ACQUISITION ACTIVITY

Acquisition of Florida Bank Group, Inc.

On February 28, 2015, the Company acquired Florida Bank Group, Inc. (“Florida Bank Group”), the holding company of Florida Bank, a Tampa, Florida-based commercial bank servicing Tampa, Tallahassee and Jacksonville, Florida. Under the terms of the agreement, Florida Bank Group shareholders received a combination of cash and shares of the Company’s common stock. Florida Bank Group shareholders received cash equal to $7.81 per share of then outstanding Florida Bank Group common stock, including shares of preferred stock that converted to common shares in the acquisition. Each Florida Bank Group common share was exchanged for 0.149 share of the Company’s common stock, as well as a cash payment for any fractional share. All unexercised Florida Bank Group stock options at the closing date were settled for cash at fair value based on the closing price.

The Company acquired all of the outstanding common stock of the former Florida Bank Group shareholders for total consideration of $90.5 million, which resulted in goodwill of $16.7 million, as shown in the table below. With this acquisition, IBERIABANK expanded its presence in the Tampa, Tallahassee and Jacksonville areas of Florida through the addition of 12 bank offices and an experienced in-market team that enhances IBERIABANK’s ability to compete in that market. The Company projects cost savings will be recognized in future periods through the elimination of redundant operations. The following summarizes consideration paid and a preliminary allocation of purchase price to net assets acquired.



(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		73,736
Goodwill		$	16,749

Acquisition of Old Florida Bancshares, Inc.

On March 31, 2015, the Company acquired Old Florida Bancshares, Inc. (“Old Florida”), the holding company of Old Florida Bank and New Traditions Bank, Orlando, which were Florida-based commercial banks. Under terms of the agreement, for each share of Old Florida common stock outstanding, Old Florida shareholders received 0.34 of a share of the Company’s common stock, as well as a cash payment for any fractional share.

The Company acquired all of the outstanding common stock of the former Old Florida shareholders for total consideration of $253.2 million, which resulted in goodwill of $99.5 million, as shown in the table below. With this acquisition, IBERIABANK expanded its presence into the Orlando, Florida MSA through the addition of 14 bank offices and an experienced in-market team. The Company projects cost savings will be recognized in future periods through the elimination of redundant operations. The following summarizes consideration paid and a preliminary allocation of purchase price to net assets acquired.



(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		153,621
Goodwill		$	99,531

Acquisition of Georgia Commerce Bancshares, Inc.

On May 31, 2015, the Company acquired Georgia Commerce Bancshares, Inc. (“Georgia Commerce”), holding company of Georgia Commerce Bank. Under the terms of the agreement, Georgia Commerce shareholders received 0.6134 of a share of the Company’s common stock for each of the Georgia Commerce common stock shares outstanding, as well as a cash payment for any fractional share. All unexercised Georgia Commerce stock options on the closing date were settled for cash at fair value based on the closing price.

The Company acquired all of the outstanding common stock of the former Georgia Commerce shareholders for total consideration of $190.3 million, which resulted in goodwill of $81.2 million, as shown in the table below. With this acquisition, IBERIABANK expanded its presence into the Atlanta, Georgia MSA through the addition of nine bank offices and an experienced in-market team. The Company projects cost savings will be recognized in future periods through the elimination of redundant operations. The following summarizes consideration paid and a preliminary allocation of purchase price to net assets acquired.



(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		109,024
Goodwill		$	81,240

The Company accounted for the aforementioned business combinations under the acquisition method in accordance with ASC Topic 805, Business Combinations. Accordingly, the purchase price is allocated to the fair value of the assets acquired and liabilities assumed as of the date of acquisition. The following purchase price allocations on these acquisitions are preliminary and will be finalized upon the receipt of final valuations on certain assets and liabilities. In conjunction with the adoption of ASU 2015-16 as of September 30, 2015, upon receipt of final fair value estimates during the measurement period, which must be within one year of the acquisition dates, the Company will record any adjustments to the preliminary fair value estimates in the reporting period in which the adjustments are determined. Information regarding the Company’s loan discount and related deferred tax asset, core deposit intangible asset and related deferred tax liability, as well as income taxes payable and the related deferred tax balances, among other assets and liabilities recorded in the acquisitions may be adjusted as the Company refines its estimates. Determining the fair value of assets and liabilities, particularly illiquid assets and liabilities, is a complicated process involving significant judgment regarding estimates and assumptions used to calculate estimated fair value. Fair value adjustments based on updated estimates could materially affect the goodwill recorded on the acquisition. The Company may incur losses on the acquired loans that are materially different from losses the Company originally projected.

The acquired assets and liabilities, as well as the preliminary adjustments to record the assets and liabilities at their estimated fair values, are presented in the following tables.



Florida Bank Group
(Dollars in thousands)	As Acquired		Preliminary 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		(7,073		)	⁽²⁾	305,829
Other real estate owned	498		(75		)	⁽³⁾	423
Core deposit intangible	—		4,489			⁽⁴⁾	4,489
Deferred tax asset, net	19,889		9,232			⁽⁵⁾	29,121
Other assets	29,810		(8,949		)	⁽⁶⁾	20,861
Total Assets	$	543,317	$	(2,240	)		$	541,077
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	1,897		4,618			⁽⁹⁾	6,515
Total Liabilities	$	453,862	$	13,479			$	467,341

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 value based on current 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 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 adjustment 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 adjustment is necessary because the weighted average interest rate of Florida Bank Group’s deposits exceeded the cost of similar funding at the time of acquisition. The fair value adjustment will be amortized to reduce future interest expense over the life of the portfolio, which is estimated at 51 months.


(8)	The amount represents the adjustment of the book value of Florida Bank Group’s borrowings to their estimated fair value based on current 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.



Old Florida
(Dollars in thousands)	As Acquired		Preliminary 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		(9,342		)	⁽¹⁾	1,064,431
Other real estate owned	4,515		(2		)	⁽²⁾	4,513
Core deposit intangible	—		10,055			⁽³⁾	10,055
Deferred tax asset, net	8,470		3,181			⁽⁴⁾	11,651
Other assets	30,732		(7,238		)	⁽⁵⁾	23,494
Total Assets	$	1,551,339	$	(3,346	)		$	1,547,993
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	3,011		76			⁽⁷⁾	3,087
Total Liabilities	$	1,394,173	$	199			$	1,394,372

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 value based on current 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 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 adjustment is necessary because the weighted average interest rate of Old Florida’s deposits exceeded the cost of similar funding at the time of acquisition. The fair value adjustment will be amortized to reduce future interest expense over the life of the portfolio, which is estimated at 56 months.


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



Georgia Commerce
(Dollars in thousands)	As Acquired		Preliminary Fair Value Adjustments				As recorded by the Company
Assets
Cash and cash equivalents	$	51,059	$	—			$	51,059
Investment securities	139,035		(806		)	⁽¹⁾	138,229
Loans held for sale	1,249		—				1,249
Loans	807,726		(6,622		)	⁽²⁾	801,104
Other real estate owned	9,795		(4,182		)	⁽³⁾	5,613
Core deposit intangible	—		7,448			⁽⁴⁾	7,448
Deferred tax asset, net	5,030		1,849			⁽⁵⁾	6,879
Other assets	30,587		(657		)	⁽⁶⁾	29,930
Total Assets	$	1,044,481	$	(2,970	)		$	1,041,511
Liabilities
Interest-bearing deposits	658,133		176			⁽⁷⁾	658,309
Non-interest-bearing deposits	249,739		—				249,739
Borrowings	13,203		—				13,203
Other liabilities	11,236		—				11,236
Total Liabilities	$	932,311	$	176			$	932,487

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 current 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 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 adjustment is necessary because the weighted average interest rate of Georgia Commerce’s deposits exceeded the cost of similar funding at the time of acquisition. The fair value adjustment will be amortized to reduce future interest expense over the life of the portfolio, which is estimated at 60 months.

Supplemental unaudited pro forma information

The following unaudited pro forma information for the nine months ended September 30, 2014 reflects the Company’s estimated consolidated results of operations as if the acquisitions of Florida Bank Group, Old Florida, and Georgia Commerce occurred at January 1, 2014, unadjusted for potential cost savings and/or synergies and preliminary purchase price adjustments.



	For the Nine Months Ended
(Dollars in thousands, except per share data)	September 30, 2014
Interest and non-interest income	$	586,979
Net income	88,615
Earnings per share - basic	2.28
Earnings per share - diluted	2.28

The Company’s consolidated financial statements as of and for the nine months ended September 30, 2015 include the operating results of the acquired assets and assumed liabilities for the days subsequent to the respective acquisition dates. Due to the system conversion of the acquired entities throughout the current nine-month period and subsequent integration of the operating activities of the acquired branches into existing Company markets, historical reporting for the former Florida Bank Group, Old Florida and Georgia Commerce branches is impracticable and thus disclosure of the revenue from the assets acquired and income before income taxes is impracticable for the period subsequent to acquisition.