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

Company Release - 4/18/2022
Acquisition furthers strategic growth in the fast-growing Salt Lake City region

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 assets 1.04 %   1.26%   1.61%
Return on average tangible assets(2) 1.07 %   1.30%   1.65%
Return on average equity 8.84 %   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 deposits 0.17 %   0.18%   0.28%
Non-interest income to total revenue FTE(2) 28.43 %   31.37%   41.78%
Non-interest expense to average assets 2.49 %   2.47%   2.98%
Efficiency ratio 66.63 %   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 loans 0.24 %   0.24%   0.38%
Non-performing assets to total loans and OREO 0.35 %   0.39%   0.51%
Allowance for credit losses to total loans 1.04 %   1.10%   1.28%
Allowance for credit losses to non-performing loans 440.01 %   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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Source: National Bank Holdings Corporation