 to $148.2 million at September 30, 2016, and represented approximately 1.0% of total loans at both December 31, 2015 and September 30, 2016.

Total deposits increased $343.8 million, or 2.1%, to $16.5 billion at September 30, 2016, from $16.2 billion at December 31, 2015. Over the same period, non-interest-bearing deposits increased $435.3 million, or 10.0%, and equated to 29.0% and 26.9% of total deposits at September 30, 2016 and December 31, 2015, respectively. The increase in deposits from year-end is a result of organic growth across multiple markets, primarily in non-interest bearing deposits.

Capital ratios as of September 30, 2016 compared to December 31, 2015 were impacted by the phase out of the Company's remaining 25% of trust preferred securities from Tier 1 risk-based capital into Tier 2 capital, and the issuance of preferred stock and repurchase of common shares in May and June 2016, respectively, in addition to normal operations of the Company. Overall, the Company's Tier 1 risk-based capital ratio increased 20 basis points and the total risk-based capital ratio increased 35 basis points from year-end. The Company met all capital adequacy requirements and IBERIABANK continued to meet the minimum requirements to be considered well-capitalized under regulatory guidelines as of September 30, 2016.

Business Outlook

The Company's long-term financial goals are as follows:


•	Core Return on Average Tangible Common Equity of 13% to 17%;


•	Core Tangible Efficiency Ratio of less than 60%;


•	Legacy Asset Quality in the top 10% of our peers;


•	Double-digit percentage growth in core diluted EPS.

The Company continues to face a challenging economic environment; however, remains strategically focused on achieving the long-term financial goals listed above. Concerns over future global economic growth have led to increased demand for safe haven assets and a corresponding contraction in interest rates, which has had a negative impact on the Company's margins.

However, the Company has organically grown its balance sheet in 2016, which should serve to withstand the headwinds of the current economic uncertainty and potential political instability resulting from the upcoming presidential election. In addition, the Company believes that its market diversification and targeted "risk-off" strategy should continue to limit the impact of sustained low oil and gas prices and the related uncertainty in the energy sector on the Company's consolidated financial results.

The Company has been most impacted by the severe downturn in the energy industry that began in 2014. Excess oil supply and weakening global demand have weighed heavily on oil prices, which reached a 12-year low at less than $27 per barrel in January of 2016. While prices have rebounded, concerns over continuing inventory builds, future global economic growth and associated global oil demand, the responsiveness of oil producers, and general economic and geopolitical uncertainty could contribute to future disruptions in oil prices. The Company experienced a downward migration in energy-related credits as expected over 2016, with 53.2% of the energy-related loan portfolio criticized, and 42.3% classified, at September 30, 2016, compared to 21.6% criticized and 11.6% classified at December 31, 2015. Energy-related non-performing assets were $153.6 million at September 30, 2016, compared to $7.3 million at December 31, 2015. Energy-related reserves were $29.2 million, or 4.9% of energy-related outstandings as of September 30, 2016, compared to $26.7 million, or 3.9% of energy-related outstandings, at December 31, 2015. The Company remains cautious regarding the effects on its markets most impacted by the oil and gas industry; however, based on the data currently available, and the fact that energy-related loans comprise only 4.0% of total outstanding loans as of September 30, 2016, the Company does not expect a material impact to its future consolidated financial results or condition.

The mortgage origination locked pipeline was $282 million at September 30, 2016, compared to $227 million at December 31, 2015 and $283 million at September 30, 2015. Mortgage originations increased 2% year-to-date in 2016 compared to 2015 and volumes sold were up 2% year-over-year.

The Company has experienced revenue growth in certain of its fee income businesses during the first nine months of 2016. Treasury management income has increased $3.2 million, or 31%, year-to-date in 2016 and client derivatives income is up approximately $4.4 million, or 144.7%, year-to-date. IFS and IWA revenues are stable and essentially flat year-over-year. ICP, the Company's energy investment banking boutique, has faced headwinds, with revenues decreasing 30% year-over-year.

Cost control measures contributed to a GAAP efficiency ratio of 61.9% during the current quarter, and the efficiency ratio has decreased steadily over the past year from 68.2% in the third quarter of 2015. The Company's core tangible efficiency ratio on a tax-equivalent basis (Non-GAAP) was 60.1% in the third quarter of 2016. The Company's long-term goal is to sustain an efficiency ratio at or below 60% on a non-GAAP core basis.

The Company expects the following results for the fourth quarter and full year of 2016:


•	Consolidated loan growth for 2016 will be around 5 percent;


•	Continued downward pressure on net interest margin, assuming no increase in interest rates, as a result of building balance sheet liquidity, the full impact of the recent increase in non-accrual loans, bond portfolio cash flow reinvestment at lower yields than the current portfolio rate, and the repricing of the loan portfolio at lower rates;


•	Full year loan loss provision of approximately $50 million;


•	Core non-interest expense of approximately $548 million for the full year;


•	Reduced income tax expense of approximately $6 million upon filing the 2015 tax return in the fourth quarter of 2016, resulting in an estimated after-tax non-core EPS benefit of approximately 15 cents per common share in the fourth quarter of 2016; and


•	Core EPS of $4.40 to $4.45 for the full year, which implies a range of $1.13 to $1.18 for the fourth quarter.

Please see the "Non-GAAP Measures" section and Table 18 for a discussion on the reasons why the Company's management believes that presentation of non-GAAP financial measures provides useful information to investors regarding the Company's financial condition and results of operations.

ANALYSIS OF RESULTS OF OPERATIONS

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 INFORMATION



	As of and For the Three Months Ended September 30
	2016		2015
Key Ratios ⁽¹⁾
Return on average assets	0.94	%	0.86	%
Core return on average assets (Non-GAAP)	0.94		0.89
Return on average common equity	7.00		7.09
Core return on average tangible common equity (Non-GAAP) ⁽²⁾	10.30		11.18
Equity to assets at end of period	12.83		12.71
Earning assets to interest-bearing liabilities at end of period	144.53		141.43
Interest rate spread ⁽³⁾	3.36		3.36
Net interest margin (TE) ^{(3) (4)}	3.53		3.50
Non-interest expense to average assets (annualized)	2.69		2.93
Efficiency ratio ⁽⁵⁾	61.9		68.2
Core tangible efficiency ratio (TE) (Non-GAAP) ^{(2) (4) (5)}	60.1		64.8
Common stock dividend payout ratio	33.25		32.90
Asset Quality Data
Non-performing assets to total assets at end of period ^{(6) (7)}	1.26	%	0.50	%
Allowance for credit losses to non-performing loans at end of period ^{(6) (7)}	66.53		255.97
Allowance for credit losses to total loans at end of period	1.07		1.03
Consolidated Capital Ratios
Tier 1 leverage ratio	9.70	%	9.33	%
Common Equity Tier 1 (CET1)	10.14		10.08
Tier 1 risk-based capital ratio	10.90		10.73
Total risk-based capital ratio	12.49		12.15


⁽¹⁾	With the exception of end-of-period ratios, all ratios are based on average daily balances during the respective periods.


⁽²⁾	Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding amortization expense on a tax-effected basis where applicable. See Table 18 for Non-GAAP reconciliations.


⁽³⁾	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 net earning assets.


⁽⁴⁾	Fully taxable equivalent (TE) calculations include the tax benefit associated with related income sources that are tax-exempt using a rate of 35%, which approximates the marginal tax rate.


⁽⁵⁾	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.


⁽⁶⁾	Non-performing loans consist of non-accruing loans and loans 90 days or more past due. Non-performing assets consist of non-performing loans and repossessed assets.


⁽⁷⁾	Acquired 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.

Net Interest Income/Net Interest Margin

Net interest income is the difference between interest realized on earning assets and interest paid on interest-bearing liabilities and is also the driver of core 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 appropriate mix of earning assets. Additionally, the need for lower cost funding sources is weighed against relationships with clients and future growth opportunities.

The following tables set forth the quarter-to-date and year-to-date 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
	2016								2015
(Dollars in thousands)	Average Balance			Interest Income/Expense ⁽²⁾			Yield/ Rate ⁽³⁾		Average Balance			Interest Income/Expense ⁽²⁾			Yield/ Rate ⁽³⁾
Earning Assets:
Loans ⁽¹⁾:
Commercial loans	$	10,646,874		$	116,653		4.34	%	$	9,915,593		$	110,282		4.41	%
Mortgage loans	1,254,665			13,718			4.37	%	1,180,725			13,156			4.46	%
Consumer and other loans	2,900,660			37,413			5.13	%	2,913,283			36,477			4.97	%
Total loans	14,802,199			167,784			4.50	%	14,009,601			159,915			4.53	%
Loans held for sale	219,369			1,774			3.24	%	200,895			1,847			3.68	%
Investment securities	2,830,892			13,815			2.09	%	2,697,617			13,730			2.16	%
FDIC loss share receivable	27,694			(3,935		)	(55.61	)%	47,190			(5,600		)	(46.43	)%
Other earning assets	641,080			1,066			0.66	%	756,277			1,185			0.62	%
Total earning assets	18,521,234			180,504			3.89	%	17,711,580			171,077			3.86	%
Allowance for loan losses	(149,101		)						(130,367		)
Non-earning assets	2,020,695								2,022,857
Total assets	$	20,392,828							$	19,604,070
Interest-bearing liabilities
Deposits:
NOW accounts	$	2,936,130		2,313			0.31	%	$	2,655,069		1,725			0.26	%
Savings and money market accounts	6,359,006			5,826			0.36	%	7,104,789			6,460			0.36	%
Certificates of deposit	2,176,159			4,592			0.84	%	2,343,794			5,039			0.85	%
Total interest-bearing deposits	11,471,295			12,731			0.44	%	12,103,652			13,224			0.43	%
Short-term borrowings	732,451			753			0.40	%	262,250			116			0.17	%
Long-term debt	682,708			3,603			2.06	%	343,016			2,620			2.99	%
Total interest-bearing liabilities	12,886,454			17,087			0.53	%	12,708,918			15,960			0.50	%
Non-interest-bearing demand deposits	4,605,447								4,265,912
Non-interest-bearing liabilities	239,911								206,030
Total liabilities	17,731,812								17,180,860
Shareholders’ equity	2,661,016								2,423,210
Total liabilities and shareholders’ equity	$	20,392,828							$	19,604,070
Net earning assets	$	5,634,780							$	5,002,662
Net interest income / Net interest spread				$	163,417		3.36	%				$	155,117		3.36	%
Net interest income (TE) / Net interest margin (TE) ⁽³⁾				$	165,795		3.53	%				$	157,302		3.50	%


⁽¹⁾	Total loans include non-accrual loans for all periods presented.


⁽²⁾	Interest income includes loan fees of $0.7 million for the three-month periods ended September 30, 2016 and 2015.


⁽³⁾	Taxable equivalent yields are calculated using a rate of 35%, which approximates the marginal tax rate.

TABLE 3 – YEAR-TO-DATE AVERAGE BALANCES, NET INTEREST INCOME AND INTEREST YIELDS/RATES



	Nine Months Ended September 30
	2016								2015
(Dollars in thousands)	Average Balance			Interest Income/Expense ⁽²⁾			Yield/ Rate ⁽³⁾		Average Balance			Interest Income/Expense ⁽²⁾			Yield/ Rate ⁽³⁾
Earning Assets:
Loans ⁽¹⁾:
Commercial loans	$	10,452,794		$	344,658		4.39	%	$	9,032,618		$	297,199		4.40	%
Mortgage loans	1,226,307			40,928			4.45	%	1,156,101			41,129			4.74	%
Consumer and other loans	2,897,576			111,758			5.15	%	2,777,330			105,113			5.06	%
Total loans	14,576,677			497,344			4.54	%	12,966,049			443,441			4.57	%
Loans held for sale	197,317			5,025			3.40	%	179,211			4,742			3.53	%
Investment securities	2,851,482			43,691			2.17	%	2,492,826			38,017			2.15	%
FDIC loss share receivable	32,398			(12,484		)	(50.63	)%	56,299			(19,011		)	(44.53	)%
Other earning assets	526,557			2,558			0.65	%	608,578			3,018			0.66	%
Total earning assets	18,184,431			536,134			3.95	%	16,302,963			470,207			3.87	%
Allowance for loan losses	(146,520		)						(129,325		)
Non-earning assets	1,982,804								1,842,042
Total assets	$	20,020,715							$	18,015,680
Interest-bearing liabilities
Deposits:
NOW accounts	$	2,902,649		6,334			0.29	%	$	2,587,020		5,042			0.26	%
Savings and money market accounts	6,480,916			16,992			0.35	%	6,064,012			14,892			0.33	%
Certificates of deposit	2,130,800			13,255			0.83	%	2,275,968			14,410			0.85	%
Total interest-bearing deposits	11,514,365			36,581			0.42	%	10,927,000			34,344			0.42	%
Short-term borrowings	617,562			1,900			0.40	%	488,574			699			0.19	%
Long-term debt	600,141			10,080			2.21	%	404,125			8,566			2.80	%
Total interest-bearing liabilities	12,732,068			48,561			0.51	%	11,819,699			43,609			0.49	%
Non-interest-bearing demand deposits	4,486,314								3,840,738
Non-interest-bearing liabilities	203,723								171,585
Total liabilities	17,422,105								15,832,022
Shareholders’ equity	2,598,610								2,183,658
Total liabilities and shareholders’ equity	$	20,020,715							$	18,015,680
Net earning assets	$	5,452,363							$	4,483,264
Net interest income / Net interest spread				$	487,573		3.44	%				$	426,598		3.38	%
Net interest income (TE) / Net interest margin (TE) ⁽³⁾				$	494,644		3.59	%				$	432,819		3.52	%


⁽¹⁾	Total loans include non-accrual loans for all periods presented.


⁽²⁾	Interest income includes loan fees of $2.1 million for the nine-month periods ended September 30, 2016 and 2015.


⁽³⁾	Taxable equivalent yields are calculated using a rate of 35%, which approximates the marginal tax rate.

Net interest income was $163.4 million for the third quarter of 2016, an $8.3 million, or 5.4%, increase compared to the same quarter of 2015. The third quarter of 2016 reflects an $809.7 million, or 4.6%, increase in average earning assets, partially offset by a $177.5 million, or 1.4%, increase in average interest-bearing liabilities compared to the third quarter of 2015. The earning asset yield increased three basis points to 3.89% during the third quarter of 2016. The increased interest income from earning asset volume in the third quarter of 2016 was partially offset by $1.5 million of interest reversals on loans moving to non-accrual status and $0.7 million accelerated bond premium amortization on the investment portfolio from higher prepayment speeds. While the FOMC increased rates in December of 2015, the incremental benefit of that rate increase was partially offset by compressing spreads on loan originations. Funding costs increased three basis points to 0.53% compared to the third quarter of 2015. Overall, the net interest spread remained flat at 3.36% for both three-month periods, and the net interest margin on an annualized basis increased three basis points to 3.53%, from 3.50%, when comparing the periods.

Net interest income was $487.6 million for the first nine months of 2016, a $61.0 million, or 14.3%, increase compared to the same period of 2015. Year-to-date 2016 results reflect a $1.9 billion, or 11.5%, increase in average earning assets, partially offset by a $912.4 million, or 7.7%, increase in average interest-bearing liabilities compared to the first nine months of 2015. The earning asset yield increased eight basis points to 3.95% during the first nine months of 2016, primarily due to the timing of investment securities purchases at higher yields and sale of lower yielding securities, offset by accelerated bond premium amortization. In addition, amortization on FDIC loss share receivables, which result in a negative yield for this asset, has decreased 34.3% year-over-year. Funding costs increased two basis points to 0.51% when compared to 2015. As a result, the net interest spread increased six basis points to 3.44%, from 3.38%, and the net interest margin on an annualized basis increased seven basis points to 3.59%, from 3.52%, when comparing the periods.

Average loans made up 79.9% and 79.1% of average earning assets in the third quarters of 2016 and 2015, respectively, and 80.2% and 79.5% for the respective nine-month periods. Average loans increased $792.6 million, or 5.7%, when comparing the third quarter of 2016 to the same quarter of 2015, and $1.6 billion, or 12.4%, when comparing the nine months of 2016 to the same period of 2015. The increase in loans was a result of organic growth in the Company's legacy loan portfolio. Investment securities made up 15.3% and 15.2% of average earning assets for the third quarters of 2016 and 2015, respectively, and 15.7% and 15.3% for the respective nine-month periods.

Average interest-bearing deposits made up 89.0% and 95.2% of average interest-bearing liabilities in the third quarters of 2016 and 2015, respectively, and 90.4% and 92.4% for the respective nine-month periods. Average short-term borrowings and long-term debt comprised 11.0% of average interest-bearing liabilities in the third quarter of 2016, compared to 4.8% for the third quarter of 2015, and 9.6% for the first nine months of 2016, compared to 7.6% for the same period of 2015.

The following table sets forth information regarding average loan balances and average yields, segregated into the legacy and acquired portfolios, for the periods indicated.

TABLE 4 – AVERAGE LOAN BALANCE AND YIELDS



	Three Months Ended September 30								Nine Months Ended September 30
	2016				2015				2016				2015
(Dollars in thousands)	Average Balance		Average Yield		Average Balance		Average Yield		Average Balance		Average Yield		Average Balance		Average Yield
Legacy loans	12,182,980		3.97	%	10,571,181		3.90	%	11,747,949		3.99	%	10,153,990		3.89	%
Acquired loans	2,619,219		6.75	%	3,438,420		6.30	%	2,828,728		6.62	%	2,812,059		6.85	%
Total loans	14,802,199		4.46	%	14,009,601		4.49	%	14,576,677		4.51	%	12,966,049		4.53	%
FDIC loss share receivables	27,694		(55.61	)%	47,190		(46.43	)%	32,398		(50.63	)%	56,299		(44.53	)%
Total loans and FDIC loss share receivables	$	14,829,893	4.35	%	$	14,056,791	4.32	%	$	14,609,075	4.38	%	$	13,022,348	4.32	%

Provision for Loan Losses

Provision for loan losses increased $7.4 million, or 146.6%, to $12.5 million in the third quarter of 2016, compared to $5.1 million in the third quarter of 2015. The increase is primarily attributable to the downward migration of energy-related credits as expected, due to general energy sector weakness, and to a lesser extent, growth in legacy loans.

Provision expense was $39.3 million, up $20.1 million, or 104.5%, during the first nine months of 2016 compared to 2015. The increase is partially related to total loan growth of 5.7% from September 30, 2015 to September 30, 2016, but primarily is due to a significant increase in classified assets, predominantly energy-related legacy commercial loans, as of those respective

period ends. Classified legacy commercial assets as of September 30, 2016 were $373.1 million, of which $253.6 million were energy-related, compared to classified legacy commercial assets of $110.0 million as of September 30, 2015, of which $41.6 million were energy-related.

See 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

The Company’s operating results for the three months ended September 30, 2016 included non-interest income of $59.8 million compared to $57.5 million for the same period of 2015. The $2.3 million, or 4.1%, increase in non-interest income included a $1.2 million, or 5.7%, increase in mortgage income, a $1.1 million, or 96.1%, increase in client derivatives income, a $0.9 million, or 24.5%, increase in treasury management income, as well as a $1.4 million, or 140.7% increase in income from COLI assets (which is more than offset by an increase in salaries and benefits expense within non-interest expense). These increases were partially offset by a $0.6 million, or 9.4%, decrease in title revenue and a $0.8 million, or 24.0%, decrease in IFS revenues. Also of note, the increase in mortgage income during the current quarter was tempered by a $1.1 million valuation adjustment on a small portfolio of loans moved from held for sale to held for investment. Non-interest income as a percentage of total gross revenue (defined as total interest and dividend income and non-interest income) in the third quarter of 2016 was 24.9% compared to 25.1% of total gross revenue in the third quarter of 2015.

Non-interest income increased $12.7 million, or 7.6%, to $180.6 million during the first nine months of 2016, which included increases of $4.4 million, or 144.7%, in client derivatives income, $3.2 million, or 31.1%, in treasury management income, and $3.8 million, or 6.0%, in mortgage income. These increases, in addition to increased non-interest income related to service charges on deposit accounts and sales of SBA loans, were partially offset by a $2.1 million, or 15.8%, decrease in broker commissions income from lower ICP revenues, and a $2.4 million gain on the sale of fixed assets in 2015, primarily related to the realized gain on a sale-leaseback transaction.

Non-interest Expense

Non-interest expense for the third quarter of 2016 decreased $6.8 million, or 4.7%, compared to the same quarter of 2015.

Net occupancy and equipment expense decreased $1.5 million, or 8.1%, compared to the third quarter of 2015 due to decreases in rent and depreciation expenses. Credit and other loan related expense decreased $3.3 million, or 63.2%, from the year-ago quarter as a result of a lower reserve for unfunded lending commitments (although this was more than offset by an increase in provision expense). Other non-interest expense decreased $3.2 million, or 24.3%, primarily due to a $1.9 million impairment charge taken in the third quarter of 2015 related to branch closures. Offsetting these decreases was an increase in salaries and employee benefits of $2.6 million.

Non-interest expense for the first nine months of 2016 was $415.1 million, $16.2 million, or 3.8%, lower than the comparable period of 2015. The primary reason for the decrease is the merger-related expenses incurred during the first nine months of 2015 resulting from the Company's three 2015 acquisitions. Data processing expense and professional services expense decreased $9.8 million, or 35.2%, and $4.4 million, or 23.5%, respectively year-over-year, predominantly due to merger-related expenses.

On a year-to-date basis, credit and other loan related expense decreased $6.6 million, or 46.8%, period-over-period primarily as a result of a $4.9 million decrease in the reserve for unfunded lending commitments due to a risk shift from higher-risk energy-related commitments, which have decreased as these lines have funded (in which case the provision for loan losses was increased) or been curtailed, to lower-risk unfunded commitments. Other non-interest expense decreased $3.7 million primarily due to a $3.9 million decrease in net costs of OREO property relating to impairment charges on branch closures taken in 2015, compared to the gains recognized on sales of those former bank properties in 2016. These decreases were offset by an $11.7 million, or 4.9%, increase in salaries and employee benefits expense, primarily a result of the Company’s acquisition-related growth.

Income Taxes

For the three months ended September 30, 2016 and 2015, the Company recorded income tax expense of $24.5 million and $20.1 million, respectively, equating to an effective income tax rate of 33.8% and 32.1%, respectively. For the nine months ended September 30, 2016 and 2015, the Company recorded income tax expense of $72.2 million and $45.5 million, respectively, which resulted in an effective income tax rate of 33.7% for the first nine months of 2016 and 31.6% for the same period of 2015.

The difference between the effective tax rate and the statutory federal and state tax rates relates to items that are non-taxable or non-deductible, primarily the effect of tax-exempt income, the non-deductibility of a portion of the amortization recorded on

acquisition intangibles, and various tax credits. The effective tax rate was negatively impacted in 2016 by the increase in pre-tax income, expiration of new market tax credits, and the post-merger effect of the 2015 acquisitions, which contributed to an increase in the Company's state effective tax rate given the higher statutory tax rates in Florida and Georgia.

FINANCIAL CONDITION

Earning Assets

Interest income associated with earning assets is the Company’s primary source of income. Earning assets are composed of interest-earning or dividend-earning assets, including loans, securities, short-term investments and loans held for sale. As a result of organic growth, earning assets increased $1.2 billion, or 6.7%, since December 31, 2015.

The following discussion highlights the Company’s major categories of earning assets.

Loans

The Company had total loans of approximately $14.9 billion at September 30, 2016, an increase of $597.1 million, or 4.2%, from December 31, 2015. Legacy loans increased $1.2 billion, or 10.9%, to $12.4 billion at September 30, 2016, while acquired loans decreased $625.8 million, or 19.9%, to $2.5 billion at September 30, 2016. The growth in the legacy portfolio included increases in commercial loans of $985.9 million, or 12.1%, consumer loans of $90.9 million, or 3.8%, and mortgage loans of $146.1 million, or 21.0%, over December 31, 2015 balances. With no additional acquisitions in the first nine months of 2016, the acquired portfolio is decreasing as expected over time as pay-downs and pay-offs occur. In addition, acquired loans are transferred to the legacy portfolio as they are refinanced, renewed, restructured, or otherwise underwritten to the Company's standards.

The major categories of loans outstanding at September 30, 2016 and December 31, 2015 are presented in the following tables, segregated into legacy and acquired loans.

TABLE 5 – SUMMARY OF LOANS



	September 30, 2016
	Commercial						Consumer and Other
(Dollars in thousands)	Real Estate		Commercial and Industrial		Energy-related		Residential Mortgage		Indirect automobile		Home Equity		Credit Card		Other		Total
Legacy	$	5,419,483	$	3,101,472	$	598,279	$	840,082	$	153,904	$	1,755,295	$	80,452	$	464,403	$	12,413,370
Acquired	1,261,732		361,525		1,362		430,448		9		395,835		507		59,711		2,511,129
Total	$	6,681,215	$	3,462,997	$	599,641	$	1,270,530	$	153,913	$	2,151,130	$	80,959	$	524,114	$	14,924,499


	December 31, 2015
	Commercial						Consumer and Other
(Dollars in thousands)	Real Estate		Commercial and Industrial		Energy-related		Residential Mortgage		Indirect automobile		Home Equity		Credit Card		Other		Total
Legacy	$	4,504,062	$	2,952,102	$	677,177	$	694,023	$	246,214	$	1,575,643	$	77,261	$	464,038	$	11,190,520
Acquired	1,569,449		492,476		3,589		501,296		84		490,524		582		78,908		3,136,908
Total	$	6,073,511	$	3,444,578	$	680,766	$	1,195,319	$	246,298	$	2,066,167	$	77,843	$	542,946	$	14,327,428

Loan Portfolio Components

The Company’s loan to deposit ratio at September 30, 2016 and December 31, 2015 was 90.3% and 88.6%, respectively. The percentage of fixed rate loans to total loans was 43.9% at September 30, 2016 and 47.9% at December 31, 2015. The discussion below highlights activity by major loan type. Overall, the composition of the Company’s loan portfolio as of September 30, 2016 is consistent with the composition as of December 31, 2015.

Commercial Loans

Total commercial loans increased $545.0 million, or 5.3%, to $10.7 billion at September 30, 2016, from $10.2 billion at December 31, 2015. Legacy commercial loan growth during the first nine months of 2016 totaled $985.9 million, a 12.1%

increase from year-end 2015. The Company continued to attract and retain commercial customers as commercial loans were 72.0% of the total loan portfolio at September 30, 2016, compared to 71.2% at December 31, 2015. Unfunded commitments on commercial loans, including approved loan commitments not yet funded, were $3.9 billion at September 30, 2016, an increase of $346.2 million, or 9.7%, when compared to year-end 2015.

Commercial real estate loans increased $607.7 million, or 10.0%, during the first nine months of 2016, driven by an increase in legacy commercial real estate loans of $915.4 million, or 20.3%, partially offset by a decrease in acquired commercial real estate loans of $307.7 million, or 19.6%. At September 30, 2016, commercial real estate loans totaled $6.7 billion, or 44.8% of the total loan portfolio, compared to 42.4% at December 31, 2015.

As of September 30, 2016, commercial and industrial loans totaled $3.5 billion, or 23.2% of the total loan portfolio. This represents an $18.4 million, or 0.5%, increase from December 31, 2015.

The following table details the Company’s commercial loans by state, as defined by market of origination.

TABLE 6 – COMMERCIAL LOANS BY STATE



(Dollars in thousands)	Louisiana		Florida		Alabama		Texas		Arkansas		Georgia		Tennessee		Other		Total
September 30, 2016
Real Estate	$	1,986,606	$	1,049,247	$	830,385	$	746,836	$	377,128	$	240,265	$	188,942	$	74	$	5,419,483
Commercial and Industrial	997,873		375,593		363,751		582,734		237,208		116,134		363,549		64,630		3,101,472
Energy-related	70,163		—		82		527,976		58		—		—		—		598,279
Total legacy	3,054,642		1,424,840		1,194,218		1,857,546		614,394		356,399		552,491		64,704		9,119,234

Real Estate	183,830		762,336		18,546		23,289		—		263,373		10,358		—		1,261,732
Commercial and Industrial	18,011		136,685		1,100		16,097		—		153,787		3,900		31,945		361,525
Energy-related	1,062		—		—		—		—		—		—		300		1,362
Total acquired	202,903		899,021		19,646		39,386		—		417,160		14,258		32,245		1,624,619
Total	$	3,257,545	$	2,323,861	$	1,213,864	$	1,896,932	$	614,394	$	773,559	$	566,749	$	96,949	$	10,743,853



(Dollars in thousands)	Louisiana		Florida		Alabama		Texas		Arkansas		Georgia		Tennessee		Other		Total
December 31, 2015
Real Estate	$	1,890,451	$	695,032	$	712,658	$	645,957	$	355,375	$	65,874	$	138,712	$	3	$	4,504,062
Commercial and Industrial	1,089,850		252,780		346,905		590,276		213,887		59,619		347,992		50,793		2,952,102
Energy-related	101,193		—		41		575,822		121		—		—		—		677,177
Total legacy	3,081,494		947,812		1,059,604		1,812,055		569,383		125,493		486,704		50,796		8,133,341

Real Estate	243,998		902,542		26,989		23,280		—		358,700		13,940		—		1,569,449
Commercial and Industrial	26,149		176,458		1,156		17,574		—		209,583		6,479		55,077		492,476
Energy-related	1,633		—		—		—		—		—		—		1,956		3,589
Total acquired	271,780		1,079,000		28,145		40,854		—		568,283		20,419		57,033		2,065,514
Total	$	3,353,274	$	2,026,812	$	1,087,749	$	1,852,909	$	569,383	$	693,776	$	507,123	$	107,829	$	10,198,855

Energy-related Loans

The Company’s loan portfolio includes energy-related loans totaling $599.6 million outstanding at September 30, 2016, or 4.0% of total loans, compared to $680.8 million, or 4.8% of total loans, at December 31, 2015, a decrease of $81.1 million, or 11.9%. At September 30, 2016, E&P loans accounted for 50.2% of energy-related loans and 54.2% of energy-related commitments. Midstream companies accounted for 18.5% of energy-related loans and 19.8% of energy commitments, while service company loans totaled 31.3% of energy-related loans and 26.0% of energy commitments.

The Company has been impacted by the severe downturn in the energy industry that began in 2014. Excess oil and gas supply and weakening global demand caused a rapid and sustained decline in energy commodity prices. While oil and gas prices have rebounded, the length of the downturn has left the financial condition of businesses and communities tied to the oil and gas industries unsettled. The Company experienced a downward migration in energy-related credits as expected over 2016, with 53.2% of the energy-related loan portfolio criticized, and 42.3% classified, at September 30, 2016, compared to 21.6% criticized and 11.6% classified at December 31, 2015. Energy-related non-performing assets were $153.6 million at September 30, 2016, compared to $7.3 million at December 31, 2015. Energy-related reserves were $29.2 million, or 4.9% of energy-related outstandings, as of September 30, 2016, compared to $26.7 million, or 3.9% of energy-related outstandings, at December 31, 2015. The Company charged-off $14.7 million of energy-related loans year-to-date in 2016, and had no energy-related charge-offs in 2015.

Mortgage Loans

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. Total residential mortgage loans increased $75.2 million, or 6.3%, compared to December 31, 2015, largely due to an increase in private banking clients, as well as transfers of other non-conforming loans from held for sale to held for investment.

Consumer Loans

The Company offers consumer loans in order to provide a full range of retail financial services to its customers. The Company originates substantially all of its consumer loans in its primary market areas. At September 30, 2016, $2.9 billion, or 19.5%, of the total loan portfolio was comprised of consumer loans, compared to $2.9 billion, or 20.5%, at the end of 2015. Total consumer loans decreased $23.1 million, or 0.8%, from December 31, 2015, primarily due to a $92.3 million decrease in indirect automobile loans, a product that is no longer offered, partially offset by an $85.0 million increase in home equity loans. The majority of the consumer loan portfolio is comprised of home equity loans, which were $2.2 billion of the total $2.9 billion of consumer loans at September 30, 2016.

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, 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 8, unscoreable consumer loans have been included in loans with credit scores below 660. Credit scores reflect the Company’s most recent information available as of the dates indicated.

TABLE 7 – CONSUMER LOANS BY STATE



(Dollars in thousands)	Louisiana		Florida		Alabama		Texas		Arkansas		Georgia		Tennessee		Other		Total
September 30, 2016
Legacy	$	1,030,813	$	409,884	$	262,229	$	116,772	$	245,717	$	58,543	$	67,482	$	262,614	$	2,454,054
Acquired	132,093		187,921		34,431		33,116		—		56,862		11,615		24		456,062
Total	$	1,162,906	$	597,805	$	296,660	$	149,888	$	245,717	$	115,405	$	79,097	$	262,638	$	2,910,116

December 31, 2015
Legacy	$	1,023,828	$	286,539	$	246,837	$	113,773	$	252,289	$	32,562	$	51,182	$	356,146	$	2,363,156
Acquired	155,980		233,886		36,977		42,420		—		86,083		14,742		10		570,098
Total	$	1,179,808	$	520,425	$	283,814	$	156,193	$	252,289	$	118,645	$	65,924	$	356,156	$	2,933,254

TABLE 8 – CONSUMER LOANS BY CREDIT SCORE



(Dollars in thousands)	Below 660		660 - 720		Above 720		Discount			Total
September 30, 2016
Legacy	$	521,349	$	618,492	$	1,314,213	$	—		$	2,454,054
Acquired	106,973		112,513		261,139		(24,563		)	456,062
Total	$	628,322	$	731,005	$	1,575,352	$	(24,563	)	$	2,910,116

December 31, 2015
Legacy	$	427,938	$	604,751	$	1,330,467	$	—		$	2,363,156
Acquired	122,619		144,665		334,023		(31,209		)	570,098
Total	$	550,557	$	749,416	$	1,664,490	$	(31,209	)	$	2,933,254

Mortgage Loans Held for Sale

Loans held for sale were $210.9 million at September 30, 2016, $166.2 million at December 31, 2015, and $202.2 million at September 30, 2015. The balances at the respective period-ends are impacted by the volume and timing of origination and sales activity. Mortgage loan originations totaled $1.92 billion during the first nine months of 2016 and sales totaled $1.86 billion. Similarly, the Company originated $1.88 billion and sold $1.83 billion during the first nine months of 2015.

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, 2015, for further discussion.

Asset Quality

The lending activities of the Company are governed by written underwriting standards 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 business and commercial real estate loans. The Company provides centralized underwriting of substantially all residential mortgage, construction and consumer loans. Established loan origination procedures require appropriate documentation, including financial data and credit reports. For loans 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 are reviewed on an ongoing basis and are adjusted as necessary based on the obligor’s risk profile and debt capacity. Loan Review 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 exercises judgment in determining the risk classification of its commercial loans.

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. Commercial loans with adverse classifications are reviewed by the Board Risk Committee of the Board of Directors periodically.

Commercial loans are placed on non-accrual status when any of the following occur: 1) the loan is maintained on a cash basis because of deterioration in the financial condition of 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); 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; or 4) the borrower has filed or is likely to file bankruptcy. 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. Certain commercial loans are also placed on non-accrual status when payment is not past due and full payment of principal and interest is expected, but we have doubt about the borrower’s ability to comply with existing repayment terms. Consideration will be given to placing a loan on non-accrual due to the deterioration of the debtor’s repayment ability, the repayment of the loan becoming totally dependent on the liquidation of collateral, an existing collateral deficiency, the loan being classified as "Doubtful" or "Loss", the client filing, and/or foreclosure being initiated. Regarding all classes within the C&I and CRE portfolios, the determination of a borrower’s ability to make the required principal and interest payments is based on an examination of the borrower’s current financial statements, industry, management capabilities, and other qualitative measures.

When a loan is placed on non-accrual status, the accrual of interest income ceases and accrued but unpaid interest attributable to the current year is reversed against interest income. Accrued interest receivable attributable to the prior year is recorded as a charge-off to the allowance for credit losses.

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.

Non-performing Assets

The Company defines nonperforming assets as non-accrual loans, accruing loans more than 90 days past due, OREO and foreclosed property. Management continually monitors loans and transfers loans to non-accrual status when warranted. The Company accounts for covered loans, loans 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 "purchased 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 2015 Annual Report on Form 10-K for the year ended December 31, 2015 for further details.

The following table sets forth the composition of the Company's non-performing assets, including accruing loans 90 days or more past due and TDRs for the periods indicated.

TABLE 9 – NON-PERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS



(Dollars in thousands)	September 30, 2016						December 31, 2015
	Legacy			Acquired ⁽⁴⁾			Legacy			Acquired ⁽⁴⁾
Non-accrual loans:
Commercial	$	49,911		$	5,692		$	22,201		2,645
Energy-related	153,620			—			7,081			170
Mortgage	13,816			1,258			13,674			1,109
Consumer and credit card	9,775			1,449			7,972			1,497
Total non-accrual loans	227,122			8,399			50,928			5,421
Accruing loans 90 days or more past due	4,936			297			624			291
Total non-performing loans ⁽¹⁾	232,058			8,696			51,552			5,712
OREO and foreclosed property ⁽²⁾	11,538			10,547			16,491			17,640
Total non-performing assets ⁽¹⁾	243,596			19,243			68,043			23,352
Performing troubled debt restructurings ⁽³⁾	112,957			5,176			38,441			3,233
Total non-performing assets and troubled debt restructurings ⁽¹⁾	$	356,553		$	24,419		$	106,484		$	26,585
Non-performing loans to total loans ⁽¹⁾	1.87		%	0.35		%	0.46		%	0.18		%
Non-performing assets to total assets ⁽¹⁾	1.33		%	0.76		%	0.42		%	0.73		%
Non-performing assets and troubled debt restructurings to total assets ⁽¹⁾	1.95		%	0.97		%	0.65		%	0.83		%
Allowance for credit losses to non-performing loans	52.09		%	451.98		%	209.41		%	780.29		%
Allowance for credit losses to total loans	0.97		%	1.57		%	0.96		%	1.42		%


⁽¹⁾	Non-performing loans and assets include accruing loans 90 days or more past due.


⁽²⁾	OREO and foreclosed property at September 30, 2016 and December 31, 2015 include $6.0 million and $8.1 million, respectively, of legacy former bank properties held for development or resale.


⁽³⁾	Performing troubled debt restructurings for September 30, 2016 and December 31, 2015 exclude $134.0 million and $23.4 million, respectively, of legacy loans, and $2.5 million and $408,000, respectively, of acquired loans that meet non-performing asset criteria.


⁽⁴⁾	Acquired 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.

Legacy non-performing assets totaled $243.6 million at September 30, 2016, an increase of $175.6 million, or 258.0%, compared to December 31, 2015. Including TDRs that are in compliance with their modified terms, total legacy non-performing assets and TDRs increased $250.1 million during the first nine months of 2016.

Non-performing legacy loans were 1.87% of total legacy loans at September 30, 2016, 141 basis points higher than at December 31, 2015. The increase in legacy non-performing assets was due primarily to an increase of $146.5 million in energy-related non-accrual loans. The majority of the increase in energy-related non-accruals is comprised of seven relationships that were deemed criticized in prior periods.

Non-performing assets as a percentage of total assets have increased since year-end primarily due to the challenges that our energy-related customers have faced as previously discussed. Legacy non-performing assets were 1.33% of total legacy assets at September 30, 2016, 91 basis points higher than at December 31, 2015. The allowance for credit losses as a percentage of non-performing legacy loans was 52.09% at September 30, 2016 and 209.41% at December 31, 2015. The Company’s allowance for credit losses as a percentage of total legacy loans increased one basis point from 0.96% at December 31, 2015 to 0.97% at September 30, 2016.

The Company had gross charge-offs on legacy loans of $28.5 million during the nine months ended September 30, 2016. Offsetting these charge-offs were recoveries of $3.1 million. As a result, net charge-offs on legacy loans for the first nine

months of 2016 were $25.4 million, or 0.29% annualized of average loans, as compared to net charge-offs of $7.5 million, or 0.10% annualized, for the first nine months of 2015.

At September 30, 2016, excluding acquired loans, the Company had $350.3 million of legacy commercial assets classified as substandard, $22.7 million of legacy commercial assets classified as doubtful, and no assets classified as loss. Accordingly, the aggregate of the Company’s legacy commercial classified assets was 1.79% of total assets, 2.50% of total loans, and 3.01% of legacy loans. At December 31, 2015, legacy commercial classified assets totaled $144.1 million, or 0.74% of total assets, 1.01% of total loans, and 1.29% of legacy loans. As with non-classified assets, a reserve for credit losses has been recorded for substandard and doubtful loans at September 30, 2016 in accordance with the Company’s allowance for credit losses policy.

In addition to the problem loans described above, there were $122.5 million of legacy commercial loans classified as special mention at September 30, 2016, which in management’s opinion were subject to potential future rating downgrades. Special mention loans are defined as loans where known information about possible credit problems of the borrowers causes management to have some doubt as to the ability of these borrowers to comply with the present loan repayment terms, which may result in future disclosure of these loans as non-performing. Special mention loans at September 30, 2016 increased $17.7 million, or 16.9%, from December 31, 2015, primarily due to commercial and industrial loans.

As noted above, the asset quality of the Company’s energy-related loan portfolio has been and may continue to be impacted by low commodity prices. At September 30, 2016, non-accrual energy-related loans totaled $153.6 million, compared to $7.3 million at year-end 2015. Thus far in 2016, the Company has experienced $14.7 million in energy-related charge-offs. There were no energy-related charge-offs in 2015.

The overall balance of the acquired loan portfolio has diminished as loans have paid down, paid off or been transferred to the legacy portfolio. Acquired non-performing loans increased $3.0 million, or 52.2%, from year-end, and were 0.35% of total acquired loans at September 30, 2016, compared to 0.18% at December 31, 2015. This increase is primarily due to an increase in non-accrual commercial real estate loans.

Past Due Loans

Past due status is based on the contractual terms of loans. Legacy past due loans (including non-accrual loans) were 2.20% of total loans at September 30, 2016 and 0.65% at December 31, 2015. At September 30, 2016, total past due acquired loans were 0.46% of total loans, an increase of 12 basis points from December 31, 2015. Additional information on past due loans is presented in the following table.

TABLE 10 – PAST DUE LOAN SEGREGATION



	September 30, 2016
	Legacy				Acquired ⁽¹⁾				Total
			% of Outstanding				% of Outstanding				% of Outstanding
(Dollars in thousands)	Amount		Balance		Amount		Balance		Amount		Balance
Accruing loans:
30-59 days past due	$	28,437	0.23	%	$	1,501	0.06	%	$	29,938	0.20	%
60-89 days past due	12,720		0.10		2,467		0.10		15,187		0.10
90-119 days past due	4,808		0.04		297		0.01		5,105		0.03
120 days past due or more	128		—		—		—		128		—
	46,093		0.37		4,265		0.17		50,358		0.34
Non-accrual loans	227,122		1.83		8,399		0.33		235,521		1.58
Total past due and non-accrual loans	$	273,215	2.20	%	$	12,664	0.50	%	$	285,879	1.92	%


⁽¹⁾	Past due 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.



	December 31, 2015
	Legacy				Acquired ⁽¹⁾				Total
			% of Outstanding				% of Outstanding				% of Outstanding
(Dollars in thousands)	Amount		Balance		Amount		Balance		Amount		Balance
Accruing loans:
30-59 days past due	$	13,839	0.12	%	$	2,761	0.09	%	$	16,600	0.11	%
60-89 days past due	6,270		0.07		2,305		0.07		8,575		0.06
90-119 days past due	461		—		291		0.01		752		0.01
120 days past due or more	163		—		—		—		163		—
	20,733		0.19		5,357		0.17		26,090		0.18
Non-accrual loans	50,928		0.46		5,421		0.17		56,349		0.39
Total past due and non-accrual loans	$	71,661	0.65	%	$	10,778	0.34	%	$	82,439	0.57	%


⁽¹⁾	Past due 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 legacy loans past due increased $201.6 million, or 281.3%, from December 31, 2015, which included increases in legacy non-accrual loans of $176.2 million and $21.0 million of loans 30-89 days past due. The increase in legacy non-accrual loans was due primarily to a $146.4 million increase in energy-related non-accrual loans.

Total acquired past due loans increased $1.9 million from December 31, 2015 to $12.7 million at September 30, 2016. The change was due to an increase in non-accrual loans of $3.0 million offset by a $1.1 million decrease in loans 30-89 days past due.

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 September 30, 2016 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” and Note 1, Summary of Significant Accounting Policies, in the 2015 Annual Report on Form 10-K for the year ended December 31, 2015 for more information.

The allowance for credit losses was $160.2 million at September 30, 2016, or 1.07% of total loans, $7.7 million higher than at December 31, 2015. The allowance for credit losses as a percentage of loans was 1.06% at December 31, 2015.

The allowance for credit losses on the legacy portfolio increased $12.9 million, or 12.0%, since December 31, 2015, primarily due to an increase in legacy non-accrual and classified loans during the first nine months of 2016. Legacy non-accrual and commercial classified loans increased $176.2 million and $229.0 million, respectively, when compared to year-end 2015, primarily due to general energy sector weakness, as previously discussed.

At September 30, 2016 and December 31, 2015, the allowance for loan losses covered non-performing legacy loans 0.5 times and 1.8 times, respectively. Including acquired loans, the allowance for loan losses covered 61.6% and 241.7% of total non-performing loans at September 30, 2016 and December 31, 2015, respectively.

At September 30, 2016, the Company had an allowance for credit losses of $39.3 million to reserve for probable losses currently in the acquired loan portfolio that have arisen after the losses estimated at the respective acquisition dates.

The following table sets forth the activity in the Company’s allowance for credit losses for the periods indicated.

TABLE 11 – SUMMARY OF ACTIVITY IN THE ALLOWANCE FOR CREDIT LOSSES



	Nine Months Ended									Nine Months Ended
	September 30, 2016									September 30, 2015
(Dollars in thousands)	Legacy Loans			Acquired Loans			Total			Legacy Loans			Acquired Loans			Total
Allowance for loan losses at beginning of period	$	93,808		$	44,570		$	138,378		$	76,174		$	53,957		$	130,131
Provision for (Reversal of) loan losses before benefit attributable to FDIC loss share agreements	40,516			(2,501		)	38,015			17,743			112			17,855
Adjustment attributable to FDIC loss share arrangements	—			1,240			1,240			—			1,342			1,342
Net provision for (reversal of) loan losses	40,516			(1,261		)	39,255			17,743			1,454			19,197
Adjustment attributable to FDIC loss share arrangements	—			(1,240		)	(1,240		)	—			(1,342		)	(1,342		)
Transfer of balance to OREO and other	—			(2,045		)	(2,045		)	—			(9,768		)	(9,768		)
Loans charged-off	(28,559		)	(1,495		)	(30,054		)	(12,073		)	(952		)	(13,025		)
Recoveries	3,124			775			3,899			4,556			505			5,061
Allowance for loan losses at end of period	108,889			39,304			148,193			86,400			43,854			130,254
Reserve for unfunded commitments at beginning of period	14,145			—			14,145			11,801			—			11,801
Provision for (Reversal of) unfunded lending commitments	(2,155		)	—			(2,155		)	2,724			—			2,724
Reserve for unfunded commitments at end of period	11,990			—			11,990			14,525			—			14,525
Allowance for credit losses at end of period	$	120,879		$	39,304		$	160,183		$	100,925		$	43,854		$	144,779

FDIC Loss Share Receivables

As part of the FDIC-assisted acquisitions in 2009 and 2010, the Company recorded a receivable from the FDIC, which represented the fair value of the expected reimbursable losses covered by the loss share agreements as of the acquisition dates. The FDIC loss share receivables decreased $15.5 million, or 38.8%, from $39.9 million at December 31, 2015 to $24.4 million at September 30, 2016. The decrease was due to amortization of $12.5 million, submission of reimbursable losses to the FDIC of $1.8 million, and a $1.2 million reversal of the provision for loan losses due to changes in estimated cash flows. See Note 7 to the unaudited consolidated financial statements for discussion of the reimbursable loss periods of the loss share agreements.

Investment Securities

Investment securities increased by $76.9 million, or 2.7%, since December 31, 2015 to $3.0 billion at September 30, 2016. Investment securities approximated 14.3% and 14.9% of total assets at September 30, 2016 and December 31, 2015, respectively. Average investment securities were 15.7% of average earning assets in the first nine months of 2016, up from 15.3% for the same period of 2015.

All of the Company’s mortgage-backed securities were issued by government-sponsored enterprises at September 30, 2016. 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, sub-prime, Alt-A, or second lien elements in its investment portfolio. At September 30, 2016, 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 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.

The Company assesses the nature of the unrealized losses in its investment portfolio at least quarterly to determine if there are losses that are deemed other-than-temporary. Based on its analysis, the Company concluded no declines in the market value of the Company’s investment securities were deemed to be other-than-temporary at September 30, 2016 and December 31, 2015. Note 4 to the unaudited consolidated financial statements provides further information on the Company’s investment securities.

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 FHLB and FRB discount rates. The balance in interest-bearing deposits at other institutions increased $504.8 million, or

187.9%, from December 31, 2015 to $773.5 million at September 30, 2016. The Company’s cash activity is further discussed in the “Liquidity and Other Off-Balance Sheet Activities” section below.

FUNDING SOURCES

Deposits obtained from clients in its primary market areas are the Company’s principal source of funds for use in lending and other business purposes. The Company attracts local deposit balances by offering a wide variety of products, competitive interest rates, convenient branch office locations and service hours, and mobile and online banking. Increasing core deposits through the development of client relationships, and acquisitions as opportunities arise, is a continuing focus of the Company. Short-term and long-term borrowings have become an important funding source as the Company has grown. Other funding sources include junior 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 nine months of 2016.

Deposits

The Company’s ability to attract and retain customer deposits is critical to the Company’s continued success. Total deposits increased $343.8 million, or 2.1%, to $16.5 billion at September 30, 2016, from $16.2 billion at December 31, 2015. Over the same period, non-interest-bearing deposits increased $435.3 million, or 10.0%, and equated to 29.0% and 26.9% of total deposits at September 30, 2016 and December 31, 2015, respectively.

The following table sets forth the composition of the Company’s deposits as of the dates indicated.

TABLE 12 – DEPOSIT COMPOSITION BY PRODUCT



(Dollars in thousands)	September 30, 2016				December 31, 2015				$ Change			% Change
Non-interest-bearing deposits	$	4,787,485	29.0	%	$	4,352,229	26.9	%	$	435,256		10.0	%
NOW accounts	2,904,835		17.6		2,974,176		18.4		(69,341		)	(2.3	)
Money market accounts	5,847,913		35.4		6,010,882		37.2		(162,969		)	(2.7	)
Savings accounts	798,781		4.8		716,838		4.4		81,943			11.4
Certificates of deposit	2,183,503		13.2		2,124,623		13.1		58,880			2.8
Total deposits	$	16,522,517	100.0	%	$	16,178,748	100.0	%	$	343,769		2.1	%

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 have an average rate of 13.2 basis points.

The following table details the average and ending balances of repurchase transactions as of and for the nine months ended September 30:

TABLE 13 – REPURCHASE TRANSACTIONS



(Dollars in thousands)	2016		2015
Average balance	$	261,774	$	240,234
Ending balance	353,272		212,460

Total short-term borrowings increased $386.7 million, or 118.4%, from December 31, 2015, to $713.3 million at September 30, 2016, a result of increases of $250.0 million in FHLB advances outstanding and $136.7 million in repurchase agreements. On a quarter-to-date average basis, short-term borrowings increased $470.2 million, or 179.3%, from the third quarter of 2015. The increase in the average outstanding balance was largely due to the increase of FHLB advances during 2016.

Total short-term borrowings were 3.9% of total liabilities and 51.5% of total borrowings at September 30, 2016, compared to 1.9% and 49.0%, respectively, at December 31, 2015. On a quarter-to-date average basis, short-term borrowings were 4.1% of total liabilities and 51.8% of total borrowings in the third quarter of 2016, compared to 1.5% and 43.3%, respectively, during the same period of 2015.

The weighted average rate paid on short-term borrowings was 0.40% and 0.17% during the third quarters of 2016 and 2015, respectively.

Long-term Debt

Long-term debt increased $332.0 million from December 31, 2015 to $672.4 million at September 30, 2016, due to an increase in FHLB advances during the period. The total change in long-term debt also included a decrease in new market tax credit notes payable associated with the unwind of certain tax credit investments at the end of the third quarter. On a period-end basis, long-term debt was 3.7% and 2.0% of total liabilities at September 30, 2016 and December 31, 2015, respectively.

On average, long-term debt increased to $682.7 million in the third quarter of 2016, $339.7 million, or 99.0%, higher than the third quarter of 2015, as the Company took advantage of favorable rates on FHLB advances to fund loan growth and for other liquidity purposes throughout the year. Average long-term debt was 3.9% of total liabilities during the current quarter, compared to 2.0% during the third quarter of 2015.

Long-term debt at September 30, 2016 included $481.6 million 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 $70.7 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 and preferred shareholders. The junior subordinated debt is redeemable by the Company, at its option, in whole or in part.

CAPITAL RESOURCES

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 September 30, 2016 and December 31, 2015, 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 14 – REGULATORY CAPITAL RATIOS



	Well-Capitalized Minimums		September 30, 2016		December 31, 2015
IBERIABANK Corporation	Well-Capitalized Minimums		Actual		Actual
Tier 1 Leverage	N/A		9.70	%	9.52	%
Common Equity Tier 1 (CET1)	N/A		10.14		10.07
Tier 1 risk-based capital	N/A		10.90		10.70
Total risk-based capital	N/A		12.49		12.14
IBERIABANK
Tier 1 Leverage	5.00	%	9.37	%	9.03	%
Common Equity Tier 1 (CET1)	6.50		10.52		10.14
Tier 1 risk-based capital	8.00		10.52		10.14
Total risk-based capital	10.00		11.44		11.05

The Company's 2016 Tier 1 capital ratio was impacted by the phase out of the remaining 25% of its trust preferred securities from Tier 1 capital into Tier 2 capital. Additionally, the Company and IBERIABANK's CET1 capital, Tier 1 risk-based capital and total risk-based capital were impacted by an additional 20% phase out of certain intangible assets above the December 31,

2015 phase out percentage. See Note 10 to the unaudited consolidated financial statements for additional information on the Company's capital ratios and shareholders' equity.

On May 4, 2016, the Company's Board of Directors authorized the repurchase of up to 950,000 shares of IBERIABANK Corporation's outstanding common stock. 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 the program may be extended, modified, suspended, or discontinued at any time. During the second quarter of 2016, the Company repurchased 202,506 common shares at a weighted average price of $57.61 per common share. The Company did not repurchase common shares during the third quarter of 2016.

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. Certificates of deposit scheduled to mature in one year or less at September 30, 2016 totaled $1.8 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 Company the ability to liquidate unencumbered securities as needed. Of the $3.0 billion in the investment securities portfolio, $1.7 billion is unencumbered and the remaining $1.3 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 significant cash inflows on a regular basis. Securities cash flows may be dependent on prepayment speeds and could change 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 September 30, 2016 the Company had $841.6 million of outstanding FHLB advances, of which $360.0 million was short-term and $481.6 million was long-term. Additional FHLB borrowing capacity at September 30, 2016 amounted to $4.4 billion. At September 30, 2016, the Company also has various funding arrangements with commercial banks providing up to $175.0 million in the form of federal funds and other lines of credit. At September 30, 2016, 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 meet its ongoing commitments associated with its operations. Based on its available cash at September 30, 2016 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.

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 overall interest rate risk, 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, 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 economic value of 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 that has traditionally been more realistic.

The Company’s interest rate risk model indicates that the Company is asset sensitive in terms of interest rate sensitivity. Based on the Company’s interest rate risk model at September 30, 2016, the table below illustrates the impact of an immediate and sustained 100 and 200 basis point increase or decrease in interest rates on net interest income.

TABLE 15 – INTEREST RATE SENSITIVITY




Shift in Interest Rates (in bps)		% Change in Projected Net Interest Income (Yr 1)
+ 200		12.0%
+ 100		6.2%
- 100		(5.2)%
- 200		(7.0)%

The influence of using the forward curve as of September 30, 2016 as a basis for projecting the interest rate environment would approximate a 0.9% increase 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, full employment, 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 actions and expectations of monetary policy going forward.

The FOMC of the FRB, in an attempt to stimulate the overall economy, has, among other things, kept interest rates low through its targeted Federal funds rate. On December 17, 2015, the FOMC voted to raise the target Federal funds rate by 0.25%, the first increase since 2006. The FOMC expects that economic conditions will evolve in a manner that will warrant only gradual increases in the Federal funds rate over the next several years. As the FOMC increases the Federal funds rate, it is possible that overall interest rates could rise, which may negatively impact the housing markets and the U.S. economic recovery. In addition,

deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our commercial borrowers, and the values of collateral securing loans, which could negatively affect our financial performance.

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

The table below presents the Company’s anticipated repricing of loans and investment securities over the next four quarters.

TABLE 16 – REPRICING OF CERTAIN EARNING ASSETS ⁽¹⁾



(Dollars in thousands)	4Q 2016		1Q 2017		2Q 2017		3Q 2017		Total less than one year
Investment securities	$	162,486	$	107,484	$	105,095	$	118,466	$	493,531
Fixed rate loans	654,703		541,545		495,190		470,340		2,161,778
Variable rate loans	7,365,930		89,973		58,720		66,596		7,581,219
Total loans	8,020,633		631,518		553,910		536,936		9,742,997
	$	8,183,119	$	739,002	$	659,005	$	655,402	$	10,236,528

⁽¹⁾ Amounts include expected maturities, scheduled paydowns, expected prepayments, and loans subject to floors and exclude the repricing of assets from prior periods, as well as covered loans, non-accrual loans and market value adjustments.

As part of its asset/liability management strategy, the Company has emphasized the origination of loans with adjustable or variable rates of interest as well as commercial and consumer loans, which typically have shorter terms than residential mortgage loans. The majority of fixed-rate, long-term residential loans are sold in the secondary market to avoid assumption of the interest rate risk associated with longer duration assets in the current low rate environment. As of September 30, 2016, $8.4 billion, or 56.1%, of the Company’s total loan portfolio had adjustable interest rates. The Company had no significant concentration to any single borrower or industry segment at September 30, 2016.

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 may be less sensitive to changes in interest rates. At September 30, 2016, 86.8% of the Company’s deposits were in transaction and limited-transaction accounts, compared to 86.9% at December 31, 2015. Non-interest-bearing transaction accounts were 29.0% and 26.9% of total deposits at September 30, 2016 and December 31, 2015, respectively.

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 Company's 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 17 – REPRICING OF LIABILITIES ⁽¹⁾



(Dollars in thousands)	4Q 2016		1Q 2017		2Q 2017		3Q 2017		Total less than one year
Time deposits	$	798,026	$	380,802	$	352,619	$	264,112	$	1,795,559
Short-term borrowings	538,272		95,000		80,000		—		713,272
Long-term debt	148,879		10,114		11,022		11,823		181,838
	$	1,485,177	$	485,916	$	443,641	$	275,935	$	2,690,669

⁽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 interest rate swaps to effectively manage interest rate risk. The interest rate swaps 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 requires 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 2016.

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 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 would 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 18, 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 18 – RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES



	Three Months Ended
	September 30, 2016								September 30, 2015
(Dollars in thousands, except per share amounts)	Pre-tax			After-tax ⁽¹⁾			Per share ⁽²⁾		Pre-tax			After-tax ⁽¹⁾			Per share⁽²⁾
Net income available to common shareholders (GAAP)	$	72,615		$	44,478		$	1.08	$	62,565		$	42,475		$	1.03
Non-interest income adjustments:
Gain on sale of investments and other non-interest income	(12		)	(8		)	—		(2,221		)	(1,444		)	(0.04		)
Non-interest expense adjustments:
Merger-related expense	—			—			—		2,212			1,438			0.04
Severance expense	—			—			—		304			198			—
Impairment of long-lived assets, net of (gain) loss on sale	—			—			—		1,713			1,113			0.03
Other non-core non-interest expense	—			—			—		242			157			—
Total non-interest expense adjustments	—			—			—		4,471			2,906			0.07
Core earnings (Non-GAAP)	72,603			44,470			1.08		64,815			43,937			1.07
Provision for loan losses	12,484			8,115			0.20		5,062			3,291			0.08
Core pre-provision earnings (Non-GAAP)	$	85,087		$	52,585		$	1.28	$	69,877		$	47,228		$	1.15


⁽¹⁾	After-tax amounts calculated using a tax rate of 35%, which approximates the marginal tax rate.


⁽²⁾	Diluted per share amounts may not appear to foot due to rounding.



	Nine Months Ended
	September 30, 2016									September 30, 2015
(Dollars in thousands, except per share amounts)	Pre-tax			After-tax ⁽¹⁾			Per share ⁽²⁾			Pre-tax			After-tax ⁽¹⁾			Per share⁽²⁾
Net income available to common shareholders (GAAP)	$	213,806		$	134,627		$	3.26		$	143,961		$	98,437		$	2.59
Non-interest income adjustments:
Gain on sale of investments and other non-interest income	(1,997		)	(1,298		)	(0.03		)	(3,876		)	(2,519		)	(0.07		)
Non-interest expense adjustments:
Merger-related expense	3			2			—			24,240			15,969			0.42
Severance expense	594			386			0.01			751			489			0.01
Impairment of long-lived assets, net of (gain) loss on sale	(212		)	(137		)	(0.01		)	3,863			2,510			0.07
Other non-core non-interest expense	2,268			1,474			0.04			2,742			1,782			0.05
Total non-interest expense adjustments	2,653			1,725			0.04			31,596			20,750			0.55
Core earnings (Non-GAAP)	214,462			135,054			3.27			171,681			116,668			3.07
Provision for loan losses	39,255			25,516			0.63			19,197			12,479			0.33
Core pre-provision earnings (Non-GAAP)	$	253,717		$	160,570		$	3.90		$	190,878		$	129,147		$	3.40


⁽¹⁾	After-tax amounts calculated using a tax rate of 35%, which approximates the marginal tax rate.


⁽²⁾	Diluted per share amounts may not appear to foot due to rounding.



	As of and For the Three Months Ended September 30
(Dollars in thousands)	2016			2015
Net interest income (GAAP)	$	163,417		$	155,117
Add: Effect of tax benefit on interest income	2,378			2,185
Net interest income (TE) (Non-GAAP) ⁽¹⁾	165,795			157,302

Non-interest income (GAAP)	59,821			57,478
Add: Effect of tax benefit on non-interest income	703			589
Non-interest income (TE) (Non-GAAP) ⁽¹⁾	60,524			58,067
Taxable equivalent revenues (Non-GAAP)⁽¹⁾	226,319			215,369
Securities gains and other non-interest income	(12		)	(2,221		)
Core taxable equivalent revenues (Non-GAAP) ⁽¹⁾	$	226,307		$	213,148

Total non-interest expense (GAAP)	$	138,139		$	144,968
Less: Intangible amortization expense	2,106			2,338
Tangible non-interest expense (Non-GAAP) ⁽²⁾	136,033			142,630
Less: Merger-related expense	—			2,212
Severance expense	—			304
Loss on sale of long-lived assets, net of impairment	—			1,713
Other non-core non-interest expense	—			242
Core tangible non-interest expense (Non-GAAP)⁽²⁾	$	136,033		$	138,159

Average assets (Non-GAAP)	$	20,392,828		$	19,604,070
Less: Average intangible assets, net	758,799			762,580
Total average tangible assets (Non-GAAP) ⁽²⁾	$	19,634,029		$	18,841,490

Total shareholders’ equity (GAAP)	$	2,667,110		$	2,483,201
Less: Goodwill and other intangibles	757,856			762,500
Total tangible shareholders’ equity (Non-GAAP)⁽²⁾	$	1,909,254		$	1,720,701

Average shareholders’ equity (GAAP)	$	2,661,016		$	2,423,210
Less: Average preferred equity	132,098			48,001
Average common equity	2,528,918			2,375,209
Less: Average intangible assets, net	758,799			762,580
Average tangible common equity (Non-GAAP) ⁽²⁾	$	1,770,119		$	1,612,629

Return on average assets (GAAP)	0.94		%	0.86		%
Add: Effect of non-core revenues and expenses	—			0.03
Core return on average assets (Non-GAAP)	0.94		%	0.89		%

Return on average common equity (GAAP)	7.00		%	7.09		%
Add: Effect of intangibles	3.30			3.73
Effect of non-core revenues and expenses	—			0.36
Core return on average tangible common equity (Non-GAAP) ⁽²⁾	10.30		%	11.18		%

Efficiency ratio (GAAP)	61.9		%	68.2		%
Less: Effect of tax benefit related to tax-exempt income	0.9			0.9
Efficiency ratio (TE) (Non-GAAP) ⁽¹⁾	61.0		%	67.3		%
Less: Effect of amortization of intangibles	0.9			1.1
Effect of non-core items	—			1.4
Core tangible efficiency ratio (TE) (Non-GAAP) ^{(1), (2)}	60.1		%	64.8		%



Total shareholders' equity (GAAP)	$	2,667,110		$	2,483,201
Less: Goodwill and other intangibles	757,856			762,500
Preferred stock	132,097			77,463
Tangible common equity (Non-GAAP) ⁽²⁾	$	1,777,157		$	1,643,238

Total assets (GAAP)	$	20,788,566		$	19,534,225
Less: Goodwill and other intangibles	757,856			762,500
Tangible assets (Non-GAAP) ⁽²⁾	$	20,030,710		$	18,771,725
Tangible common equity ratio (Non-GAAP) ⁽²⁾	8.87		%	8.75		%

Cash Yield:
Earning assets average balance (GAAP)	$	18,521,234		$	17,711,580
Add: Adjustments	76,459			91,608
Earning assets average balance, as adjusted (Non-GAAP)	$	18,597,693		$	17,803,188

Net interest income (GAAP)	$	163,417		$	155,117
Add: Adjustments	(9,152		)	(7,505		)
Net interest income, as adjusted (Non-GAAP)	$	154,265		$	147,612

Yield, as reported	3.53		%	3.50		%
Add: Adjustments	(0.22		)%	(0.19		)%
Yield, as adjusted (Non-GAAP)	3.31		%	3.31		%


⁽¹⁾	TE calculations include the tax benefit associated with related income sources that are tax-exempt using a rate of 35%, which approximates the marginal tax rate.


⁽²⁾	Tangible calculations eliminate the effect of goodwill and acquisition-related intangibles and the corresponding amortization expense on a tax-effected basis were applicable.

Glossary of Defined Terms




Term		Definition
ACL		Allowance for credit losses
Acquired loans		Loans acquired in a business combination
AFS		Available-for-sale securities
ALL		Allowance for loan and lease losses
AOCI		Accumulated other comprehensive income (loss)
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
Basel III		Global regulatory standards on bank capital adequacy and liquidity published by the BCBS
BCBS		Basel Committee on Banking Supervision
CDE		IBERIA CDE, LLC
CET1		Common Equity Tier 1 Capital defined by Basel III capital rules
Company		IBERIABANK Corporation and Subsidiaries
COLI		Company owned life insurance
Covered Loans		Acquired loans with loss protection provided by the FDIC
Dodd-Frank Act		Dodd-Frank Wall Street Reform and Consumer Protection Act
ECL		Expected credit losses
E&P		Exploration and production energy companies
EPS		Earnings per share
FASB		Financial Accounting Standards Board
FDIC		Federal Deposit Insurance Corporation
FHLB		Federal Home Loan Bank
Florida Bank Group		Florida Bank Group, Inc.
FOMC		Federal Open Market Committee
FRB		Board of Governors of the Federal Reserve System
GAAP		Accounting principles generally accepted in the United States of America
Georgia Commerce		Georgia Commerce Bancshares, Inc.
GSE		Government-sponsored enterprises
HTM		Held-to-maturity securities
IAM		IBERIA Asset Management, Inc.
IBERIABANK		Banking subsidiary of IBERIABANK Corporation
ICP		IBERIA Capital Partners, LLC
IFS		IBERIA Financial Services
IMC		IBERIABANK Mortgage Company
IWA		IBERIA Wealth Advisors
Legacy loans		Loans that were originated directly or otherwise underwritten by the Company
LIBOR		London Interbank Borrowing Offered Rate
LTC		Lenders Title Company
MSA		Metropolitan statistical area
Non-GAAP		Financial measures determined by methods other than in accordance with GAAP
NPA		Non-performing asset
OCI		Other comprehensive income
Old Florida		Old Florida Bancshares, Inc.
OREO		Other real estate owned
OTTI		Other-than-temporary impairment
Parent		IBERIABANK Corporation
PCD		Purchased Financial Assets with Credit Deterioration
RULC		Reserve for unfunded lending commitments



SBA		Small Business Administration
SEC		Securities and Exchange Commission
TDR		Troubled debt restructuring
U.S.		United States of America

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about market risk are presented at December 31, 2015 in Part II, Item 7A of the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 29, 2016. Additional information at September 30, 2016 is included herein under 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 September 30, 2016 was carried out under the supervision, and with the participation of, the Chief Executive Officer (“CEO”) and Chief Financial Officer (“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 16 – Commitments and Contingencies" of the Notes to the Unaudited Consolidated Financial Statements, incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes in risk factors disclosed by the Company in its Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 29, 2016.

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 September 30, 2016, is included in the following table:

Issuer Purchases of Equity Securities



Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1-31, 2016	—	—	—	747,494
August 1-31, 2016	—	—	—	747,494
September 1-30, 2016	—	—	—	747,494
Total	—	—	—	747,494

On May 4, 2016, IBERIABANK Corporation's Board of Directors authorized the repurchase of up to 950,000 shares of the Company's outstanding common stock. 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 Company anticipates the share repurchase program will extend over a two-year time frame, or earlier if the shares have been repurchased. The share repurchase program does not obligate the Company to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended, or discontinued at any time.

Restrictions on Dividends and Repurchase of Stock

Holders of IBERIABANK Corporation common stock are only entitled to receive such dividends as 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, 2016.

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.

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.INS	XBRL Instance Document.

Exhibit No. 101.SCH	XBRL Taxonomy Extension Schema.

Exhibit No. 101.CAL	XBRL Taxonomy Extension Calculation Linkbase.

Exhibit No. 101.DEF	XBRL Taxonomy Extension Definition Linkbase.

Exhibit No. 101.LAB	XBRL Taxonomy Extension Label Linkbase.

Exhibit No. 101.PRE	XBRL 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 7, 2016	By:	/s/ Daryl G. Byrd
	Daryl G. Byrd
	President and Chief Executive Officer

Date: November 7, 2016	By:	/s/ Anthony J. Restel
	Anthony J. Restel
	Senior Executive Vice President and Chief Financial Officer