Market Expansion

Here's something you probably haven't heard from a banker in a while.

Keith Short, market president for IberiaBank in Lee, Collier and Monroe counties, says he's exploring several deals to finance speculative new-home construction in Collier County.

“The inventory is getting pretty thin in some areas,” Short reasons. “You've got to pick the right players.”

That's indicative of how things have turned around since IberiaBank acquired Naples-based Orion Bank and Sarasota-based Century Bank from the Federal Deposit Insurance Corp. after regulators shut them down in November 2009. Even today, 40% of Orion's loans and 48% of Century's loans are delinquent, according to a recent investor presentation by IberiaBank.

Fortunately for Short, he can focus on growing the bank's Southwest Florida operations because the bad loans from the failed institutions have been segregated and handed over to a special division at the bank. That division has separate accounting and auditing functions. “They report to the credit side of the bank,” Short says.

In some cases, IberiaBank has as long as 10 years to work out some of the bad loans from Orion and Century in a loss-share agreement with the FDIC. Combined, Orion and Century's losses are projected to total $882 million and the FDIC will cover most of these losses, according to IberiaBank investor presentations.

Meanwhile, Short's mandate is to grow and use the deposits to make loans. “We're seeing more loans this year, commercial and consumer,” he says. The bank is planning on a small-business lending initiative soon, he says.

Still, even if they're credit-worthy, many customers are reluctant to take on debt because of the political and economic uncertainties. “Small businesses and individuals are cautious and conservative,” Short says.

For now, most of the opportunities are taking business from competitors because the economy hasn't turned around as meaningfully as bankers had thought it would by now. The bank doesn't disclose loan volume by county or metro area.

IberiaBank also has been recruiting from rivals to strengthen its staff in Southwest Florida. For example, it recently hired former Naples-based TIB Bank veterans David Gordley to lead the commercial banking group in Naples and Paul Belfore to lead its private-banking efforts.

One of the areas of growth has been wealth management and trust services. IberiaBank acquired Bank of Florida Trust Company in June, a non-deposit trust company based in Naples with $415 million assets under management. The trust company had once been part of the Bank of Florida holdings that included three banks that failed in the recent downturn. IberiaBank acquired Bank of Florida Trust Company for an initial $700,000, plus a contingency payment of $700,000 to be paid in June 2012 based on meeting revenue goals.

Wealth management and trust services are among the priorities for IberiaBank to diversify income. Traditionally, banks make money with loans, but low rates and stiff competition have pressured interest income. So banks in recent years have been seeking new ways to make money from non-interest income sources such as wealth management.

Short says wealth management and loan officers all report to him, so that he can provide customers with a range of shared services. What's more, Short says there are opportunities to help customers who have worked out their loan issues with credit officers laboring over the Orion problems. “I've got clients in that bucket that I want,” he says.

IberiaBank continues to seek opportunities for bank acquisitions, but it's as cautious as its customers. “We are still in the mode for failed-bank opportunities,” Short says. However, he notes that there are opportunities to acquire existing banks that aren't in danger of being shut down by government regulators.

Short says he'd like to beef up IberiaBank's presence in Lee County and fill in the gap between Sarasota and Bradenton. “We don't want to be heavy in any particular area,” he says. IberiaBank currently ranks fifth in total deposits in the Naples area with $623 million and sixth in the Sarasota area with $706 million.