First NBC Announces Agreement to Sell Nine Branches and Certain Assets and Liabilities to Whitney Bank

From a press release

First NBC Bank Holding Company recently announced that its bank subsidiary, First NBC Bank, will sell approximately $1.3 billion in loans and nine First NBC Bank branches to Whitney Bank, which will also assume approximately $511 million in transaction and savings deposits located in the nine branches and $605 million in Federal Home Loan Bank of Dallas (FHLB) borrowings.

Under the terms of the agreement, Whitney Bank will acquire approximately $160 million of the identified loans on or before January 4, 2017. The announcement signifies a major milestone in First NBC’s ongoing efforts to meet the requirements of the previously disclosed Consent Order entered into with its primary bank regulators in November and to better position First NBC and First NBC Bank for the future.

First NBC will receive cash in the transaction equal to the difference between the loans purchased and liabilities assumed at the closing of the transaction, which is currently estimated to be approximately $178 million.

In addition, Whitney Bank will pay First NBC Bank the greater of the fair market value or book value of the nine branches and related assets, currently estimated at approximately $15 million and a premium for the acquisition currently estimated at approximately $44 million.

The amount of cash actually received by First NBC Bank at the closing of the transaction is subject to adjustment as provided in the purchase agreement. First NBC expects that the transaction will provide total cash liquidity in excess of $200 million upon completion and will also result in an increase in available funding under its available credit facilities.

Shivan Govindan, First NBC’s Chairman of the Board, said, “First NBC’s Board of Directors has undertaken a comprehensive review of its alternatives, and we believe this agreement is in the best interests of our organization. We believe the successful completion of the transaction should significantly increase our liquidity and our financial flexibility as we move forward and seek to refocus our efforts of managing and growing our core business. Furthermore, the transaction is expected to strengthen our regulatory capital ratios by 300 to 400 basis points as a result of the reduction in assets and borrowings, and demonstrates the progress we are making to address the matters specified in the previously disclosed consent order.”

Govindan continued, “First NBC has and will continue to take actions to best position First NBC Bank for long-term success while upholding our commitment to making a positive contribution to the local economy as one of Louisiana’s leading community banks. As First NBC moves into 2017, the Company will have a continued emphasis on addressing the matters raised in the consent order, focusing on core banking operations, substantially reducing non-interest expense, lowering funding costs and managing nonperforming assets.”

Until the transaction closes, First NBC will continue to operate all 38 of its branches and the rest of its businesses in the normal course.

The branches to be sold, upon receipt of regulatory approval, are:

  • Amite, 400 W. Oak Street, Amite, Louisiana
  • Houma, 1241 Saint Charles St., Houma, Louisiana
  • Veterans, 521 Veterans Memorial Blvd, Metairie, Louisiana
  • Transcontinental, 4900 Veterans Memorial Blvd, Metairie, Louisiana
  • Terrytown, 2021 Carol Sue Ave, Terrytown, Louisiana
  • Pontchartrain, 4001 Pontchartrain Dr., Slidell, Louisiana
  • Gause West, 2130 Gause Blvd W, Slidell, Louisiana
  • Pearl River, 64243 Highway 41, Pearl River, Louisiana
  • Saint Charles Avenue, 3335 Saint Charles Ave, New Orleans, Louisiana

The companies expect the transaction will be completed in the first quarter of 2017, subject to regulatory approval and satisfaction of other customary closing conditions.

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