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First NBC Bank Holding Company Announces 2014 Third Quarter Results

NEW ORLEANS, Oct. 28, 2014 (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 2014. For the quarter ended September 30, 2014, the Company reported net income available to common shareholders of $14.0 million, or $0.75 per share, as compared to $12.4 million, or $0.67 per share, for the second quarter of 2014, and $9.9 million, or $0.55 per share, for the third quarter of 2013. The Company's earnings per share on a diluted basis were $0.73, $0.65, and $0.54 per diluted share, for the third quarter of 2014, second quarter of 2014, and third quarter of 2013, respectively. The effect on diluted earnings per share was an increase of $0.08 per diluted share, or 12.3%, over the second quarter of 2014, and an increase of $0.19 per diluted share, or 35.2%, over the third quarter of 2013.

Performance Highlights

  • The Company continues to experience strong asset growth, with total assets of $3.6 billion at September 30, 2014, an increase of 10.6%, from December 31, 2013.
  • The Company's total loans increased $340.8 million, or 14.5%, from December 31, 2013.
  • The Company's total deposits increased $240.4 million, or 8.8%, from December 31, 2013.
  • Net interest income for the third quarter of 2014 totaled $27.8 million, an increase of $1.2 million, or 4.6%, over the linked quarter, and an increase of $5.9 million, or 27.2%, over the third quarter of 2013.
  • The net interest margin for the quarter ended September 30, 2014 was 3.37%, an increase of 2 basis points on a linked-quarter basis, and an increase of 29 basis points from the third quarter of 2013.
  • The Company's cost of deposits for the third quarter of 2014 was 1.54%, a decrease of 1 basis point on a linked-quarter basis, and a decrease of 8 basis points from the third quarter of 2013.

Loans

The Company's loans totaled $2.7 billion at September 30, 2014, an increase of $121.5 million, or 4.7%, from June 30, 2014, and $340.8 million, or 14.5%, from December 31, 2013. Loan growth continued to be driven primarily by increases in construction, commercial real estate and commercial loans due to favorable economic market conditions in the New Orleans trade area. The Company has experienced strong loan demand in the markets it services as evidenced by the increase in loans and its loan pipeline quarter over quarter. The increase in the Company's construction loan portfolio of 49.8% from December 31, 2013 was due primarily to the funding of construction loans related to hotels, residential real estate development, and federal tax credit related projects. The growth in the Company's commercial loan portfolio was due in part to growth in the oil and gas industry, specifically with respect to oil and gas service companies. The Company expects these positive growth trends to continue through the fourth quarter of 2014.

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

(dollars in thousands) September 30, 2014 June 30, 2014 % Change December 31, 2013 % Change
Construction $ 318,145 $ 289,382 9.9 % $ 212,430 49.8 %
Commercial real estate 1,219,682 1,178,199 3.5 1,128,181 8.1
Consumer real estate 131,028 126,368 3.7 117,653 11.4
Commercial 1,008,173 961,908 4.8 883,111 14.2
Consumer 21,591 21,227 1.7 16,402 31.6
Total loans $ 2,698,619 $ 2,577,084 4.7 % $ 2,357,777 14.5 %

Deposits

Total deposits at September 30, 2014 were $3.0 billion, an increase of $13.7 million, or 0.5%, from June 30, 2014, and $240.4 million, or 8.8%, from December 31, 2013. The increase was driven primarily by an increase in money market deposit accounts of $83.1 million, or 9.6%, from June 30, 2014, partially offset by declines in NOW accounts and certificates of deposit. The Company has experienced a shift by some customers from NOW accounts to money market deposits due to the Company lowering NOW account rates in the spring of 2014, especially in the lower balance tiers. The Company has also seen a decrease in certificates of deposit balances following the implementation of tiered pricing on its certificates of deposit in an effort to reduce the average yield. As a result of the Company's efforts, the Company's certificates of deposit comprised 39.3% of the deposit mix as of September 30, 2014, compared to 40.7% as of June 30, 2014, and 44.6% as of December 31, 2013. As the certificates of deposit mature, the Company has seen those customers move to money market accounts, which have increased 9.6% from June 30, 2014 and 44.3% from December 31, 2013. Money market deposits comprised 31.8% of the deposit mix as of September 30, 2014, compared to 29.2% as of June 30, 2014, and 24.0% as of December 31, 2013. The Company expects this trend to continue as certificates of deposit issued prior to the implementation of the tiered pricing program continue to mature.

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

(dollars in thousands) September 30, 2014 June 30, 2014 % Change December 31, 2013 % Change
Noninterest-bearing $ 336,112 $ 340,716 (1.4)% $ 291,080 15.5 %
NOW accounts 470,496 499,004 (5.7) 511,620 (8.0)
Money market accounts 945,645 862,583 9.6 655,173 44.3
Savings deposits 50,646 51,318 (1.3) 53,779 (5.8)
Certificates of deposit 1,168,306 1,203,898 (3.0) 1,219,155 (4.2)
Total deposits $ 2,971,205 $ 2,957,519 0.5 % $ 2,730,807 8.8 %

Net Interest Income

Net interest income for the third quarter of 2014 totaled $27.8 million, an increase of $1.2 million, or 4.6%, from the linked-quarter and an increase of $5.9 million, or 27.2%, from the three month period ended September 30, 2013. The Company's net interest margin was 3.37% for the quarter ended September 30, 2014, which was 2 basis points higher than the linked-quarter, and 29 basis points higher than the third quarter of 2013. The 2 basis points increase in the net interest margin over the linked-quarter was due primarily to the increase in average interest-earning assets, a decrease of 1 basis point in the cost of interest-bearing liabilities, which was due to a 1 basis point decrease in the cost of interest-bearing deposits. The 29 basis point increase in the net interest margin over the same three month period in 2013 was due primarily to an increase of 18 basis points in the average rate on interest-earning assets due primarily to an increase in average interest-earning assets of $458.4 million, a decrease of 10 basis points in the cost of interest-bearing liabilities primarily due to the decrease of 8 basis points in the cost of interest-bearing deposits and the refinancing of $40.0 million of the Company's long term borrowings during the first quarter of 2014. The Company expects these positive net interest margin trends to continue into the fourth quarter of 2014 due to the implementation of tiered pricing on all of its deposit products (including certificates of deposit) in the third and fourth quarters of 2013.

The following tables set 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, 2014 June 30, 2014 September 30, 2013
(dollars in thousands) Average
Balance
Average Yield/
Rate
Average
Balance
Average Yield/
Rate
Average
Balance
Average Yield/
Rate
Interest-earning assets:
Short-term investments $ 12,804 0.20 % $ 53,592 0.20 % $ 84,019 0.22 %
Investment in short-term receivables 233,044 2.85 % 213,262 2.62 % 185,977 2.63 %
Investment securities 367,135 2.51 % 372,932 2.56 % 370,383 2.28 %
Loans 2,653,083 5.18 % 2,537,666 5.28 % 2,167,325 5.23 %
Total interest-earning assets $ 3,266,066 4.70 % $ 3,177,452 4.70 % $ 2,807,704 4.52 %
Interest-bearing liabilities:
Savings $ 51,360 0.75 % $ 54,713 0.83 % $ 52,215 0.62 %
Money market deposits 909,405 1.35 % 804,232 1.37 % 468,151 1.50 %
NOW accounts 485,143 1.17 % 512,685 1.14 % 551,012 1.33 %
Certificates of deposit under $100,000 349,841 1.59 % 366,150 1.62 % 418,714 1.56 %
Certificates of deposit of $100,000 or more 630,147 1.93 % 644,632 1.93 % 663,698 1.93 %
CDARS® 211,028 2.20 % 202,345 2.19 % 174,161 2.17 %
Total interest-bearing deposits $ 2,636,924 1.54 % $ 2,584,757 1.55 % $ 2,327,951 1.62 %
Fed funds purchased and repurchase agreements 110,594 1.42 % 108,498 1.52 % 70,822 1.48 %
Other borrowings 61,143 1.58 % 55,110 1.73 % 55,220 2.65 %
Total interest-bearing liabilities $ 2,808,661 1.54 % $ 2,748,365 1.55 % $ 2,453,993 1.64 %
Net interest spread 3.16 % 3.15 % 2.88 %
Net interest margin 3.37 % 3.35 % 3.08 %
For the Nine Months Ended
September 30, 2014 September 30, 2013
(dollars in thousands) Average
Balance
Average Yield
/Rate
Average
Balance
Average Yield
/Rate
Interest-earning assets:
Short-term investments $ 32,056 0.20 % $ 75,921 0.21 %
Investment in short-term receivables 227,924 2.79 % 149,437 2.62 %
Investment securities 370,000 2.55 % 376,141 1.93 %
Loans 2,535,956 5.23 % 2,064,195 5.25 %
Total interest-earning assets $ 3,165,936 4.69 % $ 2,665,694 4.49 %
Interest-bearing liabilities:
Savings $ 53,091 0.80 % $ 49,059 0.63 %
Money market deposits 809,025 1.37 % 407,045 1.51 %
NOW accounts 505,247 1.14 % 520,381 1.31 %
Certificates of deposit under $100,000 365,341 1.61 % 425,203 1.56 %
Certificates of deposit of $100,000 or more 644,281 1.94 % 627,909 1.90 %
CDARS® 197,553 2.19 % 169,589 2.20 %
Total interest-bearing deposits $ 2,574,538 1.55 % $ 2,199,186 1.62 %
Fed funds purchased and repurchase agreements 100,776 1.48 % 66,848 1.45 %
Other borrowings 58,345 1.90 % 76,107 2.67 %
Total interest-bearing liabilities $ 2,733,659 1.56 % $ 2,342,141 1.65 %
Net interest spread 3.13 % 2.85 %
Net interest margin 3.34 % 3.05 %

Noninterest Income

Noninterest income for the third quarter of 2014 totaled $3.0 million, an increase of $0.1 million, or 3.4%, compared to the second quarter of 2014, and an increase of $0.6 million, or 23.3%, compared to the third quarter of 2013. The increase in noninterest income for the third quarter of 2014 compared to the linked-quarter resulted primarily from the increase of $0.5 million in gain on sale of loans, which relates to the sale of the guaranteed portion of SBA/USDA loans, offset primarily by a decrease of $0.2 million in other noninterest income, which was primarily due to the recognition in the second quarter of 2014 of $0.3 million from an option agreement the Company had with a customer.

Noninterest income increased $0.6 million, or 23.3%, compared to the third quarter of 2013. The increase was driven by increases of $0.5 million in gain on sale of loans, $0.2 million in income from sales of state tax credits, and $0.2 million in cash surrender value income on bank owned life insurance. These increases were partially offset by a decrease in Community Development Entity fees of $0.3 million.

Noninterest Expense

Noninterest expense for the three month period ended September 30, 2014 totaled $20.0 million, an increase of $1.5 million, or 8.0%, compared to the linked-quarter, and an increase of $3.0 million, or 17.3%, compared to three month period ended September 30, 2013. The increase over the linked-quarter was due primarily to increases in tax credit amortization of $0.6 million, salaries and benefits of $0.5 million, and $0.1 million in advertising and marketing, which was partially offset by a decrease in taxes, licenses and FDIC assessments of $0.1 million.

The increase in noninterest expense compared to the third quarter of 2013 resulted primarily from an increase in tax credit amortization of $1.6 million as well as all other components of noninterest expense.

Taxes

The Company's tax benefit for the quarter ended September 30, 2014 was $6.6 million, an increase of $1.8 million compared to the second quarter of 2014, and an increase of $0.9 million compared to the third quarter of 2013. The increase compared to the linked-quarter and prior year third quarter was due to the increase in the Company's investment in various tax credit programs, especially in Federal Historic Rehabilitation tax credits primarily in the New Orleans area.

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

Shareholders' equity totaled $423.5 million at September 30, 2014, an increase of $41.7 million from December 31, 2013. The increase was primarily attributable to the Company's retained 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 market is the New Orleans metropolitan area and the Mississippi Gulf Coast. The Company operates 32 full service banking offices located throughout its market and a loan production office in Gulfport, Mississippi and had 487 employees at September 30, 2014.

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. Among other things, management utilizes a non-GAAP performance measure to adjust noninterest income to reflect the effect of the federal income tax credits generated from the Company's investment in tax credit entities, offset by the direct costs associated with the tax credit investments, to derive at an adjusted income before income taxes non-GAAP measure. Management believes this non-GAAP financial measure provides information useful to investors in understanding the Company's financial results, and the Company believes that its presentation, together with the accompanying reconciliation, provides a more complete understanding of factors and trends affecting the Company's business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. This non-GAAP measure 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 this financial measure with other companies' non-GAAP financial measure having the same or similar name. A reconciliation of the non-GAAP financial measure disclosed in this press release to the comparable GAAP financial measure 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 fiscal year end December 31, 2013, and other reports and statements the Company has subsequently filed with the 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, 2014 December 31, 2013
Assets
Cash and due from banks $ 27,342 $ 28,140
Short-term investments 14,757 3,502
Investment in short-term receivables 240,832 246,817
Investment securities available for sale, at fair value 246,019 277,719
Investment securities held to maturity 90,710 94,904
Mortgage loans held for sale 4,095 6,577
Loans, net of allowance for loan losses of $40,300 and $32,143, respectively 2,658,319 2,325,634
Bank premises and equipment, net 51,910 51,174
Accrued interest receivable 11,078 10,994
Goodwill and other intangible assets 7,981 8,433
Investment in real estate properties 12,082 10,147
Investment in tax credit entities 118,189 117,684
Cash surrender value of bank-owned life insurance 46,934 26,187
Other real estate 5,262 3,733
Deferred tax asset 67,933 51,191
Other assets 30,480 23,781
Total assets $ 3,633,923 $ 3,286,617
Liabilities and equity
Deposits:
Noninterest-bearing $ 336,112 $ 291,080
Interest-bearing 2,635,093 2,439,727
Total deposits 2,971,205 2,730,807
Short-term borrowings 31,000 8,425
Repurchase agreements 113,430 75,957
Long-term borrowings 55,110 55,110
Accrued interest payable 6,543 6,682
Other liabilities 33,095 27,777
Total liabilities 3,210,383 2,904,758
Shareholders' equity:
Preferred stock
Convertible preferred stock Series C – no par value; 1,680,219 shares authorized; 364,983 shares issued and outstanding at September 30, 2014 and December 31, 2013 4,471 4,471
Preferred stock Series D – no par value; 37,935 shares authorized, issued and outstanding at September 30, 2014 and December 31, 2013 37,935 37,935
Common stock – par value $1 per share; 100,000,000 shares authorized; 18,575,088 shares issued and outstanding at September 30, 2014 and 18,514,271 shares issued and outstanding at December 31, 2013 18,575 18,514
Additional paid-in capital 239,144 237,063
Accumulated earnings 139,990 100,389
Accumulated other comprehensive loss, net (16,577) (16,515)
Total shareholders' equity 423,538 381,857
Noncontrolling interest 2 2
Total equity 423,540 381,859
Total liabilities and equity $ 3,633,923 $ 3,286,617
FIRST NBC BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months
Ended
September 30,
For the Nine Months
Ended
September 30,
(In thousands, except per share data) 2014 2013 2014 2013
Interest income:
Loans, including fees $ 34,664 $ 28,566 $ 99,160 $ 81,117
Investment securities 2,323 2,128 7,053 5,420
Investment in short-term receivables 1,675 1,233 4,761 2,928
Short-term investments 6 46 48 122
38,668 31,973 111,022 89,587
Interest expense:
Deposits 10,268 9,516 29,921 26,578
Borrowings and securities sold under repurchase agreements 640 634 1,943 2,244
10,908 10,150 31,864 28,822
Net interest income 27,760 21,823 79,158 60,765
Provision for loan losses 3,000 2,400 9,000 7,400
Net interest income after provision for loan losses 24,760 19,423 70,158 53,365
Noninterest income:
Service charges on deposit accounts 548 501 1,605 1,461
Investment securities gain, net 79 135 306
Gain (loss) on assets sold, net (76) 14 63 151
Gain on sale of loans, net 579 44 649 322
Cash surrender value income on bank-owned life insurance 352 166 748 516
Income from sales of state tax credits 597 390 2,358 1,180
Community Development Entity fees earned 109 400 984 1,728
ATM fee income 490 474 1,468 1,387
Other 356 472 1,316 964
3,034 2,461 9,326 8,015
Noninterest expense:
Salaries and employee benefits 6,456 6,023 17,795 16,643
Occupancy and equipment expenses 2,737 2,626 8,005 7,592
Professional fees 1,628 1,711 5,038 4,704
Taxes, licenses and FDIC assessments 1,240 1,087 3,782 2,938
Tax credit investment amortization 3,974 2,403 10,178 6,295
Write-down of other real estate 1 29 187 131
Data processing 1,207 1,086 3,446 3,202
Advertising and marketing 685 507 1,819 1,476
Other 2,119 1,620 5,702 4,928
20,047 17,092 55,952 47,909
Income before income taxes 7,747 4,792 23,532 13,471
Income tax (benefit) expense (6,612) (5,673) (16,354) (13,884)
Net income 14,359 10,465 39,886 27,355
Less net income attributable to noncontrolling interests
Net income attributable to Company 14,359 10,465 39,886 27,355
Less preferred stock dividends (95) (62) (285) (252)
Less earnings allocated to participating securities (275) (519) (764) (1,512)
Income available to common shareholders $ 13,989 $ 9,884 $ 38,837 $ 25,591
Earnings per common share – basic $ 0.75 $ 0.55 $ 2.10 $ 1.65
Earnings per common share – diluted $ 0.73 $ 0.54 $ 2.04 $ 1.61
FIRST NBC BANK HOLDING COMPANY
EARNINGS PER COMMON SHARE
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
(In thousands, except per share data) 2014 2013 2014 2013
Basic: Income available to common shareholders $ 13,989 $ 9,884 $ 38,837 $ 25,591
Weighted-average common shares outstanding 18,556 17,885 18,530 15,508
Basic earnings per share $ 0.75 $ 0.55 $ 2.10 $ 1.65
Diluted: Net income attributable to common shareholders $ 13,989 $ 9,884 $ 38,837 $ 25,591
Weighted-average common shares outstanding 18,556 17,885 18,530 15,508
Effect of dilutive securities:
Stock options outstanding 381 440 382 305
Warrants 117 103 118 66
Weighted-average common shares outstanding – assuming dilution 19,054 18,428 19,030 15,879
Diluted earnings per share $ 0.73 $ 0.54 $ 2.04 $ 1.61
FIRST NBC BANK HOLDING COMPANY
SUMMARY FINANCIAL INFORMATION
For the Three Months Ended
September 30,
For the Three
Months Ended
June 30,
(In thousands) 2014 2013 % Change 2014 % Change
EARNINGS DATA
Total interest income $ 38,668 $ 31,973 20.9 % $ 37,193 4.0 %
Total interest expense 10,908 10,150 7.5 % 10,643 2.5 %
Net interest income 27,760 21,823 27.2 % 26,550 4.6 %
Provision for loan losses 3,000 2,400 25.0 % 3,000 — %
Total noninterest income 3,034 2,461 23.3 % 2,933 3.4 %
Total noninterest expense 20,047 17,092 17.3 % 18,568 8.0 %
Income before income taxes 7,747 4,792 61.7 % 7,915 (2.1) %
Income tax (benefit) expense (6,612) (5,673) 16.6 % (4,784) 38.2 %
Net income 14,359 10,465 37.2 % 12,699 13.1 %
Preferred stock dividends (95) (62) 53.2 % (95) — %
Earnings allocated to participating securities (275) (519) (47.0) % (243) 13.2 %
Net income available to common shareholders $ 13,989 $ 9,884 41.5 % $ 12,361 13.2 %
AVERAGE BALANCE SHEET DATA
Total assets $ 3,593,868 $ 3,090,694 16.3 % $ 3,519,851 2.1 %
Total interest-earning assets 3,266,066 2,807,704 16.3 % 3,177,452 2.8 %
Total loans 2,653,083 2,167,325 22.4 % 2,537,666 4.5 %
Total interest-bearing deposits 2,636,924 2,327,951 13.3 % 2,584,757 2.0 %
Total interest-bearing liabilities 2,808,661 2,453,993 14.5 % 2,748,365 2.2 %
Total deposits 2,968,093 2,571,460 15.4 % 2,916,562 1.8 %
Total shareholders' equity 414,756 366,500 13.2 % 401,463 3.3 %
SELECTED RATIOS(1)
Return on average common equity 15.30 % 13.08 % 14.18 %
Return on average equity 13.74 % 11.33 % 12.69 %
Return on average assets 1.59 % 1.34 % 1.45 %
Net interest margin 3.37 % 3.08 % 3.35 %
Efficiency ratio(2) 65.10 % 70.39 % 62.98 %
Tier 1 leverage ratio 11.31 % 11.83 % 11.33 %
Tier 1 capital ratio 12.37 % 13.91 % 12.50 %
Total risk-based capital ratio 13.62 % 15.06 % 13.69 %
ASSET QUALITY RATIOS(1)
Nonperforming loans to total loans(3)(5) 0.89 % 0.92 % 0.85 %
Nonperforming assets to total assets(4) 0.81 % 0.86 % 0.76 %
Allowance for loan losses to total loans(5) 1.49 % 1.35 % 1.44 %
Allowance for loan losses to nonperforming loans(3) 166.92 % 146.35 % 170.45 %
Net charge-offs to average loans 0.03 % 0.21 % 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.
(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
IMPACT OF INVESTMENT IN FEDERAL TAX CREDIT PROGRAMS
For the Three Months Ended
(In thousands) September 30,
2014
June 30,
2014
September 30,
2013
Income before income taxes:
Income before income taxes (GAAP) $ 7,747 $ 7,915 $ 4,792
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) 14,057 11,284 11,056
Income before income taxes (Non-GAAP) 21,804 19,199 15,848
Income tax expense-adjusted (Non-GAAP)(2) (7,445) (6,500) (5,383)
Net income (GAAP) $ 14,359 $ 12,699 $ 10,465
Pro forma income related to investment in tax credit entities:
Income before income taxes (GAAP) $ 7,747 $ 7,915 $ 4,792
Pro forma interest income adjustment
Pro forma interest income related to investment in tax credit entities(3) 1,544 1,466 1,132
Noninterest expense adjustment(4)
Tax credit investment amortization(5) 3,974 3,337 2,403
Other direct expenses(6) 557 622 274
Pro forma income before income taxes (Non-GAAP) 13,822 13,340 8,601
Income tax expense-adjusted (Non-GAAP)(2) (4,720) (4,517) (2,921)
Pro forma net income (Non-GAAP) $ 9,102 $ 8,823 $ 5,680
(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 of 34% for each of the quarters ended September 30, 2014, June 30, 2014 and September 30, 2013.
(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) Tax credit amortization represents the amount of amortization associated with the investment in federal tax credit programs over the tax credit compliance periods.
(6) Other direct expenses represent fees and expenses incurred as a result of the Company's investment in federal tax credit programs.

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

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