National Bank (US:NBHC)2024-04-24 20:14markdown [First Quarter 2024 Financial Results](index=1&type=section&id=First%20Quarter%202024%20Financial%20Results) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) National Bank Holdings Corporation reported **$31.4 million** net income and **$0.82 diluted EPS** for Q1 2024, achieving **15.14% return on average tangible common equity** Q1 2024 Key Financial Metrics | Metric | 1Q24 | 4Q23 | 1Q23 | | :--- | :--- | :--- | :--- | | Net income ($ millions) | $31.4 | $33.1 | $40.3 | | Earnings per share - diluted | $0.82 | $0.87 | $1.06 | | Return on average assets | 1.28% | 1.33% | 1.70% | | Return on average tangible common equity | 15.14% | 16.56% | 20.86% | - CEO Tim Laney highlighted several strengths for the quarter: - Strong fee income growth of **40.8% annualized** over the prior quarter[3](index=3&type=chunk) - **Zero basis points** of annualized net charge-offs, reflecting a prudent credit approach[3](index=3&type=chunk) - Core deposits grew **6.8% year-over-year**[3](index=3&type=chunk) - Maintained a low deposit beta of **37.5%** during the current rate cycle[3](index=3&type=chunk) [Detailed Financial Review](index=1&type=section&id=Detailed%20Financial%20Review) [Quarter-over-Quarter Analysis (Q1 2024 vs. Q4 2023)](index=1&type=section&id=Quarter-over-Quarter%20Analysis%20%28Q1%202024%20vs.%20Q4%202023%29) Net income decreased to **$31.4 million** from **$33.1 million** quarter-over-quarter, primarily due to lower net interest income despite strong non-interest income growth and pristine asset quality [Net Interest Income](index=1&type=section&id=QoQ%20Net%20Interest%20Income) Fully taxable equivalent (FTE) net interest income decreased to **$85.7 million** from **$91.2 million** quarter-over-quarter, narrowing the FTE net interest margin by **17 basis points** to **3.78%** Net Interest Income (QoQ) | Metric | 1Q24 | 4Q23 | | :--- | :--- | :--- | | FTE Net Interest Income | $85.7M | $91.2M | | FTE Net Interest Margin | 3.78% | 3.95% | [Loans and Deposits](index=3&type=section&id=QoQ%20Loans%20and%20Deposits) Total loans slightly decreased to **$7.6 billion** while average total deposits grew by **$90.3 million** (4.5% annualized), enabling paydown of **$340.0 million** in FHLB advances - Total loans stood at **$7.6 billion** at quarter-end, compared to **$7.7 billion** at the end of Q4 2023[6](index=6&type=chunk) - Average total deposits increased by **$90.3 million**, or **4.5% annualized**, during the quarter[8](index=8&type=chunk) - The company utilized deposit growth to pay down **$340.0 million** of Federal Home Loan Bank advances[9](index=9&type=chunk) [Asset Quality](index=3&type=section&id=QoQ%20Asset%20Quality) Asset quality remained exceptionally strong with **no provision for credit losses** and **0.00% annualized net charge-offs**, despite a slight increase in non-performing loans to **0.47%** Asset Quality Metrics (QoQ) | Metric | 1Q24 | 4Q23 | | :--- | :--- | :--- | | Provision for Credit Losses ($ millions) | $0 | $4.6 | | Annualized Net Charge-offs | 0.00% | 0.02% | | Non-performing Loans / Total Loans | 0.47% | 0.37% | | Allowance for Credit Losses / Loans | 1.29% | 1.27% | [Non-Interest Income and Expense](index=3&type=section&id=QoQ%20Non-Interest%20Income%20and%20Expense) Non-interest income increased by **$1.6 million** (40.8% annualized) to **$17.7 million**, while non-interest expense rose slightly by **$0.7 million** to **$62.8 million** - Non-interest income increased **$1.6 million**, or **40.8% annualized**, to **$17.7 million**, driven by diversified fee revenue sources[10](index=10&type=chunk) - Non-interest expense increased by **$0.7 million** to **$62.8 million**, with a notable **$2.1 million** rise in salaries and benefits due to higher payroll taxes[11](index=11&type=chunk) [Capital](index=3&type=section&id=QoQ%20Capital) Capital ratios remained strong, with **Tier 1 leverage ratio** at **9.99%** and **Common Equity Tier 1 capital ratio** at **12.35%**, as tangible common book value per share rose to **$23.32** Capital Position (QoQ) | Metric | Mar 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Tier 1 Leverage Ratio | 9.99% | 9.74% | | Common Equity Tier 1 Ratio | 12.35% | 11.89% | | Common Book Value per Share | $32.58 | $32.10 | | Tangible Common Book Value per Share | $23.32 | $22.77 | [Year-over-Year Analysis (Q1 2024 vs. Q1 2023)](index=4&type=section&id=Year-over-Year%20Analysis%20%28Q1%202024%20vs.%20Q1%202023%29) Year-over-year, net income decreased to **$31.4 million** from **$40.3 million** due to **61 basis point** net interest margin compression, partially offset by **20.7%** non-interest income growth [Net Income and Revenue](index=4&type=section&id=YoY%20Net%20Income%20and%20Revenue) Net income decreased to **$31.4 million** (**$0.82 diluted EPS**) from **$40.3 million** (**$1.06 diluted EPS**) year-over-year, with FTE net interest margin narrowing by **61 basis points** to **3.78%** Net Income and NIM (YoY) | Metric | 1Q24 | 1Q23 | | :--- | :--- | :--- | | Net Income ($ millions) | $31.4 | $40.3 | | Earnings per Share (Diluted) | $0.82 | $1.06 | | FTE Net Interest Income ($ millions) | $85.7 | $96.3 | | FTE Net Interest Margin | 3.78% | 4.39% | [Balance Sheet Growth](index=4&type=section&id=YoY%20Balance%20Sheet) Total loans grew by **3.0%** to **$7.6 billion**, and average total deposits increased by **6.8%** to **$8.2 billion** due to strategic acquisitions - Total loans increased by **3.0%** to **$7.6 billion**[17](index=17&type=chunk) - Average total deposits grew by **6.8%** to **$8.2 billion**[19](index=19&type=chunk) [Asset Quality](index=4&type=section&id=YoY%20Asset%20Quality) The company recorded **no provision for credit losses** and **0.00% annualized net charge-offs**, though non-performing loans increased to **0.47%** from **0.13%** year-over-year Asset Quality Metrics (YoY) | Metric | Mar 31, 2024 | Mar 31, 2023 | | :--- | :--- | :--- | | Provision for Credit Losses ($ millions) | $0 | $0.9 | | Annualized Net Charge-offs | 0.00% | 0.01% | | Non-performing Loans / Total Loans | 0.47% | 0.13% | | Allowance for Credit Losses / Loans | 1.29% | 1.23% | [Non-Interest Income and Expense](index=4&type=section&id=YoY%20Non-Interest%20Income%20and%20Expense) Non-interest income grew by **$3.0 million** (**20.7%**) to **$17.7 million**, while non-interest expense rose by **$4.5 million** (**7.8%**) to **$62.8 million** - Non-interest income increased by **20.7%** to **$17.7 million**, driven by diversified fee revenue sources including SBA loan income and trust income[20](index=20&type=chunk) - Non-interest expense rose by **7.8%** to **$62.8 million**, with salaries and benefits increasing by **$3.5 million**[21](index=21&type=chunk) [Financial Statements and Supplementary Data](index=10&type=section&id=Financial%20Statements%20and%20Supplementary%20Data) [Consolidated Statements of Operations](index=10&type=section&id=Consolidated%20Statements%20of%20Operations) This section provides the unaudited consolidated statements of operations for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023, detailing revenues, expenses, and net income Consolidated Statements of Operations (Unaudited, $ millions) | | For the three months ended March 31, 2024 | For the three months ended December 31, 2023 | For the three months ended March 31, 2023 | | :--- | :--- | :--- | :--- | | Net interest income | $84.0 | $89.5 | $94.9 | | Provision expense for credit losses | — | $4.6 | $0.9 | | Total non-interest income | $17.7 | $16.1 | $14.7 | | Total non-interest expense | $62.8 | $62.1 | $58.3 | | Income before income taxes | $38.9 | $38.9 | $50.4 | | Net income | $31.4 | $33.1 | $40.3 | [Consolidated Statements of Financial Condition](index=11&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) This section presents the unaudited consolidated balance sheets as of March 31, 2024, December 31, 2023, and March 31, 2023, showing the company's assets, liabilities, and shareholders' equity Consolidated Balance Sheet Highlights (Unaudited, $ millions/billions) | | March 31, 2024 | December 31, 2023 | March 31, 2023 | | :--- | :--- | :--- | :--- | | Total Assets | $9.97B | $9.95B | $9.92B | | Loans, net | $7.47B | $7.60B | $7.25B | | Total Deposits | $8.52B | $8.19B | $7.58B | | Federal Home Loan Bank advances | $0 | $340.0M | $1.0B | | Total Shareholders' Equity | $1.23B | $1.21B | $1.13B | [Loan Portfolio](index=12&type=section&id=Loan%20Portfolio) This section details the loan portfolio composition by type and loan fundings, showing total loans decreased **1.7%** quarter-over-quarter but increased **3.0%** year-over-year to **$7.57 billion** Period End Loan Balances by Type ($ millions/billions) | Loan Type | March 31, 2024 | % Change vs. Dec 31, 2023 | % Change vs. Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Total commercial | $4.38B | (2.6)% | 3.2% | | Commercial real estate non-owner occupied | $1.86B | (0.4)% | 0.1% | | Residential real estate | $1.31B | (2.4)% | 2.2% | | **Total loans** | **$7.57B** | **(1.7)%** | **3.0%** | - Total loan fundings for Q1 2024 were **$200.0 million**, a decrease from **$460.4 million** in Q4 2023, led by commercial loan fundings of **$96.5 million**[36](index=36&type=chunk) [Summary of Net Interest Margin](index=13&type=section&id=Summary%20of%20Net%20Interest%20Margin) This table provides a detailed breakdown of average balances, interest income/expense, and yields/rates for all interest-earning assets and interest-bearing liabilities, culminating in the calculation of the net interest margin Net Interest Margin Analysis | Metric | 1Q24 | 4Q23 | 1Q23 | | :--- | :--- | :--- | :--- | | Average Interest Earning Assets ($M) | $9,127.3 | $9,148.0 | $8,902.7 | | Yield on Earning Assets (FTE) | 5.88% | 5.91% | 5.24% | | Cost of Interest Bearing Liabilities | 3.07% | 2.91% | 1.41% | | Net Interest Spread (FTE) | 2.81% | 3.00% | 3.83% | | Net Interest Margin (FTE) | 3.78% | 3.95% | 4.39% | [Allowance for Credit Losses and Asset Quality](index=14&type=section&id=Allowance%20for%20Credit%20Losses%20and%20Asset%20Quality) This section provides data on the allowance for credit losses (ACL), including a roll-forward of the allowance, and key asset quality metrics such as non-performing loans and past due loans Allowance for Credit Losses (ACL) Analysis ($ millions) | | 1Q24 | 4Q23 | 1Q23 | | :--- | :--- | :--- | :--- | | Beginning ACL | $97.9 | $93.4 | $89.6 | | Net Charge-offs | ($0.09) | ($0.30) | ($0.26) | | Provision (release) expense | ($0.25) | $4.8 | $1.1 | | Ending ACL | $97.6 | $97.9 | $90.3 | Asset Quality Ratios | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Non-performing loans to total loans | 0.47% | 0.37% | 0.13% | | Non-performing assets to total loans and OREO | 0.53% | 0.42% | 0.18% | | ACL to total loans | 1.29% | 1.27% | 1.23% | [Key Metrics](index=15&type=section&id=Key%20Metrics) This section aggregates key performance ratios, including returns, efficiency, margins, and asset quality, providing a comprehensive snapshot of the company's performance for the last three quarters Key Performance Ratios | Metric | 1Q24 | 4Q23 | 1Q23 | | :--- | :--- | :--- | :--- | | Return on average tangible assets (non-GAAP) | 1.39% | 1.44% | 1.80% | | Return on average tangible common equity (non-GAAP) | 15.14% | 16.56% | 20.86% | | Loan to deposit ratio | 88.86% | 94.00% | 96.88% | | Net interest margin FTE (non-GAAP) | 3.78% | 3.95% | 4.39% | | Efficiency ratio | 61.77% | 58.82% | 53.21% | | Net charge-offs to average loans | 0.00% | 0.02% | 0.01% | [Non-GAAP Financial Measures and Reconciliations](index=16&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES%20AND%20RECONCILIATIONS) This section provides detailed reconciliations of non-GAAP financial measures, including tangible common book value, return on average tangible assets/equity, FTE net interest margin, and the efficiency ratio, to their most directly comparable GAAP measures - Tangible common book value per share, a non-GAAP measure, increased to **$23.32** at March 31, 2024, from **$22.77** at December 31, 2023, and **$21.76** at March 31, 2023[47](index=47&type=chunk) - The reconciliation for Return on Average Tangible Common Equity shows a result of **15.14%** for Q1 2024, compared to the GAAP Return on Average Equity of **10.30%**[49](index=49&type=chunk) - The efficiency ratio, when adjusted for intangible asset amortization on an FTE basis (non-GAAP), was **58.82%** for Q1 2024, compared to the GAAP efficiency ratio of **61.77%**[51](index=51&type=chunk) [Company Information and Disclosures](index=5&type=section&id=Company%20Information%20and%20Disclosures) [About National Bank Holdings Corporation](index=5&type=section&id=About%20National%20Bank%20Holdings%20Corporation) National Bank Holdings Corporation is a bank holding company operating over **90 banking centers** through NBH Bank and Bank of Jackson Hole Trust, serving a core footprint across multiple states - The company operates a network of over **90 banking centers** in Colorado, Kansas City region, Utah, Wyoming, Texas, New Mexico, and Idaho[24](index=24&type=chunk) - NBH Bank operates under several brand names, including Community Banks of Colorado, Bank Midwest, Hillcrest Bank, and Bank of Jackson Hole[24](index=24&type=chunk) [Conference Call Information](index=5&type=section&id=Conference%20Call) Management will host a conference call on **Thursday, April 25, 2024, at 11:00 a.m. Eastern Time** to discuss the first quarter 2024 results, with participation and replay details provided - The Q1 2024 earnings conference call is scheduled for **11:00 a.m. Eastern Time** on **Thursday, April 25, 2024**[23](index=23&type=chunk) [About Non-GAAP Financial Measures](index=5&type=section&id=About%20Non-GAAP%20Financial%20Measures) The company utilizes certain non-GAAP financial measures, including tangible common equity and pre-provision net revenue, which are reconciled to comparable GAAP measures and considered useful for decision-making - The company uses non-GAAP measures like 'tangible common equity,' 'return on average tangible common equity,' and 'fully taxable equivalent' metrics to supplement GAAP results[26](index=26&type=chunk) - Management believes these non-GAAP measures provide meaningful supplemental information by excluding items not indicative of primary business operating results[26](index=26&type=chunk) [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements subject to risks and uncertainties, including economic conditions, regulatory changes, interest rate risks, and competition, which could cause actual results to differ materially - The report includes forward-looking statements subject to risks and uncertainties as defined by the Private Securities Litigation Reform Act of 1995[28](index=28&type=chunk) - Key risk factors include the impact of regulatory changes, ability to execute business strategy, economic and interest rate risks, competition for deposits, and effects of inflation[28](index=28&type=chunk) - The company assumes no obligation to update any forward-looking statements[30](index=30&type=chunk)