National Bank Holdings Corporation Announces Fourth Quarter and Record Full Year 2023 Financial Results
National Bank Holdings Corporation (NBHC) reported strong financial results for the fourth quarter of 2023 and the full year 2023. The company achieved record full year earnings of $142.0 million, or $3.72 per share, with a return on average tangible common equity of 18.23%. The company's net interest income increased, and it maintained strong capital ratios. However, non-interest income decreased, and non-interest expenses increased. Overall, the company exhibited solid financial performance and is well-positioned for 2024.
The reported earnings of National Bank Holdings Corporation (NBHC) indicate a robust year-over-year growth in net income, with a notable increase from $71.3 million in 2022 to $142.0 million in 2023. This reflects a substantial improvement in the company's profitability, as evidenced by the earnings per share jumping from $2.18 to $3.72. The growth can be attributed to higher net interest income, which is likely a result of the Federal Reserve's interest rate hikes, as well as organic balance sheet expansion and strategic acquisitions.
From a financial perspective, the return on average tangible common equity (ROATCE) increased significantly to 18.23%, indicating that the company is generating more profit per dollar of equity. This is a critical metric as it demonstrates the efficiency of the company's capital usage. Additionally, the bank's focus on maintaining strong credit quality, with net charge-offs at just two basis points for the year, suggests a disciplined approach to risk management which is crucial for investor confidence, especially in an uncertain economic environment.
However, it's important to note the provision for credit losses increased to $4.6 million in Q4 2023, up from $1.1 million in the previous quarter, indicating a more conservative stance on potential future losses. This could be a response to changing economic conditions or specific loan portfolio assessments. Investors should monitor this trend as it may impact future profitability.
The increase in fully taxable equivalent net interest income and the widening of the net interest margin to 3.95% suggest that NBHC has effectively capitalized on the higher interest rate environment. The bank's loan portfolio shows strong organic growth, particularly in commercial loan fundings, which could be indicative of a healthy demand for business financing. This organic loan growth, coupled with a disciplined underwriting approach, positions the bank favorably in the market.
Furthermore, the bank's deposit growth strategy appears to be successful, with an 18.7% increase in average total deposits. A diversified and granular deposit base, with no exposure to volatile sectors like venture capital or crypto, enhances the bank's stability and resilience against market fluctuations. The loan to deposit ratio of 94% reflects a strong liquidity position, which is essential for meeting customer needs and pursuing new lending opportunities.
It's also worth noting the reduction in non-interest income, primarily due to lower mortgage banking income. This could signal a cooling housing market or increased competition and it may affect the bank's revenue diversification strategy. The increase in non-interest expenses, including the rise in occupancy and equipment costs, could squeeze margins if not offset by revenue growth in future periods.
The reported financial results of NBHC provide insights into the broader economic environment. The bank's performance, particularly the growth in net interest income and loan fundings, suggests a robust business environment, at least for certain segments of the economy. However, the increase in provision for credit losses could be an early indicator of economic headwinds or a more cautious outlook by the bank's management.
The bank's strong capital ratios, well above the 'well capitalized' thresholds, signal a resilient position that could withstand potential economic downturns. This is particularly relevant as the economy faces uncertainties such as potential interest rate changes by the Federal Reserve and other macroeconomic factors. The effective management of these ratios is a positive sign for stakeholders looking for stability and prudent financial stewardship.
Moreover, the bank's strategic growth from recent acquisitions and the reported increase in pre-provision net revenue point to successful integration and synergy realization. However, investors should consider the potential risks associated with integrating acquisitions, such as cultural clashes or unforeseen financial liabilities, which could impact future performance.
01/23/2024 - 04:10 PM
DENVER, Jan. 23, 2024 (GLOBE NEWSWIRE) -- National Bank Holdings Corporation (NYSE: NBHC) reported:
For the quarter For the year Adjusted (1) 4Q23 3Q23 4Q22 2023 2022 4Q22 - QTD 4Q22 -YTD Net income ($000 's) $ 33,121 $ 36,087 $ 16,721 $ 142,048 $ 71,274 $ 34,546 $ 99,577 Earnings per share - diluted $ 0.87 $ 0.94 $ 0.44 $ 3.72 $ 2.18 $ 0.91 $ 3.05 Return on average tangible assets(2) 1.44 % 1.58 % 0.77 % 1.57 % 0.95 % 1.55 % 1.32 % Return on average tangible common equity(2) 16.56 % 18.38 % 9.17 % 18.23 % 9.91 % 18.37 % 13.75 %
(1 ) See non-GAAP reconciliations below. (2 ) Quarterly ratios are annualized.
In announcing these results, Chief Executive Officer Tim Laney shared, “I am pleased to announce that our solid fourth quarter results contributed to record full year earnings of $142.0 million or $3.72 per share with a return on average tangible common equity of 18.23% . After adjusting for acquisition expenses, we grew pre-provision net revenues by 32.4% year over year. Our teams delivered 6.6% organic loan growth while adhering to our disciplined concentration limits and underwriting standards. Our credit quality remains strong with just two basis points of net charge-offs for the year.”
Mr. Laney added, “We continue to adhere to sound banking principles, which consistently produce solid results. We delivered strong deposit and capital growth during 2023, growing average total deposits by 18.7% and tangible book value by 10.4% . We enter 2024 from a position of strength, with a strong balance sheet, solid capital position and diversified funding sources. We will prudently navigate any economic environment, and we are well positioned to continue to serve our clients and communities in 2024.”
Fourth Quarter 2023 Results (All comparisons refer to the third quarter of 2023, except as noted)
Net income totaled $33.1 million or $0.87 per diluted share, compared to $36.1 million or $0.94 per diluted share. Fully taxable equivalent pre-provision net revenue totaled $45.1 million , compared to $48.1 million . The return on average tangible assets totaled 1.44% , compared to 1.58% , and the return on average tangible common equity totaled 16.56% , compared to 18.38% .
Net Interest Income $1.8 million to $91.2 million . The increase in loan interest income, which included accelerated loan fee income of $2.9 million , outpaced an increase in the cost of funds during the quarter. The fully taxable equivalent net interest margin widened three basis points to 3.95% , and average earning assets increased $108.1 million driven by $182.5 million of average originated loan growth. The cost of funds totaled 2.10% , compared to 1.80% during the third quarter.
Loans $220.3 million or 11.7% annualized to $7.7 billion at December 31, 2023. We generated quarterly loan fundings totaling $460.4 million , led by commercial loan fundings of $301.9 million . The average interest rate on the fourth quarter’s loan originations totaled 8.6% , consistent with the third quarter.
Asset Quality and Provision for Credit Losses $4.6 million of provision expense for credit losses, compared to $1.1 million in the prior quarter. The current quarter’s provision expense was primarily driven by loan growth and a specific reserve on one non-performing loan. Annualized net charge-offs totaled 0.02% of average total loans, compared to 0.01% in the prior quarter. Non-performing loans improved seven basis points to 0.37% of total loans, and non-performing assets improved seven basis points to 0.42% of total loans and OREO. The allowance for credit losses as a percentage of loans increased two basis points to 1.27% at December 31, 2023.
Deposits $47.0 million , or 2.3% annualized, to $8.1 billion during the fourth quarter 2023. The loan to deposit ratio totaled 94.0% at December 31, 2023. Average transaction deposits (defined as total deposits less time deposits) increased $53.2 million to $7.1 billion . The mix of transaction deposits to total deposits was 88.0% and 87.8% at December 31, 2023 and September 30, 2023, respectively.
Non-Interest Income $3.3 million to $16.1 million during the fourth quarter, largely driven by $2.7 million lower mortgage banking income. Included in the third quarter’s mortgage banking income was a $1.1 million gain from the sale of mortgage servicing rights. Service charges and bank card fees remained consistent with the prior quarter.
Non-Interest Expense $1.5 million to $62.1 million during the fourth quarter. Occupancy and equipment increased $1.0 million partially driven by a $0.3 million impairment on equipment. Other non-interest expense increased $1.4 million due to various items including $0.7 million of one-time asset write-downs. The efficiency ratio totaled 58.8% for the fourth quarter, compared to 56.6% for the third quarter. The fully taxable equivalent efficiency ratio totaled 56.0% for the fourth quarter compared to 53.9% , excluding other intangible assets amortization.
Income tax expense totaled $5.8 million , compared to $9.3 million in the prior quarter. The decrease in income tax expense during the quarter was largely due to $2.0 million of research and development tax credits recognized in the fourth quarter. The effective tax rate was 14.9% , compared to 20.5% for the third quarter.
Capital 9.74% at December 31, 2023, and the common equity tier 1 capital ratio totaled 11.89% at December 31, 2023. Shareholders’ equity totaled $1.2 billion at December 31, 2023, increasing $49.2 million , largely due to $22.9 million of higher retained earnings and a $24.5 million decrease in accumulated other comprehensive loss.
Common book value per share increased $1.27 t o $32.10 at December 31, 2023. Tangible common book value per share increased $1.34 t o $22.77 driven by the quarter’s earnings and a $0.65 improvement in accumulated other comprehensive loss.
Year-Over-Year Review (All comparisons refer to the full year 2022, except as noted)
Net income increased $70.8 million or 99.3% to a record $142.0 million , or $3.72 per diluted share, compared to net income of $71.3 million , or $2.18 per diluted share in the prior year. The increase over prior year was driven by higher net interest income from our organic balance sheet growth, revenues from strategic acquisition growth, and a benefit to our net interest income from increases in the Federal Reserve Bank’s interest rates. Fully taxable equivalent pre-provision net revenue increased $61.6 million , or 47.9% , to $190.0 million . The return on average tangible assets increased 62 basis points to 1.57% , and the return on average tangible common equity increased 832 basis points to 18.23% .
Prior year included $36.8 million of non-recurring acquisition-related expenses from our 2022 acquisitions. Adjusting for these expenses in the prior year, 2023 net income increased $42.5 million or 42.7% , and fully taxable equivalent pre-provision net revenue increased $46.5 million , or 32.4% . The adjusted return on average tangible assets increased 25 basis points to 1.57% , and the adjusted return on average tangible common equity increased 448 basis points to 18.23% for 2023.
Fully taxable equivalent net interest income totaled $368.1 million , an increase of $95.7 million or 35.1% . Average earning assets increased $1.7 billion , or 23.5% , including average originated loan growth of $971.6 million and average acquired loan growth of $1.1 billion . The fully taxable equivalent net interest margin widened 35 basis points to 4.08% , benefitting from a 159 basis point increase in earning asset yields to 5.56% . Average interest bearing liabilities increased $1.6 billion to $5.8 billion at December 31, 2023, and the cost of funds totaled 1.58% , compared to 0.26% in the prior year.
Loans outstanding totaled $7.7 billion increasing $478.3 million , or 6.6% , from organic loan growth. New loan fundings in 2023 totaled $1.5 billion , led by commercial loan fundings of $0.9 billion .
The Company recorded $8.3 million of provision expense for credit losses during 2023, compared to provision expense of $36.7 million in the prior year. The current year’s provision expense was driven by loan growth and higher reserve requirements. Provision expense for 2022 included $21.7 million of Day 1 reserve requirements for our 2022 acquisitions. Annualized net charge-offs decreased one basis point to 0.02% of average total loans during 2023. Non-performing loans to total loans was 0.37% , compared to 0.23% in the prior year, and non-performing assets to total loans and OREO was 0.42% at December 31, 2023, compared to 0.28% . The allowance for credit losses increased three basis points to 1.27% at December 31, 2023.
Average total deposits increased $1.3 billion or 18.7% to $8.0 billion , primarily due to higher deposit balances driven by the strategic growth from our recent acquisitions. Average transaction deposits increased $1.1 billion or 18.8% , and average non-interest bearing demand deposits increased $8.0 million . The mix of transaction deposits to total deposits was 88.0% , compared to 88.9% at December 31, 2022, and the mix of non-interest bearing demand deposits to total deposits was 28.8% , compared to 39.8% at December 31, 2022.
Non-interest income totaled $63.9 million , a decrease of $3.4 million , largely driven by $10.1 million of lower mortgage banking income due to lower purchase and refinance activity, as well as competition driving tighter gain on sale margins. Service charges and bank card fees increased a combined $3.2 million compared to prior year. Included in non-interest income was $1.5 million higher trust income, $1.3 million higher gains on SBA loan sales, $0.9 million higher fair value adjustments on company-owned life insurance, as well as the addition of Cambr income in 2023. Included in 2023 were $4.0 million in net impairments related to venture capital investments classified as non-marketable securities.
Non-interest expense totaled $242.0 million , an increase of $30.7 million , or 14.6% , primarily due to an increase in core operating expenses driven by our 2022 acquisitions. Included in other non-interest expense is $4.9 million higher FDIC deposit insurance expense as a result of our 2022 acquisitions and an increase in the FDIC assessment rate effective January 2023. Included in 2022 were non-recurring acquisition-related expenses of $15.1 million related to our 2022 acquisitions.
Income tax expense totaled $33.6 million , an increase of $18.6 million from last year, driven by higher pre-tax income. The effective tax rate was 19.1% for 2023, compared to 17.3% in the prior year.
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About Non-GAAP Financial Measures
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
Contact :ir@nationalbankholdings.com Jody.Soper@nbhbank.com NATIONAL BANK HOLDINGS CORPORATION FINANCIAL SUMMARY Consolidated Statements of Operations (Unaudited)
For the three months ended For the years ended December 31, September 30, December 31, December 31, December 31, 2023 2023 2022 2023 2022 Total interest and dividend income $ 134,703 $ 126,110 $ 103,958 $ 495,415 $ 284,688 Total interest expense 45,202 38,333 8,892 133,464 17,853 Net interest income 89,501 87,777 95,066 361,951 266,835 Taxable equivalent adjustment 1,667 1,575 1,454 6,099 5,512 Net interest income FTE(1) 91,168 89,352 96,520 368,050 272,347 Provision expense for credit losses 4,570 1,125 21,869 8,295 36,729 Net interest income after provision for credit losses FTE(1) 86,598 88,227 74,651 359,755 235,618 Non-interest income: Service charges 4,831 4,849 4,365 18,225 16,357 Bank card fees 4,915 4,993 4,954 19,636 18,299 Mortgage banking income 2,020 4,688 2,686 13,634 23,774 Other non-interest income 4,298 4,835 2,133 12,422 8,882 Total non-interest income 16,064 19,365 14,138 63,917 67,312 Non-interest expense: Salaries and benefits 34,470 35,027 36,319 137,701 124,971 Occupancy and equipment 10,186 9,167 10,409 37,552 31,496 Professional fees 2,513 2,215 6,308 10,464 14,418 Data processing 2,853 3,546 4,924 13,110 12,657 Other non-interest expense 10,065 8,640 8,339 35,758 25,354 Other intangible assets amortization 2,008 2,008 1,363 7,386 2,338 Total non-interest expense 62,095 60,603 67,662 241,971 211,234 Income before income taxes FTE(1) 40,567 46,989 21,127 181,701 91,696 Taxable equivalent adjustment 1,667 1,575 1,454 6,099 5,512 Income before income taxes 38,900 45,414 19,673 175,602 86,184 Income tax expense 5,779 9,327 2,952 33,554 14,910 Net income $ 33,121 $ 36,087 $ 16,721 $ 142,048 $ 71,274 Earnings per share - basic $ 0.87 $ 0.95 $ 0.44 $ 3.74 $ 2.20 Earnings per share - diluted 0.87 0.94 0.44 3.72 2.18
(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)
December 31, 2023 September 30, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 190,826 $ 291,291 $ 195,505 Investment securities available-for-sale 628,829 620,445 706,289 Investment securities held-to-maturity 585,052 600,501 651,527 Non-marketable securities 90,477 87,817 89,049 Loans 7,698,758 7,478,438 7,220,469 Allowance for credit losses (97,947 ) (93,446 ) (89,553 ) Loans, net 7,600,811 7,384,992 7,130,916 Loans held for sale 18,854 19,048 22,767 Other real estate owned 4,088 3,416 3,731 Premises and equipment, net 162,733 153,553 136,111 Goodwill 306,043 306,043 279,132 Intangible assets, net 66,025 68,283 59,887 Other assets 297,326 330,894 298,329 Total assets $ 9,951,064 $ 9,866,283 $ 9,573,243 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Non-interest bearing demand deposits $ 2,361,367 $ 2,483,174 $ 3,134,716 Interest bearing demand deposits 1,480,042 1,358,445 913,852 Savings and money market 3,367,012 3,314,895 2,950,658 Total transaction deposits 7,208,421 7,156,514 6,999,226 Time deposits 981,970 992,494 873,400 Total deposits 8,190,391 8,149,008 7,872,626 Securities sold under agreements to repurchase 19,627 20,273 20,214 Long-term debt 54,200 54,123 53,890 Federal Home Loan Bank advances 340,000 316,770 385,000 Other liabilities 134,039 162,524 149,311 Total liabilities 8,738,257 8,702,698 8,481,041 Shareholders' equity: Common stock 515 515 515 Additional paid in capital 1,162,269 1,160,706 1,159,508 Retained earnings 433,126 410,243 330,721 Treasury stock (306,702 ) (307,026 ) (310,338 ) Accumulated other comprehensive loss, net of tax (76,401 ) (100,853 ) (88,204 ) Total shareholders' equity 1,212,807 1,163,585 1,092,202 Total liabilities and shareholders' equity $ 9,951,064 $ 9,866,283 $ 9,573,243 SHARE DATA Average basic shares outstanding 38,013,791 37,990,659 37,762,853 Average diluted shares outstanding 38,162,538 38,134,338 38,100,155 Ending shares outstanding 37,784,851 37,739,776 37,608,519 Common book value per share $ 32.10 $ 30.83 $ 29.04 Tangible common book value per share(1) (non-GAAP) 22.77 21.43 20.63 Tangible common book value per share, excluding accumulated other comprehensive income(1) (non-GAAP) 24.79 24.10 22.98 CAPITAL RATIOS Average equity to average assets 11.97 % 11.93 % 11.47 % Tangible common equity to tangible assets(1) 8.96 % 8.50 % 8.38 % Tier 1 leverage ratio 9.74 % 9.56 % 9.29 % Common equity tier 1 risk-based capital ratio 11.89 % 11.61 % 10.54 % Tier 1 risk-based capital ratio 11.89 % 11.61 % 10.54 % Total risk-based capital ratio 13.80 % 13.49 % 12.29 %
(1 ) Represents a non-GAAP financial measure. See non-GAAP reconciliations below.
NATIONAL BANK HOLDINGS CORPORATION Loan Portfolio
Period End Loan Balances by Type
December 31, 2023 December 31, 2023 vs. September 30, 2023 vs. December 31, 2022 December 31, 2023 September 30, 2023 % Change December 31, 2022 % Change Originated: Commercial: Commercial and industrial $ 1,825,425 $ 1,784,188 2.3 % $ 1,841,313 (0.9 )% Municipal and non-profit 1,083,457 1,012,967 7.0 % 959,305 12.9 % Owner-occupied commercial real estate 879,686 827,679 6.3 % 656,361 34.0 % Food and agribusiness 265,902 258,609 2.8 % 284,714 (6.6 )% Total commercial 4,054,470 3,883,443 4.4 % 3,741,693 8.4 % Commercial real estate non-owner occupied 1,071,529 1,026,133 4.4 % 841,657 27.3 % Residential real estate 919,139 897,804 2.4 % 827,030 11.1 % Consumer 16,686 16,700 (0.1 )% 16,986 (1.8 )% Total originated 6,061,824 5,824,080 4.1 % 5,427,366 11.7 % Acquired: Commercial: Commercial and industrial 141,484 156,012 (9.3 )% 183,522 (22.9 )% Municipal and non-profit 299 305 (2.0 )% 321 (6.9 )% Owner-occupied commercial real estate 244,087 247,701 (1.5 )% 256,979 (5.0 )% Food and agribusiness 58,695 61,551 (4.6 )% 69,265 (15.3 )% Total commercial 444,565 465,569 (4.5 )% 510,087 (12.8 )% Commercial real estate non-owner occupied 785,221 787,926 (0.3 )% 854,393 (8.1 )% Residential real estate 404,648 398,187 1.6 % 424,251 (4.6 )% Consumer 2,500 2,676 (6.6 )% 4,372 (42.8 )% Total acquired 1,636,934 1,654,358 (1.1 )% 1,793,103 (8.7 )% Total loans $ 7,698,758 $ 7,478,438 2.9 % $ 7,220,469 6.6 %
Loan Fundings ( 1)
Fourth quarter Third quarter Second quarter First quarter Fourth quarter 2023 2023 2023 2023 2022 Commercial: Commercial and industrial $ 135,954 $ 89,297 $ 111,717 $ 107,013 $ 177,693 Municipal and non-profit 79,650 18,657 39,331 22,526 20,393 Owner occupied commercial real estate 75,631 67,322 62,649 33,912 40,912 Food and agribusiness 10,646 16,191 6,017 (6,564 ) 28,518 Total commercial 301,881 191,467 219,714 156,887 267,516 Commercial real estate non-owner occupied 107,738 88,434 99,984 185,875 133,271 Residential real estate 48,925 42,514 40,814 49,406 95,067 Consumer 1,849 1,689 1,777 1,717 1,396 Total $ 460,393 $ 324,104 $ 362,289 $ 393,885 $ 497,250
(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 $16,954 , ($12,877) , $13,766 , ($7,096) and $96,903 for the periods noted in the table above, respectively.
NATIONAL BANK HOLDINGS CORPORATION Summary of Net Interest Margin
For the three months ended For the three months ended For the three months ended December 31, 2023 September 30, 2023 December 31, 2022 Average Average Average Average Average Average balance Interest rate balance Interest rate balance Interest rate Interest earning assets: Originated loans FTE(1)(2) $ 5,985,610 $ 102,504 6.79 % $ 5,803,157 $ 92,813 6.35 % $ 5,269,227 $ 70,536 5.31 % Acquired loans 1,646,696 25,407 6.12 % 1,671,595 26,115 6.20 % 1,790,476 26,508 5.87 % Loans held for sale 16,599 321 7.67 % 22,154 383 6.86 % 24,381 375 6.10 % Investment securities available-for-sale 739,471 3,715 2.01 % 761,892 3,783 1.99 % 841,762 4,187 1.99 % Investment securities held-to-maturity 594,149 2,596 1.75 % 611,712 2,685 1.76 % 661,992 2,818 1.70 % Other securities 40,355 741 7.34 % 39,115 701 7.17 % 26,203 402 6.14 % Interest earning deposits 125,097 1,086 3.44 % 130,239 1,205 3.67 % 115,441 586 2.01 % Total interest earning assets FTE (2) $ 9,147,977 $ 136,370 5.91 % $ 9,039,864 $ 127,685 5.60 % $ 8,729,482 $ 105,412 4.79 % Cash and due from banks $ 105,323 $ 104,308 $ 126,107 Other assets 730,220 737,568 673,679 Allowance for credit losses (94,466 ) (92,831 ) (85,638 ) Total assets $ 9,889,054 $ 9,788,909 $ 9,443,630 Interest bearing liabilities: Interest bearing demand, savings and money market deposits $ 4,751,563 $ 32,887 2.75 % $ 4,535,183 $ 27,211 2.38 % $ 3,946,573 $ 4,587 0.46 % Time deposits 986,513 6,876 2.77 % 992,755 6,212 2.48 % 892,122 2,048 0.91 % Securities sold under agreements to repurchase 17,812 5 0.11 % 19,288 6 0.12 % 18,515 23 0.49 % Long-term debt 54,151 518 3.80 % 54,074 519 3.81 % 53,530 539 3.99 % Federal Home Loan Bank advances 348,775 4,916 5.59 % 316,723 4,385 5.49 % 162,146 1,695 4.15 % Total interest bearing liabilities $ 6,158,814 $ 45,202 2.91 % $ 5,918,023 $ 38,333 2.57 % $ 5,072,886 $ 8,892 0.70 % Demand deposits $ 2,390,457 $ 2,553,619 $ 3,142,296 Other liabilities 155,619 149,068 145,608 Total liabilities 8,704,890 8,620,710 8,360,790 Shareholders' equity 1,184,164 1,168,199 1,082,840 Total liabilities and shareholders' equity $ 9,889,054 $ 9,788,909 $ 9,443,630 Net interest income FTE(2) $ 91,168 $ 89,352 $ 96,520 Interest rate spread FTE(2) 3.00 % 3.03 % 4.09 % Net interest earning assets $ 2,989,163 $ 3,121,841 $ 3,656,596 Net interest margin FTE(2) 3.95 % 3.92 % 4.39 % Average transaction deposits $ 7,142,020 $ 7,088,802 $ 7,088,869 Average total deposits 8,128,533 8,081,557 7,980,991 Ratio of average interest earning assets to average interest bearing liabilities 148.53 % 152.75 % 172.08 %
(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 $1,667 , $1,575 and $1,454 for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively.
NATIONAL BANK HOLDINGS CORPORATION Summary of Net Interest Margin
For the year ended December 31, 2023 For the year ended December 31, 2022 Average Average Average Average balance Interest rate balance Interest rate Interest earning assets: Originated loans FTE(1)(2) $ 5,739,310 $ 361,032 6.29 % $ 4,767,713 $ 218,561 4.58 % Acquired loans 1,700,419 104,933 6.17 % 594,222 40,060 6.74 % Loans held for sale 21,756 1,510 6.94 % 58,788 2,563 4.36 % Investment securities available-for-sale 774,337 15,370 1.98 % 839,872 15,091 1.80 % Investment securities held-to-maturity 620,595 10,960 1.77 % 604,423 9,109 1.51 % Other securities 44,936 3,254 7.24 % 17,598 1,034 5.88 % Interest earning deposits 121,758 4,455 3.66 % 426,137 3,782 0.89 % Total interest earning assets FTE (2) $ 9,023,111 $ 501,514 5.56 % $ 7,308,753 $ 290,200 3.97 % Cash and due from banks $ 109,496 $ 90,657 Other assets 725,797 490,206 Allowance for credit losses (91,956 ) (59,824 ) Total assets $ 9,766,448 $ 7,829,792 Interest bearing liabilities: Interest bearing demand, savings and money market deposits $ 4,337,231 $ 87,957 2.03 % $ 3,235,834 $ 9,347 0.29 % Time deposits 970,983 21,421 2.21 % 826,293 5,249 0.64 % Securities sold under agreements to repurchase 19,346 22 0.11 % 21,298 43 0.20 % Long-term debt 54,036 2,073 3.84 % 43,048 1,519 3.53 % Federal Home Loan Bank advances 423,783 21,991 5.19 % 40,870 1,695 4.15 % Total interest bearing liabilities $ 5,805,379 $ 133,464 2.30 % $ 4,167,343 $ 17,853 0.43 % Demand deposits $ 2,660,525 $ 2,652,561 Other liabilities 144,767 105,507 Total liabilities 8,610,671 6,925,411 Shareholders' equity 1,155,777 904,381 Total liabilities and shareholders' equity $ 9,766,448 $ 7,829,792 Net interest income FTE(2) $ 368,050 $ 272,347 Interest rate spread FTE(2) 3.26 % 3.54 % Net interest earning assets $ 3,217,732 $ 3,141,410 Net interest margin FTE(2) 4.08 % 3.73 % Average transaction deposits $ 6,997,756 $ 5,888,395 Average total deposits 7,968,739 6,714,688 Ratio of average interest earning assets to average interest bearing liabilities 155.43 % 175.38 %
(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 $6,099 and $5,512 for the years ended December 31, 2023 and December 31, 2022, respectively.
NATIONAL BANK HOLDINGS CORPORATION Allowance for Credit Losses and Asset Quality
Allowance for Credit Losses Analysis
As of and for the three months ended December 31, 2023 September 30, 2023 December 31, 2022 Beginning allowance for credit losses $ 93,446 $ 92,581 $ 65,623 Day 1 CECL provision expense — — 16,027 PCD allowance for credit loss at acquisition — — 3,764 Charge-offs (357 ) (540 ) (849 ) Recoveries 58 280 129 Provision expense for credit losses 4,800 1,125 4,859 Ending allowance for credit losses ("ACL") $ 97,947 $ 93,446 $ 89,553 Ratio of annualized net charge-offs to average total loans during the period 0.02 % 0.01 % 0.04 % Ratio of ACL to total loans outstanding at period end 1.27 % 1.25 % 1.24 % Ratio of ACL to total non-performing loans at period end 346.99 % 281.36 % 542.35 % Total loans $ 7,698,758 $ 7,478,438 $ 7,220,469 Average total loans during the period 7,594,725 7,443,869 7,029,021 Total non-performing loans 28,228 33,212 16,512
Past Due and Non-accrual Loans
December 31, 2023 September 30, 2023 December 31, 2022 Loans 30-89 days past due and still accruing interest $ 12,232 $ 8,144 $ 2,986 Loans 90 days past due and still accruing interest 591 154 95 Non-accrual loans 28,228 33,212 16,512 Total past due and non-accrual loans $ 41,051 $ 41,510 $ 19,593 Total 90 days past due and still accruing interest and non-accrual loans to total loans 0.37 % 0.45 % 0.23 %
Asset Quality Data
December 31, 2023 September 30, 2023 December 31, 2022 Non-performing loans $ 28,228 $ 33,212 $ 16,512 OREO 4,088 3,416 3,731 Total non-performing assets $ 32,316 $ 36,628 $ 20,243 Accruing modified loans $ 15,148 $ 6,059 $ 4,654 Total non-performing loans to total loans 0.37 % 0.44 % 0.23 % Total non-performing assets to total loans and OREO 0.42 % 0.49 % 0.28 %
NATIONAL BANK HOLDINGS CORPORATION Key Metrics ( 1)
As of and for the three months ended As of and for the years ended December 31, September 30, December 31, December 31, December 31, 2023 2023 2022 2023 2022 Return on average assets 1.33 % 1.46 % 0.70 % 1.45 % 0.91 % Return on average tangible assets(2) 1.44 % 1.58 % 0.77 % 1.57 % 0.95 % Return on average tangible assets, adjusted(2) 1.44 % 1.58 % 1.55 % 1.57 % 1.32 % Return on average equity 11.10 % 12.26 % 6.13 % 12.29 % 7.88 % Return on average tangible common equity(2) 16.56 % 18.38 % 9.17 % 18.23 % 9.91 % Return on average tangible common equity, adjusted(2) 16.56 % 18.38 % 18.37 % 18.23 % 13.75 % Loan to deposit ratio (end of period) 94.00 % 91.77 % 91.72 % 94.00 % 91.72 % Non-interest bearing deposits to total deposits (end of period) 28.83 % 30.47 % 39.82 % 28.83 % 39.82 % Net interest margin(3) 3.88 % 3.85 % 4.32 % 4.01 % 3.65 % Net interest margin FTE(2)(3) 3.95 % 3.92 % 4.39 % 4.08 % 3.73 % Interest rate spread FTE(2)(4) 3.00 % 3.03 % 4.09 % 3.26 % 3.54 % Yield on earning assets(5) 5.84 % 5.53 % 4.72 % 5.49 % 3.90 % Yield on earning assets FTE(2)(5) 5.91 % 5.60 % 4.79 % 5.56 % 3.97 % Cost of interest bearing liabilities 2.91 % 2.57 % 0.70 % 2.30 % 0.43 % Cost of deposits 1.94 % 1.64 % 0.33 % 1.37 % 0.22 % Non-interest income to total revenue FTE(2) 14.98 % 17.81 % 12.78 % 14.80 % 19.82 % Non-interest expense to average assets 2.49 % 2.46 % 2.84 % 2.48 % 2.70 % Efficiency ratio 58.82 % 56.56 % 61.96 % 56.82 % 63.22 % Efficiency ratio excluding other intangible assets amortization FTE(2) 56.03 % 53.90 % 53.76 % 54.31 % 57.07 % Pre-provision net revenue $ 43,470 $ 46,539 $ 41,542 $ 183,897 $ 122,913 Pre-provision net revenue FTE(2) 45,137 48,114 42,996 189,996 128,425 Pre-provision net revenue FTE, adjusted(2) 45,137 48,114 49,807 189,996 143,492 Total Loans Asset Quality Data (6)(7)(8) Non-performing loans to total loans 0.37 % 0.44 % 0.23 % 0.37 % 0.23 % Non-performing assets to total loans and OREO 0.42 % 0.49 % 0.28 % 0.42 % 0.28 % Allowance for credit losses to total loans 1.27 % 1.25 % 1.24 % 1.27 % 1.24 % Allowance for credit losses to non-performing loans 346.99 % 281.36 % 542.35 % 346.99 % 542.35 % Net charge-offs to average loans 0.02 % 0.01 % 0.04 % 0.02 % 0.03 %
(1 ) Quarterly 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 and the weighted average cost of interest bearing liabilities. (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.
NATIONAL BANK HOLDINGS CORPORATION NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
Tangible Common Book Value Ratios
December 31, 2023 September 30, 2023 December 31, 2022 Total shareholders' equity $ 1,212,807 $ 1,163,585 $ 1,092,202 Less: goodwill and other intangible assets, net (364,716 ) (366,724 ) (327,191 ) Add: deferred tax liability related to goodwill 12,208 11,876 10,984 Tangible common equity (non-GAAP) $ 860,299 $ 808,737 $ 775,995 Total assets $ 9,951,064 $ 9,866,283 $ 9,573,243 Less: goodwill and other intangible assets, net (364,716 ) (366,724 ) (327,191 ) Add: deferred tax liability related to goodwill 12,208 11,876 10,984 Tangible assets (non-GAAP) $ 9,598,556 $ 9,511,435 $ 9,257,036 Tangible common equity to tangible assets calculations: Total shareholders' equity to total assets 12.19 % 11.79 % 11.41 % Less: impact of goodwill and other intangible assets, net (3.23 )% (3.29 )% (3.03 )% Tangible common equity to tangible assets (non-GAAP) 8.96 % 8.50 % 8.38 % Tangible common book value per share calculations: Tangible common equity (non-GAAP) $ 860,299 $ 808,737 $ 775,995 Divided by: ending shares outstanding 37,784,851 37,739,776 37,608,519 Tangible common book value per share (non-GAAP) $ 22.77 $ 21.43 $ 20.63 Tangible common book value per share, excluding accumulated other comprehensive loss calculations: Tangible common equity (non-GAAP) $ 860,299 $ 808,737 $ 775,995 Accumulated other comprehensive loss, net of tax 76,401 100,853 88,204 Tangible common book value, excluding accumulated other comprehensive loss, net of tax (non-GAAP) 936,700 909,590 864,199 Divided by: ending shares outstanding 37,784,851 37,739,776 37,608,519 Tangible common book value per share, excluding accumulated other comprehensive loss, net of tax (non-GAAP) $ 24.79 $ 24.10 $ 22.98
NATIONAL BANK HOLDINGS CORPORATION
Return on Average Tangible Assets and Return on Average Tangible Equity
As of and for the three months ended As of and for the years ended December 31, September 30, December 31, December 31, December 31, 2023 2023 2022 2023 2022 Net income $ 33,121 $ 36,087 $ 16,721 $ 142,048 $ 71,274 Add: impact of other intangible assets amortization expense, after tax 1,541 1,541 1,049 5,668 1,799 Net income excluding the impact of other intangible assets amortization expense, after tax (non-GAAP) $ 34,662 $ 37,628 $ 17,770 $ 147,716 $ 73,073 Net income excluding the impact of other intangible assets amortization expense, after tax $ 34,662 $ 37,628 $ 17,770 $ 147,716 $ 73,073 Add: acquisition-related adjustments, after tax (non-GAAP)(1) — — 17,825 — 28,303 Net income adjusted for the impact of other intangible assets amortization expense and acquisition-related expenses, after tax (non-GAAP)(1) $ 34,662 $ 37,628 $ 35,595 $ 147,716 $ 101,376 Average assets $ 9,889,054 $ 9,788,909 $ 9,443,630 $ 9,766,448 $ 7,829,792 Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill (353,712 ) (356,083 ) (314,017 ) (345,321 ) (166,857 ) Average tangible assets (non-GAAP) $ 9,535,342 $ 9,432,826 $ 9,129,613 $ 9,421,127 $ 7,662,935 Average shareholders' equity $ 1,184,164 $ 1,168,199 $ 1,082,840 $ 1,155,777 $ 904,381 Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill (353,712 ) (356,083 ) (314,017 ) (345,321 ) (166,857 ) Average tangible common equity (non-GAAP) $ 830,452 $ 812,116 $ 768,823 $ 810,456 $ 737,524 Return on average assets 1.33 % 1.46 % 0.70 % 1.45 % 0.91 % Return on average tangible assets (non-GAAP) 1.44 % 1.58 % 0.77 % 1.57 % 0.95 % Adjusted return on average tangible assets (non-GAAP) 1.44 % 1.58 % 1.55 % 1.57 % 1.32 % Return on average equity 11.10 % 12.26 % 6.13 % 12.29 % 7.88 % Return on average tangible common equity (non-GAAP) 16.56 % 18.38 % 9.17 % 18.23 % 9.91 % Adjusted return on average tangible common equity (non-GAAP) 16.56 % 18.38 % 18.37 % 18.23 % 13.75 % (1) Acquisition-related adjustments: Provision expense adjustments: CECL day 1 provision expense (non-GAAP) $ — $ — $ 16,348 $ — $ 21,706 Non-interest expense adjustments: Acquisition-related expenses (non-GAAP) — — 6,811 — 15,067 Acquisition-related adjustments before tax (non-GAAP) — — 23,159 — 36,773 Tax expense impact — — (5,334 ) — (8,470 ) Acquisition-related adjustments, after tax (non-GAAP) $ — $ — $ 17,825 $ — $ 28,303
Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin
As of and for the three months ended As of and for the years ended December 31, September 30, December 31, December 31, December 31, 2023 2023 2022 2023 2022 Interest income $ 134,703 $ 126,110 $ 103,958 $ 495,415 $ 284,688 Add: impact of taxable equivalent adjustment 1,667 1,575 1,454 6,099 5,512 Interest income FTE (non-GAAP) $ 136,370 $ 127,685 $ 105,412 $ 501,514 $ 290,200 Net interest income $ 89,501 $ 87,777 $ 95,066 $ 361,951 $ 266,835 Add: impact of taxable equivalent adjustment 1,667 1,575 1,454 6,099 5,512 Net interest income FTE (non-GAAP) $ 91,168 $ 89,352 $ 96,520 $ 368,050 $ 272,347 Average earning assets $ 9,147,977 $ 9,039,864 $ 8,729,482 $ 9,023,111 $ 7,308,753 Yield on earning assets 5.84 % 5.53 % 4.72 % 5.49 % 3.90 % Yield on earning assets FTE (non-GAAP) 5.91 % 5.60 % 4.79 % 5.56 % 3.97 % Net interest margin 3.88 % 3.85 % 4.32 % 4.01 % 3.65 % Net interest margin FTE (non-GAAP) 3.95 % 3.92 % 4.39 % 4.08 % 3.73 %
Efficiency Ratio and Pre-Provision Net Revenue
As of and for the three months ended As of and for the years ended December 31, September 30, December 31, December 31, December 31, 2023 2023 2022 2023 2022 Net interest income $ 89,501 $ 87,777 $ 95,066 $ 361,951 $ 266,835 Add: impact of taxable equivalent adjustment 1,667 1,575 1,454 6,099 5,512 Net interest income FTE (non-GAAP) $ 91,168 $ 89,352 $ 96,520 $ 368,050 $ 272,347 Non-interest income $ 16,064 $ 19,365 $ 14,138 $ 63,917 $ 67,312 Non-interest expense $ 62,095 $ 60,603 $ 67,662 $ 241,971 $ 211,234 Less: other intangible assets amortization (2,008 ) (2,008 ) (1,363 ) (7,386 ) (2,338 ) Less: acquisition-related expenses (non-GAAP) — — (6,811 ) — (15,067 ) Non-interest expense adjusted for other intangible assets amortization and acquisition-related expenses (non-GAAP) $ 60,087 $ 58,595 $ 59,488 $ 234,585 $ 193,829 Non-interest expense $ 62,095 $ 60,603 $ 67,662 $ 241,971 $ 211,234 Less: acquisition-related expenses (non-GAAP) — — (6,811 ) — (15,067 ) Non-interest expense, adjusted for acquisition-related expenses (non-GAAP) $ 62,095 $ 60,603 $ 60,851 $ 241,971 $ 196,167 Efficiency ratio 58.82 % 56.56 % 61.96 % 56.82 % 63.22 % Efficiency ratio excluding other intangible assets amortization and acquisition-related expenses FTE (non-GAAP) 56.03 % 53.90 % 53.76 % 54.31 % 57.07 % Pre-provision net revenue (non-GAAP) $ 43,470 $ 46,539 $ 41,542 $ 183,897 $ 122,913 Pre-provision net revenue, FTE (non-GAAP) 45,137 48,114 42,996 189,996 128,425 Pre-provision net revenue FTE, adjusted for acquisition-related expenses (non-GAAP) 45,137 48,114 49,807 189,996 143,492
Adjusted Net Income and Earnings Per Share
As of and for the three months ended As of and for the years ended December 31, September 30, December 31, December 31, December 31, 2023 2023 2022 2023 2022 Adjustments to net income: Net income $ 33,121 $ 36,087 $ 16,721 $ 142,048 $ 71,274 Add: Acquisition-related adjustments, after tax (non-GAAP) — — 17,825 — 28,303 Adjusted net income (non-GAAP) $ 33,121 $ 36,087 $ 34,546 $ 142,048 $ 99,577 Adjustments to earnings per share: Earnings per share diluted $ 0.87 $ 0.94 $ 0.44 $ 3.72 $ 2.18 Add: Acquisition-related adjustments, after tax (non-GAAP) — — 0.47 — 0.87 Adjusted earnings per share - diluted (non-GAAP)(1) $ 0.87 $ 0.94 $ 0.91 $ 3.72 $ 3.05
What were National Bank Holdings Corporation's (NBHC) earnings per share for the full year 2023?
National Bank Holdings Corporation (NBHC) reported earnings per share of $3.72 for the full year 2023.
What was the return on average tangible common equity for National Bank Holdings Corporation (NBHC) in 2023?
The return on average tangible common equity for National Bank Holdings Corporation (NBHC) in 2023 was 18.23%.
How did National Bank Holdings Corporation's (NBHC) net interest income change in the fourth quarter of 2023?
National Bank Holdings Corporation (NBHC) saw an increase in net interest income in the fourth quarter of 2023.
What was the change in non-interest income for National Bank Holdings Corporation (NBHC) in the fourth quarter of 2023?
Non-interest income decreased for National Bank Holdings Corporation (NBHC) in the fourth quarter of 2023.
What was the change in non-interest expenses for National Bank Holdings Corporation (NBHC) in the fourth quarter of 2023?
Non-interest expenses increased for National Bank Holdings Corporation (NBHC) in the fourth quarter of 2023.
What was the net charge-off percentage for National Bank Holdings Corporation (NBHC) in 2023?
The net charge-off percentage for National Bank Holdings Corporation (NBHC) in 2023 was 0.02% of average total loans.
What was the annualized loan growth for National Bank Holdings Corporation (NBHC) in the fourth quarter of 2023?
National Bank Holdings Corporation (NBHC) achieved 11.7% annualized loan growth in the fourth quarter of 2023.
