• National Bank Holdings Corporation Announces First Quarter 2022 Financial Results and Agreement to Acquire Rock Canyon Bank

    Source: Nasdaq GlobeNewswire / 18 Apr 2022 15:30:01   America/Chicago

    DENVER, April 18, 2022 (GLOBE NEWSWIRE) -- National Bank Holdings Corporation (NYSE: NBHC) reported:

              
      For the quarter
      1Q22 4Q21 1Q21
    Net income ($000's) $ 18,352 $22,769 $26,812
    Earnings per share - diluted $ 0.60 $0.74 $0.86
    Return on average tangible assets(1)  1.07%  1.30%  1.65%
    Return on average tangible common equity(1)  10.31%  12.37%  15.20%

                                                          

    (1) Ratios are annualized. See non-GAAP reconciliations below.
       

    Today National Bank Holdings Corporation (the “Company” or “NBHC”), the holding company for NBH Bank, announces the signing of a definitive merger agreement to acquire Community Bancorporation (“CB”), the holding company for Rock Canyon Bank, headquartered in Provo, Utah and operating in the greater Salt Lake City region. Upon completion of the exclusively negotiated transaction, NBHC will have approximately $9.6 billion in pro forma assets, including $6.0 billion in total loans, and $8.4 billion in total deposits when combined with the previously announced acquisition of Bancshares of Jackson Hole Incorporated. NBHC will also become the #1 third-party SBA loan volume originator in the state of Utah.

    “Our focus on expanding NBHC’s presence in high performing U.S. markets is again demonstrated by the announcement of our intent to acquire Rock Canyon Bank,” said Tim Laney, Chairman, President and CEO of National Bank Holdings Corporation. “Rock Canyon Bank’s highly successful SBA business strategy de-risks the balance sheet, produces strong fee income, and is scalable across our franchise. Equally important, this acquisition strengthens our position as a premier regional bank serving the fast-growing Salt Lake City region. Rock Canyon Bank clients will continue to enjoy the exceptional service and local decision making they have come to expect. They will also benefit from enhanced service offerings including expanded commercial loan and treasury management solutions.”

    “We are pleased to have found a partner in NBH Bank that shares our commitment to serving local businesses by providing highly personalized service that supports our clients’ and our communities’ success,” said Park Roney, President and CEO of Community Bancorporation and Chairman of Rock Canyon Bank. “NBH Bank has earned a reputation as an outstanding bank and is our partner of choice.”

    Tod Monsen, CEO of Rock Canyon Bank went on to say, “NBH Bank brings us best-in-class banking solutions for our clients, and I am looking forward to working alongside their proven and high energy leadership team as we work to take our performance to the next level.”

    Under the terms of the agreement, CB shareholders will receive approximately $16.1 million of cash consideration and approximately 3.1 million shares of NBHC common stock, subject to certain potential adjustments. The transaction has a value of $136.0 million in the aggregate, based on NBHC’s closing price of $38.69 on April 14, 2022.

    In announcing NBHC’s first quarter 2022 results, Tim Laney shared, “We’re off to a solid start delivering quarterly earnings of $0.60 per diluted share. Our teams delivered record first quarter loan fundings driving strong annualized core loan growth of 15.8%. We continue to deliver on our proven track record of maintaining excellent credit quality with a record low non-performing loans ratio of 0.24%. Our excess liquidity coupled with a fortress balance sheet leaves the bank well positioned to address any implications of an economic downturn, while also providing optionality to be leveraged for future growth.”

    First Quarter 2022 Results
    (All comparisons refer to the fourth quarter of 2021, except as noted)

    Net income totaled $18.4 million, or $0.60 per diluted share, during the first quarter of 2022, compared to $22.8 million or $0.74 per diluted share during the fourth quarter of 2021. The return on average tangible assets was 1.07%, compared to 1.30%, and the return on average tangible common equity was 10.31%, compared to 12.37%.

    Net Interest Income
    Fully taxable equivalent net interest income totaled $48.0 million during the first quarter of 2022, a decrease of $2.8 million driven by $1.9 million lower accretion income from acquired loans, $1.4 million lower Paycheck Protection Program (“PPP”) loan fee income and a $0.9 million decrease from two fewer calendar days. These decreases were partially offset by higher loan volumes and yields as well as lower cost of funds. The fully taxable equivalent net interest margin narrowed 13 basis points to 2.90% due to lower accretion income from acquired loans and lower PPP loan fees. While the impact of the 25 basis point increase in the federal funds rate on March 16, 2022 had a nominal impact on the Company’s first quarter 2022 results, the Company’s net interest income in future periods will benefit from this rate increase. The yield on earnings assets decreased 13 basis points, and the cost of deposits improved one basis point to a record low 0.17%.

    Loans
    Total loans ended the quarter at $4.7 billion, an increase of $160.9 million over the prior quarter. Excluding PPP loans of $7.6 million and $21.7 million for the first and fourth quarters respectively, total loans increased $174.9 million or 15.8% annualized, led by commercial loan growth of $152.9 million or 19.7% annualized. We generated record first quarter loan fundings totaling $419.7 million, led by commercial loan fundings of $305.3 million.

    Asset Quality and Provision for Loan Losses
    The Company recorded $0.3 million of provision release during the quarter driven by strong asset quality. Annualized net charge-offs totaled 0.05%, compared to 0.02% in the prior quarter. Non-performing loans (comprised of non-accrual loans and non-accrual TDRs) remained a record low 0.24% of total loans, and non-performing assets decreased four basis points to 0.35% of total loans and OREO. The allowance for credit losses as a percentage of total loans totaled 1.04%, compared to 1.10% at December 31, 2021.

    Deposits
    Average total deposits increased $33.8 million or 2.2% annualized, to $6.2 billion for the first quarter 2022. Average transaction deposits (defined as total deposits less time deposits) increased $63.7 million or 4.9% annualized. The mix of transaction deposits to total deposits improved 78 basis points to 87.4% at March 31, 2022. The loan to deposit ratio increased 97 basis points to 73.4%.

    Non-Interest Income
    Non-interest income totaled $19.1 million, a decrease of $4.2 million primarily driven by $2.2 million lower unrealized gains from equity method investments included in the prior quarter and $0.7 million lower mortgage banking income. Service charges and bank card fees decreased a combined $0.5 million during the quarter due to seasonality.

    Non-Interest Expense
    Non-interest expense totaled $44.1 million, a decrease of $0.4 million from the prior quarter. Salaries and benefits decreased $0.7 million largely due to two fewer calendar days. Included in the first quarter 2022 were $0.3 million of gains on sale of OREO, compared to $0.7 million in the prior quarter. The fully taxable equivalent efficiency ratio was 65.3% at March 31, 2022, compared to 59.7% at December 31, 2021.

    Income tax expense totaled $3.6 million during the first quarter, compared to $5.3 million. The effective tax rate for the first quarter 2022 was 16.4%, compared to 18.6% for the full year 2021. The lower rate compared to the statutory rate reflects the continued success of our tax strategies and tax-exempt income.

    Capital
    Capital ratios continue to be strong and in excess of federal bank regulatory agency “well capitalized” thresholds. The Tier 1 leverage ratios at March 31, 2022 for the consolidated company and NBH Bank were 10.48% and 9.09%, respectively. Shareholders’ equity totaled $820.2 million at March 31, 2022, decreasing $19.9 million primarily due to a higher accumulated other comprehensive loss.

    Common book value per share decreased $0.71 to $27.33 at March 31, 2022. Tangible common book value per share decreased $0.69 to $23.64 at March 31, 2022 as this quarter’s earnings, net of dividends paid, were outpaced by the increase in accumulated other comprehensive loss. Excluding accumulated other comprehensive loss, the tangible book value per share increased $0.37 to $24.93 at March 31, 2022.

    Year-Over-Year Review
    (All comparisons refer to the first quarter 2021, except as noted)

    Net income totaled $18.4 million, or $0.60 per diluted share, for the first quarter of 2022, compared to $26.8 million, or $0.86 per diluted share for the first quarter of 2021. The decrease was largely due to $12.7 million lower mortgage banking income, due to lower refinance activity in 2022. The return on average tangible assets was 1.07%, compared to 1.65% in the same period prior year, and the return on average tangible common equity was 10.31%, compared to 15.20%.

    Fully taxable equivalent net interest income totaled $48.0 million, an increase of $1.5 million or 3.2%. Average earning assets increased $464.6 million, or 7.4%, including originated loan growth of $356.9 million. The fully taxable equivalent net interest margin narrowed 12 basis points to 2.90%, due to lower earning asset yields, which were partially offset by a decrease in the cost of funds. The yield on earning assets decreased 20 basis points driven by lower PPP loan forgiveness activity. The cost of deposits decreased 11 basis points to a record low 0.17%.

    Loans outstanding totaled $4.7 billion, increasing $371.0 million or 8.6%. Excluding PPP loans of $7.6 million and $217.7 million for the first quarters 2022 and 2021 respectively, total loans increased $581.0 million or 14.2%, led by commercial loan growth of $534.6 million, or 19.4%. New loan fundings over the trailing 12 months totaled a record $1.7 billion, led by commercial loan fundings of $1.2 billion.  

    The Company recorded $0.3 million of provision release during the first quarter, compared to a provision release of $3.6 million in the same period last year. The provision release was driven by strong asset quality and an improved outlook in the CECL model’s underlying economic forecast. Net charge-offs totaled 0.05% of total loans, compared to 0.01% of total loans in the same period last year. Non-performing loans to total loans improved 14 basis points to 0.24% at March 31, 2022. The allowance for credit losses totaled 1.04% of total loans, compared to 1.28% at March 31, 2021.

    Average total deposits increased $413.4 million or 7.2%, to $6.2 billion. Average non-interest bearing demand deposits increased $268.3 million or 12.4%, and average transaction deposits increased $559.0 million, or 11.6%. The mix of transaction deposits to total deposits increased by 319 basis points to 87.4%, and the mix of non-interest bearing demand deposits to total deposits improved 189 basis points to 40.1% at March 31, 2022.

    Non-interest income totaled $19.1 million, a decrease of $14.3 million or 42.9%, driven by $12.7 million lower mortgage banking income due to lower refinance activity in 2022, as well as competition driving tighter gain on sale margins. Other non-interest income decreased $1.0 million due to $0.5 million lower unrealized gains on equity method investments. Included in the first quarter of 2022 was $0.7 million of banking center consolidation-related income, compared to $1.5 million in the same period last year. Service charges and bank card fees increased a combined $0.3 million compared to the first quarter 2021.

    Non-interest expense totaled $44.1 million, a decrease of $5.6 million or 11.2%. Salaries and benefits decreased $4.2 million largely due to lower mortgage banking-related compensation. Occupancy and equipment decreased $0.2 million due to efficiencies gained from banking center consolidations. Problem asset workout expense decreased $0.3 million, and gain on sale of OREO increased $0.2 million.

    Income tax expense totaled $3.6 million, a decrease of $2.1 million from the first quarter last year, driven by lower pre-tax income.

    Acquisition of Rock Canyon Bank
    Rock Canyon Bank was founded in 1991, and as of December 31, 2021 had $814.3 million in total assets, including $494.2 million in total loans, and $736.6 million in total deposits. Rock Canyon Bank is the leading third-party SBA loan originator in the state of Utah. Upon the close of the transaction, Rock Canyon Bank will operate as Hillcrest Bank. Please refer to the accompanying acquisition disclosure for additional transaction details.

    BofA Securities, Inc. served as financial advisor and Squire Patton Boggs (US) LLP served as legal counsel to National Bank Holdings Corporation. Kirton McConkie served as legal counsel to Community Bancorporation.

    Conference Call
    Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Tuesday, April 19, 2022. Interested parties may listen to this call by dialing (800) 289-0720/+44 (0)330 165 4012 (United Kingdom) using the confirmation code of 2525902 and asking for the NBHC Q1 2022 Earnings Call. A telephonic replay of the call will be available beginning approximately four hours after the call’s completion through April 24, 2022, by dialing (888) 203-1112 using the confirmation code of 2525902. The earnings release and an on-line replay of the call will also be available on the Company’s website at www.nationalbankholdings.com by visiting the investor relations area.

    About National Bank Holdings Corporation
    National Bank Holdings Corporation is a bank holding company created to build a leading community bank franchise delivering high quality client service and committed to stakeholder results. Through its bank subsidiary, NBH Bank, National Bank Holdings Corporation operates a network of 81 banking centers, serving individual consumers, small, medium and large businesses, and government and non-profit entities. Its banking centers are located in its core footprint of Colorado, the greater Kansas City region, Texas, Utah and New Mexico. Its comprehensive residential mortgage banking group primarily serves the bank’s core footprint. NBH Bank operates under a single state charter through the following brand names as divisions of NBH Bank: in Colorado, Community Banks of Colorado and Community Banks Mortgage; in Kansas and Missouri, Bank Midwest and Bank Midwest Mortgage; and in Texas, Utah and New Mexico, Hillcrest Bank and Hillcrest Bank Mortgage. Additional information about National Bank Holdings Corporation can be found at www.nationalbankholdings.com.

    For more information visit: cobnks.com, bankmw.com, hillcrestbank.com or nbhbank.com. Or, follow us on any of our social media sites:
    Community Banks of Colorado: facebook.com/cobnks, twitter.com/cobnks, instagram.com/cobnks;
    Bank Midwest: facebook.com/bankmw, twitter.com/bank_mw, instagram.com/bankmw;
    Hillcrest Bank: facebook.com/hillcrestbank, twitter.com/hillcrest_bank;
    NBH Bank: twitter.com/nbhbank;
    or connect with any of our brands on LinkedIn.

    About Non-GAAP Financial Measures
    Certain of the financial measures and ratios we present, including “tangible assets,” “return on average tangible assets,” “tangible common equity,” “return on average tangible common equity,” “tangible common book value per share,” “tangible common book value, excluding accumulated other comprehensive loss, net of tax,” “tangible common book value per share, excluding accumulated other comprehensive loss, net of tax,” “tangible common equity to tangible assets,” and “fully taxable equivalent” metrics, are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

    These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance.

    A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

    Forward-Looking Statements

    This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements contain words such as “anticipate,” “believe,” “can,” “would,” “should,” “could,” “may,” “predict,” “seek,” “potential,” “will,” “estimate,” “target,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “intend” or similar expressions that relate to the Company’s strategy, plans or intentions. Forward-looking statements involve certain important risks, uncertainties and other factors, any of which could cause actual results to differ materially from those in such statements. Such factors include, without limitation, the “Risk Factors” referenced in our most recent Form 10-K filed with the Securities and Exchange Commission (SEC), other risks and uncertainties listed from time to time in our reports and documents filed with the SEC, and the following factors: ability to obtain regulatory approvals and meet other closing conditions to the mergers on the expected terms and schedule; delay in closing the mergers; difficulties and delays in integrating the NBHC, Community Bancorporation, and Bancshares of Jackson Hole Incorporated businesses or fully realizing cost savings and other benefits; business disruption following the proposed transactions; ability to execute our business strategy; business and economic conditions; effects of any potential government shutdowns; economic, market, operational, liquidity, credit and interest rate risks associated with the Company’s business; effects of any changes in trade, monetary and fiscal policies and laws; changes imposed by regulatory agencies to increase capital standards; effects of inflation, as well as, interest rate, securities market and monetary supply fluctuations; changes in the economy or supply-demand imbalances affecting local real estate values; changes in consumer spending, borrowings and savings habits; with respect to our mortgage business, the inability to negotiate fees with investors for the purchase of our loans or our obligation to indemnify purchasers or repurchase related loans; the Company’s ability to identify potential candidates for, consummate, integrate and realize operating efficiencies from, acquisitions, consolidations and other expansion opportunities; the Company's ability to realize anticipated benefits from enhancements or updates to its core operating systems from time to time without significant change in client service or risk to the Company's control environment; the Company's dependence on information technology and telecommunications systems of third-party service providers and the risk of systems failures, interruptions or breaches of security; the Company’s ability to achieve organic loan and deposit growth and the composition of such growth; changes in sources and uses of funds; increased competition in the financial services industry; the effect of changes in accounting policies and practices; the share price of the Company’s stock; the Company's ability to realize deferred tax assets or the need for a valuation allowance; the effects of tax legislation, including the potential of future increases to prevailing tax rules, or challenges to our position; continued consolidation in the financial services industry; ability to maintain or increase market share and control expenses; costs and effects of changes in laws and regulations and of other legal and regulatory developments; technological changes; the timely development and acceptance of new products and services, including in the digital technology space our digital solution 2UniFi; the Company’s continued ability to attract, hire and maintain qualified personnel; ability to implement and/or improve operational management and other internal risk controls and processes and reporting system and procedures; regulatory limitations on dividends from the Company's bank subsidiary; changes in estimates of future credit reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; widespread natural and other disasters, pandemics, dislocations, political instability, acts of war or terrorist activities, cyberattacks or international hostilities; a cybersecurity incident, data breach or a failure of a key information technology system; adverse effects due to the novel Coronavirus Disease 2019 (COVID-19) on the Company and its clients, counterparties, employees, and third-party service providers, and the adverse impacts on our business, financial position, results of operations, and prospects; impact of reputational risk; and success at managing the risks involved in the foregoing items. The Company can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this press release, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

    Contact:
    Analysts/Institutional Investors: Aldis Birkans, Chief Financial Officer, (720) 554-6640, ir@nationalbankholdings.com
    Media: Jody Soper, Chief Marketing Officer, (303) 784-5925, Jody.Soper@nbhbank.com   

    NATIONAL BANK HOLDINGS CORPORATION
    FINANCIAL SUMMARY
    Consolidated Statements of Operations (Unaudited)
    (Dollars in thousands, except share and per share data)

             
     For the three months ended
     March 31,    December 31,    March 31,
     2022
     2021 2021
    Total interest and dividend income$ 49,525  $52,501  $49,213 
    Total interest expense  2,864   3,015   3,992 
    Net interest income  46,661   49,486   45,221 
    Taxable equivalent adjustment  1,313   1,299   1,268 
    Net interest income FTE(1)  47,974   50,785   46,489 
    Provision (release) expense for loan losses  (322)  132   (3,575)
    Net interest income after provision for loan losses FTE(1)  48,296   50,653   50,064 
    Non-interest income:        
    Service charges  3,710   3,905   3,474 
    Bank card fees  4,123   4,476   4,073 
    Mortgage banking income  9,666   10,387   22,379 
    Other non-interest income  847   3,388   1,847 
    OREO-related income       35 
    Banking center consolidation-related income  708   1,059   1,553 
    Total non-interest income  19,054   23,215   33,361 
    Non-interest expense:        
    Salaries and benefits  29,336   29,986   33,523 
    Occupancy and equipment  6,396   6,133   6,550 
    Professional fees  814   781   742 
    Other non-interest expense  7,352   7,764   6,853 
    Problem asset workout  163   212   438 
    Gain on sale of OREO, net  (275)  (667)  (29)
    Core deposit intangible asset amortization  296   296   296 
    Banking center consolidation-related expense       1,295 
    Total non-interest expense  44,082   44,505   49,668 
             
    Income before income taxes FTE(1)  23,268   29,363   33,757 
    Taxable equivalent adjustment  1,313   1,299   1,268 
    Income before income taxes  21,955   28,064   32,489 
    Income tax expense  3,603   5,295   5,677 
    Net income$ 18,352  $22,769  $26,812 
    Earnings per share - basic$ 0.61  $0.75  $0.87 
    Earnings per share - diluted  0.60   0.74   0.86 

                                                          

    (1)    Net interest income is presented on a GAAP basis and fully taxable equivalent (FTE) basis, as the Company believes this non-GAAP measure is the preferred industry measurement for this item. The FTE adjustment is for the tax benefit on certain tax exempt loans using the federal tax rate of 21% for each period presented.


    NATIONAL BANK HOLDINGS CORPORATION
    Consolidated Statements of Financial Condition (Unaudited)
    (Dollars in thousands, except share and per share data)

             
     March 31, 2022 December 31, 2021 March 31, 2021
    ASSETS        
    Cash and cash equivalents$ 786,385  $845,695  $822,518 
    Investment securities available-for-sale  790,384   691,847   666,915 
    Investment securities held-to-maturity  567,055   609,012   520,823 
    Non-marketable securities  54,568   50,740   15,493 
    Loans  4,674,238   4,513,383   4,303,246 
    Allowance for credit losses  (48,810)  (49,694)  (55,057)
    Loans, net  4,625,428   4,463,689   4,248,189 
    Loans held for sale  90,152   139,142   228,888 
    Other real estate owned  5,063   7,005   5,669 
    Premises and equipment, net  95,133   96,747   101,830 
    Goodwill  115,027   115,027   115,027 
    Intangible assets, net  13,505   12,322   20,205 
    Other assets  198,812   182,785   203,944 
    Total assets$ 7,341,512  $7,214,011  $6,949,501 
    LIABILITIES AND SHAREHOLDERS' EQUITY        
    Liabilities:        
    Non-interest bearing demand deposits$ 2,554,820  $2,506,265  $2,295,704 
    Interest bearing demand deposits  595,137   555,401   557,850 
    Savings and money market  2,412,081   2,332,591   2,199,420 
    Total transaction deposits  5,562,038   5,394,257   5,052,974 
    Time deposits  802,772   833,916   948,676 
    Total deposits  6,364,810   6,228,173   6,001,650 
    Securities sold under agreements to repurchase  24,744   22,768   19,405 
    Long-term debt  39,505   39,478    
    Other liabilities  92,238   83,486   96,456 
    Total liabilities  6,521,297   6,373,905   6,117,511 
    Shareholders' equity:        
    Common stock  515   515   515 
    Additional paid in capital  1,014,332   1,014,294   1,010,798 
    Retained earnings  301,220   289,876   243,446 
    Treasury stock  (457,219)  (457,616)  (423,254)
    Accumulated other comprehensive (loss) income, net of tax  (38,633)  (6,963)  485 
    Total shareholders' equity  820,215   840,106   831,990 
    Total liabilities and shareholders' equity$ 7,341,512  $7,214,011  $6,949,501 
    SHARE DATA        
    Average basic shares outstanding  30,120,195   30,338,265   30,828,262 
    Average diluted shares outstanding  30,479,261   30,715,500   31,143,322 
    Ending shares outstanding  30,008,781   29,958,764   30,715,790 
    Common book value per share$ 27.33  $28.04  $27.09 
    Tangible common book value per share(1) (non-GAAP)  23.64   24.33   23.41 
    Tangible common book value per share, excluding accumulated other comprehensive income(1) (non-GAAP)  24.93   24.56   23.40 
    CAPITAL RATIOS        
    Average equity to average assets 11.74%  11.88%  12.36%
    Tangible common equity to tangible assets(1) 9.81%  10.26%  10.52%
    Tier 1 leverage ratio 10.48%  10.39%  10.80%
    Common equity tier 1 risk-based capital ratio 13.94%  14.26%  15.23%
    Tier 1 risk-based capital ratio 13.94%  14.26%  15.23%
    Total risk-based capital ratio 15.56%  15.92%  16.30%

                                                          

    (1)    Represents a non-GAAP financial measure. See non-GAAP reconciliations below.


    NATIONAL BANK HOLDINGS CORPORATION
    Loan Portfolio
    (Dollars in thousands)

    Period End Loan Balances by Type

                 
         March 31, 2022   March 31, 2022
         vs. December 31,
    2021
       vs. March 31,
    2021
     March 31, 2022 December 31, 2021 % Change March 31, 2021 % Change
    Originated:            
    Commercial:            
    Commercial and industrial$ 1,551,447 $1,479,895 4.8% $1,395,461 11.2%
    Municipal and non-profit  949,125  928,705 2.2%  850,663 11.6%
    Owner-occupied commercial real estate  554,345  503,663 10.1%  476,625 16.3%
    Food and agribusiness  205,899  200,412 2.7%  178,419 15.4%
    Total commercial  3,260,816  3,112,675 4.8%  2,901,168 12.4%
    Commercial real estate non-owner occupied  634,928  611,765 3.8%  553,184 14.8%
    Residential real estate  626,763  616,135 1.7%  604,001 3.8%
    Consumer  17,321  17,336 (0.1)%  17,671 (2.0)%
    Total originated  4,539,828  4,357,911 4.2%  4,076,024 11.4%
                 
    Acquired:            
    Commercial:            
    Commercial and industrial  15,800  16,252 (2.8)%  20,405 (22.6)%
    Municipal and non-profit  335  340 (1.5)%  370 (9.5)%
    Owner-occupied commercial real estate  21,329  29,973 (28.8)%  50,607 (57.9)%
    Food and agribusiness  2,976  3,177 (6.3)%  4,129 (27.9)%
    Total commercial  40,440  49,742 (18.7)%  75,511 (46.4)%
    Commercial real estate non-owner occupied  46,431  52,964 (12.3)%  81,176 (42.8)%
    Residential real estate  47,314  52,521 (9.9)%  70,141 (32.5)%
    Consumer  225  245 (8.2)%  394 (42.9)%
    Total acquired  134,410  155,472 (13.5)%  227,222 (40.8)%
    Total loans$ 4,674,238 $4,513,383 3.6% $4,303,246 8.6%


    Loan Fundings(1)

                   
     First quarter Fourth quarter Third quarter Second quarter First quarter
     2022 2021 2021 2021 2021
    Commercial:              
    Commercial and industrial$ 169,168 $229,529 $196,289 $147,030 $144,531 
    Municipal and non-profit  49,906  101,450  43,516  25,131  7,999 
    Owner occupied commercial real estate  67,597  28,914  53,445  48,225  27,093 
    Food and agribusiness  18,620  11,016  8,442  26,956  (10,104)
    Total commercial  305,291  370,909  301,692  247,342  169,519 
    Commercial real estate non-owner occupied  63,416  46,128  55,392  58,532  49,195 
    Residential real estate  49,040  55,873  54,442  53,962  74,145 
    Consumer  1,904  2,524  1,810  2,267  1,353 
    Total$ 419,651 $475,434 $413,336 $362,103 $294,212 

                                                          

    (1)    Loan fundings are defined as closed end funded loans and net fundings under revolving lines of credit. Net fundings (paydowns) under revolving lines of credit were $66,430, $138,777, $29,154, $59,520 and ($26,395) as of the first quarter of 2022 and the fourth, third, second and first quarter of 2021, respectively.


    NATIONAL BANK HOLDINGS CORPORATION
    Summary of Net Interest Margin
    (Dollars in thousands)

                                
      For the three months ended  For the three months ended For the three months ended
      March 31, 2022 December 31, 2021 March 31, 2021
      Average          Average    Average          Average    Average          Average
      balance Interest rate balance Interest rate balance Interest rate
    Interest earning assets:                           
    Originated loans FTE(1)(2) $ 4,361,919  $ 42,085  3.91% $4,296,318  $43,066  3.98% $4,004,994  $39,560  4.01%
    Acquired loans   147,638    2,568  7.05%  172,567   4,493  10.33%  238,468   5,128  8.72%
    Loans held for sale   93,639    756  3.27%  166,470   1,214  2.89%  231,521   1,517  2.66%
    Investment securities available-for-sale   751,646    2,849  1.52%  689,994   2,560  1.48%  686,731   2,485  1.45%
    Investment securities held-to-maturity   589,830    2,012  1.36%  637,250   1,994  1.25%  421,119   1,416  1.34%
    Other securities   14,590    209  5.73%  14,590   209  5.73%  15,818   210  5.31%
    Interest earning deposits and securities purchased under agreements to resell   743,239    359  0.20%  678,729   264  0.15%  639,273   165  0.10%
    Total interest earning assets FTE(2) $ 6,702,501  $ 50,838  3.08% $6,655,918  $53,800  3.21% $6,237,924  $50,481  3.28%
    Cash and due from banks $ 79,383        $79,058        $81,253       
    Other assets   442,098         460,664         495,222       
    Allowance for credit losses   (49,584)        (49,069)        (58,915)      
    Total assets $ 7,174,398        $7,146,571        $6,755,484       
    Interest bearing liabilities:                           
    Interest bearing demand, savings and money market deposits $ 2,936,158  $ 1,437  0.20% $2,847,562  $1,500  0.21% $2,645,487  $1,652  0.25%
    Time deposits   821,814    1,094  0.54%  851,779   1,312  0.61%  967,447   2,335  0.98%
    Securities sold under agreements to repurchase   22,770    7  0.12%  20,420   7  0.14%  21,377   5  0.09%
    Long-term debt   39,489    326  3.35%  24,599   196  3.16%       0.00%
    Total interest bearing liabilities $ 3,820,231  $ 2,864  0.30% $3,744,360  $3,015  0.32% $3,634,311  $3,992  0.45%
    Demand deposits $ 2,434,198        $2,459,063        $2,165,868       
    Other liabilities   78,027         94,345         120,607       
    Total liabilities   6,332,456         6,297,768         5,920,786       
    Shareholders' equity   841,942         848,803         834,698       
    Total liabilities and shareholders' equity $ 7,174,398        $7,146,571        $6,755,484       
    Net interest income FTE(2)    $ 47,974       $50,785       $46,489   
    Interest rate spread FTE(2)        2.78%        2.89%        2.83%
    Net interest earning assets $ 2,882,270        $2,911,558        $2,603,613       
    Net interest margin FTE(2)        2.90%        3.03%        3.02%
    Average transaction deposits $ 5,370,356        $5,306,625        $4,811,355       
    Average total deposits   6,192,170         6,158,404         5,778,802       
    Ratio of average interest earning assets to average interest bearing liabilities  175.45%         177.76%         171.64%       

                                                          

    (1)    Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.
    (2)    Presented on a fully taxable equivalent basis using the statutory tax rate of 21%. The tax equivalent adjustments included above are $1,313, $1,299 and $1,268 for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively.


    NATIONAL BANK HOLDINGS CORPORATION
    Allowance for Credit Losses and Asset Quality
    (Dollars in thousands)

    Allowance for Credit Losses Analysis

             
     As of and for the three months ended
     March 31, 2022 December 31, 2021 March 31, 2021
    Beginning allowance for credit losses$ 49,694  $49,155  $59,777 
    Charge-offs  (634)  (268)  (302)
    Recoveries  75   72   182 
    Provision (release) expense  (325)  735   (4,600)
    Ending allowance for credit losses ("ACL")$ 48,810  $49,694  $55,057 
    Ratio of annualized net charge-offs to average total loans during the period 0.05%   0.02%   0.01% 
    Ratio of ACL to total loans outstanding at period end 1.04%   1.10%   1.28% 
    Ratio of ACL to total non-performing loans at period end 440.01%   458.77%   336.25% 
    Total loans$ 4,674,238  $4,513,383  $4,303,246 
    Average total loans during the period  4,520,205   4,490,391   4,277,481 
    Total non-performing loans  11,093   10,832   16,374 


    Past Due and Non-accrual Loans

             
     March 31, 2022 December 31, 2021 March 31, 2021
    Loans 30-89 days past due and still accruing interest$ 3,034 $1,687 $1,867
    Loans 90 days past due and still accruing interest  389  420  1,021
    Non-accrual loans  11,093  10,832  16,374
    Total past due and non-accrual loans$ 14,516 $12,939 $19,262
    Total 90 days past due and still accruing interest and non-accrual loans to total loans 0.25%  0.25%  0.40%


    Asset Quality Data

             
     March 31, 2022 December 31, 2021 March 31, 2021
    Non-performing loans$ 11,093 $10,832 $16,374
    OREO  5,063  7,005  5,669
    Other repossessed assets     17
    Total non-performing assets$ 16,156 $17,837 $22,060
    Accruing restructured loans$ 4,979 $7,186 $13,822
    Total non-performing loans to total loans 0.24%  0.24%  0.38%
    Total non-performing assets to total loans and OREO 0.35%  0.39%  0.51%


    NATIONAL BANK HOLDINGS CORPORATION
    Key Ratios(1)

          
     As of and for the three months ended
     March 31,     December 31,     March 31, 
     2022    2021    2021
    Return on average assets1.04% 1.26% 1.61%
    Return on average tangible assets(2)1.07% 1.30% 1.65%
    Return on average equity8.84% 10.64% 13.03%
    Return on average tangible common equity(2)10.31% 12.37% 15.20%
    Loan to deposit ratio (end of period)73.44% 72.47% 71.70%
    Non-interest bearing deposits to total deposits (end of period)40.14% 40.24% 38.25%
    Net interest margin(3)2.82% 2.95% 2.94%
    Net interest margin FTE(2)(3)2.90% 3.03% 3.02%
    Interest rate spread FTE(2)(4)2.78% 2.89% 2.83%
    Yield on earning assets(5)3.00% 3.13% 3.20%
    Yield on earning assets FTE(2)(5)3.08% 3.21% 3.28%
    Cost of interest bearing liabilities(5)0.30% 0.32% 0.45%
    Cost of deposits0.17% 0.18% 0.28%
    Non-interest income to total revenue FTE(2)28.43% 31.37% 41.78%
    Non-interest expense to average assets2.49% 2.47% 2.98%
    Efficiency ratio66.63% 60.81% 62.83%
    Efficiency ratio FTE(2)65.32% 59.74% 61.83%
          
    Total Loans Asset Quality Data(6)(7)(8)     
    Non-performing loans to total loans0.24% 0.24% 0.38%
    Non-performing assets to total loans and OREO0.35% 0.39% 0.51%
    Allowance for credit losses to total loans1.04% 1.10% 1.28%
    Allowance for credit losses to non-performing loans440.01% 458.77% 336.25%
    Net charge-offs to average loans(1)0.05% 0.02% 0.01%

                                                          

    (1)    Ratios are annualized.
    (2)    Ratio represents non-GAAP financial measure. See non-GAAP reconciliations below.
    (3) Net interest margin represents net interest income, including accretion income on interest earning assets, as a percentage of average interest earning assets.
    (4)    Interest rate spread represents the difference between the weighted average yield on interest earning assets and the weighted average cost of interest bearing liabilities.
    (5) Interest earning assets include assets that earn interest/accretion or dividends. Any market value adjustments on investment securities or loans are excluded from interest earning assets.
    (6) Non-performing loans consist of non-accruing loans and restructured loans on non-accrual.
    (7) Non-performing assets include non-performing loans and other real estate owned.
    (8) Total loans are net of unearned discounts and fees.


    NATIONAL BANK HOLDINGS CORPORATION
    NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
    (Dollars in thousands, except share and per share data)

    Tangible Common Book Value Ratios

              
      March 31, 2022 December 31, 2021 March 31, 2021
    Total shareholders' equity $ 820,215  $840,106  $831,990 
    Less: goodwill and core deposit intangible assets, net   (121,096)  (121,392)  (122,280)
    Add: deferred tax liability related to goodwill   10,298   10,070   9,384 
    Tangible common equity (non-GAAP) $ 709,417  $728,784  $719,094 
              
    Total assets $ 7,341,512  $7,214,011  $6,949,501 
    Less: goodwill and core deposit intangible assets, net   (121,096)  (121,392)  (122,280)
    Add: deferred tax liability related to goodwill   10,298   10,070   9,384 
    Tangible assets (non-GAAP) $ 7,230,714  $7,102,689  $6,836,605 
              
    Tangible common equity to tangible assets calculations:         
    Total shareholders' equity to total assets  11.17%   11.65%   11.97% 
    Less: impact of goodwill and core deposit intangible assets, net  (1.36)%   (1.39)%   (1.45)% 
    Tangible common equity to tangible assets (non-GAAP)  9.81%   10.26%   10.52% 
              
    Tangible common book value per share calculations:         
    Tangible common equity (non-GAAP) $ 709,417  $728,784  $719,094 
    Divided by: ending shares outstanding   30,008,781   29,958,764   30,715,790 
    Tangible common book value per share (non-GAAP) $ 23.64  $24.33  $23.41 
              
    Tangible common book value per share, excluding accumulated other comprehensive income calculations:         
    Tangible common equity (non-GAAP) $ 709,417  $728,784  $719,094 
    Accumulated other comprehensive loss (income), net of tax   38,633   6,963   (485)
    Tangible common book value, excluding accumulated other comprehensive loss (income), net of tax (non-GAAP)   748,050   735,747   718,609 
    Divided by: ending shares outstanding   30,008,781   29,958,764   30,715,790 
    Tangible common book value per share, excluding accumulated other comprehensive loss (income), net of tax (non-GAAP) $ 24.93  $24.56  $23.40 


    NATIONAL BANK HOLDINGS CORPORATION
    (Dollars in thousands, except share and per share data)

    Return on Average Tangible Assets and Return on Average Tangible Equity

              
      As of and for the three months ended
      March 31,     December 31,     March 31, 
      2022
        2021     2021 
    Net income $ 18,352  $22,769  $26,812 
    Add: impact of core deposit intangible amortization expense, after tax   227   227   228 
    Net income adjusted for impact of core deposit intangible amortization expense, after tax $ 18,579  $22,996  $27,040 
              
    Average assets $ 7,174,398  $7,146,571  $6,755,484 
    Less: average goodwill and core deposit intangible asset, net of deferred tax liability related to goodwill   (110,973)  (111,508)  (113,074)
    Average tangible assets (non-GAAP) $ 7,063,425  $7,035,063  $6,642,410 
              
    Average shareholders' equity $ 841,942  $848,803  $834,698 
    Less: average goodwill and core deposit intangible asset, net of deferred tax liability related to goodwill   (110,973)  (111,508)  (113,074)
    Average tangible common equity (non-GAAP) $ 730,969  $737,295  $721,624 
              
    Return on average assets  1.04%   1.26%   1.61% 
    Return on average tangible assets (non-GAAP)  1.07%   1.30%   1.65% 
    Return on average equity  8.84%   10.64%   13.03% 
    Return on average tangible common equity (non-GAAP)  10.31%   12.37%   15.20% 


    Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

              
      As of and for the three months ended
      March 31, December 31, March 31,
      2022
     2021 2021
    Interest income $ 49,525    $52,501    $49,213
    Add: impact of taxable equivalent adjustment   1,313  1,299  1,268
    Interest income FTE (non-GAAP) $ 50,838 $53,800 $50,481
              
    Net interest income $ 46,661 $49,486 $45,221
    Add: impact of taxable equivalent adjustment   1,313  1,299  1,268
    Net interest income FTE (non-GAAP) $ 47,974 $50,785 $46,489
              
    Average earning assets $ 6,702,501 $6,655,918 $6,237,924
    Yield on earning assets  3.00%  3.13%  3.20%
    Yield on earning assets FTE (non-GAAP)  3.08%  3.21%  3.28%
    Net interest margin  2.82%  2.95%  2.94%
    Net interest margin FTE (non-GAAP)  2.90%  3.03%  3.02%


    Efficiency Ratio

              
      As of and for the three months ended
         March 31,    December 31,    March 31,
         2022
        2021    2021
    Net interest income $ 46,661  $49,486  $45,221 
    Add: impact of taxable equivalent adjustment   1,313   1,299   1,268 
    Net interest income, FTE (non-GAAP) $ 47,974  $50,785  $46,489 
              
    Non-interest income $ 19,054  $23,215  $33,361 
              
    Non-interest expense $ 44,082  $44,505  $49,668 
    Less: core deposit intangible asset amortization   (296)  (296)  (296)
    Non-interest expense, adjusted for core deposit intangible asset amortization $ 43,786  $44,209  $49,372 
              
    Efficiency ratio  66.63%   60.81%   62.83% 
    Efficiency ratio FTE (non-GAAP)  65.32%   59.74%   61.83% 

     

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    National Bank Holdings Corporation Announces First Quarter 2022 Financial Results and Agreement to Acquire Rock Canyon Bank: National Bank Holdings Corporation Announces First Quarter 2022 Financial Results and Agreement to Acquire Rock Canyon Bank


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