re: First NBC Bank selling 9 branches to Whitney

quote:

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They were counting tax credits as assets and the tax credits dried up. They expanded quickly based on the tax credits they were getting in rebuilding New Orleans from the Govt for Katrina recovery. The credits stopped and they realized they didn't have the capital they thought they did.

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Ehh, no. They were counting Deferred Tax Assets as capital. Basel III standards phase out bank's ability to do that. Poor management grew the tax credit book whilst seemingly unaware of this. Their $38MM 3Q16 Net Income is really a $22MM loss when you take out the negative $60MM tax number. This has been the case for most of the recent years end, too.

As someone else said, it's poor management. This sale gets their capital ratios better without diluting any shareholders (Common equity/total assets). My guess is they'll try to earn back some stock price before raising more capital.