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What happened
Shares of First NBC Bank Holding Company (FNBC) are up by about 12% as of 10:45 a.m. EST after the company announced the sale of nine branches to a subsidiary of Hancock Holding Company (HWC 3.60%).
So what
The deal calls for First NBC Bank to sell $1.3 billion in loans and nine branches to Hancock Holding's Whitney Bank. In addition, Whitney Bank will assume $511 million of deposits, plus $605 million in Federal Home Loan Bank borrowings.
In November, First NBC entered into a consent order with the FDIC, which required the bank to review its management, loan review and problem loan identification processes, and formulate a plan to to maintain certain minimum capital levels, among other requirements.
This branch sale is another step toward improving its financial position. The company also announced today that it hired a new auditor, Crowe Horwath, after its previous auditor, Ernst & Young, declined to stand for reappointment.
Now what
First NBC will generate about $200 million of liquidity from the transaction, which should bolster its reserves. Both First NBC and Hancock Holding Company are trading higher today, evidence that investors believe the deal is a win-win transaction for both parties.