First NBC Bank Holding 10K 2015 Annual report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

Commission file number: 001-35915




FIRST NBC BANK HOLDING COMPANY (Exact name of registrant as specified in its charter)



Louisiana		14-1985604
(State of incorporation or organization)		(I.R.S. Employer Identification Number)



210 Baronne Street, New Orleans, Louisiana		70112
(Address of principal executive offices)		(Zip code)
	Registrant’s telephone number, including area code: (504) 566-8000
Securities registered under Section 12(b) of the Exchange Act: Common stock, $1.00 par value
	Securities registered under Section 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨ No x

Indicate by check mark whether the registrant: (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (ii) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the closing price of the common stock as of June 30, 2015, was approximately $561,988,908.

As of August 15, 2016, the registrant had 19,231,427 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

FIRST NBC BANK HOLDING COMPANY

2015 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS



	PART 1	Page
Item 1.	Business	3
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	25
Item 2.	Properties	25
Item 3.	Legal Proceedings	25
Item 4.	Mine Safety Disclosures	25

	PART II
Item 5.	Market Information and Holders	25
Item 6.	Selected Consolidated Financial and Other Data	27
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	64
Item 8.	Financial Statements and Supplementary Data	65
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosures	148
Item 9A.	Controls and Procedures	148
Item 9B.	Other Information	152

	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	152
Item 11.	Executive Compensation	157
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	161
Item 13.	Certain Relationships and Related Transactions, and Directors Independence	164
Item 14.	Principal Accounting Fees and Services	166

	PART IV
Item 15.	Exhibits and Financial Statement Schedules	167

SIGNATURES		170

Part I.

Unless the context otherwise requires, the words “we,” “our,” and “us” refer to First NBC Bank Holding Company and its consolidated subsidiaries.

Explanatory Note

As reported in our Current Report on Form 8-K, filed April 8, 2016, we analyzed the amount and timing of our recognition of impairment losses with respect to our investment in Federal and State Historic Rehabilitation Tax Credit entities. As a result of this analysis, the audit committee of our board of directors determined that the calculation of impairment for these investments was incorrect and therefore prior periods should be restated to prior periods and, accordingly, that our annual financial statements for the years ended December 31, 2014 and prior and for the quarterly periods within such years, and for the quarters ended March 31, 2015, June 30, 2015 and September 30, 2015 could not be relied upon. We have included the restated financial statements for each of such years and quarterly periods, showing adjustments, in Notes 2 and 33 to the financial statements included in this Annual Report on Form 10-K. All information provided herein is as of December 31, 2015, except where noted otherwise.

Item 1. Business

General

We are a bank holding company, headquartered in New Orleans, Louisiana, which offers a broad range of financial services through our wholly-owned banking subsidiary, First NBC Bank, a Louisiana state non-member bank. Our primary market is the New Orleans metropolitan area and the Florida panhandle. We serve our customers from our main office located in the Central Business District of New Orleans, 38 full service branch offices located throughout our market and a loan production office in Gulfport, Mississippi. We believe that our market exhibits attractive demographic attributes and presents favorable competitive dynamics, thereby offering long-term opportunities for growth. Our strategic focus is on building a franchise with meaningful market share and strong revenues complemented by operational efficiencies that we believe will produce attractive risk-adjusted returns for our shareholders. As of December 31, 2015, on a consolidated basis, we had total assets of $4.7 billion, net loans of $3.4 billion, total deposits of $3.8 billion, and shareholders’ equity of $380.7 million.

We were the largest bank holding company by assets headquartered in New Orleans as of December 31, 2015. We are led by a team of experienced bankers, all of whom have substantial banking or related experience and relationships in the greater New Orleans market. We believe that recent changes and disruption within our primary market caused by significant acquisitions of local financial institutions and the operating difficulties faced by many local competitors have created an underserved base of small and middle-market businesses and high net worth individuals that are interested in banking with a company headquartered in, and with decision-making authority based in, the New Orleans market. We believe our management’s long-standing presence in the area gives us insight into the local market and the ability to tailor our products and services, particularly the structure of our loans, to the needs of our targeted customers. We seek to develop comprehensive, long-term banking relationships by cross-selling loans and core deposits, offering a diverse array of products and services and delivering high quality customer service. In addition to the reputation and local connections of our management, we believe that our strong capital position gives us an instant advantage over our competitors.

Competition

We compete with a wide range of financial institutions in our market, including local, regional and national commercial banks, thrifts and credit unions, and our primary competitors are the larger regional and national banks. Consolidation activity involving out-of-state financial institutions has altered the competitive landscape in our market within recent years. As of June 30, 2005, approximately 70% of the deposits in the New Orleans market were held in banks that were based in this market. Based on deposit data as of June 30, 2015, that number had decreased to less than 30%, due in large part to the acquisition of several large, locally-based financial institutions by large out-of-state banks, two of which held in the aggregate more than 50% of the in-market deposits at the time of their respective acquisitions. Although competition within our market area is strong, we believe that the customer disruption associated with these acquisitions, as well as the loss of in-market decision-making and relationship-based banking, will continue to provide us with additional growth opportunities as the largest independent depository institution headquartered in the New Orleans market.

We also compete with mortgage companies, investment banking firms, brokerage houses, mutual fund managers, investment advisors, and other “non-bank” companies for certain of our products and services. Some of our competitors are not subject to the degree of supervision and regulatory restrictions that we are.

Employees

As of December 31, 2015, we had approximately 565 full-time equivalent employees. None of our employees are represented by any collective bargaining unit or are parties to a collective bargaining agreement. We believe that our relations with our employees are good.

Acquisitions

To complement our organic growth strategy, from time to time, we evaluate potential acquisition opportunities. We believe there are many banking institutions that continue to face credit challenges, capital constraints and liquidity issues and that lack the scale and management expertise to manage the increasing regulatory burden. Our management team has a long history of identifying targets, assessing and pricing risk and executing acquisitions in a creative, yet disciplined, manner. We seek acquisitions that provide meaningful financial benefits, long-term organic growth opportunities and expense reductions, without compromising our risk profile. Additionally, we seek banking markets with favorable competitive dynamics and potential consolidation opportunities. All of our acquisition activity is evaluated and overseen by a standing Merger and Acquisition Committee of our Board of Directors.

During 2015, we completed two acquisitions. On January 16, 2015, we purchased certain assets and assumed certain liabilities from the Federal Deposit Insurance Corporation, or FDIC, as receiver for First National Bank of Crestview, a full service commercial bank headquartered in Crestview, Florida, which was closed and placed into receivership. In the transaction, we agreed to assume all of the deposit liabilities of $72.3 million, and acquire approximately $62.3 million of assets, of the failed bank. The acquired assets included the failed bank’s performing loans, substantially all of its investment securities portfolio and its three banking facilities, with the FDIC retaining the remaining assets. The transaction did not include a loss-share agreement with the FDIC. The acquisition enabled us to expand our banking footprint into the Florida Panhandle market with an experienced in-market team and three banking locations.

On November 30, 2015, we acquired State Investors Bancorp, Inc., the parent holding company for State-Investors Bank, which conducted business from four full service banking offices in the New Orleans metropolitan area. As of September 30, 2015, State Investors Bancorp reported total assets of $248.9 million, net loans of $200.0 million, total deposits of $146.6 million and stockholders’ equity of $42.9 million. Under the terms of our agreement with State Investors Bancorp, we acquired all of its outstanding common stock for aggregate cash consideration of $48.7 million. Consistent with our strategy, the primary reasons for the acquisition were to enhance market share in the New Orleans metropolitan area and improve profitability through expected expense reductions.

Available Information

Our filings with the U.S. Securities Exchange Commission (SEC), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments thereto, are available on our website as soon as reasonably practicable after the reports are filed with or furnished to the SEC. Copies can be obtained free of charge in the “Investor Relations” section of our website at www.firstnbcbank.com. Our SEC filings are also available through the SEC’s website www.sec.gov. Copies of these filings are also available by writing to us at the following address:



	First NBC Bank Holding Company
	210 Baronne Street
	New Orleans, Louisiana 70112

Supervision and Regulation

General

Banking is highly regulated under federal and state law. We are a bank holding company and financial holding company registered under the Bank Holding Company Act of 1956, as amended, and are subject to supervision, regulation and examination by the Federal Reserve. First NBC Bank is a commercial bank chartered under the laws of the State of Louisiana. The bank is not a member of the Federal Reserve system and is subject to supervision, regulation and examination by the Louisiana Office of Financial Institutions, or OFI, and the FDIC. This system of supervision and regulation establishes a comprehensive framework for our operations and, consequently, can have a material impact on our growth and earnings performance.

The primary goals of the bank regulatory scheme are to maintain a safe and sound banking system and to facilitate the conduct of sound monetary policy. This system is intended primarily for the protection of the FDIC’s deposit insurance funds, bank depositors and the public, rather than our shareholders and creditors. The banking agencies have broad enforcement power over bank holding companies and banks, including the authority, among other things, to enjoin “unsafe or unsound” practices, require affirmative action to correct any violation or practice, issue administrative orders that can be judicially enforced, direct increases in capital, direct the sale of subsidiaries or other assets, limit dividends and distributions, restrict growth, assess civil monetary penalties, remove officers and directors, and, with respect to banks, terminate deposit insurance or place the bank into conservatorship or receivership. In general, these enforcement actions may be initiated for violations of laws and regulations or unsafe or unsound practices.

Regulatory Capital Requirements

Capital adequacy. The Federal Reserve Board monitors the capital adequacy of our holding company, on a consolidated basis, and the FDIC and the OFI monitor the capital adequacy of First NBC Bank. The regulatory agencies use a combination of risk-based guidelines and a leverage ratio to evaluate capital adequacy and consider these capital levels when taking action on various types of applications and when conducting supervisory activities related to safety and soundness. The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in risk profiles among financial institutions and their holding companies, to account for off-balance sheet exposure, and to minimize disincentives for holding liquid assets. Assets and off-balance sheet items, such as letters of credit and unfunded loan commitments, are assigned to broad risk categories, each with appropriate risk weights. Regulatory capital, in turn, is classified in one of two tiers. “Tier 1” capital includes common equity, retained earnings, qualifying non-cumulative perpetual preferred stock, and minority interests in equity accounts of consolidated subsidiaries, less goodwill, most intangible assets and certain other assets. “Tier 2” capital includes, among other things, qualifying subordinated debt and allowances for loan and lease losses, subject to limitations. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance sheet items.

Under the risk-based guidelines effective through December 31, 2014, FDIC and Federal Reserve regulations required banks and bank holding companies generally to maintain three minimum capital standards: (1) a Tier 1 capital to adjusted total assets ratio, or “leverage capital ratio,” of at least 4%, (2) a Tier 1 capital to risk-weighted assets ratio, or “Tier 1 risk-based capital ratio,” of at least 4% and (3) a total risk-based capital (Tier 1 plus Tier 2) to risk-weighted assets ratio, or “total risk-based capital ratio,” of at least 8%. In addition, the prompt corrective action standards discussed below, in effect, increase the minimum regulatory capital ratios for banking organizations. These capital requirements are minimum requirements. Higher capital levels may be required if warranted by the particular circumstances or risk profiles of individual institutions, or if required by the banking regulators due to the economic conditions impacting our market. For example, FDIC regulations provide that higher capital may be required to take adequate account of, among other things, interest rate risk and the risks posed by concentrations of credit, nontraditional activities or securities trading activities.

Effective January 1, 2015, these minimum capital standards, as well as the prompt corrective action standards discussed below, increased as a result of changes recently adopted by the federal banking agencies, which are described in greater detail below under “Basel III”.

Failure to meet capital guidelines could subject us to a variety of enforcement remedies, including issuance of a capital directive, a prohibition on accepting brokered deposits, other restrictions on our business and the termination of deposit insurance by the FDIC.

Prompt corrective action regulations. Under the FDIC’s prompt corrective action regulations, the FDIC is authorized and required to take certain actions against state nonmember banks that do not meet minimum capital requirements. For this purpose, an institution is placed in one of the following five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” The institution’s capital tier will depend upon how its capital levels compare with various relevant capital measures and certain other factors, as established by regulation.

An institution is (i) “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a common equity Tier 1 risk-based capital ratio, or CET1 capital ratio, of 6.5% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, and a leverage capital ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a CET1 capital ratio of 4.5% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, and a leverage capital ratio of 4.0% or greater and is not “well capitalized”; (iii) “undercapitalized” if it has a total risk-based capital ratio that is less than 8.0%, a CET1 capital ratio less than 4.5%, a Tier 1 risk-based capital ratio of less than 6.0% or a leverage capital ratio of less than 4.0%; (iv) “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a CET1 capital ratio less than 3.0%, a Tier 1 risk-based capital ratio of less than 4.0% or a leverage capital ratio of less than 3.0%; and (v) “critically

undercapitalized” if its tangible equity is equal to or less than 2.0% of average quarterly tangible assets. The FDIC’s regulations also establish procedures for downgrading an institution to a lower capital category based on supervisory factors other than capital.

As of December 31, 2015, First NBC Bank was “adequately capitalized” under the FDIC’s prompt corrective action regulations. Banks that are “adequately” but not “well-capitalized” may not accept, renew or rollover brokered deposits except with a waiver from the FDIC and are subject to restrictions on the interest rates that can be paid on its deposits. The FDIC’s prompt corrective action regulations also generally prohibit a bank from making any capital distributions (including payment of a dividend) or paying any management fee to its parent holding company if the bank would thereafter be “undercapitalized.” “Undercapitalized” institutions are also subject to growth limitations and are required to submit a capital restoration plan. The agencies may not accept such a plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the bank’s capital. “Significantly undercapitalized” depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become “adequately capitalized,” requirements to reduce total assets, and cessation of receipt of deposits from correspondent banks. “Critically undercapitalized” institutions are subject to the appointment of a receiver or conservator. The capital classification of a bank also affects the frequency of regulatory examinations, the bank's ability to engage in certain activities and the deposit insurance premiums paid by the bank.

Furthermore, a bank holding company must guarantee that a subsidiary depository institution meets its capital restoration plan, subject to various limitations. The controlling holding company’s obligation to fund a capital restoration plan is limited to the lesser of 5% of an undercapitalized subsidiary’s assets at the time it became undercapitalized or the amount required to meet regulatory capital requirements.

Basel III. On July 2, 2013, the federal banking agencies adopted a final rule revising the regulatory capital framework applicable to all top tier bank holding companies with consolidated assets of $500 million or more and all banks, regardless of size. The Basel III framework became applicable beginning January 1, 2015, although the capital conservation buffer, which is discussed in greater detail below, will be phased in over a three-year period, beginning January 1, 2016.

Under the Basel III framework, we are required to maintain the following minimum regulatory capital ratios:


•	A new ratio of common equity Tier 1 capital to total risk-weighted assets of not less than 4.5%;


•	A Tier 1 risk-based capital ratio of 6.0% (an increase from 4.0%);


•	A total risk-based capital ratio of 8.0%; and


•	A leverage ratio of 4.0%.

Under the Basel III framework, Tier 1 capital is redefined to include two components: (1) common equity Tier 1 capital and (2) additional Tier 1 capital. Common equity Tier 1 capital consists solely of common stock (plus related surplus), retained earnings, accumulated other comprehensive income, and limited amounts of minority interests that are in the form of common stock. Additional Tier 1 capital includes other perpetual instruments historically included in Tier 1 capital, such as non-cumulative perpetual preferred stock. With limited exceptions, trust preferred securities and cumulative perpetual preferred stock no longer qualify as Tier 1 capital. Tier 2 capital consists of instruments that currently qualify as Tier 2 capital plus instruments that the rule has disqualified from Tier 1 capital treatment. In addition, the Basel III framework establishes certain deductions from and adjustments to the regulatory capital ratios, including goodwill, intangible assets, deferred tax assets (see discussion below) and accumulated other comprehensive income.

The Basel III framework also implements a requirement for all banking organizations to maintain a capital conservation buffer above the minimum capital requirements to avoid certain restrictions on capital distributions and discretionary bonus payments to executive officers. The capital conservation buffer must be composed of common equity Tier 1 capital. When fully phased in, the capital conservation buffer requirement will effectively require banking organizations to maintain regulatory capital ratios at least 50 basis points higher than well capitalized levels to avoid the restrictions on capital distributions and discretionary bonus payments to executive officers.

The Basel III framework alters the method under which banking organizations must calculate risk-weighted assets in an effort to make the calculation of risk-weighted assets more risk-sensitive, to better account for risk mitigation techniques, and to create substitutes for credit ratings (in accordance with the Dodd-Frank Act). The standardized approach, which applies to us, includes additional exposure categories as compared with current standards including a new high volatility commercial real estate category that is risk-weighted at 150%. Although a number of asset classes will be risk-weighted differently, the Basel III framework does not change standardized risk weightings for certain assets, including residential mortgages.

The Basel III framework also requires banks and bank holding companies to measure their liquidity against specific liquidity tests. Although similar in some respects to liquidity measures historically applied by banks and regulators for management and supervisory purposes, the Basel III framework requires specific liquidity tests by rule. In September 2014, the federal banking agencies approved final rules implementing the Basel III liquidity framework, which apply only to banking organizations with $250 billion or more in consolidated assets or $10 billion or more in foreign exposures. Accordingly, the Basel III liquidity framework does not apply to us.

Deferred tax assets. The regulatory capital guidelines in place prior to Basel III, as well as those promulgated as a result of Basel III, limit the amount of deferred tax assets that can be included in our Tier 1 capital. Prior to Basel III, our ability to include in Tier 1 capital deferred tax assets dependent on future taxable income was limited to the lesser of the amount of deferred tax assets that we expected to realize within one year based on projected future taxable income or 10% of our Tier 1 capital, before deducting certain disallowed assets. As a result of the regulatory capital guidelines, we have been subject to limitations in the amount of deferred tax assets that are includible in Tier 1 capital since 2013. The Basel III framework further changed the manner in which deferred tax assets are treated for purposes of regulatory capital. In general, deferred tax assets arising from tax credit and net operating loss carryforwards must be subtracted from common equity Tier 1 capital, although the deductibility is being phased in through 2018, starting at 40% in 2015 and increasing 20% each year through 2018. Any excess amount of deferred tax assets arising from tax credit and net operating loss carryforwards not subject to deduction against common equity Tier 1 capital during the phase-in period is netted against the balance of any additional Tier 1 capital instruments. Net deferred tax assets arising from temporary differences that cannot be realized through net operating loss carrybacks are subjected to a 10% and 15% limitation. A 15% aggregate limitation is applied to temporary difference deferred tax assets, mortgage servicing rights and minority investments in other institutions.

Acquisitions by Bank Holding Companies

We must obtain the prior approval of the Federal Reserve before (1) acquiring more than five percent of the voting stock of any bank or other bank holding company, (2) acquiring all or substantially all of the assets of any bank or bank holding company, or (3) merging or consolidating with any other bank holding company. The Federal Reserve may determine not to approve any of these transactions if it would result in or tend to create a monopoly or substantially lessen competition or otherwise function as a restraint of trade, unless the anti-competitive effects of the proposed transaction are clearly outweighed by the public interest in meeting the convenience and needs of the community to be served. The Federal Reserve is also required to consider the financial and managerial resources and future prospects of the bank holding companies and banks concerned, the convenience and needs of the community to be served, and the record of a bank holding company and its subsidiary bank(s) in combating money laundering activities. In addition, a failure to implement and maintain adequate compliance programs could cause the Federal Reserve or other banking regulators not to approve an acquisition when regulatory approval is required or to prohibit an acquisition even if approval is not required.

Scope of Permissible Bank Holding Company Activities

In general, the Bank Holding Company Act limits the activities permissible for bank holding companies to the business of banking, managing or controlling banks and such other activities as the Federal Reserve has determined to be so closely related to banking as to be properly incident thereto.

A bank holding company may elect to be treated as a financial holding company if all of its depository institution subsidiaries are “well capitalized,” “well managed," and have received a rating of not less than satisfactory on each such institution's most recent examination under the Community Revinvestment Act. A financial holding company may engage in a range of activities that are (1) financial in nature or incidental to such financial activity or (2) complementary to a financial activity and which do not pose a substantial risk to the safety and soundness of a depository institution or to the financial system generally. These activities include securities dealing, underwriting and market making, insurance underwriting and agency activities, merchant banking and insurance company portfolio investments. Expanded financial activities of financial holding companies generally will be regulated according to the type of such financial activity: banking activities by banking regulators, securities activities by securities regulators and insurance activities by insurance regulators. No regulatory approval is required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature as determined by the Federal Reserve. We have made a financial holding company election; however, as of December 31, 2015, we were not engaged in any activity and did not own any assets for which a financial holding company designation would be required.

If we fail to continue to meet any of the requirements for financial holding company status, we may be required to enter into an agreement with the Federal reserve to comply with all applicable capital and management requirements within a certain period of time or lose our financial holding company designation. In addition, the Federal Reserve may place limitations on our ability to conduct the broader financial activities permissible for financial holding companies during any period of

noncompliance. In such a situation, until we would return to compliance, we would be unable to acquire a company engaged in such financial activities without prior approval of the Federal Reserve. As of December 31, 2015, First NBC Bank was "adequately capitalized" under applicable Federal Reserve regulations.

The Bank Holding Company Act does not place territorial limitations on permissible non-banking activities of bank holding companies. The Federal Reserve has the power to order any bank holding company or its subsidiaries to terminate any activity or to terminate its ownership or control of any subsidiary when the Federal Reserve has reasonable grounds to believe that continuation of such activity or such ownership or control constitutes a serious risk to the financial soundness, safety or stability of any bank subsidiary of the bank holding company.

Source of Strength Doctrine for Bank Holding Companies

Under longstanding Federal Reserve policy which has been codified by the Dodd-Frank Act, we are expected to act as a source of financial strength to, and to commit resources to support, First NBC Bank. This support may be required at times when we may not be inclined to provide it. In addition, any capital loans that we make to First NBC Bank are subordinate in right of payment to deposits and to certain other indebtedness of First NBC Bank. In the event of our bankruptcy, any commitment by us to a federal bank regulatory agency to maintain the capital of First NBC Bank would be assumed by the bankruptcy trustee and entitled to a priority of payment.

Dividends

As a bank holding company, we are subject to certain restrictions on dividends under applicable banking laws and regulations. The Federal Reserve has issued a policy statement that provides that a bank holding company should not pay dividends unless: (1) its net income over the last four quarters (net of dividends paid) has been sufficient to fully fund the dividends; (2) the prospective rate of earnings retention appears to be consistent with the capital needs, asset quality and overall financial condition of the bank holding company and its subsidiaries; and (3) the bank holding company will continue to meet minimum required capital adequacy ratios. Accordingly, a bank holding company should not pay cash dividends that exceed its net income or that can only be funded in ways that weaken the bank holding company’s financial health, such as by borrowing. The Dodd-Frank Act imposes and Basel III results in additional restrictions on the ability of banking institutions to pay dividends. In addition, in the current financial and economic environment, the Federal Reserve Board has indicated that bank holding companies should carefully review their dividend policy and has discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong. The Federal Reserve may further restrict the payment of dividends by engaging in supervisory action to restrict dividends or by requiring us to maintain a higher level of capital then would otherwise be required under the Basel III minimum capital requirements.

First NBC Bank is also subject to certain restrictions on dividends under federal and state laws, regulations and policies. In general, under Louisiana law, First NBC Bank may pay dividends to us without the approval of the OFI so long as the amount of the dividend does not exceed First NBC Bank’s net profits earned during the current year combined with its retained net profits of the immediately preceding year. The bank is required to obtain the approval of the OFI for any amount in excess of this threshold. In addition, under federal law, First NBC Bank may not pay any dividend to us if it is undercapitalized or the payment of the dividend would cause it to become undercapitalized. The FDIC may further restrict the payment of dividends by engaging in supervisory action to restrict dividends or by requiring the bank to maintain a higher level of capital than would otherwise be required to be adequately capitalized for regulatory purposes. Moreover, if, in the opinion of the FDIC, First NBC Bank is engaged in an unsound practice (which could include the payment of dividends), the FDIC may require, generally after notice and hearing, the bank to cease such practice. The FDIC has indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe banking practice. The FDIC has also issued policy statements providing that insured depository institutions generally should pay dividends only out of current operating earnings.

Restrictions on Transactions with Affiliates and Loans to Insiders

Federal law strictly limits the ability of banks to engage in transactions with their affiliates, including their bank holding companies. Sections 23A and 23B of the Federal Reserve Act, and Federal Reserve Regulation W, impose quantitative limits, qualitative standards, and collateral requirements on certain transactions by a bank with, or for the benefit of, its affiliates, and generally require those transactions to be on terms at least as favorable to the bank as transactions with non-affiliates. The Dodd-Frank Act significantly expands the coverage and scope of the limitations on affiliate transactions within a banking organization, including an expansion of what types of transactions are covered transactions to include credit exposures related to derivatives, repurchase agreements and securities lending arrangements and an increase in the amount of time for which collateral requirements regarding covered transactions must be satisfied.

Federal law also limits a bank’s authority to extend credit to its directors, executive officers and 10% shareholders, as well as to entities controlled by such persons. Among other things, extensions of credit to insiders are required to be made on terms that

are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons. Also, the terms of such extensions of credit may not involve more than the normal risk of repayment or present other unfavorable features and may not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the bank’s capital.

Deposit Insurance Assessments

FDIC-insured banks are required to pay deposit insurance assessments to the FDIC. The amount of the assessment is based on the size of the bank’s assessment base, which is equal to its average consolidated total assets less its average tangible equity, and its risk classification under an FDIC risk-based assessment system. Institutions assigned to higher risk classifications (that is, institutions that pose a higher risk of loss to the Deposit Insurance Fund) pay assessments at higher rates than institutions that pose a lower risk. An institution’s risk classification is assigned based on its capital levels and the level of supervisory concern that the institution poses to the regulators. In addition, the FDIC can impose special assessments in certain instances. As noted above, the Dodd-Frank Act changed the way that deposit insurance premiums are calculated. Continued action by the FDIC to replenish the Deposit Insurance Fund, as well as the changes contained in the Dodd-Frank Act, may result in higher assessment rates. First NBC Bank expects to be subject to increases in its deposit insurance premiums as a result its “adequately capitalized” regulatory capital classification as of December 31, 2015. Any increase in deposit insurance assessments or deposit insurance premiums could reduce our profitability or otherwise negatively impact our operations.

Branching and Interstate Banking

Under Louisiana law, First NBC Bank is permitted to establish additional branch offices within Louisiana, subject to the approval of the OFI. As a result of the Dodd-Frank Act, the bank may also establish additional branch offices outside of Louisiana, subject to prior regulatory approval, so long as the laws of the state where the branch is to be located would permit a state bank chartered in that state to establish a branch. First NBC Bank may also establish offices in other states by merging with banks or by purchasing branches of other banks in other states, subject to certain restrictions.

Community Reinvestment Act

First NBC Bank has a responsibility under the Community Reinvestment Act, or CRA, and related FDIC regulations to help meet the credit needs of its communities, including low- and moderate-income borrowers. In connection with its examination of First NBC Bank, the FDIC is required to assess the bank’s record of compliance with the CRA. The bank’s failure to comply with the provisions of the CRA could, at a minimum, result in denial of certain corporate applications, such as branches or mergers, or in restrictions on its or the company’s activities, including additional financial activities if we elect to be treated as a financial holding company. First NBC Bank has received an “outstanding” CRA rating on each CRA examination since inception. The CRA requires all FDIC-insured institutions to publicly disclose their rating.

Concentrated Commercial Real Estate Lending Regulations

The federal banking regulatory agencies have promulgated guidance governing financial institutions with concentrations in commercial real estate lending. The guidance provides that a bank has a concentration in commercial real estate lending if (i) total reported loans for construction, land development, and other land represent 100% or more of total capital or (ii) total reported loans secured by multifamily and non-farm residential properties and loans for construction, land development, and other land represent 300% or more of total capital, and the bank’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months. Owner occupied loans are excluded from this second category. If a concentration is present, management must employ heightened risk management practices that address, among other things, Board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of commercial real estate lending. As of December 31, 2015, First NBC Bank's total reported loans for construction, land development, and other land represented less than 100% of the bank's total capital, and its total reported loans secured by multifamily and non-farm residential properties and loans for construction, land development, and other land represented less than 300% of the bank's total capital.

Consumer Laws and Regulations

The bank is subject to numerous laws and regulations intended to protect consumers in transactions with the bank, including, among others, laws regarding unfair, deceptive and abusive acts and practices, usury laws, and other federal consumer protection statutes. These federal laws include the Electronic Fund Transfer Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Real Estate Procedures Act of 1974, the S.A.F.E. Mortgage Licensing Act of 2008, the Truth in Lending Act and the Truth in Savings Act, among others. Many states and local jurisdictions have consumer protection laws analogous, and in addition, to those enacted under federal law. These laws and

regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with customers when taking deposits, making loans and conducting other types of transactions. Failure to comply with these laws and regulations could give rise to regulatory sanctions, customer rescission rights, action by state and local attorneys general, and civil or criminal liability.

In addition, the Dodd-Frank Act created the Consumer Financial Protection Bureau that has broad authority to regulate and supervise retail financial services activities of banks and various non-bank providers. The Bureau has authority to promulgate regulations, issue orders, guidance and policy statements, conduct examinations and bring enforcement actions with regard to consumer financial products and services. In general, however, banks with assets of $10 billion or less, such as First NBC Bank, will continue to be examined for consumer compliance by their primary federal bank regulator.

Mortgage Lending Rules

The Dodd-Frank Act authorized the Consumer Financial Protection Bureau to establish certain minimum standards for the origination of residential mortgages, including a determination of the borrower’s ability to repay. Under the Dodd-Frank Act, financial institutions may not make a residential mortgage loan unless they make a “reasonable and good faith determination” that the consumer has a “reasonable ability” to repay the loan. The Dodd-Frank Act allows borrowers to raise certain defenses to foreclosure but provides a full or partial safe harbor from such defenses for loans that are “qualified mortgages.” On January 10, 2013, the Bureau published final rules to, among other things, specify the types of income and assets that may be considered in the ability-to-repay determination, the permissible sources for verification, and the required methods of calculating the loan’s monthly payments. Since then, the Bureau has made certain modifications to these rules. The rules extend the requirement that creditors verify and document a borrower’s income and assets to include all information that creditors rely on in determining repayment ability. The rules also provide further examples of third-party documents that may be relied on for such verification, such as government records and check-cashing or funds-transfer service receipts. The new rules became effective on January 10, 2014. The rules also define “qualified mortgages,” imposing both underwriting standards – for example, a borrower’s debt-to-income ratio may not exceed 43% – and limits on the terms of their loans. Points and fees are subject to a relatively stringent cap, and the terms include a wide array of payments that may be made in the course of closing a loan. Certain loans, including interest-only loans and negative amortization loans, cannot be qualified mortgages.

Anti-Money Laundering and OFAC

Under federal law, financial institutions must maintain anti-money laundering programs that include established internal policies, procedures and controls; a designated compliance officer; an ongoing employee training program; and testing of the program by an independent audit function. Financial institutions are also prohibited from entering into specified financial transactions and account relationships and must meet enhanced standards for due diligence and customer identification in their dealings with foreign financial institutions and foreign customers. Financial institutions must take reasonable steps to conduct enhanced scrutiny of account relationships to guard against money laundering and to report any suspicious transactions, and law enforcement authorities have been granted increased access to financial information maintained by financial institutions.

The Treasury Department's Office of Foreign Assets Control, or OFAC, is responsible for helping to insure that U.S. entities do not engage in transactions with certain prohibited parties, as defined by various Executive Orders and Acts of Congress. OFAC publishes lists of persons and organizations suspected of aiding, harboring or engaging in terrorist acts, known as Specially Designated Nationals and Blocked Persons. Generally, if the bank identifies a transaction, account or wire transfer relating to a person or entity on an OFAC list, it must freeze the account or block the transaction, file a suspicious activity report and notify the appropriate authorities.

Bank regulators routinely examine institutions for compliance with these obligations and they must consider an institution’s compliance in connection with the regulatory review of applications, including applications for banking mergers and acquisitions. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing and comply with OFAC sanctions, or to comply with relevant laws and regulations, could have serious legal, reputational, and financial consequences for the institution.

Safety and Soundness Standards

Federal bank regulatory agencies have adopted guidelines that establish general standards relating to internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth and compensation, fees and benefits. Additionally, the agencies have adopted regulations that provide the authority to order an institution that has been given notice by an agency that it is not satisfying any of these safety and soundness standards to submit a compliance plan. If, after being so notified, an institution fails to submit an acceptable compliance plan or fails in any material respect to implement an acceptable compliance plan, the agency must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution is subject under

the “prompt corrective action” provisions of the Federal Deposit Insurance Act. If an institution fails to comply with such an order, the agency may seek to enforce such order in judicial proceedings and to impose civil money penalties.

Bank holding companies are also not permitted to engage in unsound banking practices. For example, the Federal Reserve’s Regulation Y requires a holding company to give the Federal Reserve prior notice of any redemption or repurchase of its own equity securities, if the consideration to be paid, together with the consideration paid for any repurchases in the preceding year, is equal to 10% or more of the company’s consolidated net worth. The Federal Reserve may oppose the transaction if it believes that the transaction would constitute an unsafe or unsound practice or would violate any law or regulation. As another example, a holding company could not impair its subsidiary bank’s soundness by causing it to make funds available to non-banking subsidiaries or their customers if the Federal Reserve believed it not prudent to do so. The Federal Reserve has broad authority to prohibit activities of bank holding companies and their nonbanking subsidiaries that represent unsafe and unsound banking practices or that constitute violations of laws or regulations.

Effect of Governmental Monetary Policies

The commercial banking business is affected not only by general economic conditions but also by U.S. fiscal policy and the monetary policies of the Federal Reserve. Some of the instruments of monetary policy available to the Federal Reserve include changes in the discount rate on member bank borrowings, the fluctuating availability of borrowings at the “discount window,” open market operations, the imposition of and changes in reserve requirements against member banks’ deposits and assets of foreign branches, and the imposition of and changes in reserve requirements against certain borrowings by banks and their affiliates. These policies influence to a significant extent the overall growth of bank loans, investments, and deposits and the interest rates charged on loans or paid on deposits. We cannot predict the nature of future fiscal and monetary policies and the effect of these policies on our future business and earnings.

Future Legislation and Regulatory Reform

In light of current conditions and the market outlook for continuing weak economic conditions, regulators have increased their focus on the regulation of financial institutions. New laws, regulations and policies are regularly proposed that contain wide-ranging proposals for altering the structures, regulations and competitive relationships of financial institutions operating in the United States. In addition, existing laws, regulations and policies are continually subject to modification or changes in interpretation. We cannot predict whether or in what form any law, regulation or policy will be adopted or modified or the extent to which our operations and activities, financial condition, results of operations, growth plans or future prospects may be affected by its adoption or modification.

The cumulative effect of these laws and regulations add significantly to the cost of our operations and thus have a negative impact on profitability. There has also been a tremendous expansion in recent years of financial service providers that are not subject to the same level of regulation, examination and oversight as we are. Those providers, because they are not so highly regulated, may have a competitive advantage over us and may continue to draw large amounts of funds away from traditional banking institutions, with a continuing adverse effect on the banking industry in general.

Item 1A. Risk Factors

Our business is subject to risk. The following discussion, as well as management’s discussion and analysis and our financial statements and footnotes, set forth the most significant risks and uncertainties that we believe could adversely affect our business, financial condition, results of operations or growth prospects. If any of the following risks occur, our actual results could differ materially from those described in our forward-looking statements described elsewhere in this report. These risks are not the only risks that we may face. Additional risks and uncertainties of which management is not aware, or that management currently deems to be immaterial, may also have a material adverse effect on our business, financial condition, results of operations or growth prospects.

Risks Relating to our Business

As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways by weak economic conditions.

Our businesses and operations, which primarily consist of lending money to customers in the form of loans, borrowing money from customers in the form of deposits and investing in securities, are sensitive to general business and economic conditions in the United States. Although the United States economy, as a whole, has improved moderately over the past several years, and the economy of the New Orleans metropolitan area has performed more strongly than the national economy, the business environment in which we operate continues to be impacted by the effects of the most recent recession. Uncertainty about the federal fiscal policymaking process, the medium and long-term fiscal outlook of the federal government, and future tax rates is

a concern for businesses, consumers and investors in the United States. In addition, economic conditions in foreign countries, including global political hostilities and uncertainty over the stability of the euro currency, could affect the stability of global financial markets, which could hinder domestic economic growth. The current economic environment is characterized by interest rates at historically low levels, which impacts our ability to attract deposits and to generate attractive earnings through our investment portfolio. All of these factors are detrimental to our business, and the interplay between these factors can be complex and unpredictable. Our business is also significantly affected by monetary and related policies of the United States government and its agencies. Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control. Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition, results of operations and prospects.

Our ability to effectively implement our business strategies depends, in large part, on our executive management team and other senior personnel, and our operating results could be adversely affected by the inability to attract and retain qualified personnel.

We are led by an experienced core management team with substantial experience in the markets that we serve and our operating strategy focuses on providing products and services through long-term relationship managers. The future success of our business will depend in large part on the performance of our relationship managers, as well as on our ability to attract, motivate and retain highly qualified senior and middle management, including our relationship managers. However, competition for employees is intense, and the process of locating key personnel with the combination of skills and attributes required to execute our business plan may be lengthy. If we are unable to continue to attract experienced and qualified personnel, or if we lose the services of any of our key personnel for any reason, we may not be able to identify and hire qualified persons on terms acceptable to us, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

As a public company, we also require significant additional senior personnel in our accounting and finance departments to establish and maintain systems designed to ensure the reliability of our financial reporting and the preparation of our financial statements. We determined that, as of December 31, 2015, we had insufficient qualified personnel at both the executive management and staff levels with appropriate knowledge, experience and training on accounting and reporting matters, which contributed to the material weaknesses that resulted in the restatement, as well as the inability to timely file this report. As a part of our remediation efforts with respect to the material weaknesses identified in this report, we have committed to adding competent and experienced resources in our accounting and finance departments and to hiring a Chief Operating Officer. If we are unable to attract the appropriate resources in our accounting and finance departments and a suitable Chief Operating Officer, we may be unable to timely remediate the identified material weaknesses or prevent their recurrence, or we may be subject to additional material weaknesses in the future, which could also have a material adverse effect on our business, financial condition, results of operations and prospects.

Our business is concentrated in the New Orleans metropolitan area, and we are more sensitive than our more geographically diversified competitors to adverse changes in the local economy.

We conduct substantially all of our operations in Louisiana, and more specifically, within the New Orleans metropolitan area. Substantially all of the real estate loans in our loan portfolio are secured by properties located in Louisiana. We compete against a number of financial institutions that maintain significant operations outside of the New Orleans metropolitan area and outside the State of Louisiana. Accordingly, a regional or local economic downturn, or natural or man-made disaster, that affects Louisiana and New Orleans or existing or prospective property or borrowers in Louisiana and New Orleans may affect us and our profitability more significantly and more adversely than our more geographically diversified competitors.

While the economy in the New Orleans metropolitan area is more diversified than in the 1980’s, the energy sector continues to play an important role. At December 31, 2015, approximately $158.4 million, or 4.5% of our loan portfolio, by dollar amount, was made to borrowers in the energy industry in Louisiana, with an additional $6.7 million in outstanding loan commitments. Of this amount, we had $90.2 million in exposure to exploration and production, with the remainder of the exposure being primarily to maritime service companies. These borrowers can be significantly impacted by volatility in oil and gas prices, as well as material declines in the level of drilling and production activity in Louisiana. We are also subject to risks associated with our indirect exposure to the energy sector, as adverse developments in the energy sector can have significant spillover effects on the local economies in markets that we serve, including commercial and residential real estate values and overall levels of economic activity. We are carefully monitoring the impact of oil and gas prices, and their volatility events, on our loan portfolio and have reflected our current assessment of these events in the determination of our allowance for loan losses as of December 31, 2015. However, we cannot assure you that we will not be materially adversely impacted by the direct and indirect effects of current and future conditions in the energy industry.

The market in which we operate is susceptible to hurricanes and other natural disasters and adverse weather, as well as man-made disasters, which may adversely affect our business and operations.

Substantially all of our business is in the New Orleans metropolitan area, an area that has been and will continue to be susceptible to major hurricanes, floods, tornadoes, tropical storms, and other natural disasters and adverse weather. These natural disasters can disrupt our operations, cause widespread property damage, and severely depress the local economies in which we operate. Man-made disasters, like the 2010 Deepwater Horizon oil spill off the Louisiana coast, can also depress sectors that are critical to the New Orleans economy, such as tourism, energy and fishing, and other economic activity in the area. Any economic decline as a result of a natural disaster, adverse weather, oil spill or other man-made disaster can reduce the demand for loans and our other products and services. In addition, the rates of delinquencies, foreclosures, bankruptcies and losses on loan portfolios may increase substantially, as uninsured property losses or sustained job interruption or loss may materially impair the ability of borrowers to repay their loans. Moreover, the value of real estate or other collateral that secures the loans could be materially and adversely affected by a disaster. A disaster could, therefore, result in decreased revenue and loan losses.

We may not be able to adequately manage our credit risk, which could adversely affect our profitability.

Our business model is focused primarily on lending to customers. The business of lending is inherently risky, and we are subject to the risk that loans that we make may not be fully repaid in a timely manner or at all or that the value of any collateral supporting those loans will be insufficient to cover our outstanding exposure. These risks may be affected by the strength of the borrower’s business sector and local, regional and national market and economic conditions. Our risk management practices, such as monitoring the concentration of our loans within specific industries and our credit approval practices, may not adequately reduce credit risk, and our credit administration personnel, policies and procedures may not adequately adapt to changes in economic or any other conditions affecting customers and the quality of the loan portfolio. We determined that, as of December 31, 2015, we had a material weakness related to the monitoring of certain borrowers' ability to repay loans, and we have taken remedial steps designed to address this matter, including strengthening our lending and credit review policies. Finally, many of our loans are made to small and medium-sized businesses that are less able to withstand competitive, economic and financial pressures than larger borrowers. A failure to effectively measure and limit the credit risk associated with our loan portfolio could expose us to increased losses that could adversely affect our financial results.

Our allowance for loan losses may prove to be insufficient to absorb losses inherent in our loan portfolio.

Our experience in the banking industry indicates that some portion of our loans will not be fully repaid in a timely manner or at all. Accordingly, we maintain an allowance for loan losses that represents management’s best estimate of the loan losses and risks inherent in our loan portfolio. The level of the allowance reflects management’s continuing evaluation of industry concentrations; specific credit risks; loan loss experience; current loan portfolio quality; present economic, political and regulatory conditions; and unidentified losses inherent in the current loan portfolio. The determination of the appropriate level of the allowance for loan losses is inherently highly subjective and requires us to make significant estimates of current credit risks, all of which may undergo material changes. Inaccurate management assumptions, continuing deterioration of economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require us to increase our allowance for loan losses. In addition, our regulators, as an integral part of their examination process, periodically review our loan portfolio and the adequacy of our allowance for loan losses and may require adjustments based on judgments different than those of management. Further, if actual charge-offs in future periods exceed the amounts allocated to the allowance for loan losses, we may need additional provision for loan losses to restore the adequacy of our allowance for loan losses. If we are required to materially increase our level of allowance for loan losses for any reason, our business, financial condition, results of operations and prospects could be materially and adversely affected.

Our commercial real estate loan portfolio exposes us to risks that may be greater than the risks related to our other mortgage loans.

Our loan portfolio includes non-owner-occupied commercial real estate loans for individuals and businesses for various purposes, which are secured by commercial properties, as well as real estate construction and development loans. As of December 31, 2015, our non-owner-occupied commercial real estate loans totaled $974.4 million, or 28.2%, of our total loan portfolio. These loans typically involve repayment dependent upon income generated, or expected to be generated, by the property securing the loan in amounts sufficient to cover operating expenses and debt service, which may be adversely affected by changes in the economy or local market conditions. Our investment in commercial real estate projects which utilize federal tax credits is one way that we mitigate the risks in our commercial real estate portfolio. In general, commercial real estate projects typically have lower loan-to-value ratios and better collateral coverage, and the federal tax credits provide an equity injection. These loans expose us to greater credit risk than loans secured by residential real estate because the collateral

securing these loans typically cannot be liquidated as easily as residential real estate because there are fewer potential purchasers of the collateral. Additionally, non-owner-occupied commercial real estate loans generally involve relatively large balances to single borrowers or related groups of borrowers. Accordingly, charge-offs on non-owner-occupied commercial real estate loans may be larger on a per loan basis than those incurred with our residential or consumer loan portfolios. Unexpected deterioration in the credit quality of our commercial real estate loan portfolio would require us to increase our provision for loan losses, which would reduce our profitability, and could materially adversely affect our business, financial condition, results of operations and prospects.

A prolonged downturn in the real estate market could result in losses and adversely affect our profitability.

As of December 31, 2015, approximately 48.8% of our loan portfolio was composed of commercial and consumer real estate loans. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower, and we are exposed to risk based on the fluctuations in real estate collateral values. The market value of real estate can fluctuate significantly in a relatively short period of time as a result of numerous factors, including market conditions in the geographic area in which the real estate is located, natural or man-made disasters, and changes in monetary, fiscal or tax policy, among others. We stress test our commercial and consumer real estate portfolio on an annual basis to determine its susceptibility to such a prolonged downturn in the real estate market. A decline in real estate values could impair the value of our collateral and our ability to sell the collateral upon any foreclosure, which would likely require us to increase our provision for loan losses. In the event of a default with respect to any of these loans, the amounts that we receive upon sale of the collateral may be insufficient to recover the outstanding principal and interest on the loan. If we are required to re-value the collateral securing a loan to satisfy the debt during a period of reduced real estate values or to increase our allowance for loan losses, our profitability could be adversely affected.

Our high concentration of large loans to certain borrowers may increase our credit risk.

Our growth over the last several years has been partially attributable to our ability to originate and retain large loans. Many of these loans have been made to a small number of borrowers, resulting in a high concentration of large loans to certain borrowers. As of December 31, 2015, our 10 largest borrowing relationships ranged from approximately $51.8 million to $96.0 million (including unfunded commitments) and averaged approximately $76.4 million in total commitments. Along with other risks inherent in these loans, such as the deterioration of the underlying businesses or property securing these loans, this high concentration of borrowers presents a risk to our lending operations. If any one of these borrowers becomes unable to repay its loan obligations as a result of economic or market conditions, or personal circumstances, such as divorce or death, our nonperforming loans and our provision for loan losses could increase significantly.

We face significant competition to attract and retain customers, which could adversely affect our growth and profitability.

We operate in the highly competitive banking industry and face significant competition for customers from bank and non-bank competitors, particularly regional and nationwide institutions, in originating loans, attracting deposits and providing other financial services. Many of our competitors are larger and have significantly more resources, greater name recognition, and more extensive and established branch networks than we do. Because of their scale, many of these competitors can be more aggressive than we can on loan and deposit pricing. Also, many of our non-bank competitors have fewer regulatory constraints and may have lower cost structures. We expect competition to continue to intensify due to financial institution consolidation; legislative, regulatory and technological changes; and the emergence of alternative banking sources. Increased competition could require us to increase the rates that we pay on deposits or lower the rates that we offer on loans, which could reduce our profitability. Our failure to compete effectively in our market could restrain our growth or cause us to lose market share, which could materially and adversely affect our business, financial condition, results of operations and prospects.

We are subject to losses resulting from fraudulent and negligent acts on the part of loan applicants, correspondents or other third parties.

We rely heavily upon information supplied by third parties, including the information contained in credit applications, property appraisals, title information, equipment pricing and valuation and employment and income documentation, in deciding which loans we will originate, as well as the terms of those loans. If any of the information upon which we rely is misrepresented, either fraudulently or inadvertently, and the misrepresentation is not detected prior to asset funding, the value of the asset may be significantly lower than expected, or we may fund a loan that we would not have funded or on terms we would not have extended. Whether a misrepresentation is made by the applicant or another third party, we generally bear the risk of loss associated with the misrepresentation. A loan subject to a material misrepresentation is typically unsellable or subject to repurchase if it is sold prior to detection of the misrepresentation. The sources of the misrepresentations may also be difficult to locate, and we may be unable to recover any of the monetary losses we may suffer as a result of the misrepresentations.

As a community bank, our ability to maintain our reputation is critical to the growth of our business.

We are a community bank and our reputation is one of the most valuable components of our business. Our growth over the past several years has depended on attracting new customers from competing financial institutions and increasing our market share, primarily through the involvement of our employees in our communities and word-of-mouth advertising, rather than on growth in the market for banking services in New Orleans. As such, we strive to enhance our reputation by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve and delivering superior service to our customers. We cannot predict, however, the extent to which our reputation may be impacted by the restatement or our ability to timely file our periodic reports with SEC. If our reputation is negatively affected by the actions of our employees or otherwise, we may be less successful in attracting new customers and our business, financial condition, results of operations and prospects could be materially and adversely affected.

We may not be able to raise additional capital in the future on acceptable terms when needed or at all.

We may be required or otherwise need to raise additional capital in the future to provide us with sufficient capital resources and liquidity to meet regulatory capital requirements or our commitments and business needs. In addition, we may elect to raise additional capital to support our business or to finance acquisitions, if any. Our ability to raise additional capital, if needed, and the terms of any issuance, will depend, among other things, on conditions in the capital markets and general economic conditions at that time, our financial and regulatory condition, our results of operations, our credit ratings, and our ability to maintain our listing on NASDAQ. As of August 18, 2016, the ratings of our debt at both the holding company and bank levels by Kroll Bond Rating Agency were non-investment grade. In addition, our ability to raise debt capital may also be adversely impacted by any factors that may limit our ability to service our debt obligations. We cannot assure you that such capital will be available to us on acceptable terms or at all. If we are unable to raise additional capital on acceptable terms when needed our business, financial condition and results of operations and prospects may be adversely affected, and our stock price may decline.

Our growth has been aided by acquisitions of our local competitors, which may not continue.

Our growth during our initial years of operations was aided by acquisitions of several of our local competitors by larger regional or nationwide institutions. As a result of these acquisitions, whether because of disruptions caused by merger integration problems, a desire to stay with a New Orleans-based institution or otherwise, many customers of the target institutions chose instead to bank with us. However, since 2011, we have been the largest bank holding company based in New Orleans by a significant margin, and acquisitions of our New Orleans-based competitors in the future would be unlikely to result in a comparable number of customers seeking a new, locally-based financial institution. The absence of these growth opportunities within the New Orleans metropolitan area could materially and adversely affect our business, financial condition, results of operations and prospects.

We may not be able to manage the risks associated with our anticipated growth and expansion through de novo branching, which could adversely affect our profitability.

We believe that branch expansion has been meaningful to our growth since inception and our business strategy includes evaluating strategic opportunities to continue to grow organically through the expansion of our branch banking network. De novo branching presents certain risks, including those associated with the significant upfront costs and anticipated initial operating losses of establishing a branch; the ability to attract qualified management to operate the branch; local market reception for branches established outside of the New Orleans metropolitan area; local economic conditions in the market to be served by the branch; the ability to secure attractive locations at a reasonable cost; and the additional strain on management resources and internal systems and controls. If we are unable to manage the risks associated with our continued organic growth through de novo branching, our business, financial condition, results of operations and prospects may be materially and adversely affected.

We may not be able to overcome the integration and other risks associated with acquisitions, which could adversely affect our growth and profitability.

Although we plan to continue to grow our business organically, we may from time to time consider acquisition opportunities that we believe complement our activities and have the ability to enhance our profitability. Our acquisition activities could be material to our business and involve a number of risks, including those associated with:


•	the diversion of management attention from the operation of our existing business to identify, evaluate and negotiate potential transactions;


•	the use of inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets;


•	transaction pricing as a result of intense competition from other banking organizations;


•	the potential exposure to unknown or contingent liabilities related to the acquisition;


•	the time and expense required to integrate the acquisition;


•	the effectiveness of the integration of the acquisition;


•	higher operating expenses relative to operating income from the acquisition;


•	adverse short-term effect on our results of operations;


•	the potential loss of key employees and customers as a result of execution failures; and


•	the risks of impairment to goodwill or other than temporary impairment.

Depending on the condition of any institution or assets or liabilities that we may acquire, that acquisition may, at least in the near term, adversely affect our capital and earnings and, if not successfully integrated with our organization, may continue to have such effects over a longer period. We may not be successful in overcoming these risks or any other problems encountered in connection with pending or potential acquisitions. Our inability to overcome these risks could have an adverse effect on our profitability, return on equity and return on assets, as well as our ability to implement our business strategy and enhance shareholder value.

If our goodwill becomes impaired, our results of operations may be adversely impacted.

As of December 31, 2015, we had $14.6 million in goodwill, $9.8 million of which was created as a result of our two acquisitions during 2015. We perform an impairment assessment at least annually on October 1, or whenever events or changes in circumstances indicate that it is more likely than not the fair value of our goodwill may not be fully recoverable. Estimates of fair value are complex, require us to apply significant judgment and are inherently subjective because they require the future occurrence of circumstances that cannot be predicted with certainty. If the fair value of our goodwill falls below its carrying value, we may be required to recognize goodwill impairment, which would result in a charge to earnings for that period.

If we fail to maintain effective internal control over financial reporting, we may not be able to report our financial results accurately and timely, in which case our business may be harmed, investors may lose confidence in the accuracy and completeness of our financial reports, and the price of our common stock may decline.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on that system of internal control. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. In connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2015, we have identified material weaknesses relating to our internal control over financial reporting which are described in greater detail in Item 9A of this report. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company's annual or interim consolidated financial statements will not be prevented or detected on a timely basis. As a result of the material weaknesses, we have concluded that our internal control over financial reporting was not effective as of December 31, 2015. Specifically, we identified material weaknesses relating to ineffective control environment and risk assessment, monitoring of credit to borrowers and investments in short-term receivables, accounting for investment in tax credit entities, identification and evaluation of variable interest entities and consolidation of variable interest entities, accounting for business combinations and review of journal entries. However, giving full consideration to these weaknesses, and the additional analyses and other procedures we performed to ensure that our consolidated financial statements included in this Annual Report on Form 10-K were prepared in accordance with U.S. generally accepted accounting principles, or GAAP, our management concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with GAAP. While the material weaknesses described above create a reasonable possibility that an error in financial reporting may go undetected, after extensive review and the performance of additional analysis and other procedures, a restatement of prior years financial results was required.

As further described in Item 9A of this report, we are taking specific steps to remediate the material weaknesses that were identified; however, the material weaknesses will not be remediated until the necessary controls have been implemented and we have determined the controls to be operating effectively. We will continue to periodically test and update, as necessary, our

internal control systems, including our financial reporting controls. However, our actions may not be sufficient to result in an effective internal control environment.

If our remedial actions prove insufficient to prevent the recurrence of the internal control weakness, if we identify other material weaknesses in our internal control over financial reporting in the future, if we cannot comply with our requirements under the Sarbanes-Oxley Act in a timely manner or attest that our internal control over financial reporting is effective, or if our independent registered public accounting firm cannot express an opinion as to the effectiveness of our internal control over financial reporting when required, we may not be able to report our financial results accurately and timely. As a result, investors, counterparties and customers may lose confidence in the accuracy and completeness of our financial reports; our liquidity, access to capital markets, and perceptions of our creditworthiness could be adversely affected; and the market price of our common stock could decline. In addition, we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, the Federal Reserve or the FDIC, or other regulatory authorities, which could require additional financial and management resources.

If we are unable to comply with the applicable continued listing requirements or standards of NASDAQ, or if we fail to comply with the compliance plan that we submitted to NASDAQ, NASDAQ may delist our common stock from trading on its exchange.

Our common stock is currently listed on NASDAQ. In order to maintain that listing, we must satisfy minimum listing requirements and standards, including those related to complying with our SEC reporting obligations, as well as certain corporate governance requirements. As a result of our failure to timely file our Annual Report on Form 10-K for the year ended December 31, 2015, as well as our Quarterly Reports on Form 10-Q for the periods ended March 31, 2016 and June 30, 2016, we received notifications from NASDAQ informing us that we were not in compliance with NASDAQ Listing Rule 5250(c)(1). We submitted a plan to regain compliance with NASDAQ’s listing standards, which plan was accepted by NASDAQ. Under the plan, as amended, we agreed to file this annual report by August 25, 2016 and our remaining delinquent SEC filings by September 26, 2016.

If we fail to comply with our compliance plan, we expect to receive written notice from NASDAQ that our shares of common stock will be subject to delisting. In addition, if we comply with our compliance plan, but subsequently fail to satisfy other requirements for continued listing on NASDAQ, our shares of common stock will be subject to delisting.

If NASDAQ delists our common stock, we expect that our securities could be quoted on an over-the-counter market. However, we would expect to face significant material adverse consequences from any delisting, including reduced liquidity for our securities, reduced coverage from market analysts, decreased ability to issue additional securities in the future and diminished ability to engage in acquisition activity funded by our securities, any of which would also be expected to adversely impact the market value of our securities.

Regulatory requirements affecting our loans secured by commercial real estate could limit our ability to leverage our capital and adversely affect our growth and profitability.

The federal bank regulatory agencies have indicated their view that banks with high concentrations of loans secured by commercial real estate are subject to increased risk and should hold higher capital than regulatory minimums to maintain an appropriate cushion against loss that is commensurate with the perceived risk. That view has been incorporated, among other things, into the recent revised regulatory capital standards commonly known as Basel III, which increase the risk weighting for “high volatility commercial real estate loans” from 100% to 150%. Because a significant portion of our loan portfolio is dependent on commercial real estate, the Basel III capital framework, as well as any other policies affecting commercial real estate, could limit our ability to leverage our capital.

We are subject to risks associated with our investments in short-term receivables.

As a part of our liquidity management strategy, we invest in short-term receivables traded over the Receivables Exchange, a New York Stock Exchange listed electronic exchange for the sale and purchase of accounts receivable of companies whose annual revenues exceed $1 billion, whose common equity is listed on a national securities exchange or whose debt is rated by Standard & Poor’s or Moody’s. As of December 31, 2015, we had $25.6 million in investments in short-term receivables. Under the terms of the exchange contracts, the seller of the receivable is contractually committed to repurchase the receivable back from the purchaser if payment is not made by a specified repurchase date, subject to certain exceptions. As with substantially all of our other investment securities, we are subject to credit risk with respect to our investments in short-term receivables, which could adversely impact our financial condition and results of operations. We engage in a review of all sellers from which we purchase receivables over the exchange prior to investing in short-term receivables. However, we determined that as of December 31, 2015, we had a material weakness related to the evaluation and ongoing monitoring of the financial

stability and creditworthiness of companies from which we acquired short-term receivables. As a result of the material weakness, we recognized $69.9 million in impairment with respect to our investment in short-term receivables. We have taken or are taking the steps that we believe are necessary to remediate this material weakness by strengthening lending and credit review policies. Moreover, we do not expect to enter into any material amount of investments in short-term receivables in the future.

We maintain a significant investment in tax credits, which we may not be able to fully utilize.

As of December 31, 2015, we maintained an investment of $108.6 million in entities for which we receive allocations of tax credits, which we utilize to offset our taxable income. We earned and recognized $61.3 million and $38.4 million in tax credits in 2015 and 2014, respectively, and as of December 31, 2015, we had tax credit carryforwards of approximately $146.2 million. We also expect to receive an additional $43.0 million in tax credits related to Federal New Markets tax credits for which qualified equity investments have already been made and $39.0 million in tax credits related to Federal Low-Income Housing tax credits. Substantially all of these tax credits are related to development projects that are subject to ongoing compliance requirements over certain periods of time to fully realize their value. If these projects are not operated in full compliance with the required terms, the tax credits could be subject to recapture or restructuring.

If we are required to take a valuation allowance for our deferred tax assets, our earnings and capital position may be adversely impacted.

As of December 31, 2015, we had net deferred tax assets of $205.3 million. Deferred tax assets and liabilities are established for the temporary differences between the book value and tax basis of our assets and liabilities. We periodically assess deferred tax assets to determine if they are fully realizable. Certain of our deferred tax assets, including our tax credit carryforwards and net operating loss carryforwards, are subject to expiration if we are unable to utilize them during their respective terms and we actively monitor and manage our investments in tax credit entities and our tax credit activities with a view to maximizing realization of the benefits. The analysis of our ability to realize deferred tax assets requires us to apply significant judgment and is inherently subjective because it requires the future occurrence of circumstances that cannot be predicted with certainty. If, based on all available information, we determine that it is more likely than not that our deferred tax assets will not be fully realized, a valuation allowance against the deferred tax asset must be established with a corresponding charge against earnings for that period. Because of the amount of our net deferred tax asset, the determination that a valuation allowance should be established could have a material impact on our financial condition, results of operations and regulatory capital condition.

The ability to utilize our net operating loss and tax credit carryforwards could be limited under certain circumstances.

As of December 31, 2015, we had net operating loss and tax credit carryforwards of $155.0 million in the aggregate, which generally can be utilized to reduce future taxable income. However, the ability to fully utilize our net operating loss and tax credit carryforwards could be limited under Section 382 of the Internal Revenue Code, if we were to undergo a change in ownership of more than 50% of our capital stock over a three-year period as measured under Section 382. The application of these rules is complex and generally focus on ownership changes involving shareholders owning directly or indirectly 5% or more of our common stock. The Section 382 limitations could come into play in the event of the sale of the company, significant new stock issuances or other transactions, including secondary market sales of our common stock. We have no plans to sell the company and do not intend to undertake any stock offering that would have the effect of causing a Section 382 change in ownership. However, we cannot assure you that a change in ownership will not occur, including as a result of factors beyond our control. If we experience an ownership change, the resulting limit on the use of our net operating loss and tax credit carryforwards could result in a material increase in our tax liability in future years, which could impact the value of your shares or the amount that you might receive upon the sale of the company.

Our effective federal income tax rate may increase.

As a result of our utilization of tax credits, we have recognized federal income taxes at effective tax rates substantially below statutory tax rates in every year since our inception. In some years, we paid no federal income taxes, even though we were profitable. We expect that tax credit-motivated investments will continue to be a material part of our business strategy for the foreseeable future. However, our ability to continue to access tax credits in the future will depend, among other factors, on federal and state tax policies, as well as the level of competition for future tax credits. Any of these tax credit programs could be discontinued at any time by future legislative action. If we are unable for any reason to maintain a level of federal tax credits consistent with our historical allocations, our effective federal income tax rate and taxes paid would be expected to increase.

We are subject to interest rate risk, which could adversely affect our profitability.

Our profitability, like that of most financial institutions, depends to a large extent on our ability to manage the risks associated with changes in interest rates. Interest rates are highly sensitive to many factors that are beyond our control, including general

economic conditions and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve Board. Changes in monetary policy, including changes in interest rates, can impact our financial condition and results of operations in a number of ways. Net interest income, the primary driver of our earnings, is significantly affected by changes in interest rates. Net interest income is a measure of our net interest margin – the difference between the yield that we earn on our loans and investment securities and the interest rate that we pay on deposits and other borrowings – and the amount and mix of our interest-earning assets and interest-bearing liabilities. Changes in either our net interest margin or the amount or mix of interest-earning assets and interest-bearing liabilities, which can result from changes in interest rates, could affect our net interest income and our earnings. Although the yield that we earn on our assets and our funding costs tend to move in the same direction in response to changes in interest rates, one can rise or fall faster than the other, causing our net interest margin to expand or contract. Changes in interest rates can also affect our business in numerous other ways. Increases in interest rates can have a negative impact on our results of operations by reducing loan demand and the ability of borrowers to repay their current obligations. Changes in interest rates can also affect the value of the investment securities that we hold. We measure and seek to actively manage our interest rate risk by estimating the effect of changes in interest rates on our earnings under various scenarios that differ based on assumptions about the direction, magnitude and speed of the changes and the slope of the interest rate yield curve. We hedge some of that interest rate risk with interest rate derivatives. At this time, we have positioned our asset portfolio to benefit in a higher or lower interest rate environment, but this may not remain true in the future. Furthermore, our strategies may not have the intended effect. If we are unable to effectively monitor and manage our interest rate risk, our business, results of operations, financial condition and prospects may be materially and adversely affected.

Liquidity risk could impair our ability to fund operations and meet our obligations as they become due.

Liquidity is essential to our business. Liquidity risk is the potential that we will be unable to meet our obligations as they come due because of an inability to liquidate assets or obtain adequate funding, and we monitor our liquidity and manage our liquidity risk at the holding company and bank levels. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities or on terms that are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy in general. In addition, our access to certain funding sources may be adversely impacted as a result of the "adequately capitalized" classification of our banking subsidiary. Market conditions or other events could also negatively affect the level or cost of funding, affecting our ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations and fund asset growth and new business transactions at a reasonable cost, in a timely manner and without adverse consequences. Any substantial, unexpected or prolonged change in the level or cost of liquidity could have a material adverse effect on our ability to meet deposit withdrawals and other customer needs, which could have a material adverse effect on business, financial condition, results of operations and prospects. In addition, because our primary asset at the holding company level is the bank, our liquidity at the holding company level depends primarily on our receipt of dividends from the bank. If the bank is unable to pay dividends to us for any reason, we may be unable to satisfy our holding company level obligations, which include the funding operating expenses, debt service and dividends on our Series D preferred stock.

By engaging in derivative transactions, we are exposed to credit and market risk, which could adversely affect our profitability and financial condition.

We manage interest rate risk by, among other things, utilizing derivative instruments to minimize significant unplanned fluctuations in earnings that are caused by interest rate volatility. Hedging interest rate risk is a complex process, requiring sophisticated models and constant monitoring, and is not a perfect science. As a result of interest rate fluctuations, hedged assets and liabilities will appreciate or depreciate in market value. The effect of this unrealized appreciation or depreciation will generally be offset by income or loss on the derivative instruments that are linked to the hedged assets and liabilities. By engaging in derivative transactions, we are exposed to credit and market risk. If the counterparty fails to perform, credit risk exists to the extent of the fair value gain in the derivative. Market risk exists to the extent that interest rates change in ways that are significantly different from what we expected when we entered into the derivative transaction. The existence of credit and market risk associated with our derivative instruments could adversely affect our profitability and financial condition.

The fair value of our investment securities can fluctuate due to factors outside of our control.

Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities. These factors include, but are not limited to, rating agency actions in respect of the securities, defaults by the issuer or with respect to the underlying securities, and changes in market interest rates and continued instability in the capital markets. Any of these factors, among others, could cause other-than-temporary impairments and realized and/or unrealized losses in future periods and declines in other comprehensive income, which could materially and adversely affect our business, results of operations, financial condition and prospects. The process for determining whether impairment of a security is other-than-temporary usually requires complex, subjective judgments about

the future financial performance and liquidity of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security.

Our financial results depend on management’s selection of accounting methods and certain assumptions and estimates.

The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, disclosure of contingent assets and liabilities and the reported amount of related revenues and expenses. Certain accounting policies are inherently based to a greater extent on estimates, assumptions and judgments of management and, as such, have a greater possibility of producing results that could be materially different than originally estimated. These critical accounting policies include the allowance for loan losses, accounting for income taxes, the determination of fair value for financial instruments, the impairment on tax credit investments and accounting for stock-based compensation. Management’s judgment and the data relied upon by management may be based on assumptions that prove to be inaccurate, particularly in times of market stress or other unforeseen circumstances. Even if the relevant factual assumptions are accurate, our decisions may prove to be inadequate or inaccurate because of other flaws in the design or use of analytical tools used by management. Any such failures in our processes for producing accounting estimates and managing risks could have a material adverse effect on our business, financial condition and results of operations.

We may be adversely affected by the soundness of other financial institutions.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services companies are interrelated as a result of trading, clearing, counterparty, and other relationships. We have exposure to different industries and counterparties, and through transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, and other institutional clients. As a result, defaults by, or even rumors or questions about, one or more financial services companies, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. These losses or defaults could have a material adverse effect on our business, financial condition, results of operations and prospects.

We rely heavily on our information technology and telecommunications systems and third-party servicers, and any systems failures or interruptions could adversely affect our operations and financial condition.

Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party servicers. We outsource many of our major systems, such as data processing, loan servicing and deposit processing systems. The failure of any of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. If significant, sustained or repeated, a system failure or service denial could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny and possible financial liability.

We may bear costs associated with the proliferation of computer theft and cybercrime.

We necessarily collect, use and hold data concerning individuals and businesses with whom we have a banking relationship. Threats to data security, including unauthorized access and cyber attacks, rapidly emerge and change, exposing us to additional costs for protection or remediation and competing time constraints to secure our data in accordance with customer expectations and statutory and regulatory requirements. It is difficult or impossible to defend against every risk being posed by changing technologies as well as criminals intent on committing cyber-crime. Increasing sophistication of cyber-criminals and terrorists make keeping up with new threats difficult and could result in a breach. Patching and other measures to protect existing systems and servers could be inadequate, especially on systems that are being retired. Controls employed by our information technology department and cloud vendors could prove inadequate. We could also experience a breach by intentional or negligent conduct on the part of employees or other internal sources. Our systems and those of our third-party vendors may become vulnerable to damage or disruption due to circumstances beyond our or their control, such as from catastrophic events, power anomalies or outages, natural disasters, network failures, viruses and malware.

A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs, and reputational damage, any of which could have a material adverse effect on our business, results of operations, financial condition and prospects.

We are subject to environmental liability risk associated with our lending activities.

A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may foreclose on and take title to properties securing certain loans. There is a risk that hazardous or toxic substances could be found on these properties, and that we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require us to incur substantial expenses and may materially reduce the affected property’s value by limiting our ability to use or sell it. Although we have policies and procedures requiring environmental review before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could cause a material adverse effect on our business, financial condition, results of operations and prospects. Future laws or regulations or more stringent interpretations or enforcement policies with respect to existing laws and regulations may increase our exposure to environmental liability.

Risks Relating to the Regulation of our Industry

We operate in a highly regulated environment, which could restrain our growth and profitability.

We are subject to extensive regulation and supervision that govern almost all aspects of our operations. These laws and regulations, and the supervisory framework that oversees the administration of these laws and regulations, are primarily intended to protect consumers, depositors, the Deposit Insurance Fund and the banking system as a whole, and not shareholders and counterparties. These laws and regulations, among other matters, affect our lending practices, capital structure, investment practices, dividend policy, operations and growth. Compliance with the myriad laws and regulations applicable to our organization can be difficult and costly. In addition, these laws, regulations and policies are subject to continual review by governmental authorities, and changes to these laws, regulations and policies, including changes in interpretation or implementation of these laws, regulations and policies, could affect us in substantial and unpredictable ways and often impose additional compliance costs. Further, any new laws, rules and regulations could make compliance more difficult or expensive. All of these laws and regulations, and the supervisory framework applicable to the banking industry, could have a material adverse effect on our business, financial condition, results of operations and prospects.

We are subject to regulatory capital requirements, which may adversely limit our operations and potential growth.

Beginning January 1, 2015, we became subject to new rules designed to implement the recommendations with respect to regulatory capital standards, commonly known as Basel III, approved by the International Basel Committee on Banking Supervision. The new rules establish a new regulatory capital standard based on tier 1 common equity, increase the minimum tier 1 capital risk-based capital ratio, and impose a capital conservation buffer of at least 2.5% of common equity tier 1 capital above the new minimum regulatory capital ratios, when fully phased in during 2019. Failure to meet the minimum capital requirements established by Basel III, or higher regulatory capital thresholds that may be imposed by our regulators, may subject us to supervisory action, which may include restrictions on our activities and operations. In addition, failure to meet the capital conservation buffer will result in certain limitations on dividends, capital repurchases, and discretionary bonus payments to executive officers. The rules also change the manner in which a number of our regulatory capital components are calculated, including deferred tax assets, and the risk weights applicable to certain asset categories. The Basel III rules generally require us to maintain greater amounts of regulatory capital than we were required to maintain prior to implementation of such rules and may also limit or restrict how we utilize our capital. The application of the more stringent Basel III regulatory capital requirements, as they become fully phased in over time, could, among other things, result in lower returns on equity, require us to raise additional capital, adversely affect our future growth opportunities and result in regulatory restrictions or supervisory actions if we are unable to comply with such requirements.

Our banking subsidiary is “adequately capitalized” as defined by regulatory standards, which may limit additional, external sources of liquidity for the bank and result in other adverse consequences.

As of December 31, 2015, First NBC Bank was classified as “adequately capitalized” for regulatory capital purposes. Until it becomes “well capitalized” for regulatory capital purposes, it will be required to obtain FDIC approval before renewing or accepting brokered deposits and will be unable to offer interest rates on deposit accounts that are significantly higher than the average rates in the market. Moreover, other external sources of liquidity could be affected by the change in capital status.

Any of these events could limit the bank’s growth opportunities. Other possible consequences of the “adequately capitalized” classification include the potential for increases in the bank’s borrowing costs, premiums for federal deposit insurance and regulatory assessments, which could have an adverse impact on the bank’s results of operations. Further, we may be required by supervisory action to raise additional capital to bolster the regulatory capital condition of the bank at times or in amounts that we would not otherwise select in the absence of a supervisory action. In addition, if the bank were to fall below

“adequately capitalized” thresholds, the bank would be subject to additional restrictions on its activities and operations. See “Item 1. Business - Supervision and Regulation - Regulatory Capital Requirements - Prompt corrective action regulations.” The bank is working diligently to return to "well capitalized" status, but we cannot assure you if or when that will occur.

Federal and state regulators periodically examine our business and we may be required to remediate adverse examination findings or become subject to supervisory action as a results of those examinations.

The Federal Reserve, the FDIC and the Louisiana Office of Financial Institutions periodically examine our business, including our compliance with laws and regulations. If, as a result of an examination, a federal or state banking agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, it may take a number of different remedial actions as it deems appropriate. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil monetary penalties against our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance and place us into receivership or conservatorship. Any regulatory action against us could have a material adverse effect on our business, results of operations, financial condition and prospects.

Our FDIC deposit insurance premiums and assessments may increase.

The deposits of First NBC Bank are insured by the FDIC up to legal limits and, accordingly, subject it to the payment of FDIC deposit insurance assessments. The bank’s regular assessments are determined by the level of its assessment base and its risk classification, which is based on its regulatory capital levels and the level of supervisory concern that it poses. We expect the bank's deposit insurance premiums to increase as a result of the bank's "adequately capitalized" regulatory capital classification as of December 31, 2015. Moreover, the FDIC has the unilateral power to change deposit insurance assessment rates and the manner in which deposit insurance is calculated and also to charge special assessments to FDIC-insured institutions. The FDIC utilized all of these powers during the financial crisis for the purpose of restoring the reserve ratios of the Deposit Insurance Fund. Any future special assessments, increases in assessment rates or premiums, or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities.

We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.

The Community Reinvestment Act, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The Department of Justice and other federal agencies are responsible for enforcing these laws and regulations. A successful regulatory challenge to an institution’s performance under the Community Reinvestment Act or fair lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition, results of operations and prospects.

We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.

The Bank Secrecy Act, the USA PATRIOT Act of 2001, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. The federal Financial Crimes Enforcement Network is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service. We are also subject to increased scrutiny of compliance with the rules enforced by the Office of Foreign Assets Control. If our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.

Risks Relating to an Investment in our Common Stock

The market price of our common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your shares at the volume, prices and times desired.

The market price of our common stock may be volatile, which may make it difficult for you to resell your shares at the volume, prices and times desired. There are many factors that may impact the market price and trading volume of our common stock, including, without limitation:


•	actual or anticipated fluctuations in our operating results, financial condition or asset quality;


•	changes in economic or business conditions, including changes in the price and volatility of oil and gas prices;


•	initiation or termination of coverage by securities analysts;


•	publication of research reports and other public communications about us, our competitors, or the financial services industry generally, or changes in, or failure to meet, securities analysts’ estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage;


•	operating and stock price performance of companies that investors deemed comparable to us;


•	future issuances of our common stock or other securities;


•	additions or departures of key personnel;


•	proposed or adopted changes in laws, regulations or policies affecting us, including the interest rate policies of the Federal Reserve;


•	the ability to comply with our plan to regain compliance with NASDAQ's listing rules as well as our ongoing ability to comply with those rules, including the timely filing of our periodic reports with the SEC;


•	the continued listing of our common stock on NASDAQ;


•	the impact of litigation or governmental investigation arising from the restatement;


•	perceptions in the marketplace regarding our competitors and/or us;


•	significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us;


•	other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services; and


•	other news, announcements or disclosures (whether by us or others) related to us, our competitors, our core market or the financial services industry.

The stock market and, in particular, the market for financial institution stocks, have experienced substantial fluctuations in recent years, which in many cases have been unrelated to the operating performance and prospects of particular companies. In addition, significant fluctuations in the trading volume in our common stock may cause significant price variations to occur. Increased market volatility may materially and adversely affect the market price of our common stock, which could make it difficult to sell your shares at the volume, prices and times desired.

We are an “emerging growth company,” and the reduced reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We are an “emerging growth company” for purposes of the federal securities laws. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company until December 31, 2018, although we could lose that status sooner if our gross revenues exceed $1.0 billion, if we issue more than $1.0 billion in non-convertible debt in a three year period, or if the market value of our common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions, or if we choose to rely on additional exemptions in the future. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

The trading volume in our common stock is less than that of other larger financial services companies, which could increase the volatility of our stock price.

Although our common stock is listed on the NASDAQ Global Select Market, the trading volume in our common stock is less than that of many other larger financial services companies. Given the lower trading volume, significant sales of our common stock, or the expectation of these sales, could cause our stock price to fall. In addition, a majority of our outstanding common stock is held by institutional shareholders, and trading activity involving large positions may increase the volatility of our stock price. As a result, shareholders may not be able to sell their shares at the volume, prices and times desired.

The rights of our common shareholders are subordinate to the rights of the holders of our Series D preferred stock and any debt securities that we may issue and may be subordinate to the holders of any other class of preferred stock that we may issue in the future.

We have issued 37,935 shares of our Series D preferred stock to the U.S. Treasury in connection with our participation in the Small Business Lending Fund Program. In addition, on February 18, 2015, we issued $60.0 million in aggregate principal amount of our subordinated debt securities. The Series D preferred stock and subordinated debt securities have rights that are senior to our common stock. As a result, we must make payments on the preferred stock and the subordinated debt before any dividends can be paid on our common stock and, in the event of our bankruptcy, dissolution or liquidation, the holders of the Series D preferred stock and the subordinated debt must be satisfied in full before any distributions can be made to the holders of our common stock. Our Board of Directors has the authority to issue in the aggregate up to 10,000,000 shares of preferred stock, and to determine the terms of each issue of preferred stock and subordinated debt, without shareholder approval. Accordingly, you should assume that any shares of preferred stock and subordinated debt that we may issue in the future will also be senior to our common stock. Because our decision to issue debt or equity securities or incur other borrowings in the future will depend on market conditions and other factors beyond our control, the amount, timing, nature or success of our future capital raising efforts is uncertain. Thus, common shareholders bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings will negatively affect the market price of our common stock.

We do not currently pay dividends on our common stock.

Holders of our common stock are only entitled to receive such dividends as our Board of Directors may declare out of funds legally available for such payments. Historically, we have retained all of our earnings to support growth and build capital. Any future declaration and payment of dividends on our common stock would depend upon our earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate in which we operate, our ability to service any equity or debt obligations senior to our common stock and other factors deemed relevant by our Board of Directors. In addition, we are subject to certain restrictions on the payment of cash dividends as a result of banking laws, regulations and policies. Finally, because First NBC Bank is our only material asset, other than cash, our ability to pay dividends to our shareholders would likely depend on our receipt of dividends from the bank, which is also subject to restrictions on dividends as a result of banking laws, regulations and policies.

Our corporate governance documents, and certain corporate and banking laws applicable to us, could make a takeover more difficult.

Certain provisions of our articles of incorporation and bylaws, and corporate and federal banking laws, could make it more difficult for a third party to acquire control of our organization or conduct a proxy contest, even if those events were perceived by many of our shareholders as beneficial to their interests. These provisions, and the corporate and banking laws and regulations applicable to us:


•	enable our Board of Directors to issue additional shares of authorized, but unissued capital stock;


•	enable our Board of Directors to issue “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by the Board;


•	enable our Board of Directors to increase the size of the Board and fill the vacancies created by the increase;


•	enable our Board of Directors to amend our bylaws without shareholder approval;


•	require advance notice for director nominations and other shareholder proposals; and


•	require prior regulatory application and approval of any transaction involving control of our organization.

These provisions may discourage potential acquisition proposals and could delay or prevent a change in control, including under circumstances in which our shareholders might otherwise receive a premium over the market price of our shares.

An investment in our common stock is not an insured deposit and is subject to risk of loss.

Your investment in our common stock is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency. Your investment is subject to investment risk and you must be capable of affording the loss of your entire investment.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our main office is located at 210 Baronne Street in New Orleans, which was built in 1927 and housed the former First National Bank of Commerce in New Orleans until its sale to Bank One in 1998. In addition to our main office, we operate from 38 branch offices located in Orleans, Jefferson, Tangipahoa, St. Tammany, Livingston and Washington Parishes in Louisiana, as well as Okaloosa County in the Florida panhandle, and a loan production office in Gulfport, Mississippi. We lease our main office and 18 of our branch offices. These leases expire between 2017 and 2040, not including any renewal options that may be available. We own the remainder of our offices. All of our banking offices are in free-standing permanent facilities, except for the Kenner banking office. All of our banking offices are equipped with automated teller machines and provide for drive-up access, except for the main office.

Item 3. Legal Proceedings.

The information set forth under “Note 28. Commitments and Contingencies-Litigation Matters” in the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K, is incorporated herein by reference.

Item 4. Mine Safety Disclosures.

Not applicable.

Part II.

Item 5. Market Information and Holders

Our common stock is listed on the NASDAQ Global Select Market under the symbol “FNBC.” As of August 15, 2016, there were approximately 239 holders of record of our common stock.

The following table sets forth the reported high and low sales price of our common stock as quoted on the NASDAQ during each quarter in 2015:



2015	High Sale		Low Sale
4th quarter	$	42.47	$	33.54
3rd quarter	39.78		32.86
2nd quarter	36.81		32.96
1st quarter	35.00		30.96

Stock Performance Graph

The following graph and table, which were prepared by SNL Financial LC (“SNL”), compare the cumulative total return on our common stock over a measurement period beginning May 9, 2013, when our common stock began trading on NASDAQ, with (i) the cumulative total return on the stocks included in the Russell 3000 Index and (ii) the cumulative total return on the stocks included in the SNL Index of Banks with assets between $1 billion and $5 billion.



	Period Ended
Index	5/9/2013		6/30/2013		12/31/2013		6/30/2014		12/31/2014		6/30/2015		12/31/2015
First NBC Bank Holding Company	$	100.00	$	101.67	$	134.58	$	139.63	$	146.67	$	150.00	$	155.79
Russell 3000	100.00		99.13		116.08		124.14		130.66		133.19		131.28
SNL Bank $1B-$5B	100.00		104.72		130.35		129.46		136.29		144.22		152.57

The stock performance graph assumes $100.00 was invested May 9, 2013. The stock price performance included in this graph is not necessarily indicative of future stock performance.

Dividend Policy

We have not paid any dividends on our common stock since inception. Instead, we have retained all of our earnings to support growth and build capital. Any future declaration and payment of dividends on our common stock would depend upon our earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate in which we operate, our ability to service any equity or debt obligations senior to our common stock and other factors deemed relevant by our Board of Directors.

In addition, we are a holding company and do not engage directly in business activities of a material nature. Accordingly, our ability to pay dividends to our shareholders depends, in large part, upon our receipt of dividends from First NBC Bank. First NBC Bank and we are also subject to numerous limitations on the payments of dividends under federal and state banking laws, regulations and policies. See “Supervision and Regulation-Dividends” in Item 1 of this report.

Item 6. Selected Consolidated Financial and Other Data

The following table sets forth selected consolidated financial data for the years ended December 31, 2015, 2014, 2013, 2012 and 2011. The selected consolidated financial data is derived from our consolidated financial statements for the periods included in this annual report on Form 10-K or our prior annual reports on Form 10-K. The historical financial information for the years ended December 31, 2014, 2013, 2012 and 2011 has been restated to reflect the correction of an error to give effect to the equity method of accounting for our investments in federal and state tax credit investments by utilizing an impairment model and recognition of additional impairment on its investments in Federal and State Historic Rehabilitation Tax Credit entities and the consolidation of certain Federal Low-Income Housing Tax Credit entities, for which we are considered the primary beneficiary and which are accounted for as variable interest entities and as such are consolidated with our operating results. The financial statements and the tables below reflect applicable restated amounts for the periods from 2011 through September 30, 2015, the last date through which financial statements had previously been issued. The restatement provides for the recognition of additional impairment in its investment in tax credit entities and rental income and expense and the reversal of interest income related to the consolidation of certain Federal Low-Income Housing Tax Credit entities, which were consolidated for the four years presented, as well as the reversal of state tax credits income and the income tax effects related to the adjustments in these selected consolidated financial data and in the first three quarters of 2015.

The selected financial data in this table should be read together with the consolidated financial statements and notes to those restated consolidated financial statements in Item 8 of this report and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of this report.



	As of and for the year ended December 31,
	2015			2014			2013			2012			2011
				(Restated)			(Restated)			(Restated)			(Restated)
	(In thousands, except share data)
Income Statement Data:
Interest income	$	165,902		$	147,018		$	121,332		$	104,772		$	78,457
Interest expense	51,094			42,729			39,148			31,666			26,367
Net interest income	114,808			104,289			82,184			73,106			52,090
Provision for loan losses	43,538			12,000			9,800			11,035			8,010
Net interest income after provision	71,270			92,289			72,384			62,071			44,080
Noninterest income	(56,446		)	13,830			14,286			13,665			5,765
Noninterest expense	146,326			94,335			76,451			59,182			37,259
Income (loss) before income taxes	(131,502		)	11,784			10,219			16,554			12,586
Income tax benefit	(106,265		)	(32,723		)	(23,407		)	(8,664		)	(5,341		)
Net income (loss)	(25,237		)	44,507			33,626			25,218			17,927
Net income attributable to noncontrolling interests	—			—			—			(510		)	(308		)
Less preferred stock dividends	(379		)	(379		)	(347		)	(510		)	(792		)
Less earnings allocated to participating securities	113			(852		)	(2,234		)	(1,705		)	(1,173		)
Less accretion of preferred stock	—			—			—			—			(580		)
Income (loss) available to common shareholders	$	(25,503	)	$	43,276		$	31,045		$	22,493		$	15,074
Period-End Balance Sheet Data:
Investment in short-term receivables	$	25,604		$	237,135		$	246,817		$	81,044		$	10,180
Investment securities available for sale	285,826			247,647			277,719			405,355			316,309
Investment securities held to maturity	82,074			89,076			94,904			—			—
Loans, net of allowance for loan losses	3,380,115			2,631,687			2,231,150			1,820,374			1,563,049
Allowance for loan losses	78,478			42,336			32,143			26,977			18,122
Total assets	4,705,825			3,724,880			3,275,121			2,668,162			2,221,396
Noninterest-bearing deposits	368,421			362,577			289,597			238,367			221,156
Interest-bearing deposits	3,475,421			2,756,316			2,439,727			2,028,990			1,680,587
Long-term borrowings	279,042			40,000			55,110			75,220			56,845
Preferred shareholders’ equity	37,935			42,406			42,406			49,166			58,517
Common shareholders’ equity	342,814			366,125			322,692			189,461			158,109
Total shareholders’ equity	380,749			408,531			365,098			238,627			216,626
Per Share Data:
Earnings (loss)
Basic	$	(1.36	)	$	2.33		$	1.92		$	1.74		$	1.40
Diluted	(1.36		)	2.27			1.87			1.72			1.39
Book value	17.97			19.71			17.43			14.51			13.15
Tangible book value(1)	17.01			19.27			16.96			13.82			12.38
Weighted average common shares outstanding
Basic	18,806			18,541			16,204			12,953			10,795
Diluted	18,806			19,049			16,624			13,114			10,861
Performance Ratios:
Return on average common equity	(6.47		)%	12.90		%	12.80		%	13.47		%	12.94		%
Return on average equity	(5.87		)	11.49			10.79			10.55			10.19
Return on average assets	(0.60		)	1.26			1.13			1.05			1.10
Net interest margin	3.12			3.35			3.10			3.39			3.52
Efficiency ratio(2)	250.72			79.86			79.25			68.20			64.40



	As of and for the year ended December 31,
	2015		2014		2013		2012		2011
			(Restated)		(Restated)		(Restated)		(Restated)
	(dollars in thousands, except share data)
Asset Quality Ratios:
Nonperforming assets to total loans, other real estate owned and other assets owned(3)(4)	4.73	%	1.07	%	0.99	%	1.73	%	1.16	%
Allowance for loan losses to total loans(4)	2.27		1.58		1.44		1.46		1.15
Allowance for loan losses to nonperforming loans(3)	49.60		185.71		178.33		115.19		173.92
Net charge-offs to average loans	0.25		0.07		0.23		0.13		0.20
Capital Ratios:
Total shareholders’ equity to assets	8.09	%	10.97	%	11.15	%	8.94	%	9.83	%
Tangible common equity to tangible assets(5)	6.92	%	9.63	%	9.61	%	6.79	%	6.80	%
Tier 1 leverage capital	6.03	%	9.47	%	10.33	%	8.98	%	10.17	%
Tier 1 risk-based capital	6.33	%	10.28	%	11.54	%	10.72	%	11.36	%
Total risk-based capital	9.04	%	11.53	%	12.68	%	11.97	%	12.36	%
Common equity tier 1 risk-based capital	6.33	%	NA		NA		NA		NA

(1)

Tangible book value per common share is a non-GAAP financial measure. Tangible book value per common share is computed as total shareholders’ equity, excluding preferred stock, less intangible assets, divided by the number of common shares outstanding at the balance sheet date. We believe that the most directly comparable GAAP financial measure is book value per share. The calculation of this non-GAAP financial measure can be found within Table 1 in Item 7 of this report.


(2)	Efficiency ratio is the ratio of noninterest expense to net interest income and noninterest income.


(3)	Nonperforming assets consist of nonperforming loans and real estate and other property that we have repossessed. Nonperforming loans consist of nonaccrual loans and restructured loans.


(4)	Total loans are net of unearned discounts and deferred fees and costs.

(5)

Tangible common equity to tangible assets is a non-GAAP financial measure. Tangible common equity is computed as total shareholders’ equity, excluding preferred stock, less intangible assets, and tangible assets are calculated as total assets less intangible assets. We believe that the most directly comparable GAAP financial measure is total shareholders’ equity to assets. The calculation of this non-GAAP financial measure can be found within Table 1 in Item 7 of this report.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Annual Report on Form 10-K contains restatements of the Company's 2014 and 2013 financial statements. The restatements relate to the amount and timing of its recognition of impairment losses with respect to the Company's investment in Federal and State Historic Tax Credit entities, consolidation of certain investments in Federal Low-Income Housing Tax Credit entities because such entities were determined to be variable interest entities in which the Company was the primary beneficiary, various other adjustments (e.g., state tax credit timing errors), and income tax effects related to the above adjustments. The effect of the prior period adjustments to total assets, shareholders' equity, net interest income, noninterest income and expense, net income, income tax benefit and income available to common shareholders' are reflected in the financial statements.

The following discussion and analysis is intended to assist readers in understanding the consolidated financial condition and results of operations of First NBC Bank Holding Company (“Company”) and its wholly owned subsidiary, First NBC Bank, as of December 31, 2015 and December 31, 2014 (restated) and for the years ended December 31, 2015, December 31, 2014 (restated), and December 31, 2013 (restated). This discussion and analysis should be read in conjunction with the audited consolidated financial statements, accompanying the footnotes and supplemental data included herein.

Forward-Looking Statements

From time to time, the Company has made and will make forward-looking statements, which reflect the Company’s current expectations with respect to, among other things, future events and financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable of a future or forward-looking nature. The Company’s disclosures in this annual report contain forward-looking statements within the meaning of the Private Securities Litigations Reform Act of 1995. The Company also may make forward-looking statements in its other documents filed or furnished with the SEC or orally to analysts, investors, representatives of the media and others. Forward-looking statements are not historical facts, and all forward-looking statements are, by their nature, subject to risks and uncertainties, many of which are beyond the Company’s control. There are or will be important factors that could cause actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:


•	business and economic conditions generally and in the financial services industry, nationally and within our local market area, including the price and volatility of oil and gas;


•	changes in management personnel;


•	changes in government spending on rebuilding projects in New Orleans;


•	hurricanes, other natural disasters and adverse weather; oil spills and other man-made disasters; acts of terrorism, an outbreak of hostilities or other international or domestic calamities, acts of God and other matters beyond the Company’s control;


•	economic, market, operational, liquidity, credit and interest rate risks associated with the Company’s business;


•	deterioration of asset quality;


•	changes in real estate values;


•	the ability to execute the strategies described in this annual report;


•	increased competition in the financial services industry, nationally, regionally or locally, which may adversely affect pricing and terms;


•	the ability to identify potential candidates for, and consummate, acquisitions of banking franchises on attractive terms, or at all;


•	the ability to achieve organic loan and deposit growth and the composition of that growth;


•	changes in federal tax law or policy;


•	volatility and direction of market interest rates;


•	changes in the regulatory environment, including changes in regulations that affect the fees that the Company charges or expenses that it incurs in connection with its operations;


•	changes in trade, monetary and fiscal policies and laws;


•	governmental legislation and regulation, including changes in accounting regulation or standards;


•	changes in interpretation of existing law and regulation;


•	further government intervention in the U.S. financial system;


•	the Company’s ability to timely and effectively remediate the material weakness in its control over financial reporting discussed herein and implement effective internal control over financial reporting and disclosure controls and procedures in the future;

•

any adverse effects on the Company’s business as a result of the restatement of the Company’s financial statements for certain prior periods herein, including potential adverse regulatory consequences, negative publicity and reactions from stockholders, creditors or others with whom the Company does business, investor litigation, impacts on the Company’s stock price and other potential consequences; and


•	other factors that are discussed in the section titled “Risk Factors,” beginning on page 11.

Any forward-looking statement speaks only as of the date on which it is made, and the Company does not undertake any obligation to publicly update or review any forward-looking statement. New factors emerge from time to time, and it is not possible for the Company to predict which will arise. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, forward-looking statements should not be viewed as predictions and should not be the primary basis upon which investors evaluate an investment in the Company’s securities.

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, and with general practices within the financial services industry. Application of these principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company’s estimates are based on historical experience and on various other assumptions that it believes to be reasonable under current circumstances. These assumptions form the basis for its judgments about the carrying values of assets and liabilities that are not readily available from independent, objective sources. The Company evaluates its estimates on an ongoing basis. Use of alternative assumptions may have resulted in significantly different estimates. Actual results may differ from these estimates.

The Company has identified the following accounting policies and estimates that, due to the difficult, subjective or complex judgments and assumptions inherent in those policies and estimates and the potential sensitivity to its financial statements to those judgments and assumptions, are critical to an understanding of the Company’s financial condition and results of operations. The Company believes that the judgments, estimates and assumptions used in the preparation of its financial statements are appropriate.

Allowance for Loan Losses. Management evaluates the adequacy of the allowance for loan losses each quarter based on changes, if any, in underwriting activities, the loan portfolio composition (including product mix and geographic, industry or customer-specific concentrations), trends in loan performance, regulatory guidance and economic factors. This evaluation is inherently subjective, as it requires the use of significant management estimates. Many factors can affect management’s estimates of inherent losses, including volatility of default probabilities, rating migrations, loss severity and economic and political conditions. The allowance is increased through provisions charged to operating earnings and reduced by net charge-offs.

The Company determines the amount of the allowance based on the assessment of inherent losses in the loan portfolio. The allowance recorded for commercial loans is based on reviews of individual credit relationships, an analysis of the migration of commercial loans and actual loss experience, together with qualitative factors as discussed for noncommercial loans. The allowance recorded for noncommercial loans is based on an analysis of loan mix, risk characteristics of the portfolio, delinquency and bankruptcy experiences and historical losses, adjusted for current trends, for each loan category or group of loans. The allowance for loan losses relating to impaired loans is based on the collateral for collateral-dependent loans or discounted cash flows using the loan’s effective interest rate, if not collateral-dependent.

Regardless of the extent of the Company’s analysis of customer performance, portfolio trends or risk management processes, certain inherent but undetected losses are probable within the loan portfolio. This is due to several factors, including inherent delays in obtaining information regarding a customer’s financial condition or changes in their unique business conditions, the subjective nature of individual loan evaluations, collateral assessments, the interpretation of economic trends, and industry concentrations. Volatility of economic or customer-specific conditions affecting the identification and estimation of losses for larger, non-homogeneous credits and the sensitivity of assumptions utilized to establish allowances for homogenous groups of loans are among other factors. The Company estimates loss factors related to the existence and severity of these exposures. The estimates are based upon the evaluation of risk associated with the commercial and consumer portfolios and the estimated impact of the current economic environment.

Fair Value Measurement. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in a principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date, using assumptions market participants would use when pricing an asset or liability. An orderly transaction assumes exposure to the market for a customary period for marketing activities prior to the measurement date and not a forced liquidation or distressed sale. Fair value measurement and disclosure guidance provides a three-level hierarchy that prioritizes the inputs of valuation techniques used to measure fair value into three broad categories:


•	Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.


•	Level 2 – Observable inputs such as quoted prices for similar assets and liabilities in active markets, quoted prices for similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.


•	Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

Fair value may be recorded for certain assets and liabilities every reporting period on a recurring basis or under certain circumstances, on a non-recurring basis. The following represents significant fair value measurements included in the financial statements based on estimates.

The Company uses interest rate derivative instruments to manage its interest rate risk. All derivative instruments are carried on the balance sheet at fair value. Fair values for over-the-counter interest rate contracts used to manage its interest rate risk are provided either by third-party dealers in the contracts or by quotes provided by independent pricing services. Information used by these third-party dealers or independent pricing services to determine fair values are considered significant other observable inputs. Credit risk is considered in determining the fair value of derivative instruments. Deterioration in the credit ratings of customers or dealers reduces the fair value of asset contracts. The reduction in fair value is recognized in earnings during the current period. Deterioration in the Company’s credit rating below investment grade would affect the fair value of its derivative liabilities. In the event of a credit down-grade, the fair value of the Company’s derivative liabilities would decrease.

The fair value of the securities portfolio is generally based on a single price for each financial instrument provided by a third-party pricing service determined by one or more of the following:


•	Quoted prices for similar, but not identical, assets or liabilities in active markets;


•	Quoted prices for identical or similar assets or liabilities in inactive markets;


•	Inputs other than quoted prices that are observable, such as interest rate and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and


•	Other inputs derived for or corroborated by observable market inputs.

The underlying methods used by the third-party services are considered in determining the primary inputs used to determine fair values. The Company evaluates the methodologies employed by the third-party pricing services by comparing the price provided by the pricing service with other sources, including brokers’ quotes, sales or purchases of similar instruments and discounted cash flows to establish a basis for reliance on the pricing service values. Significant differences between the pricing service provided value and other sources are discussed with the pricing service to understand the basis for their values. Based on this evaluation, it can be determined that the results represent prices that would be received to sell assets or paid to transfer liabilities in an orderly transaction in the current market.

The Company evaluates impaired investment securities quarterly to determine if impairments are temporary or other-than-temporary. For impaired debt securities, management first determines whether it intends to sell or if it is more-likely than not that it will be required to sell the impaired securities before the recovery of amortized cost. This determination considers current and forecasted liquidity requirements, regulatory and capital requirements and securities portfolio management. All impaired debt securities that we intend to sell or that we expect to be required to sell are considered other-than-temporarily impaired and the full impairment loss is recognized as a charge against earnings.

Tax Credits. As part of its Community Reinvestment Act responsibilities and due to their favorable economics, the Company invests in tax credit-motivated projects. These projects are directed at tax credits issued under Federal Low-Income Housing, Federal Historic Rehabilitation, and Federal New Markets Tax Credits programs. The Company generates its returns on tax credit motivated projects through the receipt of federal, and if applicable, state tax credits as well as equity returns. The federal tax credits are recorded as an offset to the income tax provision in the year that they are earned under federal income tax law – over 10 to 15 years, beginning in the year in which rental activity commences for Federal Low-Income Housing credits, in the year of the issuance of the certificate of occupancy and the property being placed into service for Federal Historic Rehabilitation credits, and over 7 years for Federal New Markets Tax Credits upon the investment of funds into the Community Development Entity (CDE). These credits, if not used in the tax return for the year of origination, can be carried forward for 20 years. The state credits are recorded in income when earned (usually when the project is placed in service) and sold to investors after the tax credits have been transferred from the project to the Company. For certain investment structures for Federal Historic Rehabilitation and Federal New Markets Tax Credits, the Company is required to reduce the tax basis of its investment in the entity used to earn the credit by the amount of the credit earned. Deferred taxes are provided in the year that the tax basis is reduced in accordance with ASC 740.

The Company invests in Federal Low-Income Housing credits, by investing in a tax credit entity, usually a limited liability company, which owns the real estate. The Company receives a 99.99% nonvoting interest in the entity that must be retained during the compliance period for the credits (15 years). Control of the tax credit entity rests in the 0.01% interest general partner, who has the power and authority to make decisions that impact economic performance of the project and is required to oversee and manage the project. The Company accounts for its investment in Federal Low-Income Housing credits utilizing the equity method of accounting. The Company begins to evaluate its investment for impairment at the time the tax credits are

earned through the end of the 15 year compliance period. The Company evaluates its investment at the end of each reporting period for impairment and any residual returns are expected to be minor.

For Federal Historic Rehabilitation credits, the Company invests in a tax credit entity, usually a limited liability company which owns the real estate, or it invests in a master tenant structure. In some instances, the Company receives a 99% nonvoting interest in the tax credit entity that must be retained during the compliance period for the credits (5 years). In most cases, the Company’s interest in the entity is generally reduced from a 99% interest to a 0% to 25% interest at the end of the compliance period. In some instances, the Company invests 99% in a pass through entity called a master tenant, which maintains an ownership interest in the real estate. In most cases, the Company’s interest in the entity is generally reduced from a 99% interest to a 0% to 25% interest at the end of the compliance period. Control of the tax credit entity rests in the 1% interest general partner (in either structure), who has the power and authority to make decisions that impact economic performance of the project and is required to oversee and manage the project. The Company accounts for its investment in Federal Historic Rehabilitation credits utilizing the equity method of accounting. The Company begins to evaluate its investment for impairment at the time the credit is earned, which is typically in the year the project is placed in service, through the end of its compliance period. The Company evaluates its investment at the end of each reporting period for impairment and any expected residual returns reduce the amount of impairment recognized.

For Federal New Markets Tax Credits or Federal NMTC, a different structure is required by federal tax law. In order to distribute Federal NMTC, the federal government allocates such credits to CDEs. The Company invests in both CDEs formed by unaffiliated parties and in CDEs formed by the Company. Projects must be commercial or real estate operations and are qualified by their location in low income areas or by their employment of, or service to, low-income citizens. A CDE, in most cases, creates a special-purpose subsidiary for each project through which the credits are allocated and through which the proceeds from the tax credit investor and a leverage lender, if applicable, flow through to the project, which in turn generate the credit. The credits are calculated at 39% of the total CDE allocation to the project at the rate of 5% for the first three years and 6% for the next four years. Federal tax law requires special terms benefiting the qualified project, which can include below-market interest rates. The Company evaluates its investment for impairment under the equity method of accounting at the end of each reporting period, beginning at the time the tax credits are earned on the project through the end of the seven-year compliance period and any residual returns are expected to be minor. When the Company also has a loan to the project, it is reported as a loan in the consolidated balance sheet, as the Company has credit exposure to the project and the loan is repaid at the end of the compliance period (in general, the debt has no principal payments during the compliance period but the Company may require the project to fund a sinking fund over the compliance period to achieve the same risk reduction effect as if principal is being amortized).

When the Company is the tax credit investor in a CDE formed by an unaffiliated party, it has no control of the applicable CDE or the CDE’s special-purpose subsidiary. When a project is funded through FNBC CDE, the Company consolidates its CDE and the specifically formed special-purpose entities since it maintains control over these entities. As part of the activities of FNBC CDE, the Company makes investments in the CDE for purposes of providing equity to the projects sponsored by the FNBC CDE.

When a project is funded through FNBC CDE, the CDE will receive a CDE management fee at the time of the project's closing of approximately 4% and an annual fee of 0.5% of the qualified equity investment in the project. The annual fee is received until the end of the Federal NMTC compliance period. The CDE fee earned is recorded in the consolidated statement of income as a component of noninterest income. The Company may pay a fee to the CDE when the project is funded through a CDE other than FNBC CDE at the time of a project's closing and annually during the compliance period for the allocation of the credits. The fee is recorded as a component of noninterest expense in the Company's consolidated statement of income over the Federal NMTC compliance period.

Income Tax Accounting. The Company estimates its income taxes for each period for which a statement of income is presented. This involves estimating its actual current tax exposure, as well as assessing temporary differences resulting from differing timing of recognition of expenses, income and tax credits for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the Company’s consolidated balance sheets. The Company must also assess the likelihood that any deferred tax assets will be recovered from future taxable income and, to the extent that recovery is not likely, a valuation allowance must be established.

In determining whether a valuation allowance related to deferred tax assets was necessary, the Company considered all available evidence including historical information supplemented by all currently available information about future years. The

Company also considered events occurring subsequent to December 31, 2015 but before the financial statements were released that provided additional evidence (negative or positive) regarding the likelihood of realization of existing deferred tax assets.

The negative evidence cited included cumulative losses in recent years which included all “non-recurring” charges such as impairments or losses on certain assets that had not occurred previously. Certain of these items may not be indicative of future results, but they are part of total results, and therefore similar types of items may occur in future years.

Considerable judgment is required in assessing the need for a valuation allowance including all available evidence, both positive and negative, as the assessment includes determining the feasibility and willingness of the Company to employ various tax planning strategies and projections of future taxable income. Management employed various stress test techniques when evaluating the reasonableness of their estimates, including future taxable income, deferring to scenarios deemed to be mostly likely and supportable by the available data.

Stock-Based Compensation. The Company utilizes a stock-based employee compensation plan, which provides for the issuance of stock options and restricted stock. The Company accounts for stock-based employee compensation in accordance with the fair value recognition provisions of ASC 718, Compensation – Stock Compensation. As a result, compensation cost for all share-based payments is based on the grant-date fair value estimated in accordance with ASC 718. Compensation cost is recognized as expense over the service period, which is generally the vesting period of the options and restricted stock. The expense is reduced for estimated forfeitures over the vesting period and adjusted for actual forfeitures as they occur.

Goodwill and Other Intangibles. Goodwill and intangible assets that have indefinite useful lives are subject to an impairment test at least annually, or more frequently if circumstances indicate their value may not be recoverable. Other identifiable intangible assets that are subject to amortization are amortized on a straight line basis over their estimated useful lives, ranging from two to 12 years. These amortizable intangible assets are reviewed for impairment if circumstances indicate their value may not be recoverable.

EXECUTIVE OVERVIEW

The Company is a bank holding company, which operates through one segment, community banking, and offers a broad range of financial services to businesses, institutions, and individuals in southeastern Louisiana and the Florida panhandle. The Company operates 38 full service banking offices located throughout its market and a loan production office in Gulfport, Mississippi. The Company generates most of its revenue from interest on loans and investments, service charges, state tax credits and CDE fees earned. The Company’s primary source of funding for its loans is deposits. The largest expenses are interest on these deposits, salaries and related employee benefits, and impairment on investment in tax credit entities. The Company measures its performance through its net interest margin, return on average assets and return on average common equity, while maintaining appropriate regulatory leverage and risk-based capital ratios.

BALANCE SHEET POSITION AND RESULTS OF OPERATIONS

The Company’s income (loss) available to common shareholders for the year ended December 31, 2015 totaled ($25.5) million, or ($1.36) per diluted share, compared to $43.3 million, or $2.27 per diluted share for 2014. Basic earnings (loss) per share for the year ended December 31, 2015 were ($1.36), a decrease of $3.69 compared to the year ended December 31, 2014.

The Company’s earnings for the year ended December 31, 2015 were negatively impacted by the impairment of its investment of short-term receivables and the increase in impairment related to its investment in tax credit entities. The earnings were positively impacted by the year over year earning asset growth, continued reduction in the Company's cost of deposits, and the increase in income tax benefit due to the Company’s investment in federal tax credit programs.

Key components of the Company’s performance during the year ended December 31, 2015 are summarized below.

•Total assets at December 31, 2015 were $4.7 billion, an increase of $1.0 billion, or 26.3%, from December 31, 2014.

•

Total loans at December 31, 2015 were $3.5 billion, an increase of $784.6 million, or 29.3%, from December 31, 2014. The increase in loans was positively impacted by the two acquisitions during the year. The impact from the two acquisitions during the year was an increase of $197.8 million, or 5.7%. The increase in loans was primarily due to increases of $210.8 million, or 67.7%, in construction loans, $194.7 million, or 15.8%, in commercial real estate loans, and $244.6 million, or 24.9%, in commercial loans from December 31, 2014.

•

Total deposits increased $724.9 million, or 23.2%, from December 31, 2014. The increase was due to increases across all of the Company's deposit categories as well as from the deposit accounts acquired from the First National Bank of Crestview and State-Investors Bank acquisitions. Of the 23.2% increase in deposit growth from December 31, 2014, 7.4% of this growth was attributable to the two acquisitions during the year, and the remaining 15.8% was from organic deposit growth.


•	Shareholders’ equity decreased $27.8 million, or 6.8%, to $380.7 million from December 31, 2014. The decrease was primarily attributable to the Company’s loss available to common shareholders over the period.


•	Interest income increased $18.9 million, or 12.8%, during 2015 compared to 2014. The increases were driven by higher yields on average interest-earning assets and an increase in loans.


•	Interest expense increased $8.4 million, or 19.6%, during 2015 compared to 2014. The increase was due to higher average balances of interest-bearing deposits and the issuance of the subordinated debentures during 2015.


•	The provision for loan losses increased $31.5 million during 2015 compared to 2014. As of December 31, 2015, the Company’s ratio of allowance for loan losses to total loans was 2.27%, compared to 1.58% at December 31, 2014.


•	Noninterest income for the year ended December 31, 2015 decreased $70.3 million, compared to the year ended December 31, 2014. The change in noninterest income during 2015 was due primarily to the impairment of its investment in short-term receivables of $69.9 million, which was offset by an increase in state tax credits of $3.1 million.


•	Noninterest expense during 2015 increased $52.0 million, or 55.1%, compared to 2014. The increase in noninterest expense compared to 2014 was due to increases in most components of noninterest expense, primarily impairment of investment in tax credit entities of $34.5 million, higher salaries and employee benefits of $5.6 million and other noninterest expense of $5.3 million.

ACQUISITION ACTIVITY

On January 16, 2015, the Company purchased certain assets and assumed certain liabilities from the Federal Deposit Insurance Corporation (FDIC) as receiver for First National Bank of Crestview, a full-service commercial bank headquartered in Crestview, Florida, which was closed and placed into receivership. Under the agreement, the Company agreed to assume all of the deposit liabilities of $72.3 million, and acquire approximately $62.3 million of assets, of the failed bank. The acquired assets included the failed bank's performing loans, substantially all of its investment securities portfolio and its three banking facilities, with the FDIC retaining the remaining assets. The transaction did not include a loss-share agreement with the FDIC. The Company received an initial settlement amount from the FDIC of $10.1 million and recorded goodwill of $1.2 million. The Company expanded into the Florida Panhandle market through the addition of the bank's three locations and an experienced in-market team.

On November 30, 2015, the Company acquired State Investors Bancorp, Inc. (SIBC), the parent company for State-Investors Bank, which conducted business from four full service banking offices in the New Orleans metropolitan area. Under the terms of the agreement, each share of SIBC common stock was converted into cash in the amount of $21.51 per share and each issued and outstanding option to purchase a share of SIBC common stock, including any option, which became fully vested in connection with the completion of the merger, was canceled and converted into cash in an amount equal to the difference between $21.51 and the exercise price of the stock option. The Company acquired all of the outstanding common stock and stock options of SIBC for a total consideration of $48.7 million, which resulted in goodwill of $8.6 million. With this acquisition, the Company expanded its presence in the New Orleans metropolitan area. The Company anticipates cost savings will be recognized in future periods through the elimination of redundant operations.

NON-GAAP FINANCIAL MEASURES

This discussion and analysis contains financial information determined by methods other than in accordance with GAAP. The Company’s management uses these non-GAAP financial measures in its analysis of the Company’s performance.

As a material part of its business plan, the Company invests in entities that generate federal income tax credits, and management believes that understanding the impact of the Company’s investment in tax credit entities is critical to understanding its financial performance on a standalone basis and in relation to its peers. Like its investments in loans and investment securities, the Company’s investment in tax credit entities generates a return for the Company. However, unlike the income generated by its loans and investment securities, service charges or other noninterest income, which under GAAP are taken into account in the determination of income before income taxes, the return generated by the Company’s investment in tax credit entities is reflected only as a reduction of income tax expense.

Under current GAAP accounting, the returns generated from the Company’s investment in tax credit entities are a component of the Company’s income tax provision whereas all of the expenses, primarily impairment of investment in tax credit entities, are recorded in noninterest expense. Because of the level of the Company’s investment in tax credit entities, management believes that the effect of adjusting the relevant GAAP measures to account for returns generated by the Company’s investment in tax credit entities is meaningful to a more complete understanding of the Company’s financial performance.

In measuring the Company’s financial performance, in addition to financial measures that are prepared in accordance with GAAP, management utilizes adjusted income before income taxes, a non-GAAP measure that adjusts noninterest income and expense to reflect the effect of the federal income taxes generated from the Company’s investment in tax credit entities. Adjusted income before income taxes is reconciled to the corresponding measures determined in accordance with GAAP in “Table 1- Reconciliations of Non-GAAP Financial Measures.” Management believes that the non-GAAP financial measures facilitate an investor’s understanding and analysis of the Company’s underlying financial performance and trends, in addition to the corresponding financial information prepared and reported in accordance with GAAP.

Tangible common equity, tangible assets, tangible book value per common share and the ratio of tangible common equity to tangible assets also are considered non-GAAP financial measures. The Company’s management, banking regulators, many financial analysts and other investors use these non-GAAP financial measures to compare the capital adequacy of banking organizations with significant amounts of preferred equity and/or goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions. Tangible common equity, tangible assets, tangible book value per share or related measures should not be considered in isolation or as a substitute for total shareholders’ equity, total assets, book value per share or any other measure calculated in accordance with GAAP. Moreover, the manner in which the Company calculates tangible common equity, tangible assets, tangible book value per share and any other related measures may differ from that of other companies reporting measures with similar names.

These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP. The following tables reconcile, as of the dates set forth below, income before income taxes (on a GAAP basis) to adjusted income before income taxes, shareholders’ equity (on a GAAP basis) to tangible common equity and total assets (on a GAAP basis) to tangible assets and tangible book value per share.

TABLE 1-RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES



	For the Years Ended December 31,
(In thousands, except per share data)	2015			2014			2013
				(Restated)			(Restated)
Income (loss) before income taxes:
Income (loss) before income taxes (GAAP)	$	(131,502	)	$	11,784		$	10,219
Income adjustment before income taxes related to the impact of tax credit related activities (Non-GAAP)
Tax equivalent income associated with investment in federal tax credit programs(1)	92,537			56,383			40,618
Adjusted income (loss) before income taxes (Non-GAAP)	(38,965		)	68,167			50,837
Income tax expense-adjusted (Non-GAAP)(2)	13,728			(23,660		)	(17,211		)
Net income (loss) (GAAP)	$	(25,237	)	$	44,507		$	33,626


(1)	Tax equivalent income associated with investment in federal tax credit programs represents the gross amount of tax benefit from federal tax credits.


(2)	Income tax expense-adjusted represents the expense amount to reconcile adjusted income (loss) before income taxes to net income (loss) per GAAP.



	As of December 31,
(In thousands, except per share data)	2015			2014			2013
				(Restated)			(Restated)
Tangible equity and asset calculations:
Total shareholders' equity (GAAP)	$	380,751		$	408,533		$	365,100
Adjustments:
Preferred equity	(37,935		)	(42,406		)	(42,406		)
Goodwill	(14,645		)	(4,808		)	(4,808		)
Other intangibles	(3,606		)	(3,348		)	(3,966		)
Tangible common equity	$	324,565		$	357,971		$	313,920

Total assets (GAAP)	$	4,705,825		$	3,724,880		$	3,275,121
Adjustments:
Goodwill	(14,645		)	(4,808		)	(4,808		)
Other intangibles	(3,606		)	(3,348		)	(3,966		)
Tangible assets	$	4,687,574		$	3,716,724		$	3,266,347

Total common shares	19,078			18,576			18,514
Book value per common share	$	17.97		$	19.71		$	17.43
Effect of adjustment	0.96			0.44			0.47
Tangible book value per common share	$	17.01		$	19.27		$	16.96
Total equity to assets	8.09		%	10.97		%	11.15		%
Effect of adjustment	1.17		%	1.34		%	1.54		%
Tangible common equity to tangible assets	6.92		%	9.63		%	9.61		%

FINANCIAL CONDITION

Assets increased $1.0 billion, or 26.3%, to $4.7 billion as of December 31, 2015, compared to $3.7 billion as of December 31, 2014 as the Company continued to experience strong growth in the New Orleans market area. Interest-bearing cash increased $280.4 million to $293.1 million as of December 31, 2015 compared to $18.4 million as of December 31, 2014. Net loans increased $748.4 million, or 28.4%, to $3.4 billion as of December 31, 2015, compared to $2.6 billion as of December 31, 2014. Securities totaled $367.9 million as of December 31, 2015 compared to $336.7 million as of December 31, 2014, an increase of 9.3%. The Company decreased its investment in short-term receivables to $25.6 million compared to $237.1 million as of December 31, 2014. Deposits increased $724.9 million, or 23.2%, to $3.8 billion as of December 31, 2015, compared to $3.1 billion as of December 31, 2014. Long-term borrowings increased $239.0 million to $279.0 million as of December 31, 2015 compared to $40.0 million as of December 31, 2014. Total shareholders’ equity decreased $27.8 million, or 6.8%, to $380.7 million as of December 31, 2015, compared to $408.5 million as of December 31, 2014, primarily from the loss over the period.

Loan Portfolio

The Company’s primary source of income is interest on loans to small-and medium-sized businesses, real estate owners in its market area, and its private banking clients. The loan portfolio consists primarily of commercial loans and real estate loans secured by commercial real estate properties located in the Company’s primary market area. The Company’s loan portfolio represents the highest yielding component of its earning asset base.

The following table sets forth the amount of loans, by category, as of the respective periods.

TABLE 2-TOTAL LOANS BY LOAN TYPE



	As of December 31,
(In thousands)	2015				2014				2013				2012				2011
					(Restated)				(Restated)				(Restated)				(Restated)
Construction	$	522,278	15.1	%	$	311,527	11.7	%	$	201,744	8.9	%	$	165,757	9.0	%	$	194,295	12.3	%
Commercial real estate	1,423,545		41.2	%	1,228,847		46.0	%	1,093,401		48.3	%	959,084		51.9	%	772,852		48.9	%
Consumer real estate	264,422		7.6	%	132,950		5.0	%	117,653		5.2	%	103,516		5.6	%	81,663		5.2	%
Commercial and industrial	1,226,660		35.6	%	982,061		36.7	%	834,093		36.9	%	604,922		32.7	%	518,076		32.8	%
Consumer	21,688		0.5	%	18,637		0.6	%	16,402		0.7	%	14,073		0.8	%	14,318		0.8	%
Total loans	$	3,458,593	100.0	%	$	2,674,022	100.0	%	$	2,263,293	100.0	%	$	1,847,352	100.0	%	$	1,581,204	100.0	%

During the fourth quarter of 2015, the Company acquired $182.2 million in loans as a result of the SIBC acquisition. As of December 31, 2015, the balances of the loans acquired were $180.9 million, or 5.2% of the total loan portfolio.

The Company’s primary focus has been on commercial real estate and commercial and industrial, or C&I, lending, which represented approximately 77% and 83% of the loan portfolio as of December 31, 2015 and December 31, 2014, respectively. Although management expects continued growth with respect to the loan portfolio, it does not expect any significant changes over the foreseeable future in the composition of the loan portfolio or in the emphasis on commercial real estate and C&I lending. The Company has a significant portion of its commercial real estate loans are related to customers which participate in federal tax credit or other federal guarantee programs. The Company anticipates more demand in C&I lending over the next year. The Company continues to have a strong loan pipeline in the markets that it serves as evidenced by its double digit loan growth year over year.

A significant portion, $449.1 million, or 31.5%, as of December 31, 2015, compared to $419.3 million, or 34.1%, as of December 31, 2014, of the commercial real estate exposure represented loans to commercial businesses secured by owner occupied real estate. C&I loans represent the second largest category of loans in the portfolio. The Company attributes its C&I loan growth during the year in part to the economic expansion in the New Orleans area and the acquisition of new loan customers from other financial institutions. During 2015, the Company's construction loan portfolio grew 67.7% compared to 2014, primarily due to the funding of construction loans related to federal tax credit projects, hotels and residential real estate development.

The Company does have exposure to the oil and gas industry in its commercial loan portfolio. At December 31, 2015, the Company's direct oil and gas C&I loan portfolio was approximately $158.4 million, or 4.5%, of its total loan portfolio, with an additional $6.7 million in outstanding loan commitments. Of this amount, the Company's exposure to exploration and production in its oil and gas portfolio was approximately $90.2 million with outstanding commitments of $3.4 million to one borrower. The Company's remaining direct oil and gas exposure was primarily maritime service companies. The Company also had exposure to indirect oil and gas loans in its portfolio of $65.6 million with outstanding commitments of $13.1 million. The Company has provided $30.0 million or 40.0% of its total allowance for loan losses for its one large exploration and production loan. The Company determined a specific reserve was necessary due to its evaluation of the most recent reserves report, the historically low year end price of oil at December 31, 2015, and based on difficulties experienced by the customer in order to bring the shallow-water well back to production. Management believes that the specific reserve is adequate to cover any exposure related to this loan. The shallow-water well related to this loan began producing during the third quarter of 2016. The Company is actively monitoring both its direct and indirect oil and gas related loans.

The following table sets forth the contractual maturity ranges, and the amount of loans with fixed and variable rates, in each maturity range.

TABLE 3-LOAN MATURITIES BY LOAN TYPE



	As of December 31, 2015
(In thousands)	Due Within One Year		After One but Within Five Years		After Five Years		Total
Construction	$	177,374	$	257,059	$	87,845	$	522,278
Commercial real estate	312,940		1,047,707		62,898		1,423,545
Consumer real estate	26,581		72,406		165,435		264,422
Commercial and industrial	622,534		551,233		52,893		1,226,660
Consumer	11,175		9,871		642		21,688
Total	$	1,150,604	$	1,938,276	$	369,713	$	3,458,593
Amounts with fixed rates	$	305,920	$	898,448	$	280,156	$	1,484,524
Amounts with variable rates	844,684		1,039,828		89,557		1,974,069
Total	$	1,150,604	$	1,938,276	$	369,713	$	3,458,593

The Company has seen a shift in customer demand for loans with a variable rate of interest, which is represented in the table above. As of December 31, 2015, the Company had 57.1% of its loan portfolio, by dollar amount, which bears a variable rate of interest and 42.9% which bears a fixed rate of interest. Of the loans due within one year, 73.4% of the loans by dollar amount bear a variable rate of interest, and 26.6% bear a fixed rate of interest. As of December 31, 2015, approximately 94.3% of the variable rate loans in the Company’s portfolio, by dollar amount, contained floors. In order to offset the imbalance between fixed and variable rate loans, the Company entered into a series of swaps with a total notional amount of $325.0 million, which is further discussed in Note 20 of the consolidated financial statements. The swaps are intended to rebalance the composition of the portfolio make-up to a more evenly balanced loan portfolio.

Nonperforming Assets

Nonperforming assets consist of nonperforming loans, other real estate owned and other repossessed assets. Nonperforming loans consist of loans that are on nonaccrual status and restructured loans, which are loans on which the Company has granted a concession on the interest rate or original repayment terms due to financial difficulties of the borrower. Other real estate owned consists of real property acquired through foreclosure. The Company initially records other real estate owned at the lower of carrying value or fair value, less estimated costs to sell the assets. Estimated losses that result from the ongoing periodic valuations of these assets are charged to earnings as noninterest expense in the period in which they are identified. Once the Company owns the property, it is maintained, marketed, rented and sold in satisfaction of the original loan. Historically, foreclosure trends have been low due to the seasoning of the portfolio. The Company accounts for troubled debt restructurings in accordance with ASC 310, “Receivables.”

The Company generally will place loans on nonaccrual status when they become 90 days past due, unless they are well secured and in the process of collection. The Company also places loans on nonaccrual status if they are less than 90 days past due if the collection of principal or interest is in doubt. When a loan is placed on nonaccrual status, any interest previously accrued, but not collected, is reversed from income.

Any loans that are modified or extended are reviewed for classification as a restructured loan in accordance with regulatory guidelines. The Company completes the process that outlines the modification, the reasons for the proposed modification and documents the current status of the borrower.

The following table sets forth information regarding nonperforming assets as of the dates indicated:

TABLE 4-NONPERFORMING ASSETS



	As of December 31,
(In thousands)	2015			2014			2013			2012			2011
Nonaccrual loans	$	154,938		$	21,228		$	16,396		$	21,083		$	9,017
Restructured loans	3,283			1,571			1,628			2,336			1,403
Total nonperforming loans	158,221			22,799			18,024			23,419			10,420
Other assets owned(1)	290			290			276			—			18
Other real estate owned	5,232			5,549			3,733			8,632			7,991
Total nonperforming assets	$	163,743		$	28,638		$	22,033		$	32,051		$	18,429
Accruing loans past due 90+ days(2)	$	141		$	28		$	150		$	—		$	—
Nonperforming loans to total loans(3)	4.57		%	0.85		%	0.79		%	1.26		%	0.65		%
Nonperforming loans to total assets	3.36		%	0.61		%	0.55		%	0.88		%	0.47		%
Nonperforming assets to total assets(3)	3.48		%	0.77		%	0.67		%	1.20		%	0.83		%
Nonperforming assets to loans, other real estate owned and other assets owned(3)	4.73		%	1.07		%	0.96		%	1.72		%	1.15		%


(1)	Represents repossessed property other than real estate.


(2)	The amount represents cash secured tuition loans.


(3)	Ratios for the periods 2011-2014 related to total loans and total assets have been restated. See Note 2 of the Company's financial statements included in this report for an explanation of the restatements.

Approximately $1.8 million of gross income would have been reported if all loans on nonaccrual status had been current in accordance with their original terms for the year ended December 31, 2015.

Total nonperforming assets increased $135.1 million compared to December 31, 2014, and total nonperforming assets as a percentage of loans and other real estate owned increased by 366 basis points over the period. The increase resulted from an increase in the Company's impaired loans at December 31, 2015 primarily relating to its exploration and production loan of $90.2 million and commercial real estate loans of $20.5 million.

Potential problem loans are those loans that are not categorized as nonperforming loans, but where current information indicates that the borrower may not be able to comply with present loan repayment terms. These are generally referred to as its watch list loans. The Company monitors these loans closely and reviews their performance on a regular basis. At December 31, 2015, the Company had classified loans in its C&I loan portfolio of $19.3 million classified as doubtful, $161.4 million as substandard and $7.4 million as special mention. At December 31, 2014 the Company had classified loans in its C&I loan portfolio of $24.8 million classified as substandard. The increase in the Company's classified C&I loan portfolio compared to December 31, 2014 was due primarily to its one exploration and production loan which was affected by the fluctuations in energy commodity prices and the lack of production from its shallow-water well. The Company continues to monitor this credit as the borrower has experienced issues with distribution and production from its shallow-water well. The shallow-water well began production during the third quarter of 2016. The Company will continue to monitor its exposure in its oil and gas portfolio as well as the changes in energy commodity prices and related risks throughout 2016.

The Company monitors past due status as an indicator of credit deterioration and potential problem loans. A loan is considered past due when the contractual principal or interest due in accordance with the terms of the loan agreement remains unpaid after the due date of the scheduled payment. To the extent that loans become past due, management assesses the potential for loss on such loans as it would with other problem loans and considers the effect of any potential loss in determining its provision for probable loan losses. Management also assesses alternatives to maximize collection of any past due loans, including, without limitation, restructuring loan terms, requiring additional loan guarantee(s) or collateral or other planned action. Additional information regarding past due and potential problem loans as of December 31, 2015 is included in Note 8 to the Company’s financial statements included in this report.

The following table sets forth the allocation of the Company’s nonaccrual loans among various categories within its loan portfolio as of the respective periods.

TABLE 5-NONACCRUAL LOANS



	As of December 31,
(In thousands)	2015		2014		2013		2012		2011
Construction	$	2,633	$	792	$	75	$	806	$	2,244
Commercial real estate	27,937		12,146		10,133		5,831		3,463
Consumer real estate	4,538		1,919		2,347		818		1,739
Commercial and industrial	119,705		6,051		3,784		13,556		1,489
Consumer	125		320		57		72		82
Total nonaccrual loans	$	154,938	$	21,228	$	16,396	$	21,083	$	9,017

Allowance for Loan Losses

The Company maintains an allowance for loan losses that represents management’s best estimate of the loan losses inherent in the loan portfolio. In determining the allowance for loan losses, management estimates losses on specific loans, or groups of loans, where the probable loss can be identified and reasonably determined. The balance of the allowance for loan losses is based on internally assigned risk classifications of loans, historical loan loss rates, changes in the nature of the loan portfolio, overall portfolio quality, industry concentrations, delinquency trends, current economic factors, and the estimated impact of current economic conditions on certain historical loan loss rates.

The allowance for loan losses is increased by provisions charged against earnings and reduced by net loan charge-offs. Loans are charged-off when it is determined that collection has become unlikely. Recoveries are recorded only when cash payments are received.

The allowance for loan losses was $78.5 million, or 2.27% of total loans, as of December 31, 2015, compared to $42.3 million, or 1.58% of total loans, as of December 31, 2014, an increase of 69 basis points over the period. The increase in the allowance was due to primarily to an increase of $30.0 million in specific reserves as a result of one large exploration and production loan and $6.1 million for other loans in its portfolio which moved to the criticized category or experienced further deterioration. The Company also increased its general reserves due to the growth in its loan portfolio during the year. The increase in the allowance was offset by net charge-offs of $7.4 million. Net charge-offs as a percentage of average loans was 0.25% in 2015, compared to 0.07% in 2014.

The following table provides an analysis of the allowance for loan losses and net charge-offs for the respective periods.

TABLE 6-SUMMARY OF ACTIVITY IN THE ALLOWANCE FOR LOAN LOSSES



	As of and for the Years Ended December 31,
	2015			2014			2013			2012			2011
(In thousands)
Balance, beginning of year	$	42,336		$	32,143		$	26,977		$	18,122		$	12,508
Charge-offs:
Construction	12			18			46			—			—
Commercial real estate	4,105			1,034			292			1,262			614
Consumer real estate	55			63			—			59			700
Commercial and industrial	3,528			648			4,229			1,068			864
Consumer	143			166			202			172			284
Total charge-offs	7,843			1,929			4,769			2,561			2,462
Recoveries:
Construction	—			30			—			16			—
Commercial real estate	323			—			19			132			—
Consumer real estate	6			—			30			22			9
Commercial and industrial	87			71			68			153			10
Consumer	31			21			18			58			47
Total recoveries	447			122			135			381			66
Net charge-offs	7,396			1,807			4,634			2,180			2,396
Provision for loan loss	43,538			12,000			9,800			11,035			8,010
Balance, end of year	$	78,478		$	42,336		$	32,143		$	26,977		$	18,122
Net charge-offs to average loans	0.25		%	0.07		%	0.22		%	0.12		%	0.19		%
Allowance for loan losses to total loans(1)	2.27		%	1.58		%	1.40		%	1.45		%	1.13		%


(1)	Ratios for the periods 2011-2014 related to total loans have been restated. See Note 2 of the Company's financial statements included in this report for an explanation of the restatements.

Although management believes that the allowance for loan losses has been established in accordance with accounting principles generally accepted in the United States and that the allowance for loan losses was appropriate to provide for incurred losses in the portfolio at all times shown above, future provisions will be subject to ongoing evaluations of the risks in the loan portfolio. If the economy declines or if asset quality deteriorates, material additional provisions could be required.

The allowance for loan losses is allocated to loan categories based on the relative risk characteristics, asset classifications, and actual loss experience of the loan portfolio. The following table sets forth the allocation of the total allowance for loan losses by loan type and sets forth the percentage of loans in each category to gross loans. The allocation of the allowance for loan losses as shown in the table should neither be interpreted as an indication of future charge-offs, nor as an indication that charge-offs in future periods will necessarily occur in these amounts or in the indicated proportions.

TABLE 7-ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES



	As of December 31,
	2015				2014				2013				2012				2011
(In thousands)	Amount		% of Loans		Amount		% of Loans		Amount		% of Loans		Amount		% of Loans		Amount		% of Loans
Construction	$	5,027	6.4	%	$	4,030	9.5	%	$	2,790	8.7	%	$	2,004	7.4	%	$	722	4.0	%
Commercial real estate	18,016		23.0		14,965		35.3		13,780		42.9		10,716		39.7		9,871		54.5
Consumer real estate	3,500		4.5		3,316		7.8		2,656		8.3		2,450		9.1		1,519		8.4
Commercial and industrial	51,736		65.9		19,814		46.8		12,677		39.4		11,675		43.3		5,928		32.7
Consumer	199		0.2		211		0.6		240		0.7		132		0.5		82		0.4
Total	$	78,478	100.0	%	$	42,336	100.0	%	$	32,143	100.0	%	$	26,977	100.0	%	$	18,122	100.0	%

Securities

The securities portfolio is used to provide a source of interest income, maintain a source of liquidity, and serve as collateral for certain types of deposits and borrowings. The Company manages its investment portfolio according to a written investment policy approved by the Board of Directors. Investment balances in the securities portfolio are subject to change over time based on the Company’s funding needs and interest rate risk management objectives. Liquidity levels take into account anticipated future cash flows and all available sources of credit and are maintained at levels management believes are appropriate to assure future flexibility in meeting anticipated funding needs.

The securities portfolio consists primarily of U.S. government agency obligations, mortgage-backed securities, and municipal securities, although the Company also holds corporate bonds. All of the securities have varying contractual maturities. However, these maturities do not necessarily represent the expected life of the securities as the securities may be called or paid down with or without penalty prior to their stated maturities, and the targeted duration for the investment portfolios is in the three to four year range. No investment in any of these securities exceeds any applicable limitation imposed by law or regulation. The Asset Liability Committee reviews the investment portfolio on an ongoing basis to ensure that the investments conform to the Company’s investment policy. All securities, except for the other equity securities, as of December 31, 2015 were classified as Level 2 assets, as their fair value was estimated using pricing models or quoted prices of securities with similar characteristics. The other equity securities as of December 31, 2015 were classified as Level 1 assets, as their fair value was estimated using quoted prices in active markets for identical assets.

The investment portfolio consists of available for sale and held to maturity securities. During 2013, the Company transferred $95.4 million of its municipal securities and mortgage-backed securities from available for sale to held to maturity. The carrying values of the Company’s available for sale securities are adjusted for unrealized gain or loss, and any gain or loss is reported on an after-tax basis as a component of other comprehensive income. Any expected credit loss due to the inability to collect all amounts due according to the security’s contractual terms is recognized as a charge against earnings. Any remaining unrealized loss related to other factors would be recognized in other comprehensive income, net of taxes. Securities classified as held to maturity are stated at amortized cost. The amortized cost of debt securities classified as held to maturity is adjusted for amortization of premiums and accretion of discounts over the contractual life of the security using the effective interest method or, in the case of mortgage-backed securities, over the estimated life of the security using the effective yield method. Such amortization or accretion is included in interest income on securities.

The Company’s investment securities portfolio totaled $367.9 million at December 31, 2015, an increase of $31.2 million, or 9.3%, from December 31, 2014. The increase in its securities portfolio was primarily due to the acquisition of $36.9 million in investment securities from the First National Bank of Crestview and SIBC acquisitions during 2015, as well as the purchase of $30.9 million in other debt securities, offset by maturities, prepayments and calls of investment securities of $30.8 million. The Company purchased the other debt securities to invest a portion of its excess liquidity in higher yield, short duration investments. As of December 31, 2015, the weighted-average life of the portfolio was 5.95 years compared to 5.84 years as of December 31, 2014. As of December 31, 2015, investment securities having a carrying value of $233.2 million were pledged to secure public deposits, securities sold under agreements to repurchase, derivatives and borrowings.

The following table presents a summary of the amortized cost and estimated fair value of the investment portfolio.

TABLE 8-CARRYING VALUE OF SECURITIES



	As of December 31,
	2015							2014							2013
(In thousands)	Amortized Cost		Unrealized Gain (Loss)			Estimated Fair Value		Amortized Cost		Unrealized Gain (Loss)			Estimated Fair Value		Amortized Cost		Unrealized Gain (Loss)			Estimated Fair Value
Available for sale:
U.S. government agency securities	$	151,369	$	(1,694	)	$	149,675	$	161,461	$	(3,934	)	$	157,527	$	163,964	$	(12,641	)	$	151,323
U.S. Treasury securities	13,015		(312		)	12,703		13,019		(409		)	12,610		13,022		(873		)	12,149
Municipal securities	12,115		(15		)	12,100		12,175		71			12,246		23,240		(73		)	23,167
Mortgage-backed securities	78,227		(716		)	77,511		57,025		62			57,087		57,010		(1,466		)	55,544
Corporate bonds	8,103		(280		)	7,823		8,263		(86		)	8,177		37,023		(1,487		)	35,536
Other equity securities	20		—			20		—		—			—		—		—			—
Other debt securities	25,994		—			25,994		—		—			—		—		—			—
Total available for sale	$	288,843	$	(3,017	)	$	285,826	$	251,943	$	(4,296	)	$	247,647	$	294,259	$	(16,540	)	$	277,719
Held to maturity:
Municipal securities	$	38,950	$	1,870		$	40,820	$	41,255	$	2,120		$	43,375	$	44,294	$	(304	)	$	43,990
Mortgage-backed securities	43,124		(1,144		)	41,980		47,821		(240		)	47,581		50,610		(3,634		)	46,976
Total held to maturity	$	82,074	$	726		$	82,800	$	89,076	$	1,880		$	90,956	$	94,904	$	(3,938	)	$	90,966

As of December 31, 2015, all of the Company’s mortgage-backed securities were agency securities, and the Company did not hold any Fannie Mae or Freddie Mac preferred stock, corporate equity, collateralized debt obligations, collateralized loan obligations, structured investment vehicles, private label collateralized mortgage obligations, sub-prime, Alt-A, or second lien elements in the investment portfolio.

The following table sets forth the fair value, amortized cost, maturities and approximated weighted average yield based on estimated annual income divided by the average amortized cost of the Company's securities portfolio at December 31, 2015. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

TABLE 9-SECURITIES MATURITIES AND WEIGHTED AVERAGE YIELD



	As of December 31, 2015
	Due Within One Year				After One but Within Five Years				After Five but Within Ten Years				After Ten Years				Total
(In thousands)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Available for sale:
U.S. government agency securities	$	5,112	1.04	%	$	60,196	1.95	%	$	74,807	2.87	%	$	9,560	3.03	%	$	149,675	2.63	%
U.S. Treasury securities	—		—		12,703		1.10		—		—		—		—		12,703		1.10
Municipal securities	2,501		2.59		9,599		2.76		—		—		—		—		12,100		2.67
Mortgage-backed securities	2,951		2.36		50,987		1.90		21,554		1.87		2,019		1.54		77,511		1.96
Corporate bonds	—		—		—		—		7,823		3.89		—		—		7,823		3.89
Other equity securities	—		—		—		—		—		—		20		—		20		—
Other debt securities	25,994		0.72		—		—		—		—		—		—		25,994		0.72
Total available for sale	$	36,558	1.19	%	$	133,485	1.71	%	$	104,184	1.88	%	$	11,599	2.29	%	$	285,826	1.77	%
Held to maturity:
Municipal securities	$	2,329	3.80	%	$	25,706	3.70	%	$	10,241	4.12	%	$	674	3.92	%	$	38,950	3.74	%
Mortgage-backed securities	861		7.87		10,967		3.66		4,175		2.72		27,121		3.43		43,124		3.51
Total held to maturity	$	3,190	4.90	%	$	36,673	3.68	%	$	14,416	3.25	%	$	27,795	3.44	%	$	82,074	3.57	%

The following table summarizes activity in the Company’s securities portfolio during 2015.

TABLE 10-SECURITIES PORTFOLIO ACTIVITY



(In thousands)	Available for Sale			Held to Maturity
Balance, December 31, 2014	$	247,647		$	89,076
Purchases	30,937			—
Received in acquisitions	36,754			—
Sales	—			(50		)
Principal maturities, prepayments and calls	(30,834		)	(6,685		)
Amortization of premiums and accretion of discounts	43			(267		)
Increase in market value	1,279			—
Balance, December 31, 2015	$	285,826		$	82,074

The funds generated as a result of sales and prepayments are used to fund loan growth and purchase other securities. The Company monitors the market conditions to take advantage of market opportunities with the appropriate interest rate risk management objectives.

Investment in Short-term Receivables

The Company invests in short-term trade receivables. These receivables are traded on an exchange and are covered by a repurchase agreement of the seller of the receivables, if not paid within a specified period of time. As of December 31, 2015, the Company had $25.6 million invested in short-term receivables at December 31, 2015, a decrease of $211.5 million compared to December 31, 2014. The decrease in investment in short-term receivables was due primarily to the Company's decision to reduce its exposure to short-term receivables and $69.9 million in impairment recorded with respect to an investment in short-term receivables discussed below. The Company, in 2016, collected its outstanding balance of $25.6 million in investments in short-term receivables as of December 31, 2015. The average yield on the short-term receivables was 2.77% during 2015 and 2.82% during 2014.

The Company had a material investment in short-term receivables related to an ethanol company whose parent company has filed for bankruptcy as of the date of this report. As a result of the bankruptcy event and discussions with its regulators, the Company recorded an impairment charge of approximately $69.9 million. The balance on the receivables became delinquent and the Company recorded impairment on the outstanding balance of the receivables. The Company continues to aggressively pursue all legal remedies available against the obligor for the receivables, its parent company as guarantor, and the seller of the receivables. The Company, as of December 31, 2015, has discontinued making any future investments in short-term receivables.

Cash and cash equivalents

Cash and cash equivalents result from excess funds that fluctuate daily depending on the funding needs of the Company and are currently invested overnight in interest-bearing deposit accounts at other financial institutions. The balance in interest-bearing deposits at other institutions and federal funds increased $280.4 million to $298.8 million at December 31, 2015, from $18.4 million at December 31, 2014. The primary cause of the increase at December 31, 2015 was excess liquidity from the proceeds of a $200.0 million, 10 year note, from the FHLB in the fourth quarter of 2015 for additional liquidity to fund loan growth. The Company’s cash activity is further discussed in the “Liquidity and Capital Resources” section below.

Investment in Real Estate Properties

The Company's investment in real estate properties decreased $3.6 million to $80.7 million at December 31, 2015 compared to $84.3 million at December 31, 2014. The Company's subsidiaries FNBC CDC and FNBC CDE make investments in real estate properties in disadvantaged areas in order to increase the supply of housing as part of its Community Reinvestment Act responsibilities. FNBC CDC purchases various affordable residential real estate properties in the New Orleans area for the purpose of making improvements to these properties and renting or selling the properties while FNBC CDE makes investments in certain Federal Low-Income housing units in the states of Louisiana, Mississippi, and Arkansas for the purposes of making improvements to the properties and renting such units.

Investment in Tax Credit Entities

The Company’s investment in tax credit entities totaled $108.6 million as of December 31, 2015, a decrease of $32.9 million, or 23.3%, compared to December 31, 2014. The decrease was due primarily to impairment of $59.5 million, partially offset by increased investment in tax credit entities of $27.8 million. The increase in investment was primarily due to increases in Federal and State Historic Rehabilitation tax credit investment of $34.2 million and Federal Low-Income Housing tax credit investment of $2.2 million, offset by a decrease in Federal and State NMTC of $8.6 million primarily due to the return of $14.4 million from the Company's investment in a tax credit entity whose purpose was to invest in State NMTC credits.

The Company has seen increasing demand in its markets for investment in tax credit projects. Currently, the investments are directed at tax credits issued under the Federal NMTC, Federal Historic Rehabilitation tax credit and Federal Low-Income Housing tax credit programs. The Company generates returns on tax credit-motivated projects through the receipt of federal and, if applicable, state tax credits. The Company generated Federal Historic Rehabilitation Tax Credits of $41.0 million in 2015 and expects to generate $55.0 million in 2016 from projects currently under construction. The Federal Low-Income Housing and Federal NMTC associated with the Company's investment in tax credit entities are recognized over the contract periods of the respective projects, which range from seven to 15 years.

The Company has received a total of $118.0 million in Federal NMTC allocations since 2011 through its own CDE. The Company received allocations of $50.0 million in 2013, $40.0 million in 2012, and $28.0 million in 2011. Federal NMTC projects for which an investment was made during 2011 to 2013 from the Company's own tax credit allocation substantially increased the Company's supply of credits recognizable over future periods. The Company was notified during 2015 and 2014 by the Community Development Financial Institutions Fund (CDFI) of the U.S. Treasury Department that it did not receive an allocation of Federal NMTC in those allocation years. Notwithstanding, the lack of allocations during the last two Federal

NMTC award cycles has not hindered the Company's ability to utilize Federal tax credit programs and make investments in tax credit projects as the Company invested in Federal NMTC projects and utilized Federal NMTC allocations of other CDEs as was common practices for the Company when it began its tax credit investment program. The Company was also able to increase its investment in Federal Historic Rehabilitation Tax Credit projects over 2014 and 2015. Management believes that these investments present attractive after tax economic returns, furthers the Company’s Community Reinvestment Act responsibilities, and supports the communities in which the Company serves. The Company maintains a pipeline of tax credit eligible projects in which it may invest to generate federal tax credits and any applicable equity income or loss. The Company continues to evaluate its strategic initiatives with respect to its investment in tax credit entities and could consider syndication of federal tax credits generated from some of its investments in the future. As the federal tax credits are syndicated, the tax benefits earned from those investments in the future may be reduced but would generate syndication fee income for the Company. Table 22-Future Tax Credits provides information on tax credits the Company expects to generate in future years based on investments the Company has made as of December 31, 2015.

Cash Surrender Value of Bank-Owned Life Insurance

At December 31, 2015, the Company maintained investments of $48.7 million in bank-owned life insurance products due to its attractive risk-adjusted return and protection against the loss of key executives, as compared to $47.3 million and $26.2 million at December 31, 2014 and 2013, respectively. During 2014, the Company increased its investment in bank-owned life insurance by $20.0 million. The tax equivalent yield on these products was 4.49%, 4.24%, and 4.05% for the years ended December 31, 2015, 2014, and 2013, respectively.

Deferred Tax Asset

The Company had a net deferred tax asset of $205.3 million as of December 31, 2015 due to its tax net operating losses, carryforwards related to unused tax credits, and the non-deductibility of the loan loss provision for tax purposes. The Company assesses the recoverability of its deferred tax asset quarterly, and the current and projected level of taxable income provides for the ultimate realization of the carrying value of these deferred tax assets. Net deferred tax assets as of December 31, 2015 increased $111.8 million, primarily as a result of $61.3 million in tax credits generated during 2015, current year tax expense of $46.62 million, a net benefit of $0.9 million related to other comprehensive income market value adjustments, $2.4 million in deferred tax asset acquired from SIBC, offset by basis adjustment of $1.9 million.

Other Assets

Other assets, consisting primarily of prepaid expenses and software, totaled $32.7 million as of December 31, 2015, as compared to $23.9 million and $20.6 million as of December 31, 2014 and 2013, respectively.

Deposits

Deposits are the Company’s primary source of funds to support earning assets. Total deposits were $3.8 billion at December 31, 2015, compared to $3.1 billion at December 31, 2014, an increase of $724.9 million, or 23.2%, as total interest-bearing deposits were up $719.1 million, or 26.1%. The Company's deposit balance was positively impacted by the acquisition of deposit liabilities from First National Bank of Crestview and State Investors Bank during 2015. Of this 23.3% deposit growth, 15.9% was attributable to organic growth and 7.4% was attributable to acquisitions. The Company's deposit balances increased across all categories during 2015 compared to 2014. The Company also attributes its continued organic deposit growth to a number of factors, primarily its core principle of developing and maintaining long-term relationships between the relationship banker and their customers through high quality service, relationship-based pricing, which provides for pricing enhancements based on a customer’s multiple relationships with the Company, and the Company’s commitment to the communities in which it serves.

The following table sets forth the composition of the Company’s deposits over the last three years.

TABLE 11-DEPOSIT COMPOSITION BY PRODUCT



	As of December 31,
(In thousands)	2015				2014				2013
					(Restated)				(Restated)
Noninterest-bearing demand	$	368,421	9.6	%	$	362,577	11.6	%	$	289,597	10.6	%
Negotiable Order of Withrdrawl (NOW) accounts	741,469		19.3		476,825		15.3		511,620		18.7
Money market accounts	1,277,078		33.2		1,055,505		33.8		655,173		24.0
Savings deposits	79,779		2.1		49,634		1.6		53,779		2.0
Certificates of deposit	1,377,095		35.8		1,174,352		37.7		1,219,155		44.7
Total deposits	$	3,843,842	100.0	%	$	3,118,893	100.0	%	$	2,729,324	100.0	%

The Company has seen a shift in its deposit mix since it began its tiered pricing program in 2014 and 2013 on all of its interest-bearing deposit products. Since that time, money market deposits have comprised a larger portion of the deposit mix as NOW account customers and certificates of deposit customers, whose certificates have matured, have migrated to money market accounts because of the Company's tiered pricing strategy. At December 31, 2015, 33.2% of total deposits were in money market deposits, a decrease of 0.6%, compared to December 31, 2014. NOW accounts comprised 19.3% of total deposits at December 31, 2015, an increase of 4.0%, compared to December 31, 2014. The Company lowered its NOW account rates in the lower balance tiers during 2014, which led to these accounts comprising a smaller percentage of the deposit mix than in prior years. Certificates of deposit comprised 35.8% of total deposits, a decrease of 1.9%, compared to December 31, 2014.

The following table presents the remaining maturities of the Company’s certificates of deposits at December 31, 2015.

TABLE 12-REMAINING MATURITIES OF CERTIFICATES OF DEPOSIT



	As of December 31, 2015
(In thousands)	Less than $100,000		$100,000 or Greater		CDARS®		Total
3 months or less	$	48,473	$	81,093	$	66,762	$	196,328
3-12 months	122,128		209,249		143,621		474,998
12-36 months	138,226		350,585		9,599		498,410
More than 36 months	61,526		145,833		—		207,359
Total	$	370,353	$	786,760	$	219,982	$	1,377,095

Short-term Borrowings

Although deposits are the primary source of funds for lending, investment activities and general business purposes, as an alternative source of liquidity, the Company may obtain advances from the Federal Home Loan Bank of Dallas, sell investment securities subject to its obligation to repurchase them, purchase Federal funds, and engage in overnight borrowings from the Federal Home Loan Bank or its correspondent banks. The level of short-term borrowings can fluctuate on a daily basis depending on the funding needs and the source of funds to satisfy the needs. The Company had $8.0 million in short-term borrowings outstanding at December 31, 2015, an increase of $8.0 million compared to December 31, 2014. The Company assumed the short-term borrowings in the SIBC acquisition which are due to mature between March 21, 2016 and November 28, 2016.

The Company also enters into repurchase agreements to facilitate customer transactions that are accounted for as secured borrowings. These transactions typically involve the receipt of deposits from customers that the Company collateralizes with its investment portfolio and had a weighted average rate of 1.43% for the year ended December 31, 2015 and 1.40% for the year ended December 31, 2014.

The following table details the average and ending balances of repurchase transactions as of and for the years ended December 31:

TABLE 13-REPURCHASE TRANSACTIONS



(In thousands)	2015		2014		2013
Average balance	$	110,838	$	104,728	$	68,799
Ending balance	79,251		117,991		75,957

Long-term Borrowings

At December 31, 2015, the Company had long-term borrowings of $279.0 million, an increase of $239.0 million from December 31, 2014. Long-term borrowings at December 31, 2015 consisted of $236.0 million in FHLB advances, of which $36.0 million was a result of the SIBC acquisition, $60.0 million in subordinated debentures, a $3.1 million loan related to the Company's sponsored Employee Stock Ownership Trust, and a $40.0 million borrowing which is in the legal form of a long-term repurchase agreement. The Company entered into a $200.0 million, 10 year note, which bears interest based on the 3 month LIBOR from the FHLB. The Company entered into the debt for liquidity purposes to fund loan growth. The Company issued subordinated debentures during 2015 due to the favorable rate environment and the opportunity to inject additional capital into the Company to fund growth. The debentures were issued with a fixed rate of 5.75%. The loan related to the Company's sponsored Employee Stock Ownership Trust was entered into during the first quarter of 2015 to purchase 100,000 shares of Company stock. The $40.0 million borrowing was entered into during 2014 in connection with the Company’s asset liability management as a hedge against rising interest rates. The $40.0 million borrowing matures on April 1, 2019 and bears interest at a floating rate equal to three-month USD LIBOR plus 1.35%, and was 1.68% and 1.59% at December 31, 2015 and 2014, respectively.

Shareholders’ Equity

Shareholders’ equity provides a source of permanent funding, allows for future growth and provides the Company with a cushion to withstand unforeseen adverse developments. Shareholders’ equity decreased $27.8 million, or 6.8%, to $380.7 million as of December 31, 2015 from $408.5 million as of December 31, 2014, which was primarily attributable to the Company's results of operations for the year ended December 31, 2015.

Regulatory Capital

As of December 31, 2015, the Company and First NBC Bank were in compliance with all minimum regulatory capital requirements under Basel III, and First NBC Bank was classified as “adequately capitalized” for purposes of the FDIC’s prompt corrective action regulations.

The following table presents the actual capital amounts and regulatory capital ratios for the Company and First NBC Bank as of December 31, 2015 and 2014.

TABLE 14-REGULATORY CAPITAL RATIOS



	“Well- Capitalized” Minimums		At December 31, 2015				At December 31, 2014
			At December 31, 2015				At December 31, 2014
(In thousands)			Actual		Amount		Actual		Amount
							(Restated)
First NBC Bank Holding Company
Tier 1 leverage capital			6.03	%	$	265,191	9.47	%	$	341,897
Tier 1 risk-based capital			6.33		265,191		10.28		341,897
Total risk-based capital			9.04		378,815		11.53		383,446
Common equity tier 1 risk-based capital			6.33		265,191		N/A		N/A
First NBC Bank
Tier 1 leverage capital	5.00	%	7.44	%	$	321,346	8.80	%	$	315,750
Tier 1 risk-based capital	8.00		7.68		321,346		9.55		315,750
Total risk-based capital	10.00		8.96		374,976		10.80		357,112
Common equity tier 1 risk-based capital	6.50		7.68		321,346		N/A		N/A

RESULTS OF OPERATIONS

Income (loss) available to common shareholders was ($25.5) million, $43.3 million, and $31.0 million for the years ended December 31, 2015, 2014, and 2013, respectively. Earnings (loss) per share on a diluted basis were ($1.36) for 2015, $2.27 for 2014, and $1.87 for 2013. For the year ended December 31, 2015, net interest income increased $10.5 million, or 10.1%, over the same period of 2014, as interest income increased $18.9 million, or 12.8%, and interest expense increased $8.4 million, or 19.6%. The increase in interest income of $10.5 million, compared to the same period of 2014, was due to an increase in average interest-earning assets of $572.0 million, which increased interest income $18.9 million due primarily to an increase in volume of $24.3 million offset by a decrease due to rates of 23 basis points or $5.4 million. Net interest income was also impacted by an increase in interest expense of $8.4 million in 2015 compared to 2014, the yield on interest-bearing liabilities increased 1 basis point compared to the same period of 2014 and average interest-bearing liabilities increased $515.8 million over the same period.

For the year ended December 31, 2014, net interest income increased $22.1 million, or 26.9%, over the same period of 2013, as interest income increased $25.7 million, or 21.2%, and interest expense increased $3.6 million, or 9.1%. The increase in interest income of $25.7 million, compared to the same period of 2013, was due to an increase in average interest-earning assets of $456.5 million which increased interest income $25.7 million due primarily to an increase in rates of 13 basis points. Net interest income was also impacted by an increase in interest expense of $3.6 million in 2014 compared to 2013, the yield on interest-bearing liabilities decreased 9 basis points compared to the same period of 2013 and average interest-bearing liabilities increased $383.0 million over the same period.

The following discussion provides additional information on the Company’s operating results for the years ended December 31, 2015, 2014, and 2013, segregated by major income statement captions.

Net Interest Income

Net interest income, the primary contributor to the Company’s earnings, represents the difference between the income that the Company earns on interest-earning assets and the cost of interest-bearing liabilities. Net interest income depends upon the volume of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them. Net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as “volume changes.” It is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds, referred to as “rate changes.”

The Company’s net interest spread, which is the difference between the average yield earned on average earning assets and the average rates paid on average interest-bearing liabilities, was 2.95%, 3.19%, and 2.94% during the years ended December 31, 2015, 2014, and 2013, respectively. The Company’s net interest margin, which is net interest income as a percentage of average interest-earning assets, was 3.12%, 3.35%, and 3.10%, respectively for the same periods. The net interest spread and net interest margin were primarily impacted in 2015 and 2014 by the shift in the proportion of the Company’s loan portfolio to more floating rate loans from fixed rate loans and the Company's decrease in its cost of deposits over the same periods.

Net interest income increased 10.1% to $114.8 million in 2015, compared to $104.3 million in 2014. The primary driver of the increase in net interest income was a $18.9 million, or 12.8%, increase in interest income during 2015, as compared to the same period in 2014, which was partially offset by a $8.4 million, or 19.6%, increase in interest expense over the same periods. The increase in interest income was due primarily to the significant growth in average interest-earning assets during 2015 to $3.7 billion, an increase of $572.0 million compared to 2014. The average interest-earning asset yield decreased 23 basis points compared to 2014 and was negatively impacted by a decrease in the loan yield of 18 basis points and the 4 basis points impact from the excess liquidity of $135.2 million compared to 2014.

Net interest income increased 26.9% to $104.3 million in 2014, compared to $82.2 million in 2013. The increase in net interest income of $22.1 million was due to an increase in interest income of $25.7 million, or 21.2%, during 2014 as compared to the same period of 2013, offset by an increase in interest expense of $3.6 million, or 9.1%, during 2014 compared to 2013. The increase in interest income during 2014 was due primarily to the growth in average interest-earning assets to $3.1 billion, an increase of $456.5 million compared to 2013. The yield on earning assets increased 16 basis points in 2014 compared to 2013, which was impacted by a decrease in the loan yield of 5 basis points.

The decrease in the loan yield in 2015 compared to 2014 and 2014 compared to 2013 was due to the increase in the proportion of the loan portfolio represented by floating rate loans, which had a greater impact on the earning asset yield due to the fact that loans carry a higher average balance and yield compared to interest-bearing cash accounts, investment securities and investment in short-term receivables as a percentage of total assets, which carry lower average yields compared to loans. The percentage of loans to average interest-earning assets was 80.6% in 2015, compared to 79.9% in 2014, and 76.8% in 2013.

The Company has executed a total of $325.0 million of fixed swap agreements on a portion of its floating rate loan portfolio to hedge exposure to the impact of the loans with variable rates in its loan portfolio. The Company’s loan mix has shifted to more floating rate loans and has lowered its overall earning asset yield. The Company entered into the hedges in an effort to offset the loss in its earning asset yield, while still meeting the needs of its customers. The Company began receiving fixed payments on the hedge at inception. For the year ended 2015, the hedge increased the loan yield by 9 basis points. Management can increase the amount of the hedge at any time if the existing hedge does not evenly balance the portfolio ratio of fixed to variable rate loans. The hedges are expected to have a positive impact on the net interest margin in future periods.

The increase in interest expense was due primarily to an increase of $462.1 million in average interest-bearing deposits in 2015 to $3.1 billion, as compared to $2.6 billion for the same period in 2014, as well as the general mix of the average interest-bearing liabilities. The increase in average interest-bearing deposits was due primarily to an increase in volume of interest-bearing deposits of $6.1 million offset by a decrease due to rate of $1.7 million. The deposit yield decreased by 9 basis points compared to the prior year. The average rate on average interest-bearing liabilities increased 1 basis point in 2015. The increase in the Company's cost of funds compared to 2014 was due primarily to the Company's issuance of $60.0 million of subordinated debentures during 2015 as well as the $200.0 million in long-term floating rate borrowings from FHLB entered into during the fourth quarter of 2015. The Company issued the subordinated debentures in order to enhance the capital position of its bank subsidiary and entered into the long-term borrowings to enhance its liquidity position to fund loan growth. The growth in earning assets and deposits was attributable to the continued implementation of the Company’s organic growth strategy as its existing branches continued to increase market share in their respective markets and the two acquisitions during the year.

The increase in interest expense in 2014 compared to 2013 was due primarily to an increase in average interest-bearing deposits in 2014 to $2.6 billion, as compared to $2.3 billion for the same period of 2013. The increased volume of interest-bearing liabilities of $5.7 million was offset by the average rate on average interest-bearing liabilities which decreased 9 basis points in 2014. Also, beginning in the third quarter of 2013, the Company began shifting its interest-bearing deposits to tiered rates and pricing as management continued to focus its efforts to lower its cost of funds without compromising its strategic goal of relationship-based pricing for its customers. The Company's tiered pricing on its deposit products decreased the average rate on interest-bearing deposits 7 basis points in 2014.

The following tables present, for the periods indicated, the distribution of average assets, liabilities and equity, interest income and resulting yields earned on average interest-earning assets and interest expense and rates paid on average interest-bearing liabilities. Nonaccrual loans are included in the calculation of the average loan balances and interest on nonaccrual loans is included only to the extent recognized on a cash basis.

TABLE 15-AVERAGE BALANCES, NET INTEREST INCOME AND INTEREST YIELDS/RATES



	2015							2014							2013
(In thousands)	Average Balance			Interest		Average Yield/ Rate		Average Balance			Interest		Average Yield/ Rate		Average Balance			Interest		Average Yield/ Rate
								(Restated)							(Restated)
Assets:
Interest-earning assets:
Interest-bearing cash	$	167,038		$	387	0.23	%	$	31,812		$	63	0.20	%	$	67,300		$	145	0.22	%
Federal funds sold	3,200			77		2.39	%	43			—		0.20	%	27			—		0.20	%
Total interest-bearing cash and cash equivalents	170,238			464		0.27	%	31,855			63		0.20	%	67,327			145		0.22	%
Investment in short-term receivables	198,837			5,514		2.77	%	230,604			6,512		2.82	%	169,541			4,449		2.62	%
Investment securities	345,868			8,617		2.49	%	361,582			9,147		2.53	%	378,671			8,170		2.16	%
Loans (including fee income)	2,967,694			151,307		5.10	%	2,486,621			131,296		5.28	%	2,038,586			108,568		5.33	%
Total interest-earning assets	3,682,637			165,902		4.50	%	3,110,662			147,018		4.73	%	2,654,125			121,332		4.57	%
Less: Allowance for loan losses	(48,854		)					(36,965		)					(28,523		)
Noninterest-earning assets	538,103							456,622							355,594
Total assets	$	4,171,886						$	3,530,319						$	2,981,196
Liabilities and shareholders’ equity:
Interest-bearing liabilities:
Savings deposits	$	56,704		$	356	0.63	%	$	52,303		$	409	0.78	%	$	50,269		$	325	0.65	%
Money market accounts	1,148,754			13,915		1.21	%	859,743			11,509		1.34	%	455,918			6,757		1.48	%
NOW accounts	618,439			6,526		1.06	%	497,346			5,678		1.14	%	521,721			6,665		1.28	%
Certificates of deposit	1,028,109			18,778		1.83	%	996,700			18,112		1.82	%	1,056,066			18,734		1.77	%
CDARS®	221,726			4,947		2.23	%	205,560			4,475		2.18	%	171,799			3,758		2.19	%
Total interest-bearing deposits	3,073,732			44,522		1.45	%	2,611,652			40,183		1.54	%	2,255,773			36,239		1.61	%
Short-term borrowings and repurchase agreements	110,838			1,577		1.42	%	105,064			1,532		1.46	%	69,971			1,022		1.46	%
Other borrowings	110,835			4,995		4.51	%	62,866			1,014		1.61	%	70,837			1,887		2.66	%
Total interest-bearing liabilities	3,295,405			51,094		1.55	%	2,779,582			42,729		1.54	%	2,396,581			39,148		1.63	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits	397,115							325,837							238,270
Other liabilities	49,137							37,492							33,853
Total liabilities	3,741,657							3,142,911							2,668,704
Shareholders’ equity	430,229							387,408							312,492
Total liabilities and equity	$	4,171,886						$	3,530,319						$	2,981,196
Net interest income				$	114,808						$	104,289						$	82,184
Net interest spread(1)						2.95	%						3.19	%						2.94	%
Net interest margin(2)						3.12	%						3.35	%						3.10	%


(1)	Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.


(2)	Net interest margin is net interest income divided by total average interest-earning assets.

The following tables analyze the dollar amount of change in interest income and interest expense with respect to the primary components of interest-earning assets and interest-bearing liabilities. The tables show the amount of the change in interest income or interest expense caused by either changes in outstanding balances or changes in interest rates. The effect of a change in balances is measured by applying the average rate during the first period to the average balance (“volume”) change between the two periods. The effect of changes in rate is measured by applying the change in rate between the two periods to the average volume during the first period. Changes attributable to both rate and volume that cannot be segregated have been allocated proportionately to the absolute value of the change due to volume and the change due to rate.

TABLE 16-SUMMARY OF CHANGES IN NET INTEREST INCOME



	For the Years Ended December 31,
	2015 Over 2014									2014 Over 2013
	Increase/(Decrease) Due to Change In									Increase/(Decrease) Due to Change In
(In thousands)	Volume			Rate			Total			Volume			Rate			Total
										(Restated)
Interest-earning assets:
Loans (including fee income)	$	25,242		$	(5,231	)	$	20,011		$	23,852		$	(1,124	)	$	22,728
Interest bearing cash	276			48			324			(76		)	(6		)	(82		)
Federal funds sold	40			37			77			—			—			—
Investment in short-term receivables	(896		)	(102		)	(998		)	1,628			435			2,063
Investment securities	(396		)	(134		)	(530		)	(417		)	1,394			977
Total increase (decrease) in interest income	$	24,266		$	(5,382	)	$	18,884		$	24,987		$	699		$	25,686
Interest-bearing liabilities:
Savings deposits	$	30		$	(83	)	$	(53	)	$	15		$	69		$	84
Money market accounts	3,760			(1,354		)	2,406			5,878			(1,126		)	4,752
NOW accounts	1,352			(504		)	848			(288		)	(699		)	(987		)
Certificates of deposit	925			213			1,138			(322		)	417			95
Borrowed funds	1,686			2,340			4,026			370			(733		)	(363		)
Total increase (decrease) in interest expense	$	7,753		$	612		$	8,365		$	5,653		$	(2,072	)	$	3,581
Increase (decrease) in net interest income	$	16,513		$	(5,994	)	$	10,519		$	19,334		$	2,771		$	22,105

Provision for Loan Losses

The provision for loan losses represents management’s determination of the amount necessary to be charged against the current period’s earnings to maintain the allowance for loan losses at a level that is considered adequate in relation to the estimated losses inherent in the loan portfolio. The Company assesses the allowance for loan losses monthly and makes provisions for loan losses as deemed appropriate.

The Company recorded a provision for loan losses of $43.5 million, an increase of $31.5 million from the same period in 2014. The increase in the provision for loan losses was due primarily to the recording of $30.0 million in the specific reserves attributable to one large exploration and production loan and an additional $5.0 million for other loans in its portfolio which were moved to the criticized category or experienced further deterioration and downgrades at December 31, 2015 as well as an increase in its general reserves. The Company believes that the allowance for loan losses was adequate at December 31, 2015 and 2014 to cover incurred losses in the loan portfolio. The allowance for loan losses to total loans increased to 2.27% at December 31, 2015 compared to 1.58% at December 31, 2014 an increase of 69 basis points.

Noninterest Income

For the year ended December 31, 2015, noninterest income was ($56.4) million, compared to $13.8 million and $14.3 million for the same periods in 2014 and 2013, respectively. Noninterest income was impacted in 2015 primarily by decreases resulting from the impairment of short-term receivables of $69.9 million, other noninterest income of $2.2 million, CDE fees of $0.7 million, gain on loans sold of $0.5 million, and gain on assets sold of $0.3 million, offset by increases in rental property income of $0.1 million, income from sale of state tax credits earned of $3.1 million, and cash surrender value income on bank owned life insurance of $0.3 million compared to 2014.

The decrease in noninterest income in 2014 compared to 2013 was primarily due to decreases in CDE fees of $1.3 million, gain on assets sold of $1.0 million, and income from sale of state tax credits of $0.5 million compared to 2013. The Company did not receive an allocation of Federal NMTC in 2014 which impacted the CDE fees earned from the Company's CDE as compared to 2013.

The following table presents the components of noninterest income for the years indicated.

TABLE 17-NONINTEREST INCOME



(In thousands)	2015			2014		Percentage Increase (Decrease)		2013		Percentage Increase (Decrease)
				(Restated)				(Restated)
Service charges on deposit accounts	$	2,311		$	2,147	7.6	%	$	2,027	5.9	%
Investment securities gain (loss), net	(50		)	135		NM		316		(57.3	)
Gain (loss) on assets sold, net	(272		)	64		NM		1,081		(94.1	)
Gain on sale of loans, net	147			649		(77.3	)	835		(22.3	)
Cash surrender value income on bank-owned life insurance	1,402			1,102		27.2		681		61.8
Sale of state tax credits earned	4,068			1,002		NM		1,456		(31.2	)
Community Development Entity fees earned	882			1,565		(43.6	)	2,875		(45.6	)
ATM fee income	2,082			1,958		6.3		1,859		5.3
Rental property income	3,524			3,633		(3.0	)	2,297		58.2
Impairment of short-term receivables	(69,895		)	—		NM		—		—
Other	(645		)	1,575		NM		859		83.4
Total noninterest income		($56,446	)	$	13,830	NM		$	14,286	(3.2	)%

Service charges on deposit accounts. The Company earns fees from its customers for deposit-related services and these fees comprise a significant and predictable component of the Company’s noninterest income. These charges increased $0.2 million in 2015 over the prior year and increased $0.1 million between 2014 and 2013. During 2015, the fees increased compared to 2014 primarily due to the increase in noninterest-bearing deposit accounts.

Investment securities gain (loss), net. The Company experienced a decrease in investment securities gains of $0.2 million in 2015 compared to 2014. From time to time, the Company sells investment securities held as available for sale to fund loan demand, manage its asset liability sensitivity or other business purposes. During 2014 and 2013, the Company sold securities to fund loan demand.

Gain (loss) on assets sold, net. The decrease of $0.3 million in 2015 compared to 2014 was due primarily to the loss of $0.2 million on the sale of an acquired branch. The decrease of $1.0 million in 2014 compared to 2013 was due primarily to the gain on sale of other real estate owned in 2013 of $1.1 million.

Gain on sale of loans, net. The Company has historically been an active participant in Small Business Administration (SBA) and USDA loan programs as a preferred lender and typically sells the guaranteed portion of the loans that it originates. In 2015, the gain on sale of loans, net decreased $0.5 million compared to 2014, primarily due to the fact that the Company, in the prior year, sold more guaranteed portions of SBA/USDA loans than in the current year. The decrease of $0.2 million in 2014 compared to 2013 was primarily due to the gain on sale of acquired impaired loans of $0.3 million in 2013, offset by a decrease of $0.1 million in sales of loans guaranteed by the SBA. The Company believes these government guaranteed loan programs are an important part of its service to the businesses in its communities and expects to continue expanding its efforts and income related to these programs.

Cash surrender value income on bank-owned life insurance. The income earned from bank-owned life insurance increased 27.2% compared to the prior year and increased 61.8% in 2014 compared to 2013. The increase in income earned of $0.3 million in 2015 compared to 2014 is due primarily to the higher yield earned on the bank-owned life insurance during the current year. During 2014, the Company invested $20.0 million in additional bank-owned life insurance policies. The increase in cash surrender value income compared to 2013 is due primarily to the additional investment made by the Company in 2014.

Sale of state tax credits earned. As part of the Company’s investment in projects that generate federal income tax credits, the Company may receive state tax credits along with federal credits. Although the Company cannot utilize most of the state tax credits to offset its own tax liability, the Company earns income from the sale of state tax credits. The increase of $3.1 million

in 2015 compared to 2014, was due primarily to the Company selling more State Historic Rehabilitation Tax Credits in the current year compared to the prior year. The decrease of $0.5 million in 2014 compared to 2013, was due primarily to the decrease in syndication fees included in state tax credits which were generated from the $23.9 million in qualified equity investment that the Company was awarded under the State of Louisiana New Markets Jobs Act in 2013.

Community Development Entity fees earned. The Company earns management fees, through its subsidiary, First NBC Community Development Fund, LLC, related to the Fund’s Federal NMTC investments. The Company recognizes the fees related to the tax credit projects when they are earned. The fees are earned at the time that qualified equity investments are made and over the seven year term of the investment. These fees are contingent on the timing and receipt of the award from the Community Development Financial Institutions Fund of the U.S. Treasury and the amount of the allocation awarded. The Company receives CDE fees on an annual basis for projects which are still within the compliance period. The CDE fees earned decreased $0.7 million in 2015 compared to 2014 and decreased $1.3 million in 2014 compared to 2013. The decrease in 2015 is primarily due to the fact that there were more projects which closed in the prior year. The decrease in 2014 was due to the Company not receiving a Federal NMTC allocation in the current year compared to 2013 when the Company received an allocation of $50 million.

ATM fee income. This category includes income generated by automated teller machines, or ATMs. The income earned from ATMs increased $0.1 million for the year ended December 31, 2015 compared to December 31, 2014. The balance increased $0.1 million for the year ended December 31, 2014 compared to December 31, 2013. The increase over each period was due primarily to an increase in transaction volumes.

Rental property income. The income earned from rental properties decreased $0.1 million for the year ended December 31, 2015 compared to December 31, 2014 and increased $1.3 million for the year ended December 31, 2014 compared to December 31, 2013. The rental property income is primarily due from the rental income recognized from the consolidation of Federal Low-Income Housing investments VIEs which own Federal Low-Income Housing units.

Impairment of short-term receivables. The impairment of investment in short-term receivables in 2015 was due to the impairment of $69.9 million of the Company's investment in short-term receivables.

Other. This category includes a variety of other income producing activities, including income generated from trust services, credit cards and wire transfers. The decrease in other in 2015 compared to 2014 was due primarily to the realized loss from a SBIC investment of $0.9 million. The increase in other in 2014 compared to 2013 was due primarily to the recognition of income from the expiration of an option agreement that the Company had with a customer.

Noninterest Expense

Noninterest expense consists primarily of salary and employee benefits, occupancy, impairment of tax credit entities, and other expenses related to the Company’s operation and expansion. Noninterest expense increased by $52.0 million, or 55.1%, in 2015 compared to 2014 and increased $17.9 million, or 23.4%, in 2014 compared to 2013. The increase in 2015 was due primarily to the Company's continued growth as most components of noninterest expense increased during the year compared to 2014 and 2014 compared to 2013.

The following table presents the components of noninterest expense for the years indicated.

TABLE 18-NONINTEREST EXPENSE



(In thousands)	2015		2014		Percentage Increase (Decrease)		2013		Percentage Increase (Decrease)
			(Restated)				(Restated)
Salaries and employee benefits	$	30,473	$	24,867	22.5	%	$	23,813	4.4	%
Occupancy and equipment expenses	12,475		10,796		15.6		10,116		6.7
Professional fees	8,878		7,587		17.0		6,929		9.5
Taxes, licenses and FDIC assessments	6,709		5,146		30.4		4,245		21.2
Impairment of investment in tax credit entities	59,540		25,067		NM		13,099		91.4
Write-down of foreclosed assets	261		385		(32.2	)	235		63.8
Data processing	6,188		4,721		31.1		4,219		11.9
Advertising and marketing	3,596		2,886		24.6		2,427		18.9
Rental property expenses	5,171		5,182		(0.2	)	4,736		9.4
Other	13,035		7,698		69.3		6,632		16.1
Total noninterest expense	$	146,326	$	94,335	55.1	%	$	76,451	23.4	%

Salaries and employee benefits. Salaries and employee benefits are one of the largest components of noninterest expense and include employee payroll expense, the cost of incentive compensation, benefit plans, health insurance, and payroll taxes, all of which have increased in each of the past three years as the Company has hired more employees and expanded its banking operations, branch network, and transaction volumes. These expenses increased $5.6 million, or 22.5%, during 2015 and increased $1.1 million, or 4.4%, during 2014, as a result of new personnel added to support higher levels of assets, loan origination, deposit growth and wealth management activities. The increase in salaries and employee benefits during 2015 and 2014 was also due to an increase in salary levels.

Occupancy and equipment expenses. Occupancy and equipment expenses, consisting primarily of rent and depreciation, were $12.5 million, an increase of $1.7 million, or 15.6%, from $10.8 million in 2014. The increase for the year ended December 31, 2015 compared to year ended December 31, 2014 was due primarily to the increase in depreciation expense of $0.5 million and rent expenses of $0.4 million related to the acquisition of three branches in the First National Bank of Crestview acquisition and one month of expense for the four branches acquired from State Investors. The increase was also due to an increase in maintenance contracts of $0.5 million. The Company anticipates disposing of several of the State Investors branches acquired in 2015 as they are within its current branch footprint. The increase of $0.7 million, or 6.7%, for the year ended December 31, 2014 compared to year ended December 31, 2013 was due primarily to an increase in depreciation expense of $0.2 million and maintenance contracts of $0.3 million. The level of the Company’s occupancy expenses is related to the number of branch offices that it maintains, and management expects that these expenses will increase as the Company continues to implement its strategic growth plan.

Professional fees. Professional fees include fees paid to external auditors, loan review professionals and other consultants, as well as legal services required to complete transactions and resolve legal matters on delinquent loans. These fees increased to $8.9 million, compared to $7.6 million, and $6.9 million for the same periods of 2014 and 2013, respectively. The increase in professional fees during 2015 was due primarily to increases of $0.7 million in merger costs, $0.2 million in external audit costs, and $0.2 million in CDE management fees, offset by decreases of $0.2 million in CDE consulting fees and $0.2 million of CDE audit fees. The increase in professional fees in 2014 compared to 2013 was due primarily to increases of $0.5 million in external audit costs, $0.4 million in fees related to investments in short-term receivables, and $0.2 million in CDE audit fees, offset by a decrease of $0.6 million in CDE consulting fees.

Taxes, licenses and FDIC assessments. The Company’s FDIC insurance premiums and assessments comprise the largest component of this category. The expenses related to taxes, licenses and FDIC insurance premiums and assessments were higher in 2015. The increase was $1.6 million, or 30.4%, compared to 2014. The increase in 2014 compared to 2013 was $0.9 million, or 21.2%. The increases over all periods were primarily attributable to increases in the FDIC assessment due to the strong growth in the Company’s deposits, the acquisition of deposit liabilities from the First National Bank of Crestview acquisition during 2015, and increases in the bank shares tax expense.

Impairment of investment in tax credit entities. Impairment of investment in tax credit entities represents impairment recorded during the current year for investments in entities that undertake projects that qualify for tax credits against federal and state

income taxes as well as any applicable equity income or loss on its equity investment. At this time, investments are directed at tax credits issued under the Federal New Markets, Federal and State Historic Rehabilitation and Federal Low-Income Housing tax credit programs. All of the Company’s investments in tax credit entities are evaluated for impairment at the end of each reporting period and the Company records impairment, if any, in its consolidated statement of income as a component of noninterest expense.

The following table presents the impairment of investments in tax credit entities by type of credit for the respective periods.

TABLE 19-TAX CREDIT INVESTMENT IMPAIRMENT BY CREDIT TYPE



	For the Years Ended December 31,
(In thousands)	2015		2014		2013
			(Restated)		(Restated)
Federal Low-Income Housing	$	1,679	$	1,596	$	1,085
Federal and State Historic Rehabilitation	43,049		12,605		7,200
Federal NMTC	14,812		10,866		4,814
Total impairment of investment in tax credit entities	$	59,540	$	25,067	$	13,099

The increase of $34.5 million in impairment of investment in tax credit entities in 2015 compared to 2014 is due primarily to the increased investment in Federal and State Historic Rehabilitation tax credit investments and the amount of Federal and State Historic Rehabilitation tax credits earned in 2015. The increase in 2014 compared to 2013 was due to an increase in its investment in Federal and State Historic Rehabilitation and Federal NMTC tax credit entities and tax credits earned in 2014 compared to 2013.

Write-down of foreclosed assets. Write-downs of foreclosed assets decreased $0.1 million, or 32.2%, in 2015 compared to 2014 and increased $0.2 million, or, 63.8%, in 2014 compared to 2013.

Data processing. Data processing expenses increased $1.5 million, or 31.1%, in 2015 compared to 2014 and increased $0.5 million, or 11.9%, in 2014 compared to 2013. The increase was due primarily to conversion cost related to the First National Bank of Crestview and State Investors acquisitions as well as increased transaction volume due to the Company's organic growth. The increase in 2014 compared to 2013 was due primarily to increased transaction volume due to Company's organic growth.

Advertising and marketing. Advertising and marketing expenses increased $0.7 million, or 24.6%, in 2015 compared to 2014 and increased $0.5 million, or 18.9% , in 2014 compared to 2013. The increase over all years is due to an increase in contributions and sponsorships.

Rental property expenses. Rental property expenses were flat in 2015 compared to 2014 and increased $0.4 million in 2014 compared to 2013. The rental property expenses represent operating expenses related to the consolidation of Federal Low-Income Housing investments which are VIEs which own Federal Low-Income Housing units.

Other. These expenses include costs related to insurance, customer service, communications, supplies and other operations. The increase in other in 2015 compared to 2014 was due primarily to $1.2 million of impairment related to a real estate development owned by the Bank's CDC. The increase in other noninterest expense over 2014 compared to 2013 was primarily attributable to an increase in categories of other noninterest expenses proportional to the overall growth and an increase in transaction volume and number of customers resulting from the Company's organic growth.

Provision for Income Taxes

The provision for income taxes varies due to the amount of income recognized under generally accepted accounting principles and for tax purposes and as a result of the tax benefits derived from the Company’s investments in tax-advantaged securities and tax credit projects. The Company engages in material investments in entities that are designed to generate tax credits, which it utilizes to reduce its current and future taxes. These credits are recognized when earned as a benefit in the provision for income taxes.

The Company recognized an income tax benefit for the year ended December 31, 2015 of $106.3 million, compared to $32.7 million, and $23.4 million for the same periods of 2014 and 2013, respectively. The increase in income tax benefit for the periods presented was due primarily to the significant increase in tax credit investment activity in the years presented.

The Company expects to experience an effective tax rate below the statutory rate of 35% due primarily to the receipt of Federal New Markets, Federal Low-Income Housing, and Federal Historic Rehabilitation tax credits.

The following table presents the reconciliation of expected income tax provisions using statutory federal rates to actual benefit for income taxes recognized.

TABLE 20-RECONCILIATION OF INCOME TAX PROVISION



	For the Years Ended December 31,
(In thousands)	2015			2014			2013
				(Restated)			(Restated)
Tax (benefit) expense at statutory rates	$	(46,026	)	$	4,125		$	3,577
Tax credits:
Federal Low-Income Housing	(3,965		)	(3,642		)	(3,700		)
Federal Historic Rehabilitation	(40,970		)	(19,321		)	(10,497		)
Federal NMTC	(16,349		)	(15,482		)	(14,224		)
Other tax credits	(616		)	(617		)	—
Total tax credits	(61,900		)	(39,062		)	(28,421		)
Tax credit basis reduction	1,904			1,647			2,019
Tax exempt income	(764		)	(87		)	(1,070		)
Valuation allowance for deferred tax assets	127			143			173
Other	394			511			315
Benefit for income taxes	$	(106,265	)	$	(32,723	)	$	(23,407	)

Although the Company’s ability to continue to access new tax credits in the future will depend, among other factors, on federal and state tax policies, as well as the level of competition for future tax credits, the following table represents the federal income tax credits the Company expects to receive in the years indicated. The Company has made investments in Federal Historic Rehabilitation tax credit projects which have not been placed in service and as such have not received the credits. The table below in future periods for Federal Historic Rehabilitation tax credits includes amounts the Company expects to receive from those investments. The gross Federal Historic Rehabilitation and Federal NMTC credits, depending on the tax structure, could be offset by basis reduction of 35%.

The amount of basis reduction recorded related to the Company's investment in tax credit entities for the years ended December 31, 2015, 2014, and 2013 were as follows:

TABLE 21-TAX CREDIT BASIS REDUCTION



	For the Years Ended December 31,
(In thousands)	2015		2014		2013
Federal NMTC	$	1,472	$	1,401	$	2,019
Federal Historic Rehabilitation	432		246		—
Total basis reduction	$	1,904	$	1,647	$	2,019

TABLE 22-FUTURE TAX CREDITS



(In thousands)	Federal New Markets		Federal Low-Income Housing		Federal Historic Rehabilitation(1)
2016	$	15,872	$	5,051	$	54,990
2017	13,852		5,525		20
2018	7,902		5,525		145
2019	3,900		5,525		—
2020	900		4,854		—
2021 and thereafter	600		12,492		—
Total	$	43,026	$	38,972	$	55,155

(1) The Federal Historic Rehabilitation balance in future periods includes $55.0 million in 2016 and $0.2 million in 2017 and 2018 of tax credits the Company expects to generate from projects which an investment has been made as of December 31,

2015. The Company has invested $10.9 million as of December 31, 2015 and has committed to invest an additional $39.1 million in Federal Historic Rehabilitation projects in 2016, 2017 and 2018 to generate the credits above in future periods.

Liquidity and Other Off-Balance Sheet Activities

Liquidity refers to the Company’s ability to maintain cash flow that is adequate to fund operations and meet present and future financial obligations through either the sale or maturity of existing assets or by obtaining additional funding through liability management. Management believes that the sources of available liquidity were adequate as of December 31, 2015 to meet all reasonably foreseeable short-term and intermediate-term demands.

The Company evaluates liquidity both at the parent company level and at the bank level. Because First NBC Bank represents the Company’s only material asset, other than cash, the primary sources of funds at the parent company level are cash on hand, dividends paid to the Company from First NBC Bank, the net proceeds of capital offerings, and net proceeds from the issuance of subordinated debentures. The primary sources of funds at First NBC Bank are deposits, short and long-term funding from the Federal Home Loan Bank (FHLB) or other financial institutions, and principal and interest payments on loans and securities. While maturities and scheduled payments on loans and securities provide an indication of the timing of the receipt of funds, other sources of funds such as loan prepayments and deposit inflows are less predictable as they depend on the effects of changes in interest rates, economic conditions and competition. The primary investing activities are the origination of loans and the purchase of investment securities. If necessary, First NBC Bank has the ability to raise liquidity through additional collateralized borrowings, FHLB advances or the sale of its available for sale investment portfolio.

Investing activities are funded primarily by net deposit inflows, principal repayments on loans and securities, and borrowed funds. Gross loans increased to $3.5 billion as of December 31, 2015, from $2.7 billion as of December 31, 2014. At December 31, 2015, First NBC Bank had total commitments to make loans of approximately $822.0 million which included un-advanced lines of credit and loans of approximately $715.8 million. The Company anticipates that First NBC Bank will have sufficient funds available to meet its current loan originations and other commitments.

At December 31, 2015, total deposits were approximately $3.8 billion, of which approximately $1.4 billion were in certificates of deposits. Certificates of deposits scheduled to mature in one year or less as of December 31, 2015 totaled approximately $671.3 million.

In general, the Company monitors and manages liquidity on a regular basis by maintaining appropriate levels of liquid assets so that funds are available when needed. Excess liquidity is invested in overnight federal funds sold and other short-term investments. As a member of the Federal Home Loan Bank of Dallas, First NBC Bank had access to approximately $128.8 million of available lines of credit secured by qualifying collateral as of December 31, 2015. In addition, First NBC Bank maintained $85.0 million in lines of credit with its correspondent banks to support its liquidity.

Contractual Obligations

In the ordinary course of business, through First NBC Bank, the Company enters into certain on and off-balance sheet contractual obligations. The following table presents the Company’s contractual obligations outstanding as of December 31, 2015.

TABLE 23-CONTRACTUAL OBLIGATIONS AND OTHER DEBT COMMITMENTS



	As of December 31, 2015
(In thousands)	Due Within One Year		After One but Within Three Years		After Three but Within Five Years		After Five Years		Total
Operating leases	$	3,943	$	7,549	$	6,744	$	34,322	$	52,558
Capital leases	46		98		104		965		1,213
Other borrowings	8,349		30,455		44,598		263,640		347,042
Certificates of deposit	671,326		498,410		192,348		15,011		1,377,095
Total contractual obligations	$	683,664	$	536,512	$	243,794	$	313,938	$	1,777,908
Standby letters of credit	$	67,871	$	20,920	$	16,760	$	681	$	106,232
Unused loan commitments	352,899		183,271		108,728		70,861		715,759
Total off-balance sheet commitments	$	420,770	$	204,191	$	125,488	$	71,542	$	821,991

Off-Balance Sheet Arrangements

In the normal course of business, the Company enters into various transactions that are not included in the consolidated balance sheets in accordance with GAAP. These transactions include commitments to extend credit in the ordinary course of business to approved customers.

Generally, loan commitments have been granted on a temporary basis for working capital or commercial real estate financing requirements or may be reflective of loans in various stages of funding. These commitments are recorded on the Company’s financial statements as they are funded. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Loan commitments include unused commitments for open end lines secured by one to four family residential properties and commercial properties, commitments to fund loans secured by commercial real estate, construction loans, business lines of credit, and other unused commitments. The increase in unused loan commitments as of December 31, 2015 of $206.1 million compared to December 31, 2014 was due primarily to the increases in the construction and commercial loan portfolios during 2015. The liability for losses on unfunded commitments totaled $0.3 million at December 31, 2015 and $0.2 million as of December 31, 2014 and December 31, 2013.

Standby letters of credit are written conditional commitments issued by the Company to guarantee the performance of a customer to a third party. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, the Company would be entitled to seek recovery from the customer.

The Company minimizes its exposure to loss under loan commitments and standby letters of credit by subjecting them to credit approval and monitoring procedures. The effect on the revenues, expenses, cash flows and liquidity of the unused portions of these commitments cannot be reasonably predicted because there is no guarantee that the lines of credit will be used.

The following is a summary of the total notional amount of commitments outstanding as of the respective dates.

TABLE 24-OUTSTANDING COMMITMENTS



	As of December 31,
(In thousands)	2015		2014		2013		2012		2011
Standby letters of credit	$	106,232	$	110,636	$	106,467	$	92,274	$	74,811
Unused loan commitments	715,759		509,665		268,760		256,294		183,758
Total	$	821,991	$	620,301	$	375,227	$	348,568	$	258,569

Asset/Liability Management

The Company’s asset/liability management policy provides guidelines for effective funds management and the Company has established a measurement system for monitoring its net interest rate sensitivity position. The Company seeks to maintain a sensitivity position within established guidelines.

As a financial institution, the primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most of the assets and liabilities, other than those which have a short term to maturity. Because of the nature of its operations, the Company is not subject to foreign exchange or commodity price risk. The Company does not own any trading assets. Interest rate risk is the potential of economic loss due to future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair market values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent risk while at the same time maximizing income. The Company recognizes that certain risks are inherent and that the goal is to identify and understand the risks.

The Company actively manages exposure to adverse changes in interest rates through asset and liability management activities within guidelines established by the asset/liability management committee. The committee, which is composed primarily of senior officers and directors of the Company and First NBC Bank, has the responsibility for ensuring compliance with asset/liability management policies. Interest rate risk is the exposure to adverse changes in net interest income as a result of market fluctuations in interest rates. On a regular basis, the committee monitors interest rate and liquidity risk in order to implement appropriate funding and balance sheet strategies.

The Company utilizes a net interest income simulation model to analyze net interest income sensitivity. Potential changes in market interest rates and their subsequent effects on net interest income are then evaluated. The model projects the effect of instantaneous movements in interest rates. Decreases in interest rates apply primarily to long-term rates, as short-term rates are

not modeled to decrease below zero. Assumptions based on the historical behavior of the Company’s deposit rates and balances in relation to changes in interest rates are also incorporated into the model. These assumptions are inherently uncertain and, as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model’s simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and the application and timing of various management strategies.

The Company’s interest sensitivity profile was somewhat asset sensitive as of December 31, 2015, though its base net interest income would increase in the case of either an interest rate increase or decrease. Hedging instruments utilized by First NBC Bank, which consist primarily of interest rate swaps and options, protect the bank in a rising interest rate environment by providing long term funding costs at a fixed interest rate to allow the bank to continue to fund its projected loan growth. In addition, the bank utilizes interest rate floors in loan pricing to manage interest rate risk in a declining rate environment.

The following table sets forth the net interest income simulation analysis as of December 31, 2015.

TABLE 25-CHANGE IN NET INTEREST INCOME FROM INTEREST RATE CHANGES



Interest Rate Scenario	% Change in Net Interest Income
+ 300 basis points	2.8	%
+ 200 basis points	5.1	%
+ 100 basis points	2.5	%
Base	—

The Company also manages exposure to interest rates by structuring its balance sheet in the ordinary course of business. An important measure of interest rate risk is the relationship of the repricing period of earning assets and interest-bearing liabilities. The more closely the repricing periods are correlated, the less interest rate risk it has. From time to time, the Company may use instruments such as leveraged derivatives, structured notes, interest rate swaps, caps, floors, financial options, financial futures contracts or forward delivery contracts to reduce interest rate risk. As of December 31, 2015, the Company had hedging instruments in the notional amount of $315.0 million with a fair value liability of $23.7 million.

An interest rate sensitive asset or liability is one that, within a defined time period, either matures or experiences an interest rate change in line with general market interest rates. A measurement of interest rate risk is performed by analyzing the maturity and repricing relationships between interest-earning assets and interest-bearing liabilities at specific points in time (gap). Interest rate sensitivity reflects the potential effect on net interest income of a movement in interest rates. An institution is considered to be asset sensitive, or having a positive gap, when the amount of its interest-earning assets maturing or repricing within a given period exceeds the amount of its interest-bearing liabilities also maturing or repricing within that time period. Conversely, an institution is considered to be liability sensitive, or having a negative gap, when the amount of its interest-bearing liabilities maturing or repricing within a given period exceeds the amount of its interest-earning assets also maturing or repricing within that time period. During a period of rising interest rates, a negative gap would tend to affect net interest income adversely, while a positive gap would tend to increase net interest income. During a period of falling interest rates, a negative gap would tend to result in an increase in net interest income, while a positive gap would tend to affect net interest income adversely.

The following table sets forth our interest rate gap analysis as of December 31, 2015:

TABLE 26-INTEREST RATE GAP ANALYSIS



	Volumes Subject to Repricing Within
	1-3 Months			4-6 Months			7-12 Months			2 Years			3 Years			4-5 Years			6-10 Years			Over 10 Years			Total Balance
(In thousands)
Interest-earning assets:
Interest-bearing cash and Federal funds sold	$	298,784		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	298,784
Short-term receivables	—			—			—			—			—			—			—			25,604			25,604
Investment securities	56,893			9,986			10,872			18,898			25,144			135,342			74,190			36,575			367,900
Loans	1,910,639			84,647			155,199			198,095			263,000			440,677			146,595			262,338			3,461,190
Total interest-earning assets	2,266,316			94,633			166,071			216,993			288,144			576,019			220,785			324,517			4,153,478
Interest-bearing liabilities:
Transaction accounts	2,098,326			—			—			—			—			—			—			—			2,098,326
Certificates of deposit	196,333			196,109			278,886			198,985			299,422			192,348			15,005			7			1,377,095
Short-term borrowings	8,000			—			—			—			—			—			—			—			8,000
Repurchase agreements	79,251			—			—			—			—			—			—			—			79,251
Long-term borrowings	235,759			894			7,795			24,575			3,490			2,700			3,829			60,000			339,042
Total interest-bearing liabilities	2,617,669			197,003			286,681			223,560			302,912			195,048			18,834			60,007			3,901,714
Interest rate sensitivity gap	$	(351,353	)	$	(102,370	)	$	(120,610	)	$	(6,567	)	$	(14,768	)	$	380,971		$	201,951		$	264,510		$	251,764
Cumulative interest rate sensitivity gap	$	(351,353	)	$	(453,723	)	$	(574,333	)	$	(580,900	)	$	(595,668	)	$	(214,697	)	$	(12,746	)	$	251,764
Cumulative interest rate sensitivity assets to rate sensitive liabilities	0.87		%	0.84		%	0.81		%	0.83		%	0.84		%	0.94		%	1.00		%	1.06		%
Cumulative gap as a percent of total interest-earning assets	(0.08		)%	(0.11		)%	(0.14		)%	(0.14		)%	(0.14		)%	(0.05		)%	—		%	0.06		%

Certain shortcomings are inherent in the method of analysis presented in the gap table. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates, both on a short-term basis and over the life of the asset. More importantly, changes in interest rates, prepayments and early withdrawal levels may deviate significantly from those assumed in the calculations in the table. As a result of these shortcomings, management focuses more on a net interest income simulation model than on gap analysis. Although the gap analysis reflects a ratio of cumulative gap to total earning assets within acceptable limits, the net interest income simulation model is considered by management to be more informative in forecasting future income at risk.

The Company faces the risk that borrowers might repay their loans sooner than the contractual maturity. If interest rates fall, the borrower might repay their loan, forcing the bank to reinvest in a potentially lower yielding asset. This prepayment would have the effect of lowering the overall portfolio yield which may result in lower net interest income. The Company has assumed that these loans will prepay, if the borrower has sufficient incentive to do so, using prepayment tables provided by third party consultants. In addition, some assets, such as mortgage-backed securities or purchased loans, are held at a premium, and if these assets prepay, the Company would have to write down the premium, which would temporarily reduce the yield.

Conversely, as interest rates rise, borrowers might prepay their loans more slowly, which would leave lower yielding assets as interest rates rise.

Impact of Inflation

The Company’s financial statements and related data presented herein have been prepared in accordance with generally accepted accounting principles in the United States, which require the measure of financial position and operating results in terms of historic dollars, without considering changes in the relative purchasing power of money over time due to inflation.

Inflation generally increases the costs of funds and operating overhead, and to the extent loans and other assets bear variable rates, the yields on such assets. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant effect on the performance of a financial institution than the effects of general levels of inflation. In addition, inflation affects a financial institution’s cost of goods and services purchased, the cost of salaries and benefits, occupancy expense and similar items. Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings and shareholders’ equity.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

The information contained in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Asset/Liability Management” in Item 7 hereof is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

First NBC Bank Holding Company

We have audited the accompanying consolidated balance sheets of First NBC Bank Holding Company as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive (loss) income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of First NBC Bank Holding Company at December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, the 2014 and 2013 consolidated financial statements have been restated to correct errors in the accounting for certain investments in income tax credit entities and the consolidation of certain investments determined to be variable interest entities.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), First NBC Bank Holding Company’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated August 25, 2016 expressed an adverse opinion thereon.



	/s/ Ernst & Young LLP

New Orleans, Louisiana
August 25, 2016

FIRST NBC BANK HOLDING COMPANY

CONSOLIDATED BALANCE SHEETS



	December 31,
(In thousands)	2015			2014
Assets				(Restated)
Cash and due from banks:
Noninterest-bearing	$	50,270		$	32,484
Interest-bearing	293,109			18,404
Federal funds sold	5,675			—
Cash and cash equivalents	349,054			50,888
Investment in short-term receivables	25,604			237,135
Investment securities available for sale, at fair value	285,826			247,647
Investment securities held to maturity (fair value of $82,800 and $90,956, respectively)	82,074			89,076
Mortgage loans held for sale	2,597			1,622
Loans, net of allowance for loan losses of $78,478 and $42,336, respectively	3,380,115			2,631,687
Bank premises and equipment, net	67,155			51,170
Accrued interest receivable	14,003			11,451
Goodwill and other intangible assets	18,251			8,156
Investment in real estate properties	80,666			84,267
Investment in tax credit entities, net	108,586			141,517
Cash surrender value of bank-owned life insurance	48,691			47,289
Other real estate	5,232			5,549
Deferred tax asset	205,287			93,515
Other assets	32,684			23,911
Total assets	$	4,705,825		$	3,724,880
Liabilities and equity
Deposits:
Noninterest-bearing	$	368,421		$	362,577
Interest-bearing	3,475,421			2,756,316
Total deposits	3,843,842			3,118,893
Short-term borrowings	8,000			—
Repurchase agreements	79,251			117,991
Subordinated debentures	60,000			—
Long-term borrowings	279,042			40,000
Accrued interest payable	8,728			6,650
Other liabilities	46,211			32,813
Total liabilities	4,325,074			3,316,347
Shareholders’ equity:
Preferred stock:
Convertible preferred stock Series C – no par value; 1,680,219 shares authorized; No shares outstanding at December 31, 2015 and 364,983 shares issued and outstanding at December 31, 2014	—			4,471
Preferred stock Series D – no par value; 37,935 shares authorized, issued and outstanding at December 31, 2015 and December 31, 2014	37,935			37,935
Common stock- par value $1 per share; 100,000,000 shares authorized; 19,077,572 shares issued and outstanding at December 31, 2015 and 18,576,488 shares issued and outstanding at December 31, 2014	19,078			18,576
Additional paid-in capital	242,979			239,528
Accumulated earnings	102,142			127,758
Accumulated other comprehensive loss, net	(21,385		)	(19,737		)
Total shareholders’ equity	380,749			408,531
Noncontrolling interest	2			2
Total equity	380,751			408,533
Total liabilities and equity	$	4,705,825		$	3,724,880

See accompanying notes.

FIRST NBC BANK HOLDING COMPANY

CONSOLIDATED STATEMENTS OF INCOME



	Years Ended December 31,
(In thousands, except per share data)	2015			2014			2013
Interest income:				(Restated)			(Restated)
Loans, including fees	$	151,307		$	131,296		$	108,568
Investment securities	8,617			9,147			8,170
Investment in short-term receivables	5,514			6,512			4,449
Short-term investments	464			63			145
	165,902			147,018			121,332
Interest expense:
Deposits	44,522			40,183			36,239
Borrowings and securities sold under repurchase agreements	6,572			2,546			2,909
	51,094			42,729			39,148
Net interest income	114,808			104,289			82,184
Provision for loan losses	43,538			12,000			9,800
Net interest income after provision for loan losses	71,270			92,289			72,384
Noninterest income:
Service charges on deposit accounts	2,311			2,147			2,027
Investment securities (loss) gain, net	(50		)	135			316
(Loss) gain on assets sold, net	(272		)	64			1,081
Gain on sale of loans, net	147			649			835
Cash surrender value income on bank-owned life insurance	1,402			1,102			681
Sale of state tax credits earned	4,068			1,002			1,456
Community Development Entity fees earned	882			1,565			2,875
ATM fee income	2,082			1,958			1,859
Rental property income	3,524			3,633			2,297
Impairment of short-term receivables	(69,895		)	—			—
Other	(645		)	1,575			859
	(56,446		)	13,830			14,286
Noninterest expense:
Salaries and employee benefits	30,473			24,867			23,813
Occupancy and equipment expenses	12,475			10,796			10,116
Professional fees	8,878			7,587			6,929
Taxes, licenses and FDIC assessments	6,709			5,146			4,245
Impairment of investment in tax credit entities	59,540			25,067			13,099
Write-down of foreclosed assets	261			385			235
Data processing	6,188			4,721			4,219
Advertising and marketing	3,596			2,886			2,427
Rental property expenses	5,171			5,182			4,736
Other	13,035			7,698			6,632
	146,326			94,335			76,451
(Loss) income before income taxes	(131,502		)	11,784			10,219
Income tax benefit	(106,265		)	(32,723		)	(23,407		)
Net (loss) income attributable to Company	(25,237		)	44,507			33,626
Less preferred stock dividends	(379		)	(379		)	(347		)
Less loss (earnings) allocated to participating securities	113			(852		)	(2,234		)
(Loss) income available to common shareholders	$	(25,503	)	$	43,276		$	31,045
(Loss) earnings per common share – basic	$	(1.36	)	$	2.33		$	1.92
(Loss) earnings per common share – diluted	$	(1.36	)	$	2.27		$	1.87

See accompanying notes.

FIRST NBC BANK HOLDING COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)

INCOME



	Years Ended December 31,
(In thousands)	2015			2014			2013
				(Restated)			(Restated)
Net (loss) income	$	(25,237	)	$	44,507		$	33,626
Other comprehensive income (loss):
Fair value of derivative instruments designated as cash flow hedges:
Change in fair value of derivative instruments designated as cash flow hedges during the period, before tax	(5,459		)	(17,747		)	3,694
Less: reclassification adjustment for losses included in net income from terminated cash flow hedges	995			—			—
Unrealized (losses) gains on cash flow hedges, before tax	(4,464		)	(17,747		)	3,694

Unrealized gains (losses) on investment securities:
Change in unrealized gains (losses) on investment securities arising during the period	1,272			12,379			(18,576		)
Reclassification adjustment for gains included in net income	—			(135		)	(316		)
Transfer of unrealized loss on securities from available for sale to held to maturity during the period	—			—			(5,919		)
Amortization of unrealized net loss on securities transferred from available for sale to held to maturity	660			547			211
Unrealized gains (losses) on investment securities, before tax	1,932			12,791			(24,600		)
Other comprehensive loss, before taxes	(2,532		)	(4,956		)	(20,906		)
Income tax benefit related to items of other comprehensive losses	(884		)	(1,734		)	(7,317		)
Other comprehensive loss, net of tax	(1,648		)	(3,222		)	(13,589		)
Total comprehensive (loss) income	(26,885		)	41,285			20,037
Comprehensive income attributable to preferred shareholders	(379		)	(379		)	(347		)
Comprehensive loss (income) attributable to participating securities	113			(852		)	(2,234		)
Comprehensive (loss) income available to common shareholders	$	(27,151	)	$	40,054		$	17,456

See accompanying notes.

FIRST NBC BANK HOLDING COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY



(In thousands)	Preferred Stock Series C			Preferred Stock Series D		Common Stock		Additional Paid-In Capital			Accumulated Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity			Non-controlling Interest		Total Equity
Balance, December 31, 2012, as reported	$	11,231		$	37,935	$	13,052	$	128,984		$	59,825		$	(2,926	)	$	248,101		$	1	$	248,102
Restatement adjustments	—			—		—		—			(9,474		)	—			(9,474		)	—		(9,474		)
Balance, December 31, 2012, as restated	11,231			37,935		13,052		128,984			50,351			(2,926		)	238,627			1		238,628
Net income, as restated	—			—		—		—			33,626			—			33,626			—		33,626
Other comprehensive loss	—			—		—		—			—			(13,589		)	(13,589		)	—		(13,589		)
Share-based compensation	—			—		—		1,202			—			—			1,202			—		1,202
Conversion of preferred stock to common stock	(6,760		)	—		552		6,208			—			—			—			—		—
Issuance of common stock:
Stock option and director plans	—			—		87		878			—			—			965			—		965
Stock offering, net of direct cost of $10,837	—			—		4,792		99,371			—			—			104,163			—		104,163
Warrants	—			—		31		94			—			—			125			—		125
Net tax benefit related to stock option plans	—			—		—		326			—			—			326			—		326
Preferred stock dividends	—			—		—		—			(347		)	—			(347		)	—		(347		)
Equity contribution for noncontrolling interest	—			—		—		—			—			—			—			1		1
Balance, December 31, 2013, as restated	4,471			37,935		18,514		237,063			83,630			(16,515		)	365,098			2		365,100
Net income, as restated	—			—		—		—			44,507			—			44,507			—		44,507
Other comprehensive loss	—			—		—		—			—			(3,222		)	(3,222		)	—		(3,222		)
Share-based compensation	—			—		—		1,339			—			—			1,339			—		1,339
Issuance of common stock:
Stock option and director plans	—			—		62		800			—			—			862			—		862
Net tax benefit related to stock option plans	—			—		—		326			—			—			326			—		326
Preferred stock dividends	—			—		—		—			(379		)	—			(379		)	—		(379		)
Balance, December 31, 2014, as restated	4,471			37,935		18,576		239,528			127,758			(19,737		)	408,531			2		408,533
Net loss	—			—		—		—			(25,237		)	—			(25,237		)	—		(25,237		)
Other comprehensive loss	—			—		—		—			—			(1,648		)	(1,648		)	—		(1,648		)
Share-based compensation	—			—		—		755			—			—			755			—		755
Restricted stock awards compensation	—			—		—		(1,813		)	—			—			(1,813		)	—		(1,813		)
Issuance of common stock:
Stock option and director plans	—			—		48		699			—			—			747			—		747
Warrants	—			—		17		133			—			—			150			—		150
Restricted stock awards, net	—			—		72		2,347			—			—			2,419			—		2,419
Net tax benefit related to stock option plans	—			—		—		234			—			—			234			—		234
Purchase of common shares by ESOP	—			—		—		(2,920		)	—			—			(2,920		)	—		(2,920		)
Allocation of ESOP shares	—			—		—		(90		)	—			—			(90		)	—		(90		)
Preferred stock conversion	(4,471		)	—		365		4,106			—			—			—			—		—
Preferred stock dividends	—			—		—		—			(379		)	—			(379		)	—		(379		)
Balance, December 31, 2015	$	—		$	37,935	$	19,078	$	242,979		$	102,142		$	(21,385	)	$	380,749		$	2	$	380,751

See accompanying notes.

FIRST NBC BANK HOLDING COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS



	Years Ended December 31,
(In thousands)	2015			2014			2013
				(Restated)			(Restated)
Operating activities
Net (loss) income	$	(25,237	)	$	44,507		$	33,626
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred tax benefit	(108,341		)	(36,159		)	(23,593		)
Impairment of tax credit investments	59,540			25,067			13,099
Accretion (amortization) of fair value adjustments related to acquisition	741			(104		)	—
Net discount accretion or premium amortization	224			578			2,633
Loss (gain) on sale of investment securities	50			(135		)	(316		)
Loss (gain) on assets sold	272			(64		)	(1,081		)
Write-down of foreclosed assets	261			385			235
Write-down of investment in Small Business Investment Company	883			—			—
Proceeds from sale of mortgage loans held for sale	46,228			49,334			96,677
Mortgage loans originated and held for sale	(47,203		)	(44,379		)	(77,394		)
Gain on sale of loans	(147		)	(649		)	(835		)
Loss on tax credit investment	758			—			—
Derivative gains (losses) on terminated interest rate hedges, net	2,321			(7,990		)	—
Provision for loan losses	43,538			12,000			9,800
Depreciation and amortization	3,198			3,517			2,891
Share-based and other compensation expense	1,433			1,339			2,124
Increase in cash surrender value of bank-owned life insurance	(1,402		)	(1,102		)	(681		)
Decrease in receivables from sales of investments	—			—			16,909
Impairment of short-term receivables	69,895			—			—
Changes in operating assets and liabilities:
Change in other assets	(8,876		)	(2,480		)	(3,549		)
Change in accrued interest receivable	(2,552		)	(457		)	(2,266		)
Change in accrued interest payable	2,078			(32		)	1,125
Change in other liabilities	6,785			(8,855		)	14,014
Net cash provided by operating activities	44,447			34,321			83,418




FIRST NBC BANK HOLDING COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
	Years Ended December 31,
(In thousands)	2015			2014			2013
Investing activities				(Restated)			(Restated)
Purchases of available for sale investment securities	(30,884		)	(22,153		)	(132,123		)
Proceeds from sales of available for sale investment securities	—			41,670			45,791
Proceeds from maturities, prepayments, and calls of available for sale investment securities	30,834			22,229			91,328
Proceeds from sales of held to maturity securities	—			2,650			—
Proceeds from maturities, prepayments, and calls of held to maturity securities	7,286			3,851			1,013
Net change in investments in short-term receivables	141,636			9,682			(165,773		)
Reimbursement of investment in tax credit entities	18,006			24,000			—
Purchases of investments in tax credit entities	(48,018		)	(62,729		)	(57,396		)
Loans originated, net of repayments	(584,272		)	(420,516		)	(440,984		)
Proceeds from sale of bank premises and equipment	726			46			324
Disposals of bank premises and equipment	726			—			—
Cash received in acquisition, net	31,517			—			—
Cash used in acquisition, net	(16,375		)	—			—
Purchases of bank premises and equipment	(8,019		)	(4,706		)	(5,913		)
Proceeds from disposition of real estate owned	2,753			2,657			5,015
Purchases of bank-owned life insurance	—			(20,000		)	—
Net cash used in investing activities	(454,084		)	(423,319		)	(658,718		)
Financing activities
Net increase in deposits	498,598			389,262			460,760
Net change in repurchase agreements	(38,740		)	42,034			39,670
Proceeds from borrowings	259,955			—			8,425
Proceeds from ESOP loan	3,392			—			—
Repayment of borrowings	(12,839		)	(23,535		)	(41,910		)
Purchase of common stock by ESOP	(3,010		)	—			—
Proceeds from issuance of common stock, net of offering costs	826			862			104,332
Dividends paid	(379		)	(379		)	(347		)
Net cash provided by financing activities	707,803			408,244			570,930
Net change in cash and cash equivalents	298,166			19,246			(4,370		)
Cash and cash equivalents at beginning of year	50,888			31,642			36,012
Cash and cash equivalents at end of year	$	349,054		$	50,888		$	31,642

Supplemental cash flows information
Cash paid for interest	$	49,016		$	42,761		$	38,023
Cash paid for taxes	1,874			3,170			—
Supplemental information for non-cash investing and financing activities
Consolidation of Federal Low-Income Housing Tax Credit Entities	$	(65,648	)	$	(67,836	)	$	(69,928	)
Capital lease payable	1,213			—			—
Loans transfered to other real estate owned	1,812			4,715			2,032

See accompanying notes.

FIRST NBC BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Nature of Operations

First NBC Bank Holding Company (Company) is a bank holding company that offers a broad range of financial services through First NBC Bank (Bank), a Louisiana state non-member bank, to businesses, institutions, and individuals in southeastern Louisiana and the Florida panhandle. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States and to prevailing practices within the banking industry.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and First NBC Bank, and First NBC Bank’s wholly owned subsidiaries, which include First NBC Community Development, LLC (FNBC CDC), First NBC Community Development Fund, LLC (FNBC CDE) (collectively referred to as the Bank) and any variable interest entities of which the Company is the primary beneficiary. Substantially all of the Variable Interest Entities (VIE) for which the Company is the primary beneficiary relate to tax credit investments. FNBC CDC is a Community Development Corporation formed to construct, purchase, and renovate affordable residential real estate properties in the New Orleans area. FNBC CDE is a Community Development Entity (CDE) formed to apply for and receive allocations of Federal New Markets Tax Credits (NMTC).

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are susceptible to a significant change in the near term are the allowance for loan losses, income tax provision, fair value adjustments, impairment on tax credit investments, and share-based compensation.

Concentration of Credit Risk

The Company’s loan portfolio consists of the various types of loans described in Note 8. Real estate or other assets secure most loans. The majority of these loans have been made to individuals and businesses in the Company’s market area of southeastern Louisiana and the Florida panhandle, which are dependent on the area economy for their livelihoods and servicing of their loan obligations. The Company does not have any significant concentrations to any one industry or customer.

The Company maintains deposits in other financial institutions that may, from time to time, exceed the federally insured deposit limits.

Business Combinations

Assets and liabilities acquired in business combinations are recorded at their acquisition date fair values. In accordance with ASC Topic 805, Business Combinations, the Company generally records provisional amounts at the time of acquisition based on the information available to the Company. The provisional estimates of fair values may be adjusted for a period of up to one year (“measurement period”) from the date of acquisition if new information obtained about facts and circumstances that existed as of the acquisition date, if known, would have affected the measurement of the amounts recognized as of that date.

Loans generally represent a significant portion of the assets acquired in the Company’s business acquisitions. If the Company discovers that it has materially underestimated the credit losses expected in the loan portfolio based on information available at the acquisition date within the measurement period, it will reduce or eliminate the gain and/or increase goodwill recorded on the acquisition in the period the adjustment is recorded. If the Company determines that losses arose subsequent to acquisition date, such losses are reflected as a provision for credit losses.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include the amount in the accompanying consolidated balance sheet caption, cash and cash equivalents, which represents cash on hand, balances due from other financial institutions, and federal funds sold with original maturities less than three months.

Investment Securities

Investment securities are classified either as held to maturity or available for sale. Management determines the classification of securities when they are purchased.

Investment securities that the Company has the ability and positive intent to hold to maturity are classified as securities held to maturity and are stated at amortized cost. The amortized cost of debt securities classified as held to maturity or available for sale is adjusted for amortization of premiums and accretion of discounts over the contractual life of the security using the effective interest method or, in the case of mortgage-backed securities, over the estimated life of the security using the effective yield method. Such amortization or accretion is included in interest income on securities.

Securities that may be sold in response to changes in interest rates, liquidity needs, or asset liability management strategies are classified as securities available for sale. These securities are carried at fair value, with net unrealized gains or losses excluded from earnings and shown as a separate component of shareholders’ equity in accumulated other comprehensive income (loss), net of income taxes. Any expected credit loss due to the inability to collect all amounts due accordingly to the security’s contractual terms is recognized as a charge against earnings. Any remaining unrealized loss related to other factors is recognized in other comprehensive income (loss), net of taxes.

Realized gains and losses on both held to maturity securities and available for sale securities are computed based on the specific-identification method. Realized gains and losses and declines in value judged to be other than temporary are included in net investment securities gains and losses.

Unrealized losses on securities are evaluated to determine if the losses are temporary, based on various factors, including the cause of the loss, prospects for recovery, projected cash flows, collateral values, credit enhancements and other relevant factors, and management’s intent and ability not to sell the security until the fair value exceeds amortized cost. A charge is recognized against earnings for all or a portion of the impairment if the loss is determined to be other than temporary.

Investment in Short-Term Receivables

The Company invests in short-term receivables which are purchased on an exchange. These short-term receivables have repayment terms of less than a year. The investments are recorded at cost plus accreted discount. The Company evaluates its investments in short-term receivables for impairment once they become delinquent.

Mortgage Loans Held for Sale

Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value, in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance that is recorded as a charge to income. Loans held for sale have primarily been fixed-rate, single-family residential mortgage loans under contract to be sold in the secondary market. In most cases, loans in this category are sold within 120 days. These loans are sold with the mortgage servicing rights released. Buyers generally have recourse to return a purchased loan to the Company under limited circumstances which may include early payment default, breach of representations or warranties, and documentation deficiencies. During 2015 and 2014, an insignificant number of loans were returned to the Company.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered or in the case of a loan participation, a portion of the asset has been surrendered and meets the definition of a "participating interest". Control over transferred assets is deemed to be surrendered when 1) the assets have been isolated from the Company, 2) the transferee obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets, and 3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Should the transfer not meet these three criteria, the transaction is treated as a secured financing.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the principal amount outstanding, net of unamortized fees and costs on originated loans and allowances for loan losses. Loan origination fees and certain direct loan origination costs are deferred and amortized over the lives of the respective loans as a yield adjustment using the effective interest method.

Interest income on loans is accrued as earned using the interest method over the life of the loan. Interest on loans deemed uncollectible is excluded from income. The accrual of interest is discontinued and reversed against current income once loans become more than 90 days past due or earlier if conditions warrant. The past due status of loans is determined based on the contractual terms. If the decision is made to continue accruing interest on the loan, periodic reviews are made to confirm the

accruing status of the loan. When a loan is placed on nonaccrual status, interest accrued and unpaid during prior periods is reversed. Generally, any payments on nonaccrual loans are applied first to outstanding loan principal amounts and then to the recovery of the charged-off loan amounts. Any excess is treated as recovery of lost interest and fees. Loans are returned to accrual status after a minimum of six consecutive monthly payments have been made in a timely manner.

The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts due according to the original contractual terms of the loan agreement. The Company’s impaired loans include troubled debt restructurings (TDRs) and performing and nonperforming loans for which full payment of principal or interest is not expected. The Company calculates a reserve required for impaired loans based on the present value of expected future cash flows discounted using the loan’s effective interest rate or the fair value of the collateral securing the loan.

Third-party property valuations are obtained at the time of origination for real estate-secured loans. The Company obtains updated appraisals on all impaired loans at least annually. In addition, if an intervening event occurs that, in management’s opinion, would suggest further deterioration in value, the Company obtains an updated appraisal. These policies do not vary based on loan type. Any exposure arising from the deterioration in value of collateral evidenced by the appraisal is recorded as an adjustment to the loan loss reserve in the case of an impaired loan or as an adjustment to income in the case of foreclosed property.

Troubled Debt Restructurings

The Company periodically grants concessions to its customers in an attempt to protect as much of its investment as possible and minimize the risk of loss. These concessions may include restructuring the terms of a customer loan, thereby adjusting the customer’s payment requirements. In order to be considered a TDR, the Company must conclude that the restructuring constitutes a concession and the customer is experiencing financial difficulties. The Company defines a concession to a customer as a modification of existing loan terms for economic or legal reasons that it would otherwise not consider. Concessions are typically granted through an agreement with the customer or are imposed by a court of law. Concessions include modifying original loan terms to reduce or defer cash payments required as part of the loan agreement, including but not limited to:


•	A reduction of the stated interest rate for the remaining original life of the debt;


•	Extension of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk characteristics;


•	Reduction of the face amount or maturity amount of the debt as stated in the agreement; or


•	Reduction of accrued interest receivable on the debt.

In its determination of whether the customer is experiencing financial difficulties, the Company considers numerous indicators, including but not limited to:


•	Whether the customer is currently in default on its existing loan or is in an economic position where it is probable the customer will be in default on its loan in the foreseeable future without a modification;


•	Whether the customer has declared or is in the process of declaring bankruptcy;


•	Whether there is substantial doubt about the customer’s ability to continue as a going concern;


•	Whether, based on its projections of the customer’s current capabilities, the Company believes the customer’s future cash flows will be insufficient to service the debt, including interest, in accordance with the contractual terms of the existing agreement for the foreseeable future; or


•	Whether, without modification, the customer cannot obtain sufficient funds from other sources at an effective interest rate equal to the current market rate for similar debt for a nontroubled debtor.

If the Company concludes that both a concession has been granted and the concession was granted to a customer experiencing financial difficulties, the Company identifies the loan as a TDR. For purposes of the determination of an allowance for loan losses on these TDRs, the loan is reviewed for specific impairment in accordance with the Company’s allowance for loan loss methodology. If it is determined that losses are probable on such TDRs, either because of delinquency or other credit quality indicators, the Company establishes specific reserves for these loans.

Acquisition Accounting for Loans

The Company accounts for business combinations in accordance with Financial Accounting Standards Board (FASB) ASC 805, Business Combinations, which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. The fair value of loans that do not have deteriorated credit quality are accounted for in accordance with ASC 310-20, Nonrefundable Fees and Other Costs, and is represented by the expected cash flows from the portfolio discounted at current market rates. In estimating the cash flows, the Company makes assumptions about the amount and timing of principal and interest payments, estimated prepayments, estimated default rates, estimated loss severities in the event of defaults, and current market rates. The fair value adjustment is amortized over the life of the loan using the effective interest method. The Company accounts for certain acquired loans with deteriorated credit quality under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. In accordance with ASC 310-30 and in estimating the fair value of loans with deteriorated credit quality as of the acquisition date, the Company: (a) calculates the contractual amount and timing of undiscounted principal and interest payments (the undiscounted contractual cash flows), and (b) estimates the amount and timing of undiscounted expected principal and interest payments (the undiscounted expected cash flows). The difference between the undiscounted contractual cash flows and the undiscounted expected cash flows is the nonaccretable difference. On the acquisition date, the amount by which the undiscounted expected cash flows exceed the estimated fair value of the loans with deteriorated credit quality is the accretable yield. The accretable yield is recorded into interest income over the estimated lives of the loans using the effective yield method. The accretable yield changes over time as actual and expected cash flows vary from the estimated cash flows at acquisition. Decreases in expected cash flows subsequent to acquisition result in recognition of a provision for loan loss. The accretable yield is measured at each financial reporting date and represents the difference between the remaining undiscounted expected cash flows and the current carrying value of the loans. The remaining undiscounted expected cash flows are calculated at each financial reporting date, based on information currently available. Increases in expected cash flows over those originally estimated increase the accretable yield and are recognized prospectively as interest income. Increases in expected cash flows may also lead to the reduction of any allowance for loan losses recorded after the acquisition. Decreases in expected cash flows compared to those originally estimated decrease the accretable yield and are recognized by recording an allowance for loan losses. As the accretable yield increases or decreases from changes in cash flow expectations, the offset is an increase or decrease to the nonaccretable difference. There is no carryover of allowance for loan losses, as the loans acquired are initially recorded at fair value as of the date of acquisition.

Allowance for Loan Losses

The allowance for loan losses represents an estimate that management believes will be adequate to absorb probable incurred losses on existing loans in its portfolio at the balance sheet date. The allowance is based on an evaluation of the collectability of loans and prior loss experience of the Company. While management uses available information to make loan loss allowance evaluations, adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance. See Note 8 for an analysis of the Company’s allowance for loan losses by portfolio and portfolio segment, and credit quality information by class.

Management has an established methodology to determine the allowance for loan losses that assesses the risks and losses inherent in its portfolio and portfolio segments. The Company utilizes an internally developed model that requires significant judgment to determine the estimation method that fits the credit risk characteristics of the loans in its portfolio and portfolio segments. The allowance for loan losses is established through a provision for loan losses charged to expense. A similar methodology and model is utilized by the Company to calculate a reserve assigned to off-balance sheet commitments, specifically unfunded loan commitments and letters of credit, and any needed reserve is recorded in other liabilities. The appropriateness of the allowance for loan losses is determined in accordance with generally accepted accounting principles.

The Company’s loan portfolio is disaggregated into portfolio segments for purposes of determining the allowance for loan losses. The Company’s portfolio segments include commercial real estate, consumer real estate, commercial and industrial, and consumer loans. The Company further disaggregates the commercial and consumer real estate portfolio segments into classes for purposes of monitoring and assessing credit quality based on certain risk characteristics. Classes within each commercial real estate portfolio segment include commercial real estate construction and commercial real estate mortgage. Classes within each consumer real estate portfolio segment include consumer real estate construction and consumer real estate mortgage.

Loans are charged off against the allowance for loan losses when management believes that the collectability of the principal is unlikely. The allowance for loan losses consists of specific and general reserves. The Company determines specific reserves based on the provisions of ASC 310, Receivables. The Company’s allowance for loan losses includes a measure of impairment for those loans specifically identified for evaluation under the topic. This measurement is based on a comparison of the recorded investment in the loan with either the expected cash flows discounted using the loan’s original contractual effective interest rate or the fair value of the collateral underlying certain collateral-dependent loans. Collectability of principal and

interest is evaluated in assessing the need for a loss accrual. Loans identified as impaired are individually evaluated periodically for impairment.

General reserves are based on management’s evaluation of many factors and reflect an estimated measurement of losses related to loans not individually evaluated for impairment. These loans are grouped into portfolio segments. The loss rates are derived from historical loss factors of the Company sustained on loans according to their risk grade, as well as qualitative and economic factors, and may be adjusted for Company-specific factors. Loss rates are reviewed quarterly and adjusted as management deems necessary based on changing borrower and/or collateral conditions and actual collections and charge-off experience. The loss emergence period is evaluated and derived from historical data based on the date of the loss event to the actual date of charge-off and the resulting loss emergence period is applied as a factor against the historical loss factor which is reviewed annually.

Based on observations made through a qualitative review, management may apply qualitative adjustments to the quantitatively determined loss estimates at a group and/or portfolio segment level as deemed appropriate. Primary qualitative and environmental factors that may not be directly reflected in quantitative estimates include:


•	Asset quality trends;


•	Changes in lending policies;


•	Trends in the nature and volume of the loan portfolio, including the existence and effect of any portfolio concentrations;


•	Changes in experience and depth of lending staff; and


•	National and regional economic trends.

Changes in these factors are considered in determining the directional consistency of changes in the allowance for loan losses. The impact of these factors on the Company’s qualitative assessment of the allowance for loan losses can change from period to period based on management’s assessment to the extent to which these factors are already reflected in historic loss rates. The uncertainty inherent in the estimation process is also considered in evaluating the allowance for loan losses.

Off-Balance-Sheet

Credit-Related Financial Instruments

The Company accounts for its guarantees in accordance with the provisions of ASC 460, Guarantees. In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under credit card agreements, and standby letters of credit. Such financial instruments are recorded when they are funded.

Premises and Equipment

Land is carried at cost. Buildings, furniture, fixtures, and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated life of each respective type of asset as follows:



Buildings	40 years
Furniture, fixtures, and equipment	5	-	15 years

Leasehold improvements are amortized using the straight-line method over the periods of the leases, including options expected to be exercised, or the estimated useful lives, whichever is shorter. Gains and losses on disposition and maintenance and repairs are included in current operations. Rental expense on leased property is recognized on a straight-line basis over the original lease term plus options that management expects to exercise. Fixed rental increases that are determinable are expensed over the lease period, including any option periods which are expected to be exercised, using a straight-line lease expense method.

Other Real Estate

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are recorded at a new cost basis determined at the date of foreclosure as the lower of cost or fair value less estimated cost to sell. Cost is defined as the recorded investment in the loan. Subsequent to foreclosure, valuation allowances are established for any decreases in the estimate of the asset’s fair value or selling costs. Revenues and expenses from operations and changes in the valuation allowance are included in current earnings.

Goodwill and Other Intangible Assets

Goodwill

Goodwill represents the excess of the consideration paid in a business combination over the fair value of the identifiable net assets acquired. Goodwill is not amortized, but is assessed for potential impairment at a reporting unit level on an annual basis, on October 1, or whenever events or changes in circumstances indicate that it is more likely than not the fair value of a reporting unit is less than its respective carrying amount. As part of its testing, the Company may elect to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the results of the qualitative assessment indicate that more likely than not a reporting unit’s fair value is less than its carrying amount, the Company determines the fair value of the respective reporting unit (through the application of various quantitative valuation methodologies) relative to its carrying amount to determine whether quantitative indicators of potential impairment are present (i.e., Step 1). The Company may also elect to bypass the qualitative assessment and begin with Step 1. If the results of Step 1 indicate that the fair value of the reporting unit may be below its carrying amount, the Company determines the fair value of the reporting unit’s assets and liabilities, considering deferred taxes, and then measures impairment loss by comparing the implied fair value of goodwill with the carrying amount of that goodwill (i.e., Step 2).

Intangible assets subject to amortization

The Company’s acquired intangible assets that are subject to amortization include core deposit intangibles and are amortized on a straight-line basis over their estimated useful lives and evaluated annually for impairment.

Investments in Real Estate Properties

FNBC CDC invests in real estate properties, which are carried at cost. Costs of construction are capitalized during the construction period and do not include interest. The Company periodically obtains as-is appraisals to determine the recoverability of its investments for which it intends to sell. For properties the Company intends to hold, the Company assesses recoverability based on the cash flows of the underlying properties.

Investments in Tax Credit Entities, net

As part of its Community Reinvestment Act responsibilities and due to their favorable economics, the Company invests in tax credit-motivated projects. These projects produce tax credits issued under Federal Low-Income Housing, Federal Historic Rehabilitation, and Federal New Markets Tax Credits (Federal NMTC) programs. The Company generates its returns on tax credit motivated projects through the receipt of federal, and if applicable, state tax credits as well as equity returns. The federal tax credits are recorded as an offset to the income tax provision in the year that they are earned under federal income tax law – over 10 to 15 years, beginning in the year in which rental activity commences for Federal Low-Income Housing credits, in the year of the issuance of the certificate of occupancy and the property being placed into service for Federal Historic Rehabilitation credits, and over 7 years for Federal NMTC upon the investment of funds into the CDE. These credits, if not used in the tax return for the year of origination, can be carried forward for 20 years. The state credits are recorded in income when earned (usually when the project is placed in service) and sold to investors since the Company pays minimal state income taxes under Louisiana tax law.

The Company invests in projects generating Federal Low-Income Housing credits, by investing in a tax credit entity, usually a limited liability company, which owns the real estate. The Company receives a 99.99% nonvoting interest in the entity that must be retained during the compliance period for the credits (15 years). Control of the tax credit entity rests in the .01% interest general partner, who has the power and authority to make decisions that impact economic performance of the project and is required to oversee and manage the project. The Company accounts for its investment in Federal Low-Income Housing credits utilizing the equity method of accounting. The Company begins to evaluate its investment for impairment at the time the tax credits are earned through the end of the 15 year compliance period. The Company evaluates its investment at the end of each reporting period for impairment and any residual returns are expected to be minor.

For Federal Historic Rehabilitation credits, the Company invests in a tax credit entity, usually a limited liability company, which owns the real estate or a master tenant structure. In some cases, the Company receives a 99% nonvoting interest in the tax credit entity that must be retained during the compliance period for the credits (5 years). In some instances, the Company invests 99% in a pass through entity called a master tenant, which maintains an ownership interest in a limited liability company which owns the real estate. In most cases, the Company’s interest in the entity (in either structure) is generally reduced from a 99% interest to a 0% to 25% interest at the end of the compliance period. Control of the tax credit entity rests in the 1% interest general partner (in either structure), who has the power and authority to make decisions that impact economic performance of the project and is required to oversee and manage the project. The Company accounts for its investment in

Federal Historic Rehabilitation credits utilizing the equity method of accounting. The Company begins to evaluate its investment for impairment at the time the credit is earned, which is typically in the year the project is placed in service, through the end of its compliance period. The Company evaluates its investment at the end of each reporting period for impairment and any expected residual returns reduce the amount of impairment recognized.

For Federal NMTC, a different structure is required by federal tax law. In order to distribute Federal NMTC, the federal government allocates such credits to CDEs. The Company invests in both CDEs formed by unaffiliated parties and in CDEs formed by the Company. Projects must be commercial or real estate operations and are qualified by their location in low- income areas or by their employment of, or service to, low-income citizens. A CDE, in most cases, creates a special-purpose subsidiary for each project through which the credits are allocated and through which the proceeds from the tax credit investor and a leverage lender, if applicable, flow through to the project, which in turn generate the credit. The credits are calculated at 39% of the total CDE allocation to the project at the rate of 5% for the first three years and 6% for the next four years. Federal tax law requires special terms benefiting the qualified project, which can include below-market interest rates. The Company evaluates its investment for impairment under the equity method of accounting at the end of each reporting period, beginning at the time the tax credits are earned on the project through the end of the seven-year compliance period, and any residual returns are expected to be minor. When the Company also has a loan to the project, it is reported as a loan in the consolidated balance sheet, as the Company has credit exposure to the project and the loan is repaid at the end of the compliance period. In general, the debt has no principal payments during the compliance period but the Company may require the project to fund a sinking fund over the compliance period to achieve the same risk reduction effect as if principal is being amortized.

When the Company is the tax credit investor in a CDE formed by an unaffiliated party, it has no control of the applicable CDE or the CDE’s special-purpose subsidiary. For projects which are funded through FNBC CDE, the Company consolidates its CDE and the specifically formed special-purpose entities since it maintains control over these entities; however, the Company does not have control over the entity which oversees the project. As part of the activities of FNBC CDE, the Company makes investments in the CDE for purposes of providing equity to the projects sponsored by the FNBC CDE.

When a project is funded through FNBC CDE, the CDE will receive a CDE management fee at the time of the project's closing of approximately 4% and an annual fee of 0.5% of the qualified equity investment in the project. The annual fee is received until the end of the Federal NMTC compliance period. The CDE management fee earned is recorded in the consolidated statement of income as a component of noninterest income. The Company may pay a fee to the CDE when the project is funded through a CDE other than FNBC CDE at the time of a project's closing and annually during the compliance period for the allocation of the credits. The fee is recorded as a component of noninterest expense in the Company's consolidated statement of income over the Federal NMTC compliance period.

The Company has the risk of credit recapture if the project fails during the compliance period for Federal Low-Income Housing and Federal Historic Rehabilitation transactions. For Federal NMTC transactions, the risk of credit recapture exists if investment requirements are not maintained during the compliance period. The risk of recapture for Federal NMTC transactions when the project is funded by FNBC CDE is described in Note 14. Such events, although rare, are accounted for when they occur and no such events have occurred to date involving FNBC CDE.

Variable Interest Entities

VIEs are entities that, in general, either do not have equity investors with voting rights or that have equity investors that do not provide sufficient financial resources for the entity to support its activities. The Company uses VIEs in various legal forms to conduct normal business activities. The Company reviews the structure and activities of VIEs for possible consolidation.

A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits of the VIE that could potentially be significant to the VIE. A VIE often holds financial assets, including loans or receivables, real estate, or other property. The company with a controlling financial interest, known as the primary beneficiary, is required to consolidate the VIE. Noncontrolling variable interests in certain limited partnerships for which the Company does not absorb a majority of expected losses or receive a majority of expected residual returns are not included in the accompanying consolidated financial statements. Refer to Notes 14 and 15 for further detail.

Stock-Based Compensation Plans

The Company has stock-based employee compensation plans, which provide for the issuance of stock options and restricted stock. The Company accounts for stock-based employee compensation in accordance with the fair value recognition provisions of ASC 718, Compensation—Stock Compensation. Compensation cost is recognized as expense over the service period, which is generally the vesting period of the options and restricted stock. The expense is reduced for estimated forfeitures over the

vesting period and adjusted for actual forfeitures as they occur. As a result, compensation cost for all share-based payments is reflected in net income as part of salaries and employee benefits in the accompanying consolidated statements of income. See Note 26 for additional information on the Company’s stock-based compensation plans.

Income Taxes

The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are established for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities using enacted tax rates expected to be in effect during the year in which the basis differences reverse. Valuation allowances are established against deferred tax assets if, based on all available evidence, it is more likely than not some or all of the assets will not be realized.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the Company to report information regarding its exposure to various tax positions taken by the Company. The Company has determined whether any tax positions have met the recognition threshold and has measured the Company’s exposure to those tax positions. Management believes that the Company has adequately addressed all relevant tax positions and that there are no unrecorded tax liabilities. Any interest or penalties assessed to the Company are recorded in operating expenses. No interest or penalties from any taxing authorities were recorded in the accompanying consolidated financial statements. Federal, state, and local taxing authorities generally have the right to examine and audit the previous three years of tax returns filed.

The Company is also required to reduce its tax basis of the investment in certain of the projects that generated the Federal NMTC or Federal Historic Rehabilitation tax credits by the amount of the credit generated in that year based on the taxable entity structure of the investee.

Noncontrolling Interests

Noncontrolling interests include $2 thousand at December 31, 2015, 2014 and 2013, of common stock held by unrelated parties in various tax credit-related subsidiaries, which have activities solely related to generating the tax credits.

Earnings Per Share

Basic earnings per common share is computed based upon net income attributable to common shareholders divided by the weighted-average number of common shares outstanding during each period. Diluted earnings per common share is computed based upon net income, adjusted for dilutive participating securities, divided by the weighted-average number of common shares outstanding during each period and adjusted for the effect of dilutive potential common shares calculated using the treasury stock method and the assumed conversion for any dilutive convertible securities. In determining net income attributable to common shareholders, the net income attributable to participating securities is excluded. The Company issued Series C preferred stock in 2011, which is considered a participating security because it shares in any dividends paid to common shareholders. The assumed conversion of the Series C preferred stock is excluded from the calculation of diluted earnings per share due to the fact that the shares are contingently issuable and the contingency still existed at the end of 2014. During 2015, all Series C preferred stock were converted to common shares and the contingency no longer existed.

Comprehensive Income (Loss)

Accounting principles generally require that recognized revenue, expenses, gains, and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities and cash flow hedges, are reported as a separate component of the equity section of the balance sheet; such items, along with net income, are components of comprehensive income (loss).

Derivative Financial Instruments

ASC 815, Derivatives and Hedging, requires that all derivatives be recognized as assets or liabilities in the balance sheet at fair value. The Company may enter into derivative contracts to manage exposure to interest rate risk or meet the financing and/or investing needs of its customers.

In the course of its business operations, the Company is exposed to certain risks, including interest rate, liquidity, and credit risk. The Company, as part of its management of interest rate risk, utilizes derivative financial instruments, primarily through management of exposure through the receipt or payment of future cash amounts based on interest rates. The Company’s derivative financial instruments manage the differences in the timing, amount, and duration of expected cash receipts and payments.

Derivatives which are designated and qualify as a hedge of the exposure to variability in expected future cash flows or other types of forecasted transactions are considered cash flow hedges. The Company prepares written hedge documentation for all derivatives which are designated as cash flow hedges. The written hedge documentation includes identification of, among other items, the risk management objective, hedging instrument, hedged item and methodologies for assessing and measuring hedge effectiveness and ineffectiveness, along with support for management’s assertion that the hedge will be highly effective. These methods are consistent with the Company’s approach to managing risk. The Company reports these net in the accompanying consolidated balance sheets when the Company has a master netting arrangement. As of December 31, 2015 and December 31, 2014, there were net amounts reported.

For designated hedging relationships, the Company performs retrospective and prospective effectiveness testing to determine whether the hedging relationship has been highly effective in offsetting changes in cash flows of hedged items and whether the relationship is expected to continue to be highly effective in the future. Assessments of hedge effectiveness and measurements of hedge ineffectiveness are performed at least quarterly. The effective portion of the changes in the fair value of a derivative that is highly effective and that has been designated and qualifies as a cash flow hedge are initially recorded in accumulated other comprehensive income (loss) and reclassified to earnings in the same period that the hedged item impacts earnings or when the hedging relationship is terminated; any ineffective portion is recorded in earnings immediately.

Hedge accounting ceases on transactions that are no longer deemed effective, or for which the derivative has been terminated or de-designated. For discontinued cash flow hedges, the unrealized gains and losses recorded in accumulated other comprehensive income (loss) would be reclassified to earnings during the period or periods in which the previously designated hedged cash flows affect earnings (straight-line amortization/accretion) unless it was determined that the transaction was probable to not occur, whereby any unrealized gains and losses in accumulated other comprehensive income would be immediately reclassified to earnings. Note 20 describes the derivative instruments currently used by the Company and discloses how these derivatives impact the Company’s financial position and results of operations.

Fair Value

U.S. GAAP requires the use of fair values in determining carrying values of certain assets and liabilities in the financial statements, as well as for specific disclosures about certain assets and liabilities.

ASC 820, Fair Value Measurements and Disclosures, established a fair value hierarchy that prioritizes the inputs to these valuation techniques used to measure fair value giving preference to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs such as a reporting entity's own data or information or assumptions developed from this data (Level 3). Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in markets that are not active, observable inputs other than quoted prices, such as interest rates and yield curves, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Segments

All of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment. Because the overall banking operations comprise substantially all of the consolidated operations and none of the Company’s other subsidiaries, either individually or in the aggregate, meet quantitative materiality thresholds, no separate segment disclosures are presented in the accompanying consolidated financial statements.

Reclassifications

Some amounts previously reported have been adjusted to reflect certain reclassification adjustments to conform to the current period presentation. These include reclassifications of amounts previously reported in loans to investment in tax credit entities, net; amounts previously reported in premises and equipment to investment in real estate entities; and certain amounts previously reported in occupancy and equipment expenses to rental property expenses. The Company has presented rental property expenses, previously presented as a component of other noninterest expense in its consolidated statements of income, and rental property income, previously presented as a component of other noninterest income in its consolidated statements of income, as separate components on its consolidated statements of income.

Recent Accounting Pronouncements

ASU No. 2014-01

In January 2014, the FASB issued ASU No. 2014-01, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects, which permits reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in

proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). This ASU applies to all reporting entities that invest in qualified affordable housing projects through limited liability entities that are flow-through entities for tax purposes and became effective for fiscal years and interim periods beginning after December 15, 2014. After evaluating the provisions of this release the Company determined it would not adopt this ASU, resulting in no impact on the Company's financial condition or results of operations.

ASU No. 2014-09 and 2015-14

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 205): An Amendment of the FASB Accounting Standards Codification, which clarifies the principles for recognizing revenue from contracts with customers. The new accounting guidance, which does not apply to financial instruments, clarifies that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. As part of that principle, the entity should identify the contract(s) with the customer, identify the performance obligation(s) of the contract, determine the transaction price, allocate that transaction price to the performance obligation(s) of the contract, and then recognize revenue when or as the entity satisfies the performance obligation(s).

In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date , which deferred the original effective date declared in ASU No. 2014-09 by one year. Accordingly, the amendments in ASU No. 2014-09 will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that annual reporting period. The amendments will be applied through the election of one of two retrospective methods. The Company is in the process of evaluating the new guidance and its impact on the Company's financial condition or results of operations.

ASU No. 2014-12

In June 2014, the FASB issued ASU No. 2014-12 Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period, which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is intended to resolve the diverse accounting treatments of these types of awards in practice and is effective for annual and interim periods beginning after December 15, 2015. The Company does not expect the new guidance to have a material impact on the Company's financial condition or results of operations.

ASU No. 2014-13

In August 2014, the FASB issued ASU No. 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and Financial Liabilities of a Consolidated Collateralized Financing Entity, which will allow an alternative fair value measurement approach for consolidated collateralized financing entities (CFEs) to eliminate a practice issue that results in measuring the fair value of a CFE’s financial assets at a different amount from the fair value of its financial liabilities even when the financial liabilities have recourse to only the financial assets. The approach would permit the parent company of a consolidated CFE to measure the CFE’s financial assets and financial liabilities based on the more observable of the fair value of the financial assets and the fair value of the financial liabilities. The new accounting guidance is for the annual period ending after December 15, 2015, and for annual periods and interim periods thereafter, with early application permitted as of the beginning of an annual period. The Company does not expect the new guidance to have a material impact on the Company’s financial condition or results of operations.

ASU No. 2014-15

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which will require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards in connection with preparing financial statements for each annual and interim reporting period. The new accounting guidance is for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter, with early application permitted. The Company does not expect the new guidance to have a material impact on the Company's financial condition or results of operations.

ASU No. 2015-02

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which eliminates the deferral of FAS 167 and makes changes to both the variable interest model and the voting model. The new accounting guidance is for the annual period beginning after December 15, 2015, and for annual periods and interim periods thereafter, with early application permitted. The Company does not expect the new guidance to have a material impact on the Company's financial condition or results of operations.

ASU No. 2015-03

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The new accounting guidance is for the annual period beginning after December 15, 2015, and for annual periods and interim periods thereafter, with early application permitted. The Company does not expect the new guidance to have a material impact on the Company's financial condition or results of operations.

ASU No. 2015-05

In April 2015, the FASB issued ASU No. 2015-05, Intangibles-Goodwill and Other Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which provides guidance to clarify a customer’s accounting for fees paid in a cloud computing arrangement. The new accounting guidance is for the annual period beginning after December 15, 2015, and for annual periods and interim periods thereafter, with early application permitted. The Company does not expect the new guidance to have a material impact on the Company's financial condition or results of operations.

ASU No. 2015-16

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined as if the accounting had been completed at the acquisition date. The new accounting guidance is for the annual period beginning after December 15, 2015, and for annual periods and interim periods thereafter. The amendments in this update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update with early application permitted for financial statements that have not been issued. The Company does not expect the new guidance to have a material impact on the Company's financial condition or results of operations.

ASU No. 2016-01

In January 2016, the FASB issued ASU No. 2016-01, Financial Instrument-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which (1) requires equity investments to be measured at fair value with changes in fair value recognized in net income, (2) simplifies the impairment assessment of equity investments with readily determinable fair values by requiring a qualitative assessment to identify impairment, (3) eliminates the requirement to disclose the fair value instruments measured at amortized cost for entities that are not public business entities, (4) eliminates the requirement for public business entities to disclose the method and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (5) requires public business entities to use the exit price notion when measuring fair value of financial instruments for disclosure purposes, (6) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (7) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements, and (8) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity's other deferred tax assets. The new accounting guidance is for the annual period beginning after December 15, 2017, including interim periods. The Company does not expect the new guidance to have a material impact on the Company's financial condition or results of operations.

ASU No. 2016-02

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term for all leases (with the exception of short-term leases) at the commencement date. The new lease guidance simplified the accounting

for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. The guidance is for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early application is permitted for all entities upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently evaluating the provisions of the ASU to determine the potential impact the new standard will have on the Company's financial condition or results of operations.

ASU No. 2016-05

In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships, which clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship. The amendments apply to all reporting entities for which there is a change in the counterparty to a derivative instrument that has been designated as a hedging instrument. The amendments are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The amendments may be applied on either a prospective basis or a modified retrospective basis. The adoption of this guidance is not expected to have a material impact on the Company's financial condition or results of operations.

ASU No. 2016-06

In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments, that requires embedded derivatives to be separated from the host contract and accounted for separately as derivatives if certain criteria are met. The amendments apply to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. The amendments clarify what steps are required when assessing whether the economic characteristics and risks or call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts, which is one of the criteria for bifurcating an embedded derivative. Consequently, when a call (put) option is contingently exercisable, an entity does not have to assess whether the event triggers the ability to exercise a call (put) option is related to interest rates or credit risks. Public business entities must apply the new requirements for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial condition or results of operations.

ASU No. 2016-07

In March 2016, the FASB issued ASU 2016-07, Investments- Equity Method and Joint Ventures (Topic 323), which simplifies the transition to the equity method of accounting. The amendments affect all entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments require that an entity that has an available for sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments are effective for all entities for fiscal years beginning after December 15, 2016. The adoption of this guidance is not expected to have a material impact on the Company's financial condition or results of operations.

ASU No. 2016-08

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), that improves the operability and understandibility of the implementation guidance on principal versus agent considerations. The amendments relate to when another party, along with the entity, is involved in providing a good or service to a customer. It requires an entity to determine whether the nature of its promise is to provide that good or service to the customer (i.e., the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (i.e., the entity is an agent). Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's financial condition or results of operations.

ASU No. 2016-09

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, to improve the accounting for employee share-based payments. Several aspects of the accounting for share-based payment award transactions are simplified, including income tax consequences; classification of awards as either equity or liabilities; and classification on the statement of cash flows. The amendments are effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any interim or annual period. The Company is currently assessing the pronouncement and the impact of adoption.

ASU No. 2016-10

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, that clarifies the identification of performance obligations and licensing from revenue from contracts with customers. The amendments help determine the whether promises to transfer goods or services to a customer are separately identifiable by emphasizing that an entity determines whether the nature of its promise in the contract is to transfer each of the goods or services or whether the promise is to transfer a combined item (or items) to which promised goods and/or services are inputs. In addition, the amendments clarify how to determine whether an entity's promise to grant a license provides a customer with either a right to use the entity's intellectual property or a right to access the entity's intellectual property. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein. Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently assessing this pronouncement and adoption of this guidance, but it is not expected to have a material impact on the Company's financial condition or results of operations.

ASU No. 2016-12

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which is intended to improve implementation guidance on certain narrow aspects of Topic 606. The amendments in this ASU:


•	Clarify how an entity assesses the collectability criterion in Step 1 of Topic 606;


•	Permit, as an accounting policy election, entities to exclude from the transaction price amounts collected from customers for all sales (and other similar) taxes;


•	Specify the measurement date of noncash consideration as the date of contract inception;


•	Clarify when a contract is considered completed for purposes of transition of Topic 606; and


•	Clarify that an entity that retrospectively applies the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting change for the period of adoption. However, an entity is still required to disclose the effect of the changes on any prior periods retrospectively adjusted.

Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein. Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently assessing this pronouncement and adoption of this guidance, but it is not expected to have a material impact on the Company's financial condition or results of operations.

ASU No. 2016-13

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU , more commonly referred to as Current Expected Credit Losses, or CECL, requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

Public entities should apply the amendments for annual reporting periods beginning after December 15, 2019, including interim reporting periods therein. Early application for public entities is permitted as of annual reporting periods beginning after December 15, 2018, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of the ASU on the Company’s financial condition or results of operations.

2. Restatement of Previously Issued Financial Statements

As summarized in the tables below (and the unaudited quarterly financial information in Note 33), prior period financial statements have been restated to correct for the following accounting errors:

•

Use of an inappropriate amortization method in accounting for the Company’s various investments in tax credit partnerships, as opposed to proper application of the equity method of accounting. These adjustments also include recognition of additional impairments to certain investments in Federal and State Historic Rehabilitation Tax Credit entities based on information available at the time the related financial statements were issued.

•

Consolidation of certain investments in Federal Low-Income Housing Tax Credit entities because such entities were determined to be variable interest entities in which the Company was the primary beneficiary. The result of the consolidation was an adjustment to decrease loans, increase investments in real estate properties, and adjust the related operating results of these entities in the consolidated financial statements (including removing the impact of the erroneous historical accounting).


•	Various other adjustments (e.g., state tax credit timing errors).


•	Income tax effects related to the above adjustments.

These errors were identified through evaluations in 2015 of the appropriateness of the Company’s prior amortized cost method used to account for investments in these tax credit entities, more detailed analyses of potential impairments given information that was available at the time the prior period statements were issued, and a reconsideration of the investments in the Company's variable interest entities. The restatements cover the periods from 2013 through September 30, 2015, the last date through which financial statements previously had been issued.

The following is a summary of the overall impact of the errors on prior years:



	For the Years Ended December 31,
(In thousands)	2014			2013
Net income, as previously reported	$	55,589		$	40,911
Correction to equity-method and recognition of impairment	(11,008		)	(4,460		)
Consolidation of certain investments	(4,562		)	(5,152		)
Other corrections	(1,259		)	(1,329		)
	(16,829		)	(10,941		)
Tax-effect of corrections	5,747			3,656
Total adjustments, net	(11,082		)	(7,285		)
Net income, as restated	$	44,507		$	33,626



	As of December 31,
(In thousands)	2014			2013			2012
Accumulated earnings, as previously reported	$	155,599		$	100,389		$	59,825
Prior year restatement adjustments, net	(16,759		)	(9,474		)	(5,242		)
Correction to equity-method and recognition of impairment	(11,008		)	(4,460		)	463
Consolidation of certain investments	(4,562		)	(5,152		)	(5,216		)
Other corrections	(1,259		)	(1,329		)	(578		)
	(33,588		)	(20,415		)	(10,573		)
Tax-effect of corrections	5,747			3,656			1,099
Total adjustments, net	(27,841		)	(16,759		)	(9,474		)
Accumulated earnings, as restated	$	127,758		$	83,630		$	50,351

The following tables summarize, by line item, the impacts of the restatement to the Company’s prior period consolidated balance sheets, statements of income, and statements of cash flows as included in these audited financial statements. Some

amounts presented below as previously reported have been adjusted to reflect certain reclassification adjustments to conform to the current period presentation.

See Note 33 for the restated consolidated quarterly results for the quarterly periods from 2013 through September 30, 2015.

CONSOLIDATED BALANCE SHEET



December 31, 2014
(In thousands)	As previously reported			Restatement adjustments			As restated
Assets
Cash and due from banks:
Noninterest-bearing	$	32,484		$	—		$	32,484
Interest-bearing	18,404			—			18,404
Cash and cash equivalents	50,888			—			50,888
Investment in short-term receivables	237,135			—			237,135
Investment securities available for sale, at fair value	247,647			—			247,647
Investment securities held to maturity (fair value of $90,956)	89,076			—			89,076
Mortgage loans held for sale	1,622			—			1,622
Loans, net of allowance for loan losses of $42,336	2,697,638			(65,951		)	2,631,687
Bank premises and equipment, net	51,170			—			51,170
Accrued interest receivable	11,451			—			11,451
Goodwill and other intangible assets	7,831			325			8,156
Investment in real estate properties	16,480			67,787			84,267
Investment in tax credit entities, net	175,203			(33,686		)	141,517
Cash surrender value of bank-owned life insurance	47,289			—			47,289
Other real estate	5,549			—			5,549
Deferred tax asset	83,461			10,054			93,515
Other assets	28,177			(4,266		)	23,911
Total assets	$	3,750,617		$	(25,737	)	$	3,724,880
Liabilities and equity
Deposits:
Noninterest-bearing	$	364,534		$	(1,957	)	$	362,577
Interest-bearing	2,756,316			—			2,756,316
Total deposits	3,120,850			(1,957		)	3,118,893
Repurchase agreements	117,991			—			117,991
Long-term borrowings	40,000			—			40,000
Accrued interest payable	6,650			—			6,650
Other liabilities	28,752			4,061			32,813
Total liabilities	3,314,243			2,104			3,316,347
Shareholders’ equity:
Preferred stock:
Convertible preferred stock Series C – no par value; 1,680,219 shares authorized; 364,983 shares issued and outstanding at December 31, 2014	4,471			—			4,471
Preferred stock Series D – no par value; 37,935 shares authorized, issued and outstanding at December 31, 2014	37,935			—			37,935
Common stock- par value $1 per share; 100,000,000 shares authorized; 18,576,488 shares issued and outstanding at December 31, 2014	18,576			—			18,576
Additional paid-in capital	239,528			—			239,528
Accumulated earnings	155,599			(27,841		)	127,758
Accumulated other comprehensive loss, net	(19,737		)	—			(19,737		)
Total shareholders’ equity	436,372			(27,841		)	408,531
Noncontrolling interest	2			—			2
Total equity	436,374			(27,841		)	408,533
Total liabilities and equity	$	3,750,617		$	(25,737	)	$	3,724,880

CONSOLIDATED STATEMENT OF INCOME



Year Ended December 31, 2014
(In thousands, except per share data)	As previously reported			Restatement adjustments			As restated
Interest income:
Loans, including fees	$	134,256		$	(2,960	)	$	131,296
Investment securities	9,147			—			9,147
Investment in short-term receivables	6,512			—			6,512
Short-term investments	63			—			63
	149,978			(2,960		)	147,018
Interest expense:
Deposits	40,183			—			40,183
Borrowings and securities sold under repurchase agreements	2,546			—			2,546
	42,729			—			42,729
Net interest income	107,249			(2,960		)	104,289
Provision for loan losses	12,000			—			12,000
Net interest income after provision for loan losses	95,249			(2,960		)	92,289
Noninterest income:
Service charges on deposit accounts	2,147			—			2,147
Investment securities gain, net	135			—			135
Gain on assets sold, net	64			—			64
Gain on sale of loans, net	649			—			649
Cash surrender value income on bank-owned life insurance	1,102			—			1,102
Sale of state tax credits earned	2,313			(1,311		)	1,002
Community Development Entity fees earned	1,565			—			1,565
ATM fee income	1,958			—			1,958
Rental property income	105			3,528			3,633
Other	1,575			—			1,575
	11,613			2,217			13,830
Noninterest expense:
Salaries and employee benefits	24,867			—			24,867
Occupancy and equipment expenses	10,796			—			10,796
Professional fees	7,587			—			7,587
Taxes, licenses and FDIC assessments	5,146			—			5,146
Impairment of investment in tax credit entities	14,059			11,008			25,067
Write-down of foreclosed assets	385			—			385
Data processing	4,721			—			4,721
Advertising and marketing	2,886			—			2,886
Rental property expenses	52			5,130			5,182
Other	7,750			(52		)	7,698
	78,249			16,086			94,335
Income before income taxes	28,613			(16,829		)	11,784
Income tax benefit	(26,976		)	(5,747		)	(32,723		)
Net income attributable to Company	55,589			(11,082		)	44,507
Less preferred stock dividends	(379		)	—			(379		)
Less earnings allocated to participating securities	(1,066		)	214			(852		)
Income available to common shareholders	$	54,144		$	(10,868	)	$	43,276
Earnings per common share – basic	$	2.92		$	(0.59	)	$	2.33
Earnings per common share – diluted	$	2.84		$	(0.57	)	$	2.27

CONSOLIDATED STATEMENT OF INCOME



Year Ended December 31, 2013
(In thousands, except per share data)	As previously reported			Restatement adjustments			As restated
Interest income:
Loans, including fees	$	111,260		$	(2,692	)	$	108,568
Investment securities	8,170			—			8,170
Investment in short-term receivables	4,449			—			4,449
Short-term investments	145			—			145
	124,024			(2,692		)	121,332
Interest expense:
Deposits	36,239			—			36,239
Borrowings and securities sold under repurchase agreements	2,909			—			2,909
	39,148			—			39,148
Net interest income	84,876			(2,692		)	82,184
Provision for loan losses	9,800			—			9,800
Net interest income after provision for loan losses	75,076			(2,692		)	72,384
Noninterest income:
Service charges on deposit accounts	2,027			—			2,027
Investment securities gain, net	316			—			316
Gain on assets sold, net	1,081			—			1,081
Gain on sale of loans, net	835			—			835
Cash surrender value income on bank-owned life insurance	681			—			681
Sale of state tax credits earned	2,785			(1,329		)	1,456
Community Development Entity fees earned	2,875			—			2,875
ATM fee income	1,859			—			1,859
Rental property income	109			2,188			2,297
Other	859			—			859
	13,427			859			14,286
Noninterest expense:
Salaries and employee benefits	23,813			—			23,813
Occupancy and equipment expenses	10,116			—			10,116
Professional fees	6,929			—			6,929
Taxes, licenses and FDIC assessments	4,245			—			4,245
Impairment of investment in tax credit entities	8,639			4,460			13,099
Write-down of foreclosed assets	235			—			235
Data processing	4,219			—			4,219
Advertising and marketing	2,427			—			2,427
Rental property expenses	88			4,648			4,736
Other	6,632			—			6,632
	67,343			9,108			76,451
Income before income taxes	21,160			(10,941		)	10,219
Income tax benefit	(19,751		)	(3,656		)	(23,407		)
Net income attributable to Company	40,911			(7,285		)	33,626
Less preferred stock dividends	(347		)	—			(347		)
Less earnings allocated to participating securities	(1,980		)	(254		)	(2,234		)
Income available to common shareholders	$	38,584		$	(7,539	)	$	31,045
Earnings per common share – basic	$	2.38		$	(0.46	)	$	1.92
Earnings per common share – diluted	$	2.32		$	(0.45	)	$	1.87

CONSOLIDATED STATEMENT OF CASH FLOWS



Year Ended December 31, 2014
(In thousands)	As previously reported			Restatement adjustments			As restated
Operating activities
Net income	$	55,589		$	(11,082	)	$	44,507
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred tax benefit	(30,412		)	(5,747		)	(36,159		)
Impairment of tax credit investments	14,059			11,008			25,067
Accretion of fair value adjustments related to acquisition	(104		)	—			(104		)
Net discount accretion or premium amortization	578			—			578
Gain on sale of investment securities	(135		)	—			(135		)
Gain on assets sold	(64		)	—			(64		)
Write-down of foreclosed assets	385			—			385
Proceeds from sale of mortgage loans held for sale	49,334			—			49,334
Mortgage loans originated and held for sale	(44,379		)	—			(44,379		)
Gain on sale of loans	(649		)	—			(649		)
Derivative losses on terminated interest rate hedges, net	(7,990		)	—			(7,990		)
Provision for loan losses	12,000			—			12,000
Depreciation and amortization	3,554			(37		)	3,517
Share-based and other compensation expense	1,339			—			1,339
Increase in cash surrender value of bank-owned life insurance	(1,102		)	—			(1,102		)
Changes in operating assets and liabilities:				—
Change in other assets	(10,015		)	7,535			(2,480		)
Change in accrued interest receivable	(457		)	—			(457		)
Change in accrued interest payable	(32		)	—			(32		)
Change in other liabilities	(7,661		)	(1,194		)	(8,855		)
Net cash provided by operating activities	33,838			483			34,321
Investing activities
Purchases of available for sale investment securities	(22,153		)	—			(22,153		)
Proceeds from sales of available for sale investment securities	41,670			—			41,670
Proceeds from maturities, prepayments, and calls of available for sale investment securities	22,229			—			22,229
Proceeds from sales of held to maturity securities	2,650			—			2,650
Proceeds from maturities, prepayments, and calls of held to maturity securities	3,851			—			3,851
Net change in investments in short-term receivables	9,682			—			9,682
Reimbursement of investment in tax credit entities	24,000			—			24,000
Purchases of investments in tax credit entities	(61,288		)	(1,441		)	(62,729		)
Loans originated, net of repayments	(421,948		)	1,432			(420,516		)
Proceeds from sale of bank premises and equipment	46			—			46
Purchases of bank premises and equipment	(4,706		)	—			(4,706		)
Proceeds from disposition of real estate owned	2,657			—			2,657
Purchases of bank-owned life insurance	(20,000		)	—			(20,000		)
Net cash used in investing activities	(423,310		)	(9		)	(423,319		)
Financing activities
Net increase in deposits	389,736			(474		)	389,262
Net change in repurchase agreements	42,034			—			42,034
Repayment of borrowings	(23,535		)	—			(23,535		)
Proceeds from issuance of common stock, net of offering costs	862			—			862
Dividends paid	(379		)	—			(379		)
Net cash provided by financing activities	408,718			(474		)	408,244
Net change in cash and cash equivalents	19,246			—			19,246
Cash and cash equivalents at beginning of year	31,642						31,642
Cash and cash equivalents at end of year	$	50,888		$	—		$	50,888

CONSOLIDATED STATEMENT OF CASH FLOWS



Year Ended December 31, 2013
(In thousands)	As previously reported			Restatement adjustments			As restated
Operating activities
Net income	$	40,911		$	(7,285	)	$	33,626
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred tax benefit	(19,937		)	(3,656		)	(23,593		)
Impairment of tax credit investments	8,639			4,460			13,099
Net discount accretion or premium amortization	2,633			—			2,633
Gain on sale of investment securities	(316		)	—			(316		)
Gain on assets sold	(1,081		)	—			(1,081		)
Write-down of foreclosed assets	235			—			235
Proceeds from sale of mortgage loans held for sale	96,677			—			96,677
Mortgage loans originated and held for sale	(77,394		)	—			(77,394		)
Gain on sale of loans	(835		)	—			(835		)
Provision for loan losses	9,800			—			9,800
Depreciation and amortization	2,963			(72		)	2,891
Share-based and other compensation expense	2,124			—			2,124
Increase in cash surrender value of bank-owned life insurance	(681		)	—			(681		)
Decrease in receivables from sales of investments	16,909			—			16,909
Changes in operating assets and liabilities:
Change in other assets	(5,168		)	1,619			(3,549		)
Change in accrued interest receivable	(2,266		)	—			(2,266		)
Change in accrued interest payable	1,125			—			1,125
Change in other liabilities	15,125			(1,111		)	14,014
Net cash provided by operating activities	89,463			(6,045		)	83,418
Investing activities
Purchases of available for sale investment securities	(132,123		)	—			(132,123		)
Proceeds from sales of available for sale investment securities	45,791			—			45,791
Proceeds from maturities, prepayments, and calls of available for sale investment securities	91,328			—			91,328
Proceeds from maturities, prepayments, and calls of held to maturity securities	1,013			—			1,013
Net change in investments in short-term receivables	(165,773		)	—			(165,773		)
Purchases of investments in tax credit entities	(58,930		)	1,534			(57,396		)
Loans originated, net of repayments	(444,592		)	3,608			(440,984		)
Proceeds from sale of bank premises and equipment	324			—			324
Purchases of bank premises and equipment	(7,129		)	1,216			(5,913		)
Proceeds from disposition of real estate owned	5,015			—			5,015
Net cash used in investing activities	(665,076		)	6,358			(658,718		)
Financing activities
Net increase in deposits	461,073			(313		)	460,760
Net change in repurchase agreements	39,670			—			39,670
Proceeds from borrowings	8,425			—			8,425
Repayment of borrowings	(41,910		)	—			(41,910		)
Proceeds from issuance of common stock, net of offering costs	104,332			—			104,332
Dividends paid	(347		)	—			(347		)
Net cash provided by financing activities	571,243			(313		)	570,930
Net change in cash and cash equivalents	(4,370		)	—			(4,370		)
Cash and cash equivalents at beginning of year	36,012			—			36,012
Cash and cash equivalents at end of year	$	31,642		$	—		$	31,642

3. Acquisition Activity

Acquisition of Certain Assets and Liabilities of First National Bank of Crestview

On January 16, 2015, the Company acquired certain assets and assumed certain liabilities from the Federal Deposit Insurance Corporation (FDIC), as receiver for First National Bank of Crestview, a full-service commercial bank headquartered in Crestview, Florida, which was closed and placed into receivership. Under the terms of the agreement, the Company agreed to assume all of the deposit liabilities, and acquire approximately $62.3 million of assets, of the failed bank. The acquired assets included the failed bank's performing loans, substantially all of its investment securities portfolio, and its three banking facilities, with the FDIC retaining the remaining assets. The transaction did not include a loss-share agreement with the FDIC. The Company received a settlement amount from the FDIC of $10.0 million and recorded goodwill of $1.2 million, as shown in the table below. With this acquisition, the Company expanded into the Florida Panhandle market through the addition of the three banking locations and an experienced in-market team that enhances the Company's ability to compete in that market.



(In thousands)
Total consideration received	$	10,035
Fair value of assets acquired, including identifiable intangible assets	61,088
Fair value of liabilities assumed	72,314
Goodwill	$	1,191

Acquisition of State Investors Bancorp, Inc.

On November 30, 2015, the Company acquired State Investors Bancorp, Inc. (SIBC), the parent company for State-Investors Bank, which conducted business from four full service banking offices in the New Orleans metropolitan area. Under the terms of the agreement, each share of SIBC common stock was converted into cash in the amount of $21.51 per share and each issued and outstanding option to purchase a share of SIBC common stock, including any unvested option, which became fully vested in connection with the completion of the merger, was canceled and converted into cash in an amount equal to the difference between $21.51 and the exercise price of the stock option. The Company acquired all of the outstanding common stock of the former SIBC shareholders for a total consideration of $48.7 million, which resulted in goodwill of $8.6 million, as shown in the table below. With this acquisition, the Company expanded its presence in the New Orleans metropolitan area which enhances its ability to compete in that market. The Company projects cost savings will be recognized in future periods through the elimination of redundant operations.



(In thousands)
Total consideration paid	$	48,744
Fair value of assets acquired, including identifiable intangible assets	254,080
Fair value of liabilities assumed	213,981
Goodwill	$	8,645

The Company incurred merger and acquisition costs of $1.2 million during 2015 for the two acquisitions discussed above. The amount of revenue and earnings for the acquired entities for the years ended December 31, 2015 and December 31, 2014 were not material and therefore not presented herein.

The acquired assets and liabilities, as well as the adjustments to record the assets and liabilities at their estimated fair values, are presented in the following tables:

First National Bank of Crestview



(In thousands)	As Acquired		Preliminary Fair Value Adjustments				As recorded by First NBC Bank
Assets
Cash and due from banks	$	1,511	$	—			$	1,511
Short-term investments	19,971		—				19,971
Investment securities-available for sale	9,559		—				9,559
Loans	27,647		(1,203		)	⁽¹⁾	26,444
Bank premises	3,120		—				3,120
Core deposit intangible	—		188			⁽²⁾	188
Other assets	455		(160		)		295
Total Assets	$	62,263	$	(1,175	)		$	61,088

Liabilities
Deposits:
Noninterest-bearing	$	22,680	$	—			$	22,680
Interest-bearing	49,584		16			⁽³⁾	49,600
Total deposits	72,264		16				72,280
Other liabilities	34		—				34
Total Liabilities	$	72,298	$	16			$	72,314

Explanation of certain fair value adjustments:

(1) The amount represents the adjustment of the book value of First National Bank of Crestview's loans to their estimated fair value based on current interest rates and expected cash flows, which includes estimates of expected credit losses inherent in the portfolio.

(2) The amount represents the estimated fair value of the core deposit intangible asset created in the acquisition. The core deposit intangible asset will be amortized over the estimated useful life of 12 years.

(3) The adjustment is necessary because the weighted-average interest rate of First National Bank of Crestview's deposits exceeded the cost of similar funding at the time of acquisition. The fair value adjustment will be amortized to reduce future interest expense over the expected life of the deposits, which is estimated at 49 months.

State Investors Bancorp, Inc.



(In thousands)	As Acquired		Preliminary Fair Value Adjustments				As recorded by First NBC Bank
Assets
Cash and due from banks	$	20,031	$	—			$	20,031
Short-term investments	12,338		—				12,338
Investment securities-available for sale	27,388		(193		)	⁽¹⁾	27,195
Loans	182,249		(2,830		)	⁽²⁾	179,419
Bank premises and equipment	7,708		592			⁽³⁾	8,300
Deferred tax asset	1,004		1,416			⁽⁴⁾	2,420
Core deposit intangible	—		468			⁽⁵⁾	468
Other assets	3,909		—				3,909
Total Assets	$	254,627	$	(547	)		$	254,080

Liabilities
Deposits:
Noninterest-bearing	$	11,416	$	—			$	11,416
Interest-bearing	141,235		1,245			⁽⁶⁾	142,480
Total deposits	152,651		1,245				153,896
Borrowings	55,913		868			⁽⁷⁾	56,781
Other liabilities	3,304		—				3,304
Total Liabilities	$	211,868	$	2,113			$	213,981

Explanation of certain fair value adjustments:

(1) The amount represents the adjustment of the book value of SIBC's investments to their estimated fair value based on fair values on the date of acquisition.

(2) The amount represents the adjustment of the book value of loans acquired to their estimated fair value based on current interest rates and expected cash flows, which includes estimates of expected credit losses inherent in the portfolio.

(3) The amount represents the adjustment of the book value of SIBC's bank premises and equipment to their estimated fair value at the acquisition date based on their appraised value on the date of acquisition.

(4) The amount represents the deferred tax asset recognized on the fair value adjustment of SIBC acquired assets and assumed liabilities.

(5) The amount represents the estimated fair value of the core deposit intangible asset created in the acquisition. The core deposit intangible asset will be amortized over the estimated useful life of 12 years.

(6) The adjustment is necessary because the weighted-average interest rate of SIBC's deposits exceeded the cost of similar funding at the time of acquisition. The fair value adjustment will be amortized to reduce future interest expense over the life of the deposits.

(7) The adjustment represents the adjustment of the book value of SIBC's borrowings to their estimated fair value based on current interest rates and the credit characteristics inherent in the liability.

4. Earnings Per Share

The following sets forth the computation of basic net income per common share and diluted net income per common share:



	Year Ended December 31,
(In thousands, except per share data)	2015			2014		2013
				(Restated)		(Restated)
Basic: (Loss) income available to common shareholders	$	(25,503	)	$	43,276	$	31,045
Weighted-average common shares outstanding	18,806			18,541		16,204
Basic (loss) earnings per share	$	(1.36	)	$	2.33	$	1.92
Diluted: (Loss) income attributable to common shareholders	$	(25,503	)	$	43,276	$	31,045
Weighted-average common shares outstanding	18,806			18,541		16,204
Effect of dilutive securities:
Stock options outstanding	—			389		337
Restricted stock awards outstanding	—			—		—
Warrants	—			119		83
Weighted-average common shares outstanding – assuming dilution	18,806			19,049		16,624
Diluted (loss) earnings per share	$	(1.36	)	$	2.27	$	1.87

The effect from the assumed exercise of 414 thousand shares of stock options outstanding, 4 thousand shares of restricted stock grants, and 119 thousand shares of warrants outstanding were not included in the computation of diluted earnings per share for the year ended December 31, 2015 because such amounts would have had an antidilutive effect on earnings per share.

5. Cash and Due From Banks

The Company is required to maintain reserve requirements with the Federal Reserve Bank. The requirements are dependent upon the Bank’s cash on hand and transaction deposit account balances. The reserve requirements at December 31, 2015 and 2014, were $13.2 million and $9.3 million, respectively.

6. Investment in Short-Term Receivables

The Company invests in short-term trade receivables purchased on an exchange, which are covered by repurchase agreements from the sellers of the receivables, if not paid within a specified period. Since the receivables are traded on an exchange, the Company has the ability to resell the receivables on the exchange. As of December 31, 2015 and 2014, the Company had $25.6 million and $237.1 million, respectively, in purchased receivables.

The Company invested in receivables of $69.9 million which became delinquent primarily subsequent to December 31, 2015, but had defined weaknesses as of December 31, 2015. The Company determined that the these receivables were impaired and recorded impairment for the outstanding balance of the receivables. The parent company of the obligor on the receivables filed for bankruptcy during 2016. The Company has rights against the obligor and its parent company on the receivables. In addition, the Company and the receivables seller are parties to an agreement providing for certain repurchase obligations by the receivables seller with respect to the delinquent receivables.

7. Investment Securities

The amortized cost and market values of investment securities, with gross unrealized gains and losses, as of December 31, 2015 and December 31, 2014, were as follows:



	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses						Estimated Market Value
(In thousands)	Amortized Cost		Gross Unrealized Gains		Less Than One Year			Greater Than One Year			Estimated Market Value
Available for sale:
U.S. government agency securities	$	151,369	$	552	$	(1,591	)	$	(655	)	$	149,675
U.S. Treasury securities	13,015		—		—			(312		)	12,703
Municipal securities	12,115		76		—			(91		)	12,100
Mortgage-backed securities	78,227		367		(934		)	(149		)	77,511
Corporate bonds	8,103		—		(280		)	—			7,823
Other equity securities	20		—		—			—			20
Other debt securities	25,994		1		(1		)	—			25,994
	$	288,843	$	996	$	(2,806	)	$	(1,207	)	$	285,826
Held to maturity:
Municipal securities	$	38,950	$	1,888	$	—		$	(18	)	$	40,820
Mortgage-backed securities	43,124		674		(196		)	(1,622		)	41,980
	$	82,074	$	2,562	$	(196	)	$	(1,640	)	$	82,800



	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses						Estimated Market Value
(In thousands)	Amortized Cost		Gross Unrealized Gains		Less Than One Year			Greater Than One Year			Estimated Market Value
Available for sale:
U.S. government agency securities	$	161,461	$	891	$	—		$	(4,825	)	$	157,527
U.S. Treasury securities	13,019		—		—			(409		)	12,610
Municipal securities	12,175		107		(36		)	—			12,246
Mortgage-backed securities	57,025		635		(137		)	(436		)	57,087
Corporate bonds	8,263		—		—			(86		)	8,177
	$	251,943	$	1,633	$	(173	)	$	(5,756	)	$	247,647
Held to maturity:
Municipal securities	$	41,255	$	2,182	$	(62	)	$	—		$	43,375
Mortgage-backed securities	47,821		1,098		(208		)	(1,130		)	47,581
	$	89,076	$	3,280	$	(270	)	$	(1,130	)	$	90,956

During 2013, the Company transferred securities with a fair value of $95.4 million from available-for-sale to held to maturity. Management determined that it has both the positive intent and ability to hold these securities until maturity. The reclassified securities consisted of municipal and mortgage-backed securities and were transferred due to movements in interest rates. The securities were reclassified at fair value at the time of the transfer and represented a non-cash transaction. Accumulated other comprehensive income (loss) included pre-tax unrealized losses of $5.9 million on these securities at the date of the transfer. As of December 31, 2015, $4.5 million of pre-tax unrealized losses on these securities were included in accumulated other comprehensive income. These unrealized losses and offsetting other comprehensive income components are being amortized into net interest income over the remaining life of the related securities as a yield adjustment, resulting in no impact on future net income.

At December 31, 2015, the Company’s exposure to three investment security issuers individually exceeded 10% of shareholders’ equity:



(In thousands)	Amortized Cost		Estimated Market Value
Federal National Mortgage Association (Fannie Mae)	$	85,511	$	84,519
Federal Home Loan Bank (FHLB)	64,313		64,073
Federal Home Loan Mortgage Corporation (Freddie Mac)	54,901		52,797
	$	204,725	$	201,389

As of December 31, 2015, the Company had 205 securities that were in a loss position. The unrealized losses for each of the 205 securities relate to market interest rate changes. The Company has considered the current market for the securities in a loss position, as well as the severity and duration of the impairments, and expects that the value will recover. As of December 31, 2015, management does not intend to sell these investments until the fair value exceeds amortized cost and it is more likely than not that the Company will not be required to sell debt securities before the anticipated recovery of the amortized cost basis of the security; thus, the impairment is determined not to be other-than-temporary.

As of December 31, 2014, the Company had 38 securities that were in a loss position. The unrealized losses for each of the 38 securities relate to market interest rate changes. The Company has considered the current market for the securities in a loss position, as well as the severity and duration of the impairments, and expects that the value will recover. As of December 31, 2014, management had both the intent and ability to hold these investments until the fair value exceeds amortized cost; thus, the impairment is determined not to be other-than-temporary. In addition, management does not believe the Company will be required to sell debt securities before the anticipated recovery of the amortized cost basis of the security.

The amortized cost and estimated market values by contractual maturity of investment securities as of December 31, 2015 and December 31, 2014 are shown in the following table. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



	December 31, 2015						December 31, 2014
(In thousands)	Weighted Average Yield		Amortized Cost		Estimated Market Value		Weighted Average Yield		Amortized Cost		Estimated Market Value
Available for sale:
Due in one year or less	1.19	%	$	36,599	$	36,558	1.78	%	$	571	$	573
Due after one year through five years	1.71		134,275		133,485		2.64		51,037		51,916
Due after five years through ten years	1.88		105,950		104,184		2.02		176,631		172,012
Due after ten years	2.29		12,019		11,599		3.34		23,704		23,146
Total available for sale securities	1.77	%	$	288,843	$	285,826	2.27	%	$	251,943	$	247,647
Held to maturity:
Due in one year or less	4.90	%	$	3,190	$	3,068	3.88	%	$	2,045	$	2,003
Due after one year through five years	3.68		36,673		38,371		4.16		20,921		21,875
Due after five years through ten years	3.25		14,416		14,968		3.39		32,618		33,898
Due after ten years	3.44		27,795		26,393		3.30		33,492		33,180
Total held to maturity securities	3.57	%	$	82,074	$	82,800	3.55	%	$	89,076	$	90,956

Securities with estimated market values of $233.2 million and $279.1 million at December 31, 2015 and December 31, 2014, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase, and long-term borrowings.

There were no proceeds from the sales of securities for the year ended December 31, 2015. Proceeds from sales of available for sale securities for the years ended December 31, 2014 and 2013 were $41.7 million and $45.8 million, respectively. Gross gains of $0.8 million and $0.5 million were realized on these sales for the years ended December 31, 2014 and 2013, respectively. There were gross losses of $0.6 and $0.2 realized for the years ended December 31, 2014 and 2013, respectively.

The Company sold a municipal security that was classified as held to maturity in 2014. The proceeds from the sale were $2.7 million and the Company recorded a gross loss of $0.1 million which was realized on this sale. The Company made the decision to sell the municipal security due to the deteriorating credit worthiness of the issuer. The Company has the ability and intent to hold the remaining securities within the held to maturity portfolio to maturity. There were no such sales of securities classified as held to maturity during the year ended December 31, 2015.

Other Equity Securities

At December 31, 2015 and 2014, the Company included the following securities in other assets, at cost, in the accompanying consolidated balance sheets:



(In thousands)	2015		2014
FHLB stock	$	7,889	$	1,347
First National Bankers Bankshares, Inc. (FNBB) stock	970		600
Other investments	5,370		5,233
Total equity securities	$	14,229	$	7,180

During 2015, the Company had an investment in a Small Business Investment Company, which is included in other investments above, that was impaired as of December 31, 2015. The Company recorded impairment of $0.9 million related to the investment for the year ended December 31, 2015. There were no such amounts recorded for the years ended December 31, 2014 and 2013.

8. Loans, net

Major classifications of loans at December 31, 2015 and December 31, 2014 were as follows:



(In thousands)	December 31, 2015			December 31, 2014
				(Restated)
Commercial real estate loans:
Construction	$	522,269		$	300,971
Mortgage(1)	1,423,545			1,228,847
	1,945,814			1,529,818
Consumer real estate loans:
Construction	9			10,556
Mortgage	264,422			132,950
	264,431			143,506
Commercial and industrial loans	1,221,283			969,220
Loans to individuals, excluding real estate	21,688			18,638
Other loans	5,377			12,841
	3,458,593			2,674,023
Less allowance for loan losses	(78,478		)	(42,336		)
Loans, net	$	3,380,115		$	2,631,687


(1)	Included in commercial real estate loans, mortgage, are owner-occupied real estate loans, of $449.1 million at December 31, 2015 and $419.3 million at December 31, 2014.

Deferred costs less deferred fees, net of amortization, related to loan origination were $14.6 million and $13.8 million as of December 31, 2015 and 2014, respectively. These amounts are included in the loan balances above.

In addition to loans issued in the normal course of business, the Company considers overdrafts on customer deposit accounts to be loans and reclassifies these overdrafts to loans in the accompanying consolidated balance sheets. At December 31, 2015 and 2014, overdrafts of $0.6 million and $0.7 million, respectively, had been reclassified to loans receivable.

Loans with carrying values of $1.1 billion and $847.0 million were pledged on a blanket lien to secure other borrowings at December 31, 2015 and 2014, respectively.

The allowance for loan losses and recorded investment in loans, including loans acquired with deteriorated credit quality as of the dates indicated are as follows:



	December 31, 2015
(In thousands)	Construction			Commercial Real Estate			Consumer Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Balance, beginning of year	$	4,030		$	14,965		$	3,316		$	19,814		$	211		$	42,336
Charge-offs	(12		)	(4,105		)	(55		)	(3,528		)	(143		)	(7,843		)
Recoveries	—			323			6			87			31			447
Provision	1,009			6,833			233			35,363			100			43,538
Balance, end of year	$	5,027		$	18,016		$	3,500		$	51,736		$	199		$	78,478
Ending balances:
Individually evaluated for impairment	$	508		$	5,674		$	322		$	40,176		$	13		$	46,693
Collectively evaluated for impairment	$	4,519		$	12,342		$	3,178		$	11,560		$	186		$	31,785
Loans receivable:
Ending balance-total	$	522,278		$	1,423,545		$	264,422		$	1,226,660		$	21,688		$	3,458,593
Ending balances:
Individually evaluated for impairment	$	2,630		$	30,007		$	4,318		$	119,652		$	144		$	156,751
Collectively evaluated for impairment	$	519,648		$	1,393,538		$	260,104		$	1,107,008		$	21,544		$	3,301,842



	December 31, 2014
(In thousands)	Construction			Commercial Real Estate			Consumer Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Balance, beginning of year	$	2,790		$	13,780		$	2,656		$	12,677		$	240		$	32,143
Charge-offs	(18		)	(1,034		)	(63		)	(648		)	(166		)	(1,929		)
Recoveries	30			—			—			71			21			122
Provision	1,228			2,219			723			7,714			116			12,000
Balance, end of year	$	4,030		$	14,965		$	3,316		$	19,814		$	211		$	42,336
Ending balances:
Individually evaluated for impairment	$	—		$	3,138		$	—		$	5,889		$	1		$	9,028
Collectively evaluated for impairment	$	4,030		$	11,827		$	3,316		$	13,925		$	210		$	33,308
Loans receivable:
Ending balance-total(1)	$	311,527		$	1,228,847		$	132,950		$	982,061		$	18,638		$	2,674,023
Ending balances:
Individually evaluated for impairment	$	927		$	13,130		$	2,085		$	15,157		$	259		$	31,558
Collectively evaluated for impairment	$	310,600		$	1,215,717		$	130,865		$	966,904		$	18,379		$	2,642,465


(1)	Loans receivable, ending balance totals have been restated. See Note 2 for an explanation of the restatement.



	December 31, 2013
(In thousands)	Construction			Commercial Real Estate			Consumer Real Estate		Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Balance, beginning of year	$	2,004		$	10,716		$	2,450	$	11,675		$	132		$	26,977
Charge-offs	(46		)	(292		)	—		(4,229		)	(202		)	(4,769		)
Recoveries	—			19			30		68			18			135
Provision	832			3,337			176		5,163			292			9,800
Balance, end of year	$	2,790		$	13,780		$	2,656	$	12,677		$	240		$	32,143
Ending balances:
Individually evaluated for impairment	$	42		$	1,639		$	183	$	2,091		$	—		$	3,955
Collectively evaluated for impairment	$	2,748		$	12,141		$	2,473	$	10,586		$	240		$	28,188
Loans receivable:
Ending balance-total(1)	$	201,744		$	1,093,401		$	117,653	$	834,093		$	16,402		$	2,263,293
Ending balances:
Individually evaluated for impairment	$	309		$	9,811		$	2,990	$	4,005		$	—		$	17,115
Collectively evaluated for impairment	$	201,435		$	1,083,590		$	114,663	$	830,088		$	16,402		$	2,246,178


(1)	Loans receivable, ending balance totals have been restated. See Note 2 for an explanation of the restatement.

Credit quality indicators on the Company’s loan portfolio, including loans acquired with deteriorated credit quality, as of the dates indicated were as follows:



	December 31, 2015
(In thousands)	Pass and Pass/Watch		Special Mention		Substandard		Doubtful		Total
Construction	$	444,713	$	—	$	77,565	$	—	$	522,278
Commercial real estate	1,325,513		15,230		82,802		—		1,423,545
Consumer real estate	252,707		175		11,540		—		264,422
Commercial and industrial	1,038,567		7,377		161,391		19,325		1,226,660
Consumer	21,364		13		311		—		21,688
Total loans	$	3,082,864	$	22,795	$	333,609	$	19,325	$	3,458,593



	December 31, 2014
(In thousands)	Pass and Pass/Watch		Special Mention		Substandard		Doubtful		Total
Construction	$	297,837	$	2	$	13,688	$	—	$	311,527
Commercial real estate	1,180,149		1,613		47,085		—		1,228,847
Consumer real estate	128,507		60		4,383		—		132,950
Commercial and industrial	957,261		—		24,800		—		982,061
Consumer	18,248		7		383		—		18,638
Total loans(1)	$	2,582,002	$	1,682	$	90,339	$	—	$	2,674,023


(1)	Total loans and Pass and Pass/Watch have been restated. See Note 2 for an explanation of the restatement.

The table above includes $3.2 million in substandard loans as of December 31, 2015, which are loans acquired with deteriorated credit quality and accounted for under ASC 310-30. As of December 31, 2014, included in the above table was $5.4 million of substandard loans and $1.6 million of special mention loans which are loans acquired with deteriorated credit quality and accounted for under ASC 310-30.

100

The above classifications follow regulatory guidelines and can generally be described as follows:


•	Pass and pass/watch loans are of satisfactory quality.


•	Special mention loans have an existing weakness that could cause future impairment, including the deterioration of financial ratios, past due status, questionable management capabilities, and possible reduction in the collateral values.


•	Substandard loans have an existing specific and well-defined weakness that may include poor liquidity and deterioration of financial ratios. The loan may be past due and related deposit accounts may be experiencing overdrafts. Immediate corrective action is necessary.


•	Doubtful loans have specific weaknesses that are severe enough to make collection or liquidation in full highly questionable and improbable.

Age analysis of past due loans, including loans acquired with deteriorated credit quality, as of the dates indicated were as follows:



	December 31, 2015
(In thousands)	Greater Than 30 and Fewer Than 90 Days Past Due		90 Days and Greater Past Due		Total Past Due		Current Loans		Total Loans
Real estate loans:
Construction	$	430	$	981	$	1,411	$	520,867	$	522,278
Commercial real estate	979		5,943		6,922		1,416,623		1,423,545
Consumer real estate	5,628		2,517		8,145		256,277		264,422
Total real estate loans	7,037		9,441		16,478		2,193,767		2,210,245
Other loans:
Commercial and industrial	2,018		2,588		4,606		1,222,054		1,226,660
Consumer	385		190		575		21,113		21,688
Total other loans	2,403		2,778		5,181		1,243,167		1,248,348
Total loans	$	9,440	$	12,219	$	21,659	$	3,436,934	$	3,458,593



	December 31, 2014
(In thousands)	Greater Than 30 and Fewer Than 90 Days Past Due		90 Days and Greater Past Due		Total Past Due		Current Loans(1)		Total Loans(1)
Real estate loans:
Construction	$	97	$	750	$	847	$	310,680	$	311,527
Commercial real estate	2,497		9,545		12,042		1,216,805		1,228,847
Consumer real estate	1,623		1,255		2,878		130,072		132,950
Total real estate loans	4,217		11,550		15,767		1,657,557		1,673,324
Other loans:
Commercial and industrial	159		4,426		4,585		977,476		982,061
Consumer	564		322		886		17,752		18,638
Total other loans	723		4,748		5,471		995,228		1,000,699
Total loans	$	4,940	$	16,298	$	21,238	$	2,652,785	$	2,674,023


(1)	Current and Total Loans have been restated. See Note 2 for an explanation of the restatement.

The table above includes $0.2 million of consumer loans past due greater than 30 and fewer than 90 days and $0.1 million of consumer loans 90 days and greater past due, as of December 31, 2015. These loans are cash secured and the Company had rights of offset against the guarantors’ deposit accounts when the loans are 120 days past due.

As of December 31, 2014, consumer loans past due greater than 30 and fewer than 90 days were $0.6 million and consumer loans 90 days and greater past due were $28 thousand. These loans are cash secured, and the Company had rights of offset against the guarantors’ deposit accounts when the loans are 120 days past due.

101

The following is a summary of information pertaining to impaired loans, which consist primarily of nonaccrual loans. This table excludes loans acquired with deteriorated credit quality. Acquired impaired loans are generally not subject to individual evaluation for impairment and are not reported with impaired loans or troubled debt restructurings, even if they would otherwise qualify for such treatment. Impaired loans as of the periods indicated were as follows:



	December 31, 2015
(In thousands)	Recorded Investment		Contractual Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Construction	$	902	$	915	$	—	$	915	$	18
Commercial real estate	12,090		12,424		—		9,633		17
Consumer real estate	2,802		2,938		—		2,444		11
Commercial and industrial	60,821		61,013		—		30,637		1
Consumer	130		130		—		184		2
Total	$	76,745	$	77,420	$	—	$	43,813	$	49
With an allowance recorded:
Construction	$	1,728	$	1,755	$	508	$	866	$	—
Commercial real estate	17,917		17,982		5,674		11,936		60
Consumer real estate	1,516		1,534		322		763		6
Commercial and industrial	58,831		59,113		40,176		36,777		432
Consumer	14		14		13		9		—
Total	$	80,006	$	80,398	$	46,693	$	50,351	$	498
Total impaired loans:
Construction	$	2,630	$	2,670	$	508	$	1,781	$	18
Commercial real estate	30,007		30,406		5,674		21,569		77
Consumer real estate	4,318		4,472		322		3,207		17
Commercial and industrial	119,652		120,126		40,176		67,414		433
Consumer	144		144		13		193		2
Total	$	156,751	$	157,818	$	46,693	$	94,164	$	547

102



	December 31, 2014
(In thousands)	Recorded Investment		Contractual Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Construction	$	927	$	927	$	—	$	464	$	39
Commercial real estate	7,175		7,453		—		5,718		109
Consumer real estate	2,085		2,097		—		2,029		18
Commercial and industrial	436		498		—		768		22
Consumer	256		256		—		128		6
Total	$	10,879	$	11,231	$	—	$	9,107	$	194
With an allowance recorded:
Construction	$	—	$	—	$	—	$	—	$	—
Commercial real estate	5,955		6,235		3,138		5,753		79
Consumer real estate	—		—		—		509		—
Commercial and industrial	14,721		14,774		5,889		8,814		310
Consumer	3		3		1		2		—
Total	$	20,679	$	21,012	$	9,028	$	15,078	$	389
Total impaired loans:
Construction	$	927	$	927	$	—	$	464	$	39
Commercial real estate	13,130		13,688		3,138		11,471		188
Consumer real estate	2,085		2,097		—		2,538		18
Commercial and industrial	15,157		15,272		5,889		9,582		332
Consumer	259		259		1		130		6
Total	$	31,558	$	32,243	$	9,028	$	24,185	$	583



	December 31, 2013
(In thousands)	Recorded Investment		Contractual Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Construction	$	—	$	—	$	—	$	24	$	—
Commercial real estate	4,261		4,469		—		3,063		110
Consumer real estate	1,973		1,999		—		1,254		—
Commercial and industrial	1,099		1,116		—		977		40
Total	$	7,333	$	7,584	$	—	$	5,318	$	150
With an allowance recorded:
Construction	$	309	$	309	$	42	$	530	$	23
Commercial real estate	5,550		7,428		1,639		4,445		59
Consumer real estate	1,017		1,046		183		831		21
Commercial and industrial	2,906		2,941		2,091		8,093		10
Total	$	9,782	$	11,724	$	3,955	$	13,899	$	113
Total impaired loans:
Construction	$	309	$	309	$	42	$	554	$	23
Commercial real estate	9,811		11,897		1,639		7,508		169
Consumer real estate	2,990		3,045		183		2,085		21
Commercial and industrial	4,005		4,057		2,091		9,070		50
Total	$	17,115	$	19,308	$	3,955	$	19,217	$	263

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Also presented in the above table is the average recorded investment of the impaired loans and the related amount of interest recognized during the time within the period that the impaired loans were impaired. When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal under the cost recovery method. When the ultimate collectability of the total principal of an impaired loan is not in doubt and the loan is in nonaccrual status, contractual interest is credited to interest income when received under the cash basis method. In the table above, all interest recognized represents cash collected. The average balances are calculated based on the month-end balances of the financing receivables of the period reported.

As of December 31, 2015, there were $0.1 million of cash secured tuition loans that were past due 90 days or more that were still accruing interest, and $28 thousand in cash secured tuition loans that were past due 90 days or more still accruing interest as of December 31, 2014.

A summary of information pertaining to nonaccrual loans as of the periods indicated is as follows:



	December 31,
(In thousands)	2015		2014
Nonaccrual loans:
Construction	$	2,633	$	792
Commercial real estate	27,937		12,146
Consumer real estate	4,538		1,919
Commercial and industrial	119,705		6,051
Consumer	125		320
Total	$	154,938	$	21,228

For the years ended December 31, 2015 and December 31, 2014, the average recorded investment in nonaccrual loans was $34.0 million and $19.6 million, respectively. The amount of interest income that would have been recognized on nonaccrual loans based on contractual terms was $1.8 million for the year ended December 31, 2015 and $1.0 million for the years ended December 31, 2014 and 2013, respectively. As of December 31, 2015, the Company was not committed to lend additional funds to any customer whose loan was classified as impaired.

ASC 310-30 Loans

During 2011, the Company acquired certain loans from the Federal Deposit Insurance Corporation, as receiver for Central Progressive Bank, that are subject to ASC 310-30. ASC 310-30 provides recognition, measurement, and disclosure requirements for acquired loans that have evidence of deterioration of credit quality since origination for which it is probable, at acquisition, that the Company will be unable to collect all contractual amounts owed. The Company’s allowance for loan losses for all acquired loans subject to ASC 310-30 would reflect only those losses incurred after acquisition.

There were no loans acquired from the Federal Deposit Insurance Corporation, as receiver for First National Bank of

Crestview, that were subject to ASC 310-30. The Company evaluated the loan portfolio acquired from State-Investors Bank and, as such, determined there was an insignificant amount of loans which were subject to ASC 310-30.

The following is a summary of changes in the accretable yields of acquired loans as of the years ended December 31, 2015, 2014, and 2013:



(In thousands)	2015			2014			2013
Balance, beginning of year	$	114		$	170		$	628
Acquisition	—			—			—
Net transfers from nonaccretable difference to accretable yield	—			815			45
Accretion	(91		)	(871		)	(503		)
Balance, end of year	$	23		$	114		$	170

104

Information about the Company’s TDRs as of December 31, 2015 and December 31, 2014 is presented in the following tables:



December 31, 2015	Current		Greater Than 30 Days Past Due		Nonaccrual TDRs		Total TDRs
(In thousands)
Real estate loans:
Construction	$	1	$	—	$	366	$	367
Commercial real estate	2,215		—		1,393		3,608
Consumer real estate	585		—		771		1,356
Total real estate loans	2,801		—		2,530		5,331
Other loans:
Commercial and industrial	482		—		109,727		110,209
Total loans	$	3,283	$	—	$	112,257	$	115,540



December 31, 2014	Current		Greater Than 30 Days Past Due		Nonaccrual TDRs		Total TDRs
(In thousands)
Real estate loans:
Construction	$	233	$	—	$	—	$	233
Commercial real estate	349		—		1,960		2,309
Consumer real estate	604		—		132		736
Total real estate loans	1,186		—		2,092		3,278
Other loans:
Commercial and industrial	385		—		—		385
Total loans	$	1,571	$	—	$	2,092	$	3,663

The following table provides information on how the TDRs were modified during the years ended December 31, 2015, 2014, and 2013:



(In thousands)	2015		2014		2013
Maturity and interest rate adjustment	$	96,424	$	—	$	—
Movement to or extension of interest rate-only payments	15,662		—		489
Other concessions(1)	—		—		—
Total	$	112,086	$	—	$	489


(1)	Other concessions include concessions or a combination of concessions, other than maturity extensions and interest rate adjustments.

A summary of information pertaining to modified terms of loans, as of the dates indicated, is as follows:



	December 31, 2015
(In thousands)	Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Troubled debt restructuring:
Construction	3	$	367	$	367
Commercial real estate	3	3,608		3,608
Consumer real estate	5	1,356		1,356
Commercial and industrial	30	110,209		110,209
Total	41	$	115,540	$	115,540

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	December 31, 2014
(In thousands)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Troubled debt restructuring:
Construction	4	$	233	$	233
Commercial real estate	3	2,309		2,309
Consumer real estate	3	736		736
Commercial and industrial	2	385		385
Total	12	$	3,663	$	3,663



	December 31, 2013
(In thousands)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Troubled debt restructuring:
Construction	2	$	309	$	309
Commercial real estate	3	459		459
Consumer real estate	3	761		761
Commercial and industrial	1	337		337
Total	9	$	1,866	$	1,866

None of the performing TDRs defaulted subsequent to the restructuring through the date the financial statements were available to be issued.

As of December 31, 2015 and 2014, the Company was not committed to lend additional funds to any customer whose loan was classified as impaired or as a TDR.

9. Transfers and Servicing of Financial Assets

Loans serviced for others, consisting primarily of commercial loan participations sold, are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others were $43.6 million and $28.1 million at December 31, 2015 and 2014, respectively.

10. Premises and Equipment

Premises and equipment consisted of the following at December 31:



(In thousands)	2015		2014
Buildings and leasehold improvements	$	48,958	$	36,684
Land	13,209		10,401
Furniture, fixtures, and equipment	17,966		15,462
Construction in progress	3,512		1,664
Total premises and equipment	83,645		64,211
Less accumulated depreciation and amortization	16,490		13,041
Total premises and equipment, net	$	67,155	$	51,170

The Company recorded depreciation of $3.5 million, $2.9 million, and $2.6 million for the years ended December 31, 2015, 2014, and 2013, respectively.

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11. Other Real Estate Owned

At December 31, 2015 and 2014, the Company had other real estate owned of $5.2 million and $5.5 million, respectively, from real estate acquired by foreclosure. The Company records assets acquired in foreclosure as the lower of cost or fair value less estimated cost to sell.

12. Goodwill and Other Acquired Intangible Assets

Changes to the carrying amount of goodwill for the years ended December 31, 2015 and 2014 are provided in the following table:



(In thousands)
Balance at December 31, 2013	$	4,808
Goodwill acquired during the year	—
Balance at December 31, 2014	4,808
Goodwill acquired during the year	9,837
Balance at December 31, 2015	$	14,645

During 2015, the Company recorded goodwill totaling $1.2 million in connection with the FDIC assisted acquisition of First National Bank of Crestview and $8.6 million in connection with the acquisition of SIBC. See Note 3 for further information on these acquisitions.

The Company performs an annual impairment test of goodwill on October 1, or more often if indicators or conditions are present which require an assessment. The results of the most recent test performed, as of December 31, 2015, did not indicate impairment of the Company’s recorded goodwill.

Intangible assets subject to amortization

Definite-lived intangible assets had the following carrying values as of December 31:



	2015						2014
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
							(Restated)		(Restated)		(Restated)
Core deposit intangibles	$	5,056	$	1,868	$	3,188	$	4,400	$	1,485	$	2,915
Other intangible assets	493		75		418		493		60		433
Total definite-lived intangible assets	$	5,549	$	1,943	$	3,606	$	4,893	$	1,545	$	3,348

During 2015, the Company recorded a core deposit intangible asset totaling $0.2 million in connection with the acquisition of First National Bank of Crestview and $0.5 million in connection with the acquisition of SIBC. See Note 3 for further information on these acquisitions.

The Company’s core deposit intangibles are being amortized over the estimated useful life of 12 years. The Company’s annual amortization expense totaled $0.4 million, $0.6 million, and $0.2 million for the years ended December 31, 2015, 2014, and 2013, respectively.

The estimated aggregate amortization expense for the core deposit intangible asset is as follows as of December 31, 2015:



(In thousands)
2016	$	421
2017	421
2018	421
2019	421
2020	359
2021 and thereafter	1,145
Total core deposit intangibles	$	3,188

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13. Investments in Real Estate Properties

FNBC CDC purchases various affordable residential real estate properties in the New Orleans area for the purpose of making improvements to these properties and renting or selling the properties in order to increase the supply of such housing as part of its Community Reinvestment Act responsibilities. FNBC CDE has also made investments in certain Federal Low-Income housing units in the states of Louisiana, Mississippi, and Arkansas for the purpose of making improvements to the properties and renting. The Company’s cost, net of accumulated depreciation (including the cost of improvements) in these residential real estate properties totaled $80.7 million and $84.3 million at December 31, 2015 and 2014 as restated, respectively. During the years ended December 31, 2015, 2014, and 2013, the Company incurred development costs of $2.5 million, $2.6 million, and $5.0 million, respectively.

14. Investments in Tax Credit Entities

Federal NMTC

Investment in Bank Owned CDE

The Bank owns a CDE which competes each year for a Federal New Markets Tax Credits allocation. The Federal NMTC program is administered by the Community Development Financial Institutions Fund of the U.S. Treasury and is aimed at stimulating economic and community development and job creation in low-income communities. The program provides federal tax credits to investors who make qualified equity investments (QEIs) in a CDE. The CDE is required to invest the proceeds of each QEI in projects located in or benefiting low-income communities, which are generally defined as those census tracts with poverty rates greater than 20% and/or median family incomes that are less than or equal to 80% of the area median family income. FNBC CDE has received allocations of Federal NMTC totaling $118.0 million since 2011. These allocations generated $46.0 million in tax credits.

The credit provided to the investor totals 39% of each QEI in a CDE and is claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to 5% of the total QEI allocated to the project. For each of the remaining four years, the investor receives a credit equal to 6% of the total QEI allocated to the project. The Company has received up to $46.0 million in tax credits over the seven-year credit allowance period, beginning with the period in which the QEI was made, for its QEI of $118.0 million. Through December 31, 2015, FNBC CDE has invested in allocations of $118.0 million, of which $40.0 million of the awards was invested by the Company and $78.0 million was invested by other investors and leverage lenders, which include the Company. Of the $78.0 million invested by other investors and leverage lenders, $17.5 million was invested by the Company as the leverage lender. The Company's investment in its subsidiary CDE is eliminated upon consolidation. While the leverage lender's portion of the investment in the CDE is classified as a loan, the remaining investment in the CDE is accounted for as an equity method investment included in investment in tax credit entities in the accompanying consolidated balance sheets and evaluated at each reporting date for impairment. The impairment is evaluated based on the remaining tax credits available along with any applicable equity income or loss allocations. Impairment, if any, is recorded in the consolidated statement of income as a component of noninterest expense as well as any applicable equity income or loss allocations. The Federal NMTC claimed by the Company, with respect to each QEI, remain subject to recapture over each QEI’s credit allowance period upon the occurrence of any of the following:


•	CDE does not invest substantially all (defined as a minimum of 85%) of the QEI proceeds in qualified low-income community investments;


•	CDE ceases to be a CDE; or


•	CDE redeems its QEI investment prior to the end of the current credit allowance period.

At December 31, 2015 and 2014, none of the above recapture events had occurred, nor, in the opinion of management, are such events anticipated to occur in the foreseeable future. As of December 31, 2015, FNBC CDE had total assets of $131.6 million, consisting of cash of $6.6 million, loans of $112.3 million and other assets of $12.7 million, with liabilities of $0.5 million and capital of $131.1 million. Based on the structure of these transactions, the Company expects to recover its investment solely through use of the tax credits that were generated by the investments and any equity returns received through the limited partnership.

Investments in Non-Bank Owned CDEs

The Company is also a limited partner in several tax-advantaged limited partnerships and a shareholder in several C corporations whose purpose is to invest in approved Federal NMTC projects through CDEs that are not associated with FNBC CDE. During 2014, several of these partnerships that the Company was a limited partner in converted to C corporations. The Company’s ownership in the CDEs did not change based on the conversion. These investments are accounted for using the

108

equity method of accounting and are included in investment in tax credit entities in the accompanying consolidated balance sheets. The limited partnerships and C corporations are considered VIEs. The VIEs have not been consolidated because the Company is not considered the primary beneficiary. The Company's investment in Federal NMTC partnerships and C corporations, net of the loans to the investment fund, are evaluated for impairment at the end of each reporting period based on the remaining tax credits available along with any equity income or loss allocations. Impairment, if any, is recorded in the consolidated statement of income as a component of noninterest expense as well as any applicable equity income or loss allocations. All of the Company’s investments in Federal NMTC structures are privately held, and their market values are not readily determinable. Based on the structure of these transactions, the Company expects to recover its investment solely through use of the tax credits that were generated by the investments and any equity returns received through the limited partnership.

Federal Low-Income Housing Tax Credits

The Company is a limited partner in tax-advantaged limited partnerships whose purpose is to invest in approved Federal Low-Income Housing tax credit projects. The tax credits associated with these investments are typically received over a 10 to 15 year period subject to recapture. These investments are accounted for using the equity method of accounting and are included in investments in tax credit entities in the accompanying consolidated balance sheets. The limited partnerships are considered to be VIEs and are evaluated for consolidation based on the Company's determination if it is the primary beneficiary. The Company has determined that it is not the primary beneficiary with respect to the limited partnerships. Thus, the VIEs have not been consolidated except for three Federal Low-Income Housing investments which were consolidated (See Note 15 for further details.) The Company utilizes the effective yield method to evaluate impairment. Impairment, if any, is recorded in the consolidated statement of income as a component of noninterest expense as well as any applicable equity income or loss allocations. All of the Company’s investments in Federal Low-Income Housing partnerships are evaluated for impairment at the end of each reporting period. Based on the structure of these transactions, the Company expects to recover its remaining investments at December 31, 2015 through the use of the tax credits that were generated by the investments and any equity returns received through the limited partnerships.

Federal Historic Rehabilitation Tax Credits

The Company is a limited partner in several tax-advantaged limited partnerships whose purpose is to invest in approved Federal Historic Rehabilitation tax credit projects. The tax credits generated on these investments are received in the year that the project is placed in service and subject to recapture over a 5 year period. These investments are accounted for using the equity method of accounting and are included in investments in tax credit entities in the accompanying consolidated balance sheets. The limited partnerships are considered to be VIEs and are evaluated for consolidation based on the Company's determination if it is the primary beneficiary. The Company has determined that it is not the primary beneficiary with respect to any of the limited partnerships and, thus, the VIEs have not been consolidated. All of the Company’s investments in limited partnerships are evaluated for impairment at the end of each reporting period and the Company records impairment, if any, in its consolidated statement of income as a component of noninterest expense. Impairment is calculated based upon future cash flows to be received during the Company's ownership period and the residual amount expected to be received upon disposition of its ownership position. Based on the structure of these transactions, the Company expects to recover its remaining investments in Federal Historic Rehabilitation tax credits at December 31, 2015 through the future cash flows and equity ownership in the underlying projects.

State Historic Rehabilitation Tax Credits

In connection with its limited partner interest in several tax-advantaged limited partnerships whose purpose is to invest in approved Federal Historic Rehabilitation tax credit projects, the Company can receive Louisiana State Historic Rehabilitation tax credits. These credits are certified by the State of Louisiana and are earned by the Company once the project is placed in service and then sold to investors after the State Historic Rehabilitation tax credits are certified by the State of Louisiana and transferred from the project to the Company. The credits are typically sold within 12 months of the project being placed in service. The Company evaluates its investment for impairment at the end of each reporting period. Impairment, if any, is recorded in its consolidated statement of income as a component of noninterest expense.

109

State NMTC

Investments in Non-Bank Owned CDEs

The Company is a limited partner in several tax-advantaged limited partnerships that are CDEs, whose purpose is to invest in approved State NMTC projects that are not associated with FNBC CDE. Based on the structure of these transactions, the Company expects to recover its remaining investments in State NMTC at December 31, 2015 through the transfer of its ownership interest to third party investors. The Company evaluates its investment for impairment at the end of each reporting period. Impairment, if any, is recorded in its consolidated statement of income as a component of noninterest expense.

The tables below set forth the Company's investment in Federal and State NMTC, Federal Low-Income Housing, and Federal and State Historic Rehabilitation tax credits, along with the credits earned and expected to be generated through its participation in these programs as of December 31, 2015 and December 31, 2014. The amounts as of December 31, 2015 and December 31, 2014 reflect the cumulative effect of the restatement adjustments related to its investments in tax credit entities and the net impact of the restatements on the recorded impairment charges:



	December 31, 2015
(In thousands)	Investment		Total Impairment(1)			Loans to Investment Funds(2)			Elimination(3)			Net Investment		Tax Benefits Recognized Through December 31, 2014		Tax Benefits Recognized in 2015		Tax Benefits Earned and to be Recognized in 2016, and Thereafter		Total Tax Benefits Earned and to be Recognized
NMTC:
Federal:
Bank Owned CDEs	$	154,720	$	(8,288	)	$	—		$	(118,000	)	$	28,432	$	16,490	$	6,580	$	22,950	$	46,020
Non-Bank Owned CDEs	171,303		(23,738		)	(127,520		)	—			20,045		36,580		9,769		20,076		66,425
State	13,810		—			—			—			13,810		—		—		—		—
Total NMTC	339,833		(32,026		)	(127,520		)	(118,000		)	62,287		53,070		16,349		43,026		112,445

Federal Low-Income Housing	30,166		(5,979		)	—			—			24,187		13,188		3,965		38,972		56,125

Historic Rehabilitation:
Federal(4)	69,177		(55,220		)	—			—			13,957		34,335		40,970		—		75,305
State	12,518		(4,363		)	—			—			8,155		—		—		—		—
Total Historic Rehabilitation(5)	81,695		(59,583		)	—			—			22,112		34,335		40,970		—		75,305
Total	$	451,694	$	(97,588	)	$	(127,520	)	$	(118,000	)	$	108,586	$	100,593	$	61,284	$	81,998	$	243,875

(1) Amount includes the impact of restatement adjustments related to the effect of the application of the equity method, as described in Note 2, with a cumulative adjustment of $14.0 million through December, 31, 2014.

(2) Interest-only leverage loans made to the investment fund during the compliance period for Federal NMTC. This amount is recorded as an offset to the Federal NMTC investment due to the interest-only leverage loan being repaid at the end of the compliance period.

(3) FNBC CDE received allocations of Federal NMTC from the CDFI Fund of the U.S. Treasury totaling $118.0 million over a three year period beginning in 2011. These investments are eliminated upon consolidation by the Company.

(4) As of December 31, 2015, the Company had $10.9 million invested and $39.1 million in outstanding commitments in Federal Historic Rehabilitation tax credit projects which the Company expects to generate Federal Historic Rehabilitation tax credits in 2016, 2017 and 2018 when the projects are completed, receive the certificates of occupancy, and the property is placed into service. The amount of tax credits to be received will be determined when the costs are certified.

(5) The total accumulated impairment includes $5.8 million in additional accrued impairment in 2015 which is owed to the project based on the investment payment terms.

110



	December 31, 2014
(In thousands)	Investment		Total Impairment(1)			Loans to Investment Funds(2)			Elimination(3)			Net Investment		Tax Benefits Recognized Through December 31, 2013		Tax Benefits Recognized in 2014		Tax Benefits Earned and to be Recognized in 2015, and Thereafter		Total Tax Benefits Earned and to be Recognized
	(Restated)		(Restated)									(Restated)		(Restated)
NMTC:
Federal:
Bank Owned CDEs	$	154,720	$	(2,254	)	$	—		$	(118,000	)	$	34,466	$	10,375	$	6,115	$	29,530	$	46,020
Non-Bank Owned CDEs	162,192		(14,960		)	(120,540		)	—			26,692		27,213		9,367		25,945		62,525
State	28,227		—			—			—			28,227		—		—		—		—
Total NMTC	345,139		(17,214		)	(120,540		)	(118,000		)	89,385		37,588		15,482		55,475		108,545

Federal Low-Income Housing	28,016		(4,300		)	—			—			23,716		9,546		3,642		42,108		55,296

Historic Rehabilitation:
Federal(4)	45,211		(22,340		)	—			—			22,871		15,014		19,321		—		34,335
State	5,545		—			—			—			5,545		—		—		—		—
Total Historic Rehabilitation(5)	50,756		(22,340		)	—			—			28,416		15,014		19,321		—		34,335
Total	$	423,911	$	(43,854	)	$	(120,540	)	$	(118,000	)	$	141,517	$	62,148	$	38,445	$	97,583	$	198,176

(1) Amount represents impairment recorded from the date of original investment through the current period, as restated.

(3) Through December 31, 2014, FNBC CDE received allocations of Federal NMTC from the CDFI Fund of the U.S. Treasury totaling $118.0 million over a three year period beginning in 2011. These investments are eliminated upon consolidation by the Company.

(4) As of December 31, 2014, the Company had $7.3 million invested in Federal Historic Rehabilitation tax credit projects which the Company expects to generate Federal Historic Rehabilitation tax credits in 2015 and 2016 when the projects are completed, receive the certificate of occupancy, and the property is placed in service. The amount of tax credits to be received will be determined when the costs are certified.

(5) The total accumulated impairment includes $1.4 million in additional accrued impairment in 2014 which is owed to the project based on the investment payment terms.

The impairment of tax credit investments for the year ended December 31, 2015 reflected the net impact of restatement adjustments for certain of the Company's investments in tax credit entities and the net effect of the appropriate recording of the equity method and impairment charges and were as follows:



	For the Years Ended December 31,
(In thousands)	2015		2014		2013
			(Restated)		(Restated)
Federal NMTC	$	14,812	$	10,866	$	4,814
Federal Low-Income Housing	1,679		1,596		1,085
Federal and State Historic Rehabilitation	43,049		12,605		7,200
Total impairment	$	59,540	$	25,067	$	13,099

111

The Company also made loans and leverage loans in the normal course of business to the tax credit related projects. These loans are subject to the Company's underwriting criteria and all loans were performing according to their contractual terms at December 31, 2015. These loans were classified in the Company's loan portfolio at December 31, 2015 and 2014 as follows:



(In thousands)	December 31, 2015		December 31, 2014
			(Restated)
Construction	$	43,962	$	63,692
Commercial real estate	67,579		32,864
Commercial and industrial	117,389		91,273
Total loans	$	228,930	$	187,829

15. Variable Interest Entities

During 2013, the Company entered into a loan workout arrangement with a borrower. The result of this workout arrangement is considered to be a VIE, whereby the Company is considered the primary beneficiary and must consolidate the VIE. The initial recognition of this VIE relationship was accounted for using acquisition accounting. Under acquisition accounting, the assets and liabilities acquired are accounted for at market value and intercompany balances are eliminated. The asset acquired from the debtor, which consisted of a net operating loss, is included in the accompanying consolidated balance sheets.

A subsidiary of the Bank, FNBC CDC, is the managing member of several tax-advantaged limited partnerships whose purpose are to invest in approved Federal Low-Income Housing tax credit projects. This limited partnership is considered to be a VIE, whereby the Company is considered the primary beneficiary and must consolidate the VIE. As such, no impairment charges have been recorded with respect to this investment. The initial recognition of this VIE relationship was accounted for using acquisition accounting. Under acquisition accounting, the assets and liabilities acquired are accounted for at fair value and intercompany balances are eliminated. As of December 31, 2015, the Company included in its consolidated financial statements the VIE's total assets of $71.3 million, consisting of real estate of $70.6 million and other assets of $0.7 million, with liabilities of $5.6 million and capital of ($23.3) million. As of December 31, 2014, the Company included in its restated consolidated financial statements the VIEs total assets of $73.4 million, consisting of real estate of $72.7 million and other assets of $0.7 million, with liabilities of $5.5 million and capital of ($16.4) million.

16. Deposits

Interest-bearing deposits at December 31, 2015 and 2014 consisted of the following:



(In thousands)	2015		2014
Savings deposits	$	79,779	$	49,634
Money market accounts	1,277,078		1,055,505
Negotiable order of withdrawal (NOW) accounts	741,469		476,825
Certificates of deposit over $250,000	387,626		284,262
Certificates of deposit under $250,000	989,469		890,090
Total interest-bearing deposits	$	3,475,421	$	2,756,316

The certificates of deposit mature as follows as of December 31, 2015:



(In thousands)
2016	$	671,326
2017	198,986
2018	299,424
2019	48,355
2020	143,993
Thereafter	15,011
Total certificates of deposit	$	1,377,095

17. Subordinated Debentures

During 2015, the Company issued $60.0 million in aggregate principal amount of subordinated notes to certain qualified institutional investors. Unless earlier redeemed, the notes have a maturity date of February 18, 2025 and bear interest, payable

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semiannually in arrears on February 18 and August 18 of each year, commencing August 18, 2015, at a fixed interest rate of 5.75% per year.

The notes are not convertible into common stock or preferred stock of the Company and are not subject to redemption at the option of the holders. The notes may be redeemed by the Company, in whole or in part, on or after November 18, 2024 or, in whole but not in part, under certain limited circumstances set forth in the indenture under which the notes were issued. Any redemption by the Company would be at a redemption price equal to 100% of the principal balance being redeemed, together with any accrued and unpaid interest to the date of redemption.

Principal and interest on the notes are not subject to acceleration, except upon certain bankruptcy-related events. The notes are the unsecured, subordinated obligations of the Company and rank junior in right of payment to the Company’s current and future senior indebtedness and to the Company’s obligations to its general creditors.

18. Borrowings

Short-term Borrowings

The following is a summary of short-term borrowings at December 31:



(In thousands)	2015		2014
FHLB	$	8,000	$	—
Total short-term borrowings	$	8,000	$	—

The short-term borrowings at December 31, 2015 consisted of advances from the Federal Home Loan Bank of Dallas (FHLB) due to mature between March 21, 2016 and November 28, 2016. These advances had a weighted-average interest rate of 0.73% as of December 31, 2015. There were no short-term borrowings as of December 31, 2014.

The following is a summary of unused lines of credit at December 31:



(In thousands)	2015		2014
First National Bankers Bank	$	30,000	$	30,000
JPMorgan Chase	30,000		30,000
FHLB	128,801		563,213
PNC Bank	15,000		15,000
Comerica	10,000		10,000
Total unused lines of credit	$	213,801	$	648,213

The FHLB line of credit and advances at December 31, 2015 were subject to a blanket pledge of $1.1 billion of real estate loans and a custody pledge of $26.2 million of investment securities. The FHLB line of credit at December 31, 2014 was subject to a blanket pledge of $847.0 million of real estate loans.

Long-term Borrowings

Federal Home Loan Bank Advances

The Company had advances from FHLB which were included within long-term borrowings as of December 31, 2015 of $236.0 million. During 2015, the Company entered into a $200.0 million advance from FHLB for liquidity maintenance and interest rate management purposes. The advance matures November 28, 2025 and had a variable interest rate of 0.61% as of December 31, 2015. The Company acquired $36.0 million of FHLB advances in connection with the cash purchase of SIBC. These advances mature between June 1, 2017 and June 1, 2023 and had a weighted-average interest rate of 2.42% as of December 31, 2015.

Employee Stock Ownership Plan Loan

During 2015, the Company sponsored Employee Stock Ownership Trust entered into a loan from FNBB in order to purchase 100,000 shares of Company stock for $3.3 million. This borrowing is required to be recorded on the Company’s balance sheet, with an offsetting entry to additional paid-in capital. The loan matures on December 5, 2024, and bears interest at a floating rate equal to the Wall Street Journal Prime rate, which was 3.50% as of December 31, 2015. The loan is subject to a pledge of 90,000 shares of the Company stock owned by the Trust, as of December 31, 2015.

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Long-term Repurchase Agreement

The $40.0 million borrowing included within long-term borrowings at December 31, 2015 and December 31, 2014 consists of a borrowing by the Company from Credit Suisse which is in the legal form of a long-term repurchase agreement. During 2014, the borrowing was refinanced and its maturity extended. The borrowing matures on April 1, 2019, and bears interest at a floating rate equal to three-month USD LIBOR plus 1.35%, or 1.68% and 1.59% at December 31, 2015 and 2014, respectively. This borrowing is subject to a pledge of mortgage-backed securities with a market value of $62.8 million and $61.1 million at December 31, 2015 and 2014, respectively.

The following table includes a summary of long-term borrowings at December 31:



(In thousands)	2015		2014
FNBB	$	3,053	$	—
Credit Suisse Securities (USA) LLC	40,000		40,000
FHLB	235,989		—
Total long-term borrowings	$	279,042	$	40,000

As of December 31, 2015, principal payments by year on these borrowings are as follows (in thousands):



(In thousands)
2016	$	349
2017	26,349
2018	4,106
2019	44,259
2020	339
2021 and thereafter	203,640
Total long-term borrowings	$	279,042

19. Repurchase Agreements

Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature one day after the transaction date. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The Company may be required to provide additional collateral based on the fair value of the underlying securities. The carrying value of the securities pledged as collateral for the repurchase agreements was $91.3 million and $132.7 million at December 31, 2015 and 2014, respectively.

20. Derivative - Interest Rate Swap Agreements

Interest Rate Swaps. The Company entered into three delayed interest rate swaps with Counterparty C in 2014 to manage exposure against the variability in the expected future cash flows attributed to changes in the benchmark interest rate on a portion of its variable-rate debt. The Company entered into these interest rate swap agreements to convert a portion of its forecasted variable-rate debt to a fixed rate, which is a cash flow hedge of a forecasted transaction. The notional amount of each of the three derivative contracts are $55.0 million for a total notional amount of $165.0 million. The Company will receive payments from the counterparty at three-month LIBOR and make payments to the counterparty at fixed rates of 2.652%, 2.753%, and 2.793%, respectively, on each of the $55.0 million notional amounts of the derivative contracts. The cash flow payments on the derivatives begin January 2018 and terminate October 2023 for the 2.652% interest rate swap, begin January 2019 and terminate October 2024 for the 2.753% interest rate swap, and begin July 2019 and terminate April 2025 for the 2.793% interest rate swap.

The Company terminated its cash flow hedge with Counterparty A in 2014, which the Company had originally entered into in 2012, as internal forecasts for future interest rates changed since this transaction was initiated. The total notional amount of the derivative contract was $115.0 million and the Company was to receive payments from the counterparty at three-month LIBOR and make payments to the counterparty at a fixed rate on 2.88% on the notional amount. The termination of the cash flow hedge resulted in a loss of $8.0 million which had been reflected in the Company’s operating cash flows and included within accumulated other comprehensive income (loss), net of tax as of December 31, 2015 and 2014 . This loss had not been included in net income as of December 31, 2014 as the Company entered into a new delayed interest rate swap with substantially similar terms (see transaction above with Counterparty C) at the time of termination. The loss will be reclassified from accumulated

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other comprehensive income (loss) to net income as interest expense as it is amortized over a multi-year period consistent with the original maturity dates of the hedge which began in January 2015 and terminates in January 2022.

The Company entered into a delayed interest rate swap with Counterparty B in 2013 to manage exposure against the variability in the expected future cash flows attributed to changes in the benchmark interest rate on a portion of its variable-rate debt. The Company entered into this interest rate swap agreement to convert a portion of its variable-rate debt to a fixed rate, which is a cash flow hedge of a forecasted transaction. The total notional amount of the derivative contract is $150.0 million. The Company will receive payments from the counterparty at three-month LIBOR and make payments to the counterparty at a fixed rate of 4.165% on the notional amount. The cash flow payments on the derivative begin December 2016 and terminate September 2023.

Interest Rate-Prime Swaps. During 2015, the Company entered into two interest rate-prime swaps with Counterparty C to manage exposure against the variability in the expected future cash flows on the designated Prime and Prime plus 1% pools of its floating rate loan portfolio. The Company entered into these interest rate-prime swap agreements to hedge the cash flows from these pools of its floating rate loan portfolio, which is expected to offset the variability in the expected future cash flows attributable to the fluctuations in the daily weighted average Wall Street Journal Prime index, which is a cash flow hedge of a forecasted transaction. The notional amount of the contracts are a Prime tranche of $30.0 million and a Prime plus 1% tranche of $40.0 million for a total notional amount of $70.0 million. The Company receives payments from the counterparty at a fixed rate of interest and pays the counterparty at the Prime rate associated with each tranche on its notional amount. The Prime tranche receives payments at a fixed rate of 4.50% and pays the counterparty at Prime on the notional amount. The Prime plus 1% tranche receives payments at a fixed rate of 5.49% and pays the counterparty at Prime plus 1% on the notional amount. The cash flow payments on the derivatives began December 2015 and terminate September 2022.

During 2015, the Company terminated two of its interest rate swaps with Counterparty B, which the Company originally entered into in 2013, as internal forecasts for future interest rates changed since these transactions were initiated. The notional amounts of the derivative contracts were a Prime tranche of $30.0 million and a Prime plus 1% tranche of $40.0 million for a total notional amount of $70.0 million. The termination of the cash flow hedges resulted in a gain of $1.3 million which has been reflected in the Company's operating cash flows and included within accumulated other comprehensive income (loss), net of tax. This gain has not been included in net income as of December 31, 2015 as the Company entered into two new interest rate prime swaps with substantially similar terms (see interest rate-prime swaps transaction with Counterparty C above) at the time of termination. The gain will be reclassified from accumulated other comprehensive income (loss) to net income as interest income as it is accreted over a multi-year period consistent with the original maturity dates of the hedges which began in September 2013 and terminates in September 2019.

During 2015, the Company entered into four interest rate swaps with Counterparty C to manage exposure against the variability in the expected future cash flows on the designated Prime plus 1% floored at 5%, Prime plus 2%, Prime plus 2% actual/365, and Prime plus 2.25% pools of its floating rate loan portfolio. The Company entered into the interest rate-prime swap agreements to hedge the cash flows from these pools of its floating rate loan portfolio, which is expected to offset the variability in the expected future cash flows attributable to the fluctuations in the daily weighted average Wall Street Journal Prime index, which is a cash flow hedge of a forecasted transaction. The notional amount of the contracts are Prime plus 1% floored at 5% tranche of $40.0 million, Prime plus 2% tranche of $15.0 million, Prime plus 2% actual/365 tranche of $10.0 million, and Prime plus 2.25% tranche of $10.0 million for a total notional amount of $75.0 million. The Company receives payments from the counterparty at a fixed rate of interest and pays the counterparty at the Prime rate associated with each tranche on its notional amount. The Prime plus 1% floored at 5% tranche receives payments at a fixed rate of 5.81% and pays the counterparty at Prime plus 1% floored at 5% on the notional amount. The Prime plus 2% and Prime plus 2% actual/365 tranches receives payments at a fixed rate of 6.56% and pays the counterparty at Prime plus 2% on the notional amounts. The Prime plus 2.25% tranche receives payments at a fixed rate of 6.81% and pays the counterparty at Prime plus 2.25% on the notional amount. The cash flow payments on the derivatives began March 2015 and terminate March 2021.

The Company entered into four interest rate swaps with Counterparty B in 2013 to manage exposure against the variability in the expected future cash flows on the designated Prime, Prime plus 1%, Prime plus 1% floored at 5% and Prime plus 1% floored at 5.5% pools of its floating rate loan portfolio. The Company entered into the interest rate swap agreements to hedge the cash flows from these pools of its floating rate loan portfolio, which is expected to offset the variability in the expected future cash flows attributable to the fluctuations in the daily weighted average Wall Street Journal Prime index, which is a cash flow hedge of a forecasted transaction. The Company terminated the Prime and Prime plus 1% tranches in September 2015 (see September 2015 interest rate-prime swaps transaction with Counterparty B above). The notional amount of the remaining prime hedges are Prime plus 1% floored at 5% tranche of $100.0 million and Prime plus 1% floored at 5.5% tranche of $80.0 million for a total notional amount of $180.0 million as of December 31, 2015. The Company receives payments from the counterparty at a fixed rate of interest and pays the counterparty at the Prime rate associated with each tranche on its notional amount. The Prime plus 1% floored at 5% tranche receives payments at a fixed rate of 6.01% and pays the counterparty at Prime plus 1%,

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floored at 5% on the notional amount. The Prime plus 1% floored at 5.5% tranche receives payments at a fixed rate of 6.26% and pays the counterparty at Prime plus 1% floored at 5.5% on the notional amount. The cash flow payments on the derivatives began September 2013 and terminate September 2019.

Information pertaining to outstanding derivative instruments is as follows:



		Derivative Assets Fair Value					Derivative Liabilities Fair Value
(In thousands)	Balance Sheet Location	December 31, 2015		December 31, 2014		Balance Sheet Location	December 31, 2015		December 31, 2014
Derivatives designated as hedging instruments under ASC Topic 815:
Interest rate swaps - Counterparty B	Other Assets	$	—	$	—	Other Liabilities	$	20,613	$	15,995
Interest rate-prime swaps - Counterparty B	Other Assets	3,815		3,042		Other Liabilities	—		—
Interest rate swaps - Counterparty C	Other Assets	—		37		Other Liabilities	3,037		—
Interest rate-prime swaps - Counterparty C	Other Assets	541		—		Other Liabilities	406		—
		$	4,356	$	3,079		$	24,056	$	15,995

The Company entered into master netting arrangements with both Counterparty B and Counterparty C whereby the delayed interest rate swaps and hedges would be settled net. Net fair values of the Counterparty B and and Counterparty C delayed interest rate swaps and hedges as of December 31, 2015 and 2014 are as follows:



	December 31, 2015
	Gross Amounts Presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet
(In thousands)	Gross Amounts Presented in the Balance Sheet		Derivatives		Collateral		Net
Derivatives subject to master netting arrangements:
Derivative liabilities:
Counterparty B	$	16,798	$	—	$	—	$	16,798
Counterparty C	2,902		—		—		2,902
Net derivative liability	$	19,700	$	—	$	—	$	19,700



	December 31, 2014
	Gross Amounts Presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet
(In thousands)	Gross Amounts Presented in the Balance Sheet		Derivatives		Collateral		Net
Derivatives subject to master netting arrangements:
Derivative liabilities:
Counterparty B	$	12,953	$	—	$	—	$	12,953
Net derivative liability	$	12,953	$	—	$	—	$	12,953

Pursuant to the interest rate swap agreements described above with Counterparty B, the Company pledged collateral in the form of investment securities totaling $19.6 million (with a fair value at December 31, 2015 of $20.0 million), which has been presented gross in the Company’s balance sheet. Pursuant to the interest rate swap agreements described above with Counterparty C, the Company pledged collateral in the form of investment securities totaling $4.6 million (with a fair value at December 31, 2015 of $4.1 million), which has been presented gross in the Company’s balance sheet. There was no collateral posted from the counterparties to the Company as of December 31, 2015 and 2014.

Because the swap agreement used to manage interest rate risk has been designated as hedging exposure to variable cash flows of a forecasted transaction, the effective portion of the derivative’s gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings when the forecasted transaction affects earnings or when the hedge is terminated. The ineffective portion of the gain or loss is reported in earnings immediately.

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In applying hedge accounting for derivatives, the Company establishes a method for assessing the effectiveness of the hedging derivative by utilizing the dollar offset approach and a measurement approach for determining the ineffective aspect of the hedge through the variable cash flows methods upon the inception of the hedge. These methods are consistent with Company’s approach to managing risk.

For interest rate swap agreements that are not designated as hedging instruments, changes in the fair value of the derivatives are recognized in earnings immediately. As of December 31, 2015 and 2014, there were no interest rate swap agreements that were not designated as hedging instruments.

For the year ended December 31, 2015, the Company reclassified $1.1 million from accumulated other comprehensive income (loss) into interest expense as a result of the discontinuance of the cash flow hedge with Counterparty A. The Company expcects to reclassify $1.1 million from accumulated other comprehensive income (loss) into interest expense over the next 12 months related to the amortization of the net loss incurred on the cash flow hedge terminated in December 2014. The remaining $6.9 million loss related to the discontinuance of the cash flow hedge with Counterparty A will be reclassified from accumulated other comprehensive income (loss) into interest expense as it is amortized by the effective yield method over a multi-year period consistent with the original maturity dates of the hedge which began in January 2015 and will terminate in January 2022. No amounts were reclassified into earnings for the year ended December 31, 2014.

For the year ended December 31, 2015, the Company reclassified $0.1 million from accumulated other comprehensive income (loss) into interest income as a result of the discontinuance of the cash flow hedges with Counterparty B. The Company expects to reclassify $0.3 million from accumulated other comprehensive income (loss) into interest income over the next 12 months related to the accretion of the net gain incurred on the cash flow hedges terminated in September 2015. The remaining $1.2 million gain related to the discontinuance of the cash flow hedge with Counterparty B will be reclassified from accumulated other comprehensive income (loss) into interest income as it is accreted by the effective yield method over a multi-year period consistent with the original maturity dates of the hedge which began in September 2013 and terminates in September 2019.

As of December 31, 2015 and 2014, no amounts of gains or losses have been reclassified from accumulated comprehensive income (loss), nor have any amounts of gains or losses been recognized due to ineffectiveness of a portion of the derivatives. At December 31, 2015, no amount of the derivatives will mature within the next 12 months. The Company does not expect to reclassify any amount from accumulated other comprehensive income (loss) into interest income over the next 12 months for derivatives that will be settled.

At December 31, 2015 and 2014, the remaining amount of cash flow hedge effectiveness to be reclassified into earnings is as follows:



	Amount of Gain (Loss) Recognized in OCI, net of taxes (Effective Portion)
(In thousands)	As of December 31,
Derivatives in ASC Topic 815 Cash Flow Hedging Relationships:	2015			2014
Interest rate swap with Counterparty A	$	(4,483	)	$	(5,194	)
Interest rate swap and prime swaps with Counterparty B	(10,121		)	(8,419		)
Interest rate swap and prime swaps with Counterparty C	(1,887		)	23
Total	$	(16,491	)	$	(13,590	)

21. Income Taxes

The income tax benefit on the income from operations for the years ended December 31, 2015, 2014, and 2013 was as follows:



(In thousands)	2015			2014			2013
				(Restated)			(Restated)
Current tax expense	$	2,076		$	3,436		$	186
Deferred tax benefit	(108,341		)	(36,159		)	(23,593		)
Total tax benefit	$	(106,265	)	$	(32,723	)	$	(23,407	)

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The amount of taxes in the accompanying consolidated statements of income differs from the expected amount using the statutory federal income tax rates primarily due to the effect of various tax credits. An analysis of those differences for the years ended December 31, 2015, 2014, and 2013 are presented below:



	Year Ended December 31,
(In thousands)	2015			2014			2013
				(Restated)			(Restated)
Federal tax (benefit) expense at statutory rates	$	(46,026	)	$	4,125		$	3,577
Tax credits(1)	(61,284		)	(38,445		)	(28,421		)
Tax credit-basis reduction	1,904			1,647			2,019
Other tax credits	(616		)	(617		)	—
Tax-exempt income	(764		)	(87		)	(1,070		)
Disallowed interest expense	76			98			117
Valuation allowance for deferred tax assets	127			143			173
Other	318			413			198
Income tax benefit	$	(106,265	)	$	(32,723	)	$	(23,407	)


(1)	As discussed in Note 14, the Company earns Federal NMTC, Federal Historic Rehabilitation, and Federal Low-Income Housing tax credits, which reduce the Company’s federal income tax liability or creates a carryforward as applicable.

The components of the Company’s deferred tax assets and liabilities as of December 31 are presented below:



	Year Ended December 31,
(In thousands)	2015			2014
				(Restated)
Deferred tax assets:
Loan loss reserve	$	27,467		$	14,817
Tax credit carryforwards	146,220			91,863
NOL carryforward	8,762			8,681
Stock-based compensation	1,050			824
Deferred compensation	232			91
Securities available for sale	2,635			7,317
Unrealized loss on cash flow hedges	8,879			3,298
Other real estate	297			263
Basis difference in assumed liabilities	2,409			140
Impairment of investment in short term receivables	24,463			—
Capital loss carryforward	—			309
Other	2,960			884
Gross deferred tax assets	225,374			128,487
Valuation allowance	(1,537		)	(1,719		)
Total deferred tax assets	223,837			126,768
Deferred tax liabilities:
Fixed assets	7,901			7,190
Deferred loan costs	7,027			6,296
Amortizable costs	1,409			1,388
Investments in tax credit entities	901			17,821
Basis difference in assumed assets	904			—
Other	408			558
Total deferred tax liabilities	18,550			33,253
Net deferred tax assets	$	205,287		$	93,515

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As of December 31, 2015, the Company’s net operating loss carryforwards were $25.0 million with an expiration date of December 2035. Included in the Company's net operating loss carryforwards is $19.8 million obtained through a bankrupt entity which the Company's expects to obtain control.

As of December 31, 2015, the Company’s tax credit carryforwards were $146.2 million with expiration dates beginning December 2031 through December 2035.

The Company recognized $16.3 million, $15.5 million, and $14.2 million in Federal NMTC in its consolidated income tax provision for the years ended December 31, 2015, 2014, and 2013, respectively. The Company recognized $4.0 million, $3.6 million, and $3.7 million in Federal Low-Income Housing tax credits in its consolidated income tax provision for the years ended December 31, 2015, 2014, and 2013, respectively. The Company recognized $41.0 million, $19.3 million, and $10.5 million in Federal Historic Rehabilitation tax credits in its consolidated income tax provision for the years ended December 31, 2015, 2014, and 2013, respectively.

22. Shareholders’ Equity

Senior Preferred Stock

During 2015, the holder of the Series C preferred stock exchanged 364,983 shares of Series C preferred stock for an equivalent number of shares of common stock. The Company had issued 916,841 shares of convertible perpetual Series C preferred stock in exchange for approximately $20.6 million in 2011.There were no shares of the Company's Series C preferred stock outstanding as of December 31, 2015. There were no shares of the Company's convertible perpetual preferred stock Series C shares that were converted during 2014, and 551,858 shares of preferred stock were converted into an equivalent number of shares of common stock during 2013.

The assumed conversion of the convertible perpetual preferred stock Series C shares outstanding is excluded in the calculation of the Company's diluted earnings per share for the year ended 2014 since the shares were contingently issuable and the contingency still existed as of December 31, 2014.

The Company sold approximately $37.9 million of senior noncumulative perpetual preferred stock, Series D in 2011 to the U.S. Treasury, pursuant to the Small Business Lending Fund Program. At December 31, 2015, the Series D preferred stock had an aggregate liquidation preference of approximately $37.9 million and qualified as Tier 1 regulatory capital.

The terms of the Series D preferred stock provide for payment of noncumulative dividends on a quarterly basis beginning October 3, 2011. The dividend rate, as a percentage of the liquidation amount, fluctuates, while the Series D preferred stock is outstanding based upon changes in the level of qualified small business lending (QSBL) by the Company from its average level of QSBL at each of the four quarter-ends leading up to June 30, 2010 (Baseline), as follows:



Dividend Period
Beginning	Ending	Annualized Dividend Rate
January 1, 2012	March 31, 2012	1.000%
April 1, 2012	June 30, 2012	1.000%
July 1, 2012	December 31, 2013	1.000% to 5.000%
January 1, 2014	February 3, 2016	1.000% to 7.000%
February 4, 2016	Redemption	9.000%

As long as shares of Series D preferred stock remain outstanding, the Company may not pay dividends to common shareholders (nor may the Company repurchase or redeem any shares of common stock) during any quarter in which the

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Company fails to declare and pay dividends on the Series D preferred stock and for the next three quarters following such failure. In addition, under the terms of the Series D preferred stock, the Company may only declare and pay dividends on common stock (or repurchase shares of common stock) if, after payment of such dividend, the dollar amount of Tier 1 capital would be at least 90% of Tier 1 capital as of August 4, 2011, excluding charge-offs and redemptions of the Series D preferred stock (Tier 1 dividend threshold). Beginning January 1, 2014, the Tier 1 dividend threshold is subject to a reduction based upon the extent by which, if at all, the QSBL at September 30, 2013, has increased over the Baseline. The Company was notified in 2013 that its dividend rate would be 1% from January 1, 2014 until February 3, 2016 because the Company satisfied the lending baseline at September 30, 2013.

The Company may redeem the Series D preferred stock at any time at the Company’s option, at a redemption price of 100% of the liquidation amount plus accrued but unpaid dividends, subject to the approval of the Company’s primary federal regulatory agency.

As of February 4, 2016, the Company had not redeemed the Series D preferred stock, and based on its terms, the annual dividend rate increased to 9%.

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23. Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income (loss) and changes in those components are presented in the following tables:



(In thousands)	Cash Flow Hedges(1)			Terminated Cash Flow Hedges(2)			Transfers of Available for Sale Securities to Held to Maturity			Available for Sale Securities			Total
Balance at January 1, 2015	$	(8,396	)	$	(5,194	)	$	(3,354	)	$	(2,793	)	$	(19,737	)
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain (loss)	(6,785		)	1,326			—			1,272			(4,187		)
Reclassification of net losses realized and included in earnings	—			995			—			—			995
Amortization of unrealized net gain	—			—			660			—			660
Income tax expense (benefit)	(2,375		)	812			232			447			(884		)
Balance at December 31, 2015	$	(12,806	)	$	(3,685	)	$	(2,926	)	$	(1,968	)	$	(21,385	)



(In thousands)	Cash Flow Hedges(1)			Terminated Cash Flow Hedge(2)			Transfers of Available for Sale Securities to Held to Maturity			Available for Sale Securities			Total
Balance at January 1, 2014	$	(2,054	)	$	—		$	(3,710	)	$	(10,751	)	$	(16,515	)
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain (loss)	(9,757		)	(7,990		)	—			12,379			(5,368		)
Reclassification of net gains realized and included in earnings	—			—			—			(135		)	(135		)
Amortization of unrealized net gain	—			—			547			—			547
Income tax expense (benefit)	(3,415		)	(2,796		)	191			4,286			(1,734		)
Balance at December 31, 2014	$	(8,396	)	$	(5,194	)	$	(3,354	)	$	(2,793	)	$	(19,737	)



(In thousands)	Cash Flow Hedges(1)			Terminated Cash Flow Hedge		Transfers of Available for Sale Securities to Held to Maturity			Available for Sale Securities			Total
Balance at January 1, 2013	$	(4,455	)	$	—	$	—		$	1,529		$	(2,926	)
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain (loss)	3,694			—		(5,919		)	(18,576		)	(20,801		)
Reclassification of net gains realized and included in earnings	—			—		—			(316		)	(316		)
Amortization of unrealized net gain	—			—		211			—			211
Income tax expense (benefit)	1,293			—		(1,998		)	(6,612		)	(7,317		)
Balance at December 31, 2013	$	(2,054	)	$	—	$	(3,710	)	$	(10,751	)	$	(16,515	)

(1) Balances represent the net operating changes in all of the Company's cash flow hedge relationships as of the dates stated.

(2) Balances represent the net unrealized gains (loss) at termination of a certain cash flow hedge, interest rate swap cash flow hedge, and interest rate-prime swap cash flow hedge relationships. See Note 20 for further explanation on the terminated cash flow hedges.

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24. Capital Requirements and Other Regulatory Matters

Regulatory Capital Requirements

The Company and the Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements of the Company and the Bank. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total and Tier 1 capital to risk-weighted assets, Tier 1 capital to average assets, and common equity Tier 1 capital to risk-weighted assets. Management believes, as of December 31, 2015 and 2014, that the Company and the Bank met all minimum capital adequacy requirements to which they are subject.

As of December 31, 2015, the Bank was classified as “adequately capitalized” for purposes of the FDIC's prompt corrective action requirements. To be categorized as "well capitalized", an institution must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage, and common equity Tier 1 capital ratios as set forth in the following table. There are no conditions or events since the notification that management believes have changed that categorization. Section 29 of the Federal Deposit Insurance Act limits the use of brokered deposits by institutions that are less than “well-capitalized” and allows the FDIC to place restrictions on interest rates that institutions may pay.

The following tables present the actual capital amounts and regulatory capital ratios for the Company and the Bank as of December 31, 2015 and 2014:



	December 31, 2015
	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
(In thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 leverage capital:
First NBC Bank Holding Company	$	265,191	6.03	%	$	175,890	4.00	%	NA		NA
First NBC Bank	321,346		7.44	%	172,817		4.00	%	$	216,022	5.00	%
Tier 1 risk-based capital:
First NBC Bank Holding Company	$	265,191	6.33	%	$	251,400	6.00	%	NA		NA
First NBC Bank	321,346		7.68	%	251,121		6.00	%	$	334,828	8.00	%
Total risk-based capital:
First NBC Bank Holding Company	$	378,815	9.04	%	$	335,200	8.00	%	NA		NA
First NBC Bank	374,976		8.96	%	334,828		8.00	%	$	418,535	10.00	%
Common equity tier 1 risk-based capital:
First NBC Bank Holding Company	$	265,191	6.33	%	$	188,550	4.50	%	NA		NA
First NBC Bank	321,346		7.68	%	188,341		4.50	%	$	272,048	6.50	%

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	December 31, 2014
	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
(In thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Restated)		(Restated)		(Restated)				(Restated)
Tier 1 leverage capital:
First NBC Bank Holding Company	$	341,897	9.47	%	$	144,429	4.00	%	NA		NA
First NBC Bank	315,750		8.80	%	143,563		4.00	%	$	179,454	5.00	%
Tier 1 risk-based capital:
First NBC Bank Holding Company	$	341,897	10.28	%	$	133,031	4.00	%	NA		NA
First NBC Bank	315,750		9.55	%	132,309		4.00	%	$	198,464	6.00	%
Total risk-based capital:
First NBC Bank Holding Company	$	383,446	11.53	%	$	266,063	8.00	%	NA		NA
First NBC Bank	357,112		10.80	%	264,618		8.00	%	$	330,773	10.00	%

25. Warrants

In connection with the financing of the start-up activities of the Company, the organizing shareholders of the Company received warrants for 162,500 shares of common stock with an exercise price of $10 per share. The warrants are exercisable immediately and have an expiration date of 10 years. No charge was made to income in connection with the warrants. During 2015, an aggregate of 15,000 organizer warrants were exercised. As of December 31, 2015, a total of 110,000 organizer warrants remained outstanding. In connection with the acquisition of Dryades Bancorp, Inc. in 2010, the Company issued 87,509 warrants at $19.50 per share. There were 1,980 shares of these warrants exercised during 2015, and 75,446 remained outstanding as of December 31, 2015.

26. Stock-Based Compensation

The Company has various types of stock-based compensation plans. These plans are administered by the Compensation and Human Resources Committee of the Board of Directors, which selects persons eligible to receive awards and approves the number of shares and/or options subject to each award, the terms, conditions, and other provisions of the awards.

Restricted Stock

The Company issues restricted stock under the 2006 Plan and 2014 Plan for certain officers and directors. The Company approved the 2014 Plan during May 2014. There were 61,450 restricted stock awards issued under the 2014 Plan during 2015 and 13,021 restricted stock awards issued under the 2014 plan in 2014. Restricted stock awards issued under the 2014 Plan that may not be sold or otherwise transferred until certain restrictions have lapsed. The unearned compensation related to these awards is amortized over the vesting period of 3 years. The total share-based compensation expense related to the awards is determined based on the market price of the Company's common stock as of the grant date applied to the total number of shares granted and is amortized over the vesting period. There were 3,620 shares of restricted stock vested as of December 31, 2015. There was $1.8 million and $0.3 million unearned share-based compensation associated with these awards as of December 31, 2015 and 2014, respectively.

The following table represents unvested restricted stock activity for the year ended December 31, 2015:



	Number of Shares		Weighted-Average Grant Date Fair Value
Balance, beginning of year	12,892		$	34.32
Granted	61,450		33.35
Canceled	(667	)	34.26
Forfeited	(1,509	)	32.99
Balance, end of year	72,166		$	33.52

There was $0.5 million and $0.1 million in compensation expense that was included in salaries and benefits expense in the accompanying consolidated statements of income for the years ended December 31, 2015 and 2014, respectively. There was no

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compensation expense included in salaries and benefits in the accompanying consolidated statements of income for the year ended December 31, 2013.

Stock Options

The Company issues stock options to directors, officers, and other key employees. The option exercise price cannot be less than the fair value of the underlying common stock as of the date of the option grant and the maximum option term cannot exceed 10 years. The stock options granted were issued with vesting periods ranging from 3 to 5 years. At December 31, 2015, there were 981,505 shares available for future issuance of option or restricted stock awards under approved compensation plans.

For the years ended December 31, 2015 and 2014, total stock option compensation expense that was included in salaries and employee benefits expense was $0.6 million and $0.7 million was included for the year ended December 31, 2013, respectively. The related income tax benefit in the accompanying consolidated statements of income was $0.2 million, $0.1 million, and $0.2 million for the years ended December 31, 2015, 2014, and 2013, respectively.

The Company uses the Black-Scholes option pricing model to estimate the fair value of the stock options awards. The following weighted-average assumptions were used for option awards granted during the years ended December 31 of the periods indicated:



		2015			2014			2013
Expected dividend yield		—	%		—	%		—	%
Weighted-average expected volatility		42.89	%		44.53	%		36.68	%
Weighted-average risk-free interest rate		1.73	%		2.21	%		1.73	%
Expected option term (in years)		6.0			6.0			6.0
Contractual term (in years)		10.0			10.0			10.0
Weighted-average grant date fair value	$	14.06		$	15.56		$	5.22

The assumptions above were based on multiple factors, primarily the historical stock option patterns of a group of publicly traded peer banks based in the southeastern United States.

At December 31, 2015, there was $1.0 million in unrecognized compensation cost related to stock options which is expected to be recognized over a weighted-average period of 1.3 years.

The following table represents the activity related to stock options during the periods indicated:



	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)
Options outstanding, December 31, 2012	809,017		$	11.81
Granted	139,650		16.16
Exercised	(76,966	)	10.39
Forfeited or expired	(16,600	)	15.16
Options outstanding, December 31, 2013	855,101		13.48
Granted	38,013		34.32
Exercised	(57,370	)	12.26
Forfeited or expired	(1,074	)	22.13
Options outstanding, December 31, 2014	834,670		14.50
Granted	33,187		32.55
Exercised	(42,409	)	13.84
Forfeited or expired	(4,252	)	24.20
Options outstanding, December 31, 2015	821,196		$	15.22	5.55
Options exercisable, December 31, 2013	374,535		$	11.94
Options exercisable, December 31, 2014	522,600		$	12.70
Options exercisable, December 31, 2015	621,255		$	13.56	5.00

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The following table presents weighted-average remaining life as of December 31, 2015 for options outstanding within the stated exercise prices:



	Options Outstanding				Options Exercisable
Exercise Price Range Per Share	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Life (Years)	Number of Shares	Weighted- Average Exercise Price
$10.00-$12.70	306,494	$	11.32	3.38	306,494	$	11.32
$14.20-$15.88	441,322	15.00		6.54	299,405	14.92
$23.68-$34.35	73,380	32.81		8.64	15,356	32.01
Total Options	821,196	$	15.22	5.55	621,255	$	13.56

At December 31, 2015, the aggregate intrinsic value of shares underlying outstanding stock options and underlying exercisable stock options was $18.2 million and $14.8 million, respectively. Total intrinsic value of options exercised was $0.8 million for the year ended December 31, 2015 and $1.2 million during the years ended December 31, 2014 and 2013.

27. Financial Instruments With Off-Balance-Sheet Risk

The Company is a party to various financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit, which are recorded when they are funded. Such commitments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the accompanying consolidated financial statements.

At December 31, 2015 and 2014, the Company had made various commitments to extend credit of $822.0 million and $620.3 million, respectively. The Company’s management does not anticipate any material loss as a result of these transactions.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being fully drawn upon, the total commitment amounts disclosed above do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if considered necessary upon extension of credit, is based on management’s credit evaluation of the counterparty.

Standby letters of credit represent commitments by the Company to meet the obligations of certain customers, if called upon. These financial instruments are considered guarantees in accordance with ASC 460. Outstanding standby letters of credit as of December 31, 2015 were $106.2 million and expire between 2016 and 2040. Outstanding standby letters of credit as of December 31, 2014, were $110.6 million and expire between 2015 and 2040. Net unamortized fees related to letters of credit origination were $0.3 million as of December 31, 2015 and 2014. Net unamortized costs related to letters of credit origination were $0.4 million and $0.2 million as of December 31, 2015 and 2014, respectively.

28. Commitments and Contingencies

Litigation Matters

On May 5, 2016, a purported securities class action suit was commenced in the United States District Court for the Eastern District of Louisiana, naming as defendants the Company, its Chairman and Chief Executive Officer, and its Chief Financial Officer. The lawsuit alleges violations of the Securities Exchange Act of 1934 and Rule 10b-5 in connection with allegedly false and misleading statements made by the Company related to its tax credit accounting practices and exposure to the oil and gas industry. The plaintiff seeks, among other things, damages for purchasers of the Company's common stock between May 10, 2013 and April 8, 2016. A group of institutional investors and a pension fund have each moved for appointment as lead plaintiff of the putative class. Briefing on the lead plaintiff motions was completed on July 19, 2016, and the parties currently await a decision on these motions from the Court. The Company believes that it has meritorious defenses and intend to defend this lawsuit vigorously. This lawsuit and any other related lawsuits are subject to inherent uncertainties, and the ultimate outcome of such litigation is necessarily unknown. The Company is unable to make a reasonable estimate of the amount or range of loss that could result from an unfavorable outcome in such matters.

The SEC has commenced an investigation relating to the Company’s financial reporting. The Company is fully cooperating with the SEC. The Company cannot predict the duration or outcome of this investigation. Any action by the SEC or other

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government agency could result in civil or criminal sanctions against the Company and/or certain of its current or former officers, directors or employees.

The Company is party to various other litigation matters incidental to the conduct of our business. Based upon its evaluation of information currently available, the Company believes that the ultimate resolution of any such proceedings will not have a material adverse effect, either individually or in the aggregate, on its financial condition, results of operations or cash flows.

Leases

The Company leases certain branch offices through noncancelable operating leases with terms that range from one to 30 years, with renewal options thereafter. Certain leases have escalation clauses and renewal options ranging from one to 59 years. Rent expense was approximately $3.6 million, $3.2 million, and $3.3 million for the years ended December 31, 2015, 2014, and 2013, respectively.

At December 31, 2015, the minimum annual rental payments to be made under the noncancelable leases are as follows:



(In thousands)
Year ending December 31:
2016	$	3,943
2017	3,935
2018	3,614
2019	3,441
2020	3,303
Thereafter	34,322
	$	52,558

At December 31, 2015, the Company has one capital lease related to a branch office in Crestview, Florida, which included renewal options for 20 years. The $1.2 million of assets, net of accumulated depreciation of $0.1 million, recorded under the capital lease is included within Bank premises and equipment, net in the accompanying consolidated balance sheets. The Company recorded amortization of $0.1 million related to the capital lease for the year ended December 31, 2015, which has been included within depreciation expense. There were no costs related to capital leases included within depreciation for the years ended December 31, 2014 and 2013.

At December 31, 2015, the minimum annual rental payments, net of imputed interest, to be made under the capital lease are as follows:



(In thousands)
Year ending December 31:
2016	$	46
2017	48
2018	50
2019	51
2020	53
Thereafter	965
	$	1,213

Off-Balance-Sheet Arrangements

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These transactions include commitments to extend credit in the ordinary course of business to approved customers. Generally, loan commitments have been granted on a temporary basis for working capital or commercial real estate financing requirements or may be reflective of loans in various stages of funding. These commitments are recorded on the Company’s financial statements as they are funded. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Loan commitments include unused commitments for open-end lines secured by one to four family residential properties and commercial properties, commitments to fund loans secured by commercial real estate, construction loans, business lines of credit, and other unused commitments. Standby letters of credit are written conditional commitments issued by the Company to guarantee the performance of a customer to a third party. In the

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event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, the Company would be entitled to seek recovery from the customer. The Company minimizes its exposure to loss under loan commitments and standby letters of credit by subjecting them to credit approval and monitoring procedures. The effect on the Company’s revenues, expenses, cash flows, and liquidity of the unused portions of these commitments cannot be reasonably predicted because there is no guarantee that the lines of credit will be used. The liability for losses on unfunded commitments totaled $0.3 million and $0.2 million at December 31, 2015 and 2014, respectively.

The following is a summary of the total notional amount of loan commitments and standby letters of credit outstanding at December 31, 2015 and 2014:



(In thousands)	2015		2014
Standby letters of credit	$	106,232	$	110,636
Unused loan commitments	715,759		509,665
Total	$	821,991	$	620,301

29. Related-Party Transactions

In the ordinary course of business, the Company makes loans to and holds deposits for directors and executive officers of the Company and their associates.

The prior year amounts of related-party loans has been restated due to the omission of certain related-parties in the prior year. The amounts of such related-party loans were $339.4 million and $233.2 million at December 31, 2015 and 2014, respectively. During 2015, $128.9 million in related-party loans were funded and $22.7 million were repaid. Also, in the ordinary course of business, the Company makes loans to affiliate entities of the Bank. These loans totaled $41.4 million as of December 31, 2015 and 2014. None of the related-party loans and affiliate entity loans were classified as nonaccrual, past due, restructured, or potential problem loans at December 31, 2015 or 2014. The amounts of such related-party deposits were $22.5 million and $14.4 million at December 31, 2015 and 2014, respectively.

The Company leases a building from a partnership that is owned by two directors of the Company. The Company paid approximately $0.2 million in annual rent expense related to this lease for the years ended December 31, 2015, 2014, and 2013. The lease also includes options for multiple five-year term extensions beyond the original lease expiration of October 2004, provided there were no defaults of material lease provisions by the lessee. The Company exercised an option to extend the lease for an additional five years in October 2014.

30. Employee Benefits

401(k) Profit-Sharing Plan

The Company participates in a contributory retirement and savings plan (the Plan), which covers substantially all employees and meets the requirements of Section 401(k) of the Internal Revenue Code. Employer contributions to the Plan are based on the participants’ contributions, with an additional discretionary contribution as determined by the Board of Directors. Company contributions under the Plan were approximately $1.2 million, $1.1 million, and $1.0 million for the years ended December 31, 2015, 2014, and 2013, respectively. The Company pays all expenses associated with the Plan.

Employee Stock Ownership Plan

The Company sponsors an employee stock ownership plan (ESOP), which held 147,890 shares of Company stock as of December 31, 2015, a portion of which was subject to indebtedness utilized to purchase the shares in March 2015 (see Note 18 for further explanation on the ESOP loan entered in March 2015). The leveraged ESOP allocates shares annually to eligible employee participants pro rata based on compensation. All participants vest in the annual allocations at 20% per year. The Company recognized compensation expense with respect to the ESOP of $0.4 million, $0.3 million, and $0.2 million for the years ended December 31, 2015, 2014, and 2013, respectively. The Company pays all expenses associated with the ESOP.

31. Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures, clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the inputs used to develop those assumptions and measure fair value. The hierarchy requires companies to maximize the use of

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observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:


•	Level 1 – Quoted prices in active markets for identical assets or liabilities.


•	Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.


•	Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

A description of the valuation methodologies used for instruments measured at fair value follows, as well as the classification

of such instruments within the valuation hierarchy. Securities are classified within Level 1 when quoted market prices are available in an active market. Inputs include securities that have quoted prices in active markets for identical assets. If quoted market prices are unavailable, fair value is estimated using pricing models or quoted prices of securities with similar characteristics, at which point the securities would be classified within Level 2 of the hierarchy. Examples include certain available for sale securities. The Company’s investment portfolio did not include Level 3 securities as of December 31, 2015 and December 31, 2014.

The Company has segregated all financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy, based on the inputs used to determine the fair value at the measurement date in the tables below:



			December 31, 2015
			Fair Value Measurement Using
(In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Available for sale securities:
U.S. government agency securities	$	149,675	$	—	$	149,675	$	—
U.S. Treasury securities	12,703		—		12,703		—
Municipal securities	12,100		—		12,100		—
Mortgage-backed securities	77,511		—		77,511		—
Corporate bonds	7,823		—		7,823		—
Other equity securities	20		20		—		—
Other debt securities	25,994		—		25,994		—
Total	$	285,826	$	20	$	285,806	$	—
Liabilities
Derivative instruments	$	19,700	$	—	$	19,700	$	—

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			December 31, 2014
			Fair Value Measurement Using
(In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Available for sale securities:
U.S. government agency securities	$	157,527	$	—	$	157,527	$	—
U.S. Treasury securities	12,610		—		12,610		—
Municipal securities	12,246		—		12,246		—
Mortgage-backed securities	57,087		—		57,087		—
Corporate bonds	8,177		—		8,177		—
	$	247,647	$	—	$	247,647	$	—
Derivative instruments	37		—		37		—
Total	$	247,684	$	—	$	247,684	$	—
Liabilities
Derivative instruments	$	12,953	$	—	$	12,953	$	—

The Company has segregated all financial assets and liabilities that are measured at fair value on a nonrecurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the tables below:



			December 31, 2015
			Fair Value Measurement Using
(In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Loans	$	80,006	$	—	$	—	$	80,006
OREO	3,701		—		—		3,701
Investment in tax credit entities	1,425		—		—		1,425
	$	85,132	$	—	$	—	$	85,132



			December 31, 2014
			Fair Value Measurement Using
(In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Restated)						(Restated)
Assets
Loans	$	20,679	$	—	$	—	$	20,679
OREO	3,022		—		—		3,022
Investment in tax credit entities	1,672		—		—		1,672
	$	25,373	$	—	$	—	$	25,373

In accordance with ASC Topic 310, the Company records loans and other real estate considered impaired at the lower of cost or fair value. Impaired loans, recorded at fair value, are Level 3 assets measured using appraisals from external parties of the collateral, less any prior liens primarily using the market or income approach. The residual value or fair value of the Company's investment in tax credit entities are Level 3 assets measured using appraisals or actual costs incurred on the

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underlying individual properties, applying an estimated inflation rate on the appraised values or actual costs and discounting the cash flows.

The Company did not record any liabilities at fair value for which measurement of the fair value was made on a nonrecurring basis during the years ended December 31, 2015 and December 31, 2014.

ASC 820 requires the disclosure of the fair value for each class of financial instruments for which it is practicable to estimate. The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. ASC 820 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value.

Cash and Cash Equivalents

The carrying amounts of these short-term instruments approximate their fair values and would be classified within Level 1 of the hierarchy.

Investment in Short-Term Receivables

The carrying amounts of these short-term receivables approximate their fair value and would be classified within Level 1 of the hierarchy.

Investment Securities

Securities are classified within Level 1 where quoted market prices are available in the active market. If quoted market prices are unavailable, fair value is estimated using pricing models or quoted prices of securities with similar characteristics, at which point the securities would be classified within Level 2 of the hierarchy. Inputs include securities that have quoted prices in active markets for identical assets.

Loans

For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values. Fair values for fixed-rate commercial real estate, commercial loans, and consumer loans are estimated using discounted cash flow analyses using interest rates currently being offered for loans with similar terms and borrowers of similar credit quality. Fair value of mortgage loans held for sale is based on commitments on hand from investors or prevailing market rates. The fair value associated with the loans includes estimates related to expected prepayments and the amount and timing of undiscounted expected principal, interest and other cash flows, which would be classified as Level 3 of the hierarchy.

Deposits

The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts) and would be categorized within Level 2 of the fair value hierarchy. The carrying amounts of variable-rate, fixed-term money market accounts approximate their fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits. The fair value of the Company’s interest-bearing deposits would, therefore, be categorized within Level 3 of the fair value hierarchy.

Short-Term Borrowings and Repurchase Agreements

The carrying amounts of these short-term instruments approximate their fair values and would be classified within Level 2 of the hierarchy.

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Long-Term Borrowings

The fair values of long-term borrowings are estimated using discounted cash flows analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The fair value of the Company’s long-term debt would, therefore, be categorized within Level 3 of the fair value hierarchy.

Derivative Instruments

Fair values for interest rate swap agreements are based upon the amounts required to settle the contracts. The derivative instruments are classified within Level 2 of the fair value hierarchy.

The estimated fair values of the Company’s financial instruments were as follows as of the dates indicated:



	Fair Value Measurements at December 31, 2015
(In thousands)	Carrying Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	349,054	$	349,054	$	349,054	$	—	$	—
Investment in short-term receivables	25,604		25,604		25,604		—		—
Investment securities available for sale	285,826		285,826		20		285,806		—
Investment securities held to maturity	82,074		82,799		—		82,799		—
Loans and loans held for sale	3,466,268		3,444,920		—		—		3,444,920
Financial Liabilities:
Deposits, noninterest-bearing	368,421		368,421		—		368,421		—
Deposits, interest-bearing	3,475,421		3,403,261		—		—		3,403,261
Repurchase agreements	79,251		79,251		—		79,251		—
Short-term borrowings	8,000		7,994		—		7,994		—
Long-term borrowings	339,042		341,033		—		341,033		—
Derivative instruments	19,700		19,700		—		19,700		—



	Fair Value Measurements at December 31, 2014
(In thousands)	Carrying Amount		Total		Level 1		Level 2		Level 3
	(Restated)		(Restated)				(Restated)		(Restated)
Financial Assets:
Cash and cash equivalents	$	50,888	$	50,888	$	50,888	$	—	$	—
Investment in short-term receivables	237,135		237,135		237,135		—		—
Investment securities available for sale	247,647		247,647		—		247,647		—
Investment securities held to maturity	89,076		90,956		—		90,956		—
Loans and loans held for sale	2,675,645		2,659,820		—		—		2,659,820
Derivative instruments	37		37		—		37		—
Financial Liabilities:
Deposits, noninterest-bearing	362,577		362,577		—		362,577		—
Deposits, interest-bearing	2,756,316		2,722,134		—		—		2,722,134
Repurchase agreements	117,991		117,991		—		117,991		—
Long-term borrowings	40,000		42,270		—		42,270		—
Derivative instruments	12,953		12,953		—		12,953		—

131

32. Parent Company Only Financial Statements

Financial statements of First NBC Bank Holding Company (parent company only) are shown below. The parent company has no significant operating activities.

Balance Sheets



	December 31,
(In thousands)	2015		2014
Assets			(Restated)
Cash and cash equivalents	$	3,822	$	23,736
Goodwill	841		841
Investments in subsidiaries	436,363		381,847
Other assets	4,512		2,145
Total assets	$	445,538	$	408,569
Liabilities and shareholders’ equity
Long-term borrowings	$	63,053	$	—
Other liabilities	1,736		36
Total liabilities	64,789		36
Total shareholders’ equity	380,749		408,533
Total liabilities and shareholders’ equity	$	445,538	$	408,569

Statements of Income



	Year Ended December 31,
(In thousands)	2015			2014			2013
Operating income				(Restated)			(Restated)
Interest income	$	—		$	—		$	—
Dividend from bank subsidiary	22,338			—			2,000
Total operating income	22,338			—			2,000
Operating expense
Interest expense	3,092			3			424
Other expense	1,947			1,414			856
Total operating expense	5,039			1,417			1,280
Income (loss) before income tax benefit and increase in equity in undistributed earnings of subsidiaries	17,299			(1,417		)	720
Income tax benefit	(1,627		)	(496		)	(448		)
Income (loss) before equity in undistributed earnings of subsidiaries	18,926			(921		)	1,168
Equity in undistributed earnings of subsidiaries	(44,163		)	45,428			32,458
Net (loss) income	(25,237		)	44,507			33,626
Preferred stock dividends	(379		)	(379		)	(347		)
(Loss) income available to common shareholders	$	(25,616	)	$	44,128		$	33,279

132

Statements of Cash Flows



	Year Ended December 31,
(In thousands)	2015			2014			2013
Operating activities				(Restated)			(Restated)
Net (loss) income	$	(25,237	)	$	44,507		$	33,626
Adjustments to reconcile net income to net cash provided by (used in)operating activities:
Net loss (income) of subsidiaries	44,163			(45,428		)	(32,458		)
Deferred tax benefit	(1,627		)	(496		)	(448		)
Stock compensation	83			333			1,155
Changes in operating assets and liabilities:
Change in other assets	(742		)	474			1,481
Change in other liabilities	1,700			(17		)	50
Net cash provided by (used in) operating activities	18,340			(627		)	3,406
Investing activities
Capital contributed to subsidiary, net	(50,000		)	—			(67,000		)
Cash used for acquisition	(48,744		)	—			—
Net cash used in investing activities	(98,744		)	—			(67,000		)
Financing activities
Proceeds from long-term borrowings	60,000			—			—
Proceeds from ESOP loan	3,392			—			—
Repayment of borrowings	(339		)	(110		)	(20,110		)
Purchase of common stock by ESOP	(3,010		)	—			—
Proceeds from sale of common stock, net of offering costs	826			862			104,332
Dividends paid	(379		)	(379		)	(347		)
Net cash provided by financing activities	60,490			373			83,875
Net change in cash and cash equivalents	(19,914		)	(254		)	20,281
Cash and cash equivalents, beginning of year	23,736			23,990			3,709
Cash and cash equivalents, end of year	$	3,822		$	23,736		$	23,990

133

33. Restated Consolidated Quarterly Results of Operations (Unaudited)

The following represents summarized quarterly financial data of the Company which, in the opinion of management, reflects all adjustments for fair presentation, including certain reclassifications to conform prior period balances to the current period presentation. Following the summarized quarterly data the restated quarterly financial statements shown reflect applicable restatement adjustments for each individual quarterly period from March 31, 2014 through September 30, 2015, the last date through which financial statements previously had been issued.



(In thousands, except per share data)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(Restated)			(Restated)			(Restated)
Year Ended December 31, 2015
Total interest income	$	38,352		$	39,770		$	41,454		$	46,326
Total interest expense	11,484			12,402			13,228			13,980
Net interest income	26,868			27,368			28,226			32,346
Provision for loan losses	3,000			5,600			3,000			31,938
Net interest income after provision for loan losses	23,868			21,768			25,226			408
Noninterest income	3,352			3,618			1,343			(64,759		)
Noninterest expense	31,952			31,277			33,159			49,938
Income (loss) before income taxes	(4,732		)	(5,891		)	(6,590		)	(114,289		)
Income tax benefit	(14,684		)	(18,596		)	(18,111		)	(54,874		)
Net income (loss) attributable to Company	9,952			12,705			11,521			(59,415		)
Less preferred stock dividends	(95		)	(95		)	(95		)	(94		)
Less earnings allocated to participating securities	(190		)	(222		)	—			—
Income (loss) available to common shareholders	$	9,667		$	12,388		$	11,426		$	(59,509	)
Earnings (loss) per common share-basic	$	0.52		$	0.67		$	0.61		$	(3.19	)
Earnings (loss) per common share-diluted	$	0.51		$	0.65		$	0.60		$	(3.19	)



(In thousands, except per share data)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Year Ended December 31, 2014	(Restated)			(Restated)			(Restated)			(Restated)
Total interest income	$	34,421		$	36,453		$	37,928		$	38,216
Total interest expense	10,313			10,643			10,908			10,865
Net interest income	24,108			25,810			27,020			27,351
Provision for loan losses	3,000			3,000			3,000			3,000
Net interest income after provision for loan losses	21,108			22,810			24,020			24,351
Noninterest income	3,837			3,411			3,313			3,269
Noninterest expense	22,003			22,734			23,616			25,982
Income before income taxes	2,942			3,487			3,717			1,638
Income tax benefit	(6,647		)	(6,298		)	(7,987		)	(11,791		)
Net income attributable to Company	9,589			9,785			11,704			13,429
Less preferred stock dividends	(95		)	(95		)	(95		)	(94		)
Less earnings allocated to participating securities	(183		)	(187		)	(224		)	(258		)
Income available to common shareholders	$	9,311		$	9,503		$	11,385		$	13,077
Earnings per common share-basic	$	0.50		$	0.51		$	0.61		$	0.70
Earnings per common share-diluted	$	0.49		$	0.50		$	0.60		$	0.69

134

CONSOLIDATED BALANCE SHEET



September 30, 2015
(In thousands)	As previously reported			Restatement adjustments			As restated
Assets
Cash and due from banks:
Noninterest-bearing	$	33,759		$	—		$	33,759
Interest-bearing	169,526			—			169,526
Federal funds sold	10,000			—			10,000
Cash and cash equivalents	213,285			—			213,285
Investment in short-term receivables	182,945			—			182,945
Investment securities available for sale, at fair value	273,702			—			273,702
Investment securities held to maturity (fair value of $84,601)	83,319			—			83,319
Mortgage loans held for sale	2,647			—			2,647
Loans, net of allowance for loan losses of $53,076	3,065,778			(238		)	3,065,540
Bank premises and equipment, net	55,844			—			55,844
Accrued interest receivable	11,919			—			11,919
Goodwill and other intangible assets	8,942			(24		)	8,918
Investment in real estate properties	57,465			(257		)	57,208
Investment in tax credit entities, net	172,259			(8,418		)	163,841
Cash surrender value of bank-owned life insurance	48,342			—			48,342
Other real estate	4,575			—			4,575
Deferred tax asset	127,627			3,549			131,176
Other assets	36,818			470			37,288
Total assets	$	4,345,467		$	(4,918	)	$	4,340,549
Liabilities and equity
Deposits:
Noninterest-bearing	$	416,405		$	79		$	416,484
Interest-bearing	3,200,513			—			3,200,513
Total deposits	3,616,918			79			3,616,997
Repurchase agreements	93,775			—			93,775
Subordinated debentures	60,000						60,000
Long-term borrowings	43,392			—			43,392
Accrued interest payable	7,503			—			7,503
Other liabilities	37,266			1,683			38,949
Total liabilities	3,858,854			1,762			3,860,616
Shareholders’ equity:
Preferred stock:
Preferred stock Series D – no par value; 37,935 shares authorized, issued and outstanding at September 30, 2015	37,935			—			37,935
Common stock- par value $1 per share; 100,000,000 shares authorized; 19,068,301 shares issued and outstanding at September 30, 2015	19,068			—			19,068
Additional paid-in capital	242,376			—			242,376
Accumulated earnings	206,775			(6,680		)	200,095
Accumulated other comprehensive loss, net	(19,543		)	—			(19,543		)
Total shareholders’ equity	486,611			(6,680		)	479,931
Noncontrolling interest	2			—			2
Total equity	486,613			(6,680		)	479,933
Total liabilities and equity	$	4,345,467		$	(4,918	)	$	4,340,549

135

CONSOLIDATED BALANCE SHEET



June 30, 2015
(In thousands)	As previously reported			Restatement adjustments			As restated
Assets
Cash and due from banks:
Noninterest-bearing	$	55,926		$	—		$	55,926
Interest-bearing	82,097			—			82,097
Federal funds sold	10,000			—			10,000
Cash and cash equivalents	148,023			—			148,023
Investment in short-term receivables	250,575			—			250,575
Investment securities available for sale, at fair value	245,860			—			245,860
Investment securities held to maturity (fair value of $84,175)	84,804			—			84,804
Mortgage loans held for sale	4,945			—			4,945
Loans, net of allowance for loan losses of $50,351	2,882,962			26,417			2,909,379
Bank premises and equipment, net	55,377			—			55,377
Accrued interest receivable	12,655			—			12,655
Goodwill and other intangible assets	7,827			(4		)	7,823
Investment in real estate properties	56,193			(38,033		)	18,160
Investment in tax credit entities, net	174,265			6,374			180,639
Cash surrender value of bank-owned life insurance	47,994			—			47,994
Other real estate	4,459			—			4,459
Deferred tax asset	111,643			2,368			114,011
Other assets	38,921			(3,397		)	35,524
Total assets	$	4,126,503		$	(6,275	)	$	4,120,228
Liabilities and equity
Deposits:
Noninterest-bearing	$	390,001		$	947		$	390,948
Interest-bearing	3,006,744			—			3,006,744
Total deposits	3,396,745			947			3,397,692
Repurchase agreements	117,840			—			117,840
Subordinated debentures	60,000						60,000
Long-term borrowings	43,392			—			43,392
Accrued interest payable	8,098			—			8,098
Other liabilities	30,508			(2,735		)	27,773
Total liabilities	3,656,583			(1,788		)	3,654,795
Shareholders’ equity:
Preferred stock:
Preferred stock Series D – no par value; 37,935 shares authorized, issued and outstanding at June 30, 2015	37,935			—			37,935
Common stock- par value $1 per share; 100,000,000 shares authorized; 19,021,721 shares issued and outstanding at June 30, 2015	19,022			—			19,022
Additional paid-in capital	241,437			—			241,437
Accumulated earnings	188,669			(4,487		)	184,182
Accumulated other comprehensive loss, net	(17,145		)	—			(17,145		)
Total shareholders’ equity	469,918			(4,487		)	465,431
Noncontrolling interest	2			—			2
Total equity	469,920			(4,487		)	465,433
Total liabilities and equity	$	4,126,503		$	(6,275	)	$	4,120,228

136

CONSOLIDATED BALANCE SHEET



March 31, 2015
(In thousands)	As previously reported			Restatement adjustments			As restated
Assets
Cash and due from banks:
Noninterest-bearing	$	53,234		$	—		$	53,234
Interest-bearing	151,586			—			151,586
Cash and cash equivalents	204,820			—			204,820
Investment in short-term receivables	236,644			—			236,644
Investment securities available for sale, at fair value	257,865			—			257,865
Investment securities held to maturity (fair value of $89,332)	87,265			—			87,265
Mortgage loans held for sale	3,986			—			3,986
Loans, net of allowance for loan losses of $45,195	2,824,553			686			2,825,239
Bank premises and equipment, net	54,271			—			54,271
Accrued interest receivable	11,702			—			11,702
Goodwill and other intangible assets	7,739			(4		)	7,735
Investment in real estate properties	17,964			(419		)	17,545
Investment in tax credit entities, net	181,395			(7,508		)	173,887
Cash surrender value of bank-owned life insurance	47,641			—			47,641
Other real estate	4,966			—			4,966
Deferred tax asset	95,817			3,244			99,061
Other assets	32,694			21			32,715
Total assets	$	4,069,322		$	(3,980	)	$	4,065,342
Liabilities and equity
Deposits:
Noninterest-bearing	$	433,377		$	(241	)	$	433,136
Interest-bearing	2,933,069			—			2,933,069
Total deposits	3,366,446			(241		)	3,366,205
Repurchase agreements	111,864			—			111,864
Subordinated debentures	60,000						60,000
Long-term borrowings	43,392			—			43,392
Accrued interest payable	7,200			—			7,200
Other liabilities	30,457			2,377			32,834
Total liabilities	3,619,359			2,136			3,621,495
Shareholders’ equity:
Preferred stock:
Convertible preferred stock Series C – no par value; 1,680,219 shares authorized; 364,983 shares issued and outstanding at March 31, 2015	4,471			—			4,471
Preferred stock Series D – no par value; 37,935 shares authorized, issued and outstanding at March 31, 2015	37,935			—			37,935
Common stock- par value $1 per share; 100,000,000 shares authorized; 18,609,753 shares issued and outstanding at March 31, 2015	18,610			—			18,610
Additional paid-in capital	236,847			—			236,847
Accumulated earnings	171,572			(6,116		)	165,456
Accumulated other comprehensive loss, net	(19,474		)	—			(19,474		)
Total shareholders’ equity	449,961			(6,116		)	443,845
Noncontrolling interest	2			—			2
Total equity	449,963			(6,116		)	443,847
Total liabilities and equity	$	4,069,322		$	(3,980	)	$	4,065,342

137

CONSOLIDATED BALANCE SHEET



September 30, 2014
(In thousands)	As previously reported			Restatement adjustments			As restated
Assets
Cash and due from banks:
Noninterest-bearing	$	27,342		$	—		$	27,342
Interest-bearing	14,757			—			14,757
Cash and cash equivalents	42,099			—			42,099
Investment in short-term receivables	240,832			—			240,832
Investment securities available for sale, at fair value	246,019			—			246,019
Investment securities held to maturity (fair value of $90,353)	90,710			—			90,710
Mortgage loans held for sale	4,095			—			4,095
Loans, net of allowance for loan losses of $40,300	2,625,394			383			2,625,777
Bank premises and equipment, net	50,186			—			50,186
Accrued interest receivable	11,078			—			11,078
Goodwill and other intangible assets	7,981			(4		)	7,977
Investment in real estate properties	14,871			(1,358		)	13,513
Investment in tax credit entities, net	151,114			(3,153		)	147,961
Cash surrender value of bank-owned life insurance	46,934			—			46,934
Other real estate	5,262			—			5,262
Deferred tax asset	67,933			1,375			69,308
Other assets	29,415			(800		)	28,615
Total assets	$	3,633,923		$	(3,557	)	$	3,630,366
Liabilities and equity
Deposits:
Noninterest-bearing	$	336,112		$	(118	)	$	335,994
Interest-bearing	2,635,093			—			2,635,093
Total deposits	2,971,205			(118		)	2,971,087
Short-term borrowings	31,000			—			31,000
Repurchase agreements	113,430			—			113,430
Long-term borrowings	55,110			—			55,110
Accrued interest payable	6,543			—			6,543
Other liabilities	33,095			(784		)	32,311
Total liabilities	3,210,383			(902		)	3,209,481
Shareholders’ equity:
Preferred stock:
Convertible preferred stock Series C – no par value; 1,680,219 shares authorized; 364,983 shares issued and outstanding at September 30, 2014	4,471			—			4,471
Preferred stock Series D – no par value; 37,935 shares authorized, issued and outstanding at September 30, 2014	37,935			—			37,935
Common stock- par value $1 per share; 100,000,000 shares authorized; 18,575,088 shares issued and outstanding at September 30, 2014	18,575			—			18,575
Additional paid-in capital	239,144			—			239,144
Accumulated earnings	139,990			(2,655		)	137,335
Accumulated other comprehensive loss, net	(16,577		)	—			(16,577		)
Total shareholders’ equity	423,538			(2,655		)	420,883
Noncontrolling interest	2			—			2
Total equity	423,540			(2,655		)	420,885
Total liabilities and equity	$	3,633,923		$	(3,557	)	$	3,630,366

138

CONSOLIDATED BALANCE SHEET



June 30, 2014
(In thousands)	As previously reported			Restatement adjustments			As restated
Assets
Cash and due from banks:
Noninterest-bearing	$	38,660		$	—		$	38,660
Interest-bearing	24,790			—			24,790
Cash and cash equivalents	63,450			—			63,450
Investment in short-term receivables	252,460			—			252,460
Investment securities available for sale, at fair value	280,991			—			280,991
Investment securities held to maturity (fair value of $91,410)	91,075			—			91,075
Mortgage loans held for sale	5,264			—			5,264
Loans, net of allowance for loan losses of $37,403	2,506,756			(90		)	2,506,666
Bank premises and equipment, net	50,737			—			50,737
Accrued interest receivable	11,691			—			11,691
Goodwill and other intangible assets	8,132			(4		)	8,128
Investment in real estate properties	14,103			(1,358		)	12,745
Investment in tax credit entities, net	144,865			(2,694		)	142,171
Cash surrender value of bank-owned life insurance	46,583			—			46,583
Other real estate	5,190			—			5,190
Deferred tax asset	61,256			1,514			62,770
Other assets	25,855			(601		)	25,254
Total assets	$	3,568,408		$	(3,233	)	$	3,565,175
Liabilities and equity
Deposits:
Noninterest-bearing	$	340,716		$	(118	)	$	340,598
Interest-bearing	2,616,803			—			2,616,803
Total deposits	2,957,519			(118		)	2,957,401
Repurchase agreements	106,393			—			106,393
Long-term borrowings	55,110			—			55,110
Accrued interest payable	6,846			—			6,846
Other liabilities	33,366			(201		)	33,165
Total liabilities	3,159,234			(319		)	3,158,915
Shareholders’ equity:
Preferred stock:
Convertible preferred stock Series C – no par value; 1,680,219 shares authorized; 364,983 shares issued and outstanding at June 30, 2014	4,471			—			4,471
Preferred stock Series D – no par value; 37,935 shares authorized, issued and outstanding at June 30, 2014	37,935			—			37,935
Common stock- par value $1 per share; 100,000,000 shares authorized; 18,554,499 shares issued and outstanding at June 30, 2014	18,554			—			18,554
Additional paid-in capital	238,241			—			238,241
Accumulated earnings	125,726			(2,914		)	122,812
Accumulated other comprehensive loss, net	(15,755		)	—			(15,755		)
Total shareholders’ equity	409,172			(2,914		)	406,258
Noncontrolling interest	2			—			2
Total equity	409,174			(2,914		)	406,260
Total liabilities and equity	$	3,568,408		$	(3,233	)	$	3,565,175

139

CONSOLIDATED BALANCE SHEET



March 31, 2014
(In thousands)	As previously reported			Restatement adjustments			As restated
Assets
Cash and due from banks:
Noninterest-bearing	$	57,417		$	—		$	57,417
Interest-bearing	63,872			—			63,872
Cash and cash equivalents	121,289			—			121,289
Investment in short-term receivables	237,656			—			237,656
Investment securities available for sale, at fair value	271,166			—			271,166
Investment securities held to maturity (fair value of $91,366)	94,167			—			94,167
Mortgage loans held for sale	5,328			—			5,328
Loans, net of allowance for loan losses of $34,465	2,404,158			(173		)	2,403,985
Bank premises and equipment, net	50,230			—			50,230
Accrued interest receivable	11,152			—			11,152
Goodwill and other intangible assets	8,283			(4		)	8,279
Investment in real estate properties	13,491			(1,385		)	12,106
Investment in tax credit entities, net	153,729			(2,948		)	150,781
Cash surrender value of bank-owned life insurance	26,345			—			26,345
Other real estate	4,060			—			4,060
Deferred tax asset	56,297			1,689			57,986
Other assets	24,941			(523		)	24,418
Total assets	$	3,482,292		$	(3,344	)	$	3,478,948
Liabilities and equity
Deposits:
Noninterest-bearing	$	330,395		$	(118	)	$	330,277
Interest-bearing	2,559,041			—			2,559,041
Total deposits	2,889,436			(118		)	2,889,318
Repurchase agreements	106,806			—			106,806
Long-term borrowings	55,110			—			55,110
Accrued interest payable	6,777			—			6,777
Other liabilities	28,774			13			28,787
Total liabilities	3,086,903			(105		)	3,086,798
Shareholders’ equity:
Preferred stock:
Convertible preferred stock Series C – no par value; 1,680,219 shares authorized; 364,983 shares issued and outstanding at March 31, 2014	4,471			—			4,471
Preferred stock Series D – no par value; 37,935 shares authorized, issued and outstanding at March 31, 2014	37,935			—			37,935
Common stock- par value $1 per share; 100,000,000 shares authorized; 18,521,831 shares issued and outstanding at March 31, 2014	18,522			—			18,522
Additional paid-in capital	237,521			—			237,521
Accumulated earnings	113,122			(3,239		)	109,883
Accumulated other comprehensive loss, net	(16,184		)	—			(16,184		)
Total shareholders’ equity	395,387			(3,239		)	392,148
Noncontrolling interest	2			—			2
Total equity	395,389			(3,239		)	392,150
Total liabilities and equity	$	3,482,292		$	(3,344	)	$	3,478,948

140

CONSOLIDATED STATEMENT OF INCOME



For the Three Months Ended September 30, 2015
(In thousands, except per share data)	As previously reported			Restatement adjustments			As restated
Interest income:
Loans, including fees	$	38,270		$	(573	)	$	37,697
Investment securities	2,193			—			2,193
Investment in short-term receivables	1,434			—			1,434
Short-term investments	130			—			130
	42,027			(573		)	41,454
Interest expense:
Deposits	11,476			—			11,476
Borrowings and securities sold under repurchase agreements	1,752			—			1,752
	13,228			—			13,228
Net interest income	28,799			(573		)	28,226
Provision for loan losses	3,000			—			3,000
Net interest income after provision for loan losses	25,799			(573		)	25,226
Noninterest income:
Service charges on deposit accounts	596			—			596
Investment securities gain, net	—			—			—
Loss on assets sold, net	(273		)	—			(273		)
Gain on sale of loans, net	31			—			31
Cash surrender value income on bank-owned life insurance	349			—			349
Sale of state tax credits earned	495			—			495
Community Development Entity fees earned	183			—			183
ATM fee income	529			—			529
Rental property income	427			452			879
Other	(1,446		)	—			(1,446		)
	891			452			1,343
Noninterest expense:
Salaries and employee benefits	7,122			—			7,122
Occupancy and equipment expenses	3,247			—			3,247
Professional fees	2,002			—			2,002
Taxes, licenses and FDIC assessments	1,536			—			1,536
Impairment of investment in tax credit entities	3,253			9,976			13,229
Write-down of foreclosed assets	29			—			29
Data processing	1,554			—			1,554
Advertising and marketing	727			—			727
Rental property expenses	1,236			320			1,556
Other	2,345			(188		)	2,157
	23,051			10,108			33,159
Income before income taxes	3,639			(10,229		)	(6,590		)
Income tax benefit	(14,562		)	(3,549		)	(18,111		)
Net income attributable to Company	18,201			(6,680		)	11,521
Less preferred stock dividends	(95		)	—			(95		)
Less earnings allocated to participating securities	—			—			—
Income available to common shareholders	$	18,106		$	(6,680	)	$	11,426
Earnings per common share – basic	$	0.97		$	(0.36	)	$	0.61
Earnings per common share – diluted	$	0.94		$	(0.34	)	$	0.60

141

CONSOLIDATED STATEMENT OF INCOME



For the Three Months Ended June 30, 2015
(In thousands, except per share data)	As previously reported			Restatement adjustments			As restated
Interest income:
Loans, including fees	$	34,685		$	1,262		$	35,947
Investment securities	2,215			—			2,215
Investment in short-term receivables	1,514			—			1,514
Short-term investments	94			—			94
	38,508			1,262			39,770
Interest expense:
Deposits	10,662			—			10,662
Borrowings and securities sold under repurchase agreements	1,740			—			1,740
	12,402			—			12,402
Net interest income	26,106			1,262			27,368
Provision for loan losses	5,600			—			5,600
Net interest income after provision for loan losses	20,506			1,262			21,768
Noninterest income:
Service charges on deposit accounts	585			—			585
Investment securities gain, net	—			—			—
Loss on assets sold, net	(32		)	—			(32		)
Gain on sale of loans, net	101			—			101
Cash surrender value income on bank-owned life insurance	353			—			353
Sale of state tax credits earned	668			—			668
Community Development Entity fees earned	133			—			133
ATM fee income	523			—			523
Rental property income	814			61			875
Other	412			—			412
	3,557			61			3,618
Noninterest expense:
Salaries and employee benefits	7,689			—			7,689
Occupancy and equipment expenses	2,996			—			2,996
Professional fees	1,701			—			1,701
Taxes, licenses and FDIC assessments	1,693			—			1,693
Impairment of investment in tax credit entities	2,647			9,014			11,661
Write-down of foreclosed assets	42			—			42
Data processing	1,581			—			1,581
Advertising and marketing	673			—			673
Rental property expenses	13			952			965
Other	4,064			(1,788		)	2,276
	23,099			8,178			31,277
Income before income taxes	964			(6,855		)	(5,891		)
Income tax benefit	(16,228		)	(2,368		)	(18,596		)
Net income attributable to Company	17,192			(4,487		)	12,705
Less preferred stock dividends	(95		)	—			(95		)
Less earnings allocated to participating securities	(300		)	78			(222		)
Income available to common shareholders	$	16,797		$	(4,409	)	$	12,388
Earnings per common share – basic	$	0.90		$	(0.23	)	$	0.67
Earnings per common share – diluted	$	0.88		$	(0.23	)	$	0.65

142

.CONSOLIDATED STATEMENT OF INCOME



For the Three Months Ended March 31, 2015
(In thousands, except per share data)	As previously reported			Restatement adjustments			As restated
Interest income:
Loans, including fees	$	35,248		$	(754	)	$	34,494
Investment securities	2,104			—			2,104
Investment in short-term receivables	1,690			—			1,690
Short-term investments	64			—			64
	39,106			(754		)	38,352
Interest expense:
Deposits	10,244			—			10,244
Borrowings and securities sold under repurchase agreements	1,240			—			1,240
	11,484			—			11,484
Net interest income	27,622			(754		)	26,868
Provision for loan losses	3,000			—			3,000
Net interest income after provision for loan losses	24,622			(754		)	23,868
Noninterest income:
Service charges on deposit accounts	559			—			559
Investment securities loss, net	(50		)	—			(50		)
Gain on assets sold, net	43			—			43
Gain on sale of loans, net	15			—			15
Cash surrender value income on bank-owned life insurance	352			—			352
Sale of state tax credits earned	519			—			519
Community Development Entity fees earned	123			—			123
ATM fee income	501			—			501
Rental property income	28			842			870
Other	420			—			420
	2,510			842			3,352
Noninterest expense:
Salaries and employee benefits	6,907			—			6,907
Occupancy and equipment expenses	2,915			—			2,915
Professional fees	2,141			—			2,141
Taxes, licenses and FDIC assessments	1,239			—			1,239
Impairment of investment in tax credit entities	4,852			8,496			13,348
Write-down of foreclosed assets	58			—			58
Data processing	1,422			—			1,422
Advertising and marketing	1,018			—			1,018
Rental property expenses	13			952			965
Other	1,939			—			1,939
	22,504			9,448			31,952
Income before income taxes	4,628			(9,360		)	(4,732		)
Income tax benefit	(11,440		)	(3,244		)	(14,684		)
Net income attributable to Company	16,068			(6,116		)	9,952
Less preferred stock dividends	(95		)	—			(95		)
Less earnings allocated to participating securities	(308		)	118			(190		)
Income available to common shareholders	$	15,665		$	(5,998	)	$	9,667
Earnings per common share – basic	$	0.84		$	(0.32	)	$	0.52
Earnings per common share – diluted	$	0.82		$	(0.31	)	$	0.51

143

CONSOLIDATED STATEMENT OF INCOME



For the Three Months Ended December 31, 2014
(In thousands, except per share data)	As previously reported			Restatement adjustments			As restated
Interest income:
Loans, including fees	$	35,096		$	(740	)	$	34,356
Investment securities	2,094			—			2,094
Investment in short-term receivables	1,751			—			1,751
Short-term investments	15			—			15
	38,956			(740		)	38,216
Interest expense:
Deposits	10,262			—			10,262
Borrowings and securities sold under repurchase agreements	603			—			603
	10,865			—			10,865
Net interest income	28,091			(740		)	27,351
Provision for loan losses	3,000			—			3,000
Net interest income after provision for loan losses	25,091			(740		)	24,351
Noninterest income:
Service charges on deposit accounts	542			—			542
Investment securities gain, net	—			—			—
Loss on assets sold, net	1			—			1
Gain on sale of loans, net	—			—			—
Cash surrender value income on bank-owned life insurance	354			—			354
Sale of state tax credits earned	(45		)	100			55
Community Development Entity fees earned	581			—			581
ATM fee income	490			—			490
Rental property income	26			882			908
Other	338			—			338
	2,287			982			3,269
Noninterest expense:
Salaries and employee benefits	7,072			—			7,072
Occupancy and equipment expenses	2,830			—			2,830
Professional fees	2,441			—			2,441
Taxes, licenses and FDIC assessments	1,364			—			1,364
Impairment of investment in tax credit entities	3,881			2,402			6,283
Write-down of foreclosed assets	198			—			198
Data processing	1,275			—			1,275
Advertising and marketing	1,067			—			1,067
Rental property expenses	13			1,283			1,296
Other	2,156			—			2,156
	22,297			3,685			25,982
Income before income taxes	5,081			(3,443		)	1,638
Income tax benefit	(10,622		)	(1,169		)	(11,791		)
Net income attributable to Company	15,703			(2,274		)	13,429
Less preferred stock dividends	(94		)	—			(94		)
Less earnings allocated to participating securities	(302		)	44			(258		)
Income available to common shareholders	$	15,307		$	(2,230	)	$	13,077
Earnings per common share – basic	$	0.82		$	(0.12	)	$	0.70
Earnings per common share – diluted	$	0.80		$	(0.11	)	$	0.69

144

CONSOLIDATED STATEMENT OF INCOME



For the Three Months Ended September 30, 2014
(In thousands, except per share data)	As previously reported			Restatement adjustments			As restated
Interest income:
Loans, including fees	$	34,664		$	(740	)	$	33,924
Investment securities	2,323			—			2,323
Investment in short-term receivables	1,675			—			1,675
Short-term investments	6			—			6
	38,668			(740		)	37,928
Interest expense:
Deposits	10,268			—			10,268
Borrowings and securities sold under repurchase agreements	640			—			640
	10,908			—			10,908
Net interest income	27,760			(740		)	27,020
Provision for loan losses	3,000			—			3,000
Net interest income after provision for loan losses	24,760			(740		)	24,020
Noninterest income:
Service charges on deposit accounts	548			—			548
Investment securities gain, net	79			—			79
Loss on assets sold, net	(76		)	—			(76		)
Gain on sale of loans, net	579			—			579
Cash surrender value income on bank-owned life insurance	352			—			352
Sale of state tax credits earned	597			(603		)	(6		)
Community Development Entity fees earned	109			—			109
ATM fee income	490			—			490
Rental property income	22			882			904
Other	334			—			334
	3,034			279			3,313
Noninterest expense:
Salaries and employee benefits	6,456			—			6,456
Occupancy and equipment expenses	2,724			—			2,724
Professional fees	1,647			—			1,647
Taxes, licenses and FDIC assessments	1,240			—			1,240
Impairment of investment in tax credit entities	3,974			2,287			6,261
Write-down of foreclosed assets	1			—			1
Data processing	1,207			—			1,207
Advertising and marketing	685			—			685
Rental property expenses	13			1,282			1,295
Other	2,100			—			2,100
	20,047			3,569			23,616
Income before income taxes	7,747			(4,030		)	3,717
Income tax benefit	(6,612		)	(1,375		)	(7,987		)
Net income attributable to Company	14,359			(2,655		)	11,704
Less preferred stock dividends	(95		)	—			(95		)
Less earnings allocated to participating securities	(275		)	51			(224		)
Income available to common shareholders	$	13,989		$	(2,604	)	$	11,385
Earnings per common share – basic	$	0.75		$	(0.14	)	$	0.61
Earnings per common share – diluted	$	0.73		$	(0.13	)	$	0.60

145

CONSOLIDATED STATEMENT OF INCOME



For the Three Months Ended June 30, 2014
(In thousands, except per share data)	As previously reported			Restatement adjustments			As restated
Interest income:
Loans, including fees	$	33,397		$	(740	)	$	32,657
Investment securities	2,378			—			2,378
Investment in short-term receivables	1,391			—			1,391
Short-term investments	27			—			27
	37,193			(740		)	36,453
Interest expense:
Deposits	9,994			—			9,994
Borrowings and securities sold under repurchase agreements	649			—			649
	10,643			—			10,643
Net interest income	26,550			(740		)	25,810
Provision for loan losses	3,000			—			3,000
Net interest income after provision for loan losses	23,550			(740		)	22,810
Noninterest income:
Service charges on deposit accounts	498			—			498
Investment securities gain, net	56			—			56
Gain on assets sold, net	64			—			64
Gain on sale of loans, net	70			—			70
Cash surrender value income on bank-owned life insurance	237			—			237
Sale of state tax credits earned	728			(404		)	324
Community Development Entity fees earned	196			—			196
ATM fee income	505			—			505
Rental property income	28			882			910
Other	551			—			551
	2,933			478			3,411
Noninterest expense:
Salaries and employee benefits	5,942			—			5,942
Occupancy and equipment expenses	2,671			—			2,671
Professional fees	1,534			—			1,534
Taxes, licenses and FDIC assessments	1,343			—			1,343
Impairment of investment in tax credit entities	3,377			2,884			6,261
Write-down of foreclosed assets	20			—			20
Data processing	1,141			—			1,141
Advertising and marketing	556			—			556
Rental property expenses	13			1,282			1,295
Other	1,971			—			1,971
	18,568			4,166			22,734
Income before income taxes	7,915			(4,428		)	3,487
Income tax benefit	(4,784		)	(1,514		)	(6,298		)
Net income attributable to Company	12,699			(2,914		)	9,785
Less preferred stock dividends	(95		)	—			(95		)
Less earnings allocated to participating securities	(243		)	56			(187		)
Income available to common shareholders	$	12,361		$	(2,858	)	$	9,503
Earnings per common share – basic	$	0.67		$	(0.16	)	$	0.51
Earnings per common share – diluted	$	0.65		$	(0.15	)	$	0.50

146

CONSOLIDATED STATEMENT OF INCOME



For the Three Months Ended March 31, 2014
(In thousands, except per share data)	As previously reported			Restatement adjustments			As restated
Interest income:
Loans, including fees	$	31,099		$	(740	)	$	30,359
Investment securities	2,352			—			2,352
Investment in short-term receivables	1,695			—			1,695
Short-term investments	15			—			15
	35,161			(740		)	34,421
Interest expense:
Deposits	9,659			—			9,659
Borrowings and securities sold under repurchase agreements	654			—			654
	10,313			—			10,313
Net interest income	24,848			(740		)	24,108
Provision for loan losses	3,000			—			3,000
Net interest income after provision for loan losses	21,848			(740		)	21,108
Noninterest income:
Service charges on deposit accounts	559			—			559
Investment securities loss, net	—			—			—
Gain on assets sold, net	75			—			75
Gain on sale of loans, net	—			—			—
Cash surrender value income on bank-owned life insurance	159			—			159
Sale of state tax credits earned	1,033			(404		)	629
Community Development Entity fees earned	679			—			679
ATM fee income	473			—			473
Rental property income	29			882			911
Other	352			—			352
	3,359			478			3,837
Noninterest expense:
Salaries and employee benefits	5,397			—			5,397
Occupancy and equipment expenses	2,571			—			2,571
Professional fees	1,965			—			1,965
Taxes, licenses and FDIC assessments	1,199			—			1,199
Impairment of investment in tax credit entities	2,827			3,435			6,262
Write-down of foreclosed assets	166			—			166
Data processing	1,098			—			1,098
Advertising and marketing	578			—			578
Rental property expenses	13			1,282			1,295
Other	1,523			(51		)	1,472
	17,337			4,666			22,003
Income before income taxes	7,870			(4,928		)	2,942
Income tax benefit	(4,958		)	(1,689		)	(6,647		)
Net income attributable to Company	12,828			(3,239		)	9,589
Less preferred stock dividends	(95		)	—			(95		)
Less earnings allocated to participating securities	(246		)	63			(183		)
Income available to common shareholders	$	12,487		$	(3,176	)	$	9,311
Earnings per common share – basic	$	0.68		$	(0.18	)	$	0.50
Earnings per common share – diluted	$	0.66		$	(0.17	)	$	0.49

147

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures.

None.

Item 9A. Controls and Procedures.

Background

In connection with the preparation of this Annual Report on Form 10-K, and the Company's Current Report on Form 8-K filed on August 15, 2016, the Audit Committee of the Board of Directors and management of the Company, in consultation with the Company's independent registered public accounting firm, Ernst & Young LLP, concluded that the consolidated financial statements as of and for the years ended December 31, 2014, 2013, 2012 and 2011 as well as each of the interim periods within the years ended December 31, 2015, 2014 and 2013, needed to be restated and should no longer be relied upon because of certain accounting errors in those financial statements. Accordingly, the Company has restated the previously issued financial statements for these periods. See “Part II - Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 2 and 33 of Notes to Consolidated Financial Statements included in “Part II - Item 8 - Financial Statements and Supplementary Data.” As a result of management’s review of the matters underlying the accounting errors, the Company has identified several deficiencies in the Company’s internal control over financial reporting, which are discussed in greater detail below. The control deficiencies failed to prevent and detect a number of accounting errors, which led to the restatement described above.

(a) Evaluation of Disclosure Controls and Procedures

In connection with the preparation and filing of this Annual Report on Form 10-K, an evaluation was conducted under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2015, because of the material weaknesses in the Company’s internal control over financial reporting described below. However, based on a number of factors, including the completion of the Audit Committee’s review of the underlying errors, management’s internal review that identified revisions to the Company’s previously issued financial statements, efforts to remediate the material weaknesses in internal control over financial reporting described below, and the performance of additional procedures by management designed to ensure the reliability of the Company’s financial reporting, the Company believes that the consolidated financial statements in this Annual Report on Form 10-K fairly present, in all material respects, the financial condition, results of operations and cash flows of the Company as of the dates, and for the periods, presented, in conformity with U.S. generally accepted accounting principles (“GAAP”).

(b) Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP.

As of December 31, 2015, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control-Integrated Framework (2013),” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Such assessment did not include the internal controls of State Investors Bancorp, Inc., which represented 5.8% of assets of the consolidated company as of December 1, 2015 (date of acquisition) and the amount of net income from the date of acquisition through year end was immaterial to the Company's consolidated operating results.

Based on its assessment, management has concluded that the internal control over financial reporting was not effective as of December 31, 2015 because of the material weaknesses in internal control over financial reporting described below. A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

148

Ineffective Control Environment and Risk Assessment

The Company identified a material weakness related to its control environment and risk assessment, which did not sufficiently promote internal control over financial reporting throughout the Company’s management structure. Principal contributing factors included the dominant influence of the Chief Executive Officer over accounting and reporting matters without adequate transaction level and review controls, to arrive at appropriate conclusions; insufficient qualified personnel, at both the executive management and staff levels, with appropriate knowledge, experience and training on accounting and reporting matters; the lack of adequate oversight by the Company's Board of Directors ("Board"); and the failure of executive management to establish a tone and control consciousness that consistently emphasizes the importance of internal control over financial reporting, risk management and segregation of duties within the Company. Impacted areas of the organization included the financial statement closing process, journal entry review and approval process, credit and receivable evaluations and the application of the allowance for loan loss methodology, identification, evaluation, and consolidation of variable interest entities and of the accounting for tax credit investments. This material weakness was a contributing factor in the development of the other material weaknesses described below and the Company's restatement of its financial results for all periods presented in this Annual Report on Form 10-K.

Monitoring of Credit to Borrowers, Application of the Allowance for Loan Loss Methodology, and Investments in Short-term Receivables

The Company identified a material weakness related to the monitoring of certain borrowers’ ability to repay loans. There were instances in which the valuation of collateral related to certain loans either was inaccurate or did not take into account supporting data available through other sources. In addition, some loans were evaluated for loss in accordance with ASC 450 when they should have been evaluated for impairment and the creation of a specific reserve in accordance with ASC 310-10. This material weakness resulted in material adjustments to the allowance for loan losses subsequent to December 31, 2015 after unaudited annual and fourth quarter financial information had been included in a Form 8-K filed with the Securities and Exchange Commission.

The Company also identified a material weakness related to the evaluation and ongoing monitoring of the financial stability and creditworthiness of companies from which the Company acquired short-term receivables. In this regard, the Company identified a certain short-term borrower that defaulted on a portion of its obligation to the Company. As a result, the Company recognized an impairment of its investment in short-term receivables for the year ended December 31, 2015.

Accounting for Investment in Tax Credit Entities

The Company identified a material weakness related to the lack of a sufficient number of accounting personnel with the appropriate technical expertise and knowledge of the accounting for the Company’s investments in certain of its income tax credit related entities and the related evaluation of impairment, if any, associated with these investments. This material weakness resulted in material errors in the amount of impairment recorded, which led the Company to record additional adjustments to the financial statements for all periods presented in this Annual Report on Form 10-K.

Identification, Evaluation, and Consolidation of Variable Interest Entities

The Company identified a material weakness related to the lack of accounting personnel with the technical expertise and knowledge to properly identify certain investments in real estate entities made by the Company and evaluate them under GAAP to determine if the investment qualified as a variable interest entity and whether consolidation was necessary under the applicable accounting guidance. In addition, certain investments recorded at cost should have been recorded under the equity method of accounting, which would have resulted in the recognition of additional earnings/losses and related impairment charges. This material weakness resulted in the failure to properly (i) consolidate a variable interest entity that sustained losses over all periods presented in this Annual Report on Form 10-K and that should have been included in the Company’s reports of operations for such periods and (ii) record appropriate amounts of earnings/losses and impairment-related charges over those periods.

Accounting for Business Combinations

The Company identified a material weakness related to the lack of accounting personnel with the knowledge of accounting for business combinations in accordance with GAAP to accurately and timely record the necessary valuation adjustments to the acquired assets, liabilities and goodwill at the time of a business combination transaction. As a result, certain valuation adjustments were not recorded as of the date the relevant business combination was complete as required by GAAP.

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Review of Journal Entries

The Company identified a material weakness related to the preparation and review of journal entries. The material weakness resulted from an insufficient formalized process to ensure journal entries were prepared and reviewed by the appropriate management or accounting personnel.

Remediation of Material Weaknesses

The Company is working diligently to remediate the material weaknesses described above. The Company has reviewed the design of its pre-existing controls and procedures and identified areas for improvement. Based on those efforts, the Company has taken or will take the following measures to appropriately enhance its controls and procedures:


•	Evaluated the Company's Board of Directors ("Board"), accounting staff and management, as well as their respective roles and responsibilities, to identify areas for improvement;


•	Adopted a Lead Independent Director Charter to expand upon the duties and responsibilities of, and to provide for more comprehensive oversight by the lead independent director;


•	Appointed an additional independent director to the Audit Committee of the Board to provide further experience on the committee;


•	Committed to the appointment of an additional independent director to the Board and the Audit Committee who will possess significant public company financial reporting experience derived from his or her service as a chief financial officer or chief executive officer and/or experience in public accounting;


•	The Board approved amending the Audit Committee Charter to provide increased oversight of the financial reporting process, internal control environment, legal and compliance matters and internal audit and loan review functions;


•	The Board approved amending the Audit Committee Charter to provide direct control over the internal audit function and related outsourced activities, including control over the scope of audits and reviews, reviews of work performed and remediation plans;


•	Introduced new leadership to the Company’s accounting and finance departments, including the addition of a Chief Accounting Officer in December 2015 and a new Controller in March 2016, both of whom possess the level of skill and experience appropriate for their positions;


•	Reorganized the accounting and finance departments to provide for the realignment of duties to segregate accounting and reporting functions from financing functions;


•	Committed to restructuring and supplementing the Company’s executive management team to create greater segregation of duties and committed to engage a national recruiting firm to identify qualified candidates;


•	Restructured the Credit Review Committee to provide increased direct participation of finance and accounting departments;


•	Adjusted lending and credit review policies to strengthen internal controls related to the origination and extension of credit and to credit reviews;


•	Committed to supplementing the resources of the Company’s current external loan review provider with those of a larger firm possessing a greater depth of experience and capacity;


•	Initiated a review to determine whether certain activities that require substantial expertise should be handled internally or outsourced;


•	Utilized the assistance of an outside independent real estate consulting firm to provide expertise in determining the appropriateness of our methodology for valuing the Company’s historic tax credit entities;


•	Assessed the competency of those responsible for performing the control procedures and reviewed internal controls relating to material weaknesses over accounting and financial reporting;


•	Committed to additional competent and experienced resources to accounting/finance with appropriate skills and experience to provide more in-depth review and analysis of accounting and reporting matters; and


•	Increased the segregation of duties and level of review precision in certain existing key controls over financial reporting, credit, acquisitions, tax credits, investments, and income tax.

The Company believes these measures will remediate the material weaknesses described above, as well as strengthen the Board’s oversight and the review and monitoring functions of the internal audit, financial accounting and credit and loan departments. The Company is targeting complete implementation of the measures described above before the end of 2016. The

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Company will test the ongoing operating effectiveness of the new controls subsequent to their implementation and consider the material weaknesses remediated only after the applicable remedial controls have operated effectively for a sufficient period of time.

Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015. The report, which expresses an adverse opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015, is included below under Item 9A(c).

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of First NBC Bank Holding Company

We have audited First NBC Bank Holding Company’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). First NBC Bank Holding Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of State Investors Bancorp, Inc. State Investors Bancorp, Inc. represented 5.8% of assets of the consolidated company as of December 1, 2015 (date of acquisition) and the amount of net income from the date of acquisition through year end was immaterial to the Company's consolidated operating results. Our audit of internal control over financial reporting of First NBC Bank Holding Company also did not include an evaluation of the internal control over financial reporting of State Investors Bancorp, Inc.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Material weaknesses in internal control over financial reporting have been identified in the following categories and included in management’s assessment:


•	Ineffective control environment and risk assessment


•	Monitoring of credit to borrowers, application of the allowance for loan loss methodology, and investments in short-term receivables

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•	Accounting for investment in tax credit entities


•	Identification, evaluation, and consolidation of variable interest entities


•	Accounting for business combinations


•	Review of journal entries

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 2015 consolidated financial statements of First NBC Bank Holding Company. These material weaknesses were considered in determining the nature; timing and extent of audit tests applied in our audit of the 2015 consolidated financial statements, and this report does not affect our report dated August 25, 2016, which expressed an unqualified opinion on those financial statements.

In our opinion, because of the effect of the material weaknesses described above on the achievement of the objectives of the control criteria, First NBC Bank Holding Company has not maintained effective internal control over financial reporting as of December 31, 2015, based on the COSO criteria.



	/s/ Ernst & Young LLP

New Orleans, Louisiana
August 25, 2016

(d) Changes in Internal Control over Financial Reporting

Other than as described above, there were no changes in the Company’s internal control over financial reporting during the fourth quarter of 2015, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information.

None.

Part III.

Item 10. Directors, Executive Officers and Corporate Governance.

Board of Directors

The following is a list of persons who, as of August 25, 2016, constituted the Company’s Board of Directors, together with certain information regarding those persons:



Name	Age	Position with First NBC Bank Holding Company (HC)	Position with First NBC Bank	HC Director Since
William D. Aaron, Jr.	65	Director	Director	2014
William M. Carrouche	75	Director	Director	2007
Leander J. Foley, III	66	Director	None	2009
John F. French	51	Director	Director	2007
Leon L. Giorgio, Jr.	65	Director	Director	2007
Shivan Govindan	41	Vice Chairman	Director	2007
L. Blake Jones	65	Director	Director	2007
Louis V. Lauricella	60	Director	None	2007
Mark G. Merlo	52	Director	None	2011
Ashton J. Ryan, Jr.	66	Chairman of the Board, President & Chief Executive Officer	Chairman of the Board, President & Chief Executive Officer	2007
Dr. Charles C. Teamer	80	Director	Vice Chairman	2009
Joseph F. Toomy	65	Director	Director	2007

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A brief description of the background of each of the Company’s directors is set forth below. No director has a family relationship with any other executive officer or director.

William D. Aaron, Jr. Mr. Aaron is the Managing Shareholder of Aaron & Gianna, PLC A Professional Law Corporation based in New Orleans. Prior to joining the predecessor to his current law firm in January 2000, he served as a partner at Phelps Dunbar, LLP. Mr. Aaron has more than 38 years of legal experience practicing in the public and private sectors and is licensed to practice law in Louisiana, Texas and the District of Columbia. He currently serves as Vice Chairman and Chairman Elect of the Jefferson Business Council and is a former Board Chairman for the New Orleans Chamber of Commerce. He remains actively involved with the New Orleans Chamber of Commerce, where he serves as Co-chair of the Legislative Affairs Committee and as a member of the Chairman’s Council. Mr. Aaron is a member of the Boards of Directors of Greater New Orleans, Inc. and the Pontchartrain Park Community Development Corporation. Although recently joining the holding company board, Mr. Aaron has served as a director of First NBC Bank since its inception. Mr. Aaron is a graduate of Duke University, B.A. 1972, and Loyola University School of Law, J.D. 1977. Mr. Aaron’s extensive legal experience, as well as his long-term relationships with the New Orleans business and civic community make him a valuable member of the Company’s Board of Directors.

William M. Carrouche. Mr. Carrouche retired in 2013 after serving as President of the Fire Fighters’ Pension & Relief Fund for the City of New Orleans since 1975. He also served as a Fire Deputy Chief of the New Orleans Fire Department for 36 years. Mr. Carrouche served as Vice President and Board Member of the New Orleans Fire Federal Credit Union for over 20 years. Mr. Carrouche’s extensive relationships within the New Orleans business and civic community, as well as his business experience, make him a valuable member of the Company’s Board of Directors.

Leander J. Foley, III. Since 2002, Mr. Foley has served as Managing Director of Capitol Hill Partners (formerly Foley, Maldonado & O’Toole), a consulting firm that advises clients in matters before the United States Congress and the Executive Branch in various policy areas, including banking and financial services, community and economic development, asset building, rural and agricultural programs and small business development. Mr. Foley serves on the boards of directors of One United Bank, Alluvion Securities and the Cotton Exchange, LLC. Mr. Foley also served as a director of Dryades Bancshares, Inc. and Dryades Savings Bank, FSB until its acquisition by First NBC Bank in 2010. Mr. Foley is a graduate of Georgetown University, B.A., 1970. Mr. Foley’s extensive experience as a director for numerous financial services companies, including two banking organizations, one broker-dealer and one registered investment advisor, as well as his long-standing knowledge of and relationships in the New Orleans business community, add significant value to the Company’s Board of Directors.

John F. French. Since 1992, Mr. French has served as President of JAB - New Orleans, Inc., a Jos. A. Bank Clothiers franchise. He operates 12 Jos. A. Bank retail clothing locations across the country. Mr. French also serves as Managing Member of Penthouse Apartment Management, LLC, and as a director and principal of Biltmore Property Group, LLC and its affiliate The Columbus Group, Inc., which develop, own and operate community-oriented shopping centers and mixed use destinations. In addition to his business activities, he serves on the Boards of Directors of the Audubon Nature Institute and the Fenner French Foundation. Mr. French is a graduate of the University of the South, B.A., 1986, and the Freeman School of Business at Tulane University, M.B.A., 1992. He is also licensed by the State of Louisiana as a real estate broker. Mr. French’s extensive commercial real estate experience, his experience overseeing the successful growth of a local retail business into a national competitor, as well as his long-standing relationships in the local business and civic community, enable him to provide valuable insights to the Company’s Board of Directors.

Leon L Giorgio, Jr. Mr. Giorgio serves as Chairman, Chief Executive Officer, and President of Select Properties, Ltd.; Select Properties, Ltd. Realty; and their associated companies, which were co-founded by Mr. Giorgio in 1982 and which specialize in commercial real estate acquisitions, development, management, rehabilitation, investments, brokerage and design. A licensed real estate broker in the States of Louisiana and Mississippi, he heads an IREM Accredited Management Organization. Additionally, Select is General Partner/Managing Member of several real estate limited partnerships and limited liability companies which are actively engaged in commercial real estate and Mellow Mushroom restaurants in New Orleans, Baton Rouge and Lafayette. In addition to his own business activities, Mr. Giorgio represents Jefferson Parish on the Regional Planning Commission and served as co-chair of Jefferson Parish Envision 2020, which developed and is implementing a comprehensive 20-year land use plan. He currently serves on the Boards of Director of numerous civic and business organizations, including The Louisiana Community and Technical College System Foundation, Delgado Community College Foundation and the Jefferson Chamber of Commerce. He also serves on the University of New Orleans President’s Council. Mr. Giorgio is a graduate of the University of Southern Mississippi, B.S., 1972. Mr. Giorgio’s extensive experience in real estate and finance in the New Orleans metropolitan area and in the State of Louisiana, together with his long-standing relationships within the New Orleans business and civic communities, make him well qualified to serve on the Company’s Board of Directors.

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Shivan Govindan. Mr. Govindan has been a Managing Member of Blue Pine Partners LLC since 2014. Blue Pine Partners makes private equity and other investments in U.S. community banks and other financial services companies. From 2004 - 2014, Mr. Govindan held various positions at Resource America, Inc., an $18 billion AUM asset management company managing alternative assets such as real estate, credit, and financial fund management. Among his roles at Resource America, he served as President of Resource Financial Institutions Group, Inc., a wholly-owned subsidiary of Resource America, Inc. Through Resource Financial Institutions Group and its affiliates, Mr. Govindan originated, monitored, and managed approximately $4.3 billion in debt and equity investments issued by community banks and other financial services companies. From 2000 to 2004, he was Principal of Beehive Ventures, LLC, an early stage private equity firm that invests in companies providing products and services to the financial services and media industries. Prior to that, he served as Director of Corporate Development for IQ Financial Systems, Inc., a DB Ventures portfolio company that was sold to Misys. Prior to that, he served as Associate in Fixed Income Derivatives at BT Alex Brown. He also serves on the boards of directors of Colorado National Bancorp and Bridge Entertainment, Inc., an online market research company and portfolio company of Beehive Ventures, LLC. Mr. Govindan is a graduate of University of Pennsylvania, B.A., 1995. Mr. Govindan’s extensive experience with respect to capital acquisition and capital markets, risk management, financial analysis, and oversight within the banking industry, as well as his experience and oversight overseeing the growth of early stage portfolio companies, bring significant value to the Company’s Board of Directors. Mr. Govindan has served as the Company’s Vice Chairman since 2013.

L. Blake Jones. Since 1974, Mr. Jones has been a partner with Scheuermann & Jones, a Louisiana-based law firm that practices throughout much of the United States. He currently serves as the firm’s managing partner. In addition, he serves on the board of directors of Helix BioMedix, Inc., a public company focused on the biomedical industry, where he is a member of the audit committee and governance committee. He also serves on the national board of directors for the not-for-profit St. Jude’s Ranch for Children, where he is a member of the audit committee. Mr. Jones is a graduate of Louisiana State University, B.A., 1968, and Tulane Law School, J.D., 1972. Mr. Jones’ extensive legal experience, his service on the boards of other companies, including his public company experience, and his relationships within the New Orleans community, make him a valued member of the Company’s Board of Directors.

Louis C. Lauricella. Since 1988, Mr. Lauricella has served as Managing Member and Director of Development for Lauricella Land Company, L.L.C., a commercial real estate development firm, and President of Lauricella & Associates, a real estate brokerage and consulting firm, each based in New Orleans. Since joining the Lauricella Land Company, he has overseen the development of more than 2.0 million square feet of commercial space and secured financing of over $175 million for Lauricella projects. Mr. Lauricella also serves as Vice Chairman of the New Orleans Recreation Development (NORD) Foundation and as Chairman of the Lauricella Land Company Foundation. He also serves on the Boards of the Jefferson Business Council and the Jefferson Community Foundation. Mr. Lauricella served as a director of First Bank & Trust (New Orleans) from 1994 to 2005. Mr. Lauricella is a graduate of Harvard College, B.A.,1978, and Tulane University, M.B.A. and J.D., 1984. Mr. Lauricella's extensive financing structures, his experience as a bank director, and his active involvement in many local professional and charitable organizations, enable him to provide valuable insight to the Company’s Board of Directors.

Mark G. Merlo. Since 1996, Mr. Merlo has worked at Castle Creek Capital, LLC, and is currently a Managing Principal of this private equity fund management company headquartered in Rancho Santa Fe, California. Mr. Merlo has over 20 years of experience in private equity investments and mergers and acquisitions in the financial services industry. Prior to joining Castle Creek, Mr. Merlo spent 11 years working at various bank and thrifts managing their investment portfolios, hedging interest rate risk and treasury operations. Mr. Merlo also serves as a director of Business Bancshares, Inc., its subsidiary Business Bank of St. Louis and Carlile Holdings, Inc. He has previously served on the boards of three other community banks. Mr. Merlo is a graduate of University of Missouri, Columbia, B.S., 1984. Mr. Merlo’s extensive prior experience as a director of numerous banking organizations, including his experience as a director of a publicly-traded banking organization, as well as his extensive experience with capital acquisition and management in the banking industry, add significant value to the Company’s Board of Directors.

Ashton J. Ryan, Jr. Mr. Ryan has served as President, Chief Executive Officer and Chairman of the Board of First NBC Bank since its inception in 2006 and First NBC Bank Holding Company since its formation in 2007. From 1998 to 2005, Mr. Ryan served as President of First Trust Corporation and Chief Executive Officer and President of First Bank & Trust (New Orleans). From 1991 to 1998, he was President of First National Bank of Commerce, the lead bank of First Commerce Corporation, until First Commerce Corporation’s acquisition by Bank One in 1998. Mr. Ryan also served as senior executive vice-president in charge of all customer contact functions at First Commerce Corporation from 1992 to 1998. From 1971 to 1981, Mr. Ryan was a staff auditor, and from 1981 to 1991 a partner, at Arthur Andersen & Co. Mr. Ryan served on the board of directors of Stewart Enterprises, a NASDAQ-listed company, until its sale in December 2013. He also serves on the boards of directors of GNO, Inc., Louisiana Cancer Research Consortium, Early Childhood and Family Learning Center, Gulf Coast Housing Partnership, Junior Achievement, Delgado Community College Foundation, UNO Foundation, East Jefferson General Hospital and the

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Urban League of New Orleans and was an adjunct professor at the A.B. Freeman School of Business at Tulane University for 30 years. Mr. Ryan is a graduate of Tulane University, B.S., 1969, and M.B.A., 1971. Mr. Ryan’s extensive business and banking experience, as well as his long-standing business and banking relationships in the community, make him exceptionally well qualified to serve on the Company’s Board of Directors and as Chairman of the Board.

Dr. Charles C. Teamer. Dr. Teamer has served as Vice Chairman of First NBC Bank since 2010. He previously served as Chairman of Dryades Savings Bank, FSB, a position he held from its inception in 1993 through its acquisition by First NBC Bank in 2010. Mr. Teamer was employed for more than 30 years with Dillard University, where he served in numerous capacities, including Vice President of Fiscal Affairs. He has also served as a member of the Board of Supervisors of the University of Louisiana System, the Board of Trustees of Tulane University and the Business and Higher Education Council at the University of New Orleans. Dr. Teamer has also held leadership positions in numerous New Orleans-based civic and community organizations. He has served as the Chairman of the boards of the Urban League of Greater New Orleans, the Board of Commissioners of the Port of New Orleans, the United Way, the Metropolitan Area Committee, the Greater New Orleans Foundation and the World Trade Center. He has also served on the boards of the Entergy-New Orleans, Alton Oschner Medical Foundation, the Audubon Institute, the Audubon Zoo Commission, the Southern Education Foundation, the New Orleans Center for Creative Arts, the Common Fund, the Children’s Hospital and the Boy Scouts of America. Dr. Teamer is a graduate of Clark Atlanta University, B.S., 1954. Dr. Teamer’s broad experience in leadership positions in local business, public and civic organizations, his long-standing relationships within the New Orleans community and his extensive experience as a bank director, enable him to provide significant contributions to the Company’s Board of Directors.

Joseph F. Toomy. Since 2000, Mr. Toomy has been an independent insurance broker based in Gretna, Louisiana. He served from 1981 to 2000 in numerous capacities with Delgado Community College in New Orleans, including as Vice Chancellor of Administrative Affairs. Mr. Toomy is a member of the Algiers Development District, a special taxing district and local redevelopment authority within the City of N.O. Mr. Toomy is also a member of the Board of Catholic Charities of New Orleans and Chairman of PACE (Program for the All Inclusive Care of the Elderly) Greater New Orleans, a non-profit corporation affiliated with the Archdiocese of New Orleans. From 1984 to 2008, he served as the District 85 member of the Louisiana House of Representatives. He is also a former Chairman of the Board of Commissioners of the Port of New Orleans. Mr. Toomy is a graduate of Tulane University, B.A., 1971, and M.B.A., 1973. Mr. Toomy’s long-standing business and personal relationships in the New Orleans metropolitan area, his extensive business and governmental sector experience, and long-time involvement in local civic organizations, make him a valued member of on the Company’s Board of Directors.

Executive Officers

A brief description of the background of each of the Company’s executive officers is set forth below. No executive officer has a family relationship with any other executive officer or director.

Ashton J. Ryan, Jr. For biographical information regarding Mr. Ryan, see the section above titled “Board of Directors.”

William J. Burnell. Mr. Burnell, age 66, has served First NBC Bank as Chief Credit Officer since its inception in 2006. He has also served in the same capacity with First NBC Bank Holding Company since its inception in 2007. Mr. Burnell was President and Executive Director of Business Resource Capital Specialty Business from 2000 to 2006 and was a Practice Manager for Oracle Corporation from 1999 to 2000. Before that, he was Credit Review Manager at First National Bank of Commerce for 19 years, prior to its acquisition by Bank One in 1998. He is a graduate of the University of Alabama, B.S., 1971.

Marsha S. Crowle. Ms. Crowle, age 54, has served First NBC Bank as Chief Compliance Officer since its inception in 2006. She has also served in the same capacity with First NBC Bank Holding Company since its inception in 2007. Prior to her employment with First NBC Bank, Ms. Crowle was a Senior Vice President and Chief Compliance Officer for First Bank & Trust (New Orleans) from 1996 to 2006 and served as Compliance Officer while employed by Delta Bank from 1981 to 1996.

George L. Jourdan. Mr. Jourdan, age 71, has served First NBC Bank as Executive Vice President and Chief Operations Officer since its inception in 2006. He has also served in the same capacity for First NBC Bank Holding Company since its inception in 2007. Prior to his employment with First NBC Bank, he served as Project Manager at Science Applications International from 2001 to 2005 and Senior Vice President of Information Technology for First Commerce Corporation for over 30 years. Mr. Jourdan is a graduate of Louisiana State University, Baton Rouge, B.S., 1967.

William M. Roohi. Mr. Roohi, age 50, has served First NBC Bank as Senior Vice President and Director of Human Resources, and as Manager of Trust Operations and Administration, since its inception in 2006. He has also served as Senior Vice President and Director of Human Resources at First NBC Bank Holding Company since its inception in 2007. Before joining First NBC Bank, Mr. Roohi had 20 years of banking experience, serving in various capacities with First Bank & Trust (New Orleans), IBERIABANK Corporation, Hibernia Corporation, Bank One Corporation and First Commerce Corporation. He is a graduate of Spring Hill College, B.S. 1987, and holds a Senior Professional of Human Resources designation.

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Mary Beth Verdigets. Ms. Verdigets, age 48, has served First NBC Bank and First NBC Bank Holding Company as Executive Vice President and Chief Financial Officer since 2011, after serving First NBC Bank as Chief Accounting Officer from 2006 to 2008 and Chief Asset/Liability Management Officer from 2008 to 2011. Before joining First NBC Bank, she served as Vice President and Manager of Financial Planning at First Bank and Trust from 2000 to 2006, as a financial analyst at Whitney National Bank from 1999 to 2000, and in various accounting related positions for First Commerce Corporation from 1993 to 1999. Ms. Verdigets is a graduate of Tulane University, B.S., 1989, and is a certified public accountant.

Albert J. Richard, III. Mr. Richard, age 69, has served as Chief Accounting Officer of First NBC Bank and First NBC Bank Holding Company since December 2015. Prior to joining First NBC, he worked in public accounting for 46 years, most recently with Postlethwaite & Netterville, the largest public accounting firm based in Louisiana, where he served for 16 years. During his tenure with the firm, he served as a Managing Director of the New Orleans, Louisiana office, and his principal responsibilities included serving as the Audit Engagement Director for a diverse group of clients, including banks and other financial institutions. His prior financial audit experience includes work with KPMG and Deloitte, where he also served in leadership capacities. Mr. Richard is a member of the American Institute of Certified Public Accounts and the Society of Louisiana Certified Public Accountants, where he received a lifetime achievement award. He also serves as a member of the Jefferson Business Council.

Section 16 Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 and the related regulations require the Company’s executive officers and directors, and anyone owning more than ten percent of the Company’s common stock, to file reports of ownership and changes in ownership with the SEC, and to furnish the Company with copies of the forms. The Company assists its directors and executive officers in complying with these requirements. Based on the Company’s review of the forms received, or written representations from reporting persons, the Company believes that all applicable reporting persons satisfied these filing requirements except for (i) six of the Company’s Section 16 officers (Burnell, Crowle, Jourdan, Roohi, Ryan and Verdigets), who each filed one late Form 4 in connection with the issuance on March 25, 2015 of shares of unvested restricted stock, and (ii) Mark Merlo, who filed one late Form 4 in connection with the attribution of shares held of record by Castle Creek Capital Partners, IV by virtue of Mr. Merlo’s appointment as Managing Principal of Castle Creek Capital Partners, IV.

Code of Conduct

The Company maintains a Code of Business Conduct that is applicable to all of the directors, officers and employees of the Company and its subsidiaries, including First NBC Bank. In addition to the Code of Business Conduct, the Company maintains a separate Code of Ethics that is applicable to the Chief Executive Officer and senior financial officers of the Company. The Code of Business Conduct and the Code of Ethics satisfy the requirements of the SEC and Nasdaq Stock Market by providing written standards that are designed to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest; full, fair, accurate, timely, and understandable public disclosures and communications, including financial reporting; compliance with applicable laws, rules, and regulations; prompt internal reporting of violations of the code; and accountability for adherence to the code. The Code of Business Conduct and the Code of Ethics are available on the Company’s website at www.firstnbcbank.com. Any amendments to the Code of Ethics, or any waivers of its requirements, will be disclosed on the Company’s website, as well as any other means required by the Nasdaq Stock Market rules.

Board Committees

The Board of Directors has established standing committees in connection with the discharge of its responsibilities. These committees include the Audit Committee, the Compensation Committee, the Nominating and Governance Committee and the Merger and Acquisition Committee. The Board of Directors also may establish such other committees as it deems appropriate, in accordance with applicable law and regulations and the Company’s corporate governance documents.

Audit Committee. The Audit Committee assists the Board of Directors in fulfilling its responsibilities for general oversight of the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, the independent auditors’ qualifications and independence, the performance of the Company’s internal audit function and independent auditors, and risk assessment and risk management. Among other things, the Audit Committee annually reviews the Audit Committee charter and the committee’s performance; appoints, evaluates and determines the compensation of the Company’s independent auditors; reviews and approves the scope of the annual audit, the audit fee and the financial statements; reviews disclosure controls and procedures, internal controls, internal audit function, and corporate policies with respect to financial information; oversees investigations into complaints concerning financial matters, if any; and reviews other risks that may have a significant impact on the Company’s financial statements.

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The Audit Committee works closely with management as well as the Company’s independent auditors. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding to engage, outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties.

The Audit Committee is composed solely of members who satisfy the applicable independence and other requirements of the SEC and the Nasdaq Stock Market for Audit Committees. In addition, the Company has determined that a member of the Audit Committee qualifies as an “audit committee financial expert.” The members of the Audit Committee are Shivan Govindan, L. Blake Jones, Joseph F. Toomy and Leander J. Foley, III.

Compensation Committee. The Compensation Committee is responsible for discharging the Board’s responsibilities relating to compensation of the executives and directors. Among other things, the Committee evaluates human resources and compensation strategies; reviews and approves objectives relevant to executive officer compensation; evaluates performance and determines the compensation of the Chief Executive Officer in accordance with those objectives; approves any changes to non-equity based benefit plans involving a material financial commitment; recommends to the Board of Directors compensation for directors; and evaluates performance in relation to the Compensation Committee charter.

The Compensation Committee is composed solely of members who satisfy the applicable independence requirements of the SEC and the Nasdaq Stock Market. The members of the Compensation Committee are William M. Carrouche, John F. French and Leon L. Giorgio.

The Compensation Committee works throughout the year in its formal meetings, discussions with consultants, interaction with management and review of compensation-related materials developed for it. The Compensation Committee works closely with executive management, primarily the Chief Executive Officer, in assessing the appropriate compensation approach and levels. The Compensation Committee is empowered to advise management and make recommendations to the Board of Directors with respect to the compensation and other employment benefits of executive officers and key employees. The Compensation Committee establishes objectives for the Chief Executive Officer and sets the Chief Executive Officer’s compensation based, in part, on the evaluation of peer group data. The Compensation Committee also administers the Company’s long-term compensation plans and the Company’s incentive bonus programs for executive officers and key employees.

Nominating and Governance Committee. The Nominating and Governance Committee is responsible, among other things, for identifying individuals qualified to be directors consistent with the criteria approved the Board of Directors and recommending director nominees to the full Board of Directors; ensuring that the independent committees of the Board of Directors have the benefit of qualified “independent” directors; overseeing management continuity planning; leading the Board of Directors in its annual performance review; and taking a leadership role in shaping the corporate governance of the organization.

The Nominating and Governance Committee is composed solely of members who satisfy the applicable independence requirements of the SEC and the Nasdaq Stock Market. The members of the Nominating and Governance Committee are William M. Carrouche, John F. French, Leon L. Giorgio, Shivan Govindan, L. Blake Jones, Louis V. Lauricella, Mark G. Merlo and Joseph F. Toomy.

Merger and Acquisition Committee. The Merger and Acquisition Committee meets on an as-needed basis to evaluate acquisition opportunities and make recommendations to the Board of Directors on all such opportunities. In connection with the evaluation of potential acquisitions, the Committee may conduct feasibility studies, if appropriate. The Committee also oversees the due diligence process undertaken by management in the context of potential transactions. The members of the Merger and Acquisition Committee are John F. French, Shivan Govindan, Ashton J. Ryan, Jr. and Joseph F. Toomy.

Item 11. Executive Compensation.

Summary Compensation Table

The table below provides information regarding the compensation of the following executive officers of the Company for the years ended December 31, 2015 and 2014:

•Ashton J. Ryan, Jr., Chairman of the Board, President and Chief Executive Officer;

•William J. Burnell, Senior Executive Vice President and Chief Credit Officer;

•Marsha S. Crowle, Senior Executive Vice President and Chief Compliance Officer; and

•Mary Beth Verdigets, Executive Vice President and Chief Financial Officer.

For purposes of the compensation disclosures in this Item 11, the Company is treating each of these individuals as a named executive officer, although it is not required to do so with respect to Ms. Verdigets under the regulations of the SEC. The

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Company has not entered into employment agreements with any of its executive officers or employees, each of whom serves at the pleasure of the Board of Directors and is an “at will” employee. All cash compensation paid to each of the named executive officers was paid by First NBC Bank, where each serves in the same capacity. The summary compensation table represents compensation prior to the recent restatements of financial information. The Compensation Committee is presently reviewing compensation in light of the restatements.



Name and Principal Position	Year	Salary		Bonus		Non-Equity Incentive Plan (1)		Option Awards (2)(3)		Stock Awards (2)(3)		All Other Compensation		Total
Ashton J. Ryan, Jr. Chairman, President and Chief Executive Officer	2015	$	520,834	$	—	$	577,500	$	46,876	$	140,616	$	327,029	$	1,612,855
	2014	$	491,667	$	—	$	550,000	$	—	$	—	$	425,411	$	1,467,078
William J. Burnell, Sr. Executive Vice President and Chief Credit Officer	2015	$	310,000	$	—	$	230,000	$	24,985	$	74,995	$	13,904	$	653,884
	2014	$	280,934	$	—	$	200,000	$	39,262	$	29,678	$	13,774	$	563,618
Marsha S. Crowle Sr. Executive Vice President and Chief Compliance Officer	2015	$	301,667	$	—	$	185,000	$	24,985	$	74,995	$	13,904	$	600,551
	2014	$	280,934	$	—	$	170,000	$	39,262	$	29,678	$	13,744	$	533,618
Mary Beth Verdigets Executive Vice President and Chief Financial Officer	2015	$	227,500	$	—	$	100,000	$	18,742	$	56,246	$	12,404	$	414,892
	2014	$	213,434	$	—	$	95,000	$	29,446	$	22,259	$	11,877	$	372,016


(1)	The amounts shown in this column reflect [performance-based cash incentives] issued under the 2014 Omnibus Plan. For additional information, see “Omnibus Incentive Plan” below.

(2)

The Company typically grants stock options and restricted stock awards early in the year as a part of total year-end compensation awarded for prior year performance. As a result, the amounts shown with respect to these awards generally appear in the Summary Compensation Table for the year after the performance year upon which they were based. On March 25, 2015, Mr. Ryan was awarded 3,334 stock options and 4,320 restricted shares, Mr. Burnell was awarded 1,777 stock options and 2,304 restricted shares, Ms. Crowle was awarded 1,777 stock options and 2,304 restricted shares, and Ms Verdigets was awarded 1,333 stock options and 1,728 restricted shares.

(3)

The amounts shown as compensation do not reflect the compensation actually received by the named executive officers. Rather, amounts reflect the fair value of the awards as of the date of grant calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. See Note 26 to the consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2015 for additional information regarding the assumptions made in the valuation.

The following table provides information regarding each component included in the “All Other Compensation” column for 2015 in the Summary Compensation Table above. The table below does not include other benefits that the Company or First NBC Bank may offer to these employees on substantially the same basis as all other full-time employees, such as group health, life and long-term disability insurance.



Description	Ashton J. Ryan, Jr.		William J. Burnell		��	Marsha S. Crowle		Mary Beth Verdigets
Employer 401(k) contributions	$	10,600	$	10,600		$	10,600	$	9,100
Employer ESOP contributions	3,304		3,304			3,304		3,304
Forgivable loan compensation recognized	300,000		—			—		—
Nonqualified deferred compensation (1)	13,125		—			—		—
Total	$	327,029	$	13,904		$	13,904	$	12,404


(1)	Contributions are contingent on employee contributions to the nonqualified deferred compensation plan and if the employee's company contribution to the 401(k) plan for the employee is limited.

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Outstanding Equity Awards at Fiscal Year-End

The following table provides additional information as of December 31, 2015, regarding outstanding stock option awards and restricted stock issued to each of the persons included in the Summary Compensation Table. There were no outstanding equity awards other than stock options and restricted stock held by any of these persons as of December 31, 2015. Each of the stock option awards vests ratably in annual installments over a period of three years from the grant date, beginning on the first anniversary of the grant date, and expires ten years from the grant date. As a result, based on the grant dates of the respective stock option awards shown in the table below, an additional portion of each unexercisable stock option award has become exercisable since December 31, 2015. All awards issued prior to May 22, 2014 were issued under the 2006 Plan, and all awards issued after May 22, 2014 were issued under the 2014 Omnibus Plan



	Option Awards					Stock Awards
Name	Grant Date	Number of Securities Underlying Unexercised Options Exercisable	Number of Securities Underlying Unexercised Options Unexercisable	Option Exercise Price		Number of Shares of Stock That Have Not Vested	Market Value of Shares of Stock That Have Not Vested (4)
Ashton J. Ryan, Jr.	3/25/2015	—	3,334	$	32.55	4,320 (1)	$	161,525
William J. Burnell	5/19/2006	20,000	—	$	10.00	2,880 (2)	107,683
	2/24/2011	30,000	—	$	12.23
	2/16/2012	7,500	—	$	14.20
	2/21/2013	6,666	3,334	$	15.88
	3/28/2014	840	1,680	$	34.35
	3/25/2015	—	1,777	$	32.55
Marsha S. Crowle	5/19/2006	20,000	—	$	10.00	2,880 (2)	107,683
	2/24/2011	30,000	—	$	12.23
	2/16/2012	7,500	—	$	14.20
	2/21/2013	6,666	3,334	$	15.88
	3/28/2014	840	1,680	$	34.35
	3/25/2015	—	1,777	$	32.55
Mary Beth Verdigets	5/19/2006	10,000	—	$	10.00	2,160 (3)	80,762
	2/24/2011	10,000	—	$	12.23
	6/22/2011	10,000	—	$	12.70
	2/16/2012	5,000	—	$	14.20
	2/21/2013	5,000	2,500	$	15.88
	3/28/2014	630	1,260	$	34.35
	3/25/2015	—	1,333	$	32.55


(1)	Of this amount, 1,440 shares vested in March 2016, 1,440 shares are scheduled to vest in March 2017 and 1,440 shares are scheduled to vest in March 2018.


(2)	Of this amount, 1,056 shares vested in March 2016, 1,056 shares are scheduled to vest in March 2017 and 768 shares are scheduled to vest in March 2018.


(3)	Of this amount, 792 shares vested in March 2016, 792 shares are scheduled to vest in March 2017 and 576 shares are scheduled to vest in March 2018.


(4)	Based on closing price of $37.39 on December 31, 2015.

Omnibus Incentive Plan

The First NBC Bank Holding Company 2014 Omnibus Incentive Plan, or the 2014 Omnibus Plan, became effective on May 22, 2014, following the approval of the Company’s shareholders at the 2014 annual meeting. The 2014 Omnibus Plan, which replaced the First NBC Bank Holding Company Stock Incentive Plan, as amended, or 2006 Plan, was adopted to enable the Company and First NBC Bank to continue to attract, retain and motivate officers, key employees and non-employee directors by providing incentives for superior performance. The 2014 Omnibus Plan permits awards in the form of stock options, stock

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appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and other stock-based awards.

The maximum number of shares as to which awards may be granted under the 2014 Omnibus Plan was 981,505 as of December 31, 2015. This amount included the number of awards issued under the 2006 Plan that were forfeited during 2015 and became available for grant under the 2014 Omnibus Plan. As of August 1, 2016, the maximum number of shares available for issuance was 979,685. All stock options and restricted stock awards under the 2014 Omnibus Plan and its predecessor plan have been made by means of an award agreement, which contains the specific terms and conditions of the grant, which may include terms relative to vesting, rights upon death, disability or other termination of service, rights upon change in control, acceleration of benefits, transferability and amendments, among other things.

Most stock options granted under the 2014 Omnibus Plan, and its predecessor, other than the stock option grants to the Company’s directors, vest ratably in annual installments over a period of three years from the grant date, beginning on the first anniversary of the grant date. Stock options granted under the 2006 Plan to directors vest ratably in annual installments over a period of five years from the date of grant date, beginning on the first anniversary of the grant date. The term of an option cannot exceed 10 years from the date of grant. Options that have not vested upon the termination of the option holder’s employment with First NBC Bank expire immediately, while vested options must be exercised after termination of employment within the number of days specified in the respective Plan. If the Company experiences a “change in control,” as defined in the applicable plan or agreement, unless otherwise provided in an award agreement, all outstanding stock options become immediately exercisable and all restrictions on restricted stock lapse.

The 2014 Omnibus Plan authorized the Company’s Compensation Committee to establish performance measures for purposes of awards issued under the plan, and these performance measures have been established by the Compensation Committee beginning with the 2014 performance year. In each year, a peer group is established based on comparable size, composition and performance. Financial performance metrics are established for each of the officers included in the Summary Compensation Table above to earn both cash and stock incentives and included minimum, target and maximum dollar incentive awards based on the actual performance in relation to the established goals. Performance goals for return on average assets, asset quality, and net income growth are established for the performance year based on a review of the Company’s performance expectations and the performance of its peers. Cash incentives awarded under the plan are included in the Summary Compensation Table under the column titled “Non-Equity Incentive Plan.”

401(k) Retirement Plan

The Company maintains a defined contribution 401(k) retirement savings plan for its employees. The 401(k) plan is intended to qualify as a tax-qualified plan under Section 401 of the Code so that contributions to the 401(k) plan and income earned on those contributions are not taxable to participants until withdrawn or distributed from the 401(k) plan. Under the 401(k) plan, each employee is fully vested in his or her deferred salary contributions and the safe harbor plan contributions. Employee contributions are held and invested by the plan’s trustee. The 401(k) plan also permits the Company to make discretionary contributions and matching contributions, subject to established limits and a vesting schedule.

Deferred Compensation Plan

On June 30, 2012, the Company established a non-qualified deferred compensation plan to provide certain additional retirement benefits to the Company’s officers and key employees and those of its affiliates, including First NBC Bank. Under the plan, a participant is permitted to defer compensation, subject to certain limitations, generally until a fixed future date of his or her retirement. In the Company’s sole discretion, it may make matching contributions to participants’ accounts. Participants are fully vested in their contributions at the time of deferral, and those contributions may not be forfeited. Contributions made to participant accounts under the plan are 100% vested.

Employee Stock Ownership Plan

The Company has established an employee stock ownership plan, or ESOP, for the benefit of eligible employees. The Compensation Committee administers the ESOP and makes recommendations to the Board of Directors with respect to the annual discretionary contribution. All participants in the ESOP vest in the annual allocations to their respective accounts at 20% per year. The ESOP is also intended to qualify as a tax-qualified plan under the Code so that contributions to the ESOP and the increase in the value of the shares held under the ESOP are not taxable to participants until withdrawn or distributed from the ESOP.

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Director Compensation

The Company pays its directors, other than Mr. Ryan, based on the directors’ participation in Board and committee meetings held throughout the year, and First NBC Bank pays its directors in the same manner. Mr. Ryan does not receive any direct remuneration for serving as a director of the Company or First NBC Bank. During 2015, the Company’s directors (and those of First NBC Bank) received $1,800 per Board meeting attended prior to September 1, 2015 and $2,300 per Board meeting attended after September 1, 2015, and $500 per committee meeting attended. Directors who serve as committee chairs received an additional $400 per month for serving in that role. Each director may elect to receive up to half of his director’s fees in the form of common stock, rather than solely in cash. Finally, on May 24, 2012, the Company granted stock options to each of its directors, as well as those of First NBC Bank, other than Mr. Merlo. Each of the Company’s directors received a grant of 12,000 options, and each director of First NBC Bank received a grant of 8,000 options. These options vest ratably in annual installments over a period of five years from the grant date, beginning on the first anniversary of the grant date, and expire ten years from the grant date. The fair value of the stock options issuable to Mr. Merlo was paid to Castle Creek Advisors IV, L.L.C.

The following table sets forth compensation paid, earned or awarded during 2015 to each of the Company’s directors other than Mr. Ryan, who is not compensated for his service on the Board and whose compensation is set forth on the “Summary Compensation Table” elsewhere in this Item 11. The table includes compensation earned by each director that is attributable to his service as a director of First NBC Bank.



Name	Fees Earned or Paid in Cash (1)		All Other Compensation		Total
William D. Aaron, Jr.	$	46,000	$	—	$	46,000
William M. Carrouche	45,512		—		45,512
Leander J. Foley III	9,940		—		9,940
John F. French	36,862		—		36,862
Leon L. Giorgio Jr.	47,112		—		47,112
Shivan Govindan (2)	46,500		—		46,500
L. Blake Jones	43,912		—		43,912
Louis V. Lauricella	7,440		—		7,440
Mark G. Merlo (3)	24,584		—		24,584
Charles C. Teamer (4)	41,812		109,726		151,538
Joseph F. Toomy	46,462		—		46,462


(1)	Included in this column are director’s fees and a portion of their fees each director elected to receive in the form of common stock rather than cash.


(2)	Of this amount, $46,500 was paid in the name of Hidden Brook Enterprises, LLC.


(3)	All fees were paid in the name of Castle Creek Advisors IV, LLC. Cash fees include payment of the fair value of the vested portion of the stock options described above.


(4)	Amounts in the “All Other Compensation” column represent compensation paid to Dr. Teamer in his capacity as an employee of First NBC Bank.

Directors have been and will continue to be reimbursed for travel, food, lodging and other expenses directly related to their activities as directors. Directors are also entitled to the protection provided by the indemnification provisions in our articles of incorporation and bylaws, as well as the articles of incorporation and bylaws of First NBC Bank.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.

Equity Compensation Plans

All equity compensation plans maintained by the Company have been approved by the stockholders of the Company. The Company maintains two equity compensation plans at this time: the First NBC Bank Holding Company Stock Incentive Plan, as amended, or 2006 Plan, and the First NBC Bank Holding Company 2014 Omnibus Incentive Plan, or the 2014 Omnibus Plan. Although options are still outstanding under the 2006 Plan, no shares are available for future awards. The Company currently uses the 2014 Omnibus Plan for stock-based incentive awards. These awards can be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and other stock-based awards. The following table provides certain information as of December 31, 2015 about awards issued and issuable under the Company’s equity compensation plans.

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Plan Category	Number of securities to be issued upon exercise of outstanding options	Weighted-average exercise price of outstanding options	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
Equity compensation plans approved by stockholders	821,196	$15.22	981,505
Equity compensation plans not approved by stockholders	—	N/A	—

Stock Ownership

The following table provides information regarding the beneficial ownership of the Company’s common stock for (i) each person known to the Company to be the beneficial owner of more than five percent of its common stock; (ii) each of the Company’s directors and executive officers; and (iii) all directors and executive officers, as a group. Except as indicated by the footnotes below, the Company believes, based on the information furnished to it, that the persons and entities named in the tables below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.

The number of shares beneficially owned by each of the persons known to us to be the beneficial owner of more than five percent of the Company’s common stock is based on beneficial ownership information, as of December 31, 2015, contained in the report filed by each such person with the SEC. The number of shares beneficially owned by the Company’s directors and executive officers is based on beneficial ownership information as of August 16, 2016. The table below calculates the percentage of beneficial ownership based on 19,231,427 shares of common stock outstanding as of August 16, 2016, except as follows. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of August 16, 2016. However, the Company did not deem these shares outstanding for the purpose of computing the percentage ownership of any other person. Beneficial ownership representing less than 1% is denoted with an asterisk (*).

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Name of Beneficial Owner	Number of Shares	Percent of Class
Greater than 5% beneficial owners
Castle Creek Partners IV, L.P. (1)	2,205,382	11.47%
FMR LLC (2)	1,710,009	8.89%
BlackRock, Inc. (3)	1,403,152	7.30%
Numeric Investors LLC (4)	1,091,851	5.68%

Directors and Executive Officers
William D. Aaron, Jr.(5)	42,199	*
William J. Burnell (6)	59,997	*
William M. Carrouche (7)	8,112	*
Marsha S. Crowle (8)	57,602	*
Leander J. Foley, III (9)	112,184	*
John F. French (10)	149,477	*
Leon L. Giorgio, Jr. (11)	77,577	*
Shivan Govindan	11,130	*
L. Blake Jones (12)	136,077	*
George Jourdan (13)	34,151	*
Louis V. Lauricella (14)	211,183	1.10%
Mark G. Merlo (15)	—	*
Albert J, Richard, III	2,035	*
William M. Roohi (16)	24,822	*
Ashton J. Ryan, Jr. (17)	474,746	2.47%
Dr. Charles C. Teamer (18)	61,175	*
Joseph F. Toomy (19)	107,577	*
Mary Beth Verdigets (20)	41,106	*
All directors and officers, as a group (18 persons)	1,611,150	8.43%

(1) Based on the Schedule 13G filed with the SEC on November 9, 2015, Castle Creek Partners IV, LP, Castle Creek Capital IV LLC and John M. Eggemeyer III may be deemed to be the beneficial owner of the reported shares. Mr. Eggemeyer is a managing principal of Castle Creek Capital IV LLC, the sole general partner of Castle Creek Partners IV, LP. Castle Creek Capital IV, LLC and Mr. Eggemeyer each disclaim beneficial ownership of the reported shares, except to the extent of their respective pecuniary interests in Castle Creek Partners IV, LP. The business address for Castle Creek Partners IV, LP, Castle Creek Capital IV LLC and John M. Eggemeyer III is 6051 El Tordo, Rancho Santa Fe, California 92067. Does not include 364,983 shares of Series C preferred stock, which are convertible into common stock subject to certain exceptions, including that the conversion will not cause the holder to own or control in the aggregate more than 9.9% of our common stock without prior regulatory approval.

(2) Based on the Schedule 13G filed with the SEC on February 12, 2016, FMR LLC and Abigail P. Johnson reported shared voting and dispositive power over all shares beneficially owned. Their address is c/o FMR LLC, 245 Summer Street, Boston, Massachusetts 02210.

(3) Based on the Schedule 13G filed with the SEC on January 22, 2016, BlackRock Inc. reported shared voting or dispositive power over all shares beneficially owned. Their address is c/o BlackRock, Inc., 55 East 52nd Street, New York, New York 10055.


(4)	Based on Schedule 13G filed with the SEC on August 16, 2016, Numeric Investors LLC and Man Group PLC reported shared voting and dispositive power over all shares beneficially owned. The address of Numeric Investors LLC is 470 Atlantic Avenue, 6th Floor, Boston, Massachusetts 02210, and the address of Man Group, PLC is Riverbank House, 2 Swan Lane, London EC4R 3AD, United Kingdom.


(5)	Includes options to purchase 6,400 shares of common stock.


(6)	Includes options to purchase 49,772 shares of common stock and 747 shares of common stock allocated to Mr. Burnell’s account in the ESOP.


(7)	Includes options to purchase 16,000 shares of common stock.


(8)	Includes options to purchase 49,772 shares of common stock and 773 shares of common stock allocated to Ms. Crowle’s account in the ESOP.


(9)	Includes warrants to purchase 23,602 shares and options to purchase 9,600 shares of common stock.


(10)	Includes 54,696 shares held of record by Penthouse Apartment Management, L.L.C. and 58,696 shares held of record by The Columbus

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Group, Inc., entities over which Mr. French exercises control, and options to purchase 16,000 shares of common stock. The number of shares shown as beneficially owned includes 122,712 shares pledged as collateral.


(11)	Includes 22,500 shares held of record by Select Properties, Ltd., 10,000 shares held of record by J.K. Lee, Inc. and 15,000 shares held of record by 2121 Limited Partnership, over all of which Mr. Giorgio has beneficial ownership, and options to purchase 16,000 shares of common stock.


(12)	Includes warrants to purchase 16,000 shares of common stock.


(13)	Includes options to purchase 19,266 shares of common stock and 764 shares of common stock allocated to Mr. Jourdan’s account in the ESOP.


(14)	Includes 200,000 shares held of record by Elmwood Banking Investment, L.L.C., a wholly-owned subsidiary of Lauricella Land Company, L.L.C., an entity for which Mr. Lauricella serves as managing member, and options to purchase 9,600 shares of common stock.


(15)	Does not include any shares of common stock held by Castle Creek Partners IV, L.P., which are described in note 1 to this table, for which Mr. Merlo disclaims beneficial ownership.


(16)	Includes options to purchase 16,796 shares of common stock and 604 shares of common stock allocated to Mr. Roohi’s account in the ESOP.


(17)	Includes 829 shares of common stock allocated to Mr. Ryan’s account in the ESOP and 435,000 shares of common stock pledged as collateral to secure outstanding debt obligations.


(18)	Includes warrants to purchase 12,918 shares of common stock, options to purchase 16,000 shares of common stock, and 237 shares of common stock allocated to Dr. Teamer’s account in the ESOP.


(19)	Includes options to purchase 16,000 shares of common stock.


(20)	Includes options to purchase 34,204 shares of common stock and 619 shares of common stock allocated to Ms. Verdigets’ account in the ESOP.

Item 13. Certain Relationships and Related Transactions, and Directors Independence.

Related Party Transactions

In addition to the compensation arrangements with directors and executive officers described in Item 11 above, the following is a description of each transaction or arrangement since January 1, 2015, and each proposed transaction or arrangement in which the Company has been or is to be a participant; the amount involved exceeds or will exceed $120,000; and a related party, such as any of the Company’s directors, executive officers or beneficial holders of more than 5% of the Company’s capital stock, or any immediate family member of or person sharing the household with any of these individuals (other than tenants or employees), had or will have a direct or indirect material interest.

Certain Investor Rights. In connection with the Company’s 2011 private placement offering, the Company sold 523,863 shares of its common stock, and 1,680,219 shares of its Series C preferred stock, to Castle Creek Capital Fund IV, L.P., a greater than In connection with the investment of Castle Creek Partners IV, L.P., the Company entered into an agreement with Castle Creek Partners IV, L.P., the general partner of Castle Creek Capital Fund IV, L.P., that permits it to appoint one representative to the Company’s Board of Directors and one nonvoting observer to the Board of Directors of First NBC Bank, for so long as Castle Creek Partners IV, L.P. and its affiliates own at least 81,632 shares of the Company’s common stock. Mr. Merlo was appointed to the Board of Directors in August 2011 as the representative of Castle Creek Partners IV, L.P. The Company also made certain representations and warranties and covenants regarding the Company and First NBC Bank and agreed to provide limited indemnification rights to Castle Creek Partners IV, L.P. in connection with the representations and warranties. In addition, the Company agreed to provide Castle Creek Partners IV, L.P. with certain limited management rights to enable it to qualify as a Venture Capital Operating Company as a result of its investment. The Company believes the terms and conditions set forth in such agreements are reasonable and customary for transactions of this type.

Commercial Lease Relationships. First NBC Bank leases a building that houses the Carondelet branch office from a partnership that is owned by directors Leander J. Foley, III and Dr. Charles C. Teamer. The lease commenced in October 2004 for a term of five years and contained multiple five-year extensions at the bank’s option. The bank most recently exercised a five-year extension in October 2014. The Company believes that the rental payments due under the lease were based on market rates and are commensurate with rental arrangements that would be obtained in arm’s-length negotiations with an unaffiliated third party. The Company paid annual rent of approximately $184,120 for the year ended December 31, 2015, and the Company expects to pay approximately $184,120 in rent for the year ending December 31, 2016.

Ordinary Banking Relationships. Certain of the Company’s officers, directors and principal shareholders, as well as their immediate family members and affiliates, are customers of, or have or have had transactions with, First NBC Bank in the ordinary course of business. These transactions include deposits, loans, wealth management products and other financial services related transactions. Related party transactions are made in the ordinary course of business, on substantially the same

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terms, including interest rates and collateral (where applicable), as those prevailing at the time for comparable transactions with persons not related to the Company, and do not involve more than normal risk of collectability or present other features unfavorable to us. As of the date of this annual report, no related party loans were categorized as nonaccrual, past due, restructured or potential problem loans. First NBC Bank expects to continue to enter into transactions in the ordinary course of business on similar terms with the Company’s officers, directors and principal shareholders, as well as their immediate family members and affiliates.

Policies and Procedures Regarding Related Party Transactions. Transactions by the Company or First NBC Bank with related parties are subject to regulatory requirements and restrictions. These requirements and restrictions include Sections 23A and 23B of the Federal Reserve Act (which govern certain transactions by First NBC Bank with its affiliates) and the Federal Reserve’s Regulation O (which governs certain loans by First NBC Bank to its executive officers, directors, and principal shareholders). The Company has adopted written policies to comply with these regulatory requirements and restrictions.

In addition, the Company’s Audit Committee, which is composed entirely of independent directors, is charged with reviewing all related party transactions in which the Company is involved as a party. In determining whether to approve a related party transaction, the Committee will consider, among other factors, the fairness of the proposed transaction, the direct or indirect nature of the related party’s interest in the transaction, the appearance of an improper conflict of interests for any director or executive officer taking into account the size of the transaction and the financial position of the related party, whether the transaction would impair an outside director’s independence, the acceptability of the transaction to the Company’s regulators and the potential violations of other corporate policies.

Under Section 402 of the Sarbanes-Oxley Act of 2002, public companies are generally prohibited from extending, renewing or arranging for the extension of credit in the form of a personal loan to or for any director or executive officer of that issuer. This prohibition, however, is not applicable to loans that are made by banks in compliance Section 22(h) of the Federal Reserve Act or the Federal Reserve’s Regulation O. The Company believes that all related transactions comply with Section 402 of the Sarbanes-Oxley Act or have been made under a valid exception from Section 402 of the Sarbanes-Oxley Act.

Director Independence

The Board of Directors believes that the interests of the stockholders are best served by having a substantial number of objective, independent representatives on the Board. For this purpose, an independent director means a person other than an executive officer or employee of the Company or any individual having a relationship which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Applying this standard, the Board of Directors has determined that, with the exception of Chairman and Chief Executive Officer Ashton J. Ryan, Jr. and Dr. Charles C. Teamer, each of the Company’s current directors is an independent director. The Board determined that Messrs. Ryan and Teamer do not qualify as independent directors because each is an employee of First NBC Bank. The Board of Directors will continue to monitor the standards for director independence established under applicable law or NASDAQ listing requirements and will ensure that the Company’s corporate governance principles are consistent with those standards.

Item 14. Principal Accounting Fees and Services.

Ernst & Young LLP is the Company's independent registered public accounting firm and has examined the Company’s financial statements each year since its inception, and its engagement for 2015 was reviewed and approved by the Audit Committee. In addition to retaining Ernst & Young LLP to audit the Company’s financial statements, the Company engages the firm from time to time to perform other services. The following table presents fees incurred by the Company for professional services rendered by Ernst & Young LLP for 2015 and 2014:



Fees	2015		2014
Audit fees	$	5,027,309	$	1,636,649
Audit-related fees	—		73,200
Tax fees	222,450		134,000
All other fees	1,500		3,100

As defined by the SEC, (i) “audit fees” are fees for professional services rendered for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-Q, or for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years; (ii) “audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of

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the Company’s financial statements and are not reported under “audit fees;” (iii) “tax fees” are fees for professional services rendered for tax compliance, tax advice, and tax planning; and (iv) “all other fees” are fees for products and services, other than the services reported under “audit fees,” “audit-related fees,” and “tax fees.”

The Audit Committee selects and oversees the Company’s independent auditor. In addition, it is required to pre-approve the audit and non-audit services performed by the Company’s independent auditor to ensure that they do not impair the auditor’s independence. Federal securities regulations specify the types of non-audit services that an independent auditor may not provide to the Company and establish the Audit Committee’s responsibility for administration of the engagement of the Company’s independent auditors. During 2015 and 2014, the Audit Committee pre-approved all services provided to the Company by its independent auditor.

Part IV.

Item 15. Exhibits and Financial Statement Schedules.

(a) Documents Filed as Part of this Report.


(1)	The following financial statements are incorporated by reference from Item 8 hereof:

Consolidated Balance Sheets as of December 31, 2015 and 2014

Consolidated Statements of Income for the Years Ended December 31, 2015, 2014, and 2013

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2015, 2014, and 2013

Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2015, 2014, and 2013

Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014, and 2013

Notes to Consolidated Financial Statements


(2)	All schedules for which provision is made in the applicable accounting regulation of the SEC are omitted because of the absence of conditions under which they are required or because the required information is included in the consolidated financial statements and related notes thereto.


(3)	The following exhibits are filed as part of this Form 10-K, and this list includes the Exhibit Index.

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EXHIBIT INDEX



Exhibit Number	Description	Location
2.1	Purchase and Assumption Agreement, dated as of January 16, 2015, among the Federal Deposit Insurance Corporation, as Receiver of First National Bank of Crestview, First NBC Bank, and the Federal Deposit Insurance Corporation	Exhibit 2.1 to the Company's Current Report on Form 8-K filed January 23, 2015

2.2	Agreement and Plan of Reorganization, dated December 30, 2014, by and among First NBC Bank Holding Company, State Investors Bancorp, Inc. and First NBC Acquisition Company	Exhibit 2.1 to the Company's Current Report on Form 8-K filed December 30, 2014

2.3	First Amendment to Agreement and Plan of Reorganization, dated August 27, 2015, by and among First NBC Bank Holding Company, State Investors Bancorp, Inc. and First NBC Acquisition Company	Exhibit 2.1 to the Company’s Current Report on Form 8-K filed August 27, 2015

3.1	Amended and Restated Articles of Incorporation	Exhibit 3.1 to the Company’s Current Report on Form 8-K filed June 24, 2015

3.2	Amended and Restated Bylaws	Exhibit 3.2 to the Company’s Current Report on Form 8-K filed February 26, 2016

4.1	Specimen common stock certificate	Exhibit 4.1 to the Registration Statement on Form S-1/A of the Company filed April 30, 2013

4.2	Purchase Agreement, dated as of February 18, 2015, of 5.75% Subordinated Notes due 2025	Exhibit 4.1 to the Company's Current Report on Form 8-K filed February 19, 2015

4.3	Indenture, dated as of February 18, 2015, between First NBC Bank Holding Company and U.S Bank National Association	Exhibit 4.2 to the Company's Current Report on Form 8-K filed February 19, 2015

4.4	Form of Unregistered 5.75% Subordinated Note due 2025, dated as of February 18, 2015	Exhibit 4.2 to the Company's Current Report on Form 8-K filed February 19, 2016

4.5	Form of Registered 5.75% Subordinated Note due 2025, dated as of August 18, 2015	Exhibit 4.2 to Amendment No. 1 to the Company’s Registration Statement on Form S-4 filed August 18, 2015

4.6	Form of Senior Debt Indenture	Exhibit 4.3 to Amendment No. 2 to the Company’s Registration Statement on Form S-3 filed November 20, 2015

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Exhibit Number	Description	Location
10.1	First NBC Bank Holding Company Stock Incentive Plan (“2006 Plan”)+	Exhibit 10.1 to the Company's Registration Statement on Form S-1 filed April 8, 2013

10.2	Amendment No. 1 to 2006 Plan+	Exhibit 10.2 to the Registration Statement on Form S-1 of the Company filed April 8, 2013

10.3	Addendum (Directors’ Shares) to 2006 Plan+	Exhibit 10.3 to the Registration Statement on Form S-1 of the Company filed April 8, 2013

10.4	2012 Amendment to 2006 Plan+	Exhibit 10.4 to the Registration Statement on Form S-1 of the Company filed April 8, 2013

10.5	Form of Stock Option Award Agreement under 2006 Plan+	Exhibit 10.5 to the Registration Statement on Form S-1 of the Company filed April 8, 2013

10.6	Form of Restricted Stock Award Agreement under 2006 Plan+	Exhibit 10.6 to the Registration Statement on Form S-1 of the Company filed April 8, 2013

10.7	Form of Warrant Agreement relating to warrants issued to organizers of First NBC Bank	Exhibit 10.7 to the Registration Statement on Form S-1 of the Company filed April 8, 2013

10.8	Form of Warrant Agreement relating to warrants issued to shareholders of Dryades Bancorp, Inc.	Exhibit 10.8 to the Registration Statement on Form S-1 of the Company filed April 8, 2013

10.9	Securities Purchase Agreement, dated as of June 29, 2011, by and between First NBC Bank Holding Company and Castle Creek Capital Partners IV, L.P.	Exhibit 10.12 to the Registration Statement on Form S-1 of the Company filed April 8, 2013

10.10	VCOC Letter Agreement, dated November 8, 2011, by and between First NBC Bank Holding Company and Castle Creek Capital Partners IV, L.P.	Exhibit 10.13 to the Registration Statement on Form S-1 of the Company filed April 8, 2013

10.11	Securities Purchase Agreement, dated as of August 4, 2011, by and between the Secretary of the Treasury and First NBC Bank Holding Company, in connection with First NBC Bank Holding Company’s participation in the U.S. Treasury’s Small Business Lending Fund Program	Exhibit 10.14 to the Registration Statement on Form S-1 of the Company filed April 8, 2013

10.12	First NBC Bank Holding Company Deferred Compensation Plan, Effective June 30, 2012+	Exhibit 10.17 to the Registration Statement on Form S-1 of the Company filed April 8, 2013

10.13	First NBC Bank Holding Company 2014 Omnibus Incentive Plan+	Exhibit 10.1 to the Company's Current Report on Form 8-K filed May 23, 2014

10.14	Exchange Agreement, dated June 22, 2015, by and between First NBC Bank Holding Company and Castle Creek Capital Partners IV, LP	Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 24, 2015

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Exhibit Number	Description	Location
12.1	Statement of Ratios of Earnings to Fixed Charges and Preferred Stock Dividends	Filed herewith
21.1	Subsidiaries of First NBC Bank Holding Company	Filed herewith

23.1	Consent of Ernst & Young LLP	Filed herewith

31.1	Rule 13a-14(a) Certification of Chief Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

31.2	Rule 13a-14(a) Certification of Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

32.1	Section 1350 Certification of Chief Executive Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

32.2	Section 1350 Certification of Chief Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith



101.INS	XBRL Instance Document	Filed herewith

101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith

101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith

101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document	Filed herewith



	*	Schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish supplementally a copy of any omitted schedules or similar attachment to the SEC upon request.



	+	Management contract or compensatory plan or arrangement

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




		First NBC Bank Holding Company

Date:	August 25, 2016	By:	/s/ Ashton J. Ryan, Jr.
			Ashton J. Ryan, Jr.
			President and Chief Executive Officer
			(Principal Executive Officer)

Date:	August 25, 2016	By:	/s/ Mary Beth Verdigets
			Mary Beth Verdigets
			Executive Vice President and Chief Financial Officer
			(Principal Financial and Accounting Officer)

Date:	August 25, 2016	By:	/s/ William D. Aaron, Jr.
			William D. Aaron, Jr.
			Director

Date:	August 25, 2016	By:	/s/ William Carrouche
			William Carrouche
			Director

Date:	August 25, 2016	By:	/s/ John F. French
			John F. French
			Director

Date:	August 25, 2016	By:	/s/ Leander J. Foley, III
			Leander J. Foley, III
			Director

Date:	August 25, 2016	By:	/s/ Leon L. Giorgio, Jr.
			Leon L. Giorgio, Jr.
			Director

Date:	August 25, 2016	By:	/s/ Shivan Govindan
			Shivan Govindan
			Director

170



Date:	August 25, 2016	By:	/s/ L. Blake Jones
			L. Blake Jones
			Director

Date:	August 25, 2016	By:	/s/ Louis V. Lauricella
			Louis V. Lauricella
			Director

Date:	August 25, 2016	By:	/s/ Mark G. Merlo
			Mark G. Merlo
			Director

Date:	August 25, 2016	By:	/s/ Dr. Charles C. Teamer
			Dr. Charles C. Teamer
			Director

Date:	August 25, 2016	By:	/s/ Joseph F. Toomy
			Joseph F. Toomy
			Director

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First NBC Bank Holding (FNBCQ) 10-K2015 FY Annual report

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