National Bank Holdings Corporation Announces Balance Sheet Repositioning

Rhea-AI Summary

National Bank Holdings (NYSE: NBHC) has announced a strategic balance sheet repositioning through the sale of approximately $130 million of available-for-sale (AFS) investment securities. The sale, representing about 20% of the company's AFS portfolio, resulted in an after-tax loss of approximately $5 million to be recorded in Q4 2024. The company plans to redeploy the proceeds into higher-yielding securities over time, aiming to drive future earnings growth through its solid capital position.

Positive

• Strategic redeployment of assets into higher-yielding securities
• Strong capital position enabling balance sheet optimization
• Proactive management approach to enhance future earnings

Negative

• $5 million after-tax loss in Q4 2024
• 20% reduction in AFS investment securities portfolio

Insights

Financial Analyst

This strategic balance sheet restructuring by NBHC demonstrates proactive portfolio management in response to the current interest rate environment. The $130 million securities sale, representing 20% of their AFS portfolio, will result in an immediate $5 million after-tax loss, but positions them for improved yield performance. The move suggests management's confidence in their capital position and anticipation of better reinvestment opportunities. The timing aligns with market expectations of potential rate cuts in 2024, allowing NBHC to lock in higher yields before rates potentially decline. While the short-term hit to earnings is notable, the long-term benefits of portfolio restructuring could enhance net interest margin and overall profitability. For a bank with a $1.7 billion market cap, this represents a calculated risk that could pay off in future quarters through improved earnings performance.

Portfolio Manager

The portfolio restructuring reflects a broader trend among regional banks optimizing their balance sheets for an anticipated shift in the rate environment. The $5 million after-tax loss is a reasonable cost for the potential upside of reinvesting in higher-yielding securities. For context, this represents approximately 0.3% of NBHC's market capitalization - a manageable impact for the potential long-term benefits. The gradual redeployment approach mentioned suggests a disciplined strategy to avoid rushing into new positions, allowing for tactical advantage in timing new investments. This move also indicates management's proactive stance in addressing the duration risk in their AFS portfolio, which could protect against potential mark-to-market losses if interest rates become more volatile.

DENVER, Dec. 18, 2024 (GLOBE NEWSWIRE) -- National Bank Holdings Corporation (NYSE: NBHC, or the “Company”) announced today that it sold approximately $130 million of available-for-sale (“AFS”) investment securities on the open market. The securities sale is part of the Company’s strategy to proactively maximize the balance sheet with the goal of driving future earnings. The securities sold represented approximately 20% of the Company’s AFS portfolio and resulted in an after-tax loss of approximately $5 million that will be recorded in the fourth quarter of 2024. Proceeds from the sale will be redeployed over time into higher yielding securities.

“Through our solid capital position, we are able to effectively manage our balance sheet while enhancing future earnings growth for our shareholders,” said Chairman and CEO, Tim Laney.

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 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 Utah, Texas, 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.

Contact:
Analysts/Institutional Investors:
Emily Gooden, 720-554-6640
Chief Accounting Officer and Investor Relations Director
ir@nationalbankholdings.com

Nicole Van Denabeele, 720-554-6640
Chief Financial Officer
ir@nationalbankholdings.com

Media:
Jody Soper, 303-784-5925
Chief Marketing Officer
Jody.Soper@nbhbank.com

Source: National Bank Holdings Corporation

FAQ

What is the size of NBHC's securities sale announced in December 2024?

NBHC announced the sale of approximately $130 million of available-for-sale (AFS) investment securities, representing about 20% of their AFS portfolio.

How much loss will NBHC record from the December 2024 securities sale?

NBHC will record an after-tax loss of approximately $5 million in the fourth quarter of 2024 from the securities sale.

What is the purpose of NBHC's balance sheet repositioning strategy?

The strategy aims to maximize the balance sheet and drive future earnings by redeploying proceeds from the securities sale into higher-yielding securities over time.

What percentage of NBHC's AFS portfolio was sold in December 2024?

The securities sale represented approximately 20% of NBHC's available-for-sale (AFS) portfolio.