IBERIABANK CORP (Form: 10-Q, Received: 05/11/2009 13:27:26)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

Commission File Number 0-25756

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 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

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 ¨ No ¨

At April 30, 2009, the Registrant had 16,032,555 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)	3
	Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008	3
	Consolidated Statements of Income for the three months ended March 31, 2009 and 2008	4
	Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2009 and 2008	5
	Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008	6
	Notes to Unaudited Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	35

Part II.	Other Information

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3.	Defaults Upon Senior Securities	37

Item 4.	Submission of Matters to a Vote of Security Holders	37

Item 5.	Other Information	37

Item 6.	Exhibits	38

Signatures		39

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

IBERIABANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share data)


	(unaudited) March 31, 2009			December 31, 2008
Assets
Cash and due from banks	$	88,010		$	159,716
Interest-bearing deposits in banks		75,351			186,149

Total cash and cash equivalents		163,361			345,865
Securities available for sale, at fair value		929,131			828,743
Securities held to maturity, fair values of $89,158 and $60,950, respectively		88,832			60,733
Mortgage loans held for sale		81,077			63,503
Loans, net of unearned income		3,757,959			3,744,402
Allowance for loan losses		(41,662	)		(40,872	)

Loans, net		3,716,297			3,703,530
Premises and equipment, net		131,235			131,404
Goodwill		236,761			236,761
Other assets		201,379			212,687

Total Assets	$	5,548,073		$	5,583,226


Liabilities
Deposits:
Noninterest-bearing	$	580,607		$	620,637
Interest-bearing		3,552,873			3,375,179

Total deposits		4,133,480			3,995,816
Short-term borrowings		142,149			208,213
Long-term debt		544,138			568,479
Other liabilities		72,720			76,510

Total Liabilities		4,892,487			4,849,018


Shareholders’ Equity
Preferred stock, $1 par value—90,000,000 shares issued and outstanding in 2008		—			87,779
Common stock, $1 par value—25,000,000 shares authorized; 17,676,659 shares issued		17,677			17,677
Additional paid-in-capital		471,909			474,209
Retained earnings		219,137			218,818
Accumulated other comprehensive income		19,979			12,294
Treasury stock at cost—1,653,941 and 1,773,939 shares, respectively		(73,116	)		(76,569	)

Total Shareholders’ Equity		655,586			734,208

Total Liabilities and Shareholders’ Equity	$	5,548,073		$	5,583,226

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

IBERIABANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(dollars in thousands, except per share data)


	For The Three Months Ended March 31,
	2009			2008
Interest and Dividend Income
Loans, including fees	$	48,498		$	54,915
Mortgage loans held for sale, including fees		982			798
Investment securities:
Taxable interest		9,608			9,168
Tax-exempt interest		1,004			957
Other		229			1,472

Total interest and dividend income		60,321			67,310


Interest Expense
Deposits		17,844			25,585
Short-term borrowings		387			2,702
Long-term debt		5,803			6,197

Total interest expense		24,034			34,484

Net interest income		36,287			32,826
Provision for loan losses		3,032			2,695

Net interest income after provision for loan losses		33,255			30,131


Noninterest Income
Service charges on deposit accounts		5,272			5,114
ATM/debit card fee income		1,714			1,407
Income from bank owned life insurance		713			742
Gain on sale of loans, net		8,529			11,348
Title income		4,479			4,510
Broker commissions		1,214			1,290
Other income		1,809			1,875

Total noninterest income		23,730			26,286


Noninterest Expense
Salaries and employee benefits		24,228			20,918
Occupancy and equipment		5,632			5,330
Franchise and shares tax		680			611
Communication and delivery		1,597			1,688
Marketing and business development		785			859
Data processing		1,558			1,423
Printing, stationery and supplies		479			500
Amortization of acquisition intangibles		622			575
Professional services		1,276			1,111
Other expenses		6,935			3,781

Total noninterest expense		43,792			36,796

Income before income tax expense		13,193			19,621
Income tax expense		4,048			6,266

Net Income	$	9,145		$	13,355

Preferred Stock Dividends		(3,350	)		—

Earnings Available to Common Shareholders—Basic	$	5,795		$	13,355

Earnings Allocated to Unvested Restricted Stock		(169	)		(387	)

Earnings Available to Common Shareholders—Diluted	$	5,626		$	12,968

Earnings per common share—Basic	$	0.36		$	1.04

Earnings per common share—Diluted	$	0.36		$	1.02

Cash dividends declared per common share	$	0.34		$	0.34

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

IBERIABANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (unaudited)

(dollars in thousands, except share and per share data)


	Preferred Stock			Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income			Treasury Stock			Total
Balance, December 31, 2007	$	—		$	14,800	$	361,746		$	197,911		$	5,725		$	(82,123	)	$	498,059
Cumulative effect adjustment -Adoption of EITF 06-4										(71	)								(71	)

Balance after adjustment, December 31, 2007		—			14,800		361,746			197,840			5,725			(82,123	)		497,988
Comprehensive income:
Net income										13,355									13,355
Change in unrealized gain on securities available for sale, net of taxes													3,076						3,076
Change in fair value of derivatives used for cash flow hedges, net of taxes													(310	)					(310	)

Total comprehensive income																			16,121
Cash dividends declared, $.34 per share							(45	)		(4,374	)								(4,419	)
Reissuance of treasury stock under management incentive plans, net of shares surrendered in payment, including tax benefit, 56,268 shares							111									629			740
Common stock issued for vested restricted stock, net of shares forfeited							(1,142	)								1,142			—
Share-based compensation cost							1,218												1,218
Equity activity of joint venture							10												10

Balance, March 31, 2008	$	—		$	14,800	$	361,898		$	206,821		$	8,491		$	(80,352	)	$	511,658


Balance, December 31, 2008	$	87,779		$	17,677	$	474,209		$	218,818		$	12,294		$	(76,569	)	$	734,208

Comprehensive income:
Net income										9,145									9,145
Change in unrealized gain on securities available for sale, net of taxes													3,426						3,426
Change in fair value of derivatives used for cash flow hedges, net of taxes													4,259						4,259

Total comprehensive income																			16,830
Cash dividends declared, $.34 per share							16			(5,448	)								(5,432	)
Preferred stock dividend and accretion		99								(3,350	)								(3,251	)
Preferred stock redeemption		(87,878	)																(87,878	)
Reissuance of treasury stock under incentive compensation plans, net of shares surrendered in payment, including tax benefit, 13,450 shares							(238	)								(21	)		(259	)
Common stock issued for recognition and retention plan, net of shares forfeited							(3,474	)								3,474			—
Share-based compensation cost							1,396												1,396
Equity activity of joint venture										(28	)								(28	)

Balance, March 31, 2009	$	—		$	17,677	$	471,909		$	219,137		$	19,979		$	(73,116	)	$	655,586

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

IBERIABANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(dollars in thousands)


	For The Three Months Ended March 31,
	2009			2008
Cash Flows from Operating Activities
Net income	$	9,145		$	13,355

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,850			3,124
Provision for loan losses		3,032			2,695
Share-based compensation expense		1,396			1,218
Loss (Gain) on sale of assets		2			(1	)
Gain on sale of credit card receivables		—			(6,901	)
Gain on sale of investments		(3	)		(25	)
Amortization of premium/discount on investments		236			(344	)
Derivative (gains) losses on swaps		(57	)		303
Mortgage loans held for sale
Originations and transfers		(419,055	)		(248,221	)
Proceeds from sales		410,010			230,232
Gain on sale of loans, net		(8,529	)		(4,446	)
Cash retained from tax benefit associated with share-based payment arrangements		(17	)		(338	)
Other operating activities, net		11,454			1,944

Net Cash (Used in) Provided by Operating Activities		10,464			(7,405	)


Cash Flows from Investing Activities
Proceeds from sales of securities available for sale		—			12,369
Proceeds from maturities, prepayments and calls of securities available for sale		69,260			86,181
Purchases of securities available for sale		(164,635	)		(133,352	)
Proceeds from maturities, prepayments and calls of securities held to maturity		85,821			2,898
Purchases of securities held to maturity		(112,901	)		(3,017	)
Proceeds from sale of loans		—			37,402
(Increase) Decrease in loans receivable, net, excluding sale of credit card receivables		(19,905	)		(30,250	)
Proceeds from sale of premises and equipment		2			1
Purchases of premises and equipment		(1,821	)		(801	)
Proceeds from disposition of real estate owned		3,142			3,113
Cash paid in excess of cash received in acquisition		—			(5,208	)
Other investing activities, net		(2,599	)		962

Net Cash Used in Investing Activities		(143,636	)		(29,702	)


Cash Flows from Financing Activities
Increase in deposits		137,664			326,299
Net change in short-term borrowings		(66,064	)		(248,550	)
Proceeds from long-term debt		—			107,800
Repayments of long-term debt		(24,050	)		(4,697	)
Dividends paid to shareholders		(5,407	)		(4,343	)
Preferred stock dividend paid		(3,350	)		—
Proceeds from issuance of treasury stock for stock options exercised		333			696
Payments to repurchase common stock		(597	)		(341	)
Redemption of preferred stock		(87,878	)
Cash retained from tax benefit associated with share-based payment arrangements		17			338

Net Cash (Used in) Provided by Financing Activities		(49,332	)		177,202


Net (Decrease) Increase In Cash and Cash Equivalents		(182,504	)		140,095
Cash and Cash Equivalents at Beginning of Period		345,865			123,105

Cash and Cash Equivalents at End of Period	$	163,361		$	263,200


Supplemental Schedule of Noncash Activities
Acquisition of real estate in settlement of loans	$	4,070		$	3,315

Exercise of stock options with payment in company stock	$	—		$	156


Supplemental Disclosures
Cash paid for:
Interest on deposits and borrowings	$	25,292		$	34,214

Income taxes, net	$	5,819		$	513

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

IBERIABANK CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. These interim financial statements should be read in conjunction with the audited financial statements and note disclosures for IBERIABANK Corporation (“the Company”) previously filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

The consolidated financial statements include the accounts of IBERIABANK Corporation and its wholly owned subsidiaries: IBERIABANK, Pulaski Bank and Trust Company (“Pulaski Bank”), and Lenders Title Company (“LTC”). All significant intercompany balances and transactions have been eliminated in consolidation. The Company offers commercial and retail banking products and services to customers throughout locations in three states through IBERIABANK and Pulaski Bank. The Company also operates mortgage production offices in eight states through Pulaski Bank’s subsidiary, Pulaski Mortgage Company (“PMC”) and offers a full line of title insurance and closing services throughout Arkansas and Louisiana through LTC and its subsidiaries.

All normal, recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the financial statements, have been included. The preparation of financial statements in conformity with generally accepted accounting principles 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 loan losses, valuation of goodwill, intangible assets and other purchase accounting adjustments and share-based compensation.

Note 2 – Change in Accounting Principle – Earnings Per Share

In June 2008, the Financial Accounting Standards Board (“FASB”) issued FASB EITF No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities . EITF 03-6-1 clarifies share-based payment awards that entitle holders to receive non-forfeitable dividends before vesting should be considered participating securities and thus included in the calculation of basic earnings per share. Effective January 1, 2009, these awards are now included in the calculation of basic earnings per share under the two-class method, a change that reduces both basic and diluted earnings per share. The two-class method allocates earnings for the period between common shareholders and other security holders. The participating awards receiving dividends will be allocated the same amount of income as if they were outstanding shares. All prior period earnings per share data presented have been adjusted retrospectively to conform to the provisions of the principle. Previously, the Company included unvested share payment awards in the calculation of diluted earnings per share under the treasury stock method.

The following table presents the effect the adoption of EITF No. 03-6-1 has on affected financial statement line items, weighted average shares outstanding, and per share amounts for the three months ended March 31, 2009 and 2008. Adoption had no effect on the Company’s retained earnings or other components of equity.


	For the Three Months Ended March 31,
	2009					2008
	Two-class method			Treasury stock method		Two-class method			Treasury stock method
Income available to common shareholders	$	5,795,000		$	5,795,000	$	13,355,000		$	13,355,000
Distributed and undistributed earnings to unvested restricted stock		(170,000	)		—		(415,000	)		—

Distributed and undistributed earnings to common shareholders – Basic ⁽¹⁾		5,625,000			5,795,000		12,940,000			13,355,000
Undistributed earnings reallocated to unvested restricted stock		1,000			—		28,000			—

Distributed and undistributed earnings to common shareholders – Diluted	$	5,626,000		$	5,795,000	$	12,968,000		$	13,355,000

Weighted average shares outstanding- Basic		15,928,634			15,505,829		12,778,373			12,413,477
Weighted average shares outstanding- Diluted		15,728,518			15,776,120		12,687,799			12,737,599

Earnings per common share – Basic ⁽¹⁾	$	0.36		$	0.37	$	1.04		$	1.08
Earnings per common share – Diluted	$	0.36		$	0.37	$	1.02		$	1.05
Earnings per unvested restricted stock share – Basic ⁽² ⁾	$	0.40			N/A	$	1.14			N/A
Earnings per unvested restricted stock share – Diluted	$	0.40			N/A	$	1.06			N/A

(1)	Total earnings available to common shareholders include distributed earnings of $5,288,000, or $0.34 per weighted average share, and undistributed earnings of $337,000, or $0.02 per weighted average share under the two-class method for the three months ended March 31, 2009.

(2)	Total earnings available to unvested restricted stock include distributed earnings of $160,000, or $0.38 per weighted average share, and undistributed earnings of $10,000, or $0.02 per weighted average share, under the two-class method for the three months ended March 31, 2009 ^.

For the three months ended March 31, 2009 and 2008, the calculations for basic shares outstanding exclude: (a) the weighted average shares owned by the Recognition and Retention Plan (“RRP”) of 447,567 and 410,090, respectively; and (b) the weighted average shares purchased in Treasury Stock of 1,702,239 and 1,976,192 respectively.

The effect from the assumed exercise of 765,805 and 688,725 stock options was not included in the computation of diluted earnings per share for the quarters ended March 31, 2009 and 2008, respectively, because such amounts would have had an antidilutive effect on earnings per share.

Note 3 – Acquisition Activity

Kingdom Capital Management, Inc.

The Company acquired Kingdom Capital Management, Inc. (“Kingdom Capital”) on January 7, 2008. Kingdom Capital provides comprehensive fee-based private wealth management services in New Orleans, Louisiana for private banking clients, pension funds, corporations, and trusts. Upon acquisition, Kingdom Capital began doing business as IBERIABANK Asset Management, Inc. (“IAM”). The transaction had a total value of $650,000.

Allocation of the purchase price resulted in goodwill of $631,000 and net assets of $19,000.

American Abstract and Title Company

The Company acquired American Abstract and Title Company (“AAT”) on March 2, 2008. AAT operates 2 offices in Arkansas. The transaction had a total value of $5,000,000. Additional consideration will be paid should AAT meet certain revenue thresholds. The contingency period is 5 years and could result in maximum additional consideration of $500,000. AAT operates as a subsidiary of LTC.

Allocation of the purchase price resulted in goodwill of $4,953,000 and other assets of $47,000.

ANB Financial, N.A.

On May 9, 2008, Pulaski Bank entered into a Purchase and Assumption Agreement (the “Agreement”) with the Federal Deposit Insurance Corporation (“FDIC”), as receiver of ANB Financial, N.A., Bentonville, Arkansas (“ANB”). Pulaski Bank currently operates eight former ANB offices in Northwest Arkansas.

Pulaski advanced $45,863,000 in cash to the FDIC in partial settlement of the difference between the amount of assets purchased by Pulaski Bank and deposits and other liabilities assumed, less the premium to be paid by Pulaski Bank in the transaction.

The assets of ANB purchased by Pulaski Bank include $180,046,000 in cash, including fed funds and deposits with the Federal Reserve, $44,923,000 of investment securities, all of which are U.S. Treasury and agency securities, $1,945,000 of loans secured by deposits, and $194,000 of accrued interest. Pulaski Bank also acquired $12,874,000 in premises, furniture, fixtures, and equipment associated with these offices.

Pulaski Bank assumed $189,708,000 in insured deposits associated with this transaction. Insured deposits include public fund deposits to the extent those deposits were properly secured and exclude brokered and uninsured deposits. In association with this transaction, Pulaski Bank paid a deposit premium of $1,865,000. Pulaski Bank also assumed certain liabilities, primarily accrued interest payable of $512,000 on deposits.

The assets purchased and liabilities assumed in the ANB transaction are subject to adjustment up to the settlement date to reflect the actual book value of the assets and liabilities acquired. The settlement date of the transaction was to be 180 days after the closing date, but has been extended by the FDIC.

The FDIC has generally agreed to indemnify Pulaski Bank against all costs, losses, liabilities, and expenses, including legal fees, incurred in connection with certain third party claims that may be brought against Pulaski Bank based on liabilities of ANB that were not assumed by Pulaski Bank under the Agreement. Pulaski Bank has agreed to indemnify the FDIC against certain costs, losses, liabilities and expenses, including legal fees, incurred in connection with certain third party claims that may be brought against the FDIC based on liabilities or obligations of ANB that were assumed by Pulaski Bank under the Agreement.

Pulaski Bank paid deposit processing fees to the FDIC of $177,000 during 2008. In addition, the Company paid additional merger-related expenses during the second and third quarters of 2008 of $2,303,000 including salaries and personnel costs of temporary employees, travel expenses, and legal and professional services. These fees and other costs were expensed as incurred.

The results of operations of the acquired companies subsequent to the acquisition dates are included in the Company’s consolidated statements of income. The effect of the acquisitions of IAM, AAT, and ANB would not have had a material effect on the consolidated results of the Company for the three months ended March 31, 2008.

Note 4 – Share-based Compensation

The Company has various types of share-based compensation plans. These plans are administered by the Compensation Committee of the Board of Directors, which selects persons eligible to receive awards and determines the number of shares and/or options subject to each award, the terms, conditions and other provisions of the awards. See Note 15 of the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 for additional information related to these share-based compensation plans.

The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised), Share-Based Payment (“SFAS No. 123(R)”) utilizing the modified prospective method. The Company reported $17,000 and $338,000 of excess tax benefits as financing cash inflows during the first three months of 2009 and 2008, respectively. Net cash proceeds from the exercise of stock options were $333,000 and $696,000 for the three months ended March 31, 2009 and 2008, respectively.

Stock Option Plans

The Company uses the Black-Scholes option pricing model to estimate the fair value of share-based awards with the following weighted-average assumptions for the indicated periods.


	For the Three Months Ended
	March 31, 2009			March 31, 2008
Expected dividends		2.1	%		2.0	%
Expected volatility		24.1	%		23.7	%
Risk-free interest rate		4.5	%		4.7	%
Expected term (in years)		7.0			7.0
Weighted-average grant-date fair value	$	15.57		$	15.83

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.

At March 31, 2009, there was $3,301,000 of unrecognized compensation cost related to stock options which is expected to be recognized over a weighted-average period of 4.8 years.

The following table represents the compensation expense that is included in salaries and employee benefits expense in the accompanying consolidated statements of income related to stock options for the periods indicated below.

The following table represents stock option activity for the three months ended March 31, 2009.


	Number of shares		Weighted average exercise price		Weighted average remaining contract life
Outstanding options, December 31, 2008	1,357,741		$	39.35
Granted	—			—
Exercised	(13,450	)		12.89
Forfeited or expired	(1,786	)		58.50

Outstanding options, March 31, 2009	1,342,505		$	39.59	4.8 Years

Outstanding exercisable, March 31, 2009	1,119,773		$	36.18	4.3 Years

There were 251,270 shares available for future stock option grants to employees and directors under existing plans at March 31, 2009. At March 31, 2009, the aggregate intrinsic value of shares underlying outstanding stock options and exercisable stock options was $10,434,000 and $10,433,000, respectively. The total intrinsic value of options exercised was $77,000 for the three months ended March 31, 2009.

Restricted Stock Plans

The share-based compensation plans allow for the issuance of restricted stock awards that may not be sold or otherwise transferred until certain restrictions have lapsed. The unearned share-based compensation related to these awards is being amortized to compensation expense over the vesting period (generally three to seven years). The share-based compensation expense for these awards was 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, amortized over the vesting period. As of March 31, 2009, unearned share-based compensation associated with these awards totaled $21,602,000.

The following table represents the compensation expense that was included in salaries and employee benefits expense in the accompanying consolidated statements of income related to restricted stock grants for the periods indicated below.


	For the Three Months Ended
(dollars in thousands)	March 31, 2009		March 31, 2008
Compensation expense related to restricted stock	$	1,118	$	928

The following table represents unvested restricted stock activity for the periods indicated.


	For the three months ended
	March 31, 2009		March 31, 2008
Balance, beginning of year	414,788		401,917
Granted	117,832		54,450
Forfeited	(4,567	)	(3,370	)
Earned and issued	(57,596	)	(53,706	)

Balance, end of period, respectively	470,457		399,291

Phantom Stock Awards

As part of the 2008 Incentive Compensation Plan, the Company issues phantom stock awards to certain key officers and employees.

The following table represents share and dividend equivalent share award activity during the three months ended March 31, 2009.


	Number of share equivalents	Dividend equivalents	Total share equivalents	Value of share equivalents ⁽¹⁾
Balance, December 31, 2007	—	—	—		—
Granted	200	1	201	$	9,000
Forfeited share equivalents	—	—	—		—
Vested share equivalents	—	—	—

Balance, March 31, 2008	200	1	201	$	9,000


Balance, December 31, 2008	34,947	402	35,349	$	1,624,000
Granted	5,000	299	5,299		243,000
Forfeited share equivalents	—	—	—		—
Vested share equivalents	—	—	—		—

Balance, March 31, 2009	39,947	701	40,648	$	1,867,000

(1)	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 $45.94 and $44.25 on March 31, 2009 and 2008, respectively.

During the three months ended March 31, 2009, the Company recorded $46,000 in compensation expense based on the number of share equivalents vested at year-end and the current market price of $45.94 per share of common stock. There were no awards vested during the three months ended March 31, 2009 according to the vesting provisions of the plan and thus no cash payments were made to award recipients.

Note 5 – Goodwill and Other Intangible Assets

The Company accounts for goodwill and other intangible assets in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. Under these rules, goodwill and other intangible assets deemed to have indefinite lives, such as title plant assets, are not amortized, but are subject to annual impairment tests. Other intangible assets are amortized over their useful lives. The Company will perform its annual impairment test during the fourth quarter of 2009. The impairment test in 2008 indicated no impairment of the Company’s recorded goodwill. Management is not aware of any events or changes in circumstances since the previous impairment test that would indicate that goodwill might be impaired.

The Company had title plant assets totaling $6,722,000 and $6,714,000 at March 31, 2009 and 2008, respectively. Management performed its annual impairment test for its title plant assets as of October 1, 2008. The test indicated no impairment of its recorded title plant assets. Management is not aware of any events or changes in circumstances since the test of the title plant assets that would indicate the assets might be impaired.

The Company records other intangible assets that consist of core deposit intangibles, mortgage servicing rights, non-compete agreements, and title plants.

The following table summarizes the Company’s intangible assets subject to amortization.


	March 31, 2009						March 31, 2008
(dollars in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Core deposit intangibles	$	24,790	$	9,218	$	15,572	$	22,925	$	6,764	$	16,161
Non-compete agreements		18		13		5		18		7		11
Mortgage servicing rights		263		22		241		218		194		24

Total	$	25,071	$	9,253	$	15,818	$	23,161	$	6,965	$	16,196

The amortization expense related to core deposit intangibles for the three months ended March 31, 2009 and 2008 was $622,000 and $575,000, respectively.

Note 6 – Fair Value Measurements

On January 1, 2008, the Company adopted the provisions of SFAS No. 157, Fair Value Measurement and SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities . SFAS No. 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the inputs used to develop those assumptions and measure fair value. The hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

•

Level 1 — Quoted prices in active markets for identical assets or liabilities.

•

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

A description of the valuation methodologies used for instruments measured at fair value follows, as well as the classification of such instruments within the valuation hierarchy.

Securities available for sale

Securities are classified within Level 1 where quoted market prices are available in an active market. Inputs include securities that have quoted prices in active markets for identical assets. If quoted market prices are unavailable, fair value is estimated using pricing models or quoted prices of securities with similar characteristics, at which point the securities would be classified within Level 2 of the hierarchy. Examples may include certain collateralized mortgage and debt obligations. The Company’s current portfolio does not include Level 3 securities as of March 31, 2009.

Mortgage loans held for sale

As of March 31, 2009, the Company has $81,077,000 of agency-conforming loans held for sale. Mortgage loans originated and held for sale are carried at the lower of cost or estimated fair value. The Company obtains quotes or bids on these loans directly from purchasing financial institutions. Typically these quotes include a premium on the sale and thus these quotes indicate the fair value of the held for sale loans is greater than cost. At March 31, 2009, the entire balance of $81,077,000 is recorded at cost.

Impaired Loans

Loans are measured for impairment using the methods permitted by SFAS No. 114, Accounting by Creditors for Impairment of a Loan . Fair value of impaired loans is measured by either the loans obtainable market price, if available (Level 1), the fair value of the collateral if the loan is collateral dependent (Level 2), or the present value of expected future cash flows, discounted at the loans effective interest rate (Level 3). Fair value of the collateral is determined by appraisals or independent valuation.

Other Real Estate Owned (OREO)

As of March 31, 2009, the Company has $16,028,000 in OREO and foreclosed property, which includes all real estate, other than bank premises used in bank operations, owned or controlled by the Company, including real estate acquired in settlement of loans. Properties are recorded at the balance of the loan or at estimated fair value less estimated selling costs, whichever is less, at the date acquired. Fair values of OREO at March 31, 2009 are determined by sales agreement or appraisal, and costs to sell are based on estimation per the terms and conditions of the sales agreement. Inputs include appraisal values on the properties or recent sales activity for similar assets in the property’s market, and thus OREO measured at fair value would be classified within Level 2 of the hierarchy.

Derivative Financial Instruments

The Company utilizes interest rate swap agreements to convert a portion of its variable-rate debt to a fixed rate (cash flow hedge). For derivatives designated as hedging the exposure to changes in the fair value of an asset or liability (fair value hedge), the gain or loss is recognized in earnings in the period of change, together with the offsetting gain or loss to the hedged item attributable to the risk being hedged. Earnings will be affected to the extent to which the hedge is not effective in achieving offsetting changes in fair value. For derivatives designated as hedging exposure to variable cash flows of a forecasted transaction (cash flow hedge), the effective portion of the derivative’s gain or loss 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. For derivatives that are not designated as hedging instruments, changes in the fair value of the derivatives are recognized in earnings immediately.

In applying hedge accounting for derivatives, the Company establishes 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.

Changes in the fair value of interest rate swaps associated with the Company’s trust preferred securities are recorded as noninterest income. Fair value is estimated using pricing models of derivatives with similar characteristics, at which point the derivatives are classified within Level 2 of the hierarchy.

The Company enters into commitments to originate loans whereby the interest rate on the prospective loan is determined prior to funding (“rate lock commitments”). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value as derivative assets or liabilities, with changes in fair value recorded in net gain or loss on sale of mortgage loans. Fair value of the interest rate lock commitments are estimated using pricing models of financial instruments with similar characteristics, and thus the commitments are classified within Level 2 of the fair value hierarchy.

The Company’s adoption of SFAS No. 157 did not have a material impact on its consolidated financial statements. 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 determine the fair value at the measurement date in the table below.

Recurring Basis


	March 31, 2009		Fair Value Measurements at March 31, 2009
(dollars in thousands) Description	March 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Using Significant Unobservable Inputs (Level 3)
Assets
Available -for-sale securities	$	929,131	$	39,982	$	889,149	$	—
Derivative instruments		25,072		—		25,072		—

Total	$	954,203	$	39,982	$	914,221	$	—


Liabilities
Derivative instruments	$	19,698	$	—	$	19,698	$	—

Total	$	19,698	$	—	$	19,698	$	—

Gains and losses (realized and unrealized) included in earnings (or changes in net assets) for the first three months of 2009 are reported in noninterest income or other comprehensive income as follows:


(dollars in thousands)	Noninterest income		Other comprehensive income
Total gains (losses) included in earnings (or changes in net assets)	$	64	$	—

Change in unrealized gains or losses relating to assets still held at March 31, 2009	$	—	$	7,684

The Company has segregated all financial assets and liabilities that are measured at fair value on a nonrecurring 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 table below.

Nonrecurring Basis


	March 31, 2009		Fair Value Measurements at March 31, 2009
(dollars in thousands) Description	March 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Using Significant Unobservable Inputs (Level 3)
Assets
Impaired Loans	$	9,186	$	—	$	9,186	$	—

Total	$	9,186	$	—	$	9,186	$	—

In accordance with the provisions of FASB Statement No. 114, Accounting by Creditors for Impairment of a Loan , the Company records loans considered impaired at their 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 fair value of the collateral for collateral-dependent loans. Impaired loans with a carrying amount of $10,064,000 were recorded at their fair value at March 31, 2009.

The Company did not record any liabilities at fair value for which measurement of the fair value was made on a nonrecurring basis during the three months ended March 31, 2009.

SFAS No. 159 provides the Company with an option to report selected financial assets and liabilities at fair value. The fair value option established by this Statement permits the Company to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each reporting date subsequent to implementation.

The Company has currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with accounting principles generally accepted in the United States, and as such has not included any gains or losses in earnings for the three month period ended March 31, 2009.

Note 7 – Derivative Financial Instruments

In the course of its business operations, the Company is exposed to certain risks, including interest rate, liquidity, and credit risk. The Company manages its risks through the use of derivative financial instruments, primarily through management of exposure due to the receipt or payment of future cash amounts based on interest rates. The Company’s derivative financial instruments manage the differences in the timing, amount, and duration of expected cash receipts and payments.

The Company accounts for its derivative financial instruments in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 133, Accounting for Derivative Instruments and Hedging Activities , which requires that all derivatives be recognized as assets or liabilities in the balance sheet at fair value.

The primary types of derivatives used by the Company include interest rate swap agreements and interest rate lock commitments.

Interest Rate Swap Agreements

As part of its activities to manage interest rate risk due to interest rate movements, the Company has engaged in interest rate swap transactions to manage exposure to interest rate risk through modification of the Company’s net interest sensitivity to levels deemed to be appropriate. The Company utilizes these interest rate swap agreements to convert a portion of its variable-rate debt to a fixed rate (cash flow hedge). The notional amount on which the interest payments are based is not exchanged. The Company had notional amounts of $110,000,000 and $45,000,000 in derivative contracts on its debt at March 31, 2009 and 2008, respectively.

In addition to using derivative instruments as an interest rate risk management tool, the Company also enters into derivative instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with these customer contracts, the Company enters into offsetting derivative contract positions. The Company manages its credit risk, or potential risk of default by its commercial customers, through credit limit approval and monitoring procedures. At March 31, 2009, the Company had notional amounts of $131,341,000 on interest rate contracts with corporate customers and $131,341,000 in offsetting interest rate contracts with other financial institutions to mitigate the Company’s rate exposure on its corporate customers’ contracts.

Because the swap agreements used to manage interest rate risk have been designated as hedging exposure to variable cash flows of a forecasted transaction, the effective portion of the derivative’s gain or loss 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.

For interest rate swap agreements that are not designated as hedging instruments, changes in the fair value of the derivatives are recognized in earnings immediately. There is only one interest rate swap agreement that currently is not designated as a hedging instrument. The Company determined that based upon SFAS No. 133 guidance available at the time of the agreement, the “short-cut” method was an appropriate accounting method because the terms of the interest rate swaps and the corresponding debt matched and, as a result, the Company assumed no ineffectiveness in the hedging relationships. Based on technical interpretations of SFAS No. 133, the Company determined that the swaps did not qualify for hedge accounting under the short-cut method. Accordingly, the Company revised its method of accounting for the swaps, and changes in the fair value of these swaps are now recorded as noninterest income. The derivative had a notional amount of $10,000,000 at March 31, 2009 and 2008.

Rate Lock Commitments

The Company enters into commitments to originate loans whereby the interest rate on the prospective loan is determined prior to funding (“rate lock commitments”). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value as derivative assets or liabilities, with changes in fair value recorded in net gain or loss on sale of mortgage loans. The fair value of rate lock commitments was immaterial during the first three months of 2009 and 2008.

At March 31, the information pertaining to outstanding derivative instruments is as follows.


	Balance Sheet Location	Asset Derivatives				Balance Sheet Location	Liability Derivatives
		2009		2008			2009		2008
(dollars in thousands)		Fair Value					Fair Value
Derivatives designated as hedging instruments under Statement 133
Interest rate contracts	Other assets	$	25,071	$	7,294	Other liabilities	$	19,557	$	7,993

Total derivatives designated as hedging instruments under Statement 133		$	25,071	$	7,294		$	19,557	$	7,993

Derivatives not designated as hedging instruments under Statement 133
Interest rate contracts	Other assets		—		—	Other liabilities	$	139	$	226

Total derivatives not designated as hedging instruments under Statement 133			—		—		$	139	$	226

At March 31, 2009, the Company was not required to post collateral for any derivative transactions. 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 March 31, 2009. As permitted by FIN 39-1, 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.

At March 31, the information pertaining to the effect of the derivative instruments on the consolidated financial statements is as follows.


(dollars in thousands)	Amount of Gain (Loss) Recognized in OCI (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)				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)
Derivatives in Statement 133 Cash Flow Hedging Relationships	2009		2008				2009		2008			2009		2008
Interest rate contracts	$	3,584	$	(455	)	Interest income (expense)	$	—	$	—	Other income (expense)	$	—	$	—

Total	$	3,584	$	(455	)		$	—	$	—		$	—	$	—


(dollars in thousands)	Amount of Gain (Loss) Recognized in Income on Derivative					Location of Gain (Loss) Recognized in Income on Derivative
Derivatives Not Designated as Hedging Instruments under Statement 133	2009		2008
Interest rate contracts	$	62	$	(303	)	Other income (expense)

Total	$	62	$	(303	)

During the three months ended March 31, 2009, 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 March 31, 2009, the fair value of derivatives that will mature within the next twelve months is $326,000. The Company does not expect to reclassify any amount from accumulated other comprehensive income into interest income or expense over the next twelve months for derivatives that will mature over that time.

The following is a summary of the balance and changes in the accumulated derivative gain or loss included as a component of other comprehensive income as of and for the three month periods ended March 31.


*(dollars in thousands)*	2009			2008
Balance at beginning of year, net	$	(675	)	$	(144	)
Unrealized gain (loss) on cash flow hedges		6,552			(478	)
Tax effect		(2,293	)		167

Net of tax change		4,259			(311	)

Balance at end of year, net	$	3,584		$	(455	)

Note 8 – Off-Balance Sheet Activities

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby 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 same credit policies are used in these commitments as for on-balance sheet instruments. The Company’s exposure to credit loss in the event of nonperformance by the other parties is represented by the contractual amount of the financial instruments. At March 31, 2009, the fair value of guarantees under commercial and standby letters of credit was $276,000. This amount represents the unamortized fee associated with these guarantees and is included in the consolidated balance sheet of the Company. This fair value will decrease over time as the existing commercial and standby letters of credit approach their expiration dates and the total fair value of letters of credit may increase as new letters of credit are issued.

At March 31, 2009 and 2008, the Company had the following financial instruments outstanding, whose contract amounts represent credit risk.


	Contract Amount
(dollars in thousands)	2009		2008
Commitments to grant loans	$	156,583	$	121,494
Unfunded commitments under lines of credit		755,951		712,357
Commercial and standby letters of credit		27,586		21,137

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 deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty.

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. These lines-of-credit usually do not contain a specified maturity date and may not be drawn upon to the total extent to which the Company is committed.

The Company is subject to certain claims and litigation arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the ultimate disposition of these matters is not expected to have a material effect on the consolidated financial position or results of operations of the Company.

Note 9 – Redemption of Preferred Stock

On December 5, 2008, the Company completed the sale of 90,000 shares of its $1.00 par value, $1,000 liquidation value Fixed Rate Cumulative Perpetual Preferred Stock, Series A (“preferred stock”), to the U.S. Treasury as part of the announced Capital Purchase Program (“CPP”). The preferred shares included a 10-year warrant to purchase up to 138,490 shares of the Company’s common stock at an exercise price of $48.74 per share, for an aggregate purchase price of $6,750,000. The exercise price of the warrant and the market price for determining the number of shares of common stock subject to the warrant, were determined on the date of the preferred investment (calculated on a 20-trading day trailing average).

The fair value allocation of the $90,000,000 proceeds between the preferred shares and the warrant resulted in $87,779,000 allocated to the preferred shares and $2,221,000 allocated to the warrant. The issuance required the Company to pay the U.S. Treasury a 5.0% annual dividend on a quarterly basis, or $4,500,000 annually, for each of the first five years of the investment, and 9.0% thereafter.

On February 26, 2009, the Company announced it had filed notice to the U.S. Treasury that the Company would redeem all of the 90,000 outstanding shares of its preferred stock at a total redemption price of $90,575,000, which included the unpaid accrued dividend. On the March 31, 2009 redemption date, the Company paid $90,575,000 to the U.S. Treasury to redeem the preferred stock. At the time of payment, all rights of the Treasury, as the holder of the preferred stock, terminated. At the time of payment, the preferred stock had a carrying value of $87,843,000. The remaining $2,732,000 included an accrued dividend of $575,000 and an accelerated deemed dividend of $2,157,000. As a result, for the three months ended March 31, 2009, the dividend paid on the preferred shares totaled $3,350,000.

At March 31, 2009, the warrant continues to be immediately exercisable, in whole or in part, over a term of 10 years. The warrant continues to be included in the Company’s diluted average common shares outstanding in periods when the effect of its inclusion is dilutive to earnings per share. The final disposition of the warrant has not been finalized. Other than some minimal valuation expense, the Company does not believe that there will be material expense associated with the final disposition of the warrant.

Note 10 – Recent Accounting Pronouncements

On January 1, 2009, the Company prospectively adopted the provisions of SFAS 141(R), Business Combinations . Issued in December 2007, SFAS 141(R) impacts how entities apply the acquisition method to business combinations. Significant changes to how the Company accounts for business combinations under this Statement include 1) the acquisition date will be date the acquirer obtains control, 2) all identifiable assets acquired, liabilities assumed, and noncontrolling interests in the acquiree will be stated at fair value on the acquisition date, 3) assets or liabilities arising from noncontractual contingencies will be measured at their acquisition date fair value only if it is more likely than not that they meet the definition of an asset or liability on the acquisition date, 4) adjustments subsequently made to the provisional amounts recorded on the acquisition date will be made retroactively during a measurement period not to exceed one year, 5) acquisition-related restructuring costs that do not meet the criteria in SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities , will be expensed as incurred, 6) transaction costs will be expensed as incurred, 7) reversals of deferred income tax valuation allowances and income tax contingencies will be recognized in earnings subsequent to the measurement period, and 8) the allowance for loan losses of an acquiree will not be permitted to be recognized by the acquirer. Additionally, SFAS 141(R) requires additional disclosures regarding subsequent changes to acquisition-related contingencies, contingent consideration, noncontrolling interests, acquisition-related transaction costs, fair values and cash flows not expected to be collected for acquired loans, and goodwill valuation. Adoption of the provisions of SFAS 141(R) did not have any affect on the operating results, financial position, or liquidity of the Company.

On January 1, 2009, the Company adopted the provisions of SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB 51 . Issued in December 2007, SFAS 160 requires the Company to classify noncontrolling interests as a component of shareholders’ equity and subsequent changes in ownership interests in a Company subsidiary are accounted for as an equity transaction. SFAS 160 also requires the Company to recognize a gain or loss upon the loss of control of a subsidiary and to remeasure any ownership interest retained at fair value on that date. Additionally, SFAS 160 retrospectively

requires expanded disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. Adoption of the provisions of SFAS 160 did not have a material effect on the operating results, financial position, or liquidity of the Company.

In April 2009, the FASB issued FASB Staff Position (“FSP”) No. FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies . The FSP amends and clarifies SFAS 141(R), to address application issues on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. As issued, Statement 141(R) required that all contractual contingencies and all noncontractual contingencies that are more likely than not to give rise to an asset or liability be recognized at their acquisition date fair value. All noncontractual contingencies that do not meet the more-likely-than not criterion as of the acquisition date would be accounted for in accordance with other U.S. generally accepted accounting principles, as appropriate, including FASB Statement No. 5, Accounting for Contingencies . SFAS 141(R) required that when new information is obtained, a liability be measured at the higher of its acquisition-date fair value and the amount that would be recognized by applying Statement 5. FSP No. FAS 141(R)-1 clarified the guidance to state an acquirer shall recognize at fair value, at the acquisition date, an asset acquired or a liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the measurement period. The Company has adopted the provisions of this guidance effective January 1, 2009, and does not anticipate adoption will have a material effect on the operating results, financial position, or liquidity of the Company.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles , which identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements in conformity with generally accepted accounting principles. The Statement is effective 60 days following the Securities and Exchange Commission’s (“SEC”) approval of the Public Company Accounting Oversight Board amendments to AU Section 411. The Company will adopt the provisions of SFAS No. 162 when effective but does not anticipate adoption will have a material effect on the operating results, financial position, or liquidity of the Company.

In November 2008, the SEC issued a proposed roadmap regarding the potential use by U.S. issuers of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”). IFRS is a comprehensive series of accounting standards published by the International Accounting Standards Board (“IASB”). Under the proposed roadmap, the Company may be required to prepare financial statements in accordance with IFRS as early as 2014. The SEC will make a determination in 2011 regarding the mandatory adoption of IFRS. The Company is currently assessing the impact that this potential change would have on its operating results and financial condition, and will continue to monitor the development of the potential implementation of IFRS.

In April 2009, the FASB issued three final FSPs intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities.

FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, provides guidelines for making fair value measurements more consistent with the principles presented in FASB Statement No. 157, Fair Value Measurements. FSP FAS 157-4 relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales.

FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, increases the frequency of fair value disclosures. FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, provides additional guidance in accounting for and presenting impairment losses on investment securities. The FSP requires fair value disclosures for any financial instruments that are not currently reflected on the balance sheet of companies at fair value on a quarterly basis, providing qualitative and quantitative information about fair value estimates for financial instruments not measured on the balance sheet at fair value. Prior to issuing this FSP, fair values for these assets and liabilities were only disclosed once a year.

FSP FAS 115-2 and FAS 124-2 on other-than-temporary impairments clarify the timing of impairment recognition, and provide greater clarity about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. The FSP also requires increased disclosures regarding expected cash flows, credit losses, and an aging of securities with unrealized losses.

The FSPs are effective for interim and annual periods ending after June 15, 2009, but early adoption is permitted for interim or annual periods ending after March 15, 2009. Management is currently evaluating the effect the adoption of these FSPs will have on the financial condition and results of operations of the Company.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The purpose of this discussion and analysis is to focus on significant changes in the financial condition and results of operations of the Company during the three month period ended March 31, 2009. This discussion and analysis highlights and supplements information contained elsewhere in this Quarterly Report on Form 10-Q, particularly the preceding consolidated financial statements and notes. This discussion and analysis should be read in conjunction with the Company’s 2008 Annual Report on Form 10-K.

FORWARD-LOOKING STATEMENTS

To the extent that statements in this Form 10-Q 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 the use of the words “plan”, “believe”, “expect”, “intend”, “anticipate”, “estimate”, “project” or similar expressions. The Company’s actual strategies and results in future periods may differ materially from those currently expected due to various risks and uncertainties. Factors that may cause actual results to differ materially from these forward-looking statements include, but are not limited to, the risk factors described in Item 1A of the Company’s 2008 Annual Report on Form 10-K.

FIRST QUARTER OVERVIEW

The Company’s results of operations, financial condition, and liquidity were significantly impacted by the redemption on March 31, 2009 of the Company’s preferred stock held by the U.S. Treasury. On the redemption date, the Company paid $90.6 million to the U.S. Treasury to redeem the preferred stock and pay the accrued dividend. At the time of payment, the preferred stock had a value of $87.8 million. The remaining $2.7 million included an accrued dividend of $0.6 million and an accelerated deemed dividend of $2.1 million. As a result, for the three months ended March 31, 2009, the dividend paid on the preferred shares totaled $3.5 million, reducing income available to common shareholders by the same amount. For additional information, see Note 9 to the Company’s consolidated financial statements.

In addition to the preferred stock redemption, the Company’s results of operations were impacted by a change in accounting principle effective for the first quarter of 2009. In June 2008, the Financial Accounting Standards Board (“FASB”) issued FASB EITF No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities . EITF 03-6-1 clarifies share-based payment awards that entitle holders to receive non-forfeitable dividends before vesting should be considered participating securities and thus included in the calculation of basic earnings per share. Effective January 1, 2009, these awards are now included in the calculation of basic earnings per share under the “two-class” method, a change that reduces both basic and diluted earnings per share. The “two-class” method allocates earnings for the period between common shareholders and other security holders. All prior period earnings per share data presented have been adjusted retrospectively to conform to the provisions of the principle. As a result of the adoption, basic and diluted income per common share for the first quarter ended March 31, 2009 were $0.01 per share lower than they would have been under the previously-used “treasury stock” method of per share calculation. For the three months ended March 31, 2008, basic and diluted income per common share were $0.04 and $0.03 lower, respectively, under the current method than the previously reported method. Adoption had no effect on the Company’s retained earnings or other components of equity. For additional information, see Note 2 to the Company’s consolidated financial statements.

During the first quarter of 2009, the Company reported income available to common shareholders of $5.6 million, or $0.36 per common share on a diluted basis, representing a 56.6% decrease compared to net income available to common shareholders of $13.0 million earned for the first quarter of 2008. On a per share basis, this represents a 65.0% decrease from the $1.02 per diluted share earned for the first quarter of 2008.

Key components of the Company’s performance are summarized below.

•

Total assets at March 31, 2009 were $5.5 billion, a decrease of $35.2 million, or 0.6%, from $5.6 billion at December 31, 2008. The decrease is primarily the result of the preferred stock redemption in March 2009. The repayment of the preferred stock and the preferred stock dividend decreased cash by $90.6 million. The redemption was offset by the use of the proceeds from the Company’s common stock issuance in December 2008 to increase its investment securities and fund loan growth. In addition, a robust mortgage pipeline increased the Company’s held-for-sale mortgage loans $17.6 million, or 27.7%, during the first quarter of 2009.

•

The preferred stock redemption also impacted shareholders’ equity, as total shareholders’ equity decreased by $78.6 million, or 10.7%, from $734.2 million at December 31, 2008 to $655.6 million at March 31, 2009. The redemption was offset by net income of $9.1 million and other comprehensive income earned during the first three months of 2009 of $7.7 million.

•

Total loans at March 31, 2009 increased to $3.8 billion, a $13.6 million increase over December 31, 2008. The increase was spurred by commercial loan growth of $43.2 million, or 1.9%. Loan growth during the year was tempered by the continued compression of the Company’s mortgage loan portfolio. During the first three months of 2009, the mortgage loan portfolio decreased $25.9 million, or 4.8%.

•

Total customer deposits increased $137.7 million, or 3.4%, from $4.0 billion at December 31, 2008 to $4.1 billion at March 31, 2009. The increase was attributable to growth in the Company’s NOW and savings and money market products.

•

Net interest income increased $3.5 million, or 10.5%, for the three months ended March 31, 2009, compared to the same period of 2008. These increases were attributable to growth in both the IBERIABANK and Pulaski Bank loan portfolios, as well as the Company’s improved liquidity position. Because of the proceeds provided by the Company’s common and preferred stock issuances in late 2008, the Company was able to decrease its short-term borrowings, resulting in an 85.7% decrease in short-term interest expense from March 31, 2008. The corresponding net interest margin ratios on a tax-equivalent basis were 3.02% and 3.04% for the quarters ended March 31, 2009 and 2008, respectively.

•

Noninterest income decreased $2.6 million, or 9.7%, for the first quarter of 2009 as compared to the same period of 2008. The decrease in the current quarter is due to the sale of a portion of the Company’s credit card portfolio during the first quarter of 2008. The sale resulted in a gain of $6.9 million during the 2008 first quarter. Excluding the nonrecurring gain, noninterest income increased $4.3 million, or 16.3%. That increase was driven by additional service charges and fee income from the expanded customer base of the banks, as well as increased gains on the sale of mortgage loans due to the volume of activity in the first quarter of 2009.

•

Noninterest expense increased $7.0 million, or 19.0%, for the quarter ended March 31, 2009, as compared to the same quarter last year. The increase resulted primarily from higher salary and benefit costs of $3.3 million as the Company has paid higher mortgage incentive commissions due to the increased mortgage activity during 2009. Noninterest expense also included a $1.4 million increase in net costs of OREO property, as the Company has moved an increased number of properties into OREO. FDIC assessments have increased $0.8 million in the current year, as the Company is currently subject to additional insurance assessed by the FDIC to all financial institutions.

•

The Company recorded a provision for loan losses of $3.0 million during the first quarter of 2009, compared to a provision of $2.7 million for the first quarter of 2008. The increase in provision for the three month period of 2009 is attributable to loan portfolio growth and a decline in overall asset quality in portions of the Company’s loan portfolios. As of March 31, 2009, the allowance for loan losses as a percent of total loans was 1.11%, a two basis point increase over the 1.09% at December 31, 2008. Net charge-offs for the first quarter of 2009 were $2.2 million, or 0.24% of average loans on an annualized basis, compared to $1.8 million, or 0.21%, a year earlier.

•

In March 2009, the Company’s Board of Directors declared a quarterly cash dividend of $0.34 per common share, consistent with the same quarter of 2008.

FINANCIAL CONDITION

Earning Assets

Earning assets are composed of interest or dividend-earning assets, including loans, securities, short-term investments and loans held for sale. Interest income associated with earning assets is the Company’s primary source of income. Earning assets averaged $5.0 billion during the quarter ended March 31, 2009, an increase of $194.0 million, or 4.1%, from the year ended December 31, 2008 and $541.0 million, or 12.2% from March 31, 2008.

Loans and Leases – The average loan portfolio increased $81.0 million, or 2.2%, during the first three months of 2009. On a period end basis, the loan portfolio increased $13.6 million, or 0.4%.

The Company’s average loan to deposit ratios at March 31, 2009 and December 31, 2008 were 93.2% and 92.4%, respectively. At March 31, 2009, the percentage of fixed rate loans within the total loan portfolio decreased to 62% from 67% at year-end. The following table sets forth the composition of the Company’s loan portfolio as of the dates indicated.


(dollars in thousands)	March 31, 2009		December 31, 2008		Increase/(Decrease)
(dollars in thousands)	March 31, 2009		December 31, 2008		Amount			Percent
Residential mortgage loans:
Residential 1-4 family	$	476,899	$	498,740	$	(21,841	)	(4.4	)%
Construction/ Owner Occupied		32,665		36,693		(4,028	)	(11.0	)%
Total residential mortgage loans		509,564		535,433		(25,869	)	(4.8	)%
Commercial loans:
Real estate		1,551,790		1,522,965		28,825		1.9	%
Business		790,027		775,625		14,402		1.9	%

Total commercial loans		2,341,817		2,298,590		43,227		1.9	%
Consumer loans:
Indirect automobile		264,019		265,722		(1,703	)	(0.6	)%
Home equity		503,979		501,036		2,943		0.6	%
Other		138,580		143,621		(5,041	)	(3.5	)%

Total consumer loans		906,578		910,379		(3,801	)	(0.4	)%

Total loans receivable	$	3,757,959	$	3,744,402	$	13,557		0.4	%

Total commercial loans increased $43.2 million, or 1.9%, compared to December 31, 2008. Commercial loan growth was driven by commercial real estate loans, which increased $28.8 million compared to December 31, 2008. The increase is consistent with the Company’s growth strategy and focus on commercial loans.

The consumer loan portfolio decreased $3.8 million, or only 0.4%, compared to December 31, 2008, driven primarily by a decrease in personal loans of $2.9 million, or 5.6%, and indirect automobile loans of $1.7 million. These decreases were offset by growth of home equity loans and lines of credit of $2.9 million, or 0.6%. Consumer loan growth was tempered due to the current economic environment, as consumer activity has trended to saving rather than spending. Consumer loan growth was also impacted by the Company’s tightened underwriting standards, a response to a weakened national and regional economy.

Overall loan growth for the first quarter of 2009 was tempered mostly by a decrease in mortgage loans of $25.9 million, or 4.8% to $509.6 million compared to $535.4 million as of December 31, 2008. The decrease in mortgage loans is a result of increased loan sales to secondary markets during the first three months of the year. The Company continues to sell the majority of conforming mortgage loan originations, servicing released, in the secondary market and benefit from the associated fee income rather than assume the rate risk associated with these longer term assets. The Company tends to retain certain residential mortgage loans to high net worth individuals made through the private banking area. These mortgage loans traditionally have shorter durations, lower servicing costs and provide an opportunity to deepen client relationships. The Company does not originate or hold high loan to value, negative amortization, optional ARM, or other exotic mortgage loans in its portfolio.

Investment Securities – Total investment securities increased $128.5 million, or 14.4%, during the first three months of 2009. The increase was driven by purchases of securities using a portion of the proceeds from the Company’s common and preferred stock issuances during December 2008. In addition, the unrealized gain on the Company’s available-for-sale portfolio increased $5.3 million due to improved market performance during the quarter.

The following table summarizes activity by type of investment in the Company’s investment securities portfolio during the first three months of 2009. There were no acquisitions, transfers between categories, or sales of securities during the first three months of 2009. Gains and losses recorded in the income statement for the three months ended March 31, 2009 were recorded on calls of securities.


(dollars in thousands)	Available for Sale			Held to Maturity
Balance, December 31, 2008	$	828,743		$	60,733
Purchases		164,635			113,896
Principal maturities, prepayments and calls		(69,260	)		(85,820	)
Amortization of premiums and accretion of discounts		(259	)		23
Increase (Decrease) in market value		5,272			—

Balance, March 31, 2009	$	929,131		$	88,832

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to 1) the length of time and the extent to which the fair value has been less than cost, 2) the financial condition and near-term prospects of the issuer, and 3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and insight provided by industry analysts’ reports. As of March 31, 2009, management’s assessment concluded that no declines are deemed to be other than temporary.

Short-term Investments – Short-term investments result from excess funds that fluctuate daily depending on the funding needs of the Company and are currently invested overnight in an interest-bearing deposit account at the Federal Home Loan Bank (“FHLB”) of Dallas, the total balance of which earns interest at the current FHLB discount rate. The balance in interest-bearing deposits at other institutions decreased $110.8 million, or 59.5%, to $75.4 million at March 31, 2009, compared to $186.1 million at December 31, 2008. The payment on March 31, 2009 to redeem the Company’s preferred stock with the U.S. Treasury of $90.6 million, including an accrued dividend, contributed to the decrease in the end of period balance.

Mortgage Loans Held for Sale – Despite difficulties in the sub-prime mortgage industry over the past year, loans held for sale increased $17.6 million, or 27.7%, to $81.1 million at March 31, 2009, compared to $63.5 million at December 31, 2008. The increase was a result of additional volume generated during the first three months of the year. Consistent with seasonal patterns, the Company originated $419 million in mortgage loans during the first quarter, up 129% compared to the previous quarter. Originations were offset by $400 million in sales during the first quarter. Because of the decrease in borrowing rates during the quarter, customers began to refinance their mortgages, which accounted for the majority of the Company’s origination activity. 63% of mortgage loan originations during the first quarter of 2009 were due to refinancing. Loans held for sale have primarily been fixed rate single-family residential mortgage loans under contract to be sold in the secondary market. Loans sold conform to underwriting standards that are based on standards specified by the Federal National Mortgage Association (Fannie Mae), Federal Housing Administration (FHA), and the Federal Home Loan Mortgage Corporation (Freddie Mac). In most cases, loans in this category are sold within thirty days. Buyers generally have recourse to return a purchased loan to the Company under limited circumstances. Recourse conditions may include early payment default, breach of representations or warranties, and documentation deficiencies.

Asset Quality

Primarily as a result of management’s enhancements to underwriting risk/return dynamics within the loan portfolio over time, the credit quality of the Company’s assets has remained strong. Management believes that historically it has recognized and disclosed significant problem loans quickly and taken prompt action in addressing material weaknesses in those credits. The Company will continue to monitor the risk-adjusted level of return within the loan portfolio.

Written underwriting standards established by the Board of Directors and management govern the lending activities of the Company. The commercial credit department, in conjunction with senior lending personnel, underwrites all commercial business and commercial real estate loans. The Company provides centralized underwriting of 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 assessed on past due accounts. A centralized department collects delinquent loans. Every effort is made to minimize any potential loss, including instituting legal proceedings, as necessary. Commercial loans of the Company are periodically reviewed through a loan review process. All other loans are subject to loan review through a periodic sampling process.

The Company utilizes an asset risk classification system in compliance with guidelines established by the Federal Reserve Board as part of its efforts to monitor commercial asset quality. In connection with examinations of insured institutions, both federal and state examiners also have the authority to identify problem assets and, if appropriate, classify them. There are three classifications for problem assets: “substandard,” “doubtful” and “loss”. Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies 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 not considered collectable and is of such little value that continuance as an asset of the Company is not warranted. Commercial loans with adverse classifications are reviewed by the Loan Committee of the Board of Directors at least monthly. Loans are placed on nonaccrual status when, in the judgment of management, the probability of collection of principal and interest in full is deemed to be insufficient to warrant further accrual. When a loan is placed on nonaccrual status, previously accrued but unpaid interest for the current period is deducted from interest income. Prior period interest is charged-off to the allowance for loan losses.

Real estate acquired by the Company as a result of foreclosure or by deed-in-lieu of foreclosure is classified as other real estate owned (“OREO”) until sold, and is carried at the balance of the loan at the time of acquisition or at estimated fair value less estimated costs to sell, whichever is less.

Nonperforming assets, defined as nonaccrual loans, accruing loans past due 90 days or more and foreclosed property, amounted to $52.7 million, or 0.95% of total assets at March 31, 2009, compared to $46.6 million, or 0.83% of total assets at December 31, 2008. Of the $52.7 million in nonperforming assets, $33.5 million, or 63.5%, relates to the Pulaski Bank franchise. The allowance for loan losses amounted to 1.11% of total loans and 113.5% of total nonperforming loans at March 31, 2009, compared to 1.09% and 134.9%, respectively, at December 31, 2008. The following table sets forth the composition of the Company’s nonperforming assets, including accruing loans past due 90 days or more, as of the dates indicated.


(dollars in thousands)	March 31, 2009			December 31, 2008
Nonaccrual loans:
Commercial, financial and agricultural	$	27,215		$	21,433
Mortgage		1,820			2,423
Loans to individuals		4,715			3,969

Total nonaccrual loans		33,750			27,825
Accruing loans 90 days or more past due		2,952			2,481

Total nonperforming loans ⁽¹⁾		36,702			30,306
OREO and foreclosed property		16,028			16,312

Total nonperforming assets ⁽¹⁾		52,730			46,618
Performing troubled debt restructurings		—			—

Total nonperforming assets and troubled debt restructurings ⁽¹⁾	$	52,730		$	46,618


Nonperforming loans to total loans ⁽¹⁾		0.98	%		0.81	%
Nonperforming assets to total assets ⁽¹⁾		0.95	%		0.83	%
Allowance for loan losses to nonperforming loans ⁽¹⁾		113.5	%		134.9	%
Allowance for loan losses to total loans		1.11	%		1.09	%

(1)	Nonperforming loans and assets include accruing loans 90 days or more past due.

Total nonperforming assets increased $6.1 million or 13.1% from year-end, due primarily to one large relationship in the IBERIABANK portfolio. This credit had a $7.1 million balance at March 31, 2009, and was included in the Company’s nonaccrual loans. As a result, IBERIABANK nonaccrual loans increased $9.4 million, or 144.8%.

Pulaski Bank’s nonperforming assets totaled $33.5 million at March 31, 2009, including $17.9 million of nonaccrual loans, compared to $36.7 million in nonperforming assets at December 31, 2008. The Pulaski Bank nonperforming assets are primarily

construction and land development loans in Northwest Arkansas and Memphis. The Company’s efforts to address risk in the Pulaski Bank builder construction portfolio led to a decrease in nonaccrual loans at Pulaski Bank. Since year-end, Pulaski Bank’s nonaccrual loans have decreased $3.5 million, or 16.3%. The Pulaski Bank builder construction portfolio continued its compression as homes were sold and loans paid down during the first three months of 2009. The portfolio totaled $22.1 million at March 31, 2009, down $5.9 million, or 21.0%, during the quarter. Nonaccrual loans in the portfolio totaled $7.9 million, a decrease of $2.4 million, or 23.5%, from December 31, 2008.

Despite the increase in nonperforming asset balances, the percentage of total assets has remained relatively consistent with December 31, 2008. Although nonperforming assets have increased to 95 basis points of total assets, excluding the IBERIABANK credit mentioned above, that percentage would have been 0.83%, consistent with December 31, 2008.

Management continually monitors impacted loans and transfers loans to nonaccrual status when warranted. Net charge-offs for the first quarter of 2009 were $2.2 million, or 0.24%, of average loans on an annualized basis, as compared to $1.8 million, or 0.21%, for the same quarter last year. The increase in charge-offs is a result of the Company’s efforts to move troubled credits out of its portfolios to maintain its levels of asset quality.

Allowance for Loan Losses

The determination of the allowance for loan losses, which represents management’s estimate of probable losses inherent in the Company’s credit portfolio, involves a high degree of judgment and complexity. The Company establishes reserves for estimated losses on delinquent and other problem loans when it is determined that losses are probable on such loans. Management’s determination of the adequacy of the allowance is based on various factors, including an evaluation of the portfolio, past loss experience, current economic conditions, the volume and type of lending conducted by the Company, composition of the portfolio, the amount of the Company’s classified assets, seasoning of the loan portfolio, the status of past due principal and interest payments, and other relevant factors. Changes in such estimates may have a significant impact on the financial statements.

The Company has experienced significant commercial loan growth over the past five years and as a result, during that time, refined its loan loss methodology to further reflect the transition in the loan portfolio from a savings bank (i.e., mortgage/consumer loan focus) to a commercial bank (i.e., commercial loan focus). This refinement resulted in the Company assigning greater reserves to the commercial segment of the loan portfolio and previously unallocated reserves to the portfolio segments.

The foundation of the allowance for the Company’s commercial segment is the credit risk rating of each relationship within the portfolio. The credit risk of each borrower is assessed, and a risk grade is assigned. The portfolios are further segmented by facility or collateral ratings. The dual risk grade for each loan is determined by the relationship manager and other approving officers and changed from time to time to reflect an ongoing assessment of the risk. Grades are reviewed on specific loans by senior management and as part of the Company’s internal loan review process. The commercial loan loss allowance is determined for all pass-rated borrowers based upon the borrower risk rating, the expected default probabilities of each rating category, and the outstanding loan balances by risk grade. For borrowers rated special mention or below, the higher of the migration analysis and Company established minimum reserve percentages apply. In addition, consideration is given to historical loss experience by internal risk rating, current economic conditions, industry performance trends, geographic or borrower concentrations within each portfolio segment, the current business strategy and credit process, loan underwriting criteria, loan workout procedures, and other pertinent information.

Reserves are determined for impaired commercial loans individually based on management’s evaluation of the borrower’s overall financial condition, resources, and payment record; the prospects for support from any financially responsible guarantors; and the realizable value of any collateral. Reserves are established for these loans based upon an estimate of probable losses for the individual loans deemed to be impaired. This estimate considers all available evidence including the present value of the expected future cash flows and the fair value of collateral less disposal costs. Loans for which impaired reserves are provided are excluded from the general reserve calculations described above to prevent duplicate reserves.

The allowance also consists of reserves for unimpaired loans that encompass qualitative economic factors and specific market risk components. The foundation for the general consumer allowance is a review of the loan portfolios and the performance of those portfolios. This review is accomplished by first segmenting the portfolio into homogenous pools. Residential mortgage loans, direct consumer loans, consumer home equity, indirect consumer loans, credit card, and the business banking portfolio each are considered separately. The historical performance of each of these pools is analyzed by examining the level of charge-offs over a specific period of time. The historical average charge-off level for each pool is updated at least quarterly.

In addition to this base analysis, the consumer portfolios are also analyzed for specific risks within each segment. The risk analysis considers the Company’s current strategy for each segment, the maturity of each segment, expansion into new markets, the deployment of newly developed products and any other significant factors impacting that segment. Current regional and national economic factors are an important dimension of the assessment and impact each portfolio segment. The general economic factors are evaluated and adjusted quarterly.

Loan portfolios tied to acquisitions made during the year are incorporated into the Company’s allowance process. If the acquisition has an impact on the level of exposure to a particular segment, industry or geographic market, this increase in exposure is factored into the allowance determination process. Generally, acquisitions have higher levels of risk of loss based on differences in credit culture and portfolio management practices.

Acquired loans follow the reserve standard set in AICPA Statement of Position (SOP) 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer. At acquisition, the Company reviews each loan to determine whether there is evidence of deterioration in credit quality since origination and if it is probable that the Company will be unable to collect all amounts due according to the loan’s contractual terms. The Company considers expected prepayments and estimates the amount and timing of undiscounted expected principal, interest and other cash flows for each loan meeting the criteria above, and determines the excess of the loan’s scheduled contractual principal and contractual interest payments over all cash flows expected at acquisition as an amount that should not be accreted (nonaccretable difference). The remaining amount, representing the excess of the loan’s or pool’s cash flows expected to be collected over the amount paid, is accreted into interest income over the remaining life of the loan or pool (accretable yield). The Company records a discount on these loans at acquisition to record them at their realizable cash flow. As a result, acquired loans subject to SOP 03-3 are excluded from the calculation of loan loss reserves at the acquisition date.

Based on facts and circumstances available, management of the Company believes that the allowance for loan losses was adequate at March 31, 2009 to cover probable losses in the Company’s loan portfolio. However, future adjustments to the allowance may be necessary, and the Company’s results of operations could be adversely affected if circumstances differ substantially from the assumptions used by management in determining the allowance for loan losses.

The following table presents the activity in the allowance for loan losses during the first three months of 2009.


(dollars in thousands)	Amount
Balance, December 31, 2008	$	40,872
Provision charged to operations		3,032
Loans charged off		(2,765	)
Recoveries		523

Balance, March 31, 2009	$	41,662

The allowance for loan losses amounted to $41.7 million, or 1.11% of total loans at March 31, 2009, 1.09% at December 31, 2008, and 1.14% as of March 31, 2008. Although asset quality in the Pulaski builder construction portfolio improved from December 31, 2008, asset quality in the overall IBERIABANK portfolio decreased, which led to an increase in loan reserves at March 31, 2009.

Other Assets

The following table details the changes in other asset categories during the first three months of 2009.


(dollars in thousands)	March 31, 2009		December 31, 2008		Increase/(Decrease)
(dollars in thousands)	March 31, 2009		December 31, 2008		Amount			Percent
Cash and due from banks	$	163,361	$	345,865	$	(182,504	)	(52.8	)%
Premises and equipment		131,235		131,404		(169	)	(0.1	)
Bank-owned life insurance		68,634		67,921		713		1.1
Goodwill		236,761		236,761		—		—
Core Deposit Intangibles		15,572		16,193		(621	)	(3.8	)
Title plant and other intangible assets		6,727		6,729		(2	)	0.0
Accrued interest receivable		20,125		19,633		492		2.5
FHLB and FRB stock		32,296		29,673		2,623		8.8
Other		40,701		42,865		(2,164	)	(5.0	)

Total	$	715,412	$	897,044	$	(181,632	)	(20.2	)%

The $182.5 million decrease in cash and due from banks results from the Company’s redemption of its preferred stock issued to the U.S. Treasury in March 2009. In addition, the Company has deployed the proceeds from its common stock issuance in December 2008 to fund loan growth, invest in additional investment securities, and pay down its short-term debt.

The $0.7 million increase in the Company’s bank-owned life insurance balance is a result of earnings on existing policies during the first three months of 2009.

The decrease in core deposit intangibles is due to amortization expense of $0.6 million during the first three months of 2009. There were no additions to core deposit intangibles during the first quarter of 2009.

The $0.5 million increase in accrued interest receivable from year-end is due primarily to the timing of interest payments during the quarter and partially attributable to loan growth.

The $2.6 million increase in FHLB stock is the result of additional investments at IBERIABANK and Pulaski Bank made during the first quarter.

The $2.1 million decrease in other assets is primarily the result of $9.9 million in fed funds sold at December 31, 2008. The Company did not have funds sold at March 31, 2009. This decrease was offset by an increase of $4.5 million in the market value of its derivatives and modest increases in prepaid assets and other receivables.

There was no significant change in the Company’s goodwill, title plant, or other intangible asset balances since year-end. In addition, there were no significant changes in the Company’s premises and equipment balances since December 31, 2008, as asset purchases were offset by depreciation expense during 2009.

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 accounts by offering a wide variety of accounts, competitive interest rates and convenient branch office locations and service hours. Increasing core deposits through the development of client relationships is a continuing focus of the Company. Borrowings have become an increasingly important funding source as the Company has grown. Other funding sources include short-term and long-term borrowings, subordinated debt, and shareholders’ equity. The following discussion highlights the major changes in the mix of deposits and other funding sources during the first three months of the year.

Deposits – Total end of period deposits increased $137.7 million, or 3.4%, to $4.1 billion at March 31, 2009, compared to $4.0 billion at December 31, 2008. The increase was a result of deposit growth generated in the Company’s interest-bearing accounts, as customers continue to strive for a stable rate of return. The growth in the interest-bearing accounts was driven by deposit repricing in many of the Company’s markets. Interest-bearing deposits grew 5.3% during the first quarter of 2009. Significant increases in NOW, savings, and money-market balances drove total growth. This growth was offset by a decrease in noninterest-bearing accounts of $40.0 million, or 6.4%.

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


(dollars in thousands)	March 31, 2008		December 31, 2008		Increase/(Decrease)
(dollars in thousands)	March 31, 2008		December 31, 2008		Amount			Percent
Noninterest-bearing DDA	$	580,607	$	620,637	$	(40,030	)	(6.4	)%
NOW accounts		952,298		821,649		130,649		15.9
Savings and money market accounts		1,070,520		954,408		116,112		12.2
Certificates of deposit		1,530,055		1,599,122		(69,067	)	(4.3	)

Total deposits	$	4,133,480	$	3,995,816	$	137,664		3.4	%

Short-term Borrowings – Short-term borrowings decreased $66.1 million, or 31.7%, from December 31, 2008 to March 31, 2009 to $142.1 million. The decrease was a result of two primary factors. The Company used a portion of its proceeds from a common stock issuance in 2008 to pay its maturing short-term debt. In addition, in order to take advantage of lower cost long-term funding, the Company lengthened its liability structure by borrowing long-term funds to lock in more favorable long-term funding rates.

The Company’s short-term borrowings at March 31, 2009 were comprised entirely of $142.1 million of securities sold under agreements to repurchase. There were no advances under the Company’s line of credit with a correspondent bank, nor were there any outstanding short-term fixed or variable rate advances from the FHLB of Dallas. At December 31, 2008, $58.0 million in short-term advances were outstanding. The average rates paid on short-term borrowings were 0.83% and 3.12% for the quarters ended March 31, 2009 and 2008, respectively. The decrease in the average rate is a result of the decrease in bank borrowing rates since the first quarter of 2008.

Long-term Borrowings – Long-term borrowings decreased $24.3 million, or 4.3%, to $544.1 million at March 31, 2009, compared to $568.5 million at December 31, 2008. The decrease in borrowings from December 31, 2008 is a result of the repayments of maturing long-term FHLB advances during the three months ended March 31, 2009.

At March 31, 2009, the Company’s long-term borrowings were comprised of $407.3 million of fixed and variable rate advances from the FHLB of Dallas, $111.8 million in junior subordinated debt, and a $25.0 million note with a correspondent bank. The average rates paid on long-term borrowings were 4.20% and 4.83% for the quarters ended March 31, 2009 and 2008, respectively.

Shareholders’ Equity – Shareholders’ equity provides a source of permanent funding, allows for future growth, and provides the Company with a cushion to withstand unforeseen adverse developments. At March 31, 2009, shareholders’ equity totaled $655.6 million, a decrease of $78.6 million, or 10.7%, compared to $734.2 million at December 31, 2008. The following table details the changes in shareholders’ equity during the first three months of 2009.


(dollars in thousands)	Amount
Balance, December 31, 2008	$	734,208
Net income		9,145
Preferred stock dividend and accretion		(3,251	)
Preferred stock redemption		(87,878	)
Reissuance of treasury stock for under incentive compensation plans, net of shares surrendered		(259	)
Cash dividends declared		(5,432	)
Change in other comprehensive income from fair value adjustments		7,685
Share-based compensation cost		1,396
Equity activity in a joint venture		(28	)

Balance, March 31, 2009	$	655,586

In April 2007, the Board of Directors of the Company authorized a share repurchase program authorizing the repurchase of up to 300,000 shares of the Company’s outstanding common stock, or approximately 1.7% of total shares outstanding. As of March 31, 2009, the Company had 149,029 shares remaining for repurchase under the plan.

Stock repurchases generally are affected through open market purchases, and may be made through unsolicited negotiated transactions. During the first three months of 2009, the Company did not repurchase any shares of its common stock.

RESULTS OF OPERATIONS

The Company reported net income for the first quarter of 2009 of $9.1 million, compared to $13.4 million earned during the first quarter of 2008, a decrease of $4.2 million, or 31.5%. After the deduction of a preferred stock dividend of $3.4 million, income available to common shareholders was $5.6 million for the first quarter of 2009, a $7.3 million decrease from the first quarter of 2008. On a per share basis, the $0.36 earned per diluted share for the first quarter of 2009 represents a 65.0% decrease from the $1.02 earned for the first quarter of 2008. Common shareholder earnings were negatively impacted by the preferred stock dividend during the quarter. In addition, income for the first three months of 2008 was positively impacted by a nonrecurring gain of $6.9 million on the sale of a portion of the Company’s credit card receivables.

The following is a discussion of operating results for the three months ended March 31, 2009, compared to the same three-month period ended March 31, 2008, by significant income statement caption.

Net Interest Income – 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 appropriateness and mix of earning assets.

Net interest income increased $3.5 million, or 10.5%, to $36.3 million for the three months ended March 31, 2009, compared to $32.8 million for the three months ended March 31, 2008. The increase was due to a $10.5 million, or 30.3%, decrease in interest expense, which was partially offset by a $7.0 million, or 10.4%, decrease in interest income. The decrease in interest income from the first quarter of 2008 was the result of a 118 basis point, or 19.2%, decrease in the average yield of interest-earning assets. The decrease in interest expense was also driven by lower rates. The average rate of interest-bearing liabilities decreased 115 basis points, or 33.2%, from the first quarter of 2008.

The Company’s average interest rate spread, which is the difference between the yields earned on earning assets and the rates paid on interest-bearing liabilities, was 2.66% during the three months ended March 31, 2009, compared to 2.70% for the comparable period in 2008. The Company’s net interest margin on a taxable equivalent (TE) basis, which is taxable equivalent net interest income as a percentage of average earning assets, was 3.02% and 3.04% for the three months ended March 31, 2009 and March 31, 2008, respectively.

As of March 31, 2009, the Company’s interest rate risk model indicated that the Company is asset sensitive in terms of interest rate sensitivity. Based on the Company’s interest rate risk model, 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.


Shift in Interest Rates (in bps)	% Change in Projected Net Interest Income
+200	10.3	%
+100	5.6
-100	(2.6	)
-200	(4.5	)

The computations of interest rate risk shown above do not necessarily include certain actions management may undertake to manage this risk in response to anticipated changes in interest rates.

As part of its activities to manage interest rate risk, the Company has engaged in interest rate swap transactions, which are a form of derivative financial instrument, to modify the net interest sensitivity to levels deemed to be appropriate. At March 31, 2009, the Company had interest rate swaps in the notional amount of approximately $382.7 million. In addition to using derivative instruments as an interest rate risk management tool, the Company also enters into derivative instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with these customer contracts, the Company enters into offsetting derivative contract positions. The Company manages its credit risk, or potential risk of default by its commercial customers, through credit limit approval and monitoring procedures. Both the derivative contracts entered into with its customers and the offsetting derivative positions are recorded at their estimated fair value. At March 31, 2009, the Company had $131.3 million notional amount of interest rate contracts with corporate customers and $131.3 million notional amount of offsetting interest rate contracts with other financial institutions to mitigate the Company’s rate exposure on its corporate customers’ contracts.

The following table presents average balance sheets, net interest income and average interest rates for the three month periods ended March 31, 2009 and 2008.

Average Balances, Net Interest Income and Interest Yields / Rates

The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest income of the Company from earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rate; (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 the adjustments is included in nonearning assets. Tax equivalent (TE) yields are calculated using a marginal tax rate of 35%.


	Three Months Ended March 31,
	2009							2008
*(dollars in thousands)*	Average Balance			Interest		Average Yield/ Rate ⁽¹⁾		Average Balance			Interest		Average Yield/ Rate ⁽¹⁾
Earning assets:
Loans receivable:
Mortgage loans	$	521,180		$	7,347	5.64	%	$	575,096		$	8,539	5.94	%
Commercial loans (TE) ⁽²⁾		2,315,732			26,320	4.68	%		1,999,916			30,774	6.23	%
Consumer and other loans		906,120			14,831	6.64	%		818,252			15,602	7.67	%

Total loans		3,743,032			48,498	5.29	%		3,393,264			54,915	6.53	%
Mortgage loans held for sale		81,910			982	4.80	%		57,441			798	5.55	%
Investment securities (TE) ⁽²⁾⁽³⁾		968,163			10,612	4.61	%		821,033			10,125	5.18	%
Other earning assets		179,580			229	0.51	%		159,952			1,472	3.70	%

Total earning assets		4,972,685			60,321	4.98	%		4,431,690			67,310	6.16	%

Allowance for loan losses		(40,711	)						(37,542	)
Nonearning assets		640,184							600,762

Total assets	$	5,572,158						$	4,994,910


Interest-bearing liabilities:
Deposits:
NOW accounts	$	910,272		$	2,010	0.90	%	$	849,280		$	3,961	1.88	%
Savings and money market accounts		1,006,998			3,839	1.55	%		781,890			4,585	2.36	%
Certificates of deposit		1,544,596			11,995	3.15	%		1,509,335			17,039	4.54	%

Total interest-bearing deposits		3,461,866			17,844	2.09	%		3,140,505			25,585	3.28	%
Short-term borrowings		186,946			387	0.83	%		342,662			2,702	3.12	%
Long-term debt		552,838			5,803	4.20	%		507,099			6,197	4.83	%

Total interest-bearing liabilities		4,201,650			24,034	2.31	%		3,990,266			34,484	3.46	%

Noninterest-bearing demand deposits		554,269							444,284
Noninterest-bearing liabilities		72,430							46,753

Total liabilities		4,828,349							4,481,303
Shareholders’ equity		743,809							513,607

Total liabilities and shareholders' equity	$	5,572,158						$	4,994,910


Net earning assets	$	771,035						$	441,424

Ratio of earning assets to interest-bearing liabilities		118.35	%						111.06	%


Net Interest Spread				$	36,287	2.66	%				$	32,826	2.70	%


Tax-equivalent Benefit						0.11	%						0.11	%


Net Interest Income (TE) / Net Interest Margin (TE) ⁽¹⁾				$	37,623	3.02	%				$	34,025	3.04	%

⁽¹⁾	Annualized.

⁽²⁾	Fully taxable equivalent (TE) calculations include the tax benefit associated with related income sources that are tax-exempt using a marginal tax rate of 35%.

⁽³⁾	Balances exclude unrealized gain or loss on securities available for sale and impact of trade date accounting.

Provision For Loan Losses – Management of the Company assesses the allowance for loan losses quarterly and will make provisions for loan losses as deemed appropriate in order to maintain the adequacy of the allowance for loan losses. Increases to the allowance for loan losses are achieved through provisions for loan losses that are charged against income. Adjustments to the allowance may also result from purchase accounting associated with loans acquired through acquisitions.

While the asset quality of the majority of the Company’s loan portfolio performed well during the first three months of 2009, credit deterioration was noted in the IBERIABANK portfolio. This credit deterioration was exemplified by an increase in nonaccrual loans, as nonaccrual loans at IBERIABANK increased $9.4 million since December 31, 2008. As a result, on a consolidated basis, the Company recorded a provision for loan losses of $3.0 million in the first quarter of 2009. This represents an increase of $0.3 million over the $2.7 million recorded in the same period of 2008. The increase in the provision during 2009 is a result of loan growth and noted deterioration in the IBERIABANK portfolio. The provision recorded during 2009 is also a result of a higher level of chargeoffs at IBERIABANK. Despite nonperforming asset ratios that have been historically higher at Pulaski Bank than at IBERIABANK, during the first quarter of 2009 Pulaski Bank’s asset quality has exhibited some improvement. Nonperforming assets decreased $3.2 million, or 8.6%, as nonaccrual loans have decreased $3.5 million, or 16.3%. These decreases were offset partially by a 10.7% increase in loans 90 days past due still accruing.

Total net charge-offs were $2.2 million for the first quarter of 2009, or an annualized chargeoff percentage of 0.24%. Net charge-offs during the first quarter of 2008 were at 0.21% of the consolidated loan portfolio. The increase in net charge-offs over the first quarter of 2008 is a result of increased IBERIABANK charge-offs during the current year, primarily in the commercial and indirect portfolios, as the Company has seen some asset quality deterioration. Net charge-offs in both the first quarters of 2008 and 2009 included recoveries of $0.5 million.

Although some credit deterioration has been noted, the Company believes the allowance is adequate at March 31, 2009 to cover probable losses in the Company’s loan portfolio. In order to address the asset quality issues noted, the Company increased its allowance for loan losses as a percentage of outstanding loans, net of unearned income, two basis points, from 1.09% at December 31, 2008 to 1.11% at March 31, 2009. The Company believes the allowance is adequate to cover probable losses as supported by its coverage ratios of nonperforming assets and nonperforming loans. The allowance remains adequate to cover all nonperforming loans at March 31, 2009, and cover 79% of total nonperforming assets.

Noninterest Income – The Company’s total noninterest income was $23.7 million for the three months ended March 31, 2009, $2.6 million, or 2.6%, lower than the $26.3 million earned for the same period in 2008. The following table illustrates the changes in each significant component of noninterest income.


	Three Months Ended March 31,					Percent Increase (Decrease)
(dollars in thousands)	2009			2008		Percent Increase (Decrease)
Service charges on deposit accounts	$	5,272		$	5,114	3.1	%
ATM/debit card fee income		1,714			1,407	21.8
Income from bank owned life insurance		713			742	(3.9	)
Gain on sale of loans, net		8,529			11,348	(24.8	)
Gain (loss) on sale of assets		(2	)		1	(303.8	)
Gain (loss) on sale of AFS investments, net		3			122	(97.4	)
Title income		4,479			4,510	(0.7	)
Broker commissions		1,214			1,290	(5.9	)
Other income		1,808			1,752	3.2

Total noninterest income	$	23,730		$	26,286	(9.7	)%

Service charges on deposit accounts increased $0.2 million in the first quarter of 2009 over the comparable prior-year first quarter, as customer volume increased at both IBERIABANK and Pulaski Bank.

ATM/debit card fee income increased $0.3 million in 2009 compared to the same quarter last year primarily due to the expanded cardholder base and increased usage by customers.

Gains on the sale of loans decreased $2.8 million compared to the first quarter of 2008. The decrease in gains is due to the $6.9 million gain on the sale of approximately $30.4 million in credit card receivables during the first quarter of 2008, consistent with past practices at Pulaski Bank. Excluding this gain, additional volume of mortgage loan originations and sales led to an increase in sales gains in the first quarter of 2009.

The gain on the sale of AFS investments in 2008 resulted from the sale of $21.3 million in agency and mortgage-backed securities with the proceeds used to invest in collateralized mortgage obligations and municipal securities. There were no significant sales of investment securities during the first quarter of 2009.

Other sources of noninterest income remained steady during the current year, as there were no significant fluctuations in the levels of income from the first quarter of 2008. Earnings on the Company’s life insurance assets were slightly down in the current year, consistent with market performance. There were no significant gains or losses recorded on fixed asset sales during either of the three month periods ended March 31, 2009 or 2008. Title income and other noninterest income also remained consistent during the first three months of 2009 when compared to the prior year’s first quarter.

Noninterest Expense – The Company’s total noninterest expense was $43.8 million for the three months ended March 31, 2009, $7.0 million, or 19.0%, higher than the $36.8 million incurred for the same period in 2008. The following table illustrates the changes in each significant component of noninterest expense.


	Three Months Ended March 31,				Percent Increase (Decrease)
(dollars in thousands)	2009		2008		Percent Increase (Decrease)
Salaries and employee benefits	$	24,228	$	20,918	15.8	%
Occupancy and equipment		5,632		5,330	5.7
Franchise and shares tax		680		611	11.3
Communication and delivery		1,597		1,688	(5.4	)
Marketing and business development		785		859	(8.6	)
Data processing		1,558		1,423	9.5
Printing, stationery and supplies		479		500	(4.2	)
Amortization of acquisition intangibles		622		575	8.1
Professional services		1,276		1,111	14.8
Other expenses		6,935		3,781	83.4

Total noninterest expense	$	43,792	$	36,796	19.0	%

Salaries and employee benefits increased $3.3 million for the first quarter primarily due to higher mortgage incentives paid during the quarter, as well as increased staffing due to the growth of the Company. The Company expanded into the Houston and Mobile markets in the current quarter. Expenses were also higher in the first quarter of 2009 due to higher mortgage-related commissions earned from increased mortgage origination activity.

Occupancy and equipment expense increased $0.3 million for the first quarter due primarily to the facilities costs associated with ANB and the Company’s two new markets, as well as an increase in rent expense in the current year from additional locations and renewals of current property rentals. Occupancy and equipment expense for the three months of 2009 also includes equipment rental expense associated with the outsourcing of the operation and maintenance of the Company’s ATMs, as well as repairs and maintenance expenses incurred as a result of the Arkansas ice storms that affected many of the Pulaski Bank branches.

Despite the increase in the number of branches and locations the Company operates, the Company has kept other operating expenses in the current year steady with the first quarter of 2008, including reducing overall communication and delivery charges, marketing expenses, and printing expenses. The decreases are attributable to acquisition-specific expenses during 2008, as well as customer mailings and notices during 2008.

Professional services expense was $0.2 million higher for the current three month period compared to the same period last year, as the Company incurred additional legal, audit, and consulting expenses as a result of the preferred stock redemption and the increased size and complexity of the Company.

Other noninterest expenses increased $3.2 million in the first quarter of 2009 primarily in two areas. First, net costs of OREO property increased $1.4 million, as the Company has increased its collection efforts on its properties included in OREO. The increase is expenses is consistent with an increase in the size of the IBERIABANK and Pulaski Bank portfolios, as OREO balances have increased $6.3 million, or 64.8%, since March 31, 2008. For the three months ended March 31, 2009, the Company incurred $0.6 million in property writedowns that are included in these net costs. In addition, the Company’s collection efforts resulted in increased appraisal, property tax, and maintenance expenses. Many of these same expenses were offset by gains on sales in 2008.

Other noninterest expenses for the three months ended March 31, 2009 and 2008 include insurance and bond expenses of $1.7 million and $0.5 million, respectively. The largest increase in expenses is a result of additional FDIC assessments in the current year. The size of the Company’s deposits, as well as a special assessment imposed on all financial institutions during the first quarter of 2009, increased the Company’s deposit insurance almost $1.2 million. The FDIC has proposed a one-time special assessment of 20 basis points on all assessable deposits as of June 30, 2009. If imposed, the Company anticipates a continued increase in expense in the second quarter of 2009.

Both credit and loan-related expenses, as well as ATM/debit card expenses, reflect the additional locations and volume of activity resulting from the growth of the IBERIABANK and Pulaski Bank franchises. Increases in these expenses over the first quarter of 2008 were $0.2 million for each category of expense. Other expense types, including credit card expenses, bank service charges, travel and entertainment, and stock market and registration agent fees, did not experience a significant fluctuation from the same period of 2008.

Income Tax Expense – Income tax expense decreased $2.2 million, or 35.4%, for the three months ended March 31, 2009 to $4.0 million, compared to $6.3 million for the three months ended March 31, 2008. The fluctuation from the prior period corresponds to the change in income for the comparable periods.

The effective tax rates for the three months ended March 31, 2009 and 2008 were 30.7% and 31.9% respectively. The difference in the effective tax rates for the periods presented is a result of the relative tax-exempt interest income levels during the respective periods.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s liquidity, represented by cash and cash equivalents, is a product of its operating, investing and financing activities. The Company manages its liquidity with the objective of maintaining sufficient funds to respond to the needs of depositors and borrowers and to take advantage of earnings enhancement opportunities. The primary sources of funds for the Company are deposits, borrowings, repayments and maturities of loans and investment securities, securities sold under agreements to repurchase, as well as funds provided from operations. Certificates of deposit scheduled to mature in one year or less at March 31, 2009 totaled $1.1 billion, or 71.8% of the total CD balance at March 31, 2009. Based on past experience, management believes that a significant portion of maturing deposits will remain with the Company, including those obtained through acquisitions. Additionally, the majority of the investment securities portfolio is classified by the Company as available-for-sale, which provides the ability to liquidate securities as needed. Due to the relatively short planned duration of the investment security portfolio, the Company continues to experience significant cash flows on a normal basis.

The following table summarizes the Company’s cash flows for the periods indicated.


(dollars in thousands)	Three Months Ended March 31, 2009			Three Months Ended March 31, 2008
Cash flow provided by (used in) operations	$	10,464		$	(7,405	)
Cash flow used in investing activities		(143,636	)		(29,702	)
Cash flow provided by (used in) financing activities		(49,332	)		177,202

Net (decrease) increase in cash and cash equivalents cash flow	$	(182,504	)	$	140,095

The Company had operating cash flow of $10.5 million during the first three months of 2009, $17.9 million higher than in the same period of 2008. The increase was primarily due to higher sales in the Company’s loans held for sale portfolio. Net cash flow from loan sales increased $4.9 million in 2009, as sales volume has increased during the current three months. The Company’s cash flow for the first three months of 2008 was negatively impacted by a gain on the sale of a portion of its credit card portfolio of $6.9 million.

Cash used in investing activities increased $113.9 million during the first three months of 2009 compared to the same period in 2008 primarily due to cash inflows from the sale of credit card receivables, which resulted in proceeds of $37.4 million in 2008. In addition, in 2009 the Company used a portion of the proceeds from its common stock issuance to purchase significant held-to-maturity and available-for-sale investment securities. The majority of cash outflow during the first three months of 2009 was to purchase investment securities and fund loan growth. Purchases of investment securities increased $141.2 million over the first three months of 2008. These purchases were offset by maturities and calls of securities of $155.1 million in the current three-month period, an increase of $66.0 million from the first three months of 2008.

Net financing cash flows decreased $226.5 million from the first three months of 2008 to the three months of 2009, primarily due to a decrease in deposit growth, which provides funds the Company uses to repay short-term borrowings, fund loan growth, and provide additional liquidity. The decrease in deposit growth, coupled with the Company’s redemption of its preferred stock, attributed to the net decrease in funding cash flow. The Company was also able to pay down short- and long-term borrowings by $66.1 million and $24.1 million, respectively, during the three months ended March 31, 2009 without issuing additional long-term debt.

While scheduled cash flows from the amortization and maturities of loans and securities are relatively predictable sources of funds, deposit flows and prepayments of loans and investment securities are greatly influenced by general interest rates, economic conditions and competition. 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 March 31, 2009, the Company had $407.3 million of outstanding advances from the FHLB of Dallas. Additional advances available from the FHLB at March 31, 2009 were $919.9 million. The Company and IBERIABANK also have various funding arrangements with commercial banks providing up to $145 million in the form of federal funds and other lines of credit. At March 31, 2009, the Company had no balance outstanding on these lines and all of the remaining funding was available to the Company.

Liquidity management is both a daily and long-term function of business management. 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 meet its ongoing commitments and fund loan commitments. At March 31, 2009, the total approved unfunded loan commitments outstanding amounted to $156.6 million. At the same time, commitments under unused lines of credit, including credit card lines, amounted to $756.0 million. The Company has been able to generate sufficient cash through its deposits and borrowings and anticipates it will continue to have sufficient funds to meet its liquidity requirements.

At March 31, 2009, the Company and the banks had regulatory capital that was in excess of regulatory requirements. The following table details the Company’s actual levels and current requirements as of March 31, 2009.


	Actual Capital				Required Capital
(dollars in thousands)	Amount		Percent		Amount		Percent
Tier 1 Leverage	$	485,075	9.16	%	$	211,751	4.00	%
Tier 1 Risk-Based	$	485,075	11.94	%	$	162,494	4.00	%
Total Risk-Based	$	551,751	13.58	%	$	324,988	8.00	%

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about market risk are presented at December 31, 2008 in Item 7A of the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 16, 2009. Additional information at March 31, 2009 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 March 31, 2009, 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

Not Applicable

Item 1A.

Risk Factors

In addition to the risk factors disclosed in the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2008, certain additional risks and uncertainties should also be considered as discussed below.

Recent increases in deposit insurance coverage are expected to increase our FDIC insurance assessments and result in higher noninterest expense.

The FDIC announcement of an increase in premiums charged for FDIC insurance protection affects FDIC member institutions IBERIABANK and Pulaski Bank. Although the two companies have historically paid low premium rates due to their sound financial position, the announced premium increases will have an adverse effect on our results of operations and, should more bank failures occur, the premium assessments could continue to increase.

During 2008 and continuing into 2009, the number of bank failures has impacted resolution costs of the FDIC and depleted the deposit insurance fund. In response, the Emergency Economic Stabilization Act of 2008 (the “EESA”) temporarily raised the limit on federal deposit insurance coverage from $100,000 to $250,000 per depositor. The limits are scheduled to return to $100,000 on January 1, 2010. The temporary increase in insured deposit results in a higher assessment for IBERIABANK and Pulaski Bank and will adversely affect our results of operations as an increase in noninterest expense.

Separate from the EESA, in October 2008, the FDIC also announced the Temporary Liquidity Guarantee Program. In 2008, we elected to participate in the deposit guarantee portion of the TLG Program, and as a result are subject to a coverage charge of 10 basis points per annum for noninterest-bearing deposit accounts. This assessment will also adversely affect our results of operations.

These programs have also placed additional stress on the deposit insurance fund. In order to maintain a strong funding position and restore reserve ratios of the deposit insurance fund, the FDIC increased assessment rates of insured institutions uniformly by 7 cents for every $100 of deposits beginning with the first quarter of 2009, with additional changes beginning April 1, 2009, which require riskier institutions to pay a larger share of premiums by factoring in rate adjustments based on secured liabilities and unsecured debt levels.

In February, 2009, the FDIC voted to amend the restoration plan and impose a special assessment of 20 cents for every $100 of assessable deposits on insured institutions on June 30, 2009, which would be collected on September 30, 2009. The interim rule also permits the FDIC to impose an additional emergency special assessment after June 30, 2009, of up to 10 cents per $100 of assessable deposits if necessary to maintain public confidence in federal deposit insurance. These interim rules were subject to a 30-day comment period, and as of the filing date of this Form l0-Q, the FDIC has not issued its final rules regarding the special assessments. The special assessment imposed, as well as any additional assessment, will adversely affect our results of operations.

We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. If there are additional bank or financial institution failures, we may be required to pay even higher FDIC premiums than the recently increased levels.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Not Applicable.

Item 3.

Defaults Upon Senior Securities

Not Applicable.

Item 4.

Submission of Matters to a Vote of Security Holders

The Company’s Annual Meeting of Shareholders was held on May 6, 2009.

With respect to the election of four directors to serve three-year terms expiring in the year 2012 and until their successors are elected and qualified, the following is the number of shares voted :


Nominees	For	Withheld
Ernest P. Breaux, Jr.	13,748,935	373,043
Daryl G. Byrd	13,593,807	528,171
John N. Casbon	13,744,773	377,205
Jefferson G. Parker	13,744,953	377,025

There were no abstentions or broker non-votes.

With respect to the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2009, the following is the number of shares voted:


For	Against	Abstain
14,089,806	26,078	6,094

There were no broker non-votes.

Item 5.

Other Information

Effective May 5, 2009, the Compensation Committee of the Board of Directors of the Company approved an award of 12,500 shares of restricted common stock and a phantom stock award of $64,125 to Daryl G. Byrd, President and Chief Executive Officer of the Company. The value of the shares as of the effective date was $47.91 per share. The restricted stock award will vest equally over a seven-year period commencing on the first anniversary of the award. The phantom stock award will vest equally over a six-year period commencing on the second anniversary of the date of the award. The Compensation Committee also granted to Mr. Byrd a $100,000 non-qualified deferred cash compensation award.

The restricted stock award was granted pursuant to and is subject to other terms and conditions of the 2008 Stock Incentive Plan filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 29, 2008, and the Restricted Stock Award Agreement filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008. The phantom stock and deferred cash compensation awards were granted pursuant to and are subject to other terms and conditions of the Deferred Compensation Plan filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 17, 2007, and the Phantom Stock Award Agreement filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 17, 2008.

Effective May 4, 2009, the corporate title of Pulaski Bank and Trust Company, the Company’s wholly owned federal savings bank subsidiary, was changed to IBERIABANK fsb .

Item 6.

Exhibits


Exhibit No. 10.1		2005 Stock Incentive Plan, as amended.

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.

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: May 11, 2009	By:	/s/ Daryl G. Byrd
		Daryl G. Byrd
		President and Chief Executive Officer

Date: May 11, 2009	By:	/s/ Anthony J. Restel
		Anthony J. Restel
		Senior Executive Vice President and Chief Financial Officer

Exhibit 10.1

IBERIABANK Corporation

2005 STOCK INCENTIVE PLAN

1. Establishment, Purpose, and Types of Awards

IBERIABANK Corporation (the “Company”) hereby establishes this equity-based incentive compensation plan to be known as the “IBERIABANK Corporation 2005 Stock Incentive Plan” (hereinafter referred to as the “Plan”), in order to provide incentives and awards to select employees and directors of the Company and its Affiliates.

The Plan permits the granting of the following types of awards (“Awards”), according to the Sections of the Plan listed here:


Section 6		Options
Section 7		Share Appreciation Rights
Section 8		Restricted Shares, Restricted Share Units, and Unrestricted Shares
Section 9		Deferred Share Units
Section 10		Performance Awards

The Plan is not intended to affect and shall not affect any stock options, equity-based compensation, or other benefits that the Company or its Affiliates may have provided, or may separately provide in the future pursuant to any agreement, plan, or program that is independent of this Plan.

2. Defined Terms

Terms in the Plan that begin with an initial capital letter have the defined meaning set forth in Appendix A , unless defined elsewhere in this Plan or the context of their use clearly indicates a different meaning.

3. Shares Subject to the Plan

Subject to the provisions of Section 13 of the Plan, the maximum number of Shares that the Company may issue for all Awards is 450,000 Shares, provided that the Company shall not issue more than forty (40%) percent of those Shares pursuant to Awards in a form other than Options and SARs. For all Awards, the Shares issued pursuant to the Plan may be authorized but unissued Shares, or Shares that the Company has reacquired or otherwise holds in treasury.

Shares that are subject to an Award that for any reason expires, is forfeited, is cancelled, or becomes unexercisable, and Shares that are for any other reason not paid or delivered under the Plan shall again, except to the extent prohibited by Applicable Law, be available for subsequent Awards under the Plan. Notwithstanding the foregoing, but subject to adjustments pursuant to Section 13 below, the number of Shares that are available for ISO Awards shall be determined, to the extent required under applicable tax laws, by reducing the number of Shares designated in the preceding paragraph by the number of Shares issued pursuant to Awards, provided that any Shares that are issued under the Plan and forfeited back to the Plan shall be available for issuance pursuant to future ISO Awards.

4. Administration

(a) General . The Committee shall administer the Plan in accordance with its terms, provided that the Board may act in lieu of the Committee on any matter. The Committee shall hold meetings at such times and places as it may determine and shall make such rules and regulations for the conduct of its business as it deems advisable. In the absence of a duly appointed Committee or if the Board otherwise chooses to act in lieu of the Committee, the Board shall function as the Committee for all purposes of the Plan.

(b) Committee Composition . The Board shall appoint the members of the Committee. If and to the extent permitted by Applicable Law, the Committee may authorize one or more Reporting Persons (or other officers) to make Awards to Eligible Persons who are not Reporting Persons (or other officers whom the Committee

has specifically authorized to make Awards). The Board may at any time appoint additional members to the Committee, remove and replace members of the Committee with or without Cause, and fill vacancies on the Committee however caused.

(c) Powers of the Committee. Subject to the provisions of the Plan, the Committee shall have the authority, in its sole discretion:

(i) to determine Eligible Persons to whom Awards shall be granted from time to time and the number of Shares, units, or SARs to be covered by each Award;

(ii) to determine, from time to time, the Fair Market Value of Shares;

(iii) to determine, and to set forth in Award Agreements, the terms and conditions of all Awards, including any applicable exercise or purchase price, the installments and conditions under which an Award shall become vested (which may be based on performance), terminated, expired, cancelled, or replaced, and the circumstances for vesting acceleration or waiver of forfeiture restrictions, and other restrictions and limitations;

(iv) to approve the forms of Award Agreements and all other documents, notices and certificates in connection therewith which need not be identical either as to type of Award or among Participants;

(v) to construe and interpret the terms of the Plan and any Award Agreement, to determine the meaning of their terms, and to prescribe, amend, and rescind rules and procedures relating to the Plan and its administration; and

(vi) in order to fulfill the purposes of the Plan and without amending the Plan, modify, cancel, or waive the Company’s rights with respect to any Awards, to adjust or to modify Award Agreements for changes in Applicable Law, and to recognize differences in foreign law, tax policies, or customs; and

(vii) to make all other interpretations and to take all other actions that the Committee may consider necessary or advisable to administer the Plan or to effectuate its purposes.

Subject to Applicable Law and the restrictions set forth in the Plan, the Committee may delegate administrative functions to individuals who are Reporting Persons, officers, or Employees of the Company or its Affiliates.

(d) Deference to Committee Determinations. The Committee shall have the discretion to interpret or construe ambiguous, unclear, or implied (but omitted) terms in any fashion it deems to be appropriate in its sole discretion, and to make any findings of fact needed in the administration of the Plan or Award Agreements. The Committee’s prior exercise of its discretionary authority shall not obligate it to exercise its authority in a like fashion thereafter. The Committee’s interpretation and construction of any provision of the Plan, or of any Award or Award Agreement, shall be final, binding, and conclusive. The validity of any such interpretation, construction, decision or finding of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall be upheld unless clearly arbitrary or capricious.

(e) No Liability; Indemnification. Neither the Board nor any Committee member, nor any Person acting at the direction of the Board or the Committee, shall be liable for any act, omission, interpretation, construction or determination made in good faith with respect to the Plan, any Award or any Award Agreement. The Company and its Affiliates shall pay or reimburse any member of the Committee, as well as any Director, Employee, or Consultant who takes action in connection with the Plan, for all expenses incurred with respect to the Plan, and to the full extent allowable under Applicable Law shall indemnify each and every one of them for any claims, liabilities, and costs (including reasonable attorney’s fees) arising out of their good faith performance of duties under the Plan. The Company and its Affiliates may obtain liability insurance for this purpose.

5. Eligibility

(a) General Rule . The Committee may grant ISOs only to Employees (including officers who are Employees) of the Company or an Affiliate that is a “parent corporation” or “subsidiary corporation” within the meaning of Section 424 of the Code, and may grant all other Awards to any Eligible Person. A Participant who has been granted an Award may be granted an additional Award or Awards if the Committee shall so determine, if such person is otherwise an Eligible Person and if otherwise in accordance with the terms of the Plan.

(b) Grant of Awards . Subject to the express provisions of the Plan, the Committee shall determine from the class of Eligible Persons those individuals to whom Awards under the Plan may be granted, the number of Shares subject to each Award, the price (if any) to be paid for the Shares or the Award and, in the case of Performance Awards, in addition to the matters addressed in Section 10 below, the specific objectives, goals and performance criteria that further define the Performance Award. Each Award shall be evidenced by an Award Agreement signed by the Company and, if required by the Committee, by the Participant. The Award Agreement shall set forth the material terms and conditions of the Award established by the Committee.

(c) Limits on Awards . During the term of the Plan, no Participant may receive Options and SARs that relate to more than 50,000 Shares per calendar year. The Committee will adjust this limitation pursuant to Section 13 below.

(d) Replacement Awards . Subject to Applicable Laws (including any associated Shareholder approval requirements), the Committee may, in its sole discretion and upon such terms as it deems appropriate, require as a condition of the grant of an Award to a Participant that the Participant surrender for cancellation some or all of the Awards that have previously been granted to the Participant under this Plan or otherwise. An Award that is conditioned upon such surrender may or may not be the same type of Award, may cover the same (or a lesser or greater) number of Shares as such surrendered Award, may have other terms that are determined without regard to the terms or conditions of such surrendered Award, and may contain any other terms that the Committee deems appropriate. In the case of Options, these other terms may not involve an Exercise Price that is lower than the Exercise Price of the surrendered Option unless the Company’s shareholders approve the grant itself or the program under which the grant is made pursuant to the Plan.

6. Option Awards

(a) Types; Documentation . The Committee may in its discretion grant ISOs to any Employee and Non-ISOs to any Eligible Person, and shall evidence any such grants in an Award Agreement that is delivered to the Participant. Each Option shall be designated in the Award Agreement as an ISO or a Non-ISO, and the same Award Agreement may grant both types of Options. At the sole discretion of the Committee, any Option may be exercisable, in whole or in part, immediately upon the grant thereof, or only after the occurrence of a specified event, or only in installments, which installments may vary. Options granted under the Plan may contain such terms and provisions not inconsistent with the Plan that the Committee shall deem advisable in its sole and absolute discretion.

(b) ISO $100,000 Limitation. To the extent that the aggregate Fair Market Value of Shares with respect to which Options designated as ISOs first become exercisable by a Participant in any calendar year (under this Plan and any other plan of the Company or any Affiliate) exceeds $100,000, such excess Options shall be treated as Non-ISOs. For purposes of determining whether the $100,000 limit is exceeded, the Fair Market Value of the Shares subject to an ISO shall be determined as of the Grant Date. In reducing the number of Options treated as ISOs to meet the $100,000 limit, the most recently granted Options shall be reduced first. In the event that Section 422 of the Code is amended to alter the limitation set forth therein, the limitation of this Section 6(b) shall be automatically adjusted accordingly.

(c) Term of Options . Each Award Agreement shall specify a term at the end of which the Option automatically expires, subject to earlier termination provisions contained in Section 6(h) hereof; provided, that, the term of any Option may not exceed ten years from the Grant Date. In the case of an ISO granted to an Employee who is a Ten Percent Holder on the Grant Date, the term of the ISO shall not exceed five years from the Grant Date.

(d) Exercise Price. The exercise price of an Option shall be determined by the Committee in its discretion and shall be set forth in the Award Agreement, provided that (i) if an ISO is granted to an Employee who on the Grant Date is a Ten Percent Holder, the per Share exercise price shall not be less than 110% of the Fair Market Value per Share on the Grant Date, and (ii) for all other Options, such per Share exercise price shall not be less than 100% of the Fair Market Value per Share on the Grant Date.

(e) Exercise of Option . The Committee shall in its sole discretion determine the times, circumstances, and conditions under which an Option shall be exercisable, and shall set them forth in the Award Agreement. The Committee shall have the discretion to determine whether and to what extent the vesting of Options shall be tolled during any unpaid leave of absence; provided, however, that in the absence of such determination, vesting of Options shall be tolled during any such leave approved by the Company.

(f) Minimum Exercise Requirements . An Option may not be exercised for a fraction of a Share. The Committee may require in an Award Agreement that an Option be exercised as to a minimum number of Shares, provided that such requirement shall not prevent a Participant from purchasing the full number of Shares as to which the Option is then exercisable.

(g) Methods of Exercise. Prior to its expiration pursuant to the terms of the applicable Award Agreement, each Option may be exercised, in whole or in part (provided that the Company shall not be required to issue fractional shares), by delivery of written notice of exercise to the secretary of the Company accompanied by the full exercise price of the Shares being purchased. In the case of an ISO, the Committee shall determine the acceptable methods of payment on the Grant Date and it shall be included in the applicable Award Agreement. The methods of payment that the Committee may in its discretion accept or commit to accept in an Award Agreement include:

(i) cash or check payable to the Company (in U.S. dollars);

(ii) other Shares that (A) are owned by the Participant who is purchasing Shares pursuant to an Option, (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which the Option is being exercised, (C) were not acquired by such Participant pursuant to the exercise of an Option, unless such Shares have been owned by such Participant for at least six months or such other period as the Committee may determine, (D) are all, at the time of such surrender, free and clear of any and all claims, pledges, liens and encumbrances, or any restrictions which would in any manner restrict the transfer of such shares to or by the Company (other than such restrictions as may have existed prior to an issuance of such Shares by the Company to such Participant), and (E) are duly endorsed for transfer to the Company;

(iii) a cashless exercise program that the Committee may approve, from time to time in its discretion, pursuant to which a Participant may concurrently provide irrevocable instructions (A) to such Participant’s broker or dealer to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the exercise price of the Option plus all applicable taxes required to be withheld by the Company by reason of such exercise, and (B) to the Company to deliver the certificates for the purchased Shares directly to such broker or dealer in order to complete the sale; or

(iv) any combination of the foregoing methods of payment.

The Company shall not be required to deliver Shares pursuant to the exercise of an Option until payment of the full exercise price therefore is received by the Company.

(h) Termination of Continuous Service . The Committee may establish and set forth in the applicable Award Agreement the terms and conditions on which an Option shall remain exercisable, if at all, following termination of a Participant’s Continuous Service. The Committee may waive or modify these provisions at any time. To the extent that a Participant is not entitled to exercise an Option at the date of his or her termination of Continuous Service, or if the Participant (or other person entitled to exercise the Option) does not exercise the Option to the extent so entitled within the time specified in the Award Agreement or below (as applicable), the Option shall terminate and the Shares underlying the unexercised portion of the Option shall revert to the Plan and become available for future Awards. In no event may any Option be exercised after the expiration of the Option term as set forth in the Award Agreement.

The following provisions shall apply to the extent an Award Agreement does not specify the terms and conditions upon which an Option shall terminate when there is a termination of a Participant’s Continuous Service:

(i) Termination other than Upon Disability or Death or for Cause . In the event of termination of a Participant’s Continuous Service (other than as a result of Participant’s death, disability, retirement or termination for Cause), the Participant shall have the right to exercise an Option at any time within 90 days following such termination to the extent the Participant was entitled to exercise such Option at the date of such termination.

(ii) Disability . In the event of termination of a Participant’s Continuous Service as a result of his or her being Disabled, the Participant shall have the right to exercise an Option at any time within one year following such termination to the extent the Participant was entitled to exercise such Option at the date of such termination.

(iii) Retirement . In the event of termination of a Participant’s Continuous Service as a result of Participant’s retirement, the Participant shall have the right to exercise the Option at any time within six months following such termination to the extent the Participant was entitled to exercise such Option at the date of such termination.

(iv) Death . In the event of the death of a Participant during the period of Continuous Service since the Grant Date of an Option, or within thirty days following termination of the Participant’s Continuous Service, the Option may be exercised, at any time within one year following the date of the Participant’s death, by the Participant’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent the right to exercise the Option had vested at the date of death or, if earlier, the date the Participant’s Continuous Service terminated.

(v) Cause . If the Committee determines that a Participant’s Continuous Service terminated due to Cause, the Participant shall immediately forfeit the right to exercise any Option, and it shall be considered immediately null and void.

(i) Reverse Vesting. The Committee in its sole and absolute discretion may allow a Participant to exercise unvested Options, in which case the Shares then issued shall be Restricted Shares having analogous vesting restrictions to the unvested Options.

7. Share Appreciate Rights (SARs)

(a) Grants . The Committee may in its discretion grant Share Appreciation Rights to any Eligible Person, in any of the following forms:

(i) SARs related to Options . The Committee may grant SARs either concurrently with the grant of an Option or with respect to an outstanding Option, in which case the SAR shall extend to all or a portion of the Shares covered by the related Option. An SAR shall entitle the Participant who holds the related Option, upon exercise of the SAR and surrender of the related Option, or portion thereof, to the extent the SAR and related Option each were previously unexercised, to receive payment of an amount

(ii) determined pursuant to Section 7(e) below. Any SAR granted in connection with an ISO will contain such terms as may be required to comply with the provisions of Section 422 of the Code and the regulations promulgated thereunder.

(iii) SARs Independent of Options . The Committee may grant SARs which are independent of any Option subject to such conditions as the Committee may in its discretion determine, which conditions will be set forth in the applicable Award Agreement.

(iv) Limited SARs . The Committee may grant SARs exercisable only upon or in respect of a Change in Control or any other specified event, and such limited SARs may relate to or operate in tandem or combination with or substitution for Options or other SARs, or on a stand-alone basis, and may be payable in cash or Shares based on the spread between the exercise price of the SAR, and (A) a price based upon or equal to the Fair Market Value of the Shares during a specified period, at a specified time within a specified period before, after or including the date of such event, or (B) a price related to consideration payable to Company’s shareholders generally in connection with the event.

(b) Exercise Price . The per Share exercise price of an SAR shall be determined in the sole discretion of the Committee, shall be set forth in the applicable Award Agreement, and shall be no less than 100% of the Fair Market Value of one Share. The exercise price of an SAR related to an Option shall be the same as the exercise price of the related Option. The exercise price of an SAR shall be subject to the special rules on pricing contained in Sections 6(d) and 6(j) hereof.

(c) Exercise of SARs . Unless the Award Agreement otherwise provides, an SAR related to an Option will be exercisable at such time or times, and to the extent, that the related Option will be exercisable; provided that the Award Agreement shall not, without the approval of the shareholders of the Company, provide for a vesting period for the exercise of the SAR that is more favorable to the Participant than the exercise period for the related Option. An SAR may not have a term exceeding ten years from its Grant Date. An SAR granted independently of any other Award will be exercisable pursuant to the terms of the Award Agreement, but shall not, without the approval of the shareholders of the Company, provide for a vesting period for the exercise of the SAR that is more favorable to the Participant than the exercise period for the related Option. Whether an SAR is related to an Option or is granted independently, the SAR may only be exercised when the Fair Market Value of the Shares underlying the SAR exceeds the exercise price of the SAR.

(d) Effect on Available Shares . All SARs are to be settled in shares of the Company’s stock and shall be counted in full against the number of shares available for award under the Plan, regardless of the number of exercise gain shares issued upon settlement of the SARs.

(e) Payment. Upon exercise of an SAR related to an Option and the attendant surrender of an exercisable portion of any related Award, the Participant will be entitled to receive payment of an amount determined by multiplying –

(i) the excess of the Fair Market Value of a Share on the date of exercise of the SAR over the exercise price per Share of the SAR, by

(ii) the number of Shares with respect to which the SAR has been exercised.

Notwithstanding the foregoing, an SAR granted independently of an Option (i) may limit the amount payable to the Participant to a percentage, specified in the Award Agreement but not exceeding one-hundred percent (100%), of the amount determined pursuant to the preceding sentence, and (ii) shall be subject to any payment or other restrictions that the Committee may at any time impose in its discretion, including restrictions intended to conform the SARs with Section 409A of the Code.

(f) Form and Terms of Payment . Subject to Applicable Law, the Committee may, in its sole discretion, settle the amount determined under Section 7(e) above solely in cash, solely in Shares (valued at their Fair Market Value on the date of exercise of the SAR), or partly in cash and partly in Shares. In any event, cash shall be paid in lieu of fractional Shares. Absent a contrary determination by the Committee, all SARs shall be settled in cash as soon as practicable after exercise. Notwithstanding the foregoing, the Committee may, in an Award Agreement, determine the maximum amount of cash or Shares or combination thereof that may be delivered upon exercise of an SAR.

(g) Termination of Employment or Consulting Relationship . The Committee shall establish and set forth in the applicable Award Agreement the terms and conditions on which an SAR shall remain exercisable, if at all, following termination of a Participant’s Continuous Service. The provisions of Section 6(h) above shall apply to the extent an Award Agreement does not specify the terms and conditions upon which an SAR shall terminate when there is a termination of a Participant’s Continuous Service.

8. Restricted Shares, Restricted Share Units, and Unrestricted Shares

(a) Grants. The Committee may in its discretion grant restricted shares (“Restricted Shares”) to any Eligible Person and shall evidence such grant in an Award Agreement that is delivered to the Participant and that sets forth the number of Restricted Shares, the purchase price for such Restricted Shares (if any), and the terms upon which the Restricted Shares may become vested. In addition, the Company may in its discretion grant the right to receive Shares after certain vesting requirements are met (“Restricted Share Units”) to any Eligible Person and shall evidence such grant in an Award Agreement that is delivered to the Participant which sets forth the number of Shares (or formula, that may be based on future performance or conditions, for determining the number of Shares) that the Participant shall be entitled to receive upon vesting and the terms upon which the Shares subject to a Restricted Share Unit may become vested. The Committee may condition any Award of Restricted Shares or Restricted Share Units to a Participant on receiving from the Participant such further assurances and documents as the Committee may require to enforce the restrictions. In addition, the Committee may grant Awards hereunder in the form of unrestricted shares (“Unrestricted Shares”), which shall vest in full upon the date of grant or such other date as the Committee may determine or which the Committee may issue pursuant to any program under which one or more Eligible Persons (selected by the Committee in its discretion) elect to receive Unrestricted Shares in lieu of cash bonuses that would otherwise be paid.

(b) Vesting and Forfeiture . The Committee shall set forth in an Award Agreement granting Restricted Shares or Restricted Share Units, the terms and conditions under which the Participant’s interest in the Restricted Shares or the Shares subject to Restricted Share Units will become vested and non-forfeitable. Except as set forth in the applicable Award Agreement or the Committee otherwise determines, upon termination of a Participant’s Continuous Service for any other reason, the Participant shall forfeit his or her Restricted Shares and Restricted Share Units; provided that if a Participant purchases the Restricted Shares and forfeits them for any reason, the Company shall return the purchase price to the Participant only if and to the extent set forth in an Award Agreement.

(c) Issuance of Restricted Shares Prior to Vesting . The Company shall issue stock certificates that evidence Restricted Shares pending the lapse of applicable restrictions, and that bear a legend making appropriate reference to such restrictions. Except as set forth in the applicable Award Agreement or the Committee otherwise determines, the Company or a third party that the Company designates shall hold such Restricted Shares and any dividends that accrue with respect to Restricted Shares pursuant to Section 8(e) below.

(d) Issuance of Shares upon Vesting . As soon as practicable after vesting of a Participant’s Restricted Shares (or Shares underlying Restricted Share Units) and the Participant’s satisfaction of applicable tax withholding requirements, the Company shall release to the Participant, free from the vesting restrictions, one Share for each vested Restricted Share (or issue one Share free of the vesting restriction for each vested Restricted Share Unit), unless an Award Agreement provides otherwise. No fractional shares shall be distributed, and cash shall be paid in lieu thereof.

(e) Dividends Payable on Vesting . Whenever Shares are released to a Participant under Section 8(d) above pursuant to the vesting of Restricted Shares or the Shares underlying Restricted Share Units are issued to a Participant pursuant to Section 8(d) above, such Participant shall receive (unless otherwise provided in the Award Agreement), with respect to each Share released or issued, an amount equal to any cash dividends (plus, in the discretion of the Committee, simple interest at a rate as the Committee may determine) and a number of Shares equal to any stock dividends, which were declared and paid to the holders of Shares between the Grant Date and the date such Share is released or issued.

(f) Section 83(b) Elections . A Participant may make an election under Section 83(b) of the Code (the “Section 83(b) Election”) with respect to Restricted Shares. If a Participant who has received Restricted Share Units provides the Committee with written notice of his or her intention to make Section 83(b) Election with respect to the Shares subject to such Restricted Share Units, the Committee may in its discretion convert the Participant’s Restricted Share Units into Restricted Shares, on a one-for-one basis, in full satisfaction of the Participant’s Restricted Share Unit Award. The Participant may then make a Section 83(b) Election with respect to those Restricted Shares. Shares with respect to which a Participant makes a Section 83(b) Election shall not be eligible for deferral pursuant to Section 9 below.

(g) Deferral Elections . At any time within the thirty-day period (or other shorter or longer period that the Committee selects) in which a Participant who is a member of a select group of management or highly compensated employees (within the meaning of the Code) receives an Award of either Restricted Shares or Restricted Share Units, the Committee may permit the Participant to irrevocably elect, on a form provided by and acceptable to the Committee, to defer the receipt of all or a percentage of the Shares that would otherwise be transferred to the Participant upon the vesting of such Award. If the Participant makes this election, the Shares subject to the election, and any associated dividends and interest, shall be credited to an account established pursuant to Section 9 hereof on the date such Shares would otherwise have been released or issued to the Participant pursuant to Section 8(d) above.

9. Deferred Share Units

(a) Elections to Defer. The Committee may permit any Eligible Person who is a Director, Consultant or member of a select group of management or highly compensated employees (within the meaning of the Code) to irrevocably elect, on a form provided by and acceptable to the Committee (the “Election Form”), to forego the receipt of cash or other compensation (including the Shares deliverable pursuant to any Award other than Restricted Shares for which a Section 83(b) Election has been made), and in lieu thereof to have the Company credit to an internal Plan account (the “Account”) a number of deferred share units (“Deferred Share Units”) having a Fair Market Value equal to the Shares and other compensation deferred. These credits will be made at the end of each calendar month during which compensation is deferred. Each Election Form shall take effect on the first day of the next calendar year (or on the first day of the next calendar month in the case of an initial election by a Participant who is first eligible to defer hereunder) after its delivery to the Company, subject to Section 8(g) regarding deferral of Restricted Shares and Restricted Share Units and to Section 10(e) regarding deferral of Performance Awards, unless the Company sends the Participant a written notice explaining why the Election Form is invalid within five business days after the Company receives it. Notwithstanding the foregoing sentence: (i) Election Forms shall be ineffective with respect to any compensation that a Participant earns before the date on which the Company receives the Election Form, and (ii) the Committee may unilaterally make awards in the form of Deferred Share Units, regardless of whether or not the Participant foregoes other compensation.

(b) Vesting . Unless an Award Agreement expressly provides otherwise, each Participant shall be 100% vested at all times in any Shares subject to Deferred Share Units.

(c) Issuances of Shares . The Company shall provide a Participant with one Share for each Deferred Share Unit in five substantially equal annual installments that are issued before the last day of each of the five calendar years that end after the date on which the Participant’s Continuous Service terminates, unless –

(i) the Participant has properly elected a different form of distribution, on a form approved by the Committee, that permits the Participant to select any combination of a lump sum and annual installments that are completed within ten years following termination of the Participant’s Continuous Service, and

(ii) the Company received the Participant’s distribution election form at the time the Participant elects to defer the receipt of cash or other compensation pursuant to Section 9(a), provided that such election may be changed through any subsequent election that (i) is delivered to the Administrator at least one year before the date on which distributions are otherwise scheduled to commence pursuant to the Participant’s election, and (ii) defers the commencement of distributions by at least five years from the originally scheduled commencement date.

Fractional shares shall not be issued, and instead shall be paid out in cash.

(d) Crediting of Dividends . Whenever Shares are issued to a Participant pursuant to Section 9(c) above, such Participant shall also be entitled to receive, with respect to each Share issued, a cash amount equal to any cash dividends (plus simple interest at a rate of five percent per annum, or such other reasonable rate as the Committee may determine), and a number of Shares equal to any stock dividends which were declared and paid to the holders of Shares between the Grant Date and the date such Share is issued.

(e) Emergency Withdrawals. In the event a Participant suffers an unforeseeable emergency within the contemplation of this Section and Section 409A of the Code, the Participant may apply to the Company for an immediate distribution of all or a portion of the Participant’s Deferred Share Units. The unforeseeable emergency must result from a sudden and unexpected illness or accident of the Participant, the Participant’s spouse, or a dependent (within the meaning of Section 152(a) of the Code) of the Participant, casualty loss of the Participant’s property, or other similar extraordinary and unforeseeable conditions beyond the control of the Participant. Examples of purposes which are not considered unforeseeable emergencies include post-secondary school expenses or the desire to purchase a residence. In no event will a distribution be made to the extent the unforeseeable emergency could be relieved through reimbursement or compensation by insurance or otherwise, or by liquidation of the Participant’s nonessential assets to the extent such liquidation would not itself cause a severe financial hardship. The amount of any distribution hereunder shall be limited to the amount necessary to relieve the Participant’s unforeseeable emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution. The Committee shall determine whether a Participant has a qualifying unforeseeable emergency and the amount which qualifies for distribution, if any. The Committee may require evidence of the purpose and amount of the need, and may establish such application or other procedures as it deems appropriate.

(f) Unsecured Rights to Deferred Compensation. A Participant’s right to Deferred Share Units shall at all times constitute an unsecured promise of the Company to pay benefits as they come due. The right of the Participant or the Participant’s duly-authorized transferee to receive benefits hereunder shall be solely an unsecured claim against the general assets of the Company. Neither the Participant nor the Participant’s duly-authorized transferee shall have any claim against or rights in any specific assets, shares, or other funds of the Company.

10. Performance Awards

(a) Performance Units . Subject to the limitations set forth in paragraph (c) hereof, the Committee may in its discretion grant Performance Units to any Eligible Person and shall evidence such grant in an Award Agreement that is delivered to the Participant which sets forth the terms and conditions of the Award.

(b) Performance Compensation Awards . Subject to the limitations set forth in paragraph (c) hereof, the Committee may, at the time of grant of a Performance Unit, designate such Award as a “Performance Compensation Award” in order that such Award constitutes “qualified performance-based compensation” under Code Section 162(m), in which event the Committee shall have the power to grant such Performance Compensation Award upon terms and conditions that qualify it as “qualified performance-based compensation” within the meaning of Code Section 162(m). With respect to each such Performance Compensation Award, the Committee shall establish, in writing within the time required under Code Section 162(m), a “Performance Period,” “Performance Measure(s)”, and “Performance Formula(e)” (each such term being hereinafter defined).

A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that the Performance Measure(s) for such Award is achieved and the Performance Formula(e) as applied against such Performance Measure(s) determines that all or some portion of such Participant’s Award has been earned for the Performance Period. As soon as practicable after the close of each Performance Period, the Committee shall review and certify in writing whether, and to what extent, the Performance Measure(s) for the Performance Period have been achieved and, if so, determine and certify in writing the amount of the Performance Compensation Award to be paid to the Participant and, in so doing, may use negative discretion to decrease, but not increase, the amount of the Award otherwise payable to the Participant based upon such performance.

(c) Limitations on Awards . The maximum Performance Unit Award and the maximum Performance Compensation Award that any one Participant may receive for any one Performance Period shall not together exceed 50,000 Shares and $3 million in cash, per calendar year. The Committee shall have the discretion to provide in any Award Agreement that any amounts earned in excess of these limitations will either be credited as Deferred Share Units, or as deferred cash compensation under a separate plan of the Company (provided in the latter case that such deferred compensation either bears a reasonable rate of interest or has a value based on one or more predetermined actual investments). Any amounts for which payment to the Participant is deferred pursuant to the preceding sentence shall be paid to the Participant in a future year or years not earlier than, and only to the extent that, the Participant is either not receiving compensation in excess of these limits for a Performance Period, or is not subject to the restrictions set forth under Section 162(b) of the Code.

(d) Definitions .

(i) “Performance Formula” means, for a Performance Period, one or more objective formulas or standards established by the Committee for purposes of determining whether or the extent to which an Award has been earned based on the level of performance attained or to be attained with respect to one or more Performance Measure(s). Performance Formulae may vary from Performance Period to Performance Period and from Participant to Participant and may be established on a stand-alone basis, in tandem or in the alternative.

(ii) “Performance Measure” means one or more of the following selected by the Committee to measure Company, Affiliate, and/or business unit performance for a Performance Period, whether in absolute or relative terms (including, without limitation, terms relative to a peer group or index): basic, diluted, or adjusted earnings per share; sales or revenue; earnings before interest, taxes, and other adjustments (in total or on a per share basis); basic or adjusted net income; returns on equity, assets, capital, revenue or similar measure; economic value added; working capital; credit quality measurements (such as net charge-offs, the ratio of nonperforming assets to total assets, and loan loss allowances as a percentage of nonperformaning assets); total shareholder return; and product development, product market share, research, licensing, litigation, human resources, information services, mergers, acquisitions, sales of assets of Affiliates or business units. Each such measure shall be, to the extent applicable, determined in accordance with generally accepted accounting principles as consistently applied by the Company (or such other standard applied by the Committee) and, if so determined by the Committee, and in the case of a Performance Compensation Award, to the extent permitted under Code Section 162(m), adjusted to omit the effects of extraordinary items, gain or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions and cumulative effects of changes in accounting principles. Performance Measures may vary from Performance Period to Performance Period and from Participant to Participant, and may be established on a stand-alone basis, in tandem or in the alternative.

(iii) “Performance Period” means one or more periods of time (of not less than one fiscal year of the Company), as the Committee may designate, over which the attainment of one or more Performance Measure(s) will be measured for the purpose of determining a Participant’s rights in respect of an Award.

(e) Deferral Elections . At any time prior to the date that is at least six months before the close of a Performance Period (or shorter or longer period that the Committee selects) with respect to an Award of either Performance Units or Performance Compensation, the Committee may permit a Participant who is a member of a select group of management or highly compensated employees (within the meaning of the Code) to irrevocably elect, on a form provided by and acceptable to the Committee, to defer the receipt of all or a percentage of the cash or Shares that would otherwise be transferred to the Participant upon the vesting of such Award. If the Participant makes this election, the cash or Shares subject to the election, and any associated interest and dividends, shall be credited to an account established pursuant to Section 9 hereof on the date such cash or Shares would otherwise have been released or issued to the Participant pursuant to Section 10(a) or Section 10(b) above.

11. Taxes

(a) General. As a condition to the issuance or distribution of Shares pursuant to the Plan, the Participant (or in the case of the Participant’s death, the person who succeeds to the Participant’s rights) shall make such arrangements as the Company may require for the satisfaction of any applicable federal, state, local or foreign withholding tax obligations that may arise in connection with the Award and the issuance of Shares. The Company shall not be required to issue any Shares until such obligations are satisfied. If the Committee allows the withholding or surrender of Shares to satisfy a Participant’s tax withholding obligations, the Committee shall not allow Shares to be withheld in an amount that exceeds the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes.

(b) Default Rule for Employees. In the absence of any other arrangement, an Employee shall be deemed to have directed the Company to withhold or collect from his or her cash compensation an amount sufficient to satisfy such tax obligations from the next payroll payment otherwise payable after the date of the exercise of an Award.

(c) Special Rules. In the case of a Participant other than an Employee (or in the case of an Employee where the next payroll payment is not sufficient to satisfy such tax obligations, with respect to any remaining tax obligations), in the absence of any other arrangement and to the extent permitted under Applicable Law, the Participant shall be deemed to have elected to have the Company withhold from the Shares or cash to be issued pursuant to an Award that number of Shares having a Fair Market Value determined as of the applicable Tax Date (as defined below) or cash equal to the amount required to be withheld. For purposes of this Section 11, the Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined under the Applicable Law (the “Tax Date”).

(d) Surrender of Shares. If permitted by the Committee, in its discretion, a Participant may satisfy the minimum applicable tax withholding and employment tax obligations associated with an Award by surrendering Shares to the Company (including Shares that would otherwise be issued pursuant to the Award) that have a Fair Market Value determined as of the applicable Tax Date equal to the amount required to be withheld. In the case of Shares previously acquired from the Company that are surrendered under this Section 11, such Shares must have been owned by the Participant for more than six months on the date of surrender (or such longer period of time the Company may in its discretion require).

(e) Income Taxes and Deferred Compensation . Participants are solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with Awards (including any taxes arising under Section 409A of the Code), and the Company shall not have any obligation to indemnify or otherwise hold any Participant harmless from any or all of such taxes. The Administrator shall have the discretion to organize any deferral program, to require deferral election forms, and to grant or to unilaterally modify any Award in a manner that (i) conforms with the requirements of Section 409A of the Code with respect to compensation that is deferred and that vests after December 31, 2004, (ii) that voids any Participant election to the extent it would violate Section 409A of the Code, and (iii) for any distribution election that would violate Section 409A of the Code, to make distributions pursuant to the Award at the earliest to occur of a distribution event that is allowable under Section 409A of the Code or any distribution event that is both allowable under Section 409A of the Code and is elected by the Participant, subject to any valid second election to defer, provided that the Administrator permits second elections to defer in accordance with Section 409A(a)(4)(C). The Administrator shall have the sole discretion to interpret the requirements of the Code, including Section 409A, for purposes of the Plan and all Awards.

12. Non-Transferability of Awards

(a) General. Except as set forth in this Section 12, or as otherwise approved by the Committee, Awards may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution. The designation of a beneficiary by a Participant will not constitute a transfer. An Award may be exercised, during the lifetime of the holder of an Award, only by such holder, the duly-authorized legal representative of a Participant who is Disabled, or a transferee permitted by this Section 12.

(b) Limited Transferability Rights. Notwithstanding anything else in this Section 12, the Committee may in its discretion provide in an Award Agreement that an Award other than an ISO may be transferred, on such terms and conditions as the Committee deems appropriate, either (i) by instrument to the Participant’s “Immediate Family” (as defined below), (ii) by instrument to an inter vivos or testamentary trust (or other entity) in which the Award is to be passed to the Participant’s designated beneficiaries, or (iii) by gift to charitable institutions. Any transferee of the Participant’s rights shall succeed and be subject to all of the terms of this Award Agreement and the Plan. “Immediate Family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships.

13. Adjustments Upon Changes in Capitalization, Merger or Certain Other Transactions

(a) Changes in Capitalization. The Committee shall equitably adjust the number of Shares covered by each outstanding Award, and the number of Shares that have been authorized for issuance under the Plan but as to which no Awards have yet been granted or that have been returned to the Plan upon cancellation, forfeiture, or expiration of an Award, as well as the price per Share covered by each such outstanding Award, to reflect any increase or decrease in the number of issued Shares resulting from a stock-split, reverse stock-split, stock dividend, combination, recapitalization or reclassification of the Shares, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company. In the event of any such transaction or event, the Committee may provide in substitution for any or all outstanding Options under the Plan such alternative consideration (including securities of any surviving entity) as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the surrender of all Options so replaced. In any case, such substitution of securities shall not require the consent of any person who is granted Options pursuant to the Plan. Except as expressly provided herein, or in an Award Agreement, if the Company issues for consideration shares of stock of any class or securities convertible into shares of stock of any class, the issuance shall not affect, and no adjustment by reason thereof shall be required to be made with respect to the number or price of Shares subject to any award.

(b) Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company other than as part of a Change of Control, each Award will terminate immediately prior to the consummation of such action, subject to the ability of the Committee to exercise any discretion authorized in the case of a Change in Control.

(c) Change in Control. In the event of a Change in Control, the Committee may in its sole and absolute discretion and authority, without obtaining the approval or consent of the Company’s shareholders or any Participant with respect to his or her outstanding Awards, take one or more of the following actions: arrange for or otherwise provide that each outstanding Award shall be assumed or a substantially similar award shall be substituted by a successor corporation or a parent or subsidiary of such successor corporation (the “Successor Corporation”);

(i) accelerate the vesting of Awards so that Awards shall vest (and, to the extent applicable, become exercisable) as to the Shares that otherwise would have been unvested and provide that repurchase rights of the Company with respect to Shares issued upon exercise of an Award shall lapse as to the Shares subject to such repurchase right;

(ii) arrange or otherwise provide for the payment of cash or other consideration to Participants in exchange for the satisfaction and cancellation of outstanding Awards; or

(iii) make such other modifications, adjustments or amendments to outstanding Awards or this Plan as the Committee deems necessary or appropriate, subject however to the terms of Section 15(a) below.

Notwithstanding the above, in the event a Participant holding an Award assumed or substituted by the Successor Corporation in a Change in Control is Involuntarily Terminated by the Successor Corporation in connection with, or within 12 months following consummation of, the Change in Control, then any assumed or substituted Award held by the terminated Participant at the time of termination shall accelerate and become fully vested (and exercisable in full in the case of Options and SARs), and any repurchase right applicable to any Shares shall lapse in full, unless an Award Agreement provides for a more restrictive acceleration or vesting schedule or more restrictive limitations on the lapse of repurchase rights or otherwise places additional restrictions, limitations and conditions on an Award. The acceleration of vesting and lapse of repurchase rights provided for in the previous sentence shall occur immediately prior to the effective date of the Participant’s termination, unless an Award Agreement provides otherwise.

(d) Certain Distributions. In the event of any distribution to the Company’s shareholders of securities of any other entity or other assets (other than dividends payable in cash or stock of the Company) without receipt of consideration by the Company, the Committee may, in its discretion, appropriately adjust the price per Share covered by each outstanding Award to reflect the effect of such distribution.

14. Time of Granting Awards .

The date of grant (“Grant Date”) of an Award shall be the date on which the Committee makes the determination granting such Award or such other date as is determined by the Committee, provided that in the case of an ISO, the Grant Date shall be the later of the date on which the Committee makes the determination granting such ISO or the date of commencement of the Participant’s employment relationship with the Company.

15. Modification of Awards and Substitution of Options .

(a) Modification, Extension, and Renewal of Awards . Within the limitations of the Plan, the Committee may modify an Award to accelerate the rate at which an Option or SAR may be exercised (including without limitation permitting an Option or SAR to be exercised in full without regard to the installment or vesting provisions of the applicable Award Agreement or whether the Option or SAR is at the time exercisable, to the extent it has not previously been exercised), to accelerate the vesting of any Award, to extend or renew outstanding Awards or to accept the cancellation of outstanding Awards to the extent not previously exercised. However, the Committee may not cancel an outstanding option that is underwater for the purpose of reissuing the option to the participant at a lower exercise price or granting a replacement award of a different type. Notwithstanding the foregoing provision, no modification of an outstanding Award shall materially and adversely affect such Participant’s rights thereunder, unless either the Participant provides written consent or there is an express Plan provision permitting the Committee to act unilaterally to make the modification.

(b) Substitution of Options. Notwithstanding any inconsistent provisions or limits under the Plan, in the event the Company or an Affiliate acquires (whether by purchase, merger or otherwise) all or substantially all of outstanding capital stock or assets of another corporation or in the event of any reorganization or other transaction qualifying under Section 424 of the Code, the Committee may, in accordance with the provisions of that Section, substitute Options for options under the plan of the acquired company provided (i) the excess of the aggregate fair market value of the shares subject to an option immediately after the substitution over the aggregate option price of such shares is not more than the similar excess immediately before such substitution and (ii) the new option does not give persons additional benefits, including any extension of the exercise period.

16. Term of Plan .

The Plan shall continue in effect for a term of ten (10) years from its effective date as determined under Section 20 below, unless the Plan is sooner terminated under Section 17 below.

17. Amendment and Termination of the Plan .

(a) Authority to Amend or Terminate. Subject to Applicable Laws, the Board may from time to time amend, alter, suspend, discontinue, or terminate the Plan.

(b) Effect of Amendment or Termination. No amendment, suspension, or termination of the Plan shall materially and adversely affect Awards already granted unless either it relates to an adjustment pursuant to Section 13 above, or it is otherwise mutually agreed between the Participant and the Committee, which agreement must be in writing and signed by the Participant and the Company. Notwithstanding the foregoing, the Committee may amend the Plan to eliminate provisions which are no longer necessary as a result of changes in tax or securities laws or regulations, or in the interpretation thereof.

18. Conditions Upon Issuance of Shares .

Notwithstanding any other provision of the Plan or any agreement entered into by the Company pursuant to the Plan, the Company shall not be obligated, and shall have no liability for failure, to issue or deliver any Shares under the Plan unless such issuance or delivery would comply with Applicable Law, with such compliance determined by the Company in consultation with its legal counsel.

19. Reservation of Shares .

The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. Neither the Company nor the Committee shall, without shareholder approval, allow for a repricing within the meaning of the federal securities laws applicable to proxy statement disclosures.

20. Effective Date .

This Plan shall become effective on the date of its approval by the Board; provided that this Plan shall be submitted to the Company’s shareholders for approval, and if not approved by the shareholders in accordance with Applicable Laws (as determined by the Committee in its discretion) within one year from the date of approval by the Board, this Plan and any Awards shall be null, void, and of no force and effect. Awards granted under this Plan before approval of this Plan by the shareholders shall be granted subject to such approval, and no Shares shall be distributed before such approval.

21. Controlling Law .

All disputes relating to or arising from the Plan shall be governed by the internal substantive laws (and not the laws of conflicts of laws) of the State of Louisiana, to the extent not preempted by United States federal law. If any provision of this Plan is held by a court of competent jurisdiction to be invalid and unenforceable, the remaining provisions shall continue to be fully effective.

22. Laws And Regulations .

(a) U.S. Securities Laws. This Plan, the grant of Awards, and the exercise of Options and SARs under this Plan, and the obligation of the Company to sell or deliver any of its securities (including, without limitation, Options, Restricted Shares, Restricted Share Units, Deferred Share Units, and Shares) under this Plan shall be subject to all Applicable Law. In the event that the Shares are not registered under the Securities Act of 1933, as amended (the “Act”), or any applicable state securities laws prior to the delivery of such Shares, the Company may

require, as a condition to the issuance thereof, that the persons to whom Shares are to be issued represent and warrant in writing to the Company that such Shares are being acquired by him or her for investment for his or her own account and not with a view to, for resale in connection with, or with an intent of participating directly or indirectly in, any distribution of such Shares within the meaning of the Act, and a legend to that effect may be placed on the certificates representing the Shares.

(b) Other Jurisdictions . To facilitate the making of any grant of an Award under this Plan, the Committee may provide for such special terms for Awards to Participants who are foreign nationals or who are employed by the Company or any Affiliate outside of the United States of America as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. The Company may adopt rules and procedures relating to the operation and administration of this Plan to accommodate the specific requirements of local laws and procedures of particular countries. Without limiting the foregoing, the Company is specifically authorized to adopt rules and procedures regarding the conversion of local currency, taxes, withholding procedures and handling of stock certificates which vary with the customs and requirements of particular countries. The Company may adopt sub-plans and establish escrow accounts and trusts as may be appropriate or applicable to particular locations and countries.

23. No Shareholder Rights . Neither a Participant nor any transferee of a Participant shall have any rights as a shareholder of the Company with respect to any Shares underlying any Award until the date of issuance of a share certificate to a Participant or a transferee of a Participant for such Shares in accordance with the Company’s governing instruments and Applicable Law. Prior to the issuance of Shares pursuant to an Award, a Participant shall not have the right to vote or to receive dividends or any other rights as a shareholder with respect to the Shares underlying the Award, notwithstanding its exercise in the case of Options and SARs. No adjustment will be made for a dividend or other right that is determined based on a record date prior to the date the stock certificate is issued, except as otherwise specifically provided for in this Plan.

24. No Employment Rights . The Plan shall not confer upon any Participant any right to continue an employment, service or consulting relationship with the Company, nor shall it affect in any way a Participant’s right or the Company’s right to terminate the Participant’s employment, service, or consulting relationship at any time, with or without Cause.

IBERIABANK Corporation

2005 STOCK INCENTIVE PLAN

Appendix A: Definitions

As used in the Plan, the following definitions shall apply:

“ Affiliate ” means, with respect to any Person (as defined below), any other Person that directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, “control,” when used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person or the power to elect directors, whether through the ownership of voting securities, by contract or otherwise; and the terms “affiliated,” “controlling” and “controlled” have meanings correlative to the foregoing.

“ Applicable Law ” means the legal requirements relating to the administration of options and share-based plans under applicable U.S. federal and state laws, the Code, any applicable stock exchange or automated quotation system rules or regulations, and the applicable laws of any other country or jurisdiction where Awards are granted, as such laws, rules, regulations and requirements shall be in place from time to time.

“ Award ” means any award made pursuant to the Plan, including awards made in the form of an Option, an SAR, a Restricted Share, a Restricted Share Unit, an Unrestricted Share, a Deferred Share Unit and a Performance Award, or any combination thereof, whether alternative or cumulative, authorized by and granted under this Plan.

“ Award Agreement ” means any written document setting forth the terms of an Award that has been authorized by the Committee. The Committee shall determine the form or forms of documents to be used, and may change them from time to time for any reason.

“ Board ” means the Board of Directors of the Company.

“ Cause ” for termination of a Participant’s Continuous Service will exist if the Participant is terminated from employment or other service with the Company or an Affiliate for any of the following reasons: (i) the Participant’s willful failure to substantially perform his or her duties and responsibilities to the Company or deliberate violation of a material Company policy; (ii) the Participant’s commission of any material act or acts of fraud, embezzlement, dishonesty, or other willful misconduct; (iii) the Participant’s material unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (iv) Participant’s willful and material breach of any of his or her obligations under any written agreement or covenant with the Company.

The Committee shall in its discretion determine whether or not a Participant is being terminated for Cause. The Committee’s determination shall, unless arbitrary and capricious, be final and binding on the Participant, the Company, and all other affected persons. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time, and the term “Company” will be interpreted herein to include any Affiliate or successor thereto, if appropriate.

“ Change in Control ” means any of the following:

(I) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in paragraph (III)(B) below;

(II) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by the affirmative vote of a majority of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended (“Continuing Directors”);

(III) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation in which (A) the Company’s shareholders receive or retain voting common stock in the Company or the surviving or resulting corporation in such transaction on the same pro rata basis as their relative percentage ownership of Company common stock immediately preceding such transaction and a majority of the entire Board of the Company are or continue to be Continuing Directors following such transaction, or (B) the Company’s shareholders receive voting common stock in the corporation which becomes the public parent of the Company or its successor in such transaction on the same pro rata basis as their relative percentage ownership of Company common stock immediately preceding such transaction and a majority of the entire Board of such parent corporation are Continuing Directors immediately following such transaction;

(IV) the sale of any one or more Company subsidiaries, businesses or assets not in the ordinary course of business and pursuant to a shareholder approved plan for the complete liquidation or dissolution of the Company; or

(V) there is consummated any sale of assets, businesses or subsidiaries of the Company which, at the time of the consummation of the sale, (x) together represent 50% or more of the total book value of the Company’s assets on a consolidated basis or (y) generated 50% or more of the Company’s pre-tax income on a consolidated basis in either of the two fully completed fiscal years of the Company immediately preceding the year in which the Change in Control occurs; provided, however, that, in either case, any such sale shall not constitute a Change in Control if such sale constitutes a Rule 13e-3 transaction and at least 60% of the combined voting power of the voting securities of the purchasing entity are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

“ Code ” means the U.S. Internal Revenue Code of 1986, as amended.

“ Committee ” means one or more committees or subcommittees of the Board appointed by the Board to administer the Plan in accordance with Section 4 above. With respect to any decision involving an Award intended to satisfy the requirements of Section 162(m) of the Code, the Committee shall consist of two or more Directors of the Company who are “outside directors” within the meaning of Section 162(m) of the Code. With respect to any decision relating to a Reporting Person, the Committee shall consist of two or more Directors who are disinterested within the meaning of Rule 16b-3.

“ Company ” means IBERIABANK Corporation, a Louisiana corporation; provided, however, that in the event the Company reincorporates to another jurisdiction, all references to the term “Company” shall refer to the Company in such new jurisdiction.

“ Consultant ” means any person, including an advisor, who is engaged by the Company or any Affiliate to render services and is compensated for such services.

“ Continuous Service ” means the absence of any interruption or termination of service as an Employee, Director, or Consultant. Continuous Service shall not be considered interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Committee, provided that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; (iv) changes in status from Director to advisory director or emeritus status; or (iv) in the case of transfers between locations of the Company or between the Company, its Affiliates or their respective successors. Changes in status between service as an Employee, Director, and a Consultant will not constitute an interruption of Continuous Service.

“ Deferred Share Units ” mean Awards pursuant to Section 9 of the Plan.

“ Director ” means a member of the Board, or a member of the board of directors of an Affiliate.

“ Disabled ” means a condition under which a Participant -

(a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or

(b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, received income replacement benefits for a period of not less than 3 months under an accident or health plan covering employees of the Company.

“ Eligible Person ” means any Consultant, Director or Employee and includes non-Employees to whom an offer of employment has been extended.

“ Employee ” means any person whom the Company or any Affiliate classifies as an employee (including an officer) for employment tax purposes. The payment by the Company of a director’s fee to a Director shall not be sufficient to constitute “employment” of such Director by the Company.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Fair Market Value ” means, as of any date (the “Determination Date”) means: (i) the closing price of a Share on the New York Stock Exchange or the American Stock Exchange (collectively, the “Exchange”), on the Determination Date, or, if shares were not traded on the Determination Date, then on the nearest preceding trading day during which a sale occurred; or (ii) if such stock is not traded on the Exchange but is quoted on NASDAQ or a successor quotation system, (A) the last sales price (if the stock is then listed as a National Market Issue under The Nasdaq National Market System) or (B) the mean between the closing representative bid and asked prices (in all other cases) for the stock on the Determination Date as reported by NASDAQ or such successor quotation system; or (iii) if such stock is not traded on the Exchange or quoted on NASDAQ but is otherwise traded in the over-the-counter, the mean between the representative bid and asked prices on the Determination Date; or (iv) if subsections (i)-(iii) do not apply, the fair market value established in good faith by the Board.

“ Grant Date ” has the meaning set forth in Section 14 of the Plan.

“ Incentive Share Option or ISO ” hereinafter means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable Award Agreement.

“ Involuntary Termination ” means termination of a Participant’s Continuous Service under the following circumstances occurring on or after a Change in Control: (i) termination without Cause by the Company or an Affiliate or successor thereto, as appropriate; or (ii) voluntary termination by the Participant within 60

days following (A) a material reduction in the Participant’s job responsibilities, provided that neither a mere change in title alone nor reassignment to a substantially similar position shall constitute a material reduction in job responsibilities; (B) an involuntary relocation of the Participant’s work site to a facility or location more than 50 miles from the Participant’s principal work site at the time of the Change in Control; or (C) a material reduction in Participant’s total compensation other than as part of an reduction by the same percentage amount in the compensation of all other similarly-situated Employees, Directors or Consultants.

“ Non-ISO ” means an Option not intended to qualify as an ISO, as designated in the applicable Award Agreement.

“ Option ” means any stock option granted pursuant to Section 6 of the Plan.

“ Participant ” means any holder of one or more Awards, or the Shares issuable or issued upon exercise of such Awards, under the Plan.

“ Performance Awards ” mean Performance Units and Performance Compensation Awards granted pursuant to Section 10.

“ Performance Compensation Awards ” mean Awards granted pursuant to Section 10(b) of the Plan.

“ Performance Unit ” means Awards granted pursuant to Section 10(a) of the Plan which may be paid in cash, in Shares, or such combination of cash and Shares as the Committee in its sole discretion shall determine.

“ Person ” means any natural person, association, trust, business trust, cooperative, corporation, general partnership, joint venture, joint-stock company, limited partnership, limited liability company, real estate investment trust, regulatory body, governmental agency or instrumentality, unincorporated organization or organizational entity.

“ Plan ” means this IBERIABANK Corporation 2005 Stock Incentive Plan.

“ Reporting Person ” means an officer, Director, or greater than ten percent shareholder of the Company within the meaning of Rule 16a-2 under the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under the Exchange Act.

“ Restricted Shares ” mean Shares subject to restrictions imposed pursuant to Section 8 of the Plan.

“ Restricted Share Units ” mean Awards pursuant to Section 8 of the Plan.

“ Rule 16b-3 ” means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, or any successor provision.

“ SAR” or “Share Appreciation Right ” means Awards granted pursuant to Section 7 of the Plan.

“ Share ” means a share of common stock of the Company, as adjusted in accordance with Section 13 of the Plan.

“ Ten Percent Holder ” means a person who owns stock representing more than ten percent (10%) of the combined voting power of all classes of stock of the Company or any Affiliate.

“ Unrestricted Shares ” mean Shares awarded pursuant to Section 8 of the Plan.

AMENDMENT NUMBER ONE

TO THE

IBERIABANK CORPORATION 2005 STOCK INCENTIVE PLAN

WHEREAS , IBERIABANK Corporation (the “Corporation”) sponsors the IBERIABANK 2005 Stock Incentive Plan (the “Plan”);

WHEREAS , the Corporation wishes to amend the Plan to provide for automatic vesting of all awards in the event of a change of control of the Corporation and to conform the terms of the change of control provisions of the Plan with the terms of the Corporation’s 2008 Stock Incentive Plan;

NOW, THEREFORE , the Corporation hereby amends the Plan, effective as of March 2, 2009, as follows:

Section 13(c), Change in Control , is amended and restated to read as follows:

Unless otherwise provided in an Award Agreement, Awards will automatically vest in full (and to the extent applicable, become exercisable) and any repurchase rights of the Company will automatically lapse upon a Change in Control of the Company. In addition, in the event of a Change in Control, the Committee may in its sole and absolute discretion and authority, without obtaining the approval or consent of the Company’s shareholders or any Participant with respect to his or her outstanding Awards, take one or more of the following actions:

(i) arrange for or otherwise provide that each outstanding Award shall be assumed or a substantially similar award shall be substituted by a successor corporation or a parent or subsidiary of such successor corporation (the “Successor Corporation”);

(ii) require that all outstanding Options and Share Appreciation Rights be exercised on or before a specified date (before or after such Change in Control) fixed by the Committee, after which specified date all unexercised Options and Share Appreciation Rights shall terminate;

(iii) arrange or otherwise provide for the payment of cash or other consideration to Participants in exchange for the satisfaction and cancellation of outstanding Awards; or

(iv) make such other modifications, adjustments or amendments to outstanding Awards or this Plan as the Committee deems necessary or appropriate, subject however to the terms of Section 15(a) below.

Exhibit 31.1

CERTIFICATIONS

SECTION 302 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

I, Daryl G. Byrd, President and Chief Executive Officer of IBERIABANK Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of IBERIABANK Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 11, 2009				/s/ Daryl G. Byrd
				Daryl G. Byrd
				President and Chief Executive Officer

Exhibit 31.2

SECTION 302 CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Anthony J. Restel, Senior Executive Vice President and Chief Financial Officer of IBERIABANK Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of IBERIABANK Corporation;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 11, 2009				/s/ Anthony J. Restel
				Anthony J. Restel
				Senior Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of IBERIABANK Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2009 (the “Report”), I, Daryl G. Byrd, President and Chief Executive Officer of the Company, certify that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report.

/s/ Daryl G. Byrd

Daryl G. Byrd

President and Chief Executive Officer

May 11, 2009

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The information furnished herein shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of IBERIABANK Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2009 (the “Report”), I, Anthony J. Restel, Senior Executive Vice President and Chief Financial Officer of the Company, certify that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

/s/ Anthony J. Restel

Anthony J. Restel

Senior Executive Vice President and Chief Financial Officer

May 11, 2009

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