Suit claims First NBC Bank was involved in loan scheme

By John Severance | Jul 12, 2017

First NBC Bank, which was recently acquired by Hancock Whitney, still is facing legal challenges.

NEW ORLEANS — First NBC Bank, which was recently acquired by Hancock Whitney, still is facing legal challenges.

The latest lawsuit, which was filed by the Georgia Insurance Commission, was moved in May to a federal court. Another suit filed by Thinkstream, a Baton Rouge company, against First NBC also was moved to a federal court.

The Georgia suit, which was filed by Ralph Hudgens, Georgia's insurance commissioner, alleges that the bank employed a loan scheme that it used to do business with Southern Casualty Insurance Company (SCIC), which sells auto insurance to customers in Georgia, Mississippi and Louisiana.

Listed as defendants in the case are Richard O'Dom, Key Insurance Network, Key Claims Services, Wesley T. Sivley, John Robinson, Willard Peacock, Alan Yeager, AES Claims Partners, Clifford Olsen, First NBC holdings company, Federal Deposit Insurance Corporation and Ashton Ryan.

According to the lawsuit, the bank furthered its business by granting suspect loans to the insurance company. 

In the Georgia suit, insurance regulations prevented First NBC from directly making loans to SCIC.

The suit claims the two parties got around that by the bank making loans Richard O’Domo, CEO of SCIC, along with Clifford Olsen, SCIC's director, and Key Insurance Network, a firm that handles claims management for SCIC.

According to the suit, the bank would restructure the loans to make them good on its books.

The suit says Ryan made numerous loans so the dollar amount would be lower and it would not have to be reported to the loan committee.

Regulators, though, were wary and they required the bank come up with more capital to shore up the company and pay for its losses,

The suit alleges that First NBC then loaned Olsen $7 million and that Olsen would then buy shares in Key Insurance and transfer the money to SCIC.

The money was placed in a SCIC account and shown to the Georgia Department of Insurance. and it was transferred back to the bank a week later. That was an illegal transfer, according to the insurance department.

Once the money was placed in a SCIC account and shown to the Georgia Department of Insurance around Nov. 26, 2012, the money was then transferred back to First NBC Bank on Dec. 3, 2012, another fraudulent transfer, according to the department.

The allegations were similar in the Baton Rouge case.

Thinkstream claimed First NBC “kept lending more and more money” even though the company was default on existing loans. First NBC “artificially kept the loans ‘current’ by continuing to advance funds under the loans to pay itself interest as it became due.”

On April 28, First NBC Bank was closed by the Louisiana Office of Financial Institutions, and the FDIC-R was named receiver.

On that same day, the FDIC entered into a purchase agreement with Whitney Bank and all of First NBC Bank's assets were transferred to Whitney.

The suit said the FDIC-R retained ownership of potential liabilities relating to any claims “based on any action or inaction prior to the closing date of [the bank], its directors, officers, employees or agents.”

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Organizations in this Story

Federal Deposit Insurance Corporation First NBC Bank State of Georgia

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