NEW ORLEANS, Feb. 01, 2016 (GLOBE NEWSWIRE) -- First NBC Bank Holding Company (NASDAQ:FNBC), the holding company for First NBC Bank (“Company”), today announced financial results for the fourth quarter of 2015. For the quarter ended December 31, 2015, the Company reported net income available to common shareholders of $15.7 million, or $0.85 per share, as compared to $18.1 million, or $0.97 per share, for the third quarter of 2015 and $15.3 million, or $0.82 per share, for the fourth quarter of 2014.
The Company’s earnings per share on a diluted basis were $0.82, $0.94, and $0.80 per diluted share, for the fourth quarter of 2015, third quarter of 2015, and fourth quarter of 2014, respectively. This represents a decrease of $0.12 per diluted share, or 12.8%, over the third quarter of 2015, and an increase of $0.02 per diluted share, or 2.5%, over the fourth quarter of 2014.
The Company's earnings per share for the fourth quarter of 2015 excluding the impact of merger and conversion related costs related to the State Investors, Bancorp, Inc. ("State Investors") acquisition was $0.89 per share and on a diluted basis was $0.86 per share. The impact from the merger and conversion related costs was a decrease of $0.04 per share.
Performance Highlights
- The Company completed its acquisition of State Investors on November 30, 2015. The Company acquired assets of $254.6 million, which consisted primarily of loans of $182.2 million and investments of $27.4 million, and liabilities of $211.9 million, which consisted primarily of deposits of $152.7 million and borrowings of $55.9 million.
- The pre-tax income attributable to State Investors totaled $0.5 million for the quarter ended December 31, 2015.
- The Company continued to experience strong asset growth, with total assets of $4.8 billion at December 31, 2015, an increase of 28.6% from December 31, 2014.
- The Company's total loans increased $732.8 million, or 26.4%, from December 31, 2014. The increase from the State Investors acquisition was $180.9 million, or 5.2%.
- The Company's total deposits increased $724.1 million, or 23.2%, from December 31, 2014. The increase from the State Investors acquisition was $151.7 million, or 3.9%.
- Net interest income for the fourth quarter of 2015 totaled $32.9 million, an increase of $4.1 million, or 14.3%, from the linked quarter of 2015 and an increase of $4.8 million, or 17.2%, from the fourth quarter of 2014.
Loans
The Company’s loans totaled $3.5 billion at December 31, 2015, an increase of $388.2 million, or 12.4%, from September 30, 2015, and an increase of $732.8 million, or 26.4%, from December 31, 2014. Total loans excluding the impact of the State Investors acquisition increased $207.3 million, or 6.6%, from September 30, 2015 and $551.9 million, or 19.9%, from December 31, 2014. Organic loan growth continued to be driven primarily by increases in construction, commercial real estate and commercial loans. The growth in consumer real estate loans was due to the acquisition of $114.6 million in consumer real estate loans as of December 31, 2015 from State Investors. The increase in the Company's construction loan portfolio of 13.2% from September 30, 2015 and 59.4% from December 31, 2014 was due primarily to the funding of construction loans related to hotels, residential real estate development, and federal tax credit related projects coupled with $64.7 million of construction loans acquired from State Investors. The increase in the Company's commercial loan portfolio of 7.6% from September 30, 2015 and 21.8% from December 31, 2014 was due to the economic expansion in the New Orleans area and capture of new loan customers from other financial institutions. The Company does have exposure to the oil and gas industry in its commercial loan portfolio. At December 31, 2015, the Company's direct oil and gas commercial loan portfolio was approximately $158.4 million, or 4.5%, of its total loan portfolio, with an additional $6.7 million in outstanding loan commitments. Of this amount, the Company's exposure to exploration and production in its oil and gas portfolio was approximately $90.2 million with outstanding commitments of $3.4 million. The Company's remaining direct oil and gas exposure was primarily maritime service companies. The Company also had exposure to indirect oil and gas loans in its portfolio of $65.6 million with outstanding commitments of $13.1 million. The Company is actively monitoring both its direct and indirect oil and gas related loans and all of these loans were performing within their contractual terms.
The following table sets forth the composition of the Company’s loan portfolio as of the dates indicated.
| (In thousands) | December 31, 2015 | September 30, 2015 | % Change | December 31, 2014 | % Change | ||||||||||||
| Construction | $ | 522,278 | $ | 461,459 | 13.2 | % | $ | 327,677 | 59.4 | % | |||||||
| Commercial real estate | 1,443,418 | 1,313,173 | 9.9 | 1,264,371 | 14.2 | ||||||||||||
| Consumer real estate | 264,422 | 156,498 | 69.0 | 132,950 | 98.9 | ||||||||||||
| Commercial | 1,255,202 | 1,166,889 | 7.6 | 1,030,629 | 21.8 | ||||||||||||
| Consumer | 21,697 | 20,835 | 4.1 | 18,637 | 16.4 | ||||||||||||
| Total loans | $ | 3,507,017 | $ | 3,118,854 | 12.4 | % | $ | 2,774,264 | 26.4 | % | |||||||
The following table sets forth the composition of the Company’s loan portfolio excluding the loans acquired from State Investors as of the dates indicated.
| (In thousands) | December 31, 2015 | September 30, 2015 | % Change | December 31, 2014 | % Change | ||||||||||||
| Construction | $ | 457,602 | $ | 461,459 | (0.8 | )% | $ | 327,677 | 39.7 | % | |||||||
| Commercial real estate | 1,443,418 | 1,313,173 | 9.9 | 1,264,371 | 14.2 | ||||||||||||
| Consumer real estate | 149,775 | 156,498 | (4.3 | ) | 132,950 | 12.7 | |||||||||||
| Commercial | 1,255,202 | 1,166,889 | 7.6 | 1,030,629 | 21.8 | ||||||||||||
| Consumer | 20,162 | 20,835 | (3.2 | ) | 18,637 | 8.2 | |||||||||||
| Total loans | $ | 3,326,159 | $ | 3,118,854 | 6.6 | % | $ | 2,774,264 | 19.9 | % | |||||||
Investment in Short-Term Receivables
At December 31, 2015, the Company’s investment in short-term receivables was $95.5 million, a decrease of $84.0 million from September 30, 2015 and $141.6 million from December 31, 2014. The decrease in investment in short-term receivables was primarily due to the Company's strategic decision to increase its liquidity and capital position. The decrease in the Company’s investment in short-term receivables was a significant factor contributing to the increase of $119.3 million from September 30, 2015 and $280.4 million from December 31, 2014 in short-term investments, as the proceeds from the Company’s investment in short-term receivables were reinvested in short-term investments pending further deployment through the Company’s loan portfolio.
Included in the Company’s investment in short-term receivables was $69.0 million due from a U.S. company that produces ethanol for blending in gasoline. As of December 31, 2015, $15.0 million of that balance was past due, with an additional $24.7 million past due as of the date of this release. In addition to the Company’s rights against the obligor on the receivables, the Company and the receivables seller are parties to an agreement providing for certain repurchase obligations by the receivables seller with respect to past due receivables. At this time, based on its analysis of the financial capabilities of the obligor and the receivables seller and after consultation with independent counsel, management does not expect that the Company will incur any loss on its investment in its investment in short-term receivables related to the past due receivables.
Asset Quality
Nonperforming assets totaled $45.7 million at December 31, 2015, an increase of $1.9 million from September 30, 2015 and an increase of $17.1 million from December 31, 2014. During the fourth quarter of 2015, total nonperforming loans increased $1.2 million, while other real estate owned increased $0.7 million. Nonperforming assets as a percent of total loans, other real estate owned and other repossessed assets was 1.30% at December 31, 2015, down 10 basis points from September 30, 2015 and up 27 basis points from December 31, 2014.
The allowance for loan losses was $55.8 million at December 31, 2015, an increase of $2.7 million from September 30, 2015, and $13.5 million from December 31, 2014. The increase in the allowance for loan losses compared to the linked quarter of 2015 was attributable to a $3.0 million provision for loan loss, partially offset by $0.3 million in net charge-offs during the fourth quarter of 2015. The ratio of allowance for loan losses to period-end loans was 1.59% at December 31, 2015, compared to 1.70% at September 30, 2015 and 1.53% at December 31, 2014. The ratio of allowance for loan losses to period-end loans excluding State Investors was 1.68% at December 31, 2015.
Deposits
Total deposits at December 31, 2015 were $3.8 billion, an increase of $228.0 million, or 6.3%, from September 30, 2015, and an increase of $724.1 million, or 23.2%, from December 31, 2014. Total deposits increased compared to the linked quarter due to an increase in NOW accounts primarily from the acquisition of $27.2 million in NOW deposit accounts from State Investors. The growth in the Company's savings deposits of 39.8% from the linked quarter and 60.7% from December 31, 2014 was due primarily to the acquisition of $26.1 million in savings accounts from State Investors. The assumption of deposit liabilities from First National Bank of Crestview in the first quarter of 2015 and the acquisition of State Investors in the fourth quarter of 2015 contributed to 7.4% of the deposit growth as of December 31, 2015 while the remaining 15.8% was due to organic deposit growth. The Company's relationship banking strategy supported by its tiered pricing strategy continued to be the catalyst for the Company's continued organic deposit growth.
The following table sets forth the composition of the Company’s deposits as of the dates indicated.
| (In thousands) | December 31, 2015 | September 30, 2015 | % Change | December 31, 2014 | % Change | ||||||||||||
| Noninterest-bearing | $ | 369,515 | $ | 416,405 | (11.3 | )% | $ | 364,534 | 1.4 | % | |||||||
| NOW accounts | 741,469 | 691,261 | 7.3 | 476,825 | 55.5 | ||||||||||||
| Money market accounts | 1,277,078 | 1,175,184 | 8.7 | 1,055,505 | 21.0 | ||||||||||||
| Savings deposits | 79,779 | 57,079 | 39.8 | 49,634 | 60.7 | ||||||||||||
| Certificates of deposit | 1,377,095 | 1,276,989 | 7.8 | 1,174,352 | 17.3 | ||||||||||||
| Total deposits | $ | 3,844,936 | $ | 3,616,918 | 6.3 | % | $ | 3,120,850 | 23.2 | % | |||||||
The following table sets forth the composition of the Company’s deposits excluding the deposits acquired from State Investors as of the dates indicated.
| (In thousands) | December 31, 2015 | September 30, 2015 | % Change | December 31, 2014 | % Change | ||||||||||||
| Noninterest-bearing | $ | 369,515 | $ | 416,405 | (11.3 | )% | $ | 364,534 | 1.4 | % | |||||||
| NOW accounts | 714,258 | 691,261 | 3.3 | 476,825 | 49.8 | ||||||||||||
| Money market accounts | 1,268,118 | 1,175,184 | 7.9 | 1,055,505 | 20.1 | ||||||||||||
| Savings deposits | 53,717 | 57,079 | (5.9 | ) | 49,634 | 8.2 | |||||||||||
| Certificates of deposit | 1,287,658 | 1,276,989 | 0.8 | 1,174,352 | 9.6 | ||||||||||||
| Total deposits | $ | 3,693,266 | $ | 3,616,918 | 2.1 | % | $ | 3,120,850 | 18.3 | % | |||||||
Net Interest Income
Net interest income for the fourth quarter ended December 31, 2015 totaled $32.9 million, an increase of $4.1 million, or 14.3%, from the third quarter of 2015 and an increase of $4.8 million, or 17.2%, from the three month period ended December 31, 2014. The increase in net interest income compared to the linked quarter was due primarily to the increase in interest income on loans of $5.5 million offset by a decrease in interest income from short-term investments of $0.6 million and an increase in interest expense of $0.8 million. The Company’s net interest margin was 3.28% for the quarter ended December 31, 2015, 24 basis points higher than the third quarter of 2015 and 5 basis points lower than the fourth quarter of 2014. The increase in the average yield on loans of 25 basis points compared to the linked quarter was due primarily to an increase in the average loan balance of $266.2 million which increased interest income on loans compared to the linked quarter by $5.5 million, reflecting an increase of $3.5 million due to volume and $2.0 million due to rate. The increase of 22 basis points in the loan yield compared to the same period of 2014 is due primarily to the impact of a shift in the loan mix to higher yielding construction and commercial real estate loans as well as the effect of the Federal Reserve rate increase during the period on the Company's floating rate portfolio. The increases in the average loan yield over the linked quarter and fourth quarter of 2014 were due to the same factors. As the Company's loan portfolio continues to grow at a double digit pace, the Company has increased the notional amount of its Prime rate cash flow hedges. The Company had $325.0 million in notional amount of Prime rate swaps at December 31, 2015 compared to $250.0 million in notional amount during the fourth quarter of 2014, an increase of $75.0 million. These Prime rate hedges are designed to mitigate the shift in the Company's loan portfolio to a more evenly balanced portfolio. The Company's excess liquidity continued to be a drag on the net interest margin. The excess liquidity resulted primarily from the proceeds of the subordinated debt issuance, during the first quarter of 2015, which had not been deployed, and the decrease in the average balance of its investments in short-term receivables, which were reinvested in short-term investments, compared to the linked quarter of 2015 and the same quarterly period of 2014. The Company borrowed $200.0 million of 10 year notes with interest rates based on short-term LIBOR from the Federal Home Loan Bank(FHLB) during the fourth quarter of 2015 for additional liquidity to fund loan growth. The Company invested its excess funds in higher rate accounts, beginning in the second quarter of 2015, which has increased the average yield by 1 basis point compared to the linked quarter and 10 basis points compared to the fourth quarter of 2014. Average interest-earning assets increased $230.3 million over the third quarter of 2015 and $641.0 million over the fourth quarter of 2014. The cost of interest-bearing deposits was flat compared to the linked quarter of 2015 and decreased 5 basis points over the fourth quarter of 2014 due to the tiered pricing on all of its deposit products (including certificates of deposit). Throughout 2014 and 2015, the Company's margin compressed and in the third quarter of 2015 plateaued. The compression was primarily the result of the shift in its loan portfolio from fixed to floating rate loans as a result of customer preference and the impact of the proceeds from the subordinated debt issuance, during the first quarter of 2015, in order to enhance the capital position of the Bank. The increase in the Company's margin in the fourth quarter of 2015 was the result of several factors which included its long-term floating rate borrowings from FHLB, the continued growth of its loan portfolio, the mix of its earning assets and the acquisition of State Investors. The Company anticipates that these factors will have a positive impact on its margin in future periods.
The following table sets forth the Company’s average volume of and rates on its interest-earning assets and interest-bearing liabilities for the periods indicated.
| For the Three Months Ended | ||||||||||||||||||||
| December 31, 2015 | September 30, 2015 | December 31, 2014 | ||||||||||||||||||
| (In thousands) | Average Balance | Average Yield/ Rate | Average Balance | Average Yield/ Rate | Average Balance | Average Yield/ Rate | ||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||
| Short-term investments | $ | 242,654 | 0.29 | % | $ | 187,282 | 0.28 | % | $ | 31,260 | 0.19 | % | ||||||||
| Investment in short-term receivables | 108,886 | 3.19 | % | 223,728 | 2.54 | % | 238,560 | 2.91 | % | |||||||||||
| Investment securities | 361,408 | 2.31 | % | 337,805 | 2.58 | % | 336,600 | 2.47 | % | |||||||||||
| Loans | 3,273,310 | 5.30 | % | 3,007,096 | 5.05 | % | 2,738,885 | 5.08 | % | |||||||||||
| Total interest-earning assets | $ | 3,986,258 | 4.67 | % | $ | 3,755,911 | 4.44 | % | $ | 3,345,305 | 4.62 | % | ||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||
| Savings | $ | 63,387 | 0.62 | % | $ | 54,512 | 0.64 | % | $ | 49,964 | 0.74 | % | ||||||||
| Money market deposits | 1,242,473 | 1.21 | % | 1,143,464 | 1.21 | % | 1,010,242 | 1.25 | % | |||||||||||
| NOW accounts | 703,704 | 1.09 | % | 669,915 | 1.08 | % | 473,903 | 1.14 | % | |||||||||||
| Certificates of deposit | 1,091,449 | 1.85 | % | 1,040,785 | 1.83 | % | 958,358 | 1.82 | % | |||||||||||
| CDARS® | 218,119 | 2.21 | % | 227,315 | 2.23 | % | 229,319 | 2.14 | % | |||||||||||
| Total interest-bearing deposits | $ | 3,319,132 | 1.45 | % | $ | 3,135,991 | 1.45 | % | $ | 2,721,786 | 1.50 | % | ||||||||
| Fed funds purchased and repurchase agreements | 94,697 | 1.48 | % | 108,205 | 1.40 | % | 117,788 | 1.41 | % | |||||||||||
| Borrowings | 158,851 | 3.71 | % | 103,392 | 5.26 | % | 49,312 | 1.48 | % | |||||||||||
| Total interest-bearing liabilities | $ | 3,572,680 | 1.55 | % | $ | 3,347,588 | 1.57 | % | $ | 2,888,886 | 1.49 | % | ||||||||
| Net interest spread | 3.12 | % | 2.87 | % | 3.13 | % | ||||||||||||||
| Net interest margin | 3.28 | % | 3.04 | % | 3.33 | % | ||||||||||||||
| For the Years Ended | |||||||||||||
| December 31, 2015 | December 31, 2014 | ||||||||||||
| (In thousands) | Average Balance | Average Yield/ Rate | Average Balance | Average Yield/ Rate | |||||||||
| Interest-earning assets: | |||||||||||||
| Short-term investments | $ | 170,238 | 0.27 | % | $ | 31,855 | 0.20 | % | |||||
| Investment in short-term receivables | 198,752 | 2.77 | % | 230,604 | 2.82 | % | |||||||
| Investment securities | 345,868 | 2.49 | % | 361,582 | 2.53 | % | |||||||
| Loans | 3,019,476 | 5.03 | % | 2,587,105 | 5.19 | % | |||||||
| Total interest-earning assets | $ | 3,734,334 | 4.46 | % | $ | 3,211,146 | 4.67 | % | |||||
| Interest-bearing liabilities: | |||||||||||||
| Savings | $ | 56,704 | 0.63 | % | $ | 52,303 | 0.78 | % | |||||
| Money market deposits | 1,148,754 | 1.21 | % | 859,743 | 1.34 | % | |||||||
| NOW accounts | 618,439 | 1.06 | % | 497,346 | 1.14 | % | |||||||
| Certificates of deposit | 1,028,109 | 1.83 | % | 996,700 | 1.82 | % | |||||||
| CDARS® | 221,726 | 2.23 | % | 205,560 | 2.18 | % | |||||||
| Total interest-bearing deposits | $ | 3,073,732 | 1.45 | % | $ | 2,611,652 | 1.54 | % | |||||
| Fed funds purchased and repurchase agreements | 110,838 | 1.42 | % | 105,064 | 1.46 | % | |||||||
| Borrowings | 109,262 | 4.57 | % | 56,068 | 1.81 | % | |||||||
| Total interest-bearing liabilities | $ | 3,293,832 | 1.55 | % | $ | 2,772,784 | 1.54 | % | |||||
| Net interest spread | 2.91 | % | 3.13 | % | |||||||||
| Net interest margin | 3.09 | % | 3.34 | % | |||||||||
Noninterest Income
Noninterest income for the fourth quarter of 2015 totaled $3.4 million, an increase of $2.5 million compared to the linked quarter, and an increase of $1.1 million, or 50.2%, compared to the fourth quarter of 2014. The increase in noninterest income for the linked quarter was due primarily to increases in state tax credits earned of $0.4 million, Community Development Entity (CDE) fees earned of $0.3 million and other noninterest income of $1.6 million. The increase in state tax credits earned was due primarily to additional income earned as the result of a partnership with a Louisiana Capital Company to bridge state tax credits for their purchase and resale on a national basis which has significantly increased the volume of the Company's state tax credit business. The increase in CDE fees earned was due to the annual fees collected from Federal New Markets Tax Credits projects which are still in their compliance period and reached their annual renewal date. The increase compared to the linked quarter was due primarily to the impairment charge of $0.9 million of a Small Business Investment Company investment and the loss of $0.7 million on the sale of a state tax credit investment both recorded during the third quarter of 2015.
The increase in noninterest income for the fourth quarter of 2015 compared to the fourth quarter of 2014 resulted primarily from increases of $0.9 million in state tax credits earned and $0.4 million in rental income from real estate properties. The increases compared to the same period of 2014 were due to the fact that the Company received more State Historic Rehabilitation Tax Credits than the prior year fourth quarter and the Company recognizing rental income from the consolidation of a Low-Income Housing investment Variable Interest Entity (VIE) that owned Low-Income Housing units.
Noninterest Expense
Noninterest expense for the three month period ended December 31, 2015 totaled $31.9 million, an increase of $8.9 million, or 38.5%, compared to the linked quarter, and an increase of $9.6 million, or 43.2%, compared to the three month period ended December 31, 2014. The increase over the linked-quarter and fourth quarter of 2014 was due primarily to increases in all components of noninterest expense. The increase was driven primarily by an increase in impairment of investment in tax credit entities of $5.0 million and $4.3 million compared to the linked quarter and fourth quarter of 2014, respectively.
Taxes
The Company’s tax benefit for the quarter ended December 31, 2015 was $14.4 million, a decrease of $0.2 million compared to the third quarter of 2015, and an increase of $3.8 million compared to the fourth quarter of 2014. The decrease over the linked quarter was due primarily to a decrease in the federal tax credits recognized during the fourth quarter of 2015. The increase over the fourth quarter of 2014 continued to be driven by the Company's increased investment in projects that generate Federal Historic Rehabilitation tax credits.
The Company expects to experience an effective tax rate below the statutory rate of 35% due primarily to its receipt of Federal New Markets Tax Credits, Low-Income Housing Tax Credits and Federal Historic Rehabilitation Tax Credits as well as its municipal bond and bank owned life insurance income.
Shareholders’ Equity
Shareholders’ equity totaled $501.1 million at December 31, 2015, an increase of $64.8 million from year-end 2014. The increase was primarily attributable to the Company's earnings over the period.
About First NBC Bank Holding Company
First NBC Bank Holding Company, headquartered in New Orleans, Louisiana, offers a broad range of financial services through its wholly-owned banking subsidiary, First NBC Bank, a Louisiana state non-member bank. The Company’s primary markets are the New Orleans metropolitan area, Mississippi Gulf Coast, and the Florida panhandle. The Company operates 39 full service banking offices located throughout its markets, along with a loan production office in Gulfport, Mississippi, and had 565 employees at December 31, 2015.
Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America, or GAAP. These measures typically adjust GAAP performance measures to adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature. Management believes these non-GAAP financial measures provide information useful to investors in understanding the Company’s financial results, and the Company believes that its presentation, together with the accompanying reconciliations, provide a more complete understanding of factors and trends affecting the Company’s business and allow investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and the Company strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. A reconciliation of the non-GAAP financial measures disclosed in this press release to the comparable GAAP financial measures is included at the end of the financial statement tables.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company’s current views with respect to, among other things, future events and financial performance. The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of those words or other comparable words. Any forward-looking statements contained in this press release are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Information on these factors can be found in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2014, and other reports and statements the Company has filed with Securities and Exchange Commission ("SEC"), which are available at the SEC’s website (www.sec.gov).
| FIRST NBC BANK HOLDING COMPANY | |||||||
| CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
| (In thousands) | December 31, 2015 | December 31, 2014 | |||||
| Assets | |||||||
| Cash and due from banks | $ | 50,270 | $ | 32,484 | |||
| Short-term investments | 298,784 | 18,404 | |||||
| Investment in short-term receivables | 95,499 | 237,135 | |||||
| Investment securities available for sale, at fair value | 285,826 | 247,647 | |||||
| Investment securities held to maturity | 82,074 | 89,076 | |||||
| Mortgage loans held for sale | 2,597 | 1,622 | |||||
| Loans, net of allowance for loan losses of $55,824 and $42,336, respectively | 3,451,193 | 2,731,928 | |||||
| Bank premises and equipment, net | 67,155 | 51,170 | |||||
| Accrued interest receivable | 13,994 | 11,451 | |||||
| Goodwill and other intangible assets | 15,666 | 7,831 | |||||
| Investment in real estate properties | 58,328 | 16,480 | |||||
| Investment in tax credit entities | 163,581 | 140,913 | |||||
| Cash surrender value of bank-owned life insurance | 48,691 | 47,289 | |||||
| Other real estate | 5,232 | 5,549 | |||||
| Deferred tax asset | 144,880 | 83,461 | |||||
| Other assets | 39,232 | 28,177 | |||||
| Total assets | $ | 4,823,002 | $ | 3,750,617 | |||
| Liabilities and equity | |||||||
| Deposits: | |||||||
| Noninterest-bearing | $ | 369,515 | $ | 364,534 | |||
| Interest-bearing | 3,475,421 | 2,756,316 | |||||
| Total deposits | 3,844,936 | 3,120,850 | |||||
| Short-term borrowings | 8,000 | — | |||||
| Repurchase agreements | 79,251 | 117,991 | |||||
| Long-term borrowings | 338,795 | 40,000 | |||||
| Accrued interest payable | 8,728 | 6,650 | |||||
| Other liabilities | 42,167 | 28,752 | |||||
| Total liabilities | 4,321,877 | 3,314,243 | |||||
| Shareholders’ equity: | |||||||
| Preferred stock | |||||||
| Convertible preferred stock Series C – no par value; 1,680,219 shares authorized; No shares outstanding at December 31, 2015 and 364,983 shares issued and outstanding at December 31, 2014 | — | 4,471 | |||||
| Preferred stock Series D – no par value; 37,935 shares authorized, issued and outstanding at December 31, 2015 and December 31, 2014 | 37,935 | 37,935 | |||||
| Common stock- par value $1 per share; 100,000,000 shares authorized; 19,077,572 shares issued and outstanding at December 31, 2015 and 18,576,488 shares issued and outstanding at December 31, 2014 | 19,078 | 18,576 | |||||
| Additional paid-in capital | 242,979 | 239,528 | |||||
| Accumulated earnings | 222,516 | 155,599 | |||||
| Accumulated other comprehensive loss, net | (21,385 | ) | (19,737 | ) | |||
| Total shareholders’ equity | 501,123 | 436,372 | |||||
| Noncontrolling interest | 2 | 2 | |||||
| Total equity | 501,125 | 436,374 | |||||
| Total liabilities and equity | $ | 4,823,002 | $ | 3,750,617 | |||
| FIRST NBC BANK HOLDING COMPANY | |||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||||||||||||
| For the Three Months Ended | For the Years Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| (In thousands, except per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||||
| Interest income: | |||||||||||||||
| Loans, including fees | $ | 43,742 | $ | 35,096 | $ | 151,945 | $ | 134,256 | |||||||
| Investment securities | 2,105 | 2,094 | 8,617 | 9,147 | |||||||||||
| Investment in short-term receivables | 876 | 1,751 | 5,514 | 6,512 | |||||||||||
| Short-term investments | 176 | 15 | 464 | 63 | |||||||||||
| 46,899 | 38,956 | 166,540 | 149,978 | ||||||||||||
| Interest expense: | |||||||||||||||
| Deposits | 12,140 | 10,262 | 44,522 | 40,183 | |||||||||||
| Borrowings and securities sold under repurchase agreements | 1,840 | 603 | 6,572 | 2,546 | |||||||||||
| 13,980 | 10,865 | 51,094 | 42,729 | ||||||||||||
| Net interest income | 32,919 | 28,091 | 115,446 | 107,249 | |||||||||||
| Provision for loan losses | 3,000 | 3,000 | 14,600 | 12,000 | |||||||||||
| Net interest income after provision for loan losses | 29,919 | 25,091 | 100,846 | 95,249 | |||||||||||
| Noninterest income: | |||||||||||||||
| Service charges on deposit accounts | 571 | 542 | 2,311 | 2,147 | |||||||||||
| Investment securities gain (loss), net | — | — | (50 | ) | 135 | ||||||||||
| (Loss) gain on assets sold, net | (10 | ) | 1 | (272 | ) | 64 | |||||||||
| Gain on sale of loans, net | — | — | 147 | 649 | |||||||||||
| Cash surrender value income on bank-owned life insurance | 348 | 354 | 1,402 | 1,102 | |||||||||||
| State tax credits earned | 908 | (45 | ) | 2,590 | 2,313 | ||||||||||
| Community Development Entity fees earned | 443 | 581 | 882 | 1,565 | |||||||||||
| ATM fee income | 529 | 490 | 2,082 | 1,958 | |||||||||||
| Rental property income | 449 | 26 | 1,718 | 105 | |||||||||||
| Other | 197 | 338 | (417 | ) | 1,575 | ||||||||||
| 3,435 | 2,287 | 10,393 | 11,613 | ||||||||||||
| Noninterest expense: | |||||||||||||||
| Salaries and employee benefits | 8,755 | 7,072 | 30,473 | 24,867 | |||||||||||
| Occupancy and equipment expenses | 3,318 | 2,830 | 12,475 | 10,795 | |||||||||||
| Professional fees | 3,034 | 2,441 | 8,878 | 7,479 | |||||||||||
| Taxes, licenses and FDIC assessments | 2,241 | 1,364 | 6,709 | 5,146 | |||||||||||
| Impairment of investment in tax credit entities | 8,228 | 3,881 | 18,980 | 14,059 | |||||||||||
| Write-down of foreclosed assets | 132 | 198 | 261 | 385 | |||||||||||
| Data processing | 1,631 | 1,275 | 6,188 | 4,721 | |||||||||||
| Advertising and marketing | 1,178 | 1,067 | 3,596 | 2,886 | |||||||||||
| Rental property expenses | 942 | 13 | 2,205 | 53 | |||||||||||
| Other | 2,464 | 2,156 | 10,812 | 7,858 | |||||||||||
| 31,923 | 22,297 | 100,577 | 78,249 | ||||||||||||
| Income before income taxes | 1,431 | 5,081 | 10,662 | 28,613 | |||||||||||
| Income tax benefit | (14,404 | ) | (10,622 | ) | (56,634 | ) | (26,976 | ) | |||||||
| Net income attributable to Company | 15,835 | 15,703 | 67,296 | 55,589 | |||||||||||
| Less preferred stock dividends | (94 | ) | (94 | ) | (379 | ) | (379 | ) | |||||||
| Less earnings allocated to participating securities | — | (302 | ) | (295 | ) | (1,066 | ) | ||||||||
| Income available to common shareholders | $ | 15,741 | $ | 15,307 | $ | 66,622 | $ | 54,144 | |||||||
| Earnings per common share – basic | $ | 0.85 | $ | 0.82 | $ | 3.54 | $ | 2.92 | |||||||
| Earnings per common share – diluted | $ | 0.82 | $ | 0.80 | $ | 3.44 | $ | 2.84 | |||||||
| FIRST NBC BANK HOLDING COMPANY | |||||||||||||||
| EARNINGS PER COMMON SHARE | |||||||||||||||
| For the Three Months Ended December 31, | For the Years Ended December 31, | ||||||||||||||
| (In thousands, except per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||||
| Basic: Income available to common shareholders | $ | 15,741 | $ | 15,307 | $ | 66,622 | $ | 54,144 | |||||||
| Weighted-average common shares outstanding | 18,633 | 18,574 | 18,806 | 18,541 | |||||||||||
| Basic earnings per share | $ | 0.85 | $ | 0.82 | $ | 3.54 | $ | 2.92 | |||||||
| Diluted: Income attributable to common shareholders | $ | 15,741 | $ | 15,307 | $ | 66,622 | $ | 54,144 | |||||||
| Weighted-average common shares outstanding | 18,633 | 18,574 | 18,806 | 18,541 | |||||||||||
| Effect of dilutive securities: | |||||||||||||||
| Stock options outstanding | 434 | 406 | 414 | 389 | |||||||||||
| Restricted stock awards outstanding | 8 | — | 4 | — | |||||||||||
| Warrants | 118 | 123 | 119 | 119 | |||||||||||
| Weighted-average common shares outstanding – assuming dilution | 19,193 | 19,104 | 19,343 | 19,049 | |||||||||||
| Diluted earnings per share | $ | 0.82 | $ | 0.80 | $ | 3.44 | $ | 2.84 | |||||||
| FIRST NBC BANK HOLDING COMPANY | |||||||||||||||||
| SUMMARY FINANCIAL INFORMATION | |||||||||||||||||
| For the Three Months Ended December 31, | For the Three Months Ended September 30, | ||||||||||||||||
| % Change | % Change | ||||||||||||||||
| (In thousands) | 2015 | 2014 | 2015 | ||||||||||||||
| EARNINGS DATA | |||||||||||||||||
| Total interest income | $ | 46,899 | $ | 38,956 | 20.4 | % | $ | 42,027 | 11.6 | % | |||||||
| Total interest expense | 13,980 | 10,865 | 28.7 | % | 13,228 | 5.7 | % | ||||||||||
| Net interest income | 32,919 | 28,091 | 17.2 | % | 28,799 | 14.3 | % | ||||||||||
| Provision for loan losses | 3,000 | 3,000 | — | % | 3,000 | — | % | ||||||||||
| Total noninterest income | 3,435 | 2,287 | 50.2 | % | 891 | 285.5 | % | ||||||||||
| Total noninterest expense | 31,923 | 22,297 | 43.2 | % | 23,051 | 38.5 | % | ||||||||||
| Income before income taxes | 1,431 | 5,081 | (71.8 | )% | 3,639 | (60.7 | )% | ||||||||||
| Income tax (benefit) expense | (14,404 | ) | (10,622 | ) | 35.6 | % | (14,562 | ) | (1.1 | )% | |||||||
| Net income | 15,835 | 15,703 | 0.8 | % | 18,201 | (13.0 | )% | ||||||||||
| Preferred stock dividends | (94 | ) | (94 | ) | — | % | (95 | ) | (1.1 | )% | |||||||
| Earnings allocated to participating securities | — | (302 | ) | (100.0 | )% | — | — | % | |||||||||
| Net income available to common shareholders | $ | 15,741 | $ | 15,307 | 2.8 | % | $ | 18,106 | (13.1 | )% | |||||||
| AVERAGE BALANCE SHEET DATA | |||||||||||||||||
| Total assets | $ | 4,508,334 | $ | 3,701,892 | 21.8 | % | $ | 4,261,539 | 5.8 | % | |||||||
| Total interest-earning assets | 3,986,258 | 3,345,304 | 19.2 | % | 3,755,911 | 6.1 | % | ||||||||||
| Total loans | 3,273,310 | 2,738,885 | 19.5 | % | 3,007,096 | 8.9 | % | ||||||||||
| Total interest-bearing deposits | 3,319,132 | 2,721,786 | 21.9 | % | 3,135,991 | 5.8 | % | ||||||||||
| Total interest-bearing liabilities | 2,572,680 | 2,888,886 | (10.9 | )% | 3,347,588 | (23.1 | )% | ||||||||||
| Total deposits | 3,706,671 | 3,066,652 | 20.9 | % | 3,532,476 | 4.9 | % | ||||||||||
| Total shareholders' equity | 492,342 | 429,295 | 14.7 | % | 477,607 | 3.1 | % | ||||||||||
| SELECTED RATIOS(1) | |||||||||||||||||
| Return on average common equity | 13.83 | % | 16.10 | % | 16.42 | % | |||||||||||
| Return on average equity | 12.16 | % | 14.51 | % | 15.12 | % | |||||||||||
| Return on average assets | 1.39 | % | 1.68 | % | 1.69 | % | |||||||||||
| Net interest margin | 3.28 | % | 3.33 | % | 3.04 | % | |||||||||||
| Efficiency ratio(2) | 87.81 | % | 73.40 | % | 77.64 | % | |||||||||||
| Tier 1 leverage ratio | 8.98 | % | 10.66 | % | 9.53 | % | |||||||||||
| Tier 1 risk-based capital ratio | 10.07 | % | 11.59 | % | 10.47 | % | |||||||||||
| Total risk-based capital ratio | 12.81 | % | 12.84 | % | 13.33 | % | |||||||||||
| Common equity Tier 1 capital ratio | 10.07 | % | NA | 10.47 | % | ||||||||||||
| ASSET QUALITY RATIOS(1) | |||||||||||||||||
| Nonperforming loans to total loans(3)(5) | 1.15 | % | 0.82 | % | 1.25 | % | |||||||||||
| Nonperforming assets to total assets(4) | 0.95 | % | 0.76 | % | 1.01 | % | |||||||||||
| Allowance for loan losses to total loans(5) | 1.59 | % | 1.53 | % | 1.70 | % | |||||||||||
| Allowance for loan losses to nonperforming loans(3) | 138.98 | % | 185.71 | % | 136.13 | % | |||||||||||
| Net charge-offs to average loans | 0.04 | % | 0.07 | % | 0.03 | % | |||||||||||
(1) With the exception of end-of-period ratios, all ratios are based on average monthly balances during the respective periods.
(2) Efficiency ratio is the ratio of noninterest expense to net interest income and noninterest income. See the Company's Non-GAAP efficiency ratio calculation which excludes the impact of the noninterest income and expense related to its tax credit investments.
(3) Nonperforming loans consist of nonaccrual loans and restructured loans.
(4) Nonperforming assets consist of nonperforming loans and real estate and other property that has been repossessed.
(5) Total loans are net of unearned discounts and deferred fees and costs.
| FIRST NBC BANK HOLDING COMPANY | |||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||
| For the Three Months Ended | |||||||||||
| December 31, | September 30, | December 31, | |||||||||
| (In thousands, except per share data) | 2015 | 2015 | 2014 | ||||||||
| Income before income taxes: | |||||||||||
| Income before income taxes (GAAP) | $ | 1,431 | $ | 3,639 | $ | 5,081 | |||||
| Income adjustment before income taxes related to the impact of tax credit related activities (Non-GAAP) | |||||||||||
| Tax equivalent income associated with investment in federal tax credit programs(1) | 22,887 | 24,340 | 19,312 | ||||||||
| Income before income taxes (Non-GAAP) | 24,318 | 27,979 | 24,393 | ||||||||
| Income tax expense-adjusted (Non-GAAP)(2) | (8,483 | ) | (9,778 | ) | (8,690 | ) | |||||
| Net income (GAAP) | $ | 15,835 | $ | 18,201 | $ | 15,703 | |||||
| Pro forma income related to investment in tax credit entities: | |||||||||||
| Income before income taxes (GAAP) | $ | 1,431 | $ | 3,639 | $ | 5,081 | |||||
| Pro forma interest income adjustment | |||||||||||
| Pro forma interest income related to investment in tax credit entities(3) | 2,186 | 2,192 | 1,806 | ||||||||
| Noninterest expense adjustment(4) | |||||||||||
| Impairment of investment in tax credit entities(5) | 8,228 | 3,254 | 3,881 | ||||||||
| Other direct expenses(6) | 783 | 727 | 779 | ||||||||
| Pro forma income before income taxes (Non-GAAP) | 12,628 | 9,812 | 11,547 | ||||||||
| Income tax expense-adjusted (Non-GAAP)(2) | (4,405 | ) | (3,429 | ) | (4,114 | ) | |||||
| Pro forma net income (Non-GAAP) | $ | 8,223 | $ | 6,383 | $ | 7,433 | |||||
| Adjusted Efficiency Ratio: | |||||||||||
| Noninterest expense (GAAP) | $ | 31,923 | $ | 23,051 | $ | 22,297 | |||||
| Adjustments: | |||||||||||
| Impairment of investment in tax credit entities(5) | 8,228 | 3,254 | 3,881 | ||||||||
| Other direct expenses(6) | 783 | 727 | 779 | ||||||||
| Adjusted noninterest expense (Non-GAAP) | 22,912 | 19,070 | 17,637 | ||||||||
| Net interest income (GAAP) | 32,919 | 28,799 | 28,091 | ||||||||
| Noninterest income (GAAP) | 3,435 | 891 | 2,287 | ||||||||
| Adjustments: | |||||||||||
| State tax credits earned | 908 | 495 | (45 | ) | |||||||
| Community Development Entity fees earned | 443 | 183 | 581 | ||||||||
| Adjusted noninterest income (Non-GAAP) | 2,084 | 213 | 1,751 | ||||||||
| Adjusted total revenue (Non-GAAP) | $ | 35,003 | $ | 29,012 | $ | 29,842 | |||||
| Adjusted efficiency ratio (Non-GAAP) | 65.46 | % | 65.73 | % | 59.10 | % | |||||
| Adjusted earnings per share: | |||||||||||
| Income available to common shareholders (GAAP) | $ | 15,741 | $ | 18,106 | $ | 15,307 | |||||
| Adjustments: | |||||||||||
| Merger and acquisition professional fees(7) | 687 | — | — | ||||||||
| Conversion costs(8) | 154 | 195 | — | ||||||||
| Adjusted income available to common shareholders (Non-GAAP)(9) | $ | 16,582 | $ | 18,301 | $ | 15,307 | |||||
| Basic earnings per share, excluding merger-related expenses (Non-GAAP) | $ | 0.89 | $ | 0.98 | $ | 0.82 | |||||
| Diluted earnings per share, excluding merger-related expenses (Non-GAAP) | $ | 0.86 | $ | 0.95 | $ | 0.80 | |||||
(1) Tax equivalent income associated with investment in federal tax credit programs represents the gross amount of tax benefit from federal tax credits.
(2) Income tax expense is calculated on the adjusted non-GAAP effective tax rate for the Company at each quarter end period ended December 31, 2015, September 30, 2015, and December 31, 2014, respectively.
(3) Pro forma interest income adjustment related to investment in tax credit entities is calculated based on the average investment in tax credit entities utilizing the average yield on loans had the investment in tax credit entities been invested in loans.
(4) Noninterest expense adjustments related to the Company’s investment in federal tax credit programs are included as adjustments to income as if the Company had invested in loans instead of federal tax credit programs. These expenses are directly related to the Company’s investment in federal tax credit programs. Noninterest expense adjustments for direct expenses related to the Company’s investment in federal tax credit programs exclude general and administrative costs associated with the Company’s investment in federal tax credit programs.
(5) Impairment of investment in tax credit entities represents impairment recorded during the current period, as evaluated by the Company at the end of each reporting period.
(6) Other direct expenses represent fees and expenses incurred as a result of the Company’s investment in federal tax credit programs.
(7) Merger and acquisition professional fees represents merger-related expenses related to the cash acquisition of State Investors.
(8) Conversion costs represents merger-related expenses related to the system conversions of First National Bank of Crestview and State Investors.
(9) Adjusted income available to common shareholders excludes the impact of non-operating merger-related expenses incurred in the periods shown.