Carl Chaney will have to rely on every ounce of experience to turn around First NBC Bank in New Orleans.

Chaney, who spent nearly two decades at Hancock Holding, including eight as its CEO, was hired Monday to take over the same role at the $4.9 billion-asset First NBC. While the move keeps Chaney in New Orleans, where he moved in 2011, it will certainly leave him with very little free time.

First NBC has a multitude of challenges, including issues in its tax-credit business, rising delinquencies in its commercial loan book and a consent order that requires its bank to raise substantial capital. Other banks have also been actively looking to hire away the company’s best lenders, industry experts said.

Chaney, who helped build Hancock into a $20 billion-asset company, will now be at the helm of a bank that is shrinking. First NBC recently agreed to sell nine branches and about $1.3 billion in loans, in an interesting coincidence, to Hancock.

Chaney, for his part, said he is looking forward to the mission, noting that he aims to salvage First NBC, not sell it.

“I would have never taken this challenge if I didn’t think it would work,” he said in an interview Monday. “This is a great opportunity to come in, help lead this group, get our arms around the issues and turn this company around.”

Calling the pending asset sale “an important strategic move,” Chaney said the disposition leaves “a core franchise that really is attractive in fabulous markets, meaning the Florida Panhandle and southeast Louisiana. … It allows us to get our arms around the issues and focus on moving forward.”

The branch sale, expected to close by the end of March, should bring in about $220 million in cash, which will help boost capital levels.

Chaney, meanwhile, was reluctant to take a firm position on First NBC’s tax-credit business, which involves investing in historic and low-income properties. The company, which revealed in March that it had uncovered errors in its accounting treatment of the tax credits, has struggled to bring its financial reporting current since then.

First NBC warned recently that it expects to record a “material valuation allowance” that would likely reduce its deferred-tax asset, which has been estimated to be as much as $315 million. The company’s fourth-quarter call report also revealed that nonperforming commercial loans totaled $229 million at Dec. 31, representing a 75% spike from just three months earlier.

The tax-credit business “is an area that we will look at closely,” Chaney said. “We will make the right decisions as to how much of that we want to continue operating in and, even more importantly, how do we get our arms around the issues that currently exist and work our way out of them.”

First NBC offered Chaney, a three-year contract that will pay him an annual base salary of $750,000, along with a guaranteed $375,000 incentive bonus for the first year. The company also disclosed in a regulatory filing that it will pay Chaney a $500,000 signing bonus.

Chaney stands to gain even more if he turns the company around. He will receive 750,000 shares of restricted common stock, currently worth about $3 million, that will vest over three years, along with 250,000 nonqualified stock options.

Carl Chaney (second photo)
Carl Chaney worked at Hancock Holding for two decades, including the last eight as the company's CEO.

Chaney is serving as a consultant as he awaits regulatory approval to become CEO.

“I would like to think that it’s not going to take very long at all” to get approved, he said. “Regulators know me, obviously, very well because I’ve been in the industry for 30 years. It’s not like I’m an unknown. Still, they have to go through their process. I respect that and understand that. I’m certainly going to make myself available.”

Investors should see the announcement as an indication that First NBC is making progress as it looks to regain its footing, said Kevin Fitzsimmons, an analyst at Hovde Group.

“It’s still a very challenging and fluid situation, but it does imply they have a plan and they’re executing on it,” Fitzsimmons said. Chaney "is being viewed as a very legitimate CEO. The fact he is taking this role means he’s looked at the situation and thinks it can be improved.”

In October regulators declared First NBC to be in a “troubled condition” after restatements to several years of financial reports reduced the company’s capital by nearly $100 million.

The branch sale will help address that issue.

Chaney said there were few other offers that could have coaxed him to get back into banking; early retirement was the reason given for his unexpected departure from Hancock in November 2014. Chaney has been vice chairman at JTS Capital Group, a Texas firm that buys and manages loan portfolios, since August 2015.

“I probably would have been voted down if I had gone to my family and asked about … moving across the country to take on an exciting opportunity to rebuild a company,” he said. “But this is right in my backyard. It’s funny how things work out.”

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