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.

• 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.

                                    March 31,     December 31,      Increase/(Decrease)
(dollars in thousands)                2009            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.

                                                          March 31,          December 31,
(dollars in thousands)                                      2009                 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 . . .