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company’s dividend payout ratio. The lower the dividend payout ratio, the greater the company’s ability to sustain or increase dividends in the future. The quarterly dividend payout ratio of IBERIABANK Corporation has decreased significantly over the last few years as the growth in earnings outpaced the growth in dividends. 

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## REJUVENATION 

Rejuvenation is an important part of all living matter. Deciduous trees, such as the oak tree, exhibit an annual cycle of life. Leaves and acorns grow, and then fall to the ground to create mulch and saplings, later to become trees as the cycle of life continues. In a similar manner, our company engaged in activities of pruning and growing through new endeavors. 

On June 21, 2002, we completed the divestiture of our one-office operation in Morgan City, Louisiana. This divestiture entailed the sale of approximately $12 million in deposits and $5 million in primarily consumer loans. We recorded a pre-tax gain of $382,000, or approximately $0.04 per fully diluted share, in the second quarter of 2002. The decision to divest this operation was a result of internal reflection upon our strategic direction associated with that market. 

During 2002, the Company reduced the operating hours of, and subsequently closed, our Jackson Street office in Monroe, Louisiana. Loans and deposits associated with this office were consolidated into another nearby IBERIABANK branch. On December 30, 2002, the 

Jackson Street facility was sold to an investor associated with a de novo minority bank that was in the process of formation. The arrangement associated with the sale of this facility was a positive development for both organizations and the local community. 

Over many years, our organization has accumulated and 

An integral part of the rejuvenation process is nurturing the environment. We believe that giving back to our communities is a priority and critical to the future success of our company and the vitality of our surroundings. We are proud to be an active community partner supporting local organizations that care for the communities in which we live. 

## SOLID FOUNDATION 

We continue to invest in the infrastructure of our company. These investments are necessary to ensure that we have the resources to grow in the future and that we have the depth to appropriately evaluate and address potential risk factors. During the year, we added to our talent pool in internal audit, legal, security, accounting, technology, marketing and operations. 

During 2002, we embarked upon other significant improvements as well. Throughout the year, we completed five external branch makeovers in our “branch branding” efforts and made significant incremental improvements to our facilities. This improvement process is only just beginning. We are making great progress in our efforts to enhance our 

“grandfathered” various deposit account types. For example, at one point, we had over 30 different types of checking accounts. In 2002, we continued to unify our loan and deposit product sets through our efforts at product simplification. At the same time, we rejuvenated our product set by introducing new products and services to our clients. During 2002, we introduced a new Private Platinum checking account and a Private Platinum Plus money market savings account for our private banking clients, a business debit card for business banking clients, and “skip-a-pay” and “bounce protection” programs for our retail clients. 

