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| 8-K - 8-K - National Bank Holdings Corp | form8-kxq12015earningsrele.htm |
Exhibit 99.1
National Bank Holdings Corporation Announces First Quarter 2015 Financial Results
Greenwood Village, Colorado - (PR Newswire) – National Bank Holdings Corporation (NYSE: NBHC) reported net income of $1.2 million, or $0.03 per diluted share, for the first quarter of 2015, compared to net income of $2.3 million, or $0.06 per diluted share, for the fourth quarter of 2014 and $1.4 million, or $0.03 per diluted share, for the first quarter of 2014.
In announcing these results, Chief Executive Officer Tim Laney said, "We delivered on another quarter of solid loan growth, driven by $204 million in new loan originations and excellent credit quality. We had a nice uptick in commercial activity as we have remained focused on deepening our relationships with our small to mid-sized clients and expanding our deposit base within our markets. We continued to have success growing our average client demand deposits, which have grown 9.9% since the first quarter of last year, providing continued growth to our low-cost funding sources."
Mr. Laney added, "We remained active in repurchasing our shares during the first quarter and repurchased another 2.1 million shares, or 5.4% of our outstanding shares. Since early 2013, we have repurchased 29.8% of our shares outstanding, at a weighted average price of $19.48. In February, we announced another $50 million share repurchase authorization, so that we can continue the use of share repurchases as a means to opportunistically manage our shareholders' capital in the current environment."
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 OREO and problem loans, the impacts of the change in the warrant liability and conversion related expenses, which can be seen in our non-GAAP reconciliation starting on page 14. These items negatively impacted the first quarter by a net $0.14 per diluted share. The net impact of these items may fluctuate on a quarterly basis, but is expected to decrease over time in connection with the expiration of the FDIC loss-sharing agreements over the next couple of years and the decreasing problem asset workout expenses. The additional $0.14 per diluted share would have resulted in an adjusted net earnings per diluted share of $0.17 for the first quarter of 2015 compared to $0.15 for the first quarter of 2014. The adjusted return on average tangible assets was 0.60% during the first quarter. We feel that this analysis provides better clarity to the emerging profitability and the progress toward reaching our goal of 1% return on average tangible assets.”
First Quarter 2015 Highlights
(All comparisons refer to the fourth quarter of 2014, except as noted)
• | Grew the strategic loan portfolio by $77.1 million, or 15.9% annualized, driven by $203.7 million in originations. |
• | Credit quality remained strong, as annualized net charge-offs in the non 310-30 portfolio were only 0.04% of average non 310-30 loans. |
• | Successfully exited $23.2 million, or 46.7% annualized, of the remaining non-strategic loan portfolio. |
• | Added a net $10.0 million to accretable yield for the acquired loans accounted for under ASC 310-30. |
• | Average total deposits and client repurchase agreements grew $123.1 million, while higher-cost average time deposits declined $35.9 million. |
• | Net interest income totaled $39.5 million, a $3.1 million decrease from the prior quarter. The quarterly decrease was primarily driven by the $1.7 million in accelerated loan accretion recognized during the prior quarter, lower balances of high-yielding purchased loans and two fewer days in the quarter. |
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• | FDIC loss-share related non-interest income totaled a negative $8.5 million, including $7.7 million of non-cash amortization of the FDIC indemnification asset. |
• | Operating expenses decreased $1.4 million, or 15.2% annualized, from the prior quarter, while lower OREO gains drove a $3.6 million increase in total non-interest expense. |
• | Repurchased 2.1 million shares during the first quarter, or 5.4% of outstanding shares. Since early 2013, 15.6 million shares have been repurchased, or 29.8% of then outstanding shares, at a weighted average price of $19.48. |
• | At March 31, 2015, tangible common book value per share was $18.86 before consideration of the excess accretable yield value of $0.94 per share. |
First Quarter 2015 Results
(All comparisons refer to the fourth quarter of 2014, except as noted)
Net Interest Income
Net interest income totaled $39.5 million, a $3.1 million decrease from the prior quarter, largely due to $1.7 million in accelerated loan accretion recognized during the fourth quarter of 2014, lower levels of higher-yielding purchased loans and two fewer days in the first quarter. Average interest earning assets increased $114.8 million, or 2.6%, to $4.5 billion from the prior quarter, due to higher levels of short-term investments that were driven by an increase in client repurchase agreements. The net interest margin narrowed to 3.59% during the first quarter of 2015 from 3.87% during the previous quarter (fully taxable equivalent), representing a narrowing of 28 basis points. The $1.7 million of accelerated loan accretion benefited the fourth quarter by 15 basis points. Additionally, the impact of the higher level of lower-yielding short-term investments that resulted from the additional client repurchase agreements narrowed the first quarter net interest margin by 10 basis points.
Loans
Strategic loans totaled $2.0 billion at March 31, 2015 and grew $77.1 million during the quarter, or 15.9% annualized. Included in strategic loans outstanding are $1.7 billion in originated balances, which increased $100.6 million, or 24.8% annualized, over the prior quarter. Loan originations totaled $203.7 million and increased $21.5 million, or 11.8%, from the prior quarter. Total loans ended the quarter at $2.2 billion, increasing $53.9 million during the quarter, or 10.1% annualized. Consistent with the strategy of exiting the non-strategic loan portfolio, balances of non-strategic relationships totaled $178.5 million at March 31, 2015, decreasing $23.2 million during the quarter, or 46.7% 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.
Energy sector loan balances totaled $149.6 million at March 31, 2015, representing 6.8% of total loans and 3.3% of earning assets and decreased from $161.8 million at December 31, 2014 as clients raised capital, increased cash positions and moderated borrowings in response to continued depressed oil and natural gas prices.
Asset Quality and Provision for Loan Losses
Purchased loans accounted for under 310-30 totaled $249.9 million at March 31, 2015 and decreased $29.8 million during the first quarter, an annualized decrease of 43.2%, reflecting workout efforts on these purchased loans. The quarterly fair value re-measurement on the 310-30 loans resulted in a favorable net transfer of $10.0 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 $196.5 million.
Non 310-30 loans totaled $2.0 billion and represented 88.7% of total loans at March 31, 2015. These loans are comprised of originated loans of $1.7 billion and acquired loans not accounted for under 310-30 of $220.2 million. Net charge-offs within the non 310-30 portfolio remained low at just 0.04% annualized, which reflects the prudent underwriting and well-selected clients within this portfolio. Non-performing non 310-30 loans (comprised of non-accrual loans and non-accrual TDRs) represented 0.58% of total non 310-30 loans, compared to 0.57% at December 31, 2014. A provision for loan losses on the non 310-30 loans of $1.4 million was recorded during the first quarter of 2015, which was $0.1 million lower than the prior quarter and brought the allowance for loan losses on non 310-30 loans to 0.92% before consideration of $7.0 million of remaining purchase accounting discounts.
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OREO ended the quarter at $23.4 million, decreasing $5.7 million during the quarter. Gains on sales of OREO were $1.5 million during the first quarter (of which $0.7 million of the gains were covered by loss-sharing agreements with the FDIC) compared to $10.4 million in the previous quarter (of which $8.9 million were covered by loss-sharing agreements with the FDIC). Of the $23.4 million of OREO at March 31, 2015, $15.9 million, or 67.8%, were covered by loss-sharing agreements with the FDIC.
Deposits
Transaction deposits (defined as total deposits less time deposits) and client repurchase agreements averaged $2.7 billion during the first quarter, increasing $159.0 million, or 6.3%. Total deposits and client repurchase agreements averaged $4.0 billion during the first quarter, increasing $123.1 million during the quarter, or 3.2%, and was driven by a $40.5 million increase in average interest bearing demand, savings and money market deposits, coupled with a $113.6 million increase in client repurchase agreements. Higher-cost time deposits declined $35.9 million, or 10.6% annualized. Additionally, the average cost of total deposits declined one basis point from the prior quarter to 0.36% during the first quarter. The balance sheet continues to be strongly funded by client deposits and client repurchase agreements and at March 31, 2015, these client fundings comprised 97.4% of total liabilities.
Non-Interest Income
Banking related non-interest income (excludes FDIC-related non-interest income, gain on previously charged-off acquired loans and OREO related income) totaled $7.4 million during the first quarter of 2015 and decreased $0.6 million, compared to the prior quarter. The decrease was primarily attributable to a $0.5 million decrease in service charges.
FDIC loss-share related non-interest income totaled a negative $8.5 million for the first quarter compared to a negative $14.2 million during the prior quarter, improving $5.7 million. The improvement was primarily due to a $5.5 million decrease in other FDIC loss-sharing income (expense) related to the sharing of gains on sales of several covered OREO properties in the fourth quarter, which was a particularly strong quarter of covered OREO resolution. As of March 31, 2015, the FDIC indemnification asset was $27.9 million. The FDIC indemnification asset amortization is expected to be between $14.0 million and $21.0 million for the remainder of 2015. The benefit of the increased client cash flows that contributes to the amortization of the FDIC indemnification asset is captured in the 310-30 accretable yield over the remaining life of the loan pools as most of the FDIC covered assets are accounted for in the 310-30 loan pools.
"We continue to have success in our workout efforts regarding our purchased troubled loan portfolio and related OREO assets," said Brian Lilly. "While this means higher returns on the covered loans, it also means we have to share the gains with the FDIC and as a result, we have lower expected reimbursements from the FDIC. This translates into additional non-cash write-downs of the FDIC indemnification asset receivable. In the first quarter, we wrote-down this receivable $7.7 million, or $0.12 per diluted share. While we expect that the FDIC loss-share related non-interest income will continue to fluctuate and be a reflection of our workout efforts, our current expectation is that the non-cash write-down of the FDIC indemnification asset receivable will be between $0.24 and $0.35 per diluted share for the remainder of 2015."
Non-Interest Expense
Total non-interest expense was $36.7 million during the first quarter of 2015, increasing $3.6 million from the previous quarter, largely due to the significant OREO gains recorded during the fourth quarter. Operating expenses, which exclude OREO expenses, problem loan expense, the impact from the change in the warrant liability and conversion-related expenses, totaled $36.4 million and decreased $1.4 million, driven by a $0.5 million decrease in salaries and benefits.
OREO and problem loan expenses totaled $0.4 million and increased $8.9 million from the prior quarter. The increase was due to the higher levels of OREO gains realized during the fourth quarter. OREO and problem loan expenses are expected to continue to fluctuate quarterly as the acquired problem asset portfolio is resolved.
An income tax benefit of $0.4 million was recorded during the first quarter. The tax benefit was a result of tax-exempt income exceeding taxable income for the quarter.
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Capital
Capital ratios continue to be strong and well in excess of federal bank regulatory agency “well capitalized” thresholds. Shareholders’ equity totaled $762.7 million at March 31, 2015 and decreased $31.9 million from the prior quarter. The decrease was due to the repurchase of 2.1 million shares and was partially offset by a $6.2 million increase 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. The shares repurchased represented a 5.4% reduction in shares outstanding during the quarter, which brings the cumulative shares repurchased since early 2013 to 29.8% of the shares then outstanding.
Tangible common book value per share at March 31, 2015 was $18.86, compared to $18.63 at December 31, 2014, and the tangible common equity to tangible assets ratio decreased 1.15% to 14.10% at March 31, 2015.
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 March 31, 2015 accretable yield balance on the 310-30 loans of $110.8 million would add $1.84 after-tax to the tangible book value per share. A more conservative methodology, that management uses, values the excess yield and then considers the timing of the accreted interest income recognition. Under this more conservative methodology, we first net the accretable yield on 310-30 loans and the amortization of the FDIC indemnification asset and then calculate the excess above a 4.0% yield (an approximate yield on new loan originations), and finally discount the amounts at 5%. The result would add $0.94 after-tax to our tangible book value per share as of March 31, 2015.
Year-Over-Year Review
(All comparisons refer to the first quarter of 2014)
Net income for the first quarter of 2015 was $1.2 million, or $0.03 per diluted share, compared to net income of $1.4 million for the first quarter of 2014, or $0.03 per diluted share. Net interest income totaled $39.5 million during the first quarter of 2015 and decreased $3.9 million, or 8.9%, from the first quarter of 2014, largely due to lower levels of higher-yielding purchased loans. Average interest earning assets remained relatively stable from the same quarter of the prior year, as increases in the originated loan portfolio and cash offset a reduction in the investment portfolio and non-strategic purchased loans. The continued resolution of the higher-yielding acquired non-strategic loan portfolio led to a 35 basis point narrowing of the net interest margin to 3.59% from 3.94% (fully taxable equivalent). The elevated level of lower-yielding short-term investments that resulted from the increased client repurchase agreements negatively impacted the first quarter 2015 margin by 10 basis points.
Loan balances as of March 31, 2015 totaled $2.2 billion and increased $254.7 million, or 13.0%, since March 31, 2014. Strategic loans increased $397.4 million since March 31, 2014, a 24.2% increase, on the strength of $856.0 million in loan originations between the two periods. The strong loan originations were the result of continued market penetration and the success of specialty lending groups. Non-strategic loans declined $142.7 million from a year ago, a 44.4% decrease, as a result of the continued workout progress on exiting acquired problem loans.
Average transaction deposits and client repurchase agreements totaled $2.7 billion during the first quarter of 2015 and increased $200.7 million from the same period in 2014, or 8.1%, and were led by a $133.1 million increase in client repurchase agreements and a $66.2 million increase in average demand deposits as a result of our strategic focus on relationship banking. Total deposits and client repurchase agreements averaged $4.0 billion during the first quarter of 2015, increasing $76.5 million, or 1.9%, from the first quarter of the prior year. The increase was primarily due to the aforementioned increases in client repurchase agreements coupled with the $66.2 million, or 9.9%, increase in demand deposits, and was somewhat offset by a $124.2 million, or 8.5%, decline in average time deposits. The mix of transaction deposits to total deposits improved to 65.4% at March 31, 2015 from 62.7% at March 31, 2014. Additionally, the average cost of total deposits declined one basis point to 0.36% in the first quarter of 2015 from 0.37% during the same period of 2014.
Provision for loan loss expense was $1.5 million during the first quarter of 2015, compared to $1.8 million during the first quarter of 2014, a decrease of $0.3 million. The decrease in provision was primarily due to improved credit quality as non 310-30 net charge-offs decreased to only 0.04% during the first quarter of 2015 compared to 0.09% during the same period of 2014.
Non-interest income was a negative $0.5 million during the first quarter of 2015 compared to a negative $0.4 million during the same period a year ago, a decrease of $0.1 million. Banking related non-interest income of $7.4 million during the first quarter
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of 2015 was up $0.5 million compared to the same period in the prior year as a result of increases in bank card fees, gain on sale of mortgages and bank owned life insurance income and were somewhat offset by a decrease in service charges. FDIC loss-share related income was relatively stable compared to the first quarter of the prior year.
Non-interest expense totaled $36.7 million in the first quarter of 2015 compared to $39.0 million during 2014, a decrease of $2.3 million, or 5.9%. Operating expenses of $36.4 million during the first quarter of 2015 decreased $1.2 million from the same quarter of 2014. The 3.3% year-over-year decrease in operating expenses was primarily due to lower salaries and benefits of $0.7 million as a result of a continued focus on operational efficiencies. OREO and problem loan expenses declined $1.9 million and were driven by $0.9 million higher net gains on OREO sales coupled with $1.2 million in lower OREO expenses. The benefit from the change in the fair value of the warrant liability was $0.5 million less during the first quarter of 2015 than the same quarter of the prior year.
Conference Call
Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Friday, April 24, 2015. Interested parties may listen to this call by dialing (877) 272-6762 (United States)/(615) 800-6832 (International) using the Conference ID of 16946906 and asking for the National Bank Holdings Corporation First Quarter Earnings conference call. A telephonic replay of the call will be available beginning approximately two hours after the call’s completion through May 8, 2015, by dialing (855) 859-2056 (United States)/(404) 537-3406 (International) using the Conference ID of 16946906. The earnings release will also be available on the Company’s website at www.nationalbankholdings.com by visiting the investor relations area.
About Non-GAAP Financial Measures
Certain of the financial measures and ratios we present, including “tangible assets,” “return on average tangible assets,” “return on average tangible 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.
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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, N.A., 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.
Contact:
Analysts/Institutional Investors: Brian Lilly, Chief Financial Officer, (720) 529-3315, ir@nationalbankholdings.com
Media: Whitney Bartelli, SVP Director of Marketing, (816) 298-2203, media@nbhbank.com
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NATIONAL BANK HOLDINGS CORPORATION | |||||||||||
FINANCIAL SUMMARY | |||||||||||
Consolidated Statements of Operations (Unaudited) | |||||||||||
(Dollars in thousands, except share and per share data) | |||||||||||
For the three months ended | |||||||||||
March 31, | December 31, | March 31, | |||||||||
2015 | 2014 | 2014 | |||||||||
Total interest and dividend income | $ | 43,087 | $ | 46,280 | $ | 46,885 | |||||
Total interest expense | 3,608 | 3,696 | 3,538 | ||||||||
Net interest income before provision for loan losses | 39,479 | 42,584 | 43,347 | ||||||||
Provision for loan losses on 310-30 loans | 50 | (185 | ) | (54 | ) | ||||||
Provision for loan losses on non 310-30 loans | 1,403 | 1,450 | 1,823 | ||||||||
Net interest income after provision for loan losses | 38,026 | 41,319 | 41,578 | ||||||||
Non-interest income: | |||||||||||
FDIC indemnification asset amortization | (7,670 | ) | (7,922 | ) | (7,608 | ) | |||||
Other FDIC loss-sharing expense | (810 | ) | (6,313 | ) | (957 | ) | |||||
Service charges | 3,327 | 3,872 | 3,540 | ||||||||
Bank card fees | 2,550 | 2,575 | 2,374 | ||||||||
Gain on sale of mortgages, net | 400 | 326 | 208 | ||||||||
Other non-interest income | 1,166 | 1,253 | 825 | ||||||||
Gain on previously charged-off acquired loans | 58 | 62 | 296 | ||||||||
OREO related write-ups and other income | 500 | 1,030 | 968 | ||||||||
Total non-interest income (expense) | (479 | ) | (5,117 | ) | (354 | ) | |||||
Non-interest expense: | |||||||||||
Salaries and benefits | 20,077 | 20,574 | 20,774 | ||||||||
Occupancy and equipment | 6,089 | 6,263 | 6,474 | ||||||||
Professional fees | 1,120 | 1,077 | 638 | ||||||||
Other non-interest expense | 8,111 | 8,539 | 8,376 | ||||||||
Gain from the change in fair value of warrant liability | (390 | ) | (219 | ) | (898 | ) | |||||
Intangible asset amortization | 1,336 | 1,336 | 1,336 | ||||||||
Other real estate owned (income) expenses | (418 | ) | (8,979 | ) | 1,633 | ||||||
Problem loan expenses | 799 | 448 | 685 | ||||||||
Contract termination expenses | — | 4,110 | — | ||||||||
Total non-interest expense | 36,724 | 33,149 | 39,018 | ||||||||
Income before income taxes | 823 | 3,053 | 2,206 | ||||||||
Income tax (benefit) expense | (423 | ) | 774 | 775 | |||||||
Net income | $ | 1,246 | $ | 2,279 | $ | 1,431 | |||||
Income per share - basic | $ | 0.03 | $ | 0.06 | $ | 0.03 | |||||
Income per share - diluted | $ | 0.03 | $ | 0.06 | $ | 0.03 | |||||
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NATIONAL BANK HOLDINGS CORPORATION | |||||||||||
Consolidated Statements of Condition (Unaudited) | |||||||||||
(Dollars in thousands, except share and per share data) | |||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 490,104 | $ | 256,979 | $ | 197,815 | |||||
Investment securities available-for-sale | 1,413,414 | 1,479,214 | 1,720,840 | ||||||||
Investment securities held-to-maturity | 503,610 | 530,590 | 616,221 | ||||||||
Non-marketable securities | 27,050 | 27,045 | 31,109 | ||||||||
Loans receivable, net | 2,216,269 | 2,162,409 | 1,961,592 | ||||||||
Allowance for loan losses | (18,873 | ) | (17,613 | ) | (13,972 | ) | |||||
Loans, net | 2,197,396 | 2,144,796 | 1,947,620 | ||||||||
Loans held for sale | 4,935 | 5,146 | 2,143 | ||||||||
FDIC indemnification asset, net | 27,854 | 39,082 | 56,677 | ||||||||
Other real estate owned | 23,417 | 29,120 | 65,983 | ||||||||
Premises and equipment, net | 104,334 | 106,341 | 112,534 | ||||||||
Goodwill | 59,630 | 59,630 | 59,630 | ||||||||
Intangible assets, net | 15,546 | 16,883 | 20,893 | ||||||||
Other assets | 123,760 | 124,820 | 82,122 | ||||||||
Total assets | $ | 4,991,050 | $ | 4,819,646 | $ | 4,913,587 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Liabilities: | |||||||||||
Non-interest bearing demand deposits | $ | 758,763 | $ | 732,580 | $ | 689,248 | |||||
Interest bearing demand deposits | 390,523 | 386,121 | 398,429 | ||||||||
Savings and money market | 1,358,515 | 1,290,436 | 1,334,521 | ||||||||
Total transaction deposits | 2,507,801 | 2,409,137 | 2,422,198 | ||||||||
Time deposits | 1,324,661 | 1,357,051 | 1,443,898 | ||||||||
Total deposits | 3,832,462 | 3,766,188 | 3,866,096 | ||||||||
Securities sold under agreements to repurchase | 284,161 | 133,552 | 91,065 | ||||||||
Federal Home Loan Bank advances | 40,000 | 40,000 | — | ||||||||
Other liabilities | 71,751 | 85,331 | 60,577 | ||||||||
Total liabilities | 4,228,374 | 4,025,071 | 4,017,738 | ||||||||
Shareholders' equity: | |||||||||||
Common stock | 512 | 512 | 512 | ||||||||
Additional paid in capital | 993,874 | 993,212 | 990,700 | ||||||||
Retained earnings | 39,866 | 40,528 | 39,121 | ||||||||
Treasury stock | (283,661 | ) | (245,516 | ) | (134,953 | ) | |||||
Accumulated other comprehensive income, net of tax | 12,085 | 5,839 | 469 | ||||||||
Total shareholders' equity | 762,676 | 794,575 | 895,849 | ||||||||
Total liabilities and shareholders' equity | $ | 4,991,050 | $ | 4,819,646 | $ | 4,913,587 | |||||
SHARE DATA | |||||||||||
Average basic shares outstanding | 38,028,506 | 39,439,646 | 44,819,644 | ||||||||
Average diluted shares outstanding | 38,028,612 | 39,444,330 | 44,863,138 | ||||||||
Ending shares outstanding | 36,797,787 | 38,884,953 | 44,486,467 | ||||||||
Common book value per share | $ | 20.73 | $ | 20.43 | $ | 20.14 | |||||
Tangible common book value per share (1) | $ | 18.86 | $ | 18.63 | $ | 18.44 | |||||
Tangible common book value per share, excluding accumulated other comprehensive income(1) | $ | 18.53 | $ | 18.48 | $ | 18.43 | |||||
CAPITAL RATIOS | |||||||||||
Average equity to average assets | 15.88 | % | 16.75 | % | 18.34 | % | |||||
Tangible common equity to tangible assets (1) | 14.10 | % | 15.25 | % | 16.96 | % | |||||
Leverage ratio | 13.96 | % | 14.98 | % | 16.81 | % | |||||
(1) Represents a non-GAAP financial measure. See non-GAAP reconciliation starting on page 14.
8
NATIONAL BANK HOLDINGS CORPORATION | |||||||||||||||||||||||||||||||||||
Loan Portfolio Update | |||||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||
Accounting Treatment and Loss-Share Coverage Period End Loan Balances: | |||||||||||||||||||||||||||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |||||||||||||||||||||||||||||||||
ASC 310-30 Loans | Non 310-30 Loans | Total Loans | ASC 310-30 Loans | Non 310-30 Loans | Total Loans | ASC 310-30 Loans | Non 310-30 Loans | Total Loans | |||||||||||||||||||||||||||
Commercial | $ | 21,481 | $ | 832,724 | $ | 854,205 | $ | 22,956 | $ | 772,440 | $ | 795,396 | $ | 52,107 | $ | 530,462 | $ | 582,569 | |||||||||||||||||
Agriculture | 19,067 | 113,608 | 132,675 | 19,063 | 118,468 | 137,531 | 23,545 | 131,586 | 155,131 | ||||||||||||||||||||||||||
Commercial real estate | 171,742 | 388,833 | 560,575 | 192,330 | 369,264 | 561,594 | 263,608 | 317,137 | 580,745 | ||||||||||||||||||||||||||
Residential real estate | 33,158 | 602,904 | 636,062 | 40,761 | 591,939 | 632,700 | 60,467 | 548,758 | 609,225 | ||||||||||||||||||||||||||
Consumer | 4,406 | 28,346 | 32,752 | 4,535 | 30,653 | 35,188 | 6,819 | 27,103 | 33,922 | ||||||||||||||||||||||||||
Total | $ | 249,854 | $ | 1,966,415 | $ | 2,216,269 | $ | 279,645 | $ | 1,882,764 | $ | 2,162,409 | $ | 406,546 | $ | 1,555,046 | $ | 1,961,592 | |||||||||||||||||
Covered | $ | 142,345 | $ | 29,542 | $ | 171,887 | $ | 160,876 | $ | 32,821 | $ | 193,697 | $ | 244,322 | $ | 43,268 | $ | 287,590 | |||||||||||||||||
Non-covered | 107,509 | 1,936,873 | 2,044,382 | 118,769 | 1,849,943 | 1,968,712 | 162,224 | 1,511,778 | 1,674,002 | ||||||||||||||||||||||||||
Total | $ | 249,854 | $ | 1,966,415 | $ | 2,216,269 | $ | 279,645 | $ | 1,882,764 | $ | 2,162,409 | $ | 406,546 | $ | 1,555,046 | $ | 1,961,592 | |||||||||||||||||
Strategic/Non-Strategic Period-End Loan Balances: | |||||||||||||||||||||||||||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |||||||||||||||||||||||||||||||||
Strategic | Non-strategic | Total | Strategic | Non-strategic | Total | Strategic | Non-strategic | Total | |||||||||||||||||||||||||||
Commercial | $ | 826,190 | $ | 28,015 | $ | 854,205 | $ | 765,114 | $ | 30,282 | $ | 795,396 | $ | 513,669 | $ | 68,900 | $ | 582,569 | |||||||||||||||||
Agriculture | 130,711 | 1,964 | 132,675 | 135,559 | 1,972 | 137,531 | 151,708 | 3,423 | 155,131 | ||||||||||||||||||||||||||
Owner-occupied commercial real estate | 151,463 | 18,258 | 169,721 | 140,729 | 19,228 | 159,957 | 134,453 | 26,935 | 161,388 | ||||||||||||||||||||||||||
Commercial real estate | 279,768 | 111,086 | 390,854 | 275,311 | 126,326 | 401,637 | 227,634 | 191,723 | 419,357 | ||||||||||||||||||||||||||
Residential real estate | 618,631 | 17,431 | 636,062 | 610,583 | 22,117 | 632,700 | 581,451 | 27,774 | 609,225 | ||||||||||||||||||||||||||
Consumer | 30,974 | 1,778 | 32,752 | 33,371 | 1,817 | 35,188 | 31,401 | 2,521 | 33,922 | ||||||||||||||||||||||||||
Total | $ | 2,037,737 | $ | 178,532 | $ | 2,216,269 | $ | 1,960,667 | $ | 201,742 | $ | 2,162,409 | $ | 1,640,316 | $ | 321,276 | $ | 1,961,592 | |||||||||||||||||
Originations: | |||||||||||||||||||
First | Fourth | Third | Second | First | |||||||||||||||
quarter | quarter | quarter | quarter | quarter | |||||||||||||||
2015 | 2014 | 2014 | 2014 | 2014 | |||||||||||||||
Commercial | $ | 129,120 | $ | 102,732 | $ | 110,083 | $ | 133,671 | $ | 130,096 | |||||||||
Agriculture | 3,605 | 4,952 | 7,014 | 10,288 | 4,959 | ||||||||||||||
Owner-occupied commercial real estate | 12,778 | 11,139 | 10,293 | 28,803 | 21,002 | ||||||||||||||
Commercial real estate | 21,898 | 27,617 | 33,817 | 45,903 | 29,633 | ||||||||||||||
Residential real estate | 33,042 | 31,680 | 35,404 | 44,539 | 27,812 | ||||||||||||||
Consumer | 3,247 | 4,111 | 6,678 | 3,556 | 3,461 | ||||||||||||||
Total | $ | 203,690 | $ | 182,231 | $ | 203,289 | $ | 266,760 | $ | 216,963 | |||||||||
9
NATIONAL BANK HOLDINGS CORPORATION | |||||||||||||||||||||||||||||||||
Summary of Net Interest Margin | |||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||
Three months ended March 31, 2015 | Three months ended December 31, 2014 | Three months ended March 31, 2014 | |||||||||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | ||||||||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||||||||
Interest earning assets: | |||||||||||||||||||||||||||||||||
ASC 310-30 loans | $ | 266,573 | $ | 12,694 | 19.05 | % | $ | 295,308 | $ | 14,195 | 19.23 | % | $ | 424,335 | $ | 16,900 | 15.93 | % | |||||||||||||||
Non 310-30 loans(1)(2)(3)(4) | 1,917,774 | 19,682 | 4.16 | % | 1,879,779 | 20,897 | 4.41 | % | 1,480,674 | 16,506 | 4.52 | % | |||||||||||||||||||||
Investment securities available-for-sale | 1,449,654 | 6,897 | 1.90 | % | 1,529,101 | 7,273 | 1.90 | % | 1,779,739 | 8,647 | 1.94 | % | |||||||||||||||||||||
Investment securities held-to-maturity | 519,155 | 3,675 | 2.83 | % | 545,735 | 3,855 | 2.83 | % | 630,871 | 4,521 | 2.87 | % | |||||||||||||||||||||
Other securities | 27,101 | 327 | 4.83 | % | 26,997 | 302 | 4.47 | % | 31,658 | 389 | 4.92 | % | |||||||||||||||||||||
Interest earning deposits and securities purchased under agreements to resell | 329,637 | 207 | 0.25 | % | 118,171 | 78 | 0.26 | % | 130,355 | 81 | 0.25 | % | |||||||||||||||||||||
Total interest earning assets(4) | $ | 4,509,894 | $ | 43,482 | 3.91 | % | $ | 4,395,091 | $ | 46,600 | 4.21 | % | $ | 4,477,632 | $ | 47,044 | 4.26 | % | |||||||||||||||
Cash and due from banks | 57,766 | 57,031 | 58,938 | ||||||||||||||||||||||||||||||
Other assets | 365,996 | 391,582 | 386,388 | ||||||||||||||||||||||||||||||
Allowance for loan losses | (18,555 | ) | (17,260 | ) | (13,138 | ) | |||||||||||||||||||||||||||
Total assets | $ | 4,915,101 | $ | 4,826,444 | $ | 4,909,820 | |||||||||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||||||||||||||
Interest bearing demand, savings and money market deposits | $ | 1,718,010 | $ | 1,071 | 0.25 | % | $ | 1,677,494 | $ | 1,075 | 0.25 | % | $ | 1,716,638 | $ | 1,057 | 0.25 | % | |||||||||||||||
Time deposits | 1,339,897 | 2,328 | 0.70 | % | 1,375,779 | 2,420 | 0.70 | % | 1,464,120 | 2,449 | 0.68 | % | |||||||||||||||||||||
Securities sold under agreements to repurchase | 227,584 | 45 | 0.08 | % | 113,993 | 37 | 0.13 | % | 94,443 | 32 | 0.14 | % | |||||||||||||||||||||
Federal Home Loan Bank advances | 40,000 | 164 | 1.66 | % | 39,565 | 164 | 1.64 | % | — | — | 0.00 | % | |||||||||||||||||||||
Total interest bearing liabilities | $ | 3,325,491 | $ | 3,608 | 0.44 | % | $ | 3,206,831 | $ | 3,696 | 0.46 | % | $ | 3,275,201 | $ | 3,538 | 0.44 | % | |||||||||||||||
Demand deposits | 733,230 | 728,345 | 667,009 | ||||||||||||||||||||||||||||||
Other liabilities | 75,917 | 82,632 | 67,128 | ||||||||||||||||||||||||||||||
Total liabilities | 4,134,638 | 4,017,808 | 4,009,338 | ||||||||||||||||||||||||||||||
Shareholders' equity | 780,463 | 808,636 | 900,482 | ||||||||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 4,915,101 | $ | 4,826,444 | $ | 4,909,820 | |||||||||||||||||||||||||||
Net interest income | $ | 39,874 | $ | 42,904 | $ | 43,506 | |||||||||||||||||||||||||||
Interest rate spread | 3.47 | % | 3.75 | % | 3.82 | % | |||||||||||||||||||||||||||
Net interest earning assets | $ | 1,184,403 | $ | 1,188,260 | $ | 1,202,431 | |||||||||||||||||||||||||||
Net interest margin(4) | 3.59 | % | 3.87 | % | 3.94 | % | |||||||||||||||||||||||||||
Ratio of average interest earning assets to average interest bearing liabilities | 135.62 | % | 137.05 | % | 136.71 | % | |||||||||||||||||||||||||||
(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 $1.7 billion, $1.6 billion and $1.2 billion, and interest income of $16.2 million, $17.1 million and $12.0 million, with yields of 3.88%, 4.16% and 4.16% for the three months ended March 31 2015, December 31, 2014 and March 31, 2014, respectively. | ||||||||||||||||||||||||||||||||
(3) | Non 310-30 loans include loans held-for-sale. Average balances during the three months ended March 31, 2015, December 31, 2014 and March 31, 2014 were $2.9 million, $3.6 million and $2.3 million, and interest income was $77 thousand, $83 thousand and $45 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 $395 thousand, $320 thousand and $159 thousand for the three months ended March 31, 2015, December 31, 2014 and March 31, 2014, respectively. | ||||||||||||||||||||||||||||||||
10
NATIONAL BANK HOLDINGS CORPORATION | |||||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||
Allowance For Loan Losses Analysis (1): | |||||||||||||||||||||||||||||||||||
As of and for the three months ended: | |||||||||||||||||||||||||||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |||||||||||||||||||||||||||||||||
ASC 310-30 | Non 310-30 | Total | ASC 310-30 | Non 310-30 | Total | ASC 310-30 | Non 310-30 | Total | |||||||||||||||||||||||||||
Beginning allowance for loan losses | $ | 721 | $ | 16,892 | $ | 17,613 | $ | 907 | $ | 15,684 | $ | 16,591 | $ | 1,280 | $ | 11,241 | $ | 12,521 | |||||||||||||||||
Net charge-offs | — | (193 | ) | (193 | ) | (1 | ) | (242 | ) | (243 | ) | (2 | ) | (316 | ) | (318 | ) | ||||||||||||||||||
Provision (recoupment)/expense | 50 | 1,403 | 1,453 | (185 | ) | 1,450 | 1,265 | (54 | ) | 1,823 | 1,769 | ||||||||||||||||||||||||
Ending allowance for loan losses | $ | 771 | $ | 18,102 | $ | 18,873 | $ | 721 | $ | 16,892 | $ | 17,613 | $ | 1,224 | $ | 12,748 | $ | 13,972 | |||||||||||||||||
Ratio of annualized net charge-offs to average total loans during the period, respectively | 0.00 | % | 0.04 | % | 0.04 | % | 0.00 | % | 0.05 | % | 0.04 | % | 0.00 | % | 0.09 | % | 0.07 | % | |||||||||||||||||
Ratio of allowance for loan losses to total loans outstanding at period end, respectively | 0.31 | % | 0.92 | % | 0.85 | % | 0.26 | % | 0.90 | % | 0.81 | % | 0.30 | % | 0.82 | % | 0.71 | % | |||||||||||||||||
Ratio of allowance for loan losses to total non-performing loans at period end, respectively | 0.00 | % | 159.38 | % | 166.16 | % | 0.00 | % | 156.22 | % | 162.89 | % | 0.00 | % | 130.91 | % | 143.48 | % | |||||||||||||||||
Total loans | $ | 249,854 | $ | 1,966,415 | $ | 2,216,269 | $ | 279,645 | $ | 1,882,764 | $ | 2,162,409 | $ | 406,546 | $ | 1,555,046 | $ | 1,961,592 | |||||||||||||||||
Average total loans during the period | $ | 266,573 | $ | 1,917,774 | $ | 2,184,347 | $ | 295,308 | $ | 1,876,203 | $ | 2,171,511 | $ | 424,335 | $ | 1,478,336 | $ | 1,902,671 | |||||||||||||||||
Total non-performing loans(2) | $ | — | $ | 11,358 | $ | 11,358 | $ | — | $ | 10,813 | $ | 10,813 | $ | — | $ | 9,738 | $ | 9,738 | |||||||||||||||||
Past Due Loans(1): | |||||||||||||||||||||||||||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |||||||||||||||||||||||||||||||||
ASC 310-30 Loans | Non 310-30 Loans | Total | ASC 310-30 Loans | Non 310-30 Loans | Total | ASC 310-30 Loans | Non 310-30 Loans | Total | |||||||||||||||||||||||||||
Loans 30-89 days past due and still accruing interest | $ | 1,738 | $ | 1,186 | $ | 2,924 | $ | 7,016 | $ | 1,142 | $ | 8,158 | $ | 25,873 | $ | 4,551 | $ | 30,424 | |||||||||||||||||
Loans 90 days past due and still accruing interest | 24,797 | 174 | 24,971 | 33,834 | 263 | 34,097 | 47,789 | 53 | 47,842 | ||||||||||||||||||||||||||
Non-accrual loans | — | $ | 4,907 | 4,907 | — | 3,840 | 3,840 | — | 6,140 | 6,140 | |||||||||||||||||||||||||
Restructured loans on non-accrual | — | 6,451 | 6,451 | — | 6,973 | 6,973 | — | 3,598 | 3,598 | ||||||||||||||||||||||||||
Total past due and non-accrual loans | $ | 26,535 | $ | 12,718 | $ | 39,253 | $ | 40,850 | $ | 12,218 | $ | 53,068 | $ | 73,662 | $ | 14,342 | $ | 88,004 | |||||||||||||||||
Total 90 days past due and still accruing interest and non-accrual loans to total loans, respectively | 9.92 | % | 0.59 | % | 1.64 | % | 12.10 | % | 0.59 | % | 2.08 | % | 11.75 | % | 0.63 | % | 2.94 | % | |||||||||||||||||
Total non-accrual loans to total loans, respectively | 0.00 | % | 0.58 | % | 0.51 | % | 0.00 | % | 0.57 | % | 0.50 | % | 0.00 | % | 0.63 | % | 0.50 | % | |||||||||||||||||
% of total past due and non-accrual loans that carry fair value marks | 100.00 | % | 33.97 | % | 78.61 | % | 100.00 | % | 34.66 | % | 84.96 | % | 100.00 | % | 46.78 | % | 91.33 | % | |||||||||||||||||
% of total past due and non-accrual loans that are covered by FDIC loss sharing agreements, respectively | 85.59 | % | 9.95 | % | 61.08 | % | 87.41 | % | 11.39 | % | 69.91 | % | 79.13 | % | 15.67 | % | 68.79 | % | |||||||||||||||||
11
NATIONAL BANK HOLDINGS CORPORATION | |||||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||
Asset Quality Data (Covered/Non-covered)(1): | |||||||||||||||||||||||||||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |||||||||||||||||||||||||||||||||
Non-covered | Covered | Total | Non-covered | Covered | Total | Non-covered | Covered | Total | |||||||||||||||||||||||||||
Non-accrual loans | $ | 4,816 | $ | 91 | $ | 4,907 | $ | 3,729 | $ | 111 | $ | 3,840 | $ | 5,627 | $ | 513 | $ | 6,140 | |||||||||||||||||
Restructured loans on non-accrual | 5,388 | 1,063 | 6,451 | 5,767 | 1,206 | 6,973 | 1,936 | 1,662 | 3,598 | ||||||||||||||||||||||||||
Total non-performing loans(2) | 10,204 | 1,154 | 11,358 | 9,496 | 1,317 | 10,813 | 7,563 | 2,175 | 9,738 | ||||||||||||||||||||||||||
OREO | 7,529 | 15,888 | 23,417 | 10,653 | 18,467 | 29,120 | 29,418 | 36,565 | 65,983 | ||||||||||||||||||||||||||
Other repossessed assets | 829 | — | 829 | 829 | 20 | 849 | 784 | 302 | 1,086 | ||||||||||||||||||||||||||
Total non-performing assets | $ | 18,562 | $ | 17,042 | $ | 35,604 | $ | 20,978 | $ | 19,804 | $ | 40,782 | $ | 37,765 | $ | 39,042 | $ | 76,807 | |||||||||||||||||
Loans 90 days or more past due and still accruing interest | $ | 99 | $ | 75 | $ | 174 | $ | 188 | $ | 75 | $ | 263 | $ | 53 | $ | — | $ | 53 | |||||||||||||||||
Accruing restructured loans(3) | $ | 6,817 | $ | 1,846 | $ | 8,663 | $ | 9,489 | $ | 9,786 | $ | 19,275 | $ | 17,800 | $ | 4,720 | $ | 22,520 | |||||||||||||||||
Allowance for loan losses | $ | 18,873 | $ | 17,613 | $ | 13,972 | |||||||||||||||||||||||||||||
Total non-performing loans to total non-covered, total covered, and total loans, respectively | 0.50 | % | 0.67 | % | 0.51 | % | 0.48 | % | 0.68 | % | 0.50 | % | 0.45 | % | 0.76 | % | 0.50 | % | |||||||||||||||||
Loans 90 days or more past due and still accruing interest to total non-covered loans, total covered loans, and total loans, respectively | 0.00 | % | 0.04 | % | 0.01 | % | 0.01 | % | 0.04 | % | 0.01 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||||||||
Total non-performing assets to total assets | 0.71 | % | 0.85 | % | 1.56 | % | |||||||||||||||||||||||||||||
Allowance for loan losses to non-performing loans | 166.16 | % | 162.89 | % | 143.48 | % | |||||||||||||||||||||||||||||
(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. | |||||||||||||||||||||||||||||||||||
(2) Non-performing loans were redefined during the third quarter of 2014 to only include non-accrual loans and restructured loans on non-accrual. All previous periods have been restated. | |||||||||||||||||||||||||||||||||||
(3) Includes restructured loans less than 90 days past due and still accruing interest. | |||||||||||||||||||||||||||||||||||
Changes in Accretable Yield: | |||||||||||||||||
For the three months ended | Life-to-date | ||||||||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | March 31, 2015 | ||||||||||||||
Accretable yield at beginning of period | $ | 113,463 | $ | 113,108 | $ | 130,624 | $ | — | |||||||||
Additions through acquisitions | — | — | — | 214,994 | |||||||||||||
Reclassification from non-accretable difference to accretable yield | 11,186 | 16,858 | 6,164 | 245,122 | |||||||||||||
Reclassification to non-accretable difference from accretable yield | (1,137 | ) | (2,308 | ) | (590 | ) | (24,733 | ) | |||||||||
Accretion | (12,694 | ) | (14,195 | ) | (16,900 | ) | (324,565 | ) | |||||||||
Accretable yield at end of period | $ | 110,818 | $ | 113,463 | $ | 119,298 | $ | 110,818 | |||||||||
12
NATIONAL BANK HOLDINGS CORPORATION | |||||||||
Key Ratios | |||||||||
As of and for the three months ended | |||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |||||||
Key Ratios(1) | |||||||||
Return on average assets | 0.10 | % | 0.19 | % | 0.12 | % | |||
Return on average tangible assets(2) | 0.17 | % | 0.26 | % | 0.19 | % | |||
Adjusted return on average tangible assets(2) | 0.60 | % | 0.71 | % | 0.65 | % | |||
Return on average equity | 0.65 | % | 1.12 | % | 0.64 | % | |||
Return on average tangible common equity(2) | 1.18 | % | 1.66 | % | 1.10 | % | |||
Interest earning assets to interest bearing liabilities (end of period)(3) | 135.28 | % | 137.36 | % | 137.14 | % | |||
Loans to deposits ratio (end of period) | 57.96 | % | 57.55 | % | 50.79 | % | |||
Non-interest bearing deposits to total deposits (end of period) | 19.80 | % | 19.45 | % | 17.83 | % | |||
Net interest margin(4) | 3.55 | % | 3.84 | % | 3.93 | % | |||
Net interest margin (fully taxable equivalent)(2)(4) | 3.59 | % | 3.87 | % | 3.94 | % | |||
Interest rate spread(5) | 3.47 | % | 3.75 | % | 3.82 | % | |||
Yield on earning assets(3) | 3.87 | % | 4.18 | % | 4.25 | % | |||
Yield on earning assets (fully taxable equivalent)(2)(3) | 3.91 | % | 4.21 | % | 4.26 | % | |||
Cost of interest bearing liabilities(3) | 0.44 | % | 0.46 | % | 0.44 | % | |||
Cost of deposits | 0.36 | % | 0.37 | % | 0.37 | % | |||
Non-interest expense to average assets | 3.03 | % | 2.72 | % | 3.22 | % | |||
Efficiency ratio (fully taxable equivalent) (2)(6) | 89.83 | % | 84.19 | % | 87.32 | % | |||
Adjusted efficiency ratio (fully taxable equivalent)(2)(6) | 74.04 | % | 71.58 | % | 71.87 | % | |||
Asset Quality Data (7)(8)(9) | |||||||||
Non-performing loans to total loans | 0.51 | % | 0.50 | % | 0.50 | % | |||
Covered non-performing loans to total non-performing loans | 10.16 | % | 12.18 | % | 22.34 | % | |||
Non-performing assets to total assets | 0.71 | % | 0.85 | % | 1.56 | % | |||
Covered non-performing assets to total non-performing assets | 47.87 | % | 48.56 | % | 50.83 | % | |||
Allowance for loan losses to total loans | 0.85 | % | 0.81 | % | 0.71 | % | |||
Allowance for loan losses to total non-covered loans | 0.92 | % | 0.89 | % | 0.83 | % | |||
Allowance for loan losses to non-performing loans | 166.16 | % | 162.89 | % | 143.48 | % | |||
Net charge-offs to average loans | 0.04 | % | 0.04 | % | 0.07 | % | |||
(1) | Ratios are annualized. | ||||||||
(2) | Ratio represents non-GAAP financial measure. See non-GAAP reconciliations starting on page 14. | ||||||||
(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. | ||||||||
13
NATIONAL BANK HOLDINGS CORPORATION | ||||||||||||
Non-GAAP Financial Measures and Reconciliations | ||||||||||||
(Dollars in thousands, except share and per share data) | ||||||||||||
Statements of Financial Condition | ||||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | ||||||||||
Total shareholders' equity | $ | 762,676 | $ | 794,575 | $ | 895,849 | ||||||
Less: goodwill and intangible assets, net | (75,176 | ) | (76,513 | ) | (80,523 | ) | ||||||
Add: deferred tax liability related to goodwill | 6,609 | 6,222 | 5,059 | |||||||||
Tangible common equity (non-GAAP) | $ | 694,109 | $ | 724,284 | $ | 820,385 | ||||||
Total assets | $ | 4,991,050 | $ | 4,819,646 | $ | 4,913,587 | ||||||
Less: goodwill and intangible assets, net | (75,176 | ) | (76,513 | ) | (80,523 | ) | ||||||
Add: deferred tax liability related to goodwill | 6,609 | 6,222 | 5,059 | |||||||||
Tangible assets (non-GAAP) | $ | 4,922,483 | $ | 4,749,355 | $ | 4,838,123 | ||||||
Tangible common equity to tangible assets calculations: | ||||||||||||
Total shareholders' equity to total assets | 15.28 | % | 16.49 | % | 18.23 | % | ||||||
Less: impact of goodwill and intangible assets, net | (1.18 | %) | (1.24 | %) | (1.27 | %) | ||||||
Tangible common equity to tangible assets (non-GAAP) | 14.10 | % | 15.25 | % | 16.96 | % | ||||||
Common book value per share calculations: | ||||||||||||
Total shareholders' equity | $ | 762,676 | $ | 794,575 | $ | 895,849 | ||||||
Divided by: ending shares outstanding | 36,797,787 | 38,884,953 | 44,486,467 | |||||||||
Common book value per share | $ | 20.73 | $ | 20.43 | $ | 20.14 | ||||||
Tangible common book value per share calculations: | ||||||||||||
Tangible common equity (non-GAAP) | $ | 694,109 | $ | 724,284 | $ | 820,385 | ||||||
Divided by: ending shares outstanding | 36,797,787 | 38,884,953 | 44,486,467 | |||||||||
Tangible common book value per share (non-GAAP) | $ | 18.86 | $ | 18.63 | $ | 18.44 | ||||||
Tangible common book value per share, excluding accumulated other comprehensive income calculations: | ||||||||||||
Tangible common equity (non-GAAP) | $ | 694,109 | $ | 724,284 | $ | 820,385 | ||||||
Less: accumulated other comprehensive income, net of tax | (12,085 | ) | (5,839 | ) | (469 | ) | ||||||
Tangible common book value, excluding accumulated other comprehensive income, net of tax (non-GAAP) | 682,024 | 718,445 | 819,916 | |||||||||
Divided by: ending shares outstanding | 36,797,787 | 38,884,953 | 44,486,467 | |||||||||
Tangible common book value per share, excluding accumulated other comprehensive income, net of tax (non-GAAP) | $ | 18.53 | $ | 18.48 | $ | 18.43 | ||||||
14
Return on Average Tangible Assets and Return on Average Tangible Equity | |||||||||||
As of and for the three months ended | |||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |||||||||
Net income | $ | 1,246 | $ | 2,279 | $ | 1,431 | |||||
Add: impact of core deposit intangible amortization expense, after tax | 815 | 815 | 808 | ||||||||
Net income adjusted for impact of core deposit intangible amortization expense, after tax | $ | 2,061 | $ | 3,094 | $ | 2,239 | |||||
Average assets | $ | 4,915,101 | $ | 4,826,444 | $ | 4,909,820 | |||||
Less: average goodwill and intangible assets, net of deferred tax asset related to goodwill | 69,379 | 71,080 | 76,271 | ||||||||
Average tangible assets (non-GAAP) | $ | 4,845,722 | $ | 4,755,364 | $ | 4,833,549 | |||||
Average shareholder's equity | $ | 780,463 | $ | 808,636 | $ | 900,482 | |||||
Less: average goodwill and intangible assets, net of deferred tax asset related to goodwill | 69,379 | 71,080 | 76,271 | ||||||||
Average tangible common equity (non-GAAP) | $ | 711,084 | $ | 737,556 | $ | 824,211 | |||||
Return on average assets | 0.10 | % | 0.19 | % | 0.12 | % | |||||
Return on average tangible assets (non-GAAP) | 0.17 | % | 0.26 | % | 0.19 | % | |||||
Return on average equity | 0.65 | % | 1.12 | % | 0.64 | % | |||||
Return on average tangible common equity (non-GAAP) | 1.18 | % | 1.66 | % | 1.10 | % | |||||
Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin | |||||||||||
As of and for the three months ended | |||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |||||||||
Interest income | $ | 43,087 | $ | 46,280 | $ | 46,885 | |||||
Add: impact of taxable equivalent adjustment | 395 | 320 | 159 | ||||||||
Interest income, fully taxable equivalent (non-GAAP) | $ | 43,482 | $ | 46,600 | $ | 47,044 | |||||
Net interest income | $ | 39,479 | $ | 42,584 | $ | 43,347 | |||||
Add: impact of taxable equivalent adjustment | 395 | 320 | 159 | ||||||||
Net interest income, fully taxable equivalent (non-GAAP) | $ | 39,874 | $ | 42,904 | $ | 43,506 | |||||
Average earning assets | 4,509,894 | 4,395,091 | 4,477,632 | ||||||||
Yield on earning assets | 3.87 | % | 4.18 | % | 4.25 | % | |||||
Yield on earning assets,fully taxable equivalent (non-GAAP) | 3.91 | % | 4.21 | % | 4.26 | % | |||||
Net interest margin | 3.55 | % | 3.84 | % | 3.93 | % | |||||
Net interest margin, fully taxable equivalent (non-GAAP) | 3.59 | % | 3.87 | % | 3.94 | % | |||||
15
Adjusted Efficiency Ratio | |||||||||||
As of and for the three months ended | |||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |||||||||
Net interest income | $ | 39,479 | $ | 42,584 | $ | 43,347 | |||||
Add: impact of taxable equivalent adjustment | 395 | 320 | 159 | ||||||||
Net interest income, fully taxable equivalent (non-GAAP) | $ | 39,874 | $ | 42,904 | $ | 43,506 | |||||
Non-interest income | $ | (479 | ) | $ | (5,117 | ) | $ | (354 | ) | ||
Add: FDIC indemnification asset amortization | 7,670 | 7,922 | 7,608 | ||||||||
Add: FDIC loss sharing expense | 810 | 6,313 | 957 | ||||||||
Less: gain on sale of previously charged-off acquired loans | (58 | ) | (62 | ) | (296 | ) | |||||
Less: impact of OREO related write-ups and other income | (500 | ) | (1,030 | ) | (968 | ) | |||||
Adjusted non-interest income (non-GAAP) | $ | 7,443 | $ | 8,026 | $ | 6,947 | |||||
Non-interest expense adjusted for core deposit intangible asset amortization | $ | 35,388 | $ | 31,813 | $ | 37,682 | |||||
Less: impact of change in fair value of warrant liabilities | 390 | 219 | 898 | ||||||||
Less: other real estate owned expenses | 418 | 8,979 | (1,633 | ) | |||||||
Less: problem loan expenses | (799 | ) | (448 | ) | (685 | ) | |||||
Less: contract termination expenses | — | (4,110 | ) | — | |||||||
Less: conversion related expenses | (364 | ) | — | — | |||||||
Adjusted non-interest expense (non-GAAP) | $ | 35,033 | $ | 36,453 | $ | 36,262 | |||||
Efficiency ratio | 90.74 | % | 84.91 | % | 87.65 | % | |||||
Efficiency ratio (fully taxable equivalent) (non-GAAP) | 89.83 | % | 84.19 | % | 87.32 | % | |||||
Adjusted efficiency ratio (fully taxable equivalent) (non-GAAP) | 74.04 | % | 71.57 | % | 71.87 | % | |||||
16
Adjusted Financial Results | |||||||||||
For the three months ended | |||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |||||||||
Adjustments to diluted earnings per share: | |||||||||||
Income per share - diluted | $ | 0.03 | $ | 0.06 | $ | 0.03 | |||||
Adjustments to diluted earnings per share (non-GAAP)(1) | 0.14 | 0.13 | 0.12 | ||||||||
Adjusted diluted earnings per share (non-GAAP)(1) | $ | 0.17 | $ | 0.19 | $ | 0.15 | |||||
Adjustments to return on average tangible assets: | |||||||||||
Annualized adjustments to net income (non-GAAP)(1) | $ | 20,716 | $ | 21,384 | $ | 22,196 | |||||
Divided by: average tangible assets (non-GAAP) | 4,845,722 | 4,755,364 | 4,833,549 | ||||||||
Adjustments to return on average tangible assets (non-GAAP) | 0.43 | % | 0.45 | % | 0.46 | % | |||||
Return on average tangible assets (non-GAAP) | 0.17 | % | 0.26 | % | 0.19 | % | |||||
Adjusted return on average tangible assets (non-GAAP) | 0.60 | % | 0.71 | % | 0.65 | % | |||||
Adjustments to net income: | |||||||||||
Net income | $ | 1,246 | $ | 2,279 | $ | 1,431 | |||||
Adjustments to net income (non-GAAP)(1) | 5,108 | 5,390 | 5,473 | ||||||||
Adjusted net income (non-GAAP) | $ | 6,354 | $ | 7,669 | $ | 6,904 | |||||
(1) Adjustments | |||||||||||
Non-interest income adjustments: | |||||||||||
Plus: FDIC indemnification asset amortization | $ | 7,670 | $ | 7,922 | $ | 7,608 | |||||
Plus: other FDIC loss sharing income (loss) | 810 | 6,313 | 957 | ||||||||
Less: gain on recoveries of previously charged-off acquired loans | (58 | ) | (62 | ) | (296 | ) | |||||
Less: OREO related write-ups and other income | (500 | ) | (1,030 | ) | (968 | ) | |||||
Total non-interest income adjustments (non-GAAP) | $ | 7,922 | $ | 13,143 | $ | 7,301 | |||||
Non-interest expense adjustments: | |||||||||||
Less: other real estate owned expenses | $ | 418 | $ | 8,979 | $ | (1,633 | ) | ||||
Less: problem loan expenses | (799 | ) | (448 | ) | (685 | ) | |||||
Plus: warrant change | 390 | 219 | 898 | ||||||||
Less: contract termination expenses | — | (4,110 | ) | — | |||||||
Less: conversion related expenses | (364 | ) | — | — | |||||||
Total non-interest expense adjustments (non-GAAP) | $ | (355 | ) | $ | 4,640 | $ | (1,420 | ) | |||
Pre-tax adjustments | 8,277 | 8,503 | 8,721 | ||||||||
Collective tax expense impact | (3,169 | ) | (3,113 | ) | (3,248 | ) | |||||
Adjustments to net income (non-GAAP) | $ | 5,108 | $ | 5,390 | $ | 5,473 | |||||
17