re: First NBC Bank selling 9 branches to Whitney

FNBC has been losing depositors in waves since the letters came out from an investment firm that owns part of their debt and the FDIC is already monitoring solvency. They're hilarious to read and you'll wonder what the heck management is doing.

In short, the bank's only asset is tax credits that are worthless in event of an acquisition. They never became a viable commercial bank in this newest version of FNBC because they assumed a competitive market for reselling these tax credits would always exist.

Tax credit market is gone, management didn't understand IRS rules on tax credits' transferability to a new owner and they don't have any other banking fundamentals to carry on.

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First NBC is to ripe of a target to let that happen. They would be attractive for a buyout from another bank before it got that far.

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The majority of their value as a going concern is in their tax credits. Upon a change in control, some pretty sick tax accounting rules kick in that make those credits almost worthless. They don't technically go away, but it just becomes very hard to use them.

So if you strip that away, what you have left is the deposits, the hard assets such as the branches, and the loan portfolio. The loan portfolio for a while was pretty terrible (heavy in FL real estate) but it's gotten somewhat better over time. Still not great.

They are selling 1.3 billion in loan portfolio, plus the 9 branches and the float from those deposits, for basically 850 million - 250 million cash and 600 in federal bank loan assumption. That's a fire sale if I ever saw one.

The cash. and getting that 600 million liability off their books, gives them some time and some breathing room. I don't think in the end, it changes the result.

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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.

Those letters were entertaining.

All I know is I had drinks recently with someone who used to work there and the rumor mill is that their Sr level mgmt sucks and pushed employees to do shady shite.
I wouldn't touch this company as an investment unless you just like high risk gambling

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they are bleeding deposits

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Regulatory action has a way about this.

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What put the hurt on them?

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Arrogant management at the top.

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For a moment there, I thought I was on the Poly board.

Well, I saw that earlier this week they said they'd have to restate some of their already restated earnings. So...classic First NBC.

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