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How First NBC Buyout Will Benefit Hancock's Profitability

Hancock Holding Company ???s HBHC banking subsidiary, Whitney Bank, has agreed to acquire approximately $1.3 billion in loans and nine branches of First NBC Bank, the subsidiary of First NBC Bank Holding Company FNBC .

Per the agreement, which is expected to close during the first quarter of 2017, Whitney Bank will assume over $500 million in transaction and savings deposits and nearly $605 million in Federal Home Loan Bank of Dallas borrowings. Of the identified loans, approximately $160 million will be acquired on or before Jan 4.

Whitney Banks??? president and CEO, John M. Hairston said, ???We are pleased to be able to quickly deploy a portion of our recent capital raise to strategically grow our company.??? He added, ???The purchase of these assets and liabilities will strengthen our position in Greater New Orleans, where we already enjoy one of the top market share positions, and we expect the transaction will add approximately $26 million of incremental annual earnings once completed.???

Further, Hancock remains well positioned to grow organically, supported by a strong balance sheet position. Moreover, this acquisition along with its other strategic investments in growth markets will likely bolster revenue growth in the near term.

Notably, shares of the company have witnessed growth of 73.1% in the last year, outpacing the 43.8% gain for the Zacks categorized Southeast Banks industry.

The transaction is also expected to better position First NBC and First NBC Bank for the future. Cash, equal to the difference between the loans purchased and liabilities assumed, will be paid to First NBC.?? Additionally, it will receive an amount, which is the greater of the fair market value or book value of the nine branches and related assets, and will be paid a premium for the acquisition, which currently stands at approximately $44 million.

Management at First NBC expects that once the transaction is complete, it will provide total cash liquidity over $200 million. Also, the acquisition is likely to increase the funding available to First NBC, under its available credit facilities.

Currently, Hancock carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the same space include Carolina Financial Corporation CARO and First Horizon National Corporation FHN .

Carolina has witnessed an upward earnings estimate revision of 14.3% for 2016, over the past 90 days. Its share price has risen 70.3%, in the last one year. It currently boasts a Zacks Rank #1 (Strong Buy). You can see the complete list of today???s Zacks #1 Rank stocks here .

First Horizon also sports a Zacks Rank #1. For 2016, it has witnessed an upward earnings estimate revision of 1.1%, over the past 90 days. Its share price has increased 41.3%, in the last one year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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