What’s In a Name?
Ask First NBC
New Orleans businesses have long recognized the role that a trusted corporate name can play in developing a following. Consider, for instance, the thousands of local consumers who for decades proudly carried the signature shopping bags of stores such as Schwegmann and K&B. Though neither name remains in operation today, many locals remember them with fondness and a sense of trust.
The value of having a strong local identity, embraced by retailers, wasn’t lost on bankers either. Recently, two names worn for many years by the city’s largest banks resurfaced in local business news.
First National Bank of Commerce, founded in New Orleans in 1971, grew into a $9 billion institution before agreeing to be acquired by Banc One Corp. in ’98. During that time, the company – commonly known by its abbreviated moniker First NBC – built a loyal following that held up well, even through the challenging years of the savings and loan crisis, which eventually spread to banks.
One of First NBC’s longtime executives, Ashton Ryan, paid tribute to the bank’s solid reputation by hearkening back to its name when, in 2006, he and a group of local investors launched a new institution and dubbed it First NBC Bank. They even plopped their corporate headquarters in the same downtown New Orleans space that had formerly housed the main lobby of First National Bank of Commerce.
Ryan touted the First NBC name as he aggressively sought deposits and chased business throughout the local area. In a relatively short time he built the bank into bustling institution noted for a focus on local business lending and supporting local real estate development projects. In 2013, First NBC Bank went public, raising $100 million from investors who bought shares in the company.
But in time, First NBC Bank began to stumble. It appeared that the institution had leaned too heavily on business generated by a slew of federal and state tax credits that had been put to work to help New Orleans recover from Hurricane Katrina. First NBC Bank drew investors to local construction projects by linking them with low-income housing and historical rehabilitation tax credits, among other incentive programs, and by putting a substantial amount of the bank’s own resources into the developments.
First NBC Bank amassed nearly $5 billion in assets as it grew its business and acquired several smaller banks. The company’s physical footprint came to include almost 40 branch offices.
But the bank’s growing reliance on tax credit-fed business became problematic when regulators issued new rules regarding such business, causing the value of the credits to be diminished.
At the same time, First NBC ran into problems with some of its activities in the troubled oil and gas sector that forced the bank to write down the value of some assets and set aside large sums to cover potential future losses in the sector.
Last year the Federal Deposit Insurance Corp. slapped limits on the kinds of deposits First NBC Bank can take in, and state and federal regulators declared the bank to be in “troubled condition.” Under pressure from regulators, the bank signed an agreement to review its management and its loan and accounting processes, and develop a plan to shore up capital. As its condition darkened, the bank’s stock price plunged from about $40 a share to as low as $6 a share.
Despite its venerable name, trust in First NBC Bank began to erode and Ryan was forced to step down as its CEO, though he remained a member of the board and retained the title of president. It was at this point that another banking name from the past re-surfaced in the news.
Until 2010, when it was sold to Mississippi-based Hancock Holding Co, Whitney National Bank was the oldest banking institution in Louisiana. It had survived not only recent banking crises, but also the Great Depression on its way to becoming one of New Orleans’ biggest banks.
Recognizing the value of the Whitney name, Hancock Holding chose not to put its own name on the Louisiana offices it acquired. Instead, Hancock left the Whitney name, as well as Whitney’s signature clocks, on all the newly acquired Louisiana banking properties.
In a twist, recently it appeared that Hancock – under the Whitney moniker – would come to the aid of First NBC Bank. In late December, the two companies announced that First NBC Bank would sell nine of its branches and $1.3 billion in loans to Whitney.
Assuming that regulators sign off on the deal, Whitney, a subsidiary of Hancock Holding, will put its name on bank branches in New Orleans, Metairie, Terrytown, Slidell, Pearl River, Houma and Amite.
While a possible sale of the entirety of First NBC Bank has been rumored for months, at press time, Hancock officials had so far avoided any talk of taking over the New Orleans-based institution. More definitive news likely will surface in coming weeks. Whatever the boards of the two institutions should decide, it’s likely that the value of a name and the importance of brand loyalty will weigh heavily in their discussions.