They have run out of time and the FDIC has run out of patience. Despite many opportunities to add capital, management continued to argue that the bank was fundamentally strong because their federal tax credit assets had more value than regulators asserted. Fact is, if no one wants to buy your assets, you have to recognize that there is no there there. Shades of Lehman Brothers! Now, the bank has been seized, the depositors are being paid off and the FDIC is recording a $900+ million loss. What's left of the holding company? It still has outstanding debt and some newly issued preferred that was sold to the incumbent directors. Someone paid 20 cents for the stock in the market following the announcement of the seizure. All I can say is the 20 cents is better than nothing.
One of my cardinal investing rules has been to never bet against the government, which has unlimited funds to pursue its agenda and which never admits to an error. Regulators wanted the Company to develop a rational capital plan, but despite some rather cosmetic efforts and a sale of substantial business assets to Hancock Bank, management obviously chose to fight rather than seek a deal agreeable to the government. Well, who won that fight?
Bank was formed in 2006 by former execs from National Bank of Commerce (after it was absorbed by what is now Chase). Went public in 2013 at 26. Grew by acquisitions and enterprising commercial lending into a nearly $5 billion bank today and became the largest bank headquartered in New Orleans. Had a bad time getting its 2015 10k filed due to accounting issues and this controversy trashed the stock down to 11 or so when I first recommended it. Regulators were not convinced and slapped consent orders on the bank, driving the stock price to about 5. Replaced the auditors and top management, but were obviously unable to convince the regulators that they had a viable plan to resuscitate the bank.
Major owners include Castle Creek, BlackRock, Ameriprise, Vanguard, BancFunds, all of whom are crying in their beer today.
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