NATIONAL BANK HOLDINGS CORPORATION GREENWOOD VILLAGE, Colo., Jan. 28, 2016 /PRNewswire/ -- National Bank Holdings Corporation (NYSE: NBHC) reported net income of $3.3 million, or $0.11 per diluted share, for the fourth quarter of 2015, compared to net income of $1.6 million, or $0.05 per diluted share, for the third quarter of 2015 and $2.3 million, or $0.06 per diluted share, for the fourth quarter of 2014. For the full year 2015, net income totaled $4.9 million, or $0.14 per diluted share, compared to net income of $9.2 million, or $0.22 per diluted share, during 2014.
https://photos.prnewswire.com/prnvar/20141002/149998
In announcing these results, Chief Executive Officer Tim Laney said, "We closed out 2015 with loan production of $967 million, realizing 20% year-over-year spot loan growth and 32% growth in our originated loan portfolio. We remain focused on building and maintaining a diverse, conservatively structured loan portfolio that protects against stress in any one sector. Net charge-offs were only 12 basis points for the year, which were well within our guidance, and criticized and classified loan levels declined during the fourth quarter. We continued to grow our low-cost deposit base and have increased our average transaction deposits and repurchase agreements by $238 million, or 10% during 2015. We also delivered solid banking related non-interest income growth, which increased 9% over last year. We executed strategic expense initiatives throughout 2015, realizing a net 3.2% decrease in operating expenses compared to the prior year, and we expect to continue to reduce operating expenses during 2016."
Mr. Laney added, "We successfully repurchased 8.6 million shares throughout 2015, or 22% of our outstanding shares. Since early 2013, we have repurchased 42% of our shares outstanding, at a weighted average price of $19.88. Our capital position remains strong with excess capital of $135 million above a 9% leverage ratio as of year-end. Our excess capital is a source of strength and gives us flexibility to react to future opportunities to leverage capital in situations that we believe will create attractive returns for our shareholders."
Mr. Laney concluded, "We also completed three significant regulatory initiatives during the fourth quarter, including the termination of our operating agreement with the OCC, the termination of the loss-share agreements with the FDIC, and finally, the Bank's charter conversion from a national association to a Colorado state-chartered bank. These milestones in our company's history are expected to result in many future benefits, including cost efficiencies and greater clarity and comparability of our financial results."
Brian Lilly, Chief Financial Officer, added, "We continue to evaluate the progress of building our company by analyzing the financial results that are expected to emerge over time. We do this by excluding the impact of the non-cash FDIC indemnification asset amortization, FDIC loss-share income/expense, the large expense/income related to the workout of acquired problem assets, the impacts of the change in the warrant liability, severance expense accruals, banking center consolidation expense accruals, bargain purchase gain and one-time expenses from the acquisition of Pine River, and our core system conversion-related expenses, which can be seen in our non-GAAP reconciliation starting on page 16. These items negatively impacted the fourth quarter by a net $0.05 per diluted share. The additional $0.05 per diluted share would have resulted in an adjusted net income per diluted share of $0.16 for the fourth quarter of 2015 compared to an adjusted $0.17 for the prior quarter. The adjusted return on average tangible assets was 0.48% during the fourth quarter."
Fourth Quarter 2015 Highlights
(All comparisons refer to the third quarter of 2015, except as noted)
-- Grew total loans by $64.5 million, or 10.1% annualized, driven by $238.1
million in fourth quarter originations partially offset by higher than
normal pay-downs. Strategic loans at December 31, 2015 increased a
strong $507.2 million, or 25.9%, since December 31, 2014 on the strength
of $966.9 million in loan originations.
-- Total loans ended 2015 at $2.6 billion, a 19.7% increase since December
31, 2014.
-- Net charge-offs in the non 310-30 portfolio were 0.09% of average non
310-30 loans during the fourth quarter and totaled 0.12% for the full
year.
-- Successfully exited $23.5 million of the remaining non-strategic loan
portfolio, a strong 65.1% annualized. Non-strategic loans decreased
$81.9 million for the full year, or 40.6%, to just $119.8 million at
December 31, 2015.
-- Added a net $2.7 million to accretable yield for the acquired loans
accounted for under ASC 310-30.
-- Average transaction deposits increased $46.6 million, or 7.1%
annualized, while cost of deposits remained flat at 0.35%.
-- Average demand deposits continued solid growth, adding $15.1 million, or
7.4% annualized, while total deposits remained relatively flat as
higher-cost time deposits declined.
-- Net interest income totaled $39.9 million, a $1.2 million increase from
the prior quarter.
-- Exited loss-share agreements with the FDIC, resulting in a $4.9 million
gain.
-- Banking related non-interest income totaled $8.6 million, increasing
$0.3 million, or 13.7% annualized.
-- Non-interest expenses increased $3.6 million, or 9.2%, from the prior
quarter, driven by one-time expenses related to the core system
conversion and efficiency initiatives.
-- Successfully completed bank charter conversion from a national
association to a Colorado state-chartered bank.
-- At December 31, 2015, tangible common book value per share was $18.22
before consideration of the excess accretable yield value of $1.21 per
share.
Fourth Quarter 2015 Results
(All comparisons refer to the third quarter of 2015, except as noted)
Net Interest Income
Net interest income totaled $39.9 million for the fourth quarter of 2015, a $1.2 million increase from the prior quarter driven by $1.0 million of accelerated 310-30 accretion and other accelerated discounts realized on acquired loans. The accelerated income plus lower levels of short-term investments widened the net interest margin 19 basis points to 3.73% from the prior quarter of 3.54% (fully taxable equivalent). Average interest earning assets totaled $4.3 billion and decreased $74.8 million, driven by an $84.2 million decrease in lower-yielding short-term investments.
Loans
Total loans ended the quarter at $2.6 billion, increasing $64.5 million, or 10.1% annualized, driven by new loan originations totaling $238.1 million. Strategic loans totaled $2.5 billion at December 31, 2015 and grew $88.1 million during the quarter, or 14.7% annualized. Included in strategic loans outstanding are $2.2 billion in originated balances, which increased $106.7 million, or 20.4% annualized, over the prior quarter and 32.5% over the fourth quarter of 2014. Consistent with the strategy of exiting the non-strategic loan portfolio, balances of non-strategic relationships ended the year at $119.8 million, decreasing $23.5 million during the quarter, a strong 65.1% annualized. Strategic loans include all originated loans in addition to those acquired loans inside our operating markets that meet our credit risk profile. Identification as strategic for acquired loans was made at the time of acquisition. Criteria utilized in the designation of an acquired loan as "strategic" include (a) geography, (b) total relationship with borrower and (c) credit metrics commensurate with our underwriting standards.
Asset Quality and Provision for Loan Losses
Acquired troubled loans accounted for under 310-30 totaled $202.8 million at December 31, 2015 and decreased $18.1 million during the fourth quarter, an annualized decrease of 32.4%, reflecting workout efforts on these acquired loans. The quarterly fair value re-measurement on the 310-30 loans resulted in a favorable net transfer of $2.7 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 $203.7 million.
Non 310-30 loans totaled $2.4 billion and represented 92.2% of total loans at December 31, 2015. 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 $2.1 million during the fourth quarter, primarily from a general industries commercial loan. Non-performing non 310-30 loans (comprised of non-accrual loans and non-accrual TDRs) decreased by $3.0 million at quarter end, representing 1.08% of total non 310-30 loans, compared to 1.24% at September 30, 2015. A provision for loan losses on the non 310-30 loans of $5.2 million was recorded during the fourth quarter of 2015, driven by loan growth, net charge-offs, and increased specific reserves of $2.6 million primarily from the previously mentioned commercial loan and one energy services loan.
Energy sector loan balances totaled $146.9 million at December 31, 2015, representing 5.7% of total loans, 3.4% of earning assets and 28.3% of the Bank's tier one capital, and decreased from $147.5 million in the prior quarter. Of the $146.9 million energy sector loans, $118.3 million or 80.5% related to the midstream and E&P sectors and $28.6 million or 19.5% related to the energy services sector. The energy portfolio is granular, with an average loan balance of $5.2 million per client. Two energy services clients with loan balances totaling $12.0 million were placed on non-accrual during the third quarter 2015. Non-accrual classification was determined to be prudent based on the clients' weakening liquidity and capital given prolonged stress on energy prices. One of these loans has a specific reserve of $2.1 million at December 31, 2015. The implied allowance for loan losses is 2.65% of energy sector loan balances.
Rick Newfield, Chief Risk Management Officer, said "We recognized the importance of a diversified and granular loan portfolio and established in-house concentration limits from day one. For example, no single industry sector can comprise more than 15% of total loan exposure, and we have tighter limits in place for several industries. We have also maintained granularity, with commercial loans originated in 2015 averaging $1.6 million. With respect to non-owner occupied commercial real estate, we have remained disciplined with balances representing just 85% of the Bank's tier one capital at December 31, 2015."
OREO ended the quarter at $20.8 million, increasing $1.8 million, driven by one loan transferred to OREO during the quarter. Gains on sales of OREO were $0.4 million during the fourth quarter compared to $0.2 million in the previous quarter.
Deposits
Transaction deposits (defined as total deposits less time deposits) averaged $2.6 billion during the fourth quarter, increasing $46.6 million, or 7.1% annualized. The increase was due to higher average demand deposits of $15.1 million, or 7.4% annualized, coupled with an increase in other low-cost transaction deposits of $31.5 million, or 7.0% annualized. Total deposits and client repurchase agreements averaged $4.0 billion during the fourth quarter, decreasing $37.8 million, driven by a $45.6 million decrease in higher-cost time deposits. Additionally, the average cost of total deposits remained unchanged from the prior quarter at 0.35%. The balance sheet continues to be strongly funded by client deposits and client repurchase agreements, and at December 31, 2015, these client fundings comprised 97.8% of total liabilities.
Non-Interest Income
Non-interest income totaled $15.4 million in the fourth quarter of 2015, increasing $11.7 million. FDIC-related non-interest income increased $10.7 million, driven by the termination of the loss-share agreements and the resulting gain of $4.9 million. Banking related non-interest income (excludes FDIC-related non-interest income, gain on previously charged-off acquired loans and OREO related income) totaled $8.6 million during the fourth quarter of 2015 and increased $0.3 million, or 13.7% annualized, compared to the prior quarter. A seasonal decrease in service charges was more than offset by an increase in mark-to-market adjustments of $0.6 million related to fair value interest rate swaps on fixed-rate term loans. OREO related income increased $1.3 million during the fourth quarter of 2015 primarily due to a valuation adjustment on one foreclosed property, offset by the bargain purchase gain recorded in the prior quarter.
"The early termination of the FDIC loss-share agreements had a positive impact on the fourth quarter, including a one-time pre-tax gain of $4.9 million, resulting primarily from the settlement payment made to the FDIC and the write-off of the remaining FDIC indemnification asset of $18.2 million and the clawback payable of $38.7 million." said Brian Lilly. "We are pleased with the mutually beneficial end to this partnership and the improvement in our financial transparency and comparability to industry peers going forward."
Non-Interest Expense
Total non-interest expense was $42.2 million during the fourth quarter of 2015, increasing $3.6 million. The increase was driven by one-time core system conversion-related expenses of $1.1 million, efficiency initiative expenses related to severance accruals and banking center consolidation expense accruals of $1.3 million, and the change in warrant liability fair value adjustments of $0.9 million. One-time non-interest expenses included in the fourth quarter totaled $3.7 million. Problem asset workout expenses totaled $1.5 million and decreased $0.1 million from the prior quarter. Problem asset workout expenses are expected to continue to fluctuate quarterly as the acquired problem asset portfolio is resolved.
This week, we announced plans to consolidate seven banking centers in our Community Banks of Colorado footprint during the second quarter of 2016 as part of our continued focus on operational efficiency. Six owned banking centers were classified as held-for-sale during the fourth quarter, resulting in a fair value impairment charge of $0.3 million. The payback period on the consolidation is expected to be less than one year.
Income tax expense totaled $4.4 million, an effective tax rate of 56.6%, on pre-tax earnings of $7.7 million. Included in the tax expense is $1.9 million of deferred tax asset write-offs in connection with stock compensation agreements. Without this $1.9 million charge, tax expense would have been $2.5 million, an effective tax rate of 32.3%. 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 well in excess of federal bank regulatory agency "well capitalized" thresholds. Shareholders' equity totaled $617.5 million at December 31, 2015 and decreased $3.6 million from the prior quarter. The decrease in equity is due to a decrease of $8.6 million in accumulated other comprehensive income, net of tax, which was driven by the fair market value fluctuations of the available-for-sale investment securities portfolio, partially offset by a reclassification of the warrant liability to equity during the quarter totaling $3.1 million.
Tangible common book value per share decreased to $18.22 at December 31, 2015 from $18.31 in the prior quarter, driven by a change in accumulated other comprehensive income, net of tax, due to the fair market value fluctuations of the available-for-sale investment securities portfolio. The tangible common equity to tangible assets ratio increased to 11.98% at December 31, 2015 from 11.76% in the prior quarter, driven by a decrease in tangible assets. The leverage ratio at December 31, 2015 for the consolidated company and the Bank was 11.75% and 11.20%, respectively.
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 December 31, 2015 accretable yield balance on the 310-30 loans of $84.2 million would add $1.69 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 $1.21 after-tax to our tangible book value per share as of December 31, 2015, resulting in a tangible common book value per share of $19.43.
Year-Over-Year Review
(All comparisons refer to the full year 2014)
Net income for 2015 was $4.9 million, or $0.14 per diluted share, compared to net income of $9.2 million, or $0.22 per diluted share for 2014. Net interest income totaled $156.9 million and decreased $13.3 million, or 7.8%, primarily driven by lower levels of higher-yielding acquired loans. Average interest earning assets remained consistent as increases in the originated loan portfolio offset reductions in the investment portfolio and non-strategic acquired loans. The continued resolution of the higher-yielding acquired non-strategic loan portfolio and higher levels of lower-yielding short-term investments led to a 25 basis point narrowing of the fully taxable equivalent net interest margin to 3.60% from 3.85%.
Loan balances at December 31, 2015 totaled $2.6 billion and increased $425.3 million, or 19.7%. Strategic loans increased $507.2 million, or 25.9%, on the strength of loan originations. Loan originations during 2015 totaled $966.9 million, increasing 11.2%, as a result of continued market penetration. Non-strategic loans declined $81.9 million, or 40.6%, as a result of the continued workout progress that has been made on exiting acquired problem loans.
Average transaction deposits and client repurchase agreements totaled $2.7 billion during 2015 and increased $237.9 million, or 9.5%. The increase was driven by higher average demand deposits of $81.6 million, or 11.6%, coupled with an increase in other low-cost transaction deposits of $57.6 million, or 3.4%. Client repurchase agreements also increased $98.7 million, or 99.6%. Total deposits and client repurchase agreements averaged $4.0 billion during 2015, increasing $97.4 million from the prior year. The increase in total deposits was driven by growth in transaction deposits and client repurchase agreements, offset by a $140.6 million decrease in average time deposits as we continued to focus our deposit base on clients who were interested in market-rate time deposits and in developing a banking relationship. The mix of transaction deposits to total deposits improved to 68.9% at December 31, 2015 from 64.0% at prior year end. Additionally, the average cost of total deposits declined one basis point to 0.36% in 2015 from 0.37% during 2014.
Provision for loan loss expense was $12.4 million during 2015, compared to $6.2 million during 2014, an increase of $6.2 million. The increase in provision was primarily due to an increase in specific reserves of $5.6 million. The non 310-30 allowance was 1.09% of total non 310-30 loans compared to 0.90% in the prior year, increasing primarily due to the higher specific reserves and an increase in the general allowance as the originated portfolio becomes a larger component of non 310-30 loans. Net charge-offs on non 310-30 loans remained low at only 0.12% during 2015 compared to 0.05% during 2014.
Non-interest income was $21.4 million in 2015 compared to a negative $1.7 million in the prior year, an increase of $23.1 million. The increase was largely due to $21.1 million higher FDIC related income driven by $7.0 million less indemnification amortization, $9.2 million increase in other FDIC loss-share income, and a $4.9 million gain on the termination of the FDIC loss-share agreements. Banking related non-interest income totaled $33.0 million during 2015, increasing $2.6 million, or 8.6%, as a result of increases in bank card fees, gain on sale of mortgages, mark-to-market adjustments related to fair value interest rate swaps on fixed-rate term loans, and bank-owned life insurance income, and were somewhat offset by a decrease in overdraft fees.
Total non-interest expense was $158.0 million in 2015, increasing $8.0 million. The increase was driven by lower year-over-year OREO gains of $7.0 million, one-time core system conversion-related expenses of $3.0 million, efficiency initiative expenses related to severance accruals and banking center consolidation expense accruals of $2.4 million, change in warrant liability fair value adjustments of $3.1 million primarily due to the change in our stock price, and $2.1 million related to the addition of Pine River Valley Bank. These increases were partially offset by a net decrease in operating expenses of $4.8 million during 2015 and a $4.1 million contract termination expense in 2014. One-time non-interest expenses totaled $6.2 million during 2015 and are excluded from operating expenses in 2015. When further adjusted for the additional Pine River Valley Bank expenses, operating expenses decreased a net $4.8 million year-over-year, or 3.2%. Operating expense reductions were driven by lower compensation costs, banking center consolidations and successful vendor contract negotiations. Operating expenses exclude problem asset workout expenses, and one-time expenses related to the change in the warrant liability, contract termination expenses, banking center consolidation expense accruals, severance expense accruals, core system conversion-related expenses, and acquisition-related expenses.
Included in our efficiency initiative expenses for 2015 are $1.4 million of banking center consolidation expense accruals from the consolidation of twelve, or 12.4%, of our total banking centers over the past year.
Conference Call
Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Friday, January 29, 2016. Interested parties may listen to this call by dialing (877) 272-6762 (United States) / (615) 800-6832 (International) using the Conference ID of 12866911 and asking for the National Bank Holdings Corporation Fourth Quarter Earnings conference call. A telephonic replay of the call will be available beginning approximately two hours after the call's completion through February 12, 2016, by dialing (855) 859-2056 (United States) / (404) 537-3406 (International) using the Conference ID of 12866911. 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 "operating expenses," "tangible assets," "return on average tangible assets," "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," "fully taxable equivalent" metrics, "adjusted net income," "adjusted basic earnings per share," "adjusted diluted earnings per share," and "adjusted return on average tangible assets," 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. In particular, the items that we exclude in our adjustments are not necessarily consistent with the items that our peers may exclude from their results of operations and key financial measures and therefore may limit the comparability of similarly named financial measures and ratios. 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 97 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.
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 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 successfully convert core operating systems, at the estimated cost, without significant business interruption and to realize the anticipated benefits; 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.
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 year ended
-------------------------- ------------------
December 31, September 30, December 31, December 31, December 31,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
Total interest and dividend income $43,492 $42,311 $46,280 $171,407 $184,662
Total interest expense 3,563 3,629 3,696 14,462 14,413
----- ----- ----- ------ ------
Net interest income before provision for
loan losses 39,929 38,682 42,584 156,945 170,249
------ ------ ------ ------- -------
Provision for loan losses on 310-30 loans 198 110 (185) 366 (520)
Provision for loan losses on non 310-30
loans 5,225 3,600 1,450 12,078 6,729
----- ----- ----- ------ -----
Net interest income after provision for
loan losses 34,506 34,972 41,319 144,501 164,040
------ ------ ------ ------- -------
Non-interest income:
Service charges 3,821 3,953 3,872 14,798 15,430
Bank card fees 2,841 2,808 2,575 10,898 10,123
Gain on sale of mortgages, net 389 628 326 1,963 1,000
Other non-interest income 1,521 896 1,253 5,306 3,810
Gain on previously charged-off acquired
loans 466 46 62 609 737
OREO related write-ups and other income 1,508 183 1,030 2,379 3,807
Bargain purchase gain - 1,048 - 1,048 -
FDIC indemnification asset amortization/
gain on termination 4,873 (5,798) (7,922) (15,878) (27,741)
Other FDIC loss-sharing income (expense) - (3) (6,313) 325 (8,862)
--- --- ------ --- ------
Total non-interest income 15,419 3,761 (5,117) 21,448 (1,696)
Non-interest expense:
Salaries and benefits 21,331 20,454 20,574 83,018 82,834
Occupancy and equipment 6,234 6,098 6,263 24,490 25,101
Professional fees 1,489 924 1,077 4,495 3,257
Other non-interest expense 9,572 8,735 8,539 34,562 34,178
Problem asset workout 1,448 1,583 (8,531) 4,541 (1,868)
Intangible asset amortization 1,370 1,359 1,336 5,401 5,344
Loss (gain) from the change in fair value
of warrant liability 464 (476) (219) 106 (2,953)
Banking center consolidation related
expenses 322 - - 1,411 -
Contract termination expense - - 4,110 - 4,110
--- --- ----- --- -----
Total non-interest expense 42,230 38,677 33,149 158,024 150,003
------ ------ ------ ------- -------
Income before income taxes 7,695 56 3,053 7,925 12,341
Income tax expense (benefit) 4,355 (1,580) 774 3,044 3,165
----- ------ --- ----- -----
Net income $3,340 $1,636 $2,279 $4,881 $9,176
====== ====== ====== ====== ======
Income per share - basic $0.11 $0.05 $0.06 $0.14 $0.22
Income per share - diluted $0.11 $0.05 $0.06 $0.14 $0.22
NATIONAL BANK HOLDINGS CORPORATION
Consolidated Statements of Condition (Unaudited)
(Dollars in thousands, except share and per share data)
December 31, 2015 September 30, 2015 December 31, 2014
----------------- ------------------ -----------------
ASSETS
Cash and cash equivalents $166,092 $153,156 $256,979
Securities purchased under agreements to
resell - 50,000 -
Investment securities available-for-sale 1,157,246 1,244,267 1,479,214
Investment securities held-to-maturity 427,503 445,069 530,590
Non-marketable securities 22,529 27,049 27,045
Loans receivable, net 2,587,673 2,523,128 2,162,409
Allowance for loan losses (27,119) (23,827) (17,613)
------- ------- -------
Loans, net 2,560,554 2,499,301 2,144,796
Loans held for sale 13,292 11,246 5,146
FDIC indemnification asset, net - 18,155 39,082
Other real estate owned 20,814 19,034 29,120
Premises and equipment, net 103,103 104,452 106,341
Goodwill 59,630 59,630 59,630
Intangible assets, net 12,429 13,799 16,883
Other assets 140,716 142,891 124,820
------- ------- -------
Total assets $4,683,908 $4,788,049 $4,819,646
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Non-interest bearing demand
deposits $815,054 $820,269 $732,580
Interest bearing demand deposits 436,745 408,341 386,121
Savings and money market 1,394,995 1,390,054 1,290,436
--------- --------- ---------
Total transaction deposits 2,646,794 2,618,664 2,409,137
Time deposits 1,193,883 1,255,973 1,357,051
--------- --------- ---------
Total deposits 3,840,677 3,874,637 3,766,188
Securities sold under agreements to
repurchase 136,523 169,488 133,552
Federal Home Loan Bank advances 40,000 40,000 40,000
Other liabilities 49,164 82,731 85,331
------ ------ ------
Total liabilities 4,066,364 4,166,856 4,025,071
Shareholders' equity:
Common stock 513 513 512
Additional paid in capital 997,926 995,440 993,212
Retained earnings 38,670 36,778 40,528
Treasury stock (419,660) (420,274) (245,516)
Accumulated other comprehensive income, net
of tax 95 8,736 5,839
--- ----- -----
Total shareholders' equity 617,544 621,193 794,575
------- ------- -------
Total liabilities and
shareholders' equity $4,683,908 $4,788,049 $4,819,646
========== ========== ==========
SHARE DATA
Average basic shares outstanding 30,625,371 32,681,181 39,439,646
Average diluted shares outstanding 30,795,333 32,762,516 39,444,330
Ending shares outstanding 30,358,509 30,318,684 38,884,953
Common book value per share $20.34 $20.49 $20.43
Tangible common book value per
share (1) $18.22 $18.31 $18.63
Tangible common book value per
share, excluding accumulated
other comprehensive income(1) $18.22 $18.02 $18.48
CAPITAL RATIOS
Average equity to average assets 13.17% 13.76% 16.75%
Tangible common equity to tangible assets
(1) 11.98% 11.76% 15.25%
Leverage ratio 11.75% 11.50% 14.98%
(1) Represents a non-GAAP financial
measure. See non-GAAP
reconciliation starting on page
16.
NATIONAL BANK HOLDINGS CORPORATION
Loan Portfolio Update
(Dollars in thousands)
Accounting Treatment Period End Loan Balances:
December 31, 2015 September 30, 2015 December 31, 2014
----------------- ------------------ -----------------
ASC 310- Non 310- Total ASC 310- Non 310- Total ASC 310- Non 310- Total
30 Loans 30 Loans(1) Loans 30 Loans 30 Loans(1) Loans 30 Loans 30 Loans(1) Loans
-------- ---------- ----- -------- ---------- ----- -------- ---------- -----
Commercial $13,007 $1,039,769 $1,052,776 $19,226 $999,400 $1,018,626 $22,956 $772,440 $795,396
Agriculture 16,752 145,558 162,310 17,908 131,119 149,027 19,063 118,468 137,531
Commercial real estate 148,888 506,331 655,219 153,546 480,709 634,255 192,330 369,264 561,594
Residential real estate 21,452 662,550 684,002 26,975 659,475 686,450 40,761 591,939 632,700
Consumer 2,731 30,635 33,366 3,237 31,533 34,770 4,535 30,653 35,188
----- ------ ------ ----- ------ ------ ----- ------ ------
Total $202,830 $2,384,843 $2,587,673 $220,892 $2,302,236 $2,523,128 $279,645 $1,882,764 $2,162,409
======== ========== ========== ======== ========== ========== ======== ========== ==========
(1) Included in non 310-30 loans are
originated loans of $2,180,267,
$2,073,560, and $1,645,533 as
of December 31, 2015, September
30, 2015, and December 31,
2014, respectively, and loans
acquired under business
combinations of $204,576,
$228,676 and $237,231 as of
December 31, 2015, September
30, 2015, and December 31,
2014, respectively.
Strategic/Non-Strategic Period End
Loan Balances:
December 31, 2015 September 30, 2015 December 31, 2014
----------------- ------------------ -----------------
Non- Non- Non-
Strategic strategic Total Strategic strategic Total Strategic strategic Total
--------- --------- ----- --------- --------- ----- --------- --------- -----
Commercial $1,047,053 $5,723 $1,052,776 $997,676 $20,950 $1,018,626 $765,114 $30,282 $795,396
Agriculture 160,824 1,486 162,310 147,311 1,716 149,027 135,559 1,972 137,531
Owner-
occupied
commercial
real estate 200,218 12,115 212,333 186,983 12,507 199,490 140,729 19,228 159,957
Commercial
real estate 353,001 89,885 442,886 342,197 92,568 434,765 275,311 126,326 401,637
Residential
real estate 674,351 9,651 684,002 672,008 14,442 686,450 610,583 22,117 632,700
Consumer 32,398 968 33,366 33,606 1,164 34,770 33,371 1,817 35,188
------ --- ------ ------ ----- ------ ------ ----- ------
Total $2,467,845 $119,828 $2,587,673 $2,379,781 $143,347 $2,523,128 $1,960,667 $201,742 $2,162,409
========== ======== ========== ========== ======== ========== ========== ======== ==========
Originations:
Fourth Third Second First Fourth
quarter quarter quarter quarter quarter
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Commercial $123,739 $151,434 $147,321 $129,120 $102,732
Agriculture 24,194 11,295 19,019 3,605 4,952
Owner-
occupied
commercial
real estate 13,395 12,095 17,566 12,778 11,139
Commercial
real estate 23,260 36,480 38,113 21,898 27,617
Residential
real estate 50,387 36,808 44,699 33,042 31,680
Consumer 3,086 5,616 4,669 3,247 4,111
----- ----- ----- ----- -----
Total $238,061 $253,728 $271,387 $203,690 $182,231
======== ======== ======== ======== ========
NATIONAL BANK HOLDINGS CORPORATION
Summary of Net Interest Margin
(Dollars in thousands)
Three months ended Three months ended Three months ended
December 31, 2015 September 30, 2015 December 31, 2014
----------------- ------------------ -----------------
Average Average Average Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ---- ------- -------- ----
Interest earning assets:
ASC 310-30 loans $209,268 $11,527 22.03% $230,978 $11,262 19.50% $295,308 $14,195 19.23%
Non 310-30 loans(1)(2)(3)(4) 2,332,948 23,857 4.06% 2,193,383 22,210 4.02% 1,879,779 20,897 4.41%
Investment securities available-for-sale 1,207,785 7,234 2.40% 1,286,897 5,929 1.84% 1,529,101 7,273 1.90%
Investment securities held-to-maturity 436,930 1,431 1.31% 461,530 3,215 2.79% 545,735 3,855 2.83%
Other securities 22,287 247 4.43% 27,059 319 4.72% 26,997 302 4.47%
Interest earning deposits and securities
purchased under agreements to resell 139,244 124 0.35% 223,432 198 0.35% 118,171 78 0.26%
------- --- ------- --- ------- ---
Total interest earning assets(4) $4,348,462 $44,420 4.05% $4,423,279 $43,133 3.87% $4,395,091 $46,600 4.21%
========== ======= ========== ======= ========== =======
Cash and due from banks $57,579 $66,288 $57,031
Other assets 341,840 351,071 391,582
Allowance for loan losses (24,748) (21,176) (17,260)
------- ------- -------
Total assets $4,723,133 $4,819,462 $4,826,444
========== ========== ==========
Interest bearing liabilities:
Interest bearing demand, savings
and money market deposits $1,812,345 $1,184 0.26% $1,780,799 $1,167 0.26% $1,677,494 $1,075 0.25%
Time deposits 1,222,829 2,151 0.70% 1,268,476 2,257 0.71% 1,375,779 2,420 0.70%
Securities sold under agreements to
repurchase 143,294 60 0.17% 182,071 37 0.08% 113,993 37 0.13%
Federal Home Loan Bank advances 40,000 168 1.67% 40,000 168 1.67% 39,565 164 1.64%
------ --- ------ --- ------ ---
Total interest bearing
liabilities $3,218,468 $3,563 0.44% $3,271,346 $3,629 0.44% $3,206,831 $3,696 0.46%
========== ====== ========== ====== ========== ======
Demand deposits $825,979 $810,895 $728,345
Other liabilities 56,447 73,984 82,632
------ ------ ------
Total liabilities 4,100,894 4,156,225 4,017,808
--------- --------- ---------
Shareholders' equity 622,239 663,237 808,636
------- ------- -------
Total liabilities and
shareholders' equity $4,723,133 $4,819,462 $4,826,444
========== ========== ==========
Net interest income $40,857 $39,504 $42,904
======= ======= =======
Interest rate spread 3.61% 3.43% 3.75%
Net interest earning assets $1,129,994 $1,151,933 $1,188,260
========== ========== ==========
Net interest margin(4) 3.73% 3.54% 3.87%
Ratio of average interest earning assets
to average interest bearing liabilities 135.11% 135.21% 137.05%
(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 $2.1
billion, $2.0 billion and $1.6
billion, and interest income of
$19.3 million, $18.3 million
and $17.1 million, with tax
equivalent yields of 3.78%,
3.85% and 4.24% for the three
months ended December 31, 2015,
September 30, 2015, and
December 31, 2014,
respectively.
(3) Non 310-30 loans include loans
held-for-sale. Average
balances during the three
months ended December 31, 2015,
September 30, 2015, and
December 31, 2014 were $9.4
million, $9.2 million and $3.6
million, and interest income
was $166 thousand, $192
thousand and $83 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 $928
thousand, $822 thousand and
$320 thousand for the three
months ended December 31, 2015,
September 30, 2015, and
December 31, 2014,
respectively.
NATIONAL BANK HOLDINGS CORPORATION
Summary of Net Interest Margin
(Dollars in thousands)
For the year ended December 31, 2015 For the year ended December 31, 2014
------------------------------------ ------------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
Interest earning assets:
ASC 310-30 loans $237,453 $47,255 19.90% $361,806 $60,841 16.82%
Non 310-30 loans(1)(2)(3)(4) 2,109,152 86,693 4.11% 1,691,253 74,565 4.41%
Investment securities available-for-sale 1,327,245 26,398 1.99% 1,655,730 31,887 1.93%
Investment securities held-to-maturity 476,924 11,747 2.46% 588,909 16,764 2.85%
Other securities 25,865 1,210 4.68% 25,855 1,206 4.66%
Interest earning deposits and securities
purchased under agreements to resell 262,500 799 0.30% 123,350 329 0.27%
------- --- ------- ---
Total interest earning assets(4) $4,439,139 $174,102 3.92% $4,446,903 $185,592 4.17%
========== ======== ========== ========
Cash and due from banks $59,526 $57,763
Other assets 353,344 378,723
Allowance for loan losses (20,939) (15,460)
------- -------
Total assets $4,831,070 $4,867,929
========== ==========
Interest bearing liabilities:
Interest bearing demand, savings
and money market deposits $1,758,965 $4,524 0.26% $1,701,344 $4,323 0.25%
Time deposits 1,281,171 9,085 0.71% 1,421,726 9,797 0.69%
Securities sold under agreements to
repurchase 197,728 187 0.09% 99,057 129 0.13%
Federal Home Loan Bank advances 40,000 666 1.67% 9,975 164 1.64%
------ --- ----- ---
Total interest bearing
liabilities $3,277,864 $14,462 0.44% $3,232,102 $14,413 0.45%
========== ======= ========== =======
Demand deposits $782,431 $700,809
Other liabilities 69,299 74,327
------ ------
Total liabilities 4,129,594 4,007,238
--------- ---------
Shareholders' equity 701,476 860,691
------- -------
Total liabilities and
shareholders' equity $4,831,070 $4,867,929
========== ==========
Net interest income $159,640 $171,179
======== ========
Interest rate spread 3.48% 3.72%
Net interest earning assets $1,161,275 $1,214,801
========== ==========
Net interest margin(4) 3.60% 3.85%
Ratio of average interest earning assets
to average interest bearing liabilities 135.43% 137.59%
(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 $1.9
billion and $1.4 billion, and
interest income of $70.6
million and $58.1 million, with
tax equivalent yields of 3.87%
and 4.17% for 2015 and 2014,
respectively.
(3) Non 310-30 loans include loans
held-for-sale. Average
balances during 2015 and 2014
were $7.1 million and $3.1
million, and interest income
was $589 thousand and $267
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 $2,695
thousand and $930 thousand for
2015 and 2014, respectively.
NATIONAL BANK HOLDINGS CORPORATION
(Dollars in thousands)
Allowance For Loan Losses Analysis (1):
As of and for the three months ended:
-------------------------------------
December 31, 2015 September 30, 2015 December 31, 2014
----------------- ------------------ -----------------
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 $875 $22,952 $23,827 $765 $19,476 $20,241 $907 $15,684 $16,591
Net charge-offs 3 (2,134) (2,131) - (124) (124) (1) (242) (243)
Provision (recoupment)/
expense 198 5,225 5,423 110 3,600 3,710 (185) 1,450 1,265
--- ----- ----- --- ----- ----- ---- ----- -----
Ending ALL $1,076 $26,043 $27,119 $875 $22,952 $23,827 $721 $16,892 $17,613
====== ======= ======= ==== ======= ======= ==== ======= =======
Ratio of annualized net
charge-offs to average
total loans during the
period, respectively (0.01)% 0.36% 0.33% 0.00% 0.02% 0.02% 0.00% 0.05% 0.04%
Ratio of ALL to total loans
outstanding at period end,
respectively 0.53% 1.09% 1.05% 0.40% 1.00% 0.94% 0.26% 0.90% 0.81%
Ratio of ALL to total non-
performing loans at period
end, respectively 0.00% 101.54% 105.74% 0.00% 80.13% 83.18% 0.00% 156.22% 162.89%
Total loans $202,830 $2,384,843 $2,587,673 $220,892 $2,302,236 $2,523,128 $279,645 $1,882,764 $2,162,409
Average total loans during
the period $209,268 $2,323,527 $2,532,795 $230,978 $2,184,169 $2,415,147 $295,308 $1,876,203 $2,171,511
Total non-performing loans $ - $25,647 $25,647 $ - $28,645 $28,645 $ - $10,813 $10,813
Past Due Loans (1):
December 31, 2015 September 30, 2015 December 31, 2014
----------------- ------------------ -----------------
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
----- ----- ----- ----- ----- ----- ----- ----- -----
Loans 30-89 days
past due and
still accruing
interest $3,941 $6,716 $10,657 $2,035 $1,561 $3,596 $7,016 $1,142 $8,158
Loans 90 days
past due and
still accruing
interest 15,762 165 15,927 18,942 266 19,208 33,834 263 34,097
Non-accrual
loans - 25,647 25,647 - 28,645 28,645 - 10,813 10,813
--- ------ ------ --- ------ ------ --- ------ ------
Total past due
and non-
accrual loans $19,703 $32,528 $52,231 $20,977 $30,472 $51,449 $40,850 $12,218 $53,068
======= ======= ======= ======= ======= ======= ======= ======= =======
Total 90 days
past due and
still accruing
interest and
non-accrual
loans to total
loans,
respectively 7.77% 1.08% 1.61% 8.58% 1.26% 1.90% 12.10% 0.59% 2.08%
Total non-
accrual loans
to total loans,
respectively 0.00% 1.08% 0.99% 0.00% 1.24% 1.14% 0.00% 0.57% 0.50%
% of total past
due and non-
accrual loans
that carry fair
value marks 100.00% 22.01% 51.43% 100.00% 14.21% 49.19% 100.00% 34.66% 84.96%
NATIONAL BANK HOLDINGS CORPORATION
(Dollars in thousands)
Asset Quality Data(1):
December 31, 2015 September 30, 2015 December 31, 2014
----------------- ------------------ -----------------
Non-accrual loans $7,854 $7,288 $3,840
Restructured loans on non-
accrual 17,793 21,357 6,973
------ ------ -----
Total non-performing loans 25,647 28,645 10,813
OREO 20,814 19,034 29,120
Other repossessed assets 894 894 849
--- --- ---
Total non-performing
assets $47,355 $48,573 $40,782
======= ======= =======
Accruing restructured
loans $8,403 $11,028 $19,275
Total non-performing
loans to total loans 0.99% 1.14% 0.50%
Total non-performing
assets to total loans and
OREO 1.81% 1.91% 1.86%
(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.
Changes in Accretable Yield:
For the three months ended Life-to-date
-------------------------- ------------
December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015
----------------- ------------------ ----------------- -----------------
Accretable yield at
beginning of period $93,015 $103,430 $113,108 $ -
Additions through
acquisitions - - - 214,994
Reclassification from
non-accretable
difference to
accretable yield 3,367 3,202 16,858 256,328
Reclassification to
non-accretable
difference from
accretable yield (642) (2,355) (2,308) (27,983)
Accretion (11,547) (11,262) (14,195) (359,146)
------- ------- ------- --------
Accretable yield at end
of period $84,193 $93,015 $113,463 $84,193
======= ======= ======== =======
NATIONAL BANK HOLDINGS CORPORATION
Key Ratios
As of and for the As of and for the
three months ended year ended
------------------ ----------
December 31, September 30, December 31, December 31, December 31,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
Key Ratios(1)
------------
Return on
average
assets 0.28% 0.13% 0.19% 0.10% 0.19%
Return on
average
tangible
assets(2) 0.36% 0.21% 0.26% 0.17% 0.26%
Adjusted
return on
average
tangible
assets(2) 0.48% 0.52% 0.71% 0.54% 0.66%
Return on
average
equity 2.13% 0.98% 1.12% 0.70% 1.07%
Return on
average
tangible
common
equity(2) 2.97% 1.64% 1.66% 1.29% 1.58%
Interest
earning
assets to
interest
bearing
liabilities
(end of
period)(3) 133.71% 134.58% 137.36% 133.71% 137.36%
Loans to
deposits
ratio (end
of period) 67.72% 65.41% 57.55% 67.72% 57.55%
Non-interest
bearing
deposits to
total
deposits
(end of
period) 21.22% 21.17% 19.45% 21.22% 19.45%
Net interest
margin(4) 3.64% 3.47% 3.84% 3.54% 3.83%
Net interest
margin
(fully
taxable
equivalent)(2)(4) 3.73% 3.54% 3.87% 3.60% 3.85%
Interest rate
spread(5) 3.61% 3.43% 3.75% 3.48% 3.72%
Yield on
earning
assets(3) 3.97% 3.79% 4.18% 3.86% 4.15%
Yield on
earning
assets
(fully
taxable
equivalent)(2)(3) 4.05% 3.87% 4.21% 3.92% 4.17%
Cost of
interest
bearing
liabilities(3) 0.44% 0.44% 0.46% 0.44% 0.45%
Cost of
deposits 0.35% 0.35% 0.37% 0.36% 0.37%
Non-interest
expense to
average
assets 3.55% 3.18% 2.72% 3.27% 3.08%
Efficiency
ratio (fully
taxable
equivalent)(2)(6) 72.61% 86.25% 84.19% 84.28% 85.35%
Adjusted
efficiency
ratio (fully
taxable
equivalent)(2)(6) 72.34% 73.25% 71.58% 73.68% 72.13%
Asset Quality
Data
(7)(8)(9)
-------------
Non-
performing
loans to
total loans 0.99% 1.14% 0.50% 0.99% 0.50%
Non-
performing
assets to
total loans
and OREO 1.81% 1.91% 1.86% 1.81% 1.86%
Allowance for
loan losses
to total
loans 1.05% 0.94% 0.81% 1.05% 0.81%
Allowance for
loan losses
to non-
performing
loans 105.74% 83.18% 162.89% 105.74% 162.89%
Net charge-
offs to
average
loans(1) 0.33% 0.02% 0.04% 0.12% 0.05%
(1) Ratios are annualized.
(2) Ratio represents non-GAAP financial
measure. See non-GAAP reconciliations
starting on page 16.
(3) Interest earning assets include assets
that earn interest/accretion or
dividends, except for the FDIC
indemnification asset that may earn
accretion but is not part of interest
earning assets. 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 plus non-interest
income on a fully taxable equivalent
basis.
(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.
NATIONAL BANK HOLDINGS CORPORATION
Non-GAAP Financial Measures and Reconciliations
(Dollars in thousands, except share and per share data)
Statements of Financial Condition
December 31, 2015 September 30, 2015 December 31, 2014
----------------- ------------------ -----------------
Total shareholders' equity $617,544 $621,193 $794,575
Less: goodwill and intangible assets,
net (72,060) (73,429) (76,513)
Add: deferred tax liability related
to goodwill 7,772 7,385 6,222
----- ----- -----
Tangible common equity (non-GAAP) $553,256 $555,149 $724,284
======== ======== ========
Total assets $4,683,908 $4,788,049 $4,819,646
Less: goodwill and intangible assets,
net (72,060) (73,429) (76,513)
Add: deferred tax liability related
to goodwill 7,772 7,385 6,222
----- ----- -----
Tangible assets (non-GAAP) $4,619,620 $4,722,005 $4,749,355
========== ========== ==========
Tangible common equity to tangible
assets calculations:
Total shareholders' equity to total
assets 13.18% 12.97% 16.49%
Less: impact of goodwill and
intangible assets, net (1.20)% (1.21)% (1.24)%
------ ------ ------
Tangible common equity to tangible
assets (non-GAAP) 11.98% 11.76% 15.25%
===== ===== =====
Common book value per share
calculations:
Total shareholders' equity $617,544 $621,193 $794,575
Divided by: ending shares outstanding 30,358,509 30,318,684 38,884,953
---------- ---------- ----------
Common book value per share $20.34 $20.49 $20.43
====== ====== ======
Tangible common book value per share
calculations:
Tangible common equity (non-GAAP) $553,256 $555,149 $724,284
Divided by: ending shares outstanding 30,358,509 30,318,684 38,884,953
---------- ---------- ----------
Tangible common book value per share
(non-GAAP) $18.22 $18.31 $18.63
====== ====== ======
Tangible common book value per share,
excluding accumulated other
comprehensive income calculations:
Tangible common equity (non-GAAP) $553,256 $555,149 $724,284
Less: accumulated other comprehensive
income, net of tax (95) (8,736) (5,839)
--- ------ ------
Tangible common book value, excluding
accumulated other comprehensive
income, net of tax (non-GAAP) 553,161 546,413 718,445
Divided by: ending shares outstanding 30,358,509 30,318,684 38,884,953
---------- ---------- ----------
Tangible common book value per share,
excluding accumulated other
comprehensive income, net of tax
(non-GAAP) $18.22 $18.02 $18.48
====== ====== ======
Return on Average Tangible Assets and Return on Average Tangible Equity
As of and for the As of and for the
three months ended year ended
------------------ ----------
December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
----------------- ------------------ ----------------- ----------------- -----------------
Net income $3,340 $1,636 $2,279 $4,881 $9,176
Add: impact of core
deposit intangible
amortization
expense, after tax 836 829 815 3,295 3,260
--- --- --- ----- -----
Net income adjusted
for impact of core
deposit intangible
amortization
expense, after tax $4,176 $2,465 $3,094 $8,176 $12,436
====== ====== ====== ====== =======
Average assets $4,723,133 $4,819,462 $4,846,444 $4,831,070 $4,867,929
Less: average
goodwill and
intangible assets,
net of deferred
tax asset related
to goodwill 64,954 66,575 71,080 66,549 73,074
------ ------ ------ ------ ------
Average tangible
assets (non-GAAP) $4,658,179 $4,752,887 $4,775,364 $4,764,521 $4,794,855
========== ========== ========== ========== ==========
Average
shareholders'
equity $622,239 $663,237 $808,636 $701,476 $860,691
Less: average
goodwill and
intangible assets,
net of deferred
tax asset related
to goodwill 64,954 66,575 71,080 66,549 73,074
------ ------ ------ ------ ------
Average tangible
common equity
(non-GAAP) $557,285 $596,662 $737,556 $634,927 $787,617
======== ======== ======== ======== ========
Return on average
assets (non-GAAP) 0.28% 0.13% 0.19% 0.10% 0.19%
Return on average
tangible assets
(non-GAAP) 0.36% 0.21% 0.26% 0.17% 0.26%
Return on average
equity (non-GAAP) 2.13% 0.98% 1.12% 0.70% 1.07%
Return on average
tangible common
equity (non-GAAP) 2.97% 1.64% 1.66% 1.29% 1.58%
Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin
As of and for the As of and for the
three months ended year ended
------------------ ----------
December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
----------------- ------------------ ----------------- ----------------- -----------------
Interest
income $43,492 $42,311 $46,280 $171,407 $184,662
Add: impact
of taxable
equivalent
adjustment 928 822 320 2,695 930
--- --- --- ----- ---
Interest
income,
fully
taxable
equivalent
(non-GAAP) $44,420 $43,133 $46,600 $174,102 $185,592
======= ======= ======= ======== ========
Net interest
income $39,929 $38,682 $42,584 $156,945 $170,249
Add: impact
of taxable
equivalent
adjustment 928 822 320 2,695 930
--- --- --- ----- ---
Net interest
income,
fully
taxable
equivalent
(non-GAAP) $40,857 $39,504 $42,904 $159,640 $171,179
======= ======= ======= ======== ========
Average
earning
assets $4,348,462 $4,423,279 $4,395,091 $4,439,139 $4,446,903
Yield on
earning
assets 3.97% 3.79% 4.18% 3.86% 4.15%
Yield on
earning
assets,
fully
taxable
equivalent
(non-GAAP) 4.05% 3.87% 4.21% 3.92% 4.17%
Net interest
margin 3.64% 3.47% 3.84% 3.54% 3.83%
Net interest
margin,
fully
taxable
equivalent
(non-GAAP) 3.73% 3.54% 3.87% 3.60% 3.85%
Adjusted Efficiency Ratio
As of and for the As of and for the
three months ended year ended
------------------ ----------
December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
----------------- ------------------ ----------------- ----------------- -----------------
Net interest income $39,929 $38,682 $42,584 $156,945 $170,249
Add: impact of taxable
equivalent adjustment 928 822 320 2,695 930
--- --- --- ----- ---
Net interest income,
fully taxable equivalent
(non-GAAP) $40,857 $39,504 $42,904 $159,640 $171,179
======= ======= ======= ======== ========
Non-interest income $15,419 $3,761 $(5,117) $21,448 $(1,696)
Gain on sale of
previously charged-off
acquired loans (466) (46) (62) (609) (737)
Impact of OREO related
write-ups and other
income (1,508) (183) (1,030) (2,379) (3,807)
Bargain purchase gain - (1,048) - (1,048) -
FDIC indemnification
asset amortization/gain
on termination (4,873) 5,798 7,922 15,878 27,741
FDIC loss sharing
(income) expense - 3 6,313 (325) 8,862
--- --- ----- ---- -----
Adjusted non-interest
income (non-GAAP) $8,572 $8,285 $8,026 $32,965 $30,363
====== ====== ====== ======= =======
Non-interest expense
adjusted for core
deposit intangible asset
amortization $40,860 $37,318 $31,813 $152,623 $144,659
Impact of change in fair
value of warrant
liabilities (464) 476 219 (106) 2,953
Problem asset workout
expense (1,448) (1,583) 8,531 (4,541) 1,868
Banking center
consolidation related
expenses (322) - - (1,411) -
Contract termination
expense - - (4,110) - (4,110)
Severance expenses (986) - - (986) -
Conversion related
expenses (1,732) (659) - (2,967) -
Acquisition related
expenses (153) (547) - (700) -
---- ---- --- ---- ---
Adjusted non-interest
expense (non-GAAP) $35,755 $35,005 $36,453 $141,912 $145,370
======= ======= ======= ======== ========
Efficiency ratio 73.82% 87.93% 84.91% 85.55% 85.82%
Efficiency ratio (fully
taxable equivalent)
(non-GAAP) 72.61% 86.25% 84.19% 84.28% 85.35%
Adjusted efficiency ratio
(fully taxable
equivalent) (non-GAAP) 72.34% 73.25% 71.58% 73.68% 72.13%
Adjusted Financial Result
For the three months ended For the year ended
-------------------------- ------------------
December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
----------------- ------------------ ----------------- ----------------- -----------------
Adjustments to diluted earnings per
share:
Income per share - diluted $0.11 $0.05 $0.06 $0.14 $0.22
Adjustments to diluted earnings per share
(non-GAAP)(1) 0.05 0.12 0.13 0.51 0.45
---- ---- ---- ---- ----
Adjusted diluted earnings per share (non-
GAAP)(1) $0.16 $0.17 $0.19 $0.65 $0.67
===== ===== ===== ===== =====
Adjustments to return on average tangible
assets:
Annualized adjustments to net income
(non-GAAP)(1) $5,705 $15,084 $21,384 $17,563 $19,118
Divided by: average tangible assets (non-
GAAP) 4,658,179 4,752,887 4,755,364 4,764,521 4,794,855
Adjustments to return on average tangible
assets (non-GAAP) 0.12% 0.31% 0.45% 0.37% 0.40%
Return on average tangible assets (non-
GAAP) 0.36% 0.21% 0.26% 0.17% 0.26%
---- ---- ---- ---- ----
Adjusted return on average tangible
assets (non-GAAP) 0.48% 0.52% 0.71% 0.54% 0.66%
==== ==== ==== ==== ====
Adjustments to net income:
Net income $3,340 $1,636 $2,279 $4,881 $9,176
Adjustments to net income (non-GAAP)(1) 1,438 3,802 5,390 17,563 19,118
----- ----- ----- ------ ------
Adjusted net income (non-GAAP) $4,778 $5,438 $7,669 $22,444 $28,294
====== ====== ====== ======= =======
(1) Refer to table below for adjustments
Adjustments
Non-interest income adjustments:
Gain on recoveries of previously charged-
off acquired loans $(466) $(46) $(62) $(609) $(737)
OREO related write-ups and other income (1,508) (183) (1,030) (2,379) (3,807)
Bargain purchase gain - (1,048) - (1,048) -
FDIC indemnification asset amortization/
gain on termination (4,873) 5,798 7,922 15,878 27,741
Other FDIC loss sharing expense (income) - 3 6,313 (325) 8,862
--- --- ----- ---- -----
Total non-interest income adjustments
(non-GAAP) $(6,847) $4,524 $13,143 $11,517 $32,059
======= ====== ======= ======= =======
Non-interest expense adjustments:
Problem asset workout expense $(1,448) $(1,583) $8,531 $(4,541) $1,868
Impact of change in fair value of warrant
liabilities (464) 476 219 (106) 2,953
Contract termination expense - - (4,110) - (4,110)
Severance expenses (986) - - (986) -
Banking center consolidation related
expenses (322) - - (1,411) -
Conversion related expenses (1,732) (659) - (2,967) -
Acquisition related expenses (153) (547) - (700) -
---- ---- --- ---- ---
Total non-interest expense adjustments
(non-GAAP) $(5,105) $(2,313) $4,640 $(10,711) $711
------- ------- ------ -------- ----
Pre-tax adjustments (1,742) 6,837 8,503 22,228 31,348
------ ----- ----- ------ ------
Collective tax expense impact 3,180 (3,035) (3,113) (4,665) (12,230)
----- ------ ------ ------ -------
Adjustments to net income (non-GAAP) $1,438 $3,802 $5,390 $17,563 $19,118
====== ====== ====== ======= =======
Logo - http://photos.prnewswire.com/prnh/20141002/149998
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/national-bank-holdings-corporation-announces-fourth-quarter-and-full-year-2015-financial-results-300211731.html
SOURCE National Bank Holdings Corporation
