First NBC Bank Holding Co. said Friday its financial statements for 2011 to 2014 should no longer be relied upon.
The parent company for First NBC Bank said it had identified accounting errors in its 2015 annual report involving federal and state historic rehabilitation tax credit entities. In evaluating those errors, the bank’s audit committee and management determined that the financial statements for the previous four years should not be relied upon.
Asked what that means, LSU Banking Professor Joseph Mason said, “Generally, nothing good, but it is hard to say until you see the restatements.”
In mid-March, First NBC Bank Holding said adjustments to its noninterest expenses and income tax benefits would likely be increased and net income reduced for the fourth quarter and 2015.
The company had reported a fourth-quarter profit of $15.7 million, or 85 cents per share, up from $15.3 million, or 82 cents per share, a year earlier. For all of 2015, First NBC had reported net income of $67.3 million, or $3.44 per share, compared to $55.6 million, or $2.84 per share, a year earlier.
First NBC said it does not plan to restate earnings for 2011 to 2014. The company is working to correct the issues that caused the errors.
First NBC President and Chief Executive Officer Ashton J. Ryan Jr. said Friday the company changed the way it accounted for historic tax credits in June, under the advice of its Audit Committee.
Basically, First NBC accelerated the write-offs for the portion of the investments that weren’t expected to pay off, Ryan said.
“We have 37 historic properties that we are the tax credit owner of. So we have to go back ... and look at cash flows on all of those over 32 years and try to figure out what the value of that is,” he said.
First NBC brought in real estate experts to help with those calculations, but the task has taken longer than expected, Ryan said. The company had until March 30 to complete its annual report.
When the company did not, Nasdaq told First NBC it was not in compliance and had until June 3 to file a plan to achieve that. If the plan is accepted, First NBC has until Sept. 26 to file its annual report and regain compliance. First NBC expects to complete the audit of its 2015 consolidated financial statements and file its annual report filed within that time.
First NBC’s shares have been hit hard in the last four months. Since peaking at $42.47 on Dec. 1, share prices have fallen by more than half. The stock closed Friday at $19.12, down 37 cents.
Most of First NBC Bank Holding’s 34 Louisiana branches are in metro New Orleans. First NBC also has five Florida branches.