An Eye on Earnings Report: National Bank Holdings Corporation (NYSE: NBHC)

Charles Barnes

I am Charles Barnes and I focus on breaking news stories and ensuring we (“Import Tourism”) offer timely reporting on some of the most recent stories released through market wires about “Financial” sector.

I have formerly spent over 3 years as a trader in U.S. Stock Market and is now semi-stepped down. I work on a full time basis for Import Tourism specializing in quicker moving active shares with a short term view on investment opportunities and trends.

Address: 3819 Sun Valley Road, George, WA 98824, USA
Phone: (+1) 509-785-0774
Email: charlesbarnes@importtourism.com
Charles Barnes

GREENWOOD VILLAGE, Colo., July 6, 2019 – Shares of National Bank Holdings Corporation (NYSE: NBHC) gained 0.38% to $36.89. The stock traded total volume of 76.430K shares lower than the average volume of 124.26K shares.

National Bank Holdings Corp. (NBHC) reported first-quarter profit of $18.90M.

First Quarter 2019 Results:
(All comparisons refer to the fourth quarter of 2018, except as noted)

Net income totaled a record $18.90M during the first quarter 2019, or $0.60 per diluted share, contrast to $17.20M during the last quarter, or $0.55 per diluted share. The return on average tangible assets increased 13 basis points to 1.39% and the return on average tangible common equity increased 86 basis points to 13.15%.

Net Interest Income:

Fully taxable equivalent net interest income totaled $52.40M and increased $0.60M, or 4.4% annualized. Fully taxable equivalent net interest margin widened 6 basis points to 4.05% from the prior quarter, driven by a 15 basis point higher earning asset yield, which was partially offset by a 12 basis point higher cost of funds.

Loans:

Originated loans and attained loans not accounted for under 310-30 (“attained loans”) ended the quarter at $4.20B, increasing $162.00M, or 16.3% annualized, led by originated and attained commercial loan growth of $112.80M, or 17.4% annualized. Total first quarter loan originations were $311.00M, led by commercial loan originations of $201.30M. The fully taxable equivalent yield on originated loans outstanding increased 19 basis points during the first quarter 2019 to 4.88% because of higher new loan yields and increases in short-term market rates.

Asset Quality and Provision for Loan Losses:

Provision for loan losses of $1.50M was recorded during the quarter to support originated loan growth. Annualized net charge-offs on originated and attained loans totaled 0.02%, contrast to 0.06% in the prior quarter. Non-performing originated and attained loans (comprised of non-accrual loans and non-accrual TDRs) were 0.63% of total originated and attained loans, contrast to 0.61% at December 31, 2018. The originated and attained allowance for loan losses was 0.88%, consistent with the prior quarter.

Attained problem loans accounted for under 310-30 totaled $63.50M at March 31, 2019 and reduced $7.40M from the fourth quarter 2018.

Deposits:

Average non-interest bearing demand deposits increased $3.70M, or 1.4% annualized. Average transaction deposits (defined as total deposits less time deposits) reduced $1.90M, driven by a decrease in interest bearing demand, savings and money market deposits of $5.60M. Average total deposits reduced $22.50M to $4.60B, or 2.0% annualized, driven by a decrease of $20.70M in time deposits. The cost of deposits was 0.58%, a boost of 6 basis points from the prior quarter and just 17 basis points over the first quarter last year.

Spot transaction deposits increased $178.30M during the first quarter 2019 to $3.60B at March 31, 2019, improving the mix of transaction deposits to total deposits to 77.1% from 76.2% last quarter. The non-interest bearing demand deposits to total deposits mix improved to 24.9% from 23.6% in the prior quarter and the loan to deposit ratio remained at 90%, consistent with the prior quarter.

Non-Interest Income:

Non-interest income totaled $17.10M and increased $1.70M mainly because of higher mortgage banking income of $1.50M, driven by higher levels of 1-4 family mortgage loans sold in the secondary market. Other non-interest income increased $0.80M, mainly because of swap fee income during the quarter, and was mostly offset by a combined seasonal decrease of $0.60M in service charges and bank card fees.

Non-Interest Expense:

Non-interest expense totaled $44.40M and increased $1.50M from the prior quarter, mainly driven by a $0.90M increase in salaries and benefits because of higher commissions and payroll taxes, $0.50M higher occupancy and equipment expense and $0.30M higher other non-interest expense, partially offset by lower professional fees of $0.60M. Gain on sale of OREO and problem asset workout expense totaled a net expense of $0.80M, a boost of $0.50M from the prior quarter because of the write-down of one OREO property.

Income tax expense totaled $3.40M during both the first quarter 2019 and fourth quarter 2018. Included in income tax expense during the first quarter 2019 was $0.80M of tax benefit from stock compensation activity. Adjusting for the stock compensation activity, the effective tax rate for the first quarter of 2019 would be 18.5% contrast to 16.5% during the fourth quarter 2018. The lower rate contrast to the statutory rate reflects the continued success of our tax strategies and tax exempt income.

Year-Over-Year Review:
(All comparisons refer to the first quarter 2018, except as noted)

Fully taxable equivalent net interest income totaled $52.40M and increased $3.70M, or 7.6%. Average earning assets increased $106.70M, or 2.1%, mainly driven by originated loan growth. The fully taxable equivalent net interest margin widened 21 basis points to 4.05%. The yield on earning assets increased 44 basis points, led by a 56 basis point increase in the originated loan portfolio yields because of higher new loan yields and short-term rate increases, and was partially offset by a boost in the cost of funds of 33 basis points from 0.55% to 0.88%.

Originated and attained loans outstanding totaled $4.20B and increased $593.40M, or 16.5%, driven by a boost in originated loans of $791.30M, or 26.6%. New loan originations between the two periods totaled $1.30B, led by commercial loan originations of $948.20M. The 310-30 loan portfolio declined $48.80M, or 43.4%, to $63.50M at March 31, 2019.

Average non-interest bearing demand deposits increased $50.50M. Total deposits averaged $4.60B, decreasing $36.60M from the first quarter last year, driven by a decrease of $88.70M in time deposits. Spot transaction deposits increased $71.50M, to $3.60B at March 31, 2019, improving the mix of transaction deposits to total deposits to 77.1% from 75.6% in the first quarter last year. The non-interest bearing demand deposits to total deposits mix improved to 24.9% contrast to 23.0% in the first quarter last year.

Provision for loan loss expense was $1.50M, contrast to $41.0K during the first quarter last year. Net charge-offs on originated and attained loans totaled 0.02%, contrast to 0.07% in the first quarter last year. Non-performing originated and attained loans reduced to 0.63% from 0.66% at March 31, 2018. The originated and attained allowance for loan losses totaled 0.88% of total originated and attained loans contrast to 0.85% at March 31, 2018.

Non-interest income was $17.10M during the first quarter 2019, representing a decrease of $0.80M from the first quarter last year, mainly because of $1.00M lower mortgage banking income and $0.30M lower OREO related income. These decreases were partially offset by $0.70M higher other non-interest income because of a boost in swap fee income during the period.

Non-interest expense totaled $44.40M during the first quarter 2019, representing a decrease of $10.90M, mainly driven by $7.60M of acquisition costs during the first quarter of 2018 and efficiencies gained from the integration of the Peoples acquisition.

Income tax expense totaled $3.40M during the first quarter 2019 contrast to $1.70M during the first quarter 2018, a boost of $1.70M. Included in income tax expense was $0.80M and $0.40M of tax benefit from stock compensation activity during the first quarters 2019 and 2018, respectively.

NBHC has the market capitalization of $1.13B and its EPS growth ratio for the past five years was 70.40%. The return on assets ratio of the Company was 1.30% while its return on investment ratio stands at 25.90%. Price to sales ratio was 4.94 while 93.70% of the stock was owned by institutional investors.

Charles Barnes

Charles Barnes

I am Charles Barnes and I focus on breaking news stories and ensuring we (“Import Tourism”) offer timely reporting on some of the most recent stories released through market wires about “Financial” sector. I have formerly spent over 3 years as a trader in U.S. Stock Market and is now semi-stepped down. I work on a full time basis for Import Tourism specializing in quicker moving active shares with a short term view on investment opportunities and trends. Address: 3819 Sun Valley Road, George, WA 98824, USA Phone: (+1) 509-785-0774 Email: charlesbarnes@importtourism.com