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| 8-K - 8-K - National Bank Holdings Corp | form8-kxq42013earningsrele.htm |
Exhibit 99.1
National Bank Holdings Corporation Announces Fourth Quarter 2013 Financial Results and Increases Share Repurchase Authorization to $50 Million
Greenwood Village, Colorado - (BusinessWire) – National Bank Holdings Corporation (NYSE: NBHC) reported net income of $1.0 million, or $0.02 per diluted share, for the fourth quarter of 2013, compared to net income of $0.9 million, or $0.02 per diluted share, for the third quarter of 2013.
In announcing these results, President and Chief Executive Officer Tim Laney said, “We are pleased to report continued strength and momentum in our loan production during the fourth quarter with $244.2 million in new loan originations and total loans growing by $111.3 million, or 25.3% annualized. We are realizing solid growth while maintaining strong credit quality, as reflected by total charge-offs on originated loans of just three basis points during 2013.”
Mr. Laney continued, “In just over three years, we have acquired four banks with $2.8 billion in loans. Almost $2 billion of these loans were determined to be distressed or non-strategic. We closed out 2013 with non-strategic loan balances at $350.0 million and with strong workout performance as evidenced by a pickup of $166.7 million of net accretable yield. At the same time, we have grown our strategic portfolio from $800 million to over $1.5 billion and our organic loan growth has outpaced our aggressive reduction in non-strategic loans, resulting in net loan growth during the second half of 2013. To put organic loan growth in perspective - new loan fundings of approximately $714 million represented a 65% increase over 2012.”
Mr. Laney added, “We end 2013 with a focus on levering our momentum in loan production to expand client relationships and realize solid growth in fee income and transaction account balances during 2014.”
With regard to mergers and acquisitions, Mr. Laney shared, “We are not pleased with the current pace of acquisitions but remain confident that there are opportunities to leverage capital in situations that we believe will create attractive returns for our investors. In the interim, we expect to continue to opportunistically buy in our shares, as evidenced by the 7.4 million shares that have been repurchased to date, representing a 14.2% reduction in total shares outstanding. To take advantage of future opportunities, we recently increased our share repurchase program to $50 million. Further, we believe these repurchases could serve to offset any future share issuances for acquisitions.”
Fourth Quarter 2013 Highlights
• | Grew the strategic loan portfolio by $174.5 million, or 52.1% annualized, driven by $244.2 million in originations, a 27.4% linked quarter increase in originations and a 74.7% increase over the fourth quarter last year. |
• | Successfully exited $63.2 million, or 60.7% annualized, of the non-strategic loan portfolio. |
• | Total loans increased $111.3 million, or 25.3% annualized, over September 30, 2013. |
• | Increased client cash flow estimates resulted in a net addition of $23.6 million to accretable yield for the acquired loans accounted for under ASC 310-30, complemented by $0.2 million in provision recoupments within that portfolio. |
• | Credit quality of the non 310-30 loan portfolio continued to improve, with non-performing loans decreasing to 1.51% of total non 310-30 loans at December 31, 2013 from 2.31% at September 30, 2013. |
• | Net interest income totaled $43.6 million, decreasing $1.9 million from the prior quarter. The third quarter had the benefit of $2.5 million from the early pay off of one ASC 310-30 loan pool. |
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• | Operating expenses before the banking center closure charges, problem loan/OREO workout expenses and fair value changes to the warrant liability decreased $2.2 million from the prior quarter driven by efficiency initiatives. |
• | Problem loan/OREO workout expenses totaled $4.6 million, increasing $3.0 million from the prior quarter as the third quarter included the benefit of $3.5 million of OREO gains. |
• | Repurchased 6,306,551 shares at a weighted average price of $20.00 per share and announced a new $35 million share repurchase authorization. |
• | Tangible common book value per share was $18.27 before consideration of the excess accretable yield value of $0.75 per share. |
Fourth Quarter 2013 Results
(All comparisons refer to the third quarter of 2013, except as noted)
Net Interest Income
Net interest income totaled $43.6 million for the fourth quarter of 2013, decreasing $1.9 million compared to the prior quarter. The linked quarter decrease was largely reflective of an early payoff of one loan pool in the third quarter, which resulted in an immediate recognition of $2.5 million of accretable yield at that time. Excluding the $2.5 million of accretable yield recognized in the prior quarter, the net interest income increased slightly as strong originations have helped stabilize interest income. Interest earning assets declined $174.0 million, largely due to the $126.1 million of cash used to repurchase shares during the fourth quarter. Higher yields on the ASC 310-30 loan portfolio (acquired loan pools) were realized as a result of the continued improvements in expected cash flows on these loans and the resulting transfers to accretable yield in recent quarters. The increase in yield on the ASC 310-30 loans was offset by lower average balances in the ASC 310-30 portfolio as we continue to actively exit the non-strategic loan portfolio. A three basis point decrease in yield earned on interest earning assets was complemented by a one basis point decrease in the cost of interest bearing deposits and client repurchase agreements. As a result, the fourth quarter net interest margin narrowed by two basis points to 3.78%.
Loans
During the fourth quarter total loans increased $111.3 million, or 25.3% annualized, ending at $1.9 billion. Strategic loans totaled $1.5 billion at December 31, 2013 and increased $174.5 million, or 52.1% annualized, on the strength of $244.2 million in loan originations, a $52.5 million increase from the third quarter of 2013, and a 74.7% increase over the fourth quarter of 2012. Included in strategic loans outstanding are $1.1 billion in originated balances, which increased $206.4 million, or 93.4% annualized, over the prior quarter. Consistent with the strategy of exiting the non-strategic loan portfolio, balances of non-strategic relationships decreased $63.2 million during the quarter, or 60.7% annualized, to $350.0 million, as adversely rated and other non-strategic relationships paid off or paid down. 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 current underwriting standards.
Asset Quality and Provision for Loan Losses
“We had another quarter of outstanding credit quality as we continue to benefit from prudent underwriting standards and successful workout efforts,” said Chief Financial Officer Brian Lilly. “During the fourth quarter, we transferred an additional $23.6 million, net, from non-accretable difference to accretable yield, which we will recognize over the lives of the acquired loan pools. Our life-to-date benefit of accretable yield net of impairments is $166.7 million, further validating our conservative acquisition due diligence process and our ongoing workout efforts.” Mr. Lilly continued, “FDIC loss-sharing agreements cover 17% of loans and 55% of OREO. As a result, we have one of the lowest risk-weighted assets to total assets ratio in the industry at 43%. Additionally, 38% of the loan portfolio carries acquisition discounts and 24% of loans are accounted for under ASC 310-30 in acquired loan pools.”
Loans accounted for under ASC 310-30 totaled $450.9 million at December 31, 2013 and decreased $62.1 million during the fourth quarter, an annualized decrease of 48.0%, reflecting workout efforts on these purchased loans. One commercial and industrial loan pool, totaling $14.8 million and covered by a loss-sharing agreement, remains on non-accrual status with the balance decreasing $2.0 million from September 30, 2013 as cash payments were applied to the book balance.
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Credit quality trends in the non 310-30 portfolio continue to be very strong. Non 310-30 loans totaled $1.4 billion and represented 75.7% of total loans at December 31, 2013. These loans are comprised of $1.1 billion of originated loans and $320.2 million of acquired loans that are not accounted for under the ASC 310-30 acquired loan pool accounting. Within the non 310-30 portfolio, the ratio of non-performing loans to loans improved to 1.51% at December 31, 2013 from 2.31% at September 30, 2013. The non 310-30 loan portfolio had net recoveries of $0.4 million during the fourth quarter. Originated loans within the non 310-30 portfolio continued to show strong credit quality and finished the year with total net charge-offs of just 0.03% and non-performing loans of 0.42%. As a result of the net recoveries, improved credit quality and loan growth, a provision for loan losses of $1.0 million was recorded during the fourth quarter on the non 310-30 loans.
OREO ended the quarter at $70.1 million, a decrease of $0.6 million and included transfers from the loan portfolio of $7.6 million. Of the $70.1 million of OREO at December 31, 2013, $38.8 million, or 55.4%, were covered by the loss-sharing agreements with the FDIC.
Deposits
Transaction deposits (defined as total deposits less time deposits) and client repurchase agreements averaged $2.5 billion during the fourth quarter, decreasing $81.2 million. Total deposits and client repurchase agreements averaged $4.0 billion during the fourth quarter, decreasing $98.5 million. Both decreases were driven by the previously announced closing of the California banking centers and the limited-service retirement centers on December 31, 2013, coupled with a fourth quarter restructuring of a legacy deposit product that was in place at Bank of Choice at the time of acquisition. Excluding these actions, average balances of transaction deposits and client repurchase agreements increased $25.4 million, or 4.0% annualized, and average balances of total deposits and client repurchase agreements decreased $34.3 million. The mix of transaction deposits to total deposits remained steady at 61.0% at December 31, 2013. Additionally, the average cost of total deposits improved two basis points to 0.38% in the fourth quarter from 0.40% during the prior quarter. The balance sheet is strongly funded by client deposits and client repurchase agreements, and at December 31, 2013, these client fundings comprised 98.0% of total liabilities.
Non-Interest Income
Banking related non-interest income (excludes FDIC-related income) totaled $9.9 million during the fourth quarter of 2013 and increased $1.2 million compared to the prior quarter as a $0.4 million decrease in service charge and bank card income was offset by a $1.4 million increase in OREO income.
Included in total non-interest income is a net $2.2 million decrease in FDIC-related income largely as a result of additional amortization on the FDIC indemnification asset. The amortization of the FDIC indemnification asset has been steadily increasing over the past three quarters due to better performance of the underlying covered assets. As of December 31, 2013, the FDIC indemnification asset was $64.4 million, comprised of $44.7 million in projected future FDIC loss-share billings and $19.7 million representing increased client cash flows. The benefit of the increased client cash flows is primarily captured in the ASC 310-30 accretable yield as most of the FDIC covered assets are accounted for in the ASC 310-30 loan pools. Our current projection for the $19.7 million portion of the FDIC indemnification asset related to increased client cash flows is for amortization of $16.6 million in 2014 and $2.9 million in 2015.
Non-Interest Expense
Non-interest expense totaled $44.2 million during the fourth quarter of 2013, a decrease of $2.4 million from the previous quarter. Operating expenses totaled $39.0 million and decreased $2.2 million from the prior quarter. Operating expenses exclude problem loan/OREO workout expenses, the warrant liability charge of $0.7 million and the banking center closure charges incurred in the third quarter. This decrease was primarily due to a $2.0 million decline in salaries and employee benefits in the fourth quarter as a result of operating efficiency initiatives that were implemented.
OREO and problem loan expenses totaled $4.6 million during the fourth quarter and increased $3.0 million from the prior quarter as the third quarter benefited from $3.5 million of gains on sale of OREO. The OREO and problem loan expenses are expected to continue to fluctuate quarterly as we resolve the acquired problem asset portfolio, however, these expenses have been trending downward steadily.
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Taxes were a net benefit of $56.0 thousand for the fourth quarter. The net tax benefit related to the true-up of state-related tax liabilities that benefited the fourth quarter by $0.5 million.
Capital
Capital ratios continue to be strong and well in excess of federal bank regulatory agency “well capitalized” thresholds. Stockholders’ equity totaled $897.8 million at December 31, 2013 and decreased $133.5 million during the fourth quarter, primarily due to the repurchase of 6.3 million shares for $126.1 million as well as a $6.6 million decline in accumulated other comprehensive income (loss), net of tax, which was driven by the fair market value fluctuations of the available-for-sale investment securities portfolio. The 6.3 million shares repurchased during the quarter represented a 12.3% reduction in shares outstanding, at a weighted average price of $20.00 per share.
Tangible common book value per share at December 31, 2013 was $18.27, compared to $18.60 at September 30, 2013, and the tangible common equity to tangible assets ratio decreased 177 basis points during the quarter ending at 16.97%. Both decreases were driven by the share repurchases and the decrease in accumulated other comprehensive income (loss) related to market value fluctuations in the investment portfolio.
To date, we have repurchased 7.4 million shares, representing a 14.2% reduction in total shares outstanding. During the fourth quarter, the Board of Directors approved a new $35 million share repurchase authorization. As of December 31, 2013, there was $25 million remaining under that $35 million repurchase authorization. On January 23, 2014, the Board of Directors replaced the remaining buyback authorization with a new authorization to repurchase up to $50 million of the Company’s common stock through December 31, 2014. Under the new program, the shares may be acquired from time to time either in the open market or in privately negotiated transactions.
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, 2013 accretable yield balance on the ASC 310-30 loans of $130.6 million would add $1.77 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 $130.6 million of accretable yield on ASC 310-30 loans and the $19.7 million of the FDIC indemnification asset that is to be amortized in the future, and then calculate the excess above a 4.5% yield (an approximate yield on new loan originations), and finally discount the amounts at 5%. The result would add $0.75 after-tax to our tangible book value per share as of December 31, 2013.
Year-Over-Year Review
(All comparisons refer to the full year 2012)
Net income for 2013 was $6.9 million, or $0.14 per diluted share, compared to a net loss of $0.5 million for 2012, or $0.01 per diluted share. Included in 2013 were after-tax banking center closure expenses of $2.1 million, or $0.04 per diluted share, and included in 2012 were one-time after tax expenses of $11.2 million, or $0.22 per diluted share, related to our initial public offering completed in September 2012, which included $8.0 million of initial public offering expenses and $3.2 million related to stock-based compensation, after tax. Net interest income totaled $179.0 million and decreased $25.3 million, which resulted from the lower purchased loan balances as non-strategic loans were paid off or paid down, coupled with lower yields earned on the non 310-30 loan portfolio and on the investment portfolio. Loan originations increased 64.4% to $714.0 million in 2013 from $434.3 million in 2012 and resulted in reaching the loans outstanding inflection point during the third quarter where total loan balances began to grow as originations began to outpace the resolution of acquired problem loans. Total loans outstanding at December 31, 2013 increased $21.4 million over the prior year-end as strong originations more than offset the steady resolution of acquired troubled loans.
The net interest margin narrowed 17 basis points to 3.81% during 2013 from 3.98% during 2012 as a result of lower yield on earning assets, and partially offset by a lower average cost of interest bearing liabilities. The yield on interest earning assets declined 39 basis points in 2013 compared to 2012 due to lower balances on the higher-yielding purchased portfolios as loans originated during the current low interest rate environment continue to make up a larger portion of the loan portfolio coupled with lower reinvestment yields earned on the investment portfolio.
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Transaction deposits and client repurchase agreements averaged $2.5 billion during 2013, increasing $78.2 million, or 3.3%, from the prior year. Total deposits and client repurchase agreements averaged $4.1 billion during 2013, decreasing $506.6 million from the prior year. The decline was driven by a $584.8 million decrease in average time deposits as many of these clients were single-service, highly rate-sensitive clients of the problem banks that we purchased, coupled to a lesser extent with the previously mentioned California banking center and limited-service retirement center closures. Since the completion of the acquisitions, we have focused our deposit base on in-market clients who are interested in market rate time deposits and developing a banking relationship. In doing so, the mix of transaction deposits to total deposits increased to 61.0% at December 31, 2013 from 58.3% at December 31, 2012 and the cost of deposits decreased 23 basis points during 2013.
Provision for loan loss expense was $4.3 million during 2013, compared to $28.0 million during 2012, a decrease of $23.7 million. The decrease in provision was due to lower impairment charges on the ASC 310-30 loan pools coupled with improved credit quality in the non 310-30 loan portfolio. The ratio of non-performing loans to total loans within the non 310-30 portfolio improved to 1.51% at December 31, 2013 from 4.04% at December 31, 2012 and net charge-offs declined to 0.27% in 2013 from 0.79% in 2012.
Non-interest income was $20.2 million in 2013 compared to $37.4 million during 2012, a decrease of $17.2 million, which was largely due to a $14.4 million decrease in FDIC-related income as a result of lower covered OREO expenses and higher amortization of the FDIC indemnification asset, coupled with a $3.0 million decrease in gain on previously charged-off acquired loans, and a $0.7 million decrease in gain on sale of securities. The higher FDIC indemnification asset amortization is driven by better performance of covered assets and is also reflected in the higher yields on the ASC 310-30 loan portfolio.
Non-interest expense totaled $184.0 million in 2013 compared to $209.6 million during 2012, a decrease of $25.6 million. Operating expenses, which excludes problem loan/OREO workout expenses, warrant liability changes, IPO related expenses in 2012, and the banking center closure charges in 2013, decreased $11.0 million during 2013. The year-over-year decrease in operating expenses was primarily due to lower professional fees of $7.4 million, lower salaries and employee benefits of $4.1 million and lower telecommunications and data processing expenses of $1.8 million as management continues to realize efficiencies in the business. The increase in occupancy and equipment expense primarily related to the settlement of the premises and equipment purchased from the FDIC in the first half of 2012 related to our Bank of Choice and Community Banks of Colorado acquisitions.
OREO and problem loan expenses decreased $12.2 million during 2013. These expenses have been steadily trending downward echoing the resolutions of purchased troubled assets throughout the year. The increase in the warrant liability expense of $2.2 million was primarily attributable to the increase in our stock price during 2013.
Income tax expense totaled $4.0 million in 2013 compared to $4.6 million in 2012, which equate to effective tax rates of 36.3% and 113.4% for the respective periods. The higher effective tax rate for 2012 was primarily attributable to $8.0 million of expenses associated with the initial public offering of our stock that were non-deductible for income tax purposes.
Stockholders' equity decreased $192.8 million during 2013 and was primarily impacted by the repurchase of 7.4 million shares at a weighted average purchase price of $19.77. Also contributing to the decrease was a $47.3 million decline in accumulated other comprehensive income, net of tax, as a result of market value fluctuations in the investment portfolio.
Conference Call
Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Wednesday, January 29, 2014. Interested parties may listen to this call by dialing (877) 272-6762 (United States)/(615) 800-6832 (International) using the Conference ID of 26586785 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, 2014, by dialing (855) 859-2056 (United States)/(404) 537-3406 (International) using the Conference ID of 26586785. The earnings release and an on-line replay of the call will also be available on the Company’s website at www.nationalbankholdings.com by visiting the investor relations area.
About Non-GAAP Financial Measures
Certain of the financial measures and ratios we present, including “tangible assets,” “return on average tangible assets,” “tangible common equity,” “return on average tangible common equity,” “tangible common book value,” “tangible common book value
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per share,” “tangible common book value per share, excluding accumulated other comprehensive income (loss),” and "tangible common equity to 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. 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 client 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), as supplemented from time to time in our periodic reports 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 of financial institutions; the Company's ability to complete the integration of its retirement center locations and the exit of its California banking centers on the anticipated timeline and at the expected cost; 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; 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 its reporting system and procedures; regulatory
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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; political instability, acts of war or terrorism and natural disasters; 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, blilly@nationalbankholdings.com
Media: Whitney Bartelli, SVP Director of Marketing, (816) 298-2203, whitney.bartelli@nbhbank.com
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NATIONAL BANK HOLDINGS CORPORATION | |||||||||||||||||||
FINANCIAL SUMMARY | |||||||||||||||||||
Consolidated Statements of Operations (Unaudited) | |||||||||||||||||||
(Dollars in thousands, except share and per share data) | |||||||||||||||||||
For the three months ended | For the years ended | ||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||||
2013 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||
Total interest and dividend income | $ | 47,377 | $ | 49,522 | $ | 54,708 | $ | 195,475 | $ | 233,485 | |||||||||
Total interest expense | 3,787 | 4,007 | 5,124 | 16,514 | 29,234 | ||||||||||||||
Net interest income before provision for loan losses | 43,590 | 45,515 | 49,584 | 178,961 | 204,251 | ||||||||||||||
Provision for loan losses on 310-30 loans | (230 | ) | (313 | ) | 1,620 | 769 | 19,018 | ||||||||||||
Provision for loan losses on non 310-30 loans | 1,002 | 750 | 1,050 | 3,527 | 8,977 | ||||||||||||||
Net interest income after provision for loan losses | 42,818 | 45,078 | 46,914 | 174,665 | 176,256 | ||||||||||||||
Non-interest income: | |||||||||||||||||||
FDIC indemnification asset amortization | (7,117 | ) | (4,208 | ) | (4,655 | ) | (18,960 | ) | (13,820 | ) | |||||||||
Other FDIC loss-sharing income | (467 | ) | (1,191 | ) | 2,791 | 2,811 | 12,069 | ||||||||||||
Service charges | 4,011 | 4,334 | 4,222 | 15,955 | 17,392 | ||||||||||||||
Bank card fees | 2,447 | 2,482 | 2,531 | 9,956 | 9,699 | ||||||||||||||
Gain on sale of mortgages, net | 233 | 345 | 328 | 1,358 | 1,214 | ||||||||||||||
Gain on sale of securities, net | — | — | — | — | 674 | ||||||||||||||
Gain on previously charged-off acquired loans | 221 | 224 | 1,671 | 1,339 | 4,298 | ||||||||||||||
Other non-interest income | 3,036 | 1,352 | 2,109 | 7,718 | 5,853 | ||||||||||||||
Total non-interest income | 2,364 | 3,338 | 8,997 | 20,177 | 37,379 | ||||||||||||||
Non-interest expense: | |||||||||||||||||||
Salaries and employee benefits | 20,639 | 22,639 | 21,885 | 90,002 | 94,111 | ||||||||||||||
Occupancy and equipment | 6,309 | 6,556 | 5,713 | 24,700 | 20,558 | ||||||||||||||
Professional fees | 689 | 791 | 2,544 | 3,734 | 11,156 | ||||||||||||||
Other real estate owned expenses | 3,282 | 459 | 8,161 | 10,957 | 20,313 | ||||||||||||||
Problem loan expenses | 1,283 | 1,134 | 1,828 | 5,644 | 8,532 | ||||||||||||||
Intangible asset amortization | 1,337 | 1,336 | 1,324 | 5,346 | 5,344 | ||||||||||||||
Banking center closure related expenses | — | 3,389 | — | 3,389 | — | ||||||||||||||
Initial public offering related expenses | — | — | — | — | 7,974 | ||||||||||||||
Other non-interest expense | 10,699 | 10,309 | 9,912 | 40,193 | 41,610 | ||||||||||||||
Total non-interest expense | 44,238 | 46,613 | 51,367 | 183,965 | 209,598 | ||||||||||||||
Income before income taxes | 944 | 1,803 | 4,544 | 10,877 | 4,037 | ||||||||||||||
Income tax (benefit) expense | (56 | ) | 856 | 1,541 | 3,950 | 4,580 | |||||||||||||
Net income (loss) | $ | 1,000 | $ | 947 | $ | 3,003 | $ | 6,927 | $ | (543 | ) | ||||||||
Income (loss) per share - basic | $ | 0.02 | $ | 0.02 | $ | 0.06 | $ | 0.14 | $ | (0.01 | ) | ||||||||
Income (loss) per share - diluted | $ | 0.02 | $ | 0.02 | $ | 0.06 | $ | 0.14 | $ | (0.01 | ) | ||||||||
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NATIONAL BANK HOLDINGS CORPORATION | |||||||||||
Consolidated Statements of Condition (Unaudited) | |||||||||||
(Dollars in thousands, except share and per share data) | |||||||||||
December 31, 2013 | September 30, 2013 | December 31, 2012 | |||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 189,460 | $ | 349,244 | $ | 769,180 | |||||
Securities purchased under agreements to resell | — | 75,000 | — | ||||||||
Investment securities available-for-sale | 1,785,528 | 1,889,962 | 1,718,028 | ||||||||
Investment securities held-to-maturity | 641,907 | 664,717 | 577,486 | ||||||||
Non-marketable securities | 31,663 | 31,725 | 32,996 | ||||||||
Loans receivable, net | 1,854,094 | 1,742,813 | 1,832,702 | ||||||||
Allowance for loan losses | (12,521 | ) | (11,419 | ) | (15,380 | ) | |||||
Loans, net | 1,841,573 | 1,731,394 | 1,817,322 | ||||||||
Loans held for sale | 5,787 | 5,265 | 5,368 | ||||||||
FDIC indemnification asset, net | 64,447 | 58,086 | 86,923 | ||||||||
Other real estate owned | 70,125 | 70,753 | 94,808 | ||||||||
Premises and equipment, net | 115,219 | 117,285 | 121,436 | ||||||||
Goodwill | 59,630 | 59,630 | 59,630 | ||||||||
Intangible assets, net | 22,229 | 23,566 | 27,575 | ||||||||
Other assets | 86,547 | 85,342 | 100,023 | ||||||||
Total assets | $ | 4,914,115 | $ | 5,161,969 | $ | 5,410,775 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Liabilities: | |||||||||||
Non-interest bearing demand deposits | $ | 674,989 | $ | 689,405 | $ | 677,985 | |||||
Interest bearing demand deposits | 386,762 | 430,123 | 529,996 | ||||||||
Savings and money market | 1,280,871 | 1,297,585 | 1,240,020 | ||||||||
Total transaction deposits | 2,342,622 | 2,417,113 | 2,448,001 | ||||||||
Time deposits | 1,495,687 | 1,534,390 | 1,752,718 | ||||||||
Total deposits | 3,838,309 | 3,951,503 | 4,200,719 | ||||||||
Securities sold under agreements to repurchase | 99,547 | 116,471 | 53,685 | ||||||||
Other liabilities | 78,467 | 62,745 | 65,812 | ||||||||
Total liabilities | 4,016,323 | 4,130,719 | 4,320,216 | ||||||||
Stockholders' equity: | |||||||||||
Common stock | 512 | 512 | 523 | ||||||||
Additional paid in capital | 990,216 | 989,614 | 1,006,194 | ||||||||
Retained earnings | 39,966 | 41,266 | 43,273 | ||||||||
Treasury stock | (126,146 | ) | — | (4 | ) | ||||||
Accumulated other comprehensive income (loss), net of tax | (6,756 | ) | (142 | ) | 40,573 | ||||||
Total stockholders' equity | 897,792 | 1,031,250 | 1,090,559 | ||||||||
Total liabilities and stockholders' equity | $ | 4,914,115 | $ | 5,161,969 | $ | 5,410,775 | |||||
SHARE DATA | |||||||||||
Average basic shares outstanding | 47,378,400 | 51,454,200 | 52,296,704 | ||||||||
Average diluted shares outstanding | 47,494,341 | 51,501,980 | 52,372,806 | ||||||||
Ending shares outstanding | 44,918,336 | 51,213,044 | 52,327,672 | ||||||||
Common book value per share | $ | 19.99 | $ | 20.14 | $ | 20.84 | |||||
Tangible common book value per share1 | $ | 18.27 | $ | 18.60 | $ | 19.23 | |||||
Tangible common book value per share, excluding accumulated other comprehensive income (loss)1 | $ | 18.42 | $ | 18.60 | $ | 18.46 | |||||
CAPITAL RATIOS | |||||||||||
Average equity to average assets | 19.02 | % | 19.97 | % | 20.09 | % | |||||
Tangible common equity to tangible assets1 | 16.97 | % | 18.74 | % | 18.89 | % | |||||
Leverage ratio | 16.63 | % | 18.54 | % | 18.21 | % | |||||
1Represents a non-GAAP financial measure. See non-GAAP reconciliation on page 15.
9
NATIONAL BANK HOLDINGS CORPORATION | |||||||||||||||||||||||
Loan Portfolio Update | |||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Accounting Treatment and Loss-Share Coverage Period End Loan Balances: | |||||||||||||||||||||||
December 31, 2013 | September 30, 2013 | ||||||||||||||||||||||
ASC 310-30 Loans | Non 310-30 Loans | Total Loans | ASC 310-30 Loans | Non 310-30 Loans | Total Loans | ||||||||||||||||||
Commercial | $ | 61,511 | $ | 421,984 | $ | 483,495 | $ | 68,250 | $ | 272,114 | $ | 340,364 | |||||||||||
Commercial real estate | 291,198 | 283,022 | 574,220 | 325,701 | 288,752 | 614,453 | |||||||||||||||||
Agriculture | 27,000 | 132,952 | 159,952 | 37,882 | 117,464 | 155,346 | |||||||||||||||||
Residential real estate | 63,011 | 536,913 | 599,924 | 72,409 | 523,160 | 595,569 | |||||||||||||||||
Consumer | 8,160 | 28,343 | 36,503 | 8,768 | 28,313 | 37,081 | |||||||||||||||||
Total | $ | 450,880 | $ | 1,403,214 | $ | 1,854,094 | $ | 513,010 | $ | 1,229,803 | $ | 1,742,813 | |||||||||||
Covered | $ | 259,364 | $ | 50,033 | $ | 309,397 | $ | 309,380 | $ | 56,966 | $ | 366,346 | |||||||||||
Non-covered | 191,516 | 1,353,181 | 1,544,697 | 203,630 | 1,172,837 | 1,376,467 | |||||||||||||||||
Total | $ | 450,880 | $ | 1,403,214 | $ | 1,854,094 | $ | 513,010 | $ | 1,229,803 | $ | 1,742,813 | |||||||||||
Strategic/Non-Strategic Period-End Loan Balances: | |||||||||||||||||||||||
December 31, 2013 | September 30, 2013 | ||||||||||||||||||||||
Strategic | Non-strategic | Total | Strategic | Non-strategic | Total | ||||||||||||||||||
Commercial | $ | 411,589 | $ | 71,906 | $ | 483,495 | $ | 262,384 | $ | 77,980 | $ | 340,364 | |||||||||||
Commercial real estate | 333,651 | 240,569 | 574,220 | 326,679 | 287,774 | 614,453 | |||||||||||||||||
Agriculture | 154,811 | 5,141 | 159,952 | 144,784 | 10,562 | 155,346 | |||||||||||||||||
Residential real estate | 570,455 | 29,469 | 599,924 | 561,770 | 33,799 | 595,569 | |||||||||||||||||
Consumer | 33,599 | 2,904 | 36,503 | 34,002 | 3,079 | 37,081 | |||||||||||||||||
Total | $ | 1,504,105 | $ | 349,989 | $ | 1,854,094 | $ | 1,329,619 | $ | 413,194 | $ | 1,742,813 | |||||||||||
Originations: | |||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | |||||||||||||||||||
quarter | quarter | quarter | quarter | quarter | |||||||||||||||||||
2013 | 2013 | 2013 | 2013 | 2012 | |||||||||||||||||||
Commercial | $ | 159,931 | $ | 80,833 | $ | 24,982 | $ | 15,150 | $ | 30,988 | |||||||||||||
Commercial real estate | 20,959 | 50,081 | 31,553 | 36,749 | 20,993 | ||||||||||||||||||
Agriculture | 23,610 | 5,689 | 22,901 | 9,446 | 28,978 | ||||||||||||||||||
Residential real estate | 36,113 | 51,749 | 86,161 | 45,808 | 52,778 | ||||||||||||||||||
Consumer | 3,594 | 3,326 | 3,157 | 2,211 | 6,025 | ||||||||||||||||||
Total | $ | 244,207 | $ | 191,678 | $ | 168,754 | $ | 109,364 | $ | 139,762 | |||||||||||||
10
NATIONAL BANK HOLDINGS CORPORATION | ||||||||||||||||||||||
Summary of Net Interest Margin | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Three months ended December 31, 2013 | Three months ended September 30, 2013 | |||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||
ASC 310-30 loans | $ | 475,562 | $ | 17,045 | 14.34 | % | $ | 554,750 | $ | 19,603 | 14.14 | % | ||||||||||
Non 310-30 loans (1) (2) (3) | 1,310,450 | 16,220 | 4.91 | % | 1,149,312 | 15,725 | 5.43 | % | ||||||||||||||
Investment securities available-for-sale | 1,864,960 | 8,886 | 1.91 | % | 1,983,108 | 8,851 | 1.79 | % | ||||||||||||||
Investment securities held-to-maturity | 655,805 | 4,676 | 2.85 | % | 648,799 | 4,688 | 2.89 | % | ||||||||||||||
Other securities | 31,700 | 389 | 4.91 | % | 31,754 | 388 | 4.89 | % | ||||||||||||||
Interest earning deposits and securities purchased under agreements to resell | 234,739 | 161 | 0.27 | % | 379,537 | 267 | 0.28 | % | ||||||||||||||
Total interest earning assets | $ | 4,573,216 | $ | 47,377 | 4.11 | % | $ | 4,747,260 | $ | 49,522 | 4.14 | % | ||||||||||
Cash and due from banks | 60,961 | 60,410 | ||||||||||||||||||||
Other assets | 391,974 | 402,496 | ||||||||||||||||||||
Allowance for loan losses | (11,977 | ) | (11,668 | ) | ||||||||||||||||||
Total assets | $ | 5,014,174 | $ | 5,198,498 | ||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||
Interest bearing demand, savings and money market deposits | $ | 1,667,653 | $ | 1,031 | 0.25 | % | $ | 1,744,705 | $ | 1,085 | 0.25 | % | ||||||||||
Time deposits | 1,544,223 | 2,715 | 0.70 | % | 1,561,552 | 2,880 | 0.73 | % | ||||||||||||||
Securities sold under agreements to repurchase | 107,985 | 41 | 0.15 | % | 120,654 | 42 | 0.14 | % | ||||||||||||||
Total interest bearing liabilities | $ | 3,319,861 | $ | 3,787 | 0.45 | % | $ | 3,426,911 | $ | 4,007 | 0.46 | % | ||||||||||
Demand deposits | 676,959 | 668,400 | ||||||||||||||||||||
Other liabilities | 63,518 | 65,219 | ||||||||||||||||||||
Total liabilities | 4,060,338 | 4,160,530 | ||||||||||||||||||||
Stockholders' equity | 953,836 | 1,037,968 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 5,014,174 | $ | 5,198,498 | ||||||||||||||||||
Net interest income | $ | 43,590 | $ | 45,515 | ||||||||||||||||||
Interest rate spread | 3.66 | % | 3.68 | % | ||||||||||||||||||
Net interest earning assets | $ | 1,253,355 | $ | 1,320,349 | ||||||||||||||||||
Net interest margin | 3.78 | % | 3.80 | % | ||||||||||||||||||
Ratio of average interest earning assets to average interest bearing liabilities | 137.75 | % | 138.53 | % | ||||||||||||||||||
(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 $972,275 and $769,586, interest income of $10,747 and $8,697 and yields of 4.39% and 4.48% for the three months ended December 31, 2013 and September 30, 2013, respectively. | |||||||||||||||||||||
(3) | Non 310-30 loans include loans held-for-sale. Average balances during the three months ended December 31, 2013 and September 30, 2013 were $2.8 million and $6.1 million, and interest income was $67 thousand and $101 thousand for the same periods, respectively. | |||||||||||||||||||||
11
NATIONAL BANK HOLDINGS CORPORATION | |||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Allowance For Loan Losses Analysis (1): | |||||||||||||||||||||||
As of and for the three months ended | |||||||||||||||||||||||
December 31, 2013 | September 30, 2013 | ||||||||||||||||||||||
ASC 310-30 | Non 310-30 | Total | ASC 310-30 | Non 310-30 | Total | ||||||||||||||||||
Beginning allowance for loan losses | $ | 1,604 | $ | 9,815 | $ | 11,419 | $ | 2,195 | $ | 9,652 | $ | 11,847 | |||||||||||
Net (charge-offs)/recoveries | (94 | ) | 424 | 330 | (278 | ) | (587 | ) | (865 | ) | |||||||||||||
Provision (recoupment)/expense | (230 | ) | 1,002 | 772 | (313 | ) | 750 | 437 | |||||||||||||||
Ending allowance for loan losses | $ | 1,280 | $ | 11,241 | $ | 12,521 | $ | 1,604 | $ | 9,815 | $ | 11,419 | |||||||||||
Ratio of annualized net charge-offs/(recoveries) to average total loans during the period, respectively | 0.08 | % | (0.13 | )% | (0.07 | )% | 0.20 | % | 0.20 | % | 0.20 | % | |||||||||||
Ratio of allowance for loan losses to total loans outstanding at period end, respectively | 0.28 | % | 0.80 | % | 0.68 | % | 0.31 | % | 0.80 | % | 0.66 | % | |||||||||||
Ratio of total non-performing loans to total loans, respectively | 3.29 | % | 1.51 | % | 1.95 | % | 3.29 | % | 2.31 | % | 2.60 | % | |||||||||||
Ratio of allowance for loan losses to total non-performing loans at period end, respectively | 8.63 | % | 52.90 | % | 34.71 | % | 9.52 | % | 34.50 | % | 25.20 | % | |||||||||||
Total loans | $ | 450,880 | $ | 1,403,214 | $ | 1,854,094 | $ | 513,010 | $ | 1,229,803 | $ | 1,742,813 | |||||||||||
Average total loans during the period | $ | 475,562 | $ | 1,307,631 | $ | 1,783,193 | $ | 554,750 | $ | 1,143,223 | $ | 1,697,973 | |||||||||||
Total non-performing loans | $ | 14,828 | $ | 21,250 | $ | 36,078 | $ | 16,857 | $ | 28,453 | $ | 45,310 | |||||||||||
Past Due Loans(1): | |||||||||||||||||||||||
December 31, 2013 | September 30, 2013 | ||||||||||||||||||||||
ASC 310-30 Loans | Non 310-30 Loans | Total | ASC 310-30 Loans | Non 310-30 Loans | Total | ||||||||||||||||||
Non-accrual loans | $ | 14,827 | $ | 9,517 | $ | 24,344 | $ | 16,857 | $ | 13,994 | $ | 30,851 | |||||||||||
Loans 30-89 days past due and still accruing interest | 11,245 | 2,854 | 14,099 | 27,900 | 2,247 | 30,147 | |||||||||||||||||
Loans 90 days past due and still accruing interest | 55,864 | 129 | 55,993 | 62,324 | 169 | 62,493 | |||||||||||||||||
Total past due and non-accrual loans | $ | 81,936 | $ | 12,500 | $ | 94,436 | $ | 107,081 | $ | 16,410 | $ | 123,491 | |||||||||||
Total past due and non-accrual loans to total loans, respectively | 18.17 | % | 0.89 | % | 5.09 | % | 20.87 | % | 1.33 | % | 7.09 | % | |||||||||||
Total non-accrual loans to total loans, respectively | 3.29 | % | 0.68 | % | 1.31 | % | 3.29 | % | 1.14 | % | 1.77 | % | |||||||||||
% of total past due and non-accrual loans that carry fair value marks | 100.00 | % | 52.23 | % | 93.68 | % | 100.00 | % | 38.65 | % | 91.85 | % | |||||||||||
% of total past due and non-accrual loans that are covered by FDIC loss sharing agreements, respectively | 77.63 | % | 18.27 | % | 69.77 | % | 82.56 | % | 16.10 | % | 73.73 | % | |||||||||||
12
NATIONAL BANK HOLDINGS CORPORATION | |||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Asset Quality Data (Covered/Non-covered)(1): | |||||||||||||||||||||||
December 31, 2013 | September 30, 2013 | ||||||||||||||||||||||
Non-covered | Covered | Total | Non-covered | Covered | Total | ||||||||||||||||||
Total non-accrual loans | $ | 7,573 | $ | 16,771 | $ | 24,344 | $ | 11,591 | $ | 19,260 | $ | 30,851 | |||||||||||
Total loans 90 days past due and still accruing interest | 14 | 115 | 129 | 169 | — | 169 | |||||||||||||||||
Accruing restructured loans (2) | 5,891 | 5,714 | 11,605 | 8,286 | 6,004 | 14,290 | |||||||||||||||||
Total non-performing loans | 13,478 | 22,600 | 36,078 | 20,046 | 25,264 | 45,310 | |||||||||||||||||
OREO | 31,300 | 38,825 | 70,125 | 26,671 | 44,082 | 70,753 | |||||||||||||||||
Other repossessed assets | 784 | 302 | 1,086 | 784 | 481 | 1,265 | |||||||||||||||||
Total non-performing assets | $ | 45,562 | $ | 61,727 | $ | 107,289 | $ | 47,501 | $ | 69,827 | $ | 117,328 | |||||||||||
Allowance for loan losses | $ | 12,521 | $ | 11,419 | |||||||||||||||||||
Total non-performing loans to loans, respectively | 0.87 | % | 7.30 | % | 1.95 | % | 1.46 | % | 6.90 | % | 2.60 | % | |||||||||||
Total non-performing assets to total assets | 2.18 | % | 2.27 | % | |||||||||||||||||||
(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) Includes restructured loans less than 90 days past due and still accruing. | |||||||||||||||||||||||
Changes in Accretable Yield: | |||||||||||||||||||||||
For the three months ended | Life-to-date | ||||||||||||||||||||||
December 31, 2013 | September 30, 2013 | December 31, 2012 | December 31, 2013 | ||||||||||||||||||||
Accretable yield at beginning of period | $ | 124,086 | $ | 128,542 | $ | 148,868 | $ | — | |||||||||||||||
Additions through acquisitions | — | — | — | 214,994 | |||||||||||||||||||
Reclassification from non-accretable difference to accretable yield | 25,343 | 17,626 | 13,145 | 186,684 | |||||||||||||||||||
Reclassification to non-accretable difference from accretable yield | (1,760 | ) | (2,479 | ) | (4,273 | ) | (20,024 | ) | |||||||||||||||
Accretion income | (17,045 | ) | (19,603 | ) | (24,155 | ) | (251,030 | ) | |||||||||||||||
Accretable yield at end of period | $ | 130,624 | $ | 124,086 | $ | 133,585 | $ | 130,624 | |||||||||||||||
13
NATIONAL BANK HOLDINGS CORPORATION | |||||||||||||||
Key Ratios | |||||||||||||||
As of and for the three months ended | As of and for the years ended | ||||||||||||||
December 31, 2013 | September 30, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||||
Key Ratios (1) | |||||||||||||||
Return on average assets | 0.08 | % | 0.07 | % | 0.22 | % | 0.13 | % | -0.01 | % | |||||
Return on average tangible assets (2) | 0.15 | % | 0.14 | % | 0.28 | % | 0.20 | % | 0.05 | % | |||||
Return on average equity | 0.42 | % | 0.36 | % | 1.10 | % | 0.67 | % | -0.05 | % | |||||
Return on average tangible common equity (2) | 0.82 | % | 0.73 | % | 1.50 | % | 1.06 | % | 0.27 | % | |||||
Return on risk weighted assets | 0.19 | % | 0.19 | % | 0.64 | % | 0.33 | % | -0.03 | % | |||||
Interest earning assets to interest bearing liabilities (end of period) (3) | 137.05 | % | 139.44 | % | 134.44 | % | 137.05 | % | 134.44 | % | |||||
Loans to deposits ratio (end of period) | 48.46 | % | 44.24 | % | 43.76 | % | 48.46 | % | 43.76 | % | |||||
Non-interest bearing deposits to total deposits (end of period) | 17.59 | % | 17.45 | % | 16.14 | % | 17.59 | % | 16.14 | % | |||||
Net interest margin (4) | 3.78 | % | 3.80 | % | 4.09 | % | 3.81 | % | 3.98 | % | |||||
Interest rate spread (5) | 3.66 | % | 3.68 | % | 3.94 | % | 3.68 | % | 3.81 | % | |||||
Yield on earning assets (3) | 4.11 | % | 4.14 | % | 4.51 | % | 4.16 | % | 4.55 | % | |||||
Cost of interest bearing liabilities (3) | 0.45 | % | 0.46 | % | 0.57 | % | 0.48 | % | 0.74 | % | |||||
Cost of deposits | 0.38 | % | 0.40 | % | 0.48 | % | 0.41 | % | 0.64 | % | |||||
Non-interest expense to average assets | 3.50 | % | 3.56 | % | 3.77 | % | 3.55 | % | 3.62 | % | |||||
Efficiency ratio (6) | 93.36 | % | 92.68 | % | 85.43 | % | 89.70 | % | 84.53 | % | |||||
Asset Quality Data (7) (8) (9) | |||||||||||||||
Non-performing loans to total loans | 1.95 | % | 2.60 | % | 2.23 | % | 1.95 | % | 2.23 | % | |||||
Covered non-performing loans to total non-performing loans | 62.64 | % | 55.76 | % | 27.14 | % | 62.64 | % | 27.14 | % | |||||
Non-performing assets to total assets | 2.18 | % | 2.27 | % | 2.53 | % | 2.18 | % | 2.53 | % | |||||
Covered non-performing assets to total non-performing assets | 57.53 | % | 59.51 | % | 41.70 | % | 57.53 | % | 41.70 | % | |||||
Allowance for loan losses to total loans | 0.68 | % | 0.66 | % | 0.84 | % | 0.68 | % | 0.84 | % | |||||
Allowance for loan losses to total non-covered loans | 0.81 | % | 0.83 | % | 1.26 | % | 0.81 | % | 1.26 | % | |||||
Allowance for loan losses to non-performing loans | 34.71 | % | 25.20 | % | 37.64 | % | 34.71 | % | 37.64 | % | |||||
Net (recoveries)/charge-offs to average loans | (0.07 | )% | 0.20 | % | 1.00 | % | 0.41 | % | 1.20 | % | |||||
(1) | Ratios are annualized. | ||||||||||||||
(2) | Ratio represents non-GAAP financial measure. See non-GAAP reconciliation on page 15. | ||||||||||||||
(3) | Interest earning assets include assets that earn interest/accretion or dividends, except for the FDIC indemnification asset, which 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 amortization 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. | ||||||||||||||
(7) | Non-performing loans consist of non-accruing loans, loans 90 days or more past due and still accruing interest and restructured loans, but exclude any loans accounted for under ASC 310-30 in which the pool is still performing. These ratios may, therefore, not be comparable to similar ratios of our peers. | ||||||||||||||
(8) | Non-performing assets include non-performing loans, other real estate owned and other repossessed assets. | ||||||||||||||
(9) | Total loans are net of unearned discounts and fees. | ||||||||||||||
14
NATIONAL BANK HOLDINGS CORPORATION | ||||||||||||
Non-GAAP Financial Measures | ||||||||||||
(Dollars in thousands, except share and per share data) | ||||||||||||
Statements of Financial Condition Non-GAAP Reconciliations | ||||||||||||
December 31, 2013 | September 30, 2013 | December 31, 2012 | ||||||||||
Total stockholders' equity | $ | 897,792 | $ | 1,031,250 | $ | 1,090,559 | ||||||
Less: goodwill | (59,630 | ) | (59,630 | ) | (59,630 | ) | ||||||
Add: deferred tax liability related to goodwill | 4,671 | 4,284 | 3,121 | |||||||||
Less: intangible assets, net | (22,229 | ) | (23,566 | ) | (27,575 | ) | ||||||
Tangible common equity | $ | 820,604 | $ | 952,338 | $ | 1,006,475 | ||||||
Total assets | $ | 4,914,115 | $ | 5,161,969 | $ | 5,410,775 | ||||||
Less: goodwill | (59,630 | ) | (59,630 | ) | (59,630 | ) | ||||||
Add: deferred tax liability related to goodwill | 4,671 | 4,284 | 3,121 | |||||||||
Less: intangible assets, net | (22,229 | ) | (23,566 | ) | (27,575 | ) | ||||||
Tangible assets | $ | 4,836,927 | $ | 5,083,057 | $ | 5,326,691 | ||||||
Total stockholders' equity to total assets | 18.27 | % | 19.98 | % | 20.16 | % | ||||||
Less: impact of goodwill and intangible assets, net | -1.30 | % | -1.24 | % | -1.27 | % | ||||||
Tangible common equity to tangible assets | 16.97 | % | 18.74 | % | 18.89 | % | ||||||
Common book value per share calculations: | ||||||||||||
Total stockholders' equity | $ | 897,792 | $ | 1,031,250 | $ | 1,090,559 | ||||||
Divided by: ending shares outstanding | 44,918,336 | 51,213,044 | 52,327,672 | |||||||||
Common book value per share | $ | 19.99 | $ | 20.14 | $ | 20.84 | ||||||
Tangible common book value per share calculations: | ||||||||||||
Tangible common equity | $ | 820,604 | $ | 952,338 | $ | 1,006,475 | ||||||
Divided by: ending shares outstanding | 44,918,336 | 51,213,044 | 52,327,672 | |||||||||
Tangible common book value per share | $ | 18.27 | $ | 18.60 | $ | 19.23 | ||||||
Tangible common book value per share, excluding accumulated other comprehensive income (loss) calculations: | ||||||||||||
Tangible common equity | $ | 820,604 | $ | 952,338 | $ | 1,006,475 | ||||||
Less: accumulated other comprehensive income (loss), net of tax | 6,756 | 142 | (40,573 | ) | ||||||||
Tangible common book value, excluding accumulated other comprehensive income (loss), net of tax | 827,360 | 952,480 | 965,902 | |||||||||
Divided by: ending shares outstanding | 44,918,336 | 51,213,044 | 52,327,672 | |||||||||
Tangible common book value per share, excluding accumulated other comprehensive income (loss), net of tax | $ | 18.42 | $ | 18.60 | $ | 18.46 | ||||||
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As of and for the three months ended | As of and for the years ended | |||||||||||||
December 31, 2013 | September 30, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | ||||||||||
Return on average assets | 0.08 | % | 0.07 | % | 0.22 | % | 0.13 | % | -0.01 | % | ||||
Add: impact of goodwill and intangible assets, after tax, net | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||
Add: impact of core deposit intangible expense, after tax | 0.07 | % | 0.07 | % | 0.06 | % | 0.07 | % | 0.06 | % | ||||
Return on average tangible assets | 0.15 | % | 0.14 | % | 0.28 | % | 0.20 | % | 0.05 | % | ||||
Return on average equity | 0.42 | % | 0.36 | % | 1.10 | % | 0.67 | % | -0.05 | % | ||||
Add: impact of goodwill and intangible assets, after tax, net | 0.07 | % | 0.03 | % | 0.09 | % | 0.08 | % | 0.00 | % | ||||
Add: impact of core deposit intangible expense, after tax | 0.33 | % | 0.34 | % | 0.31 | % | 0.31 | % | 0.32 | % | ||||
Return on average tangible common equity | 0.82 | % | 0.73 | % | 1.50 | % | 1.06 | % | 0.27 | % | ||||
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