IberiaBank Corp. announced this week that it will receive $90 million from the Treasury Department as part of the federal government’s bailout of the financial industry. The Federal Treasury set up a $250 billion Capital Purchase Program for publicly traded banks, hoping to encourage healthy banks to engage in more lending as well as takeovers of less stable financial institutions. In exchange for accepting funds, the Treasury Department receives an ownership stake in approved banks in the form of preferred stock and warrants for common stock.
IberiaBank becomes the second Louisiana-based bank to participate in the program. Whitney National Bank, based in New Orleans, announced last week that it was approved to receive up to $301 million from the federal government. Whitney shareholders must first approve issuing preferred stock.
The Capital Purchase Program allows banks to receive between 1 and 3 percent of their risk-weighted assets. IberiaBank qualified to receive $115 million but opted to accept only $90 million, which represents 2.3 percent of its risk-weighted assets. IberiaBank expects to receive the capital within the next 10 days. The funds could prompt further expansion for the Lafayette-based bank, which now has 87 branches in Louisiana, Arkansas and Tennessee. In an article in today’s Times-Picayune, IberiaBank President and CEO Daryl Byrd indicates that the program was too good an opportunity to pass up. “It’s a big decision,” Byrd tells the paper. “By having this money, we will have protected our shareholders.”