First NBC Bank Holding Company Announces 2013 Third Quarter Results

NEW ORLEANS, Nov. 7, 2013 (GLOBE NEWSWIRE) -- First NBC Bank Holding Company (Nasdaq:NBCB), the holding company for First NBC Bank ("Company"), today announced financial results for the third quarter of 2013. For the quarter ended September 30, 2013, the Company reported net income available to common shareholders of $10.4 million, or $0.55 per share, as compared to $8.1 million, or $0.58 per share, for the quarter ended September 30, 2012.

For the nine months ended September 30, 2013, the Company reported net income available to common shareholders of $27.1 million, or $1.65 per share, generating an annualized return on average stockholders' equity of 11.90% and an annualized return on average assets of 1.26%. The Company reported net income available to common shareholders of $23.5 million, or $1.69 per share, for the nine months ended September 30, 2012.

For the quarter ended September 30, 2013 and 2012, the Company's earnings per share on a diluted basis were $0.54 and $0.57 per diluted share, respectively, a decrease of $0.03 per diluted share, or 5.3%, over the prior year three month period. For the nine months ended September 30, 2013, the Company reported earnings per share on a diluted basis of $1.61 per diluted share compared to $1.66 per diluted share for the prior year nine month period, a decrease of $0.05 per diluted share, or 3.0%.

Performance Highlights

  • The Company continues to experience strong asset growth, with total assets of $3.2 billion at September 30, 2013, an increase of 4.4% from June 30, 2013 and 25.6% from September 30, 2012.
  • Loans grew 5.9% from June 30, 2013 and 22.6% from September 30, 2012.
  • On September 24, 2013, the Company's Community Development Entity (CDE) was awarded $19.6 million in qualified equity investment authority from the State of Louisiana under the Louisiana New Markets Jobs Act. On October 4, 2013, the Company's CDE was awarded an additional $4.3 million in qualified equity investment authority from the State of Louisiana under the same program.
  • Net interest income for the third quarter of 2013 totaled $21.8 million, an increase of $2.6 million, or 13.3%, over the linked-quarter.
  • The net interest margin for the quarter ended September 30, 2013 was 3.08%, an increase of 20 basis points on a linked-quarter basis.
  • The Company executed a $250 million receive fixed swap agreement on the cash flows from its floating rate loan portfolio to hedge exposure to variable rates in its loan portfolio.
  • The Company, in a strategic effort to manage its net interest margin, began shifting its interest-bearing deposits to tiered rates and pricing, which is expected to decrease the Company's cost of funds in future periods.

Loans

The Company's loans totaled $2.2 billion at September 30, 2013, an increase of $123 million, or 5.9%, from June 30, 2013, and an increase of $295 million, or 15.4%, from December 31, 2012. Loan growth continues to be driven primarily by increases in commercial real estate and commercial loans due to favorable economic market conditions in the New Orleans trade area.

The following table sets forth the composition of the Company's loan portfolio as of the dates indicated.

September 30, December 31, Increase/(Decrease)
(dollars in thousands) 2013 2012 Amount Percent
Construction $192,241 $168,544 $23,697 14%
Commercial real estate 1,120,422 988,994 131,428 13
Consumer real estate 113,414 103,516 9,898 10
Commercial 773,571 647,090 126,481 20
Consumer 17,864 14,073 3,791 27
Total loans $2,217,512 $1,922,217 $295,295 15%

Deposits

Total deposits at September 30, 2013 were $2.6 billion, an increase of $120.6 million, or 4.8%, from June 30, 2013, and an increase of $365.6 million, or 16.1%, from December 31, 2012.

The following table sets forth the composition of the Company's deposits as of the dates indicated.

September 30, December 31, Increase/(Decrease)
(dollars in thousands) 2013 2012 Amount Percent
Noninterest-bearing demand $241,383 $239,538 $1,845 1%
NOW accounts 544,005 437,542 106,463 24
Money market deposits 541,088 410,928 130,160 32
Savings deposits 51,189 45,295 5,894 13
Certificates of deposits 1,256,512 1,135,225 121,287 11
Total deposits $2,634,177 $2,268,528 $365,649 16%

Net Interest Income

Net interest income for the third quarter September 30, 2013 totaled $21.8 million, an increase of $2.6 million, or 13.3%, from the linked-quarter and an increase of $2.8 million, or 14.9%, from the three month period ended September 30, 2012. Net interest income for the nine months ended September 30, 2013 totaled $60.8 million, an increase of $5.7 million, or 10.4%, from the same period of 2012.

The Company's net interest margin was 3.08% for the quarter ended September 30, 2013, 20 basis points higher than the second quarter of 2013. The linked-quarter increase also reflects the Company's strategic decision to implement a tiered rate and pricing structure on its interest-bearing deposits. In early September 2013, the Company entered into a total of $250 million of interest rate swaps in order to offset the shift in its loan portfolio mix from fixed rates to floating rates, resulting from a change in customer behavior over the past two years. As the low interest rate environment continued since the recession of 2008-2009, commercial customers chose floating rates over fixed rates on an increasing basis negatively affecting the Company's net interest margin while significantly enhancing the Company's future results in an increasing interest rate environment.

In order to protect the Company's margin while accommodating its customers' preferences, the Company entered into a series of interest rate swaps with a six year term to receive a weighted average fixed rate of 5.88% while paying floating rates of Prime, Prime plus 1%, Prime plus 1% with a 5% floor, and Prime plus 1% with a 5.5% floor (current weighted average rate of 4.83%). Since its inception, in September, the Company earned $154,000, net, on the swaps. Despite the swaps, the Company's net interest margin is expected to improve substantially as interest rates increase. The Company expects the margin to be positively impacted in future quarters by a lower cost of funds and the hedge of $250 million of the cash flows from its floating rate loan portfolio through a fixed swap agreement.

The following table sets forth the Company's average volume and rate of its interest-earning assets and interest-bearing liabilities for the periods indicated.

For the Three Months Ended
September 30, 2013 September 30, 2012
(dollars in thousands) Average Average Average Average
Balance Yield/Rate Balance Yield/Rate
Interest-earning assets:
Short- term investments $84,019 0.22% $76,382 0.18%
Investment securities 556,360 2.40 395,593 2.30
Loans 2,167,325 5.23 1,794,789 5.45
Total interest-earning assets $2,807,704 4.52 $2,266,764 4.73
Interest-bearing liabilities:
Savings $52,215 0.62 $41,594 0.60
Money market deposits 468,151 1.50 395,929 1.60
NOW accounts 551,012 1.33 349,501 1.25
Certificates of deposit under $100,000 418,714 1.56 444,729 1.42
Certificates of deposit of $100,000 or more 663,698 1.93 534,363 1.76
CDARS® 174,161 2.17 109,711 2.47
Total interest-bearing deposits $2,327,951 1.62 $1,875,827 1.57
Fed funds purchased and repurchase agreements 70,822 1.48 48,477 1.47
Other borrowings 55,220 2.65 55,330 2.66
Total interest-bearing liabilities $2,453,993 1.64 $1,979,634 1.59
Net interest spread 2.88% 3.13%
Net interest margin 3.08% 3.33%
For the Nine Months Ended
September 30, 2013 September 30, 2012
(dollars in thousands) Average Average Average Average
Balance Yield/Rate Balance Yield/Rate
Interest-earning assets:
Short- term investments $75,921 0.21% $65,085 0.22%
Investment securities 525,578 2.12 361,341 2.34
Loans 2,064,195 5.25 1,741,529 5.49
Total interest-earning assets $2,665,694 4.49 $2,167,955 4.81
Interest-bearing liabilities:
Savings $49,059 0.63 $40,907 0.58
Money market deposits 407,045 1.51 395,128 1.62
NOW accounts 520,381 1.31 302,417 1.19
Certificates of deposit under $100,000 425,203 1.56 449,967 1.56
Certificates of deposit of $100,000 or more 627,909 1.90 501,989 1.77
CDARS® 169,589 2.20 106,208 2.45
Total interest-bearing deposits $2,199,186 1.62 $1,796,616 1.60
Fed funds purchased and repurchase agreements 66,848 1.45 37,280 1.48
Other borrowings 76,107 2.67 55,798 2.65
Total interest-bearing liabilities $2,342,141 1.65 $1,889,694 1.63
Net interest spread 2.85% 3.18%
Net interest margin 3.05% 3.39%

Noninterest Income

Noninterest income for the third quarter of 2013 totaled $2.5 million, an increase of $0.9 million, or 57.8%, compared to the third quarter of 2012. The increase in noninterest income for the third quarter of 2013 compared to the third quarter of 2012 resulted primarily from increases of $0.4 million in management fees from First NBC Community Development Fund, LLC related to the Fund's New Markets Tax Credit investments and $0.3 million in income from sales of state tax credits.

Noninterest income, excluding securities gains, for the nine months ended September 30, 2013 totaled $7.7 million, an increase of $1.2 million, or 18.3%, compared to the nine months ended September 30, 2012. Noninterest income for the nine months ended September 30, 2013 totaled $8.0 million, a decrease of $0.4 million, or 4.3%. The increase in noninterest income, excluding securities gains, for the nine months of 2013 compared to the same period of 2012 resulted primarily from increases of $1.5 million in management fees from First NBC Community Development Fund, LLC related to the Fund's New Markets Tax Credit investments and $0.4 million in income from sales of state tax credits. The Company expects that its participation in the Federal New Markets Tax Credit investment program will continue to have a positive impact on noninterest income in future quarters as the Company continues to receive allocations of Federal New Markets Tax Credits.

The Company realized $0.3 million and $1.8 million in securities gains during the first quarter of 2013 and second quarter of 2012, respectively. The Company did not realize any securities gains during the third quarter of 2013 and $0.1 million during the third quarter of 2012.

Noninterest Expense

Noninterest expense for the three month period ended September 30, 2013 totaled $17.1 million, an increase of $3.5 million, or 25.8%, compared to the three month period ended September 30, 2012. The increase was due primarily to increases in salaries and employee benefits of $1.3 million, professional fees of $1.4 million, and tax credit amortization of $1.0 million, compared to the same period of 2012.

Noninterest expense for the nine months ended September 30, 2013 totaled $47.9 million, an increase of $6.7 million, or 16.3%, compared to the same period of 2012. The increase in noninterest expense for the nine month period of 2013 compared to the nine month period of 2012, resulted primarily from increases in salaries and benefits expense of $1.6 million, professional fees of $2.5 million, and tax credit amortization of $2.4 million.

Taxes

The Company's tax benefit for the three and nine months ended September 30, 2013 was $5.7 million and $13.9 million, an increase of 81.3% and 73.4%, respectively, compared to the prior year three and nine month periods. The increase was due to the Company's participation in various tax credit programs.

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.

Shareholders' Equity and Regulatory Capital

Shareholders' equity totaled $368.8 million at September 30, 2013, an increase of $120.7 million from year-end 2012. The increase was primarily attributable to the results of the Company's initial public offering and retained earnings over the period. At September 30, 2013, the Company and First NBC Bank exceeded all applicable regulatory capital standards, and First NBC Bank was considered "well capitalized" for purposes of the FDIC's prompt corrective action regulations. The Company's regulatory capital ratios at September 30, 2013 were as follows:

Tier 1 leverage 11.82%
Tier 1 risk-based capital 13.89%
Total risk-based capital 15.04%

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 market is the New Orleans metropolitan area and the Mississippi Gulf Coast. The Company operates 31 full service banking offices located throughout its market and a loan production office in Gulfport, Mississippi and had 460 employees at September 30, 2013.

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 Quarterly Report on Form 10-Q, dated August 14, 2013, and other reports and statements the Company has filed with Securities and Exchange Commission which are available at the SEC's website (www.sec.gov).

FIRST NBC BANK HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS-UNAUDITED
(In thousands)
September 30, December 31,
2013 2012
Assets
Cash and due from banks $54,061 $26,471
Short-term investments 71,096 9,541
Investment securities available for sale, at fair value 487,442 486,399
Investment securities held to maturity 95,429
Mortgage loans held for sale 3,988 25,860
Loans, net of allowance for loan losses of $29,990 and $26,977, respectively 2,187,522 1,895,240
Bank premises and equipment, net 49,838 47,067
Accrued interest receivable 9,832 8,728
Goodwill and other intangible assets 8,495 8,682
Investment in real estate properties 9,429 6,935
Investment in tax credit entities 85,857 67,393
Cash surrender value of bank-owned life insurance 26,022 25,506
Other real estate 6,481 8,632
Deferred tax asset 44,295 16,589
Receivables from sales of investments 16,909
Other assets 21,285 20,915
Total assets $3,161,072 $2,670,867
Liabilities and equity
Deposits:
Noninterest-bearing $241,383 $239,538
Interest-bearing 2,392,794 2,028,990
Total deposits 2,634,177 2,268,528
Short-term borrowings 21,800
Repurchase agreements 67,619 36,287
Long-term borrowings 55,220 75,220
Derivative instruments 5,119 6,854
Accrued interest payable 6,425 5,557
Other liabilities 23,701 8,519
Total liabilities 2,792,261 2,422,765
Shareholders' equity:
Preferred stock
Convertible preferred stock Series C – no par value; 1,680,219 shares authorized; 916,841 shares issued and outstanding at September 30, 2013 and December 31, 2012 11,231 11,231
Preferred stock Series D – no par value; 37,935 shares authorized, issued and outstanding at September 30, 2013 and December 31, 2012 37,935 37,935
Common stock- par value $1 per share; 20,000,000 shares authorized; 17,933,992 shares issued and outstanding at September 30, 2013 and 13,052,583 shares issued and outstanding at December 31, 2012 17,934 13,052
Additional paid-in capital 229,995 128,984
Accumulated earnings 86,928 59,825
Accumulated other comprehensive loss, net (15,213) (2,926)
Total shareholders' equity 368,810 248,101
Noncontrolling interest 1 1
Total equity 368,811 248,102
Total liabilities and equity $3,161,072 $2,670,867
FIRST NBC BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the three months ended For the nine months ended
September 30, September 30,
(In thousands, except per share data) 2013 2012 2013 2012
Interest income:
Loans, including fees $28,566 $24,603 $81,117 $71,640
Investment securities 3,361 2,289 8,348 6,318
Short-term investments 46 35 122 105
31,973 26,927 89,587 78,063
Interest expense:
Deposits 9,516 7,387 26,578 21,495
Borrowings and securities sold under repurchase agreements 634 548 2,244 1,520
10,150 7,935 28,822 23,015
Net interest income 21,823 18,992 60,765 55,048
Provision for loan losses 2,400 1,800 7,400 6,235
Net interest income after provision for loan losses 19,423 17,192 53,365 48,813
Noninterest income:
Service charges on deposit accounts 501 608 1,461 1,993
Investment securities gain, net 103 306 1,860
Gain (loss) on other assets sold, net 11 (12) 141 229
Gain (loss) on fixed assets, net 3 10 (4)
Gain on sale of loans, net 44 322 603
Cash surrender value income on bank-owned life insurance 166 187 516 567
Income from sales of state tax credits 390 71 1,180 790
Community Development Entity fees earned 400 36 1,728 276
ATM fee income 474 409 1,387 1,250
Other 472 156 965 815
2,461 1,558 8,016 8,379
Noninterest expense:
Salaries and employee benefits 6,023 4,729 16,643 15,060
Occupancy and equipment expenses 2,626 2,641 7,592 7,434
Professional fees 1,711 329 4,704 2,246
Taxes, licenses and FDIC assessments 1,087 760 2,938 2,333
Tax credit investment amortization 2,403 1,445 6,295 3,907
Write-down of other real estate 29 22 131 251
Data processing 1,086 1,063 3,202 3,180
Advertising and marketing 507 617 1,476 1,617
Other 1,620 1,980 4,929 5,159
17,092 13,586 47,910 41,187
Income before income taxes 4,792 5,164 13,471 16,005
Income tax benefit (5,673) (3,130) (13,884) (8,008)
Net income 10,465 8,294 27,355 24,013
Less net income attributable to noncontrolling interests (17) (135)
Net income attributable to Company 10,465 8,277 27,355 23,878
Less preferred stock dividends (62) (226) (252) (415)
Income available to common shareholders $10,403 $8,051 $27,103 $23,463
Earnings per common share – basic $0.55 $0.58 $1.65 $1.69
Earnings per common share – diluted $0.54 $0.57 $1.61 $1.66
FIRST NBC BANK HOLDING COMPANY
EARNINGS PER COMMON SHARE
For the three months ended For the nine months ended
September 30, September 30,
(In thousands, except per share data) 2013 2012 2013 2012
Basic: Net income available to common shareholders $10,403 $8,051 $27,103 $23,463
Less: Net income attributable to participating securities (Series C preferred stock) 519 537 1,512 1,692
Net income attributable to common shareholders $9,884 $7,514 $25,591 $21,771
Weighted-average common shares outstanding 17,885,333 13,028,416 15,507,969 12,920,261
Basic earnings per share $0.55 $0.58 $1.65 $1.69
Diluted: Net income attributable to common shareholders $9,884 $7,514 $25,591 $21,771
Weighted-average common shares outstanding 17,885,333 13,028,416 15,507,969 12,920,261
Effect of dilutive securities:
Stock options outstanding 403,610 107,162 305,087 100,325
Restricted stock grants
Warrants 80,555 51,956 65,724 49,338
Weighted-average common shares outstanding – assuming dilution 18,369,498 13,187,534 15,878,780 13,069,924
Diluted earnings per share $0.54 $0.57 $1.61 $1.66
FIRST NBC BANK HOLDING COMPANY
SELECTED RATIOS
Three Months Ended September 30, Nine Months Ended September 30,
2013 2012 2013 2012
Financial ratios:
Return on average assets (1) 1.34% 1.32% 1.26% 1.35%
Return on average stockholders' equity (1) 13.09% 17.27% 11.90% 13.72%
Net interest margin 3.08% 3.33% 3.05% 3.39%
September 30, 2013 December 31, 2012
Capital ratios:
Tier 1 leverage 11.82% 9.04%
Tier 1 risk-based capital 13.89% 11.26%
Total risk-based capital 15.04% 12.51%
September 30, 2013 December 31, 2012
Asset quality ratios:
Nonperforming loans to total loans (2)(4) 0.92% 1.22%
Nonperforming assets to total assets (3) 0.86% 1.20%
Allowance for loan losses to total loans (4) 1.35% 1.40%
Allowance for loan losses to nonperforming loans (2) 146.35% 115.19%
Net charge-offs to average loans 0.21% 0.12%
(1) Annualized.
(2) Nonperforming loans consist of nonaccrual loans and restructured loans.
(3) Nonperforming assets consist of nonperforming loans and real estate and other property that has been repossessed.
(4)Total loans are net of unearned discounts and deferred fees and costs.

CONTACT: For further information contact: First NBC Bank Holding Company Ashton J. Ryan, Jr. President and Chief Executive Officer (504) 671-3801 aryanjr@firstnbcbank.comSource:First NBC Bank Holding Company