New Orleans: Regulators on Friday seized New Orleans-based First NBC Bank in the costliest bank failure since the financial crisis, with cleanup costs estimated at $1 billion (Dh3.67 billion).

The Louisiana Office of Financial Institutions handed the bank to the Federal Deposit Insurance Corp in the fourth failure of a federally insured bank this year.

Hancock Holding Co. of Gulfport, Mississippi, bought $1.6 billion in deposits and $1 billion in assets, including $600 million in cash. Hancock will fold First NBC’s 24 Louisiana branches into its Whitney Bank unit and First NBC’s five Florida Panhandle branches into its Hancock Bank unit.

“It’s a really big growth opportunity for our company,” Hancock CEO John Hairston said of the deal, projected to boost profits and push the regional bank’s assets above $27 billion.

Bank closures have been infrequent since the 2010 peak in the wake of the Great Recession. That year, regulators shuttered 157 banks, the most in any year since the savings and loan crisis two decades earlier and topping the 140 that were closed in 2009.

The billion-dollar loss comes from the difference in the FDIC’s obligations and what it can expect to collect from the assets. The last time the FDIC paid more than $1 billion to absorb losses was when two banks in Puerto Rico failed in 2010.

Hancock agreed to pay $35 million for the deposits it took over. Hancock had bought $1.3 billion in loans, $400 million in deposits and nine branches from First NBC earlier this year, as First NBC sold chunks of itself in an ultimately futile attempt to raise capital and avoid failure.

The FDIC, though, was only able to sell part of the bank to Hancock, which FDIC spokesman David Barr said was the sole bidder. The FDIC will mail $1.4 billion in checks beginning Monday to depositors who mostly hold certificates of deposit, individual retirement accounts and brokered deposits. No depositor will lose money, and the checks will include interest accrued through Friday. The FDIC will also have to dispose of roughly $2.5 billion in assets that Hancock didn’t want. For now, though, depositors and borrowers can keep doing business with their current branches.

First NBC was founded in 2006 and proclaimed its mission to be helping Louisiana rebuild from Hurricane Katrina. The bank got in trouble in part because it became unusually reliant on projects that revolve around federal tax credits for low-income or less developed areas. The bank would finance projects and get tax credits good in the future. But regulators decided that First NBC was overstating the value of those tax credits, forcing the bank to write down their value. Regulators increased scrutiny and ordered the bank to raise capital, but the bank had to set aside another $86 million in the last three months of 2016 to cover increasing loan losses.

The chain of events ultimately led to the exit of First NBC founder Ashton Ryan, who was replaced as CEO by former Hancock chief Carl Chaney. Hancock Chief Financial Officer Michael Achary said Chaney’s hiring “had nothing to do with the transaction.”

The acquisition of 40,000 accounts will push Hancock’s Whitney unit close to being the largest bank in metro New Orleans by deposits. Some branches are likely to be combined with Hancock’s existing offices.