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Acquisitions | 9 Months Ended
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Sep. 30, 2017
Acquisitions [Abstract] |
Acquisitions | 2. Acquisitions ﻿ On March 10, 2017, the Company, through its banking subsidiary, Whitney Bank (“Whitney”), completed the acquisition of certain assets and liabilities, including nine branches, from First NBC Bank (“FNBC”), referred to as the FNBC I transaction. Whitney paid approximately $323 million in cash consideration ($326 million cash paid net of $3 million in branch cash acquired), including a $41.6 million transaction premium for the earnings stream acquired. ﻿ On April 28, 2017, the Louisiana Office of Financial Institutions (“OFI”) closed FNBC and appointed the FDIC as receiver. Whitney entered into a purchase and assumption agreement with the FDIC, referred to as the FNBC II transaction. Pursuant to the agreement, Whitney acquired selected assets and liabilities of the former FNBC, including substantially all of the transaction and savings deposits, and con tinued to operate its 29 branch locations (24 in Louisiana and five in Florida). Whitney also had the option to purchase (or assume the leases for) the branch and non-branch locations, including furniture, fixtures, and equipment subsequent to the date of the transaction. This option was exercised for seven branch locations. Whitney paid a premium of $35 million to the FDIC for the earnings stream acquired and received approximately $800 million in cash ($64 2 million from the FDIC for the net liabilities assumed and $158 million in branch cash acquired). ﻿ The FNBC I and FNBC II transactions were accounted for as business combinations and therefore, assets acquired and liabilities assumed were recorded at estimated fair values on the acquisition dates. The following table sets forth the preliminary acquisition date fair value of the assets acquired and liabilities assumed, the consideration paid or received, and the resulting goodwill recorded in each of the FNBC I and FNBC II transactions, and in the aggregate. The Company recorded certain p urchase accounting adjustments and a cash settlement with the FDIC during the third quarter of 2017. The Company expects to finalize acquisition date fair values and the resulting goodwill in the fourth quarter of 2017. ﻿
﻿ |  |  |  |  |  |  |  |  |
﻿ |  |  | FNBC I |  |  | FNBC II |  |  |
﻿(in thousands) |  |  | March 10, 2017 |  |  | April 28, 2017 |  |  | Total
﻿ASSETS |  |  |  |  |  |  |  |  |
﻿Cash and due from banks |  | $ | 2,856 |  | $ | 157,932 |  | $ | 160,788
﻿Interest-bearing time deposits with other banks |  |  | — |  |  | 382,622 |  |  | 382,622
﻿Fed funds sold and other short-term investments |  |  | — |  |  | 148 |  |  | 148
﻿Securities |  |  | — |  |  | 213,877 |  |  | 213,877
﻿Total loans |  |  | 1,211,523 |  |  | 165,577 |  |  | 1,377,100
﻿Property and equipment |  |  | 11,837 |  |  | 8,988 |  |  | 20,825
﻿Accrued interest receivable |  |  | 2,969 |  |  | 885 |  |  | 3,854
﻿Identifiable intangible assets |  |  | 3,900 |  |  | 21,400 |  |  | 25,300
﻿Other assets |  |  | 63 |  |  | 4,150 |  |  | 4,213
﻿ Total identifiable assets |  |  | 1,233,148 |  |  | 955,579 |  |  | 2,188,727
﻿ |  |  |  |  |  |  |  |  |
﻿LIABILITIES |  |  |  |  |  |  |  |  |
﻿Deposits |  |  | 398,171 |  |  | 1,530,338 |  |  | 1,928,509
﻿Short-term borrowings |  |  | 510,749 |  |  | 85,886 |  |  | 596,635
﻿Long-term debt |  |  | 93,120 |  |  | — |  |  | 93,120
﻿Other liabilities |  |  | 1,607 |  |  | 3,079 |  |  | 4,686
﻿ Total liabilities |  |  | 1,003,647 |  |  | 1,619,303 |  |  | 2,622,950
﻿ Net identifiable assets acquired (liabilities assumed) |  |  | 229,501 |  |  | (663,724) |  |  | (434,223)
﻿ |  |  |  |  |  |  |  |  |
﻿ Consideration (Paid) Received |  |  | (325,564) |  |  | 641,577 |  |  | 316,013
﻿ Goodwill |  | $ | 96,063 |  | $ | 22,147 |  | $ | 118,210
﻿ The loans acquired were recorded at estimated fair value at the acquisition dates with no carryover of the related allowance for loan losses. Substantially all of the loans acquired were considered to be performing (“purchased credit performing”) based on such factors as past due status and nonaccrual status, and were accounted for under Accounting Standards Codification (“ASC”) 310-20. The unpaid principal balance of the performing loans acquired totaled $1.4 billion, of which $31.7 million is not expected to be collected. The difference at the acquisition dates between the fair value and the contractual amounts due (the “fair value discount”) of $41.0 million will be accreted into income over the estimated lives of the loan pools established in the valuation. Loans with an unpaid principal balance of $39.9 million and a fair value of $23.4 million were considered to be purchased credit impaired and were accounted for under ASC 310-30 using the cost recovery method; as such, the related fair value discount of $16.5 million will not be accreted into income. ﻿ The Company assumed approximately $604 million of borrowings in the FNBC I transaction, consisting of both short-term and long-term Federal Home Loan Bank (“FHLB”) borrowings. The short-term borrowings consisted of $460 million in variable rate term notes, of which $200 million mature in 2025 and $260 million mature in 2026. These notes reprice quarterly and may be repaid at the Company’s option, either in full or in part, on any quarterly repricing date. Also included in short-term borrowings are $51 million in fixed rate term notes. The long-term borrowings include $93.1 million in fixed rate term notes, of which $88 million mature in 2018, $3.2 million mature in 2019, and $1.9 million mature in 2023. Short-term borrowings assumed in the FNBC II transaction consisted of securities sold under repurchase agreements. No long-term borrowings were assumed in the FNBC II transaction. ﻿ Identifiable intangible assets consist of core deposit intangibles totaling $2 5.3 million that are being amortized using sum of years’ digits over the asset’s life of eight years for the FNBC I transaction and eleven years for the FNBC II transaction. Goodwill totaling $11 8 million represents the excess of the consideration paid over the fair value of the net assets acquired, or the excess of the fair value of the net liabilities assumed over the consideration received. It is comprised of estimated future economic benefits arising from these transactions that cannot not be individually identified or do not qualify for separate recognition. These benefits include increased market share in the Greater New Orleans and Florida Panhandle market areas, expected earnings streams, and operational efficiencies that the Company believes will result from these business combinations. The tax basis of the goodwill generated from these transactions is expected to be deductible for federal income tax purposes. ﻿ ﻿
﻿ |  |
﻿Goodwill balance at December 31, 2016 | $ | 621,193
﻿Additions: |  |
﻿ Initial goodwill recorded in FNBC I transaction |  | 95,568
﻿ Measurement period adjustments - FNBC I transaction |  | 495
﻿ Initial goodwill recorded in FNBC II transaction |  | 23,009
﻿ Measurement period adjustments - FNBC II transaction |  | (862)
﻿Goodwill balance at September 30, 2017 | $ | 739,403
The operating results of the Company for the three and nine months ended September 30, 2017 include the results from the operations acquired in the FNBC transactions since the respective acquisition dates. Estimating reliable historical financial information is impracticable as only selected components of the businesses, as historically operated, were acquired. A number of post-acquisition events, including the consolidation of certain branch locations and the integration of operations, cash and investments acquired make quantifying discrete earnings contributions of the businesses acquired impracticable. As such, neither supplemental pro forma financial information of the combined entity, nor revenue and earnings contributed by the businesses acquired since the dates of acquisition are presented. ﻿ The Company incurred merger-related costs in connection with the FNBC I and FNBC II transactions. The following table reflects the merger-related costs for the three and nine months ended September 30, 2017 for both the FNBC I and FNBC II transactions combined. The Company does not expect to incur any additional merger-related costs related to the FNBC transactions in any subsequent period. ﻿ ﻿
﻿ |  |  |  |  |
﻿(in thousands) |  | Three Months Ended September 30, 2017 |  |  | Nine Months Ended September 30, 2017
﻿Personnel expense | $ | 2,120 |  | $ | 3,662
﻿Net occupancy and equipment expense |  | 500 |  |  | 777
﻿Professional services expense |  | 2,854 |  |  | 9,681
﻿Data processing expense |  | 929 |  |  | 974
﻿Other real estate |  | - |  |  | (1,511)
﻿Advertising expense |  | 358 |  |  | 1,389
﻿Other expense |  | 2,132 |  |  | 4,398
﻿Total merger-related expenses | $ | 8,893 |  | $ | 19,370
﻿

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