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National Bank Holdings Corporation Announces Third Quarter 2024 Financial Results and Increase to Quarterly Dividend
ソース: Nasdaq GlobeNewswire / 22 10 2024 16:10:04 America/New_York
DENVER, Oct. 22, 2024 (GLOBE NEWSWIRE) -- National Bank Holdings Corporation (NYSE: NBHC) reported:
For the quarter(1) For the year(1) 3Q24 2Q24 3Q23 2024 2023 Net income ($000's) $ 33,105 $ 26,135 $ 36,087 $ 90,631 $ 108,927 Earnings per share - diluted $ 0.86 $ 0.68 $ 0.94 $ 2.36 $ 2.85 Return on average assets 1.32 % 1.06 % 1.46 % 1.22 % 1.50 % Return on average tangible assets(2) 1.43 % 1.17 % 1.58 % 1.33 % 1.61 % Return on average equity 10.33 % 8.46 % 12.26 % 9.70 % 12.71 % Return on average tangible common equity(2) 14.84 % 12.44 % 18.38 % 14.14 % 18.81 % (1 ) Ratios are annualized. (2 ) See non-GAAP reconciliations below. In announcing these results, Chief Executive Officer Tim Laney shared, “We delivered quarterly earnings of $0.86 per diluted share and a return on average tangible common equity of 14.84%. On the strength of our balance sheet, capital position and earnings, we are pleased to announce a 3.6% increase in our quarterly dividend to $0.29 per share. During the quarter, our disciplined approach to loan and deposit pricing drove 11 basis points of net interest margin expansion to 3.87%. Our teams delivered solid quarterly growth in our core banking fees, and we continued to leverage our diverse revenue streams across our franchise resulting in meaningful year-to-date fee income growth.”
Mr. Laney added, “We continue to remain vigilant in monitoring our loan portfolio, delivering the lowest non-performing loan ratio since early 2023. Our teams adhere to prudent, disciplined approaches that limit concentrations in our loan book and our depositor base, and we regularly perform robust stress testing on our loan portfolio. We enter the fourth quarter from a position of strength and stability and expect to finish the year strong. We believe our Common Equity Tier 1 capital ratio of 12.88%, ample liquidity position, and diversified funding sources provide optionality for future growth.”
Third Quarter 2024 Results
(All comparisons refer to the second quarter of 2024, except as noted)Net income increased $7.0 million or 26.7% to $33.1 million or $0.86 per diluted share, compared to $26.1 million or $0.68 per diluted share. The quarter’s increase was driven by net interest income and fee income growth. Included in the prior quarter was $3.9 million of impairment related to venture capital investments. Fully taxable equivalent pre-provision net revenue increased $7.5 million or 20.6% to $43.7 million. The return on average tangible assets increased 26 basis points to 1.43%, and the return on average tangible common equity increased 240 basis points to 14.84%.
Net Interest Income
Fully taxable equivalent net interest income increased $4.2 million to $89.5 million, driven by a $74.7 million increase in average interest earning assets, a 12 basis point increase in average loan yields and one extra day in the quarter. The fully taxable equivalent net interest margin widened 11 basis points to 3.87%, driven by a 13 basis point increase in earning asset yields which was partially offset by a two basis point increase in the cost of funds.Loans
Loans totaled $7.7 billion at September 30, 2024, consistent with the prior quarter. We generated quarterly loan fundings totaling $359.3 million, led by commercial loan fundings of $219.1 million. The average interest rate on the third quarter’s loan originations was 8.5%.Asset Quality and Provision for Credit Losses
The Company recorded $2.0 million of provision expense for credit losses, compared to $2.8 million in the prior quarter. The current quarter’s provision expense was primarily driven by higher reserve requirements from changes in the CECL model’s underlying economic forecast. Annualized net charge-offs decreased four basis points to 0.18% of average total loans and included the resolution of one previously reserved credit during the quarter. Non-performing loans decreased three basis points to 0.31% of total loans at September 30, 2024, and non-performing assets decreased four basis points to 0.32% of total loans and OREO at September 30, 2024. The allowance for credit losses as a percentage of loans totaled 1.23% at September 30, 2024, compared to 1.25% in the prior quarter.Deposits
Average total deposits increased $21.3 million to $8.4 billion during the third quarter 2024. The loan to deposit ratio totaled 90.8% at September 30, 2024. Average transaction deposits (defined as total deposits less time deposits) totaled $7.4 billion, consistent with the prior quarter. The mix of transaction deposits to total deposits was 88% at September 30, 2024, consistent with June 30, 2024.Non-Interest Income
Non-interest income increased $4.4 million to $18.4 million driven by increases in our diversified sources of fee revenue. Service charges increased $0.6 million, swap fee income increased $0.3 million and trust fee income increased $0.1 million. These increases were partially offset by a $0.3 million decrease in mortgage banking income. Included in the prior quarter was $3.9 million of impairment related to venture capital investments.Non-Interest Expense
Non-interest expense totaled $64.2 million during the third quarter, compared to $63.1 million in the prior quarter. Salaries and benefits increased $0.4 million driven by one additional payroll day in the quarter. Professional fees increased $0.4 million and data processing increased $0.3 million driven by our continued investments in technology. These increases were partially offset by a decrease in occupancy and equipment of $0.4 million. The fully taxable equivalent efficiency ratio, excluding other intangible assets amortization, improved 387 basis points to 57.7% for the third quarter.Income tax expense increased $1.2 million to $6.8 million, compared to $5.6 million in the prior quarter, due to the third quarter’s higher pre-tax income. The effective tax rate was 17.0%, compared to 17.7% for the second quarter.
Capital
Capital ratios continue to be strong and in excess of federal bank regulatory agency “well capitalized” thresholds. The tier 1 leverage ratio totaled 10.44%, and the common equity tier 1 capital ratio totaled 12.88% at September 30, 2024. Shareholders’ equity totaled $1.3 billion at September 30, 2024, increasing $44.4 million. The third quarter’s net income drove $22.2 million of growth in retained earnings, and changes in the interest rate environment led to a $17.9 million improvement in accumulated other comprehensive loss.Common book value per share increased $1.09 to $34.01 at September 30, 2024. Tangible common book value per share increased $1.17 to $24.91 as this quarter’s earnings and a decrease in accumulated other comprehensive loss outpaced the quarterly dividend.
Dividend Announcement
The quarterly cash dividend will increase 3.6% from $0.28 per share to $0.29 per share. The dividend will be payable on December 13, 2024 to shareholders of record at the close of business on November 29, 2024. This is the eighth consecutive semiannual increase to the quarterly dividend since early 2021.Year-Over-Year Review
(All comparisons refer to the first nine months of 2023, except as noted)Net income totaled $90.6 million, or $2.36 per diluted share, compared to net income of $108.9 million, or $2.85 per diluted share, for the first nine months of 2023. The decrease over the same period prior year was largely driven by lower net interest income, due to an increase in cost of funds outpacing the increase in interest income. Partially offsetting this decrease was a 4.7% increase in non-interest income driven by our diversified sources of fee revenue. Fully taxable equivalent pre-provision net revenue totaled $120.5 million, compared to $144.9 million. The return on average tangible assets totaled 1.33%, compared to 1.61%, and the return on average tangible common equity was 14.14%, compared to 18.81%.
Fully taxable equivalent net interest income totaled $260.5 million, compared to $276.9 million. Average earning assets increased $165.0 million, including average loan growth of $296.4 million, which was partially offset by a decrease in average investment securities of $70.2 million. The fully taxable equivalent net interest margin narrowed 32 basis points to 3.80%, as the increase in earning asset yields was more than offset by an increase in the cost of funds. Average interest bearing liabilities increased $555.3 million due to higher deposit balances, and the cost of funds totaled 2.31%, compared to 1.40% in the same period prior year.
Loans outstanding totaled $7.7 billion, increasing $236.1 million or 3.2%. New loan fundings over the trailing twelve months totaled $1.5 billion, led by commercial loan fundings of $1.0 billion.
The Company recorded $4.8 million of provision expense for credit losses for the first nine months of 2024, compared to provision expense of $3.7 million in the same period prior year. Annualized net charge-offs totaled 0.13% of average total loans during the first nine months of 2024, compared to 0.02% of average total loans during the first nine months of 2023. Non-performing loans decreased 13 basis points to 0.31% of total loans at September 30, 2024, and non-performing assets decreased 17 basis points to 0.32% of total loans and OREO at September 30, 2024. The allowance for credit losses as a percentage of loans totaled 1.23% at September 30, 2024, compared to 1.25% at September 30, 2023.
Average total deposits increased $418.6 million or 5.3% to $8.3 billion, and average transaction deposits increased $369.2 million or 5.3%. The mix of transaction deposits to total deposits was 88%, consistent with September 30, 2023.
Non-interest income totaled $50.1 million, an increase of $2.3 million or 4.7%, driven by increases in our diversified sources of fee revenue. Other non-interest income increased $5.2 million, or 63.6%, and included increases in SBA loan income, trust income, Cambr income and swap fee income. Mortgage banking income decreased $2.7 million as the sustained higher-interest rate environment has lowered mortgage volume.
Non-interest expense totaled $190.1 million, an increase of $10.2 million or 5.7%, largely due to ongoing investments in technology. Salaries and benefits increased $7.6 million, occupancy and equipment increased $2.4 million and data processing increased $2.3 million. Other intangible assets amortization increased $0.6 million due to our Cambr acquisition in April of 2023. These increases were partially offset by a decrease of $2.5 million in professional fees.
Income tax expense totaled $19.9 million, a decrease of $7.9 million from the same period prior year, driven by lower pre-tax income. The effective tax rate was 18.0% for the first nine months of 2024, compared to 20.3%.
Conference Call
Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Wednesday, October 23, 2024. Interested parties may listen to this call by dialing (888) 204-4368 using the participant passcode of 3279876 and asking for the NBHC Q3 2024 Earnings Call. The earnings release and a link to the replay of the call will be available on the Company’s website at www.nationalbankholdings.com by visiting the investor relations area.About National Bank Holdings Corporation
National Bank Holdings Corporation is a bank holding company created to build a leading community bank franchise, delivering high quality client service and committed to stakeholder results. Through its bank subsidiaries, NBH Bank and Bank of Jackson Hole Trust, National Bank Holdings Corporation operates a network of over 90 banking centers, serving individual consumers, small, medium and large businesses, and government and non-profit entities. Its banking centers are located in its core footprint of Colorado, the greater Kansas City region, Utah, Wyoming, Texas, New Mexico and Idaho. Its comprehensive residential mortgage banking group primarily serves the bank’s core footprint. Its trust and wealth management business is operated in its core footprint under the Bank of Jackson Hole Trust charter. NBH Bank operates under a single state charter through the following brand names as divisions of NBH Bank: in Colorado, Community Banks of Colorado and Community Banks Mortgage; in Kansas and Missouri, Bank Midwest and Bank Midwest Mortgage; in Texas, Utah, New Mexico and Idaho, Hillcrest Bank and Hillcrest Bank Mortgage; and in Wyoming, Bank of Jackson Hole and Bank of Jackson Hole Mortgage. Additional information about National Bank Holdings Corporation can be found at www.nationalbankholdings.com.For more information visit: cobnks.com, bankmw.com, hillcrestbank.com, bankofjacksonhole.com, or nbhbank.com, or connect with any of our brands on LinkedIn.
About Non-GAAP Financial Measures
Certain of the financial measures and ratios we present, including “tangible assets,” “return on average tangible assets,” “tangible common equity,” “return on average tangible common equity,” “tangible common book value per share,” “tangible common book value, excluding accumulated other comprehensive loss, net of tax,” “tangible common book value per share, excluding accumulated other comprehensive loss, net of tax,” “tangible common equity to tangible assets,” “non-interest expense excluding other intangible assets amortization,” “efficiency ratio excluding other intangible assets amortization,” “net income excluding the impact of other intangible assets amortization expense, after tax,” “pre-provision net revenue,” and “fully taxable equivalent” metrics, are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance. A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements contain words such as “anticipate,” “believe,” “can,” “would,” “should,” “could,” “may,” “predict,” “seek,” “potential,” “will,” “estimate,” “target,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “intend” or similar expressions that relate to the Company’s strategy, plans or intentions. Forward-looking statements involve certain important risks, uncertainties and other factors, any of which could cause actual results to differ materially from those in such statements. Such factors include, without limitation, the “Risk Factors” referenced in our most recent Form 10-K filed with the Securities and Exchange Commission (SEC), other risks and uncertainties listed from time to time in our reports and documents filed with the SEC, and the following factors: the impact of potential regulatory changes to capital requirements, treatment of investment securities and FDIC deposit insurance levels and costs; our ability to execute our business strategy, including our digital strategy, as well as changes in our business strategy or development plans; business and economic conditions; effects of any potential government shutdowns; economic, market, operational, liquidity, credit and interest rate risks associated with the Company’s business, including increased competition for deposits due to prevailing market interest rates and banking sector volatility; effects of any changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; changes imposed by regulatory agencies to increase capital standards; effects of inflation, as well as interest rate, securities market and monetary supply fluctuations; changes in the economy or supply-demand imbalances affecting local real estate values; changes in consumer spending, borrowings and savings habits; changes in the fair value of our investment securities due to market conditions outside of our control; financial or reputational impacts associated with the increased prevalence of fraud or other financial crimes; with respect to our mortgage business, the inability to negotiate fees with investors for the purchase of our loans or our obligation to indemnify purchasers or repurchase related loans if the loans fail to meet certain criteria, or higher rate of delinquencies and defaults as a result of the geographic concentration of our servicing portfolio; the Company’s ability to identify potential candidates for, obtain regulatory approval for, and consummate, integrate and realize operating efficiencies from, acquisitions, consolidations and other expansion opportunities; our ability to integrate acquisitions or consolidations and to achieve synergies, operating efficiencies and/or other expected benefits within expected timeframes, or at all, or within expected cost projections, and to preserve the goodwill of acquired financial institutions; the Company's ability to realize anticipated benefits from enhancements or updates to its core operating systems from time to time without significant change in client service or risk to the Company's control environment; the Company's dependence on information technology and telecommunications systems of third-party service providers and the risk of systems failures, interruptions or breaches of security, including those that could result in disclosure or misuse of confidential or proprietary client or other information; the Company’s ability to achieve organic loan and deposit growth and the competition for, and composition of, such growth; changes in sources and uses of funds; increased competition in the financial services industry; regulatory and financial impacts associated with the Company growing to over $10 billion in consolidated assets; increases in claims and litigation related to our fiduciary responsibilities in connection with our trust and wealth management business; the effect of changes in accounting policies and practices as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board (“FASB”) and other accounting standard setters; the share price of the Company’s stock; the Company's ability to realize deferred tax assets or the need for a valuation allowance, or the effects of changes in tax laws on our deferred tax assets; the effects of tax legislation, including the potential of future increases to prevailing tax rules, or challenges to our positions; 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, including, but not limited to, changes in regulation that affect the fees that we charge, the resolution of legal proceedings or regulatory or other government inquiries, and the results of regulatory examinations, reviews or other inquiries, and changes in regulations that apply to us as a Colorado state-chartered bank and a Wyoming state-chartered bank; technological changes, including with respect to the advancement of artificial intelligence; the timely development and acceptance of new products and services, including in the digital technology space our digital solution 2UniFi; changes in our management personnel and the Company’s continued ability to attract, hire and maintain qualified personnel; ability to implement and/or improve operational management and other internal risk controls and processes and reporting system and procedures; regulatory limitations on dividends from our bank subsidiaries; changes in estimates of future credit reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; financial, reputational, or strategic risks associated with our investments in financial technology companies and initiatives; widespread natural and other disasters, pandemics, dislocations, political instability, acts of war or terrorist activities, cyberattacks or international hostilities through impacts on the economy and financial markets generally or on us or our counterparties specifically; a cybersecurity incident, data breach or a failure of a key information technology system; impact of reputational risk; other risks and uncertainties listed from time to time in the Company’s reports and documents filed with the Securities and Exchange Commission; 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.Contacts:
Analysts/Institutional Investors:
Emily Gooden, Chief Accounting Officer and Investor Relations Director, (720) 554-6640, ir@nationalbankholdings.com
Nicole Van Denabeele, Chief Financial Officer, (720) 529-3370, ir@nationalbankholdings.comMedia:
Jody Soper, Chief Marketing Officer, (303) 784-5925, Jody.Soper@nbhbank.com
NATIONAL BANK HOLDINGS CORPORATION
FINANCIAL SUMMARY
Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except share and per share data)For the three months ended For the nine months ended September 30, June 30, September 30, September 30, September 30, 2024 2024 2023 2024 2023 Total interest and dividend income $ 138,003 $ 132,447 $ 126,110 $ 402,182 $ 360,712 Total interest expense 50,350 48,873 38,333 146,925 88,262 Net interest income 87,653 83,574 87,777 255,257 272,450 Taxable equivalent adjustment 1,816 1,711 1,575 5,220 4,432 Net interest income FTE(1) 89,469 85,285 89,352 260,477 276,882 Provision expense for credit losses 2,000 2,776 1,125 4,776 3,725 Net interest income after provision for credit losses FTE(1) 87,469 82,509 88,227 255,701 273,157 Non-interest income: Service charges 4,912 4,295 4,849 13,598 13,394 Bank card fees 4,832 4,882 4,993 14,292 14,721 Mortgage banking income 2,981 3,296 4,688 8,932 11,614 Other non-interest income 5,664 1,556 4,835 13,290 8,124 Total non-interest income 18,389 14,029 19,365 50,112 47,853 Non-interest expense: Salaries and benefits 37,331 36,933 35,027 110,784 103,231 Occupancy and equipment 9,697 10,120 9,167 29,758 27,366 Professional fees 2,111 1,706 2,215 5,463 7,951 Data processing 4,398 4,117 3,546 12,581 10,257 Other non-interest expense 8,648 8,222 8,640 25,523 25,693 Other intangible assets amortization 1,977 1,977 2,008 5,962 5,378 Total non-interest expense 64,162 63,075 60,603 190,071 179,876 Income before income taxes FTE(1) 41,696 33,463 46,989 115,742 141,134 Taxable equivalent adjustment 1,816 1,711 1,575 5,220 4,432 Income before income taxes 39,880 31,752 45,414 110,522 136,702 Income tax expense 6,775 5,617 9,327 19,891 27,775 Net income $ 33,105 $ 26,135 $ 36,087 $ 90,631 $ 108,927 Earnings per share - basic $ 0.86 $ 0.68 $ 0.95 $ 2.37 $ 2.87 Earnings per share - diluted 0.86 0.68 0.94 2.36 2.85 (1 ) Net interest income is presented on a GAAP basis and fully taxable equivalent (FTE) basis, as the Company believes this non-GAAP measure is the preferred industry measurement for this item. The FTE adjustment is for the tax benefit on certain tax exempt loans using the federal tax rate of 21% for each period presented. NATIONAL BANK HOLDINGS CORPORATION
Consolidated Statements of Financial Condition (Unaudited)
(Dollars in thousands, except share and per share data)September 30, 2024 June 30, 2024 December 31, 2023 September 30, 2023 ASSETS Cash and cash equivalents $ 180,796 $ 144,993 $ 190,826 $ 291,291 Investment securities available-for-sale 708,987 691,076 628,829 620,445 Investment securities held-to-maturity 538,157 554,686 585,052 600,501 Non-marketable securities 72,353 72,987 90,477 87,817 Loans 7,714,495 7,722,153 7,698,758 7,478,438 Allowance for credit losses (95,047 ) (96,457 ) (97,947 ) (93,446 ) Loans, net 7,619,448 7,625,696 7,600,811 7,384,992 Loans held for sale 16,765 18,787 18,854 19,048 Other real estate owned 1,432 1,526 4,088 3,416 Premises and equipment, net 191,889 177,456 162,733 153,553 Goodwill 306,043 306,043 306,043 306,043 Intangible assets, net 60,390 62,356 66,025 68,283 Other assets 297,023 315,245 297,326 330,894 Total assets $ 9,993,283 $ 9,970,851 $ 9,951,064 $ 9,866,283 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Non-interest bearing demand deposits $ 2,268,801 $ 2,229,432 $ 2,361,367 $ 2,483,174 Interest bearing demand deposits 1,407,667 1,420,942 1,480,042 1,358,445 Savings and money market 3,768,211 3,703,810 3,367,012 3,314,895 Total transaction deposits 7,444,679 7,354,184 7,208,421 7,156,514 Time deposits 1,052,449 1,022,741 981,970 992,494 Total deposits 8,497,128 8,376,925 8,190,391 8,149,008 Securities sold under agreements to repurchase 19,517 19,465 19,627 20,273 Long-term debt 54,433 54,356 54,200 54,123 Federal Home Loan Bank advances — 35,000 340,000 316,770 Other liabilities 130,208 237,461 134,039 162,524 Total liabilities 8,701,286 8,723,207 8,738,257 8,702,698 Shareholders' equity: Common stock 515 515 515 515 Additional paid in capital 1,164,395 1,161,804 1,162,269 1,160,706 Retained earnings 491,849 469,630 433,126 410,243 Treasury stock (302,277 ) (303,880 ) (306,702 ) (307,026 ) Accumulated other comprehensive loss, net of tax (62,485 ) (80,425 ) (76,401 ) (100,853 ) Total shareholders' equity 1,291,997 1,247,644 1,212,807 1,163,585 Total liabilities and shareholders' equity $ 9,993,283 $ 9,970,851 $ 9,951,064 $ 9,866,283 SHARE DATA Average basic shares outstanding 38,277,042 38,210,869 38,013,791 37,990,659 Average diluted shares outstanding 38,495,091 38,372,777 38,162,538 38,134,338 Ending shares outstanding 37,988,364 37,899,453 37,784,851 37,739,776 Common book value per share $ 34.01 $ 32.92 $ 32.10 $ 30.83 Tangible common book value per share(1) (non-GAAP) 24.91 23.74 22.77 21.43 Tangible common book value per share, excluding accumulated other comprehensive loss(1) (non-GAAP) 26.56 25.86 24.79 24.10 CAPITAL RATIOS Average equity to average assets 12.80 % 12.57 % 11.97 % 11.93 % Tangible common equity to tangible assets(1) 9.81 % 9.35 % 8.96 % 8.50 % Tier 1 leverage ratio 10.44 % 10.20 % 9.74 % 9.56 % Common equity tier 1 risk-based capital ratio 12.88 % 12.41 % 11.89 % 11.61 % Tier 1 risk-based capital ratio 12.88 % 12.41 % 11.89 % 11.61 % Total risk-based capital ratio 14.79 % 14.32 % 13.80 % 13.49 % (1 ) Represents a non-GAAP financial measure. See non-GAAP reconciliations below. NATIONAL BANK HOLDINGS CORPORATION
Loan Portfolio
(Dollars in thousands)Period End Loan Balances by Type
September 30, 2024 September 30, 2024 vs. June 30, 2024 vs. September 30, 2023 September 30, 2024 June 30, 2024 % Change September 30, 2023 % Change Originated: Commercial: Commercial and industrial $ 1,894,830 $ 1,906,095 (0.6 )% $ 1,784,188 6.2 % Municipal and non-profit 1,096,843 1,063,706 3.1 % 1,012,967 8.3 % Owner-occupied commercial real estate 949,330 921,122 3.1 % 827,679 14.7 % Food and agribusiness 257,743 248,401 3.8 % 258,609 (0.3 )% Total commercial 4,198,746 4,139,324 1.4 % 3,883,443 8.1 % Commercial real estate non-owner occupied 1,113,796 1,116,424 (0.2 )% 1,026,133 8.5 % Residential real estate 933,644 923,313 1.1 % 897,804 4.0 % Consumer 13,600 14,385 (5.5 )% 16,700 (18.6 )% Total originated 6,259,786 6,193,446 1.1 % 5,824,080 7.5 % Acquired: Commercial: Commercial and industrial 116,683 124,104 (6.0 )% 156,012 (25.2 )% Municipal and non-profit 282 288 (2.1 )% 305 (7.5 )% Owner-occupied commercial real estate 221,928 232,890 (4.7 )% 247,701 (10.4 )% Food and agribusiness 43,733 48,061 (9.0 )% 61,551 (28.9 )% Total commercial 382,626 405,343 (5.6 )% 465,569 (17.8 )% Commercial real estate non-owner occupied 720,384 752,040 (4.2 )% 787,926 (8.6 )% Residential real estate 349,916 369,003 (5.2 )% 398,187 (12.1 )% Consumer 1,783 2,321 (23.2 )% 2,676 (33.4 )% Total acquired 1,454,709 1,528,707 (4.8 )% 1,654,358 (12.1 )% Total loans $ 7,714,495 $ 7,722,153 (0.1 )% $ 7,478,438 3.2 % Loan Fundings(1)
Third quarter Second quarter First quarter Fourth quarter Third quarter 2024 2024 2024 2023 2023 Commercial: Commercial and industrial $ 93,711 $ 241,910 $ 53,978 $ 135,954 $ 89,297 Municipal and non-profit 35,677 28,785 14,564 79,650 18,657 Owner occupied commercial real estate 70,517 102,615 35,128 75,631 67,322 Food and agribusiness 19,205 11,040 (7,204 ) 10,646 16,191 Total commercial 219,110 384,350 96,466 301,881 191,467 Commercial real estate non-owner occupied 91,809 83,184 73,789 107,738 88,434 Residential real estate 47,322 36,124 29,468 48,925 42,514 Consumer 1,010 1,547 234 1,849 1,689 Total $ 359,251 $ 505,205 $ 199,957 $ 460,393 $ 324,104 (1 ) Loan fundings are defined as closed end funded loans and net fundings under revolving lines of credit. Net fundings (paydowns) under revolving lines of credit were $16,302, $19,281, ($59,523), $16,954 and ($12,877) for the periods noted in the table above, respectively. NATIONAL BANK HOLDINGS CORPORATION
Summary of Net Interest Margin
(Dollars in thousands)For the three months ended For the three months ended For the three months ended September 30, 2024 June 30, 2024 September 30, 2023 Average Average Average Average Average Average balance Interest rate balance Interest rate balance Interest rate Interest earning assets: Originated loans FTE(1)(2) $ 6,251,827 $ 108,403 6.90 % $ 6,074,199 $ 101,794 6.74 % $ 5,803,157 $ 92,813 6.35 % Acquired loans 1,487,002 22,660 6.06 % 1,541,576 23,464 6.12 % 1,671,595 26,115 6.20 % Loans held for sale 18,078 319 7.02 % 16,862 318 7.59 % 22,154 383 6.86 % Investment securities available-for-sale 790,268 5,132 2.60 % 802,830 5,101 2.54 % 761,892 3,783 1.99 % Investment securities held-to-maturity 548,120 2,344 1.71 % 564,818 2,419 1.71 % 611,712 2,685 1.76 % Other securities 26,213 405 6.18 % 25,093 377 6.01 % 39,115 701 7.17 % Interest earning deposits 70,946 556 3.12 % 92,388 685 2.98 % 130,239 1,205 3.67 % Total interest earning assets FTE(2) $ 9,192,454 $ 139,819 6.05 % $ 9,117,766 $ 134,158 5.92 % $ 9,039,864 $ 127,685 5.60 % Cash and due from banks $ 86,887 $ 100,165 $ 104,308 Other assets 777,758 771,475 737,568 Allowance for credit losses (96,369 ) (97,741 ) (92,831 ) Total assets $ 9,960,730 $ 9,891,665 $ 9,788,909 Interest bearing liabilities: Interest bearing demand, savings and money market deposits $ 5,134,650 $ 40,146 3.11 % $ 5,109,924 $ 39,681 3.12 % $ 4,535,183 $ 27,211 2.38 % Time deposits 1,039,563 9,220 3.53 % 1,015,371 8,536 3.38 % 992,755 6,212 2.48 % Securities sold under agreements to repurchase 17,146 5 0.12 % 17,449 5 0.12 % 19,288 6 0.12 % Long-term debt 54,383 519 3.80 % 54,307 518 3.84 % 54,074 519 3.81 % Federal Home Loan Bank advances 32,641 460 5.61 % 9,505 133 5.63 % 316,723 4,385 5.49 % Total interest bearing liabilities $ 6,278,383 $ 50,350 3.19 % $ 6,206,556 $ 48,873 3.17 % $ 5,918,023 $ 38,333 2.57 % Demand deposits $ 2,226,807 $ 2,254,454 $ 2,553,619 Other liabilities 180,667 187,499 149,068 Total liabilities 8,685,857 8,648,509 8,620,710 Shareholders' equity 1,274,873 1,243,156 1,168,199 Total liabilities and shareholders' equity $ 9,960,730 $ 9,891,665 $ 9,788,909 Net interest income FTE(2) $ 89,469 $ 85,285 $ 89,352 Interest rate spread FTE(2) 2.86 % 2.75 % 3.03 % Net interest earning assets $ 2,914,071 $ 2,911,210 $ 3,121,841 Net interest margin FTE(2) 3.87 % 3.76 % 3.92 % Average transaction deposits $ 7,361,457 $ 7,364,378 $ 7,088,802 Average total deposits 8,401,020 8,379,749 8,081,557 Ratio of average interest earning assets to average interest bearing liabilities 146.41 % 146.91 % 152.75 % (1 ) Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan. (2 ) Presented on a fully taxable equivalent basis using the statutory tax rate of 21%. The tax equivalent adjustments included above are $1,816, $1,711 and $1,575 for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively. NATIONAL BANK HOLDINGS CORPORATION
Summary of Net Interest Margin
(Dollars in thousands)For the nine months ended September 30, 2024 For the nine months ended September 30, 2023 Average Average Average Average balance Interest rate balance Interest rate Interest earning assets: Originated loans FTE(1)(2) $ 6,124,757 $ 311,112 6.79 % $ 5,656,309 $ 258,528 6.11 % Acquired loans 1,546,482 70,413 6.08 % 1,718,523 79,526 6.19 % Loans held for sale 15,661 862 7.35 % 23,494 1,189 6.77 % Investment securities available-for-sale 781,454 14,336 2.45 % 786,087 11,655 1.98 % Investment securities held-to-maturity 563,975 7,277 1.72 % 629,507 8,364 1.77 % Other securities 28,771 1,398 6.48 % 46,480 2,513 7.21 % Interest earning deposits 84,920 2,004 3.15 % 120,633 3,369 3.73 % Total interest earning assets FTE(2) $ 9,146,020 $ 407,402 5.95 % $ 8,981,033 $ 365,144 5.44 % Cash and due from banks $ 96,510 $ 110,902 Other assets 768,521 724,305 Allowance for credit losses (97,327 ) (91,110 ) Total assets $ 9,913,724 $ 9,725,130 Interest bearing liabilities: Interest bearing demand, savings and money market deposits $ 5,064,386 $ 116,240 3.07 % $ 4,197,603 $ 55,070 1.75 % Time deposits 1,015,081 25,340 3.33 % 965,750 14,545 2.01 % Securities sold under agreements to repurchase 17,839 16 0.12 % 19,863 17 0.11 % Long-term debt 54,307 1,555 3.82 % 53,997 1,555 3.85 % Federal Home Loan Bank advances 89,918 3,774 5.61 % 449,060 17,075 5.08 % Total interest bearing liabilities $ 6,241,531 $ 146,925 3.14 % $ 5,686,273 $ 88,262 2.08 % Demand deposits $ 2,253,986 $ 2,751,537 Other liabilities 170,005 141,110 Total liabilities 8,665,522 8,578,920 Shareholders' equity 1,248,202 1,146,210 Total liabilities and shareholders' equity $ 9,913,724 $ 9,725,130 Net interest income FTE(2) $ 260,477 $ 276,882 Interest rate spread FTE(2) 2.81 % 3.36 % Net interest earning assets $ 2,904,489 $ 3,294,760 Net interest margin FTE(2) 3.80 % 4.12 % Average transaction deposits $ 7,318,372 $ 6,949,140 Average total deposits 8,333,453 7,914,890 Ratio of average interest earning assets to average interest bearing liabilities 146.53 % 157.94 % (1 ) Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan. (2 ) Presented on a fully taxable equivalent basis using the statutory tax rate of 21%. The tax equivalent adjustments included above are $5,220 and $4,432 for the nine months ended September 30, 2024 and September 30, 2023, respectively. NATIONAL BANK HOLDINGS CORPORATION
Allowance for Credit Losses and Asset Quality
(Dollars in thousands)Allowance for Credit Losses Analysis
As of and for the three months ended September 30, 2024 June 30, 2024 September 30, 2023 Beginning allowance for credit losses $ 96,457 $ 97,607 $ 92,581 Charge-offs (3,505 ) (4,605 ) (540 ) Recoveries 95 499 280 Provision expense for credit losses 2,000 2,956 1,125 Ending allowance for credit losses ("ACL") $ 95,047 $ 96,457 $ 93,446 Ratio of annualized net charge-offs to average total loans during the period 0.18 % 0.22 % 0.01 % Ratio of ACL to total loans outstanding at period end 1.23 % 1.25 % 1.25 % Ratio of ACL to total non-performing loans at period end 403.68 % 370.18 % 281.36 % Total loans $ 7,714,495 $ 7,722,153 $ 7,478,438 Average total loans during the period 7,714,765 7,582,506 7,443,869 Total non-performing loans 23,545 26,057 33,212 Past Due and Non-accrual Loans
September 30, 2024 June 30, 2024 September 30, 2023 Loans 30-89 days past due and still accruing interest $ 31,253 $ 27,159 $ 8,144 Loans 90 days past due and still accruing interest 9,509 3,498 154 Non-accrual loans 23,545 26,057 33,212 Total past due and non-accrual loans $ 64,307 $ 56,714 $ 41,510 Total 90 days past due and still accruing interest and non-accrual loans to total loans 0.43 % 0.38 % 0.45 % Asset Quality Data
September 30, 2024 June 30, 2024 September 30, 2023 Non-performing loans $ 23,545 $ 26,057 $ 33,212 OREO 1,432 1,526 3,416 Total non-performing assets $ 24,977 $ 27,583 $ 36,628 Total non-performing loans to total loans 0.31 % 0.34 % 0.44 % Total non-performing assets to total loans and OREO 0.32 % 0.36 % 0.49 % NATIONAL BANK HOLDINGS CORPORATION
Key Metrics(1)As of and for the three months ended As of and for the nine months ended September 30, June 30, September 30, September 30, September 30, 2024 2024 2023 2024 2023 Return on average assets 1.32 % 1.06 % 1.46 % 1.22 % 1.50 % Return on average tangible assets(2) 1.43 % 1.17 % 1.58 % 1.33 % 1.61 % Return on average equity 10.33 % 8.46 % 12.26 % 9.70 % 12.71 % Return on average tangible common equity(2) 14.84 % 12.44 % 18.38 % 14.14 % 18.81 % Loan to deposit ratio (end of period) 90.79 % 92.18 % 91.77 % 90.79 % 91.77 % Non-interest bearing deposits to total deposits (end of period) 26.70 % 26.61 % 30.47 % 26.70 % 30.47 % Net interest margin(3) 3.79 % 3.69 % 3.85 % 3.73 % 4.06 % Net interest margin FTE(2)(3) 3.87 % 3.76 % 3.92 % 3.80 % 4.12 % Interest rate spread FTE(4) 2.86 % 2.75 % 3.03 % 2.81 % 3.36 % Yield on earning assets(5) 5.97 % 5.84 % 5.53 % 5.87 % 5.37 % Yield on earning assets FTE(2)(5) 6.05 % 5.92 % 5.60 % 5.95 % 5.44 % Cost of interest bearing liabilities 3.19 % 3.17 % 2.57 % 3.14 % 2.08 % Cost of deposits 2.34 % 2.31 % 1.64 % 2.27 % 1.18 % Non-interest income to total revenue FTE(9) 17.05 % 14.13 % 17.81 % 16.13 % 14.74 % Non-interest expense to average assets 2.56 % 2.56 % 2.46 % 2.56 % 2.47 % Efficiency ratio 60.51 % 64.62 % 56.56 % 62.24 % 56.16 % Efficiency ratio excluding other intangible assets amortization FTE(2) 57.65 % 61.52 % 53.90 % 59.28 % 53.74 % Pre-provision net revenue $ 41,880 $ 34,528 $ 46,539 $ 115,298 $ 140,427 Pre-provision net revenue FTE(2) 43,696 36,239 48,114 120,518 144,859 Total Loans Asset Quality Data(6)(7)(8) Non-performing loans to total loans 0.31 % 0.34 % 0.44 % 0.31 % 0.44 % Non-performing assets to total loans and OREO 0.32 % 0.36 % 0.49 % 0.32 % 0.49 % Allowance for credit losses to total loans 1.23 % 1.25 % 1.25 % 1.23 % 1.33 % Allowance for credit losses to non-performing loans 403.68 % 370.18 % 281.36 % 403.68 % 281.36 % Net charge-offs to average loans 0.18 % 0.22 % 0.01 % 0.13 % 0.02 % (1 ) Ratios are annualized. (2 ) Ratio represents non-GAAP financial measure. See non-GAAP reconciliations below. (3 ) Net interest margin represents net interest income, including accretion income on interest earning assets, as a percentage of average interest earning assets. (4 ) Interest rate spread represents the difference between the weighted average yield on interest earning assets, including FTE income, and the weighted average cost of interest bearing liabilities. Ratio represents a non-GAAP financial measure. (5 ) Interest earning assets include assets that earn interest/accretion or dividends. Any market value adjustments on investment securities or loans are excluded from interest earning assets. (6 ) Non-performing loans consist of non-accruing loans and modified loans on non-accrual. (7 ) Non-performing assets include non-performing loans and other real estate owned. (8 ) Total loans are net of unearned discounts and fees. (9 ) Non-interest income to total revenue represents non-interest income divided by the sum of net interest income FTE and non-interest income. Ratio represents a non-GAAP financial measure. NATIONAL BANK HOLDINGS CORPORATION
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(Dollars in thousands, except share and per share data)Tangible Common Book Value Ratios
September 30, 2024 June 30, 2024 December 31, 2023 September 30, 2023 Total shareholders' equity $ 1,291,997 $ 1,247,644 $ 1,212,807 $ 1,163,585 Less: goodwill and other intangible assets, net (358,754 ) (360,732 ) (364,716 ) (366,724 ) Add: deferred tax liability related to goodwill 13,203 12,871 12,208 11,876 Tangible common equity (non-GAAP) $ 946,446 $ 899,783 $ 860,299 $ 808,737 Total assets $ 9,993,283 $ 9,970,851 $ 9,951,064 $ 9,866,283 Less: goodwill and other intangible assets, net (358,754 ) (360,732 ) (364,716 ) (366,724 ) Add: deferred tax liability related to goodwill 13,203 12,871 12,208 11,876 Tangible assets (non-GAAP) $ 9,647,732 $ 9,622,990 $ 9,598,556 $ 9,511,435 Tangible common equity to tangible assets calculations: Total shareholders' equity to total assets 12.93 % 12.51 % 12.19 % 11.79 % Less: impact of goodwill and other intangible assets, net (3.12 )% (3.16 )% (3.23 )% (3.29 )% Tangible common equity to tangible assets (non-GAAP) 9.81 % 9.35 % 8.96 % 8.50 % Tangible common book value per share calculations: Tangible common equity (non-GAAP) $ 946,446 $ 899,783 $ 860,299 $ 808,737 Divided by: ending shares outstanding 37,988,364 37,899,453 37,784,851 37,739,776 Tangible common book value per share (non-GAAP) $ 24.91 $ 23.74 $ 22.77 $ 21.43 Tangible common book value per share, excluding accumulated other comprehensive loss calculations: Tangible common equity (non-GAAP) $ 946,446 $ 899,783 $ 860,299 $ 808,737 Accumulated other comprehensive loss, net of tax 62,485 80,425 76,401 100,853 Tangible common book value, excluding accumulated other comprehensive loss, net of tax (non-GAAP) 1,008,931 980,208 936,700 909,590 Divided by: ending shares outstanding 37,988,364 37,899,453 37,784,851 37,739,776 Tangible common book value per share, excluding accumulated other comprehensive loss, net of tax (non-GAAP) $ 26.56 $ 25.86 $ 24.79 $ 24.10 NATIONAL BANK HOLDINGS CORPORATION
(Dollars in thousands, except share and per share data)
Return on Average Tangible Assets and Return on Average Tangible EquityAs of and for the three months ended As of and for the nine months ended September 30, June 30, September 30, September 30, September 30, 2024 2024 2023 2024 2023 Net income $ 33,105 $ 26,135 $ 36,087 $ 90,631 $ 108,927 Add: impact of other intangible assets amortization expense, after tax 1,517 1,516 1,541 4,575 4,128 Net income excluding the impact of other intangible assets amortization expense, after tax (non-GAAP) $ 34,622 $ 27,651 $ 37,628 $ 95,206 $ 113,055 Average assets $ 9,960,730 $ 9,891,665 $ 9,788,909 $ 9,913,724 $ 9,725,130 Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill (346,757 ) (349,030 ) (356,083 ) (348,717 ) (342,826 ) Average tangible assets (non-GAAP) $ 9,613,973 $ 9,542,635 $ 9,432,826 $ 9,565,007 $ 9,382,304 Average shareholders' equity $ 1,274,873 $ 1,243,156 $ 1,168,199 $ 1,248,202 $ 1,146,210 Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill (346,757 ) (349,030 ) (356,083 ) (348,717 ) (342,826 ) Average tangible common equity (non-GAAP) $ 928,116 $ 894,126 $ 812,116 $ 899,485 $ 803,384 Return on average assets 1.32 % 1.06 % 1.46 % 1.22 % 1.50 % Return on average tangible assets (non-GAAP) 1.43 % 1.17 % 1.58 % 1.33 % 1.61 % Return on average equity 10.33 % 8.46 % 12.26 % 9.70 % 12.71 % Return on average tangible common equity (non-GAAP) 14.84 % 12.44 % 18.38 % 14.14 % 18.81 % Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin
As of and for the three months ended As of and for the nine months ended September 30, June 30, September 30, September 30, September 30, 2024 2024 2023 2024 2023 Interest income $ 138,003 $ 132,447 $ 126,110 $ 402,182 $ 360,712 Add: impact of taxable equivalent adjustment 1,816 1,711 1,575 5,220 4,432 Interest income FTE (non-GAAP) $ 139,819 $ 134,158 $ 127,685 $ 407,402 $ 365,144 Net interest income $ 87,653 $ 83,574 $ 87,777 $ 255,257 $ 272,450 Add: impact of taxable equivalent adjustment 1,816 1,711 1,575 5,220 4,432 Net interest income FTE (non-GAAP) $ 89,469 $ 85,285 $ 89,352 $ 260,477 $ 276,882 Average earning assets $ 9,192,454 $ 9,117,766 $ 9,039,864 $ 9,146,020 $ 8,981,033 Yield on earning assets 5.97 % 5.84 % 5.53 % 5.87 % 5.37 % Yield on earning assets FTE (non-GAAP) 6.05 % 5.92 % 5.60 % 5.95 % 5.44 % Net interest margin 3.79 % 3.69 % 3.85 % 3.73 % 4.06 % Net interest margin FTE (non-GAAP) 3.87 % 3.76 % 3.92 % 3.80 % 4.12 % Efficiency Ratio and Pre-Provision Net Revenue
As of and for the three months ended As of and for the nine months ended September 30, June 30, September 30, September 30, September 30, 2024 2024 2023 2024 2023 Net interest income $ 87,653 $ 83,574 $ 87,777 $ 255,257 $ 272,450 Add: impact of taxable equivalent adjustment 1,816 1,711 1,575 5,220 4,432 Net interest income FTE (non-GAAP) $ 89,469 $ 85,285 $ 89,352 $ 260,477 $ 276,882 Non-interest income $ 18,389 $ 14,029 $ 19,365 $ 50,112 $ 47,853 Non-interest expense $ 64,162 $ 63,075 $ 60,603 $ 190,071 $ 179,876 Less: other intangible assets amortization (1,977 ) (1,977 ) (2,008 ) (5,962 ) (5,378 ) Non-interest expense excluding other intangible assets amortization (non-GAAP) $ 62,185 $ 61,098 $ 58,595 $ 184,109 $ 174,498 Efficiency ratio 60.51 % 64.62 % 56.56 % 62.24 % 56.16 % Efficiency ratio excluding other intangible assets amortization FTE (non-GAAP) 57.65 % 61.52 % 53.90 % 59.28 % 53.74 % Pre-provision net revenue (non-GAAP) $ 41,880 $ 34,528 $ 46,539 $ 115,298 $ 140,427 Pre-provision net revenue, FTE (non-GAAP) 43,696 36,239 48,114 120,518 144,859 
