Hancock Holding in Gulfport, Miss., has agreed to buy nine branches and about $1.3 billion in loans from First NBC Bank in New Orleans.
The $23 billion-asset Hancock said in a press release late Friday that it will also take on $500 million in deposits and $600 million in Federal Home Loan bank borrowings. The deal is expected to close in the first quarter.
Hancock said it will pay about $237 million in cash based on the deal's terms and current valuations for the assets and liabilities involved. The $4.9 billion-asset First NBC said in a separate release that the transaction should increase its regulatory capital ratios by 300 to 400 basis points while also increasing available funding under its credit facilities.
"First NBC's board ... has undertaken a comprehensive review of its alternatives, and we believe this agreement is in the best interests of our organization," Shivan Govindan, the company's chairman, said in the press release. "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."
Seven of the branches are in the New Orleans area. First NBC would still have 29 branches after the deal closes.
Hancock, which recently raised capital, said it expects to incur about $12 million in merger-related expenses. The deal will also increase the company's annual noninterest expenses by about $3 million.
The sale is the first major move since First NBC replaced Ashton Ryan with an interim CEO. Ryan remains the company's president.
First NBC disclosed in November that its bank had entered into a consent order that requires it to review its management, loan review and problem-loan identification processes and its loan portfolio policy and procedures. The bank must also submit a plan for maintaining a Tier 1 leverage capital ratio of at least 10%, a Tier 1 risk-based capital ratio of at least 13% and a total risk-based capital ratio of 15% or more.
First NBC warned in October that regulators had "deemed it to be in troubled condition." At June 30, First NBC's Tier 1 risk-based ratio and total risk-based capital ratio were both below 7.3%. The company earlier this year restated several years of financial reports, reducing capital by $99.2 million.
Sandler O'Neill; Skadden, Arps, Slate, Meagher & Flom; and Fenimore, Kay, Harrison & Ford advised First NBC. Morgan Stanley and Wachtell, Lipton, Rosen & Katz advised Hancock.