Sunday, July 7, 2013

Seeking Alpha: Iberiabank Paying The Price Of Growth

Growth comes with its own set of costs, and Iberiabank (IBKC) is paying some of those costs today. Not only is the bank seeing accounting changes to covered loans weigh on reported results, but overhead expenses tied to the expansion of its branch banking and fee-generating operations are also taking a toll. On the other hand, Iberibank's underlying growth prospects in loans, deposits, profits and so on look considerably better than average over the next few years.

All told, Iberiabank's stock looks like a mixed bag today. The 1.1x multiple to book value and 1.5x multiple to tangible book value seem rather appealing, but that has to be set next to below-average returns on tangible assets and equity both today and likely for the next couple of years. Given that today's valuation already seems to factor in an eventual return to low-teens returns on equity, I would say Iberiabank is fairly valued today, but a name worth watching should the shares pull back again.

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Iberiabank Paying The Price Of Growth

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