EX-99.1 2 nbhc-20160721ex991f9bfdf.htm EX-99.1 nbhc_Ex99_1

 

                                                                                                                                                                                              

Exhibit 99.1

Picture 2

National Bank Holdings Corporation Announces Record Second Quarter 2016 Financial Results

 

Greenwood Village, Colorado - (PR Newswire) – National Bank Holdings Corporation (NYSE: NBHC) reported record net income of $4.5 million, or $0.15 per diluted share, for the second quarter of 2016, compared to net income of $0.3 million, or $0.01 per diluted share, for the first quarter of 2016 and a net loss of $1.3 million, or $0.04 per diluted share, for the second quarter of 2015. The return on average assets and return on average equity for the second quarter of 2016 was 0.38% and 3.01%, respectively, compared to 0.02% and 0.16% for the first quarter of 2016, respectively, and (0.11)% and (0.72)% for the second quarter of 2015, respectively.

 

The return on average tangible assets and return on average tangible equity for the second quarter of 2016 was 0.45% and 3.98%, respectively, compared to 0.10% and 0.79% for the  first quarter of 2016, respectively, and (0.04)% and (0.31)% for the second quarter of 2015, respectively.

 

In announcing these results, Chief Executive Officer Tim Laney shared, “We are pleased to have delivered a record level of earnings and loan originations during the quarter while realizing a solid reduction in our expense run rate. Record earnings were realized despite continued headwinds from energy exposure and the continued reduction of the acquired problem loan portfolio. During the quarter, we took an additional net allowance of $4.3 million against previously identified energy loans. Outside of energy, our originated loan portfolio continues to exhibit excellent credit quality with second quarter annualized net charge offs of just 2 basis points.”

 

Mr. Laney added, “We continue to grow our young company with a focus on safety and soundness while moving toward our financial goal of realizing $2.00 of earnings per share and a return on tangible assets of 1% or greater. We also continued to capitalize on the opportunity to repurchase our shares by executing share buybacks year-to-date through July 20th of 1.8 million shares at a weighted average price of $19.68.”

 

Second Quarter 2016 Highlights

(All comparisons refer to the first quarter of 2016, except as noted)

·

At June 30, 2016, loans totaled $2.7 billion and increased $146.5 million, or 22.7% annualized, on the strength of record originations of $316.9 million. Total loans at June 30, 2016 increased $410.0 million, or 17.6%, since June 30, 2015.

·

Fully taxable equivalent net interest income totaled $35.8 million and decreased $3.2 million, primarily driven by $2.5 million lower 310-30 accretion income.

·

Net charge-offs in the non 310-30 portfolio were 0.58%, annualized of average non 310-30 loans during the second quarter, compared to 0.10%, annualized in the prior quarter. Net charge-offs excluding non 310-30 energy sector loans were 0.02%, annualized during the second quarter.

·

Continued weakness in one previously impaired energy sector client drove a net increase of $4.3 million in the energy sector provision for loan losses, or a negative $0.10 per share, resulting in a total allowance for loan losses on energy sector loans of 14.8%. 

·

Total deposits averaged $4.0 billion and increased $161.9 million. Adjusting for a short-term money market deposit from one energy client, average deposits totaled $3.8 billion, consistent with prior quarter. Average demand deposits continued solid growth, adding $28.7 million, or 14.6% annualized.

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·

Non-interest income totaled $10.5 million, increasing $2.6 million, driven primarily by a $1.8 million gain on the sale of a building, and a $0.4 million increase in service charges and bank card fees.

·

Non-interest expense totaled $33.3 million, decreasing $1.6 million, due to lower salaries and benefits of $1.0 million and higher OREO gains of $1.2 million, partially offset by a net increase of $0.6 million in other expense categories due to timing of professional fees and marketing campaigns.

·

Executed share buybacks during the second quarter of 555 thousand shares, or $11.0 million, and year-to-date through July 20th of 1.8 million shares, or $34.6 million at a weighted average price of $19.68.

·

At June 30, 2016, common book value per share was $20.79, while tangible common book value per share was $18.68 and $19.67 after consideration of the excess accretable yield value of $0.99 per share.

 

Second Quarter 2016 Results

(All comparisons refer to the first quarter of 2016, except as noted)

 

Net Interest Income

Fully taxable equivalent net interest income totaled $35.8 million, a $3.2 million decrease primarily driven by $2.5 million lower 310-30 accretion income resulting in a 3.80% lower yield on the 310-30 portfolio. The lower level of 310-30 accretion income resulted from lower amounts of accelerated accretion on 310-30 loans and extension of future estimated cash flows from the quarterly re-measurement. In addition, slightly lower yields on the non 310-30 portfolio contributed to $0.5 million of the net interest income decrease. The fully taxable equivalent net interest margin of 3.26% decreased 0.42% primarily driven by a 0.26% impact from the lower 310-30 accretion income and a 0.14% impact from lower-yielding short-term investments. The higher level of low-yielding short-term investments during the quarter was driven by temporary client funds on deposit from one energy client.

 

Loans

Total loans ended the quarter at $2.7 billion, increasing $146.5 million, or 22.7% annualized, driven by record new loan originations of $316.9 million. Originated loans outstanding totaled $2.4 billion and increased $169.9 million, or 30.7% annualized. The second quarter new loan originations totaled $316.9 million and increased $153.5 million, or 93.9%, compared to the prior quarter, and $45.5 million, or 16.8%, compared to the second quarter of the prior year.

 

Asset Quality and Provision for Loan Losses

Non 310-30 loans totaled $2.6 billion and represented 93.8% of total loans at June 30, 2016. These loans are comprised of originated loans and acquired loans not accounted for under 310-30. Net charge-offs within the non 310-30 portfolio totaled 0.58%, annualized, increasing from 0.10%, annualized in the prior quarter, driven by a $3.4 million previously reserved charge-off on a resolved energy sector loan. Excluding the energy sector charge-off, net charge-offs within the non-310-30 portfolio totaled 0.02%, annualized during the quarter. Non-performing non 310-30 loans (comprised of non-accrual loans and non-accrual TDRs) represented 1.46% of total non 310-30 loans, compared to 1.87% at March 31, 2016, the decrease was driven by one energy sector credit totaling $6.2 million that was settled during the quarter. Outside of the energy sector, the loan portfolio credit profile remains strong as evidenced by the non-performing loans to total loans ratio of 0.44%, decreasing from 0.52% in the prior quarter. Furthermore, the classified ratio for the loan portfolio, outside of the energy sector, improved from 1.4% of non 310-30 loans as of March 31, 2016 to 1.3% as of June 30, 2016.

 

A provision for loan losses on the non 310-30 loans of $6.4 million was recorded during the second quarter of 2016, driven by net increases in the energy sector provision of $4.3 million. The non 310-30 allowance for loan losses was 1.55% of total non 310-30 loans compared to 1.53% in the prior quarter. Excluding the energy portfolio, the non 310-30 allowance for loan losses was 0.99% of total non 310-30 loans compared to 0.98% in the prior quarter.

 

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Energy sector loan balances totaled $104.7 million at June 30, 2016, representing 3.8% of total loans, 2.4% of earning assets and 20.1% of the Company’s risk based capital, and decreased from $132.1 million, or 20.8%, from the prior quarter. Of the $104.7 million energy sector loans, $55.0 million, or 52.6%, related to the midstream sector, $33.2 million, or 31.7%, related to the E&P sector and $16.5 million, or 15.7%, related to the energy services sector. Three energy sector loans with balances of $25.8 million were on non-accrual at June 30, 2016, with no new non-accruals added during the quarter. The total allowance for loan losses on the energy sector portfolio was 14.8% compared to 11.0% at prior quarter end.

 

Acquired problem loans accounted for under 310-30 totaled $169.3 million at June 30, 2016 and decreased $10.2 million during the second quarter, an annualized decrease of 22.9%, reflecting continued successful workout efforts on these acquired loans. The quarterly fair value re-measurement on the 310-30 loans resulted in a favorable net transfer of $0.5 million from non-accretable difference to accretable yield, which will be recognized over the lives of the 310-30 pools. This increased the life-to-date economic benefit of the accretable yield transfers net of impairments on 310-30 loans to $206.1 million.

 

Deposits

Total deposits averaged $4.0 billion during the second quarter, increasing $161.9 million, driven by a $167.5 million increase in transaction deposits (defined as total deposits less time deposits) which averaged $2.8 billion during the second quarter. Average non-interest bearing demand deposits increased $28.7 million, or 14.6% annualized, primarily driven by the growth of our small and mid-sized business clients. Other average interest bearing transaction deposits increased $138.8 million, driven by short-term money market deposits from one energy client. Adjusting for a short-term money market deposit with one client, average transaction deposits totaled $2.6 billion, consistent with the prior quarter. The average cost of total deposits increased one basis point to 0.36% compared to the prior quarter. The balance sheet continues to be strongly funded by client deposits and client repurchase agreements, and at June 30, 2016, these client fundings comprised 97.5% of total liabilities.

 

Non-Interest Income

Non-interest income totaled $10.5 million in the second quarter of 2016, increasing $2.6 million. The increase was primarily due to a $1.8 million gain on the sale of a building, a $0.4 million increase in service charges, bank card fees and gain on sale of mortgages, a $0.2 million lower mark-to-market adjustment related to fair value interest rate swaps on fixed-rate term loans, and a combined $0.2 million increase from bank-owned life insurance income and other income.

 

Non-Interest Expense

Non-interest expense totaled $33.3 million, decreasing $1.6 million, or 4.5%, due to lower salaries and benefits of $1.0 million and higher OREO gains of $1.2 million, partially offset by a net increase of $0.6 million in other expense categories due to timing of professional fees and marketing campaigns.

 

Capital

Capital ratios continue to be strong and in excess of federal bank regulatory agency “well capitalized” thresholds. Shareholders’ equity totaled $598.9 million at June 30, 2016 and decreased $5.0 million from prior quarter end. The decrease in equity is due to share repurchases of $11.0 million, offset by net income of $4.5 million and a $2.7 million increase in accumulated other comprehensive income which was driven by the fair market value fluctuations of the available-for-sale investment securities portfolio.

 

Book value per share was $20.79 at June 30, 2016 and increased $0.14 from prior quarter end. Tangible common book value per share increased to $18.68 at June 30, 2016 from $18.51 at prior quarter end, driven by a $0.10 per share increase from net income, net of dividends, coupled with a $0.09 increase in accumulated other comprehensive income, offset by $0.02 of other items. The tangible common equity to tangible assets ratio decreased to 11.78% at June 30, 2016 from 11.89%, driven by share repurchases of $11.0 million. The leverage ratio at June 30, 2016 for the consolidated company and the Bank was 11.04% and 8.30%, respectively.

 

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Share buybacks during the second quarter totaled 555 thousand shares, or $11.0 million, at a weighted average price of $19.77. Year-to-date share buybacks through July 20th totaled 1.8 million shares, or $34.6 million, at a weighted average price of $19.68. Since early 2013, we have repurchased 45.7% of our shares outstanding, at a weighted average price of $19.87.

 

A common convention in the industry is to add the value of the accretable yield to the tangible book value per share. The value of the June 30, 2016 accretable yield balance on the 310-30 loans of $67.8 million would add $1.43 after-tax to the tangible book value per share. A more conservative methodology that management uses values the excess yield above a 4.0% yield (an approximate yield on new loan originations) and then considers the timing of the excess accreted interest income recognition discounted at 5%. This would add $0.99 after-tax to our tangible book value per share as of June 30, 2016, resulting in a tangible common book value per share of $19.67.

Year-Over-Year Review

(All comparisons refer to the first six months of 2015, except as noted)

 

Net income for first six months of 2016 was $4.8 million, or $0.16 per diluted share, compared to a net loss of $0.1 million, or $0.00 per diluted share for the first six months of 2015. Fully taxable equivalent net interest income totaled $74.8 million and decreased $4.5 million, or 5.6%. Lower levels of higher-yielding 310-30 loans and investment portfolio paydowns decreased interest income $11.0 million and was partially offset by a $6.4 million increase in non 310-30 interest income from new loan originations. The fully taxable equivalent net interest margin narrowed 9 basis points to 3.47% from 3.56% due to higher levels of low-yielding short-term investments from short-term client funds on deposit in money market accounts.

Loan balances at June 30, 2016 totaled $2.7 billion and increased $410.0 million, or 17.6%, on the strength of $972.1 million in loan originations between the two periods. The strong loan originations were the result of continued market penetration. The acquired 310-30 loan portfolio declined $72.0 million, or 29.8%, as a result of the continued successful workout efforts that have been made on exiting acquired problem loans.

Total deposits and client repurchase agreements averaged $4.0 billion during the first six months of 2016, decreasing $7.0 million from the prior year as the increase in average transaction deposits of $250.1 million was offset by lower average time deposits of $134.0 million and lower average client repurchase agreements of $123.1 million. Transaction deposits averaged $2.7 billion during the first six months of 2016 and increased $250.1 million, or 10.1%. The increase was driven by higher average demand deposits of $61.8 million, or 8.3%, coupled with an increase in other low-cost transaction deposits of $188.3 million, or 10.9%. The mix of transaction deposits to total deposits improved to 69.1% at June 30, 2016 from 66.3% in the prior year. Additionally, the average cost of total deposits declined two basis point to 0.35%, resulting from the decrease in higher-cost time deposits. 

Provision for loan loss expense was $17.1 million during the first six months of 2016, compared to $3.3 million, an increase of $13.8 million driven by a $15.0 million increase in energy sector provision for loan losses. The non 310-30 allowance for loan losses ended the quarter at 1.55% of total non 310-30 loans compared to 0.93% in the prior year, increasing primarily due to higher reserves for the energy sector loans. At quarter end, the energy sector allowance for loan losses totaled 14.8% of energy loan balances. Excluding the energy reserves, the non 310-30 allowance was 0.99% of total non 310-30 loans compared to 1.00% at June 30, 2015. Net charge-offs on non 310-30 loans totaled 0.34%, annualized, compared to 0.06%, annualized. Excluding the energy portfolio, net charge-offs on non 310-30 loans were 0.06%, annualized, in the first six months of 2016.

Non-interest income was $18.4 million during the first six months of 2016, compared to $2.3 million in the prior year, an increase of $16.1 million. The increase was driven by negative $14.6 million of FDIC-related income in the prior year coupled with a $1.8 million gain on sale of a building this year. Bank card fees grew $0.5 million on the strength of interchange activity, offset by $0.3 million lower service charges due to lower instances of overdrafts, in addition to a lower mark-to-market adjustment related to fair value interest rate swaps on fixed-rate term loans of $0.5 million.

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Non-interest expense totaled $68.2 million during the first six months of 2016, decreasing $8.9 million or 11.5%. The decrease was partially due to lower salaries and benefits of $1.0 million, lower professional fees of $0.6 million and lower occupancy and equipment of $0.4 million. Other non-interest expenses were also lower $4.1 million, primarily due to lower telecommunications and data processing expense benefiting from the core system conversion and lower marketing expense. Problem asset workout expenses decreased $1.7 million compared to the prior year consistent with the decrease in acquired problem credits. Additionally, the prior period included banking center consolidation related expenses of $1.1 million and warrant liability expenses of $0.1 million.

Conference Call

Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Friday, July 22, 2016. Interested parties may listen to this call by dialing (877) 272-6762 (United States) / (615) 800-6832 (International) using the Conference ID of 92236155 and asking for the National Bank Holdings Corporation Second Quarter Earnings conference call. A telephonic replay of the call will be available beginning approximately two hours after the call’s completion through August 5, 2016, by dialing (855) 859-2056 (United States) / (404) 537-3406 (International) using the Conference ID of 92236155. The earnings release will also be available on the Company’s website at www.nationalbankholdings.com by visiting the investor relations area.

 

About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including “tangible assets,” “return on average tangible assets,” “return on average tangible assets before provision for loan losses and taxes,” “return on average tangible common equity,” “tangible common book value,” “tangible common book value per share,” “tangible common equity,” “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 are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. 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.

 

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 customer service and committed to shareholder results. National Bank Holdings Corporation operates a network of 91 banking centers located in Colorado, the greater Kansas City region and Texas. Through the Company’s subsidiary, NBH Bank, it operates under the following brand names: Bank Midwest in Kansas and Missouri, Community Banks of Colorado in Colorado and Hillcrest Bank in Texas. Additional information about National Bank Holdings Corporation can be found at www.nationalbankholdings.com.

 

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For more information visit: bankmw.com, cobnks.com, hillcrestbank.com or nbhbank.com. Or, follow us on any of our social media sites:

Bank Midwest: facebook.com/bankmw, twitter.com/bank_mw, instagram.com/bankmw;

Community Banks of Colorado: facebook.com/cobnks, twitter.com/cobnks, instagram.com/cobnks;

Hillcrest Bank: facebook.com/hillcrestbank, twitter.com/hillcrest_bank;

NBH Bank: twitter.com/nbhbank;

or connect with any of our brands on LinkedIn.

 

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 additional factors: ability to execute our business strategy; business and economic conditions; 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; the Company’s ability to identify potential candidates for, consummate, integrate and realize operating efficiencies from, acquisitions; the Company's ability to realize the anticipated benefits from converted core operating systems 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; 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; the Company’s continued ability to attract 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 loan reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; widespread natural and other disasters, dislocations, political instability, acts of war or terrorist activities, cyberattacks or international hostilities; 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: Brian Lilly, Chief Financial Officer; Chief of M&A and Strategy, (720) 529-3315, ir@nationalbankholdings.com

Media: Whitney Bartelli, Chief Marketing Officer, (816) 298-2203, media@nbhbank.com

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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

 

For the six months ended

 

June 30, 

    

March 31, 

    

June 30, 

    

June 30, 

    

June 30, 

 

2016

 

2016

 

2015

 

2016

 

2015

Total interest and dividend income

$

38,472

 

$

41,554

 

$

42,517

 

$

80,026

 

$

85,604

Total interest expense

 

3,719

 

 

3,516

 

 

3,662

 

 

7,235

 

 

7,270

Net interest income

 

34,753

 

 

38,038

 

 

38,855

 

 

72,791

 

 

78,334

Taxable equivalent adjustment

 

1,037

 

 

975

 

 

550

 

 

2,013

 

 

945

Net interest income fully taxable equivalent (FTE)(1)

 

35,790

 

 

39,013

 

 

39,405

 

 

74,804

 

 

79,279

Provision (recoupment) for loan losses on 310-30 loans

 

57

 

 

(862)

 

 

8

 

 

(805)

 

 

58

Provision for loan losses on non 310-30 loans

 

6,400

 

 

11,481

 

 

1,850

 

 

17,881

 

 

3,253

Net interest income after provision for loan losses FTE(1)

 

29,333

 

 

28,394

 

 

37,547

 

 

57,728

 

 

75,968

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges

 

3,465

 

 

3,260

 

 

3,697

 

 

6,725

 

 

7,024

Bank card fees

 

2,935

 

 

2,767

 

 

2,699

 

 

5,702

 

 

5,249

Gain on sale of mortgages, net

 

534

 

 

474

 

 

546

 

 

1,008

 

 

946

Other non-interest income

 

3,383

 

 

1,086

 

 

1,762

 

 

4,469

 

 

2,986

OREO related write-ups and other income

 

187

 

 

336

 

 

188

 

 

523

 

 

688

FDIC loss-sharing related

 

 —

 

 

 —

 

 

(6,145)

 

 

 —

 

 

(14,625)

Total non-interest income

 

10,504

 

 

7,923

 

 

2,747

 

 

18,427

 

 

2,268

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

19,612

 

 

20,612

 

 

21,156

 

 

40,224

 

 

41,233

Occupancy and equipment

 

5,708

 

 

6,066

 

 

6,069

 

 

11,774

 

 

12,158

Professional fees

 

978

 

 

456

 

 

962

 

 

1,434

 

 

2,082

Other non-interest expense

 

6,299

 

 

5,856

 

 

8,144

 

 

12,155

 

 

16,255

Problem asset workout

 

958

 

 

974

 

 

1,762

 

 

1,932

 

 

3,614

Gain on sale of OREO, net

 

(1,611)

 

 

(432)

 

 

(633)

 

 

(2,043)

 

 

(2,104)

Intangible asset amortization

 

1,370

 

 

1,370

 

 

1,336

 

 

2,740

 

 

2,672

Loss from change in fair value of warrant liability

 

 —

 

 

 —

 

 

508

 

 

 —

 

 

118

Banking center consolidation related expenses

 

 —

 

 

 —

 

 

1,089

 

 

 —

 

 

1,089

Total non-interest expense

 

33,314

 

 

34,902

 

 

40,393

 

 

68,216

 

 

77,117

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes FTE(1)

 

6,523

 

 

1,415

 

 

(99)

 

 

7,939

 

 

1,119

Taxable equivalent adjustment

 

1,037

 

 

975

 

 

550

 

 

2,013

 

 

945

Income (loss) before income taxes

 

5,486

 

 

440

 

 

(649)

 

 

5,926

 

 

174

Income tax expense

 

982

 

 

189

 

 

692

 

 

1,171

 

 

269

Net income (loss)

$

4,504

 

$

251

 

$

(1,341)

 

$

4,755

 

$

(95)

Income (loss) per share - basic

$

0.15

 

$

0.01

 

$

(0.04)

 

$

0.16

 

$

0.00

Income (loss) per share - diluted

$

0.15

 

$

0.01

 

$

(0.04)

 

$

0.16

 

$

0.00

                                                      

(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 35% for each period presented. See non-GAAP reconciliation starting on page 15.

 

 

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NATIONAL BANK HOLDINGS CORPORATION

Consolidated Statements of Financial Condition (Unaudited)

(Dollars in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2016

 

March 31, 2016

 

June 30, 2015

    

December 31, 2015

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

147,939

 

$

193,624

 

$

242,441

 

$

166,092

Securities purchased under agreements to resell

 

 —

 

 

 —

 

 

50,000

 

 

Investment securities available-for-sale

 

1,046,047

 

 

1,108,419

 

 

1,316,829

 

 

1,157,246

Investment securities held-to-maturity

 

381,172

 

 

404,578

 

 

472,605

 

 

427,503

Non-marketable securities

 

12,304

 

 

17,268

 

 

27,050

 

 

22,529

Loans

 

2,738,504

 

 

2,592,047

 

 

2,328,524

 

 

2,587,673

Allowance for loan losses

 

(40,106)

 

 

(37,166)

 

 

(20,241)

 

 

(27,119)

Loans, net

 

2,698,398

 

 

2,554,881

 

 

2,308,283

 

 

2,560,554

Loans held for sale

 

9,690

 

 

7,415

 

 

10,037

 

 

13,292

FDIC indemnification asset, net

 

 —

 

 

 —

 

 

23,215

 

 

 —

Other real estate owned

 

23,242

 

 

21,019

 

 

20,367

 

 

20,814

Premises and equipment, net

 

98,570

 

 

102,559

 

 

102,228

 

 

103,103

Goodwill

 

59,630

 

 

59,630

 

 

59,630

 

 

59,630

Intangible assets, net

 

9,689

 

 

11,059

 

 

14,210

 

 

12,429

Other assets

 

141,139

 

 

135,522

 

 

130,955

 

 

140,716

Total assets

$

4,627,820

 

$

4,615,974

 

$

4,777,850

 

$

4,683,908

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing demand deposits

$

831,891

 

$

805,442

 

$

777,727

 

$

815,054

Interest bearing demand deposits

 

416,192

 

 

429,298

 

 

389,270

 

 

436,745

Savings and money market

 

1,378,764

 

 

1,422,257

 

 

1,327,953

 

 

1,394,995

Total transaction deposits

 

2,626,847

 

 

2,656,997

 

 

2,494,950

 

 

2,646,794

Time deposits

 

1,174,098

 

 

1,182,684

 

 

1,267,539

 

 

1,193,883

Total deposits

 

3,800,945

 

 

3,839,681

 

 

3,762,489

 

 

3,840,677

Securities sold under agreements to repurchase

 

126,146

 

 

86,352

 

 

187,314

 

 

136,523

Federal Home Loan Bank advances

 

40,000

 

 

40,000

 

 

40,000

 

 

40,000

Other liabilities

 

61,819

 

 

46,018

 

 

69,781

 

 

49,164

Total liabilities

 

4,028,910

 

 

4,012,051

 

 

4,059,584

 

 

4,066,364

Shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

514

 

 

513

 

 

513

 

 

513

Additional paid in capital

 

996,855

 

 

997,243

 

 

994,454

 

 

997,926

Retained earnings

 

40,419

 

 

37,409

 

 

36,709

 

 

38,670

Treasury stock

 

(450,156)

 

 

(439,795)

 

 

(317,854)

 

 

(419,660)

Accumulated other comprehensive income, net of tax

 

11,278

 

 

8,553

 

 

4,444

 

 

95

Total shareholders' equity

 

598,910

 

 

603,923

 

 

718,266

 

 

617,544

Total liabilities and shareholders' equity

$

4,627,820

 

$

4,615,974

 

$

4,777,850

 

$

4,683,908

SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

Average basic shares outstanding

 

29,215,822

 

 

30,117,317

 

 

36,164,617

 

 

30,625,371

Average diluted shares outstanding

 

29,278,759

 

 

30,118,303

 

 

36,164,617

 

 

30,795,333

Ending shares outstanding

 

28,810,883

 

 

29,252,419

 

 

35,053,339

 

 

30,358,509

Common book value per share

$

20.79

 

$

20.65

 

$

20.49

 

$

20.34

Tangible common book value per share(1)

$

18.68

 

$

18.51

 

$

18.58

 

$

18.22

Tangible common book value per share, excluding accumulated other comprehensive income(1)

$

18.29

 

$

18.22

 

$

18.46

 

$

18.22

CAPITAL RATIOS

 

 

 

 

 

 

 

 

 

 

 

Average equity to average assets

 

12.57%

 

 

13.30%

 

 

15.24%

 

 

13.17%

Tangible common equity to tangible assets(1)

 

11.78%

 

 

11.89%

 

 

13.83%

 

 

11.98%

Leverage ratio

 

11.04%

 

 

11.55%

 

 

13.51%

 

 

11.75%

Tier 1 risk-based capital ratios

 

16.23%

 

 

17.08%

 

 

24.02%

 

 

17.48%

Total risk-based capital ratio

 

17.48%

 

 

18.31%

 

 

24.78%

 

 

18.37%

                                                      

(1)

Represents a non-GAAP financial measure. See non-GAAP reconciliation starting on page 15.

 

8

 


 

 

NATIONAL BANK HOLDINGS CORPORATION

Loan Portfolio Update

(Dollars in thousands)

 

Accounting Treatment Period End Loan Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2016 vs.

 

 

 

 

 

June 30, 2016 vs.

 

 

 

 

 

 

 

 

March 31, 2016

 

 

 

 

 

June 30, 2015

 

June 30, 2016

 

March 31, 2016

 

 

% Change

 

June 30, 2015

 

 

% Change

Non 310-30(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

1,015,858

 

$

908,904

 

 

11.8%

 

$

751,161

 

 

35.2%

Owner-occupied commercial real estate

 

191,668

 

 

192,736

 

 

(0.6)%

 

 

146,509

 

 

30.8%

Agriculture

 

131,685

 

 

139,716

 

 

(5.7)%

 

 

122,468

 

 

7.5%

Energy

 

104,663

 

 

132,100

 

 

(20.8)%

 

 

144,148

 

 

(27.4)%

Total commercial

 

1,443,874

 

 

1,373,456

 

 

5.1%

 

 

1,164,286

 

 

24.0%

Commercial real estate non owner-occupied

 

424,020

 

 

338,312

 

 

25.3%

 

 

270,376

 

 

56.8%

Residential Real Estate

 

674,830

 

 

674,348

 

 

0.1%

 

 

623,167

 

 

8.3%

Consumer

 

26,498

 

 

26,424

 

 

0.3%

 

 

29,400

 

 

(9.9)%

Total non 310-30

 

2,569,222

 

 

2,412,540

 

 

6.5%

 

 

2,087,229

 

 

23.1%

ASC 310-30:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

46,875

 

 

49,628

 

 

(5.5)%

 

 

75,259

 

 

(37.7)%

Commercial real estate non owner-occupied

 

101,719

 

 

108,003

 

 

(5.8)%

 

 

131,125

 

 

(22.4)%

Residential real estate

 

19,341

 

 

20,037

 

 

(3.5)%

 

 

31,162

 

 

(37.9)%

Consumer

 

1,347

 

 

1,839

 

 

(26.8)%

 

 

3,749

 

 

(64.1)%

Total ASC 310-30

 

169,282

 

 

179,507

 

 

(5.7)%

 

 

241,295

 

 

(29.8)%

Total loans

$

2,738,504

 

$

2,592,047

 

 

5.7%

 

$

2,328,524

 

 

17.6%

                                                      

(1)

Included in non 310-30 loans are originated loans of $2,392,887, $2,223,015, and $1,901,288 as of June 30, 2016, March 31, 2016, and June 30, 2015, respectively, and loans acquired under business combinations of $176,335, $189,525, and $185,941 as of June 30, 2016, March 31, 2016, and June 30, 2015, respectively.

 

Originations(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second quarter

 

First quarter

 

Fourth quarter

 

Third quarter

 

Second quarter

 

2016

 

2016

 

2015

 

2015

 

2015

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

142,179

 

$

59,361

 

$

122,664

 

$

134,189

 

$

135,654

Owner-occupied commercial real estate

 

17,883

 

 

10,399

 

 

13,395

 

 

12,095

 

 

17,566

Agriculture

 

18,072

 

 

10,375

 

 

24,194

 

 

11,295

 

 

19,019

Energy

 

(17,328)

 

 

(13,984)

 

 

1,075

 

 

17,245

 

 

11,667

Total commercial

 

160,806

 

 

66,151

 

 

161,328

 

 

174,824

 

 

183,906

Commercial real estate non owner-occupied

 

89,109

 

 

44,876

 

 

23,260

 

 

36,480

 

 

38,113

Residential real estate

 

63,815

 

 

49,722

 

 

50,387

 

 

36,808

 

 

44,699

Consumer

 

3,158

 

 

2,671

 

 

3,086

 

 

5,616

 

 

4,669

Total

$

316,888

 

$

163,420

 

$

238,061

 

$

253,728

 

$

271,387

                                                      

(1)

Originations equal, for each quarter, closed end funded loans and net fundings under revolving lines of credit.

 

 

9

 


 

 

NATIONAL BANK HOLDINGS CORPORATION

Summary of Net Interest Margin

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Three months ended 

 

Three months ended 

 

June 30, 2016

 

March 31, 2016

 

June 30, 2015

 

Average

    

    

 

 

Average

    

Average

    

    

 

 

Average

    

Average

    

    

 

 

Average

 

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASC 310-30 loans

$

174,415

 

$

7,762

 

 

17.80%

 

$

190,658

 

$

10,294

 

 

21.60%

 

$

243,694

 

$

11,772

 

 

19.32%

Non 310-30 loans(1)(2)(3)(4)

 

2,421,033

 

 

23,348

 

 

3.88%

 

 

2,401,257

 

 

23,637

 

 

3.96%

 

 

1,987,015

 

 

20,944

 

 

4.23%

Investment securities available-for-sale

 

1,072,976

 

 

4,954

 

 

1.85%

 

 

1,137,509

 

 

5,304

 

 

1.87%

 

 

1,367,746

 

 

6,338

 

 

1.85%

Investment securities held-to-maturity

 

395,027

 

 

2,804

 

 

2.84%

 

 

417,945

 

 

2,931

 

 

2.81%

 

 

491,155

 

 

3,426

 

 

2.79%

Other securities

 

14,936

 

 

192

 

 

5.14%

 

 

18,804

 

 

228

 

 

4.85%

 

 

27,049

 

 

317

 

 

4.69%

Interest earning deposits and securities purchased under agreements to resell

 

337,426

 

 

449

 

 

0.54%

 

 

95,049

 

 

135

 

 

0.57%

 

 

360,209

 

 

270

 

 

0.30%

Total interest earning assets(4)

$

4,415,813

 

$

39,509

 

 

3.60%

 

$

4,261,222

 

$

42,529

 

 

4.01%

 

$

4,476,868

 

$

43,067

 

 

3.86%

Cash and due from banks

$

71,162

 

 

 

 

 

 

 

$

71,265

 

 

 

 

 

 

 

$

56,400

 

 

 

 

 

 

Other assets

 

333,855

 

 

 

 

 

 

 

 

328,814

 

 

 

 

 

 

 

 

354,758

 

 

 

 

 

 

Allowance for loan losses

 

(37,532)

 

 

 

 

 

 

 

 

(28,505)

 

 

 

 

 

 

 

 

(19,207)

 

 

 

 

 

 

Total assets

$

4,783,298

 

 

 

 

 

 

 

$

4,632,796

 

 

 

 

 

 

 

$

4,868,819

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand, savings and money market deposits

$

1,978,438

 

$

1,317

 

 

0.27%

 

$

1,839,627

 

$

1,183

 

 

0.26%

 

$

1,723,429

 

$

1,102

 

 

0.26%

Time deposits

 

1,180,496

 

 

2,199

 

 

0.75%

 

 

1,186,126

 

 

2,127

 

 

0.72%

 

 

1,294,908

 

 

2,349

 

 

0.73%

Securities sold under agreements to repurchase

 

113,645

 

 

37

 

 

0.13%

 

 

106,860

 

 

40

 

 

0.15%

 

 

239,059

 

 

45

 

 

0.08%

Federal Home Loan Bank advances

 

40,000

 

 

166

 

 

1.67%

 

 

40,000

 

 

166

 

 

1.67%

 

 

40,000

 

 

166

 

 

1.66%

Total interest bearing liabilities

$

3,312,579

 

$

3,719

 

 

0.45%

 

$

3,172,613

 

$

3,516

 

 

0.45%

 

$

3,297,396

 

$

3,662

 

 

0.45%

Demand deposits

$

821,987

 

 

 

 

 

 

 

$

793,262

 

 

 

 

 

 

 

$

758,288

 

 

 

 

 

 

Other liabilities

 

47,590

 

 

 

 

 

 

 

 

50,711

 

 

 

 

 

 

 

 

71,009

 

 

 

 

 

 

Total liabilities

 

4,182,156

 

 

 

 

 

 

 

 

4,016,586

 

 

 

 

 

 

 

 

4,126,693

 

 

 

 

 

 

Shareholders' equity

 

601,142

 

 

 

 

 

 

 

 

616,210

 

 

 

 

 

 

 

 

742,126

 

 

 

 

 

 

Total liabilities and shareholders' equity

$

4,783,298

 

 

 

 

 

 

 

$

4,632,796

 

 

 

 

 

 

 

$

4,868,819

 

 

 

 

 

 

Net interest income

 

 

 

$

35,790

 

 

 

 

 

 

 

$

39,013

 

 

 

 

 

 

 

$

39,405

 

 

 

Interest rate spread(4)

 

 

 

 

 

 

 

3.15%

 

 

 

 

 

 

 

 

3.56%

 

 

 

 

 

 

 

 

3.41%

Net interest earning assets

$

1,103,234

 

 

 

 

 

 

 

$

1,088,609

 

 

 

 

 

 

 

$

1,179,472

 

 

 

 

 

 

Net interest margin(4)

 

 

 

 

 

 

 

3.26%

 

 

 

 

 

 

 

 

3.68%

 

 

 

 

 

 

 

 

3.53%

Ratio of average interest earning assets to average interest bearing liabilities

 

133.30%

 

 

 

 

 

 

 

 

134.31%

 

 

 

 

 

 

 

 

135.77%

 

 

 

 

 

 

                                                      

(1)

Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.

(2)

Includes originated loans with average balances of $2.2 billion, $2.2 billion and $1.8 billion, and interest income of $19.8 million, $19.8 million and $16.8 million, with tax equivalent yields of 3.74%, 3.80% and 3.92% for the three months ended June 30, 2016, March 31, 2016, and June 30, 2015, respectively.

(3)

Non 310-30 loans include loans held-for-sale. Average balances during the three months ended June 30, 2016, March 31, 2016, and June 30, 2015 were $7.6 million, $12.3 million and $6.7 million, and interest income was $117 thousand, $166 thousand and $154 thousand for the same periods, respectively.

(4)

Presented on a fully taxable equivalent basis using the statutory tax rate of 35%. The tax equivalent adjustments included above are $1,037 thousand, $975 thousand and $550 thousand for the three months ended June 30, 2016, March 31, 2016, and June 30, 2015, respectively. 

 

10

 


 

 

NATIONAL BANK HOLDINGS CORPORATION

Summary of Net Interest Margin

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the six months ended June 30, 2016

 

For the six months ended June 30, 2015

 

Average

  

    

 

  

Average

 

Average

  

    

 

  

Average

 

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASC 310-30 loans

$

182,537

 

$

18,056

 

19.78%

 

$

255,070

 

$

24,466

 

19.18%

Non 310-30 loans(1)(2)(3)(4)

 

2,411,145

 

 

46,985

 

3.92%

 

 

1,952,585

 

 

40,626

 

4.20%

Investment securities available-for-sale

 

1,105,243

 

 

10,258

 

1.86%

 

 

1,408,474

 

 

13,235

 

1.88%

Investment securities held-to-maturity

 

406,486

 

 

5,735

 

2.82%

 

 

505,077

 

 

7,101

 

2.81%

Other securities

 

16,870

 

 

421

 

4.99%

 

 

27,075

 

 

644

 

4.76%

Interest earning deposits and securities purchased under agreements to resell

 

216,238

 

 

584

 

0.54%

 

 

345,008

 

 

477

 

0.28%

Total interest earning assets(4)

$

4,338,519

 

$

82,039

 

3.80%

 

$

4,493,289

 

$

86,549

 

3.88%

Cash and due from banks

$

71,213

 

 

 

 

 

 

$

57,079

 

 

 

 

 

Other assets

 

331,335

 

 

 

 

 

 

 

360,347

 

 

 

 

 

Allowance for loan losses

 

(33,018)

 

 

 

 

 

 

 

(18,883)

 

 

 

 

 

Total assets

$

4,708,049

 

 

 

 

 

 

$

4,891,832

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand, savings and money market deposits

$

1,909,032

 

$

2,500

 

0.26%

 

$

1,720,734

 

$

2,173

 

0.25%

Time deposits

 

1,183,311

 

 

4,326

 

0.74%

 

 

1,317,278

 

 

4,677

 

0.72%

Securities sold under agreements to repurchase

 

110,253

 

 

77

 

0.14%

 

 

233,353

 

 

90

 

0.08%

Federal Home Loan Bank advances

 

40,000

 

 

332

 

1.67%

 

 

40,000

 

 

330

 

1.66%

Total interest bearing liabilities

$

3,242,596

 

$

7,235

 

0.45%

 

$

3,311,365

 

$

7,270

 

0.44%

Demand deposits

$

807,624

 

 

 

 

 

 

$

745,828

 

 

 

 

 

Other liabilities

 

49,153

 

 

 

 

 

 

 

73,450

 

 

 

 

 

Total liabilities

 

4,099,373

 

 

 

 

 

 

 

4,130,643

 

 

 

 

 

Shareholders' equity

 

608,676

 

 

 

 

 

 

 

761,189

 

 

 

 

 

Total liabilities and shareholders' equity

$

4,708,049

 

 

 

 

 

 

$

4,891,832

 

 

 

 

 

Net interest income

 

 

 

$

74,804

 

 

 

 

 

 

$

79,279

 

 

Interest rate spread(4)

 

 

 

 

 

 

3.35%

 

 

 

 

 

 

 

3.44%

Net interest earning assets

$

1,095,923

 

 

 

 

 

 

$

1,181,924

 

 

 

 

 

Net interest margin(4)

 

 

 

 

 

 

3.47%

 

 

 

 

 

 

 

3.56%

Ratio of average interest earning assets to average interest bearing liabilities

 

133.80%

 

 

 

 

 

 

 

135.69%

 

 

 

 

 

 

                                                      

(1)

Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.

(2)

Includes originated loans with average balances of $2.2 billion and $1.7 billion, and interest income of $40.0 million and $33.0 million, with tax equivalent yields of 3.77% and 3.94% for the six months ended June 30, 2016, and June 30, 2015, respectively.

(3)

Non 310-30 loans include loans held-for-sale. Average balances during the six months ended June 30, 2016, and June 30, 2015, were $9.9 million and $4.8 million, and interest income was $282 thousand and $231 thousand for the same periods, respectively.

(4)

Presented on a fully taxable equivalent basis using the statutory tax rate of 35%. The tax equivalent adjustments included above are $2,013 thousand and $945 thousand for the six months ended June 30, 2016, and June 30, 2015, respectively.

 

 

11

 


 

 

NATIONAL BANK HOLDINGS CORPORATION

(Dollars in thousands)

 

Allowance for Loan Losses Analysis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the three months ended

 

June 30, 2016

 

March 31, 2016

 

June 30, 2015

 

ASC

    

Non

    

 

 

    

ASC

    

Non

    

 

 

    

ASC

    

Non

    

 

 

 

310-30

 

310-30

 

 

 

 

310-30

 

310-30

 

 

 

 

310-30

 

310-30

 

 

 

 

Loans

 

Loans

 

Total

 

Loans

 

Loans

 

Total

 

Loans

 

Loans

 

Total

Beginning allowance for loan losses

$

215

 

$

36,951

 

$

37,166

 

$

1,077

 

$

26,042

 

$

27,119

 

$

771

 

$

18,102

 

$

18,873

Charge-offs

 

(41)

 

 

(3,686)

 

 

(3,727)

 

 

 —

 

 

(659)

 

 

(659)

 

 

(14)

 

 

(669)

 

 

(683)

Recoveries

 

 —

 

 

210

 

 

210

 

 

 —

 

 

87

 

 

87

 

 

 —

 

 

193

 

 

193

Provision (recoupment)/expense

 

57

 

 

6,400

 

 

6,457

 

 

(862)

 

 

11,481

 

 

10,619

 

 

8

 

 

1,850

 

 

1,858

Ending ALL

$

231

 

$

39,875

 

$

40,106

 

$

215

 

$

36,951

 

$

37,166

 

$

765

 

$

19,476

 

$

20,241

Ratio of annualized net charge-offs to average total loans during the period, respectively

 

0.09%

 

 

0.58%

 

 

0.55%

 

 

0.00%

 

 

0.10%

 

 

0.09%

 

 

0.02%

 

 

0.10%

 

 

0.09%

Ratio of ALL to total loans outstanding at period end, respectively

 

0.14%

 

 

1.55%

 

 

1.46%

 

 

0.12%

 

 

1.53%

 

 

1.43%

 

 

0.32%

 

 

0.93%

 

 

0.87%

Ratio of ALL to total non-performing loans at period end, respectively(1)

 

0.00%

 

 

106.54%

 

 

107.16%

 

 

0.00%

 

 

81.96%

 

 

82.44%

 

 

0.00%

 

 

129.18%

 

 

134.25%

Total loans

$

169,282

 

$

2,569,222

 

$

2,738,504

 

$

179,507

 

$

2,412,540

 

$

2,592,047

 

$

241,295

 

$

2,087,229

 

$

2,328,524

Average total loans during the period

$

174,415

 

$

2,413,375

 

$

2,587,790

 

$

190,658

 

$

2,388,941

 

$

2,579,599

 

$

243,694

 

$

1,980,296

 

$

2,223,990

Total non-performing loans(1)

$

 —

 

$

37,428

 

$

37,428

 

$

 —

 

$

45,084

 

$

45,084

 

$

 

$

15,077

 

$

15,077

                                                      

(1)

Loans accounted for under ASC 310-30 may be considered performing, regardless of past due status, if the timing and expected cash flows on these loans can be reasonably estimated and if collection of the new carrying value is expected.

 

Non 310-30 Allowance for Loan Losses Analysis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the three months ended

 

June 30, 2016

 

March 31, 2016

 

 

 

 

Non

 

Total

 

 

 

 

Non

 

Total

 

 

 

    

310-30

    

Non

 

 

    

310-30

    

Non

 

Energy

 

Excluding

 

310-30

 

Energy

 

Excluding

 

310-30

 

Portfolio

 

Energy

 

Loans

 

Portfolio

 

Energy

 

Loans

Beginning allowance for loan losses

$

14,486

 

$

22,465

 

$

36,951

 

$

3,763

 

$

22,279

 

$

26,042

Charge-offs

 

(3,374)

 

 

(312)

 

 

(3,686)

 

 

 -

 

 

(659)

 

 

(659)

Recoveries

 

 -

 

 

210

 

 

210

 

 

 -

 

 

87

 

 

87

Provision (recoupment)/expense

 

4,331

 

 

2,069

 

 

6,400

 

 

10,723

 

 

758

 

 

11,481

Ending ALL

$

15,443

 

$

24,432

 

$

39,875

 

$

14,486

 

$

22,465

 

$

36,951

Ratio of annualized net charge-offs to average total loans during the period, respectively

 

11.46%

 

 

0.02%

 

 

0.58%

 

 

0.00%

 

 

0.10%

 

 

0.10%

Ratio of ALL to total loans outstanding at period end, respectively

 

14.75%

 

 

0.99%

 

 

1.55%

 

 

10.97%

 

 

0.98%

 

 

1.53%

Total loans

$

104,663

 

$

2,464,558

 

$

2,569,222

 

$

132,100

 

$

2,280,441

 

$

2,412,540

Average loans

$

118,382

 

$

2,294,994

 

$

2,413,375

 

$

139,490

 

$

2,249,451

 

$

2,388,941

12

 


 

 

NATIONAL BANK HOLDINGS CORPORATION

(Dollars in thousands)

 

Non 310-30 Past Due Loans

 

 

 

 

 

 

 

 

 

 

 

June 30, 2016

 

March 31, 2016

 

June 30, 2015

Loans 30-89 days past due and still accruing interest

$

5,279

 

$

4,106

 

$

2,795

Loans 90 days past due and still accruing interest

 

43

 

 

311

 

 

21

Non-accrual loans(1)

 

37,428

 

 

45,084

 

 

15,077

Total past due and non-accrual loans

$

42,750

 

$

49,501

 

$

17,893

Total 90 days past due and still accruing interest and non-accrual loans to total loans

 

1.46%

 

 

1.88%

 

 

0.72%

Total non-accrual loans to total loans

 

1.46%

 

 

1.87%

 

 

0.72%

% of total past due and non-accrual loans that carry fair value marks

 

12.22%

 

 

12.03%

 

 

17.72%

                                                      

(1)

Includes non-accrual energy loans of $25.8 million, $32.2 million, and $5.9 million at June 30, 2016, March 31, 2016, and June 30, 2015, respectively.

 

Asset Quality Data:

 

 

 

 

 

 

 

 

 

 

June 30, 2016

 

March 31, 2016

 

June 30, 2015

Non-accrual loans

$

24,377

 

$

26,780

 

$

9,691

Restructured loans on non-accrual

 

13,051

 

 

18,304

 

 

5,386

Total non-performing loans(1)

 

37,428

 

 

45,084

 

 

15,077

OREO

 

23,242

 

 

21,019

 

 

20,367

Other repossessed assets

 

894

 

 

894

 

 

894

Total non-performing assets

$

61,564

 

$

66,997

 

$

36,338

Accruing restructured loans

$

5,729

 

$

5,278

 

$

15,212

Total non-performing loans to total loans

 

1.37%

 

 

1.74%

 

 

0.65%

Total non-performing loans excluding energy sector loans to total loans excluding energy sector loans

 

0.44%

 

 

0.52%

 

 

0.42%

Total non-performing assets to total loans and OREO

 

2.23%

 

 

2.56%

 

 

1.55%

Total non-performing assets excluding energy sector to total loans excluding energy sector loans and OREO

 

1.34%

 

 

1.40%

 

 

1.65%

                                                      

(1)

Includes non-accrual energy loans of $25.8 million, $32.2 million, and $5.9 million at June 30, 2016, March 31, 2016, and June 30, 2015, respectively.

 

Changes in Accretable Yield:

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

Life-to-date

 

June 30, 2016

    

March 31, 2016

    

June 30, 2015

    

June 30, 2016

Accretable yield at beginning of period

$

75,007

 

$

84,194

 

$

110,818

 

$

 —

Additions through acquisitions

 

 —

 

 

 —

 

 

 

 

214,996

Reclassification from non-accretable difference to accretable yield

 

2,462

 

 

3,184

 

 

4,637

 

 

261,977

Reclassification to non-accretable difference from accretable yield

 

(1,942)

 

 

(2,077)

 

 

(253)

 

 

(32,008)

Accretion

 

(7,762)

 

 

(10,294)

 

 

(11,772)

 

 

(377,200)

Accretable yield at end of period

$

67,765

 

$

75,007

 

$

103,430

 

$

67,765

 

13

 


 

 

NATIONAL BANK HOLDINGS CORPORATION

Key Ratios

 

 

 

 

 

 

 

 

 

 

 

As of and for the three months ended

 

As of and for the six months ended

 

June 30, 

    

March 31, 

    

June 30, 

    

June 30, 

 

June 30, 

 

2016

 

2016

 

2015

 

2016

 

2015

Key Ratios(1)

 

 

 

 

 

 

 

 

 

Return on average assets

0.38%

 

0.02%

 

(0.11)%

 

0.20%

 

0.00%

Return on average tangible assets(2)

0.45%

 

0.10%

 

(0.04)%

 

0.28%

 

0.06%

Return on average tangible assets before provision for loan losses and taxes FTE(2)

1.22%

 

1.18%

 

0.26%

 

1.20%

 

0.30%

Return on average equity

3.01%

 

0.16%

 

(0.72)%

 

1.57%

 

(0.03)%

Return on average tangible common equity(2)

3.98%

 

0.79%

 

(0.31)%

 

2.36%

 

0.45%

Interest earning assets to interest bearing liabilities (end of period)(3)

135.31%

 

134.09%

 

136.82%

 

135.31%

 

136.82%

Loans to deposits ratio (end of period)

72.30%

 

67.70%

 

62.15%

 

72.30%

 

62.15%

Non-interest bearing deposits to total deposits (end of period)

21.89%

 

20.98%

 

20.67%

 

21.89%

 

20.67%

Net interest margin(4)

3.17%

 

3.59%

 

3.48%

 

3.37%

 

3.52%

Net interest margin FTE(2)(4)

3.26%

 

3.68%

 

3.53%

 

3.47%

 

3.56%

Interest rate spread(5)

3.15%

 

3.56%

 

3.41%

 

3.35%

 

3.44%

Yield on earning assets(3)

3.50%

 

3.92%

 

3.81%

 

3.71%

 

3.84%

Yield on earning assets FTE(2)(3)

3.60%

 

4.01%

 

3.86%

 

3.80%

 

3.88%

Cost of interest bearing liabilities(3)

0.45%

 

0.45%

 

0.45%

 

0.45%

 

0.44%

Cost of deposits

0.36%

 

0.35%

 

0.37%

 

0.35%

 

0.37%

Non-interest expense to average assets

2.80%

 

3.03%

 

3.33%

 

2.91%

 

3.18%

Efficiency ratio FTE(2)(6)

69.00%

 

71.44%

 

92.66%

 

70.23%

 

91.29%

 

 

 

 

 

 

 

 

 

 

Asset Quality Data(7)(8)(9)

 

 

 

 

 

 

 

 

 

Non-performing loans to total loans

1.37%

 

1.74%

 

0.65%

 

1.37%

 

0.65%

Non-performing assets to total loans and OREO

2.23%

 

2.56%

 

1.55%

 

2.23%

 

1.55%

Allowance for loan losses to total loans

1.46%

 

1.43%

 

0.87%

 

1.46%

 

0.87%

Allowance for loan losses to non-performing loans

107.16%

 

82.44%

 

134.25%

 

107.16%

 

134.25%

Net charge-offs to average loans(1)

0.55%

 

0.09%

 

0.09%

 

0.32%

 

0.06%

                                                      

(1)

Ratios are annualized.

(2)

Ratio represents non-GAAP financial measure. See non-GAAP reconciliations below.

(3)

Interest earning assets include assets that earn interest/accretion or dividends. Any market value adjustments on investment securities are excluded from interest-earning assets. Interest bearing liabilities include liabilities that must be paid interest.

(4)

Net interest margin represents net interest income, including accretion income on interest earning assets, as a percentage of average interest earning assets.

(5)

Interest rate spread represents the difference between the weighted average yield on interest earning assets and the weighted average cost of interest bearing liabilities.

(6)

The efficiency ratio represents non-interest expense, less intangible asset amortization, as a percentage of net interest income on a FTE basis plus non-interest income.

(7)

Non-performing loans consist of non-accruing loans and restructured loans on non-accrual, but exclude any loans accounted for under ASC 310-30 in which the pool is still performing. These ratios may, therefore, not be comparable to similar ratios of our peers.

(8)

Non-performing assets include non-performing loans, other real estate owned and other repossessed assets.

(9)

Total loans are net of unearned discounts and fees.

 

 

14

 


 

 

NATIONAL BANK HOLDINGS CORPORATION

Non-GAAP Financial Measures and Reconciliations

(Dollars in thousands, except share and per share data)

 

Statements of Financial Condition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2016

 

March 31, 2016

 

June 30, 2015

    

December 31, 2015

Total shareholders' equity

$

598,910

 

$

603,923

 

$

718,266

 

$

617,544

Less: goodwill and intangible assets, net

 

(69,320)

 

 

(70,689)

 

 

(73,840)

 

 

(72,060)

Add: deferred tax liability related to goodwill

 

8,547

 

 

8,160

 

 

6,997

 

 

7,772

Tangible common equity (non-GAAP)

$

538,137

 

$

541,394

 

$

651,423

 

$

553,256

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

4,627,820

 

$

4,615,974

 

$

4,777,850

 

$

4,683,908

Less: goodwill and intangible assets, net

 

(69,320)

 

 

(70,689)

 

 

(73,840)

 

 

(72,060)

Add: deferred tax liability related to goodwill

 

8,547

 

 

8,160

 

 

6,997

 

 

7,772

Tangible assets (non-GAAP)

$

4,567,047

 

$

4,553,445

 

$

4,711,007

 

$

4,619,620

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets calculations:

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity to total assets

 

12.95%

 

 

13.08%

 

 

15.03%

 

 

13.18%

Less: impact of goodwill and intangible assets, net

 

(1.17)%

 

 

(1.19)%

 

 

(1.20)%

 

 

(1.20)%

Tangible common equity to tangible assets (non-GAAP)

 

11.78%

 

 

11.89%

 

 

13.83%

 

 

11.98%

 

 

 

 

 

 

 

 

 

 

 

 

Common book value per share calculations:

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

$

598,910

 

$

603,923

 

$

718,266

 

$

617,544

Divided by: ending shares outstanding

 

28,810,883

 

 

29,252,419

 

 

35,053,339

 

 

30,358,509

Common book value per share

$

20.79

 

$

20.65

 

$

20.49

 

$

20.34

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common book value per share calculations:

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity (non-GAAP)

$

538,137

 

$

541,394

 

$

651,423

 

$

553,256

Divided by: ending shares outstanding

 

28,810,883

 

 

29,252,419

 

 

35,053,339

 

 

30,358,509

Tangible common book value per share (non-GAAP)

$

18.68

 

$

18.51

 

$

18.48

 

$

18.22

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common book value per share, excluding accumulated other comprehensive income calculations:

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity (non-GAAP)

$

538,137

 

$

541,394

 

$

651,423

 

$

553,256

Less: accumulated other comprehensive income, net of tax

 

(11,278)

 

 

(8,553)

 

 

(4,444)

 

 

(95)

Tangible common book value, excluding accumulated other comprehensive income, net of tax (non-GAAP)

 

526,859

 

 

532,841

 

 

646,979

 

 

553,161

Divided by: ending shares outstanding

 

28,810,883

 

 

29,252,419

 

 

35,053,339

 

 

30,358,509

Tangible common book value per share, excluding accumulated other comprehensive income, net of tax (non-GAAP)

$

18.29

 

$

18.22

 

$

18.46

 

$

18.22

15

 


 

 

Return on Average Tangible Assets and Return on Average Tangible Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the three months ended

 

As of and for the six months ended

 

June 30, 2016

    

March 31, 2016

    

June 30, 2015

    

June 30, 2016

    

June 30, 2015

Net income

$

4,504

 

$

251

 

$

(1,341)

 

$

4,755

 

$

(95)

Add: impact of core deposit intangible amortization expense, after tax

 

836

 

 

836

 

 

815

 

 

1,671

 

 

1,630

Net income adjusted for impact of core deposit intangible amortization expense, after tax

$

5,340

 

$

1,087

 

$

(526)

 

$

6,426

 

$

1,535

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes FTE (non-GAAP)

$

6,523

 

$

1,415

 

$

(98)

 

$

7,939

 

$

1,119

Add: impact of core deposit intangible amortization expense, before tax

 

1,370

 

 

1,370

 

 

1,336

 

 

2,740

 

 

2,672

Add: provision for loan losses

 

6,457

 

 

10,619

 

 

1,858

 

 

17,076

 

 

3,311

FTE income adjusted for impact of core deposit intangible amortization expense and provision (non-GAAP)

$

14,350

 

$

13,404

 

$

3,096

 

$

27,755

 

$

7,102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy sector provision for loan losses

$

4,331

 

$

10,723

 

$

N/A

 

$

15,054

 

$

N/A

Tax rate 38%

 

38.0%

 

 

38.0%

 

 

N/A

 

 

38.0%

 

 

N/A

Energy sector provision for loan losses, after  tax

$

2,685

 

$

6,648

 

$

N/A

 

$

9,333

 

$

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average assets

$

4,783,298

 

$

4,632,796

 

$

4,868,820

 

$

4,708,049

 

$

4,891,832

Less: average goodwill and intangible assets, net of deferred tax asset related to goodwill

 

(61,445)

 

 

(63,202)

 

 

(67,651)

 

 

(62,130)

 

 

(68,317)

Average tangible assets (non-GAAP)

$

4,721,853

 

$

4,569,594

 

$

4,801,169

 

$

4,645,919

 

$

4,823,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shareholders' equity

$

601,142

 

$

616,210

 

$

742,126

 

$

608,676

 

$

761,189

Less: average goodwill and intangible assets, net of deferred tax asset related to goodwill

 

(61,445)

 

 

(63,202)

 

 

(67,651)

 

 

(62,130)

 

 

(68,317)

Average tangible common equity (non-GAAP)

$

539,697

 

$

553,008

 

$

674,475

 

$

546,546

 

$

692,872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (non-GAAP)

 

0.38%

 

 

0.02%

 

 

(0.11)%

 

 

0.20%

 

 

0.00%

Return on average tangible assets (non-GAAP)

 

0.45%

 

 

0.10%

 

 

(0.04)%

 

 

0.28%

 

 

0.06%

Return on average tangible assets before provision for loan losses and taxes FTE (non-GAAP)

 

1.22%

 

 

1.18%

 

 

0.26%

 

 

1.20%

 

 

0.30%

Return on average tangible assets before energy sector provision for loan losses (non-GAAP)

 

0.70%

 

 

0.68%

 

 

N/A

 

 

0.70%

 

 

N/A

Return on average equity (non-GAAP)

 

3.01%

 

 

0.16%

 

 

(0.72)%

 

 

1.57%

 

 

(0.03)%

Return on average tangible common equity (non-GAAP)

 

3.98%

 

 

0.79%

 

 

(0.31)%

 

 

2.36%

 

 

0.45%

 

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the three months ended

 

As of and for the six months ended

 

June 30, 2016

 

March 31, 2015

 

June 30, 2015

 

June 30, 2016

June 30, 2015

Interest income

$

38,472

    

$

41,554

    

$

42,517

    

$

80,026

$

85,604

Add: impact of taxable equivalent adjustment

 

1,037

 

 

975

 

 

550

 

 

2,013

 

945

Interest income FTE (non-GAAP)

$

39,509

 

$

42,529

 

$

43,067

 

$

82,039

$

86,549

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

$

34,753

 

$

38,038

 

$

38,855

 

$

72,791

$

78,334

Add: impact of taxable equivalent adjustment

 

1,037

 

 

975

 

 

550

 

 

2,013

 

945

Net interest income FTE (non-GAAP)

$

35,790

 

$

39,013

 

$

39,405

 

$

74,804

$

79,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average earning assets

$

4,415,813

 

$

4,261,222

 

$

4,476,869

 

$

4,338,519

$

4,493,289

Yield on earning assets

 

3.50%

 

 

3.92%

 

 

3.81%

 

 

3.71%

 

3.84%

Yield on earning assets FTE (non-GAAP)

 

3.60%

 

 

4.01%

 

 

3.86%

 

 

3.80%

 

3.88%

Net interest margin

 

3.17%

 

 

3.59%

 

 

3.48%

 

 

3.37%

 

3.52%

Net interest margin FTE (non-GAAP)

 

3.26%

 

 

3.68%

 

 

3.53%

 

 

3.47%

 

3.56%

 

 

16