8-K
National Bank Holdings Corp (NBHC)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K
CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 18, 2022
NATIONAL BANK HOLDINGS CORP ORATION (Exact name of registrant as specified in its charter)
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|---|---|---|---|---|
| Delaware | | 001-35654 | | 27-0563799 |
| (State or other jurisdiction <br>of incorporation) | | (Commission<br>File Number) | | (IRS Employer<br>Identification No.) |
7800 East Orchard Road , Suite 300 , Greenwood Village , Colorado **** 80111 (Address of principal executive offices) (Zip Code)
303 - 892-8715 (Registrant’s telephone, including area code)
Not Applicable (Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | **** | Trading Symbol | **** | Name of each exchange on which registered: |
|---|---|---|---|---|
| Class A Common Stock | | NBHC | | NYSE |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Conditions. *
On April 18, 2022, National Bank Holdings Corporation (“NBHC”) issued a press release announcing its financial results for the quarter ended March 31, 2022, which press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure. *
On April 18, 2022, NBHC entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Community Bancorporation, the holding company for Rock Canyon Bank, headquartered in Provo, Utah, pursuant to which, upon the terms and subject to the conditions set forth in the Merger Agreement, NBHC and Community Bancorporation will merge, with NBHC continuing as the surviving entity (the “Merger”).
NBHC has distributed, made available to investors, and posted on its website, the press release and accompanying financial tables reflecting its financial results for the quarter ended March 31, 2022, which also includes information regarding the terms of the proposed Merger. In addition, NBHC is furnishing an investor presentation providing supplemental information regarding the proposed Merger, which investor presentation is furnished as Exhibit 99.2 hereto and incorporated herein by reference. Representatives from NBHC intend to use the investor presentation in one or more meetings with investors and analysts from time to time.
Item 9.01. Financial Statements and Exhibits. *
(d) Exhibits
| Exhibit No. | Description of Exhibit | |
|---|---|---|
| 99.1 | | Press release dated April 18, 2022 |
| 99.2 | | National Bank Holdings Corporation Investor Presentation, dated April 18, 2022 |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101) |
*The information contained in Items 2.02, 7.01 and 9.01 of this Current Report on Form 8-K is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any registration statement or other filings of the Registrant under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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|---|---|---|
| | | National Bank Holdings Corporation |
| | | |
| | | |
| By: | /s/ Angela N. Petrucci | |
| | | Name: Angela N. Petrucci<br><br>Title: Chief Administrative Officer and General Counsel |
Date: April 18, 2022
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****
Exhibit 99.1
National Bank Holdings Corporation Announces First Quarter 2022
Financial Results and Agreement to Acquire Rock Canyon Bank
Acquisition furthers strategic growth in the fast-growing Salt Lake City region
Denver, Colorado - (Globe Newswire) – National Bank Holdings Corporation (NYSE: NBHC) reported:
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | For the quarter | |||||||
| | | 1Q22 | | 4Q21 | | 1Q21 | |||
| Net income ($000's) | | $ | 18,352 | | $ | 22,769 | | $ | 26,812 |
| Earnings per share - diluted | | $ | 0.60 | | $ | 0.74 | | $ | 0.86 |
| Return on average tangible assets^(1)^ | | | 1.07% | | | 1.30% | | | 1.65% |
| Return on average tangible common equity^(1)^ | | | 10.31% | | | 12.37% | | | 15.20% |
| | | |
|---|---|---|
| (1) | | Ratios are annualized. See non-GAAP reconciliations starting on page 13. |
| | | |
Today National Bank Holdings Corporation (the “Company” or “NBHC”), the holding company for NBH Bank, announces the signing of a definitive merger agreement to acquire Community Bancorporation (“CB”), the holding company for Rock Canyon Bank, headquartered in Provo, Utah and operating in the greater Salt Lake City region. Upon completion of the exclusively negotiated transaction, NBHC will have approximately $9.6 billion in pro forma assets, including $6.0 billion in total loans, and $8.4 billion in total deposits when combined with the previously announced acquisition of Bancshares of Jackson Hole Incorporated. NBHC will also become the #1 third-party SBA loan volume originator in the state of Utah.
“Our focus on expanding NBHC’s presence in high performing U.S. markets is again demonstrated by the announcement of our intent to acquire Rock Canyon Bank,” said Tim Laney, Chairman, President and CEO of National Bank Holdings Corporation. “Rock Canyon Bank’s highly successful SBA business strategy de-risks the balance sheet, produces strong fee income, and is scalable across our franchise. Equally important, this acquisition strengthens our position as a premier regional bank serving the fast-growing Salt Lake City region. Rock Canyon Bank clients will continue to enjoy the exceptional service and local decision making they have come to expect. They will also benefit from enhanced service offerings including expanded commercial loan and treasury management solutions.”
“We are pleased to have found a partner in NBH Bank that shares our commitment to serving local businesses by providing highly personalized service that supports our clients’ and our communities’ success,” said Park Roney, President and CEO of Community Bancorporation and Chairman of Rock Canyon Bank. “NBH Bank has earned a reputation as an outstanding bank and is our partner of choice.”
Tod Monsen, CEO of Rock Canyon Bank went on to say, “NBH Bank brings us best-in-class banking solutions for our clients, and I am looking forward to working alongside their proven and high energy leadership team as we work to take our performance to the next level.”
Under the terms of the agreement, CB shareholders will receive approximately $16.1 million of cash consideration and approximately 3.1 million shares of NBHC common stock, subject to certain potential adjustments. The transaction has a value of $136.0 million in the aggregate, based on NBHC’s closing price of $38.69 on April 14, 2022.
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In announcing NBHC’s first quarter 2022 results, Tim Laney shared, “We’re off to a solid start delivering quarterly earnings of $0.60 per diluted share. Our teams delivered record first quarter loan fundings driving strong annualized core loan growth of 15.8%. We continue to deliver on our proven track record of maintaining excellent credit quality with a record low non-performing loans ratio of 0.24%. Our excess liquidity coupled with a fortress balance sheet leaves the bank well positioned to address any implications of an economic downturn, while also providing optionality to be leveraged for future growth.”
First Quarter 2022 Results
(All comparisons refer to the fourth quarter of 2021, except as noted)
Net income totaled $18.4 million, or $0.60 per diluted share, during the first quarter of 2022, compared to $22.8 million or $0.74 per diluted share during the fourth quarter of 2021. The return on average tangible assets was 1.07%, compared to 1.30%, and the return on average tangible common equity was 10.31%, compared to 12.37%.
Net Interest Income
Fully taxable equivalent net interest income totaled $48.0 million during the first quarter of 2022, a decrease of $2.8 million driven by $1.9 million lower accretion income from acquired loans, $1.4 million lower Paycheck Protection Program (“PPP”) loan fee income and a $0.9 million decrease from two fewer calendar days. These decreases were partially offset by higher loan volumes and yields as well as lower cost of funds. The fully taxable equivalent net interest margin narrowed 13 basis points to 2.90% due to lower accretion income from acquired loans and lower PPP loan fees. While the impact of the 25 basis point increase in the federal funds rate on March 16, 2022 had a nominal impact on the Company’s first quarter 2022 results, the Company’s net interest income in future periods will benefit from this rate increase. The yield on earnings assets decreased 13 basis points, and the cost of deposits improved one basis point to a record low 0.17%.
Loans
Total loans ended the quarter at $4.7 billion, an increase of $160.9 million over the prior quarter. Excluding PPP loans of $7.6 million and $21.7 million for the first and fourth quarters respectively, total loans increased $174.9 million or 15.8% annualized, led by commercial loan growth of $152.9 million or 19.7% annualized. We generated record first quarter loan fundings totaling $419.7 million, led by commercial loan fundings of $305.3 million.
Asset Quality and Provision for Loan Losses
The Company recorded $0.3 million of provision release during the quarter driven by strong asset quality. Annualized net charge-offs totaled 0.05%, compared to 0.02% in the prior quarter. Non-performing loans (comprised of non-accrual loans and non-accrual TDRs) remained a record low 0.24% of total loans, and non-performing assets decreased four basis points to 0.35% of total loans and OREO. The allowance for credit losses as a percentage of total loans totaled 1.04%, compared to 1.10% at December 31, 2021.
Deposits
Average total deposits increased $33.8 million or 2.2% annualized, to $6.2 billion for the first quarter 2022. Average transaction deposits (defined as total deposits less time deposits) increased $63.7 million or 4.9% annualized. The mix of transaction deposits to total deposits improved 78 basis points to 87.4% at March 31, 2022. The loan to deposit ratio increased 97 basis points to 73.4%.
Non-Interest Income
Non-interest income totaled $19.1 million, a decrease of $4.2 million primarily driven by $2.2 million lower unrealized gains from equity method investments included in the prior quarter and $0.7 million lower mortgage banking income. Service charges and bank card fees decreased a combined $0.5 million during the quarter due to seasonality.
Non-Interest Expense
Non-interest expense totaled $44.1 million, a decrease of $0.4 million from the prior quarter. Salaries and benefits decreased $0.7 million largely due to two fewer calendar days. Included in the first quarter 2022 were $0.3 million of gains on sale of OREO, compared to $0.7
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million in the prior quarter. The fully taxable equivalent efficiency ratio was 65.3% at March 31, 2022, compared to 59.7% at December 31, 2021.
Income tax expense totaled $3.6 million during the first quarter, compared to $5.3 million. The effective tax rate for the first quarter 2022 was 16.4%, compared to 18.6% for the full year 2021. The lower rate compared to the statutory rate reflects the continued success of our tax strategies and tax-exempt income.
Capital
Capital ratios continue to be strong and in excess of federal bank regulatory agency “well capitalized” thresholds. The Tier 1 leverage ratios at March 31, 2022 for the consolidated company and NBH Bank were 10.48% and 9.09%, respectively. Shareholders’ equity totaled $820.2 million at March 31, 2022, decreasing $19.9 million primarily due to a higher accumulated other comprehensive loss.
Common book value per share decreased $0.71 to $27.33 at March 31, 2022. Tangible common book value per share decreased $0.69 to $23.64 at March 31, 2022 as this quarter’s earnings, net of dividends paid, were outpaced by the increase in accumulated other comprehensive loss. Excluding accumulated other comprehensive loss, the tangible book value per share increased $0.37 to $24.93 at March 31, 2022.
Year-Over-Year Review
(All comparisons refer to the first quarter 2021, except as noted)
Net income totaled $18.4 million, or $0.60 per diluted share, for the first quarter of 2022, compared to $26.8 million, or $0.86 per diluted share for the first quarter of 2021. The decrease was largely due to $12.7 million lower mortgage banking income, due to lower refinance activity in 2022. The return on average tangible assets was 1.07%, compared to 1.65% in the same period prior year, and the return on average tangible common equity was 10.31%, compared to 15.20%.
Fully taxable equivalent net interest income totaled $48.0 million, an increase of $1.5 million or 3.2%. Average earning assets increased $464.6 million, or 7.4%, including originated loan growth of $356.9 million. The fully taxable equivalent net interest margin narrowed 12 basis points to 2.90%, due to lower earning asset yields, which were partially offset by a decrease in the cost of funds. The yield on earning assets decreased 20 basis points driven by lower PPP loan forgiveness activity. The cost of deposits decreased 11 basis points to a record low 0.17%.
Loans outstanding totaled $4.7 billion, increasing $371.0 million or 8.6%. Excluding PPP loans of $7.6 million and $217.7 million for the first quarters 2022 and 2021 respectively, total loans increased $581.0 million or 14.2%, led by commercial loan growth of $534.6 million, or 19.4%. New loan fundings over the trailing 12 months totaled a record $1.7 billion, led by commercial loan fundings of $1.2 billion.
The Company recorded $0.3 million of provision release during the first quarter, compared to a provision release of $3.6 million in the same period last year. The provision release was driven by strong asset quality and an improved outlook in the CECL model’s underlying economic forecast. Net charge-offs totaled 0.05% of total loans, compared to 0.01% of total loans in the same period last year. Non-performing loans to total loans improved 14 basis points to 0.24% at March 31, 2022. The allowance for credit losses totaled 1.04% of total loans, compared to 1.28% at March 31, 2021.
Average total deposits increased $413.4 million or 7.2%, to $6.2 billion. Average non-interest bearing demand deposits increased $268.3 million or 12.4%, and average transaction deposits increased $559.0 million, or 11.6%. The mix of transaction deposits to total deposits increased by 319 basis points to 87.4%, and the mix of non-interest bearing demand deposits to total deposits improved 189 basis points to 40.1% at March 31, 2022.
Non-interest income totaled $19.1 million, a decrease of $14.3 million or 42.9%, driven by $12.7 million lower mortgage banking income due to lower refinance activity in 2022, as well as competition driving tighter gain on sale margins. Other non-interest income
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decreased $1.0 million due to $0.5 million lower unrealized gains on equity method investments. Included in the first quarter of 2022 was $0.7 million of banking center consolidation-related income, compared to $1.5 million in the same period last year. Service charges and bank card fees increased a combined $0.3 million compared to the first quarter 2021.
Non-interest expense totaled $44.1 million, a decrease of $5.6 million or 11.2%. Salaries and benefits decreased $4.2 million largely due to lower mortgage banking-related compensation. Occupancy and equipment decreased $0.2 million due to efficiencies gained from banking center consolidations. Problem asset workout expense decreased $0.3 million, and gain on sale of OREO increased $0.2 million.
Income tax expense totaled $3.6 million, a decrease of $2.1 million from the first quarter last year, driven by lower pre-tax income.
Acquisition of Rock Canyon Bank
Rock Canyon Bank was founded in 1991, and as of December 31, 2021 had $814.3 million in total assets, including $494.2 million in total loans, and $736.6 million in total deposits. Rock Canyon Bank is the leading third-party SBA loan originator in the state of Utah. Upon the close of the transaction, Rock Canyon Bank will operate as Hillcrest Bank. Please refer to the accompanying acquisition disclosure for additional transaction details.
BofA Securities, Inc. served as financial advisor and Squire Patton Boggs (US) LLP served as legal counsel to National Bank Holdings Corporation. Kirton McConkie served as legal counsel to Community Bancorporation.
Conference Call
Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Tuesday, April 19, 2022. Interested parties may listen to this call by dialing (800) 289-0720/+44 (0)330 165 4012 (United Kingdom) using the confirmation code of 2525902 and asking for the NBHC Q1 2022 Earnings Call. A telephonic replay of the call will be available beginning approximately four hours after the call’s completion through April 24, 2022, by dialing (888) 203-1112 using the confirmation code of 2525902. The earnings release and an on-line replay of the call will also 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 subsidiary, NBH Bank, National Bank Holdings Corporation operates a network of 81 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, Texas, Utah and New Mexico. Its comprehensive residential mortgage banking group primarily serves the bank’s core footprint. 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; and in Texas, Utah and New Mexico, Hillcrest Bank and Hillcrest Bank 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 or nbhbank.com. Or, follow us on any of our social media sites:
Community Banks of Colorado: facebook.com/cobnks, twitter.com/cobnks, instagram.com/cobnks;
Bank Midwest: facebook.com/bankmw, twitter.com/bank_mw, instagram.com/bankmw;
Hillcrest Bank: facebook.com/hillcrestbank, twitter.com/hillcrest_bank;
NBH Bank: twitter.com/nbhbank;
or connect with any of our brands on LinkedIn.
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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,” 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: ability to obtain regulatory approvals and meet other closing conditions to the mergers on the expected terms and schedule; delay in closing the mergers; difficulties and delays in integrating the NBHC, Community Bancorporation, and Bancshares of Jackson Hole Incorporated businesses or fully realizing cost savings and other benefits; business disruption following the proposed transactions; ability to execute our business strategy; 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; effects of any changes in trade, monetary and fiscal policies and laws; 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; 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; the Company’s ability to identify potential candidates for, consummate, integrate and realize operating efficiencies from, acquisitions, consolidations and other expansion opportunities; 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; the Company’s ability to achieve organic loan and deposit growth
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and the composition of such growth; changes in sources and uses of funds; increased competition in the financial services industry; the effect of changes in accounting policies and practices; the share price of the Company’s stock; the Company's ability to realize deferred tax assets or the need for a valuation allowance; the effects of tax legislation, including the potential of future increases to prevailing tax rules, or challenges to our position; 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; technological changes; the timely development and acceptance of new products and services, including in the digital technology space our digital solution 2UniFi; 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 the Company's bank subsidiary; changes in estimates of future credit reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; widespread natural and other disasters, pandemics, dislocations, political instability, acts of war or terrorist activities, cyberattacks or international hostilities; a cybersecurity incident, data breach or a failure of a key information technology system; adverse effects due to the novel Coronavirus Disease 2019 (COVID-19) on the Company and its clients, counterparties, employees, and third-party service providers, and the adverse impacts on our business, financial position, results of operations, and prospects; impact of reputational risk; 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.
Contact:
Analysts/Institutional Investors: Aldis Birkans, Chief Financial Officer, (720) 554-6640, ir@nationalbankholdings.com
Media: Jody Soper, Chief Marketing Officer, (303) 784-5925, Jody.Soper@nbhbank.com
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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 | |||||||
| | March 31, | December 31, | March 31, | |||||
| | 2022 | | 2021 | | 2021 | |||
| Total interest and dividend income | $ | 49,525 | | $ | 52,501 | | $ | 49,213 |
| Total interest expense | **** | 2,864 | | 3,015 | | 3,992 | ||
| Net interest income | **** | 46,661 | | 49,486 | | 45,221 | ||
| Taxable equivalent adjustment | | 1,313 | | | 1,299 | | | 1,268 |
| Net interest income FTE^(1)^ | | 47,974 | | | 50,785 | | | 46,489 |
| Provision (release) expense for loan losses | **** | (322) | | 132 | | (3,575) | ||
| Net interest income after provision for loan losses FTE^(1)^ | **** | 48,296 | | 50,653 | | 50,064 | ||
| Non-interest income: | | | | | | | | |
| Service charges | **** | 3,710 | | 3,905 | | 3,474 | ||
| Bank card fees | **** | 4,123 | | 4,476 | | 4,073 | ||
| Mortgage banking income | **** | 9,666 | | 10,387 | | 22,379 | ||
| Other non-interest income | **** | 847 | | 3,388 | | 1,847 | ||
| OREO-related income | **** | — | | — | | 35 | ||
| Banking center consolidation-related income | **** | 708 | | 1,059 | | 1,553 | ||
| Total non-interest income | **** | 19,054 | | 23,215 | | 33,361 | ||
| Non-interest expense: | | | | | | | | |
| Salaries and benefits | **** | 29,336 | | 29,986 | | 33,523 | ||
| Occupancy and equipment | | 6,396 | | | 6,133 | | | 6,550 |
| Professional fees | **** | 814 | | 781 | | 742 | ||
| Other non-interest expense | **** | 7,352 | | 7,764 | | 6,853 | ||
| Problem asset workout | **** | 163 | | 212 | | 438 | ||
| Gain on sale of OREO, net | **** | (275) | | (667) | | (29) | ||
| Core deposit intangible asset amortization | | 296 | | | 296 | | | 296 |
| Banking center consolidation-related expense | | — | | | — | | | 1,295 |
| Total non-interest expense | | 44,082 | | 44,505 | | 49,668 | ||
| | | | | | | | | |
| Income before income taxes FTE^(1)^ | **** | 23,268 | | 29,363 | | 33,757 | ||
| Taxable equivalent adjustment | | 1,313 | | | 1,299 | | | 1,268 |
| Income before income taxes | | 21,955 | | | 28,064 | | | 32,489 |
| Income tax expense | **** | 3,603 | | 5,295 | | 5,677 | ||
| Net income | $ | 18,352 | | $ | 22,769 | | $ | 26,812 |
| Earnings per share - basic | $ | 0.61 | | $ | 0.75 | | $ | 0.87 |
| Earnings per share - diluted | | 0.60 | | | 0.74 | | | 0.86 |
| | | |
|---|---|---|
| (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. |
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NATIONAL BANK HOLDINGS CORPORATION
Consolidated Statements of Financial Condition (Unaudited)
(Dollars in thousands, except share and per share data)
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | March 31, 2022 | | December 31, 2021 | | March 31, 2021 | |||
| ASSETS | | | | | | | | |
| Cash and cash equivalents | $ | 786,385 | | $ | 845,695 | | $ | 822,518 |
| Investment securities available-for-sale | **** | 790,384 | | 691,847 | | 666,915 | ||
| Investment securities held-to-maturity | **** | 567,055 | | 609,012 | | 520,823 | ||
| Non-marketable securities | **** | 54,568 | | 50,740 | | 15,493 | ||
| Loans | **** | 4,674,238 | | 4,513,383 | | 4,303,246 | ||
| Allowance for credit losses | **** | (48,810) | | (49,694) | | (55,057) | ||
| Loans, net | **** | 4,625,428 | | 4,463,689 | | 4,248,189 | ||
| Loans held for sale | **** | 90,152 | | 139,142 | | 228,888 | ||
| Other real estate owned | **** | 5,063 | | 7,005 | | 5,669 | ||
| Premises and equipment, net | **** | 95,133 | | 96,747 | | 101,830 | ||
| Goodwill | **** | 115,027 | | 115,027 | | 115,027 | ||
| Intangible assets, net | **** | 13,505 | | 12,322 | | 20,205 | ||
| Other assets | **** | 198,812 | | 182,785 | | 203,944 | ||
| Total assets | $ | 7,341,512 | | $ | 7,214,011 | | $ | 6,949,501 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | |
| Liabilities: | | | | | | | | |
| Non-interest bearing demand deposits | $ | 2,554,820 | | $ | 2,506,265 | | $ | 2,295,704 |
| Interest bearing demand deposits | **** | 595,137 | | 555,401 | | 557,850 | ||
| Savings and money market | **** | 2,412,081 | | 2,332,591 | | 2,199,420 | ||
| Total transaction deposits | **** | 5,562,038 | | 5,394,257 | | 5,052,974 | ||
| Time deposits | **** | 802,772 | | 833,916 | | 948,676 | ||
| Total deposits | **** | 6,364,810 | | 6,228,173 | | 6,001,650 | ||
| Securities sold under agreements to repurchase | **** | 24,744 | | 22,768 | | 19,405 | ||
| Long-term debt | **** | 39,505 | | 39,478 | | — | ||
| Other liabilities | **** | 92,238 | | 83,486 | | 96,456 | ||
| Total liabilities | **** | 6,521,297 | | 6,373,905 | | 6,117,511 | ||
| Shareholders' equity: | | | | | | | | |
| Common stock | **** | 515 | | 515 | | 515 | ||
| Additional paid in capital | **** | 1,014,332 | | 1,014,294 | | 1,010,798 | ||
| Retained earnings | **** | 301,220 | | 289,876 | | 243,446 | ||
| Treasury stock | **** | (457,219) | | (457,616) | | (423,254) | ||
| Accumulated other comprehensive (loss) income, net of tax | **** | (38,633) | | (6,963) | | 485 | ||
| Total shareholders' equity | **** | 820,215 | | 840,106 | | 831,990 | ||
| Total liabilities and shareholders' equity | $ | 7,341,512 | | $ | 7,214,011 | | $ | 6,949,501 |
| SHARE DATA | | | | | | | | |
| Average basic shares outstanding | **** | 30,120,195 | | 30,338,265 | | 30,828,262 | ||
| Average diluted shares outstanding | **** | 30,479,261 | | 30,715,500 | | 31,143,322 | ||
| Ending shares outstanding | **** | 30,008,781 | | 29,958,764 | | 30,715,790 | ||
| Common book value per share | $ | 27.33 | | $ | 28.04 | | $ | 27.09 |
| Tangible common book value per share^(1)^ (non-GAAP) | | 23.64 | | | 24.33 | | | 23.41 |
| Tangible common book value per share, excluding accumulated other comprehensive income^(1)^ (non-GAAP) | | 24.93 | | | 24.56 | | | 23.40 |
| CAPITAL RATIOS | | | | | | | | |
| Average equity to average assets | | 11.74% | | | 11.88% | | | 12.36% |
| Tangible common equity to tangible assets^(1)^ | | 9.81% | | | 10.26% | | | 10.52% |
| Tier 1 leverage ratio | | 10.48% | | | 10.39% | | | 10.80% |
| Common equity tier 1 risk-based capital ratio | | 13.94% | | | 14.26% | | | 15.23% |
| Tier 1 risk-based capital ratio | | 13.94% | | | 14.26% | | | 15.23% |
| Total risk-based capital ratio | | 15.56% | | | 15.92% | | | 16.30% |
| | | |
|---|---|---|
| (1) | Represents a non-GAAP financial measure. See non-GAAP reconciliations starting on page 13. |
8
NATIONAL BANK HOLDINGS CORPORATION
Loan Portfolio
(Dollars in thousands)
Period End Loan Balances by Type
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | March 31, 2022 | | | | March 31, 2022 | |||
| | | | | | vs. December 31, 2021 | | | | vs. March 31, 2021 | |||
| | March 31, 2022 | | December 31, 2021 | | % Change | | March 31, 2021 | | % Change | |||
| Originated: | | | | | | | | | | | | |
| Commercial: | | | | | | | | | | | | |
| Commercial and industrial | $ | 1,551,447 | | $ | 1,479,895 | | 4.8% | | $ | 1,395,461 | | 11.2% |
| Municipal and non-profit | | 949,125 | | | 928,705 | | 2.2% | | | 850,663 | | 11.6% |
| Owner-occupied commercial real estate | | 554,345 | | | 503,663 | | 10.1% | | | 476,625 | | 16.3% |
| Food and agribusiness | | 205,899 | | | 200,412 | | 2.7% | | | 178,419 | | 15.4% |
| Total commercial | | 3,260,816 | | | 3,112,675 | | 4.8% | | | 2,901,168 | | 12.4% |
| Commercial real estate non-owner occupied | | 634,928 | | | 611,765 | | 3.8% | | | 553,184 | | 14.8% |
| Residential real estate | | 626,763 | | | 616,135 | | 1.7% | | | 604,001 | | 3.8% |
| Consumer | | 17,321 | | | 17,336 | | (0.1)% | | | 17,671 | | (2.0)% |
| Total originated | | 4,539,828 | | | 4,357,911 | | 4.2% | | | 4,076,024 | | 11.4% |
| | | | | | | | | | | | | |
| Acquired: | | | | | | | | | | | | |
| Commercial: | | | | | | | | | | | | |
| Commercial and industrial | | 15,800 | | | 16,252 | | (2.8)% | | | 20,405 | | (22.6)% |
| Municipal and non-profit | | 335 | | | 340 | | (1.5)% | | | 370 | | (9.5)% |
| Owner-occupied commercial real estate | | 21,329 | | | 29,973 | | (28.8)% | | | 50,607 | | (57.9)% |
| Food and agribusiness | | 2,976 | | | 3,177 | | (6.3)% | | | 4,129 | | (27.9)% |
| Total commercial | | 40,440 | | | 49,742 | | (18.7)% | | | 75,511 | | (46.4)% |
| Commercial real estate non-owner occupied | | 46,431 | | | 52,964 | | (12.3)% | | | 81,176 | | (42.8)% |
| Residential real estate | | 47,314 | | | 52,521 | | (9.9)% | | | 70,141 | | (32.5)% |
| Consumer | | 225 | | | 245 | | (8.2)% | | | 394 | | (42.9)% |
| Total acquired | | 134,410 | | | 155,472 | | (13.5)% | | | 227,222 | | (40.8)% |
| Total loans | $ | 4,674,238 | | $ | 4,513,383 | | 3.6% | | $ | 4,303,246 | | 8.6% |
Loan Fundings^(1)^
| | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | First quarter | | Fourth quarter | | Third quarter | | Second quarter | | First quarter | |||||
| | 2022 | | 2021 | | 2021 | | 2021 | | 2021 | |||||
| Commercial: | | | | | | | | | | | | | | |
| Commercial and industrial | $ | 169,168 | | $ | 229,529 | | $ | 196,289 | | $ | 147,030 | | $ | 144,531 |
| Municipal and non-profit | | 49,906 | | | 101,450 | | | 43,516 | | | 25,131 | | | 7,999 |
| Owner occupied commercial real estate | 67,597 | | 28,914 | | 53,445 | | 48,225 | | 27,093 | |||||
| Food and agribusiness | 18,620 | | 11,016 | | 8,442 | | 26,956 | | (10,104) | |||||
| Total commercial | | 305,291 | | | 370,909 | | | 301,692 | | | 247,342 | | | 169,519 |
| Commercial real estate non-owner occupied | 63,416 | | 46,128 | | 55,392 | | 58,532 | | 49,195 | |||||
| Residential real estate | 49,040 | | 55,873 | | 54,442 | | 53,962 | | 74,145 | |||||
| Consumer | 1,904 | | 2,524 | | 1,810 | | 2,267 | | 1,353 | |||||
| Total | $ | 419,651 | | $ | 475,434 | | $ | 413,336 | | $ | 362,103 | | $ | 294,212 |
| | | |
|---|---|---|
| (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 $66,430, $138,777, $29,154, $59,520 and ($26,395) as of the first quarter of 2022 and the fourth, third, second and first quarter of 2021, respectively. |
9
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 | |||||||||||||||||||||
| | | March 31, 2022 | | December 31, 2021 | | March 31, 2021 | |||||||||||||||||||||
| | | Average | | | Average | Average | | | Average | Average | | | Average | ||||||||||||||
| | | balance | | Interest | | rate | | balance | | Interest | | rate | | balance | | Interest | | rate | |||||||||
| Interest earning assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Originated loans FTE^(1)(2)^ | | $ | 4,361,919 | | $ | 42,085 | | | 3.91% | | $ | 4,296,318 | | $ | 43,066 | | | 3.98% | | $ | 4,004,994 | | $ | 39,560 | | | 4.01% |
| Acquired loans | | **** | 147,638 | | **** | 2,568 | | | 7.05% | | 172,567 | | 4,493 | | | 10.33% | | 238,468 | | | 5,128 | | | 8.72% | |||
| Loans held for sale | | | 93,639 | | | 756 | | | 3.27% | | | 166,470 | | | 1,214 | | | 2.89% | | | 231,521 | | | 1,517 | | | 2.66% |
| Investment securities available-for-sale | | **** | 751,646 | | **** | 2,849 | | | 1.52% | | 689,994 | | 2,560 | | | 1.48% | | 686,731 | | | 2,485 | | | 1.45% | |||
| Investment securities held-to-maturity | | **** | 589,830 | | **** | 2,012 | | | 1.36% | | 637,250 | | 1,994 | | | 1.25% | | 421,119 | | | 1,416 | | | 1.34% | |||
| Other securities | | **** | 14,590 | | **** | 209 | | | 5.73% | | 14,590 | | 209 | | | 5.73% | | 15,818 | | | 210 | | | 5.31% | |||
| Interest earning deposits and securities purchased under agreements to resell | | **** | 743,239 | | **** | 359 | | | 0.20% | | 678,729 | | 264 | | | 0.15% | | 639,273 | | | 165 | | | 0.10% | |||
| Total interest earning assets FTE^(2)^ | | $ | 6,702,501 | | $ | 50,838 | | | 3.08% | | $ | 6,655,918 | | $ | 53,800 | | | 3.21% | | $ | 6,237,924 | | $ | 50,481 | | | 3.28% |
| Cash and due from banks | | $ | 79,383 | | | | | | | | $ | 79,058 | | | | | | | | $ | 81,253 | | | | | | |
| Other assets | | **** | 442,098 | | | | | | | | 460,664 | | | | | | | | 495,222 | | | | | | | ||
| Allowance for credit losses | | **** | (49,584) | | | | | | | | (49,069) | | | | | | | | (58,915) | | | | | | | ||
| Total assets | | $ | 7,174,398 | | | | | | | | $ | 7,146,571 | | | | | | | | $ | 6,755,484 | | | | | | |
| Interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing demand, savings and money market deposits | | $ | 2,936,158 | | $ | 1,437 | | | 0.20% | | $ | 2,847,562 | | $ | 1,500 | | | 0.21% | | $ | 2,645,487 | | $ | 1,652 | | | 0.25% |
| Time deposits | | **** | 821,814 | | **** | 1,094 | | | 0.54% | | 851,779 | | 1,312 | | | 0.61% | | 967,447 | | | 2,335 | | | 0.98% | |||
| Securities sold under agreements to repurchase | | **** | 22,770 | | **** | 7 | | | 0.12% | | 20,420 | | 7 | | | 0.14% | | 21,377 | | | 5 | | | 0.09% | |||
| Long-term debt | | | 39,489 | | | 326 | | | 3.35% | | | 24,599 | | 196 | | | 3.16% | | | — | | | — | | | 0.00% | |
| Total interest bearing liabilities | | $ | 3,820,231 | | $ | 2,864 | | | 0.30% | | $ | 3,744,360 | | $ | 3,015 | | | 0.32% | | $ | 3,634,311 | | $ | 3,992 | | | 0.45% |
| Demand deposits | | $ | 2,434,198 | | | | | | | | $ | 2,459,063 | | | | | | | | $ | 2,165,868 | | | | | | |
| Other liabilities | | **** | 78,027 | | | | | | | | 94,345 | | | | | | | | 120,607 | | | | | | | ||
| Total liabilities | | **** | 6,332,456 | | | | | | | | 6,297,768 | | | | | | | | 5,920,786 | | | | | | | ||
| Shareholders' equity | | **** | 841,942 | | | | | | | | 848,803 | | | | | | | | 834,698 | | | | | | | ||
| Total liabilities and shareholders' equity | | $ | 7,174,398 | | | | | | | | $ | 7,146,571 | | | | | | | | $ | 6,755,484 | | | | | | |
| Net interest income FTE^(2)^ | | | | | $ | 47,974 | | | | | | | | $ | 50,785 | | | | | | | | $ | 46,489 | | | |
| Interest rate spread FTE^(2)^ | | | | | | | | | 2.78% | | | | | | | | | 2.89% | | | | | | | | | 2.83% |
| Net interest earning assets | | $ | 2,882,270 | | | | | | | | $ | 2,911,558 | | | | | | | | $ | 2,603,613 | | | | | | |
| Net interest margin FTE^(2)^ | | | | | | | | | 2.90% | | | | | | | | | 3.03% | | | | | | | | | 3.02% |
| Average transaction deposits | | $ | 5,370,356 | | | | | | | | $ | 5,306,625 | | | | | | | | $ | 4,811,355 | | | | | | |
| Average total deposits | | | 6,192,170 | | | | | | | | | 6,158,404 | | | | | | | | | 5,778,802 | | | | | | |
| Ratio of average interest earning assets to average interest bearing liabilities | | | 175.45% | | | | | | | | | 177.76% | | | | | | | | | 171.64% | | | | | | |
| | | |
|---|---|---|
| (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 $1,313, $1,299 and $1,268 for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively. |
10
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 | |||||||
| | March 31, 2022 | | December 31, 2021 | | March 31, 2021 | |||
| Beginning allowance for credit losses | $ | 49,694 | | $ | 49,155 | | $ | 59,777 |
| Charge-offs | **** | (634) | | (268) | | | (302) | |
| Recoveries | | 75 | | | 72 | | | 182 |
| Provision (release) expense | **** | (325) | | 735 | | (4,600) | ||
| Ending allowance for credit losses ("ACL") | $ | 48,810 | | $ | 49,694 | | $ | 55,057 |
| Ratio of annualized net charge-offs to average total loans during the period | | 0.05% | | | 0.02% | | | 0.01% |
| Ratio of ACL to total loans outstanding at period end | | 1.04% | | | 1.10% | | | 1.28% |
| Ratio of ACL to total non-performing loans at period end | | 440.01% | | | 458.77% | | | 336.25% |
| Total loans | $ | 4,674,238 | | $ | 4,513,383 | | $ | 4,303,246 |
| Average total loans during the period | | 4,520,205 | | | 4,490,391 | | | 4,277,481 |
| Total non-performing loans | | 11,093 | | | 10,832 | | | 16,374 |
Past Due and Non-accrual Loans
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | March 31, 2022 | | December 31, 2021 | | March 31, 2021 | |||
| Loans 30-89 days past due and still accruing interest | $ | 3,034 | | $ | 1,687 | | $ | 1,867 |
| Loans 90 days past due and still accruing interest | **** | 389 | | 420 | | 1,021 | ||
| Non-accrual loans | **** | 11,093 | | 10,832 | | 16,374 | ||
| Total past due and non-accrual loans | $ | 14,516 | | $ | 12,939 | | $ | 19,262 |
| Total 90 days past due and still accruing interest and non-accrual loans to total loans | | 0.25% | | | 0.25% | | | 0.40% |
| | | |
|---|
Asset Quality Data
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | March 31, 2022 | | December 31, 2021 | | March 31, 2021 | |||
| Non-performing loans | $ | 11,093 | | $ | 10,832 | | $ | 16,374 |
| OREO | **** | 5,063 | | 7,005 | | 5,669 | ||
| Other repossessed assets | **** | — | | — | | 17 | ||
| Total non-performing assets | $ | 16,156 | | $ | 17,837 | | $ | 22,060 |
| Accruing restructured loans | $ | 4,979 | | $ | 7,186 | | $ | 13,822 |
| Total non-performing loans to total loans | | 0.24% | | | 0.24% | | | 0.38% |
| Total non-performing assets to total loans and OREO | | 0.35% | | | 0.39% | | | 0.51% |
11
NATIONAL BANK HOLDINGS CORPORATION
Key Ratios^(1)^
| | | | | | |
|---|---|---|---|---|---|
| | As of and for the three months ended | ||||
| | March 31, | December 31, | March 31, | ||
| | 2022 | 2021 | 2021 | ||
| Return on average assets | 1.04% | | 1.26% | | 1.61% |
| Return on average tangible assets^(2)^ | 1.07% | | 1.30% | | 1.65% |
| Return on average equity | 8.84% | | 10.64% | | 13.03% |
| Return on average tangible common equity^(2)^ | 10.31% | | 12.37% | | 15.20% |
| Loan to deposit ratio (end of period) | 73.44% | | 72.47% | | 71.70% |
| Non-interest bearing deposits to total deposits (end of period) | 40.14% | | 40.24% | | 38.25% |
| Net interest margin^(3)^ | 2.82% | | 2.95% | | 2.94% |
| Net interest margin FTE^(2)(3)^ | 2.90% | | 3.03% | | 3.02% |
| Interest rate spread FTE^(2)(4)^ | 2.78% | | 2.89% | | 2.83% |
| Yield on earning assets^(5)^ | 3.00% | | 3.13% | | 3.20% |
| Yield on earning assets FTE^(2)(5)^ | 3.08% | | 3.21% | | 3.28% |
| Cost of interest bearing liabilities^(5)^ | 0.30% | | 0.32% | | 0.45% |
| Cost of deposits | 0.17% | | 0.18% | | 0.28% |
| Non-interest income to total revenue FTE^(2)^ | 28.43% | | 31.37% | | 41.78% |
| Non-interest expense to average assets | 2.49% | | 2.47% | | 2.98% |
| Efficiency ratio | 66.63% | | 60.81% | | 62.83% |
| Efficiency ratio FTE^(2)^ | 65.32% | | 59.74% | | 61.83% |
| | | | | | |
| Total Loans Asset Quality Data^(6)(7)(8)^ | | | | | |
| Non-performing loans to total loans | 0.24% | | 0.24% | | 0.38% |
| Non-performing assets to total loans and OREO | 0.35% | | 0.39% | | 0.51% |
| Allowance for credit losses to total loans | 1.04% | | 1.10% | | 1.28% |
| Allowance for credit losses to non-performing loans | 440.01% | | 458.77% | | 336.25% |
| Net charge-offs to average loans^(1)^ | 0.05% | | 0.02% | | 0.01% |
| | | |
|---|---|---|
| (1) | Ratios are annualized. | |
| (2) | Ratio represents non-GAAP financial measure. See non-GAAP reconciliations starting on page 13. | |
| (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 restructured 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. |
12
NATIONAL BANK HOLDINGS CORPORATION
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(Dollars in thousands, except share and per share data)
Tangible Common Book Value Ratios
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | March 31, 2022 | | December 31, 2021 | | March 31, 2021 | |||
| Total shareholders' equity | | $ | 820,215 | | $ | 840,106 | | $ | 831,990 |
| Less: goodwill and core deposit intangible assets, net | | **** | (121,096) | | (121,392) | | (122,280) | ||
| Add: deferred tax liability related to goodwill | | **** | 10,298 | | 10,070 | | 9,384 | ||
| Tangible common equity (non-GAAP) | | $ | 709,417 | | $ | 728,784 | | $ | 719,094 |
| | | | | | | | | | |
| Total assets | | $ | 7,341,512 | | $ | 7,214,011 | | $ | 6,949,501 |
| Less: goodwill and core deposit intangible assets, net | | **** | (121,096) | | (121,392) | | (122,280) | ||
| Add: deferred tax liability related to goodwill | | **** | 10,298 | | 10,070 | | 9,384 | ||
| Tangible assets (non-GAAP) | | $ | 7,230,714 | | $ | 7,102,689 | | $ | 6,836,605 |
| | | | | | | | | | |
| Tangible common equity to tangible assets calculations: | | | | | | | | | |
| Total shareholders' equity to total assets | | | 11.17% | | | 11.65% | | | 11.97% |
| Less: impact of goodwill and core deposit intangible assets, net | | | (1.36)% | | | (1.39)% | | | (1.45)% |
| Tangible common equity to tangible assets (non-GAAP) | | | 9.81% | | | 10.26% | | | 10.52% |
| | | | | | | | | | |
| Tangible common book value per share calculations: | | | | | | | | | |
| Tangible common equity (non-GAAP) | | $ | 709,417 | | $ | 728,784 | | $ | 719,094 |
| Divided by: ending shares outstanding | | **** | 30,008,781 | | 29,958,764 | | 30,715,790 | ||
| Tangible common book value per share (non-GAAP) | | $ | 23.64 | | $ | 24.33 | | $ | 23.41 |
| | | | | | | | | | |
| Tangible common book value per share, excluding accumulated other comprehensive income calculations: | | | | | | | | | |
| Tangible common equity (non-GAAP) | | $ | 709,417 | | $ | 728,784 | | $ | 719,094 |
| Accumulated other comprehensive loss (income), net of tax | | **** | 38,633 | | 6,963 | | (485) | ||
| Tangible common book value, excluding accumulated other comprehensive loss (income), net of tax (non-GAAP) | | **** | 748,050 | | 735,747 | | 718,609 | ||
| Divided by: ending shares outstanding | | **** | 30,008,781 | | 29,958,764 | | 30,715,790 | ||
| Tangible common book value per share, excluding accumulated other comprehensive loss (income), net of tax (non-GAAP) | | $ | 24.93 | | $ | 24.56 | | $ | 23.40 |
13
NATIONAL BANK HOLDINGS CORPORATION
(Dollars in thousands, except share and per share data)
Return on Average Tangible Assets and Return on Average Tangible Equity
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | As of and for the three months ended | |||||||
| | | March 31, | December 31, | March 31, | |||||
| | | 2022 | 2021 | 2021 | |||||
| Net income | | $ | 18,352 | | $ | 22,769 | | $ | 26,812 |
| Add: impact of core deposit intangible amortization expense, after tax | | **** | 227 | | 227 | | 228 | ||
| Net income adjusted for impact of core deposit intangible amortization expense, after tax | | $ | 18,579 | | $ | 22,996 | | $ | 27,040 |
| | | | | | | | | | |
| Average assets | | $ | 7,174,398 | | $ | 7,146,571 | | $ | 6,755,484 |
| Less: average goodwill and core deposit intangible asset, net of deferred tax liability related to goodwill | | **** | (110,973) | | (111,508) | | (113,074) | ||
| Average tangible assets (non-GAAP) | | $ | 7,063,425 | | $ | 7,035,063 | | $ | 6,642,410 |
| | | | | | | | | | |
| Average shareholders' equity | | $ | 841,942 | | $ | 848,803 | | $ | 834,698 |
| Less: average goodwill and core deposit intangible asset, net of deferred tax liability related to goodwill | | **** | (110,973) | | (111,508) | | (113,074) | ||
| Average tangible common equity (non-GAAP) | | $ | 730,969 | | $ | 737,295 | | $ | 721,624 |
| | | | | | | | | | |
| Return on average assets | | | 1.04% | | | 1.26% | | | 1.61% |
| Return on average tangible assets (non-GAAP) | | | 1.07% | | | 1.30% | | | 1.65% |
| Return on average equity | | | 8.84% | | | 10.64% | | | 13.03% |
| Return on average tangible common equity (non-GAAP) | | | 10.31% | | | 12.37% | | | 15.20% |
Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | As of and for the three months ended | |||||||
| | | March 31, | | December 31, | | March 31, | |||
| | | 2022 | | 2021 | | 2021 | |||
| Interest income | | $ | 49,525 | $ | 52,501 | $ | 49,213 | ||
| Add: impact of taxable equivalent adjustment | | **** | 1,313 | | 1,299 | | 1,268 | ||
| Interest income FTE (non-GAAP) | | $ | 50,838 | | $ | 53,800 | | $ | 50,481 |
| | | | | | | | | | |
| Net interest income | | $ | 46,661 | | $ | 49,486 | | $ | 45,221 |
| Add: impact of taxable equivalent adjustment | | **** | 1,313 | | 1,299 | | 1,268 | ||
| Net interest income FTE (non-GAAP) | | $ | 47,974 | | $ | 50,785 | | $ | 46,489 |
| | | | | | | | | | |
| Average earning assets | | $ | 6,702,501 | | $ | 6,655,918 | | $ | 6,237,924 |
| Yield on earning assets | | **** | 3.00% | | 3.13% | | 3.20% | ||
| Yield on earning assets FTE (non-GAAP) | | **** | 3.08% | | 3.21% | | 3.28% | ||
| Net interest margin | | **** | 2.82% | | 2.95% | | 2.94% | ||
| Net interest margin FTE (non-GAAP) | | **** | 2.90% | | 3.03% | | 3.02% |
Efficiency Ratio
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | As of and for the three months ended | |||||||
| | **** | March 31, | December 31, | March 31, | |||||
| | **** | 2022 | 2021 | 2021 | |||||
| Net interest income | | $ | 46,661 | | $ | 49,486 | | $ | 45,221 |
| Add: impact of taxable equivalent adjustment | | **** | 1,313 | | 1,299 | | 1,268 | ||
| Net interest income, FTE (non-GAAP) | | $ | 47,974 | | $ | 50,785 | | $ | 46,489 |
| | | | | | | | | | |
| Non-interest income | | $ | 19,054 | | $ | 23,215 | | $ | 33,361 |
| | | | | | | | | | |
| Non-interest expense | | $ | 44,082 | | $ | 44,505 | | $ | 49,668 |
| Less: core deposit intangible asset amortization | | | (296) | | (296) | | (296) | ||
| Non-interest expense, adjusted for core deposit intangible asset amortization | | $ | 43,786 | | $ | 44,209 | | $ | 49,372 |
| | | | | | | | | | |
| Efficiency ratio | | | 66.63% | | | 60.81% | | | 62.83% |
| Efficiency ratio FTE (non-GAAP) | | | 65.32% | | | 59.74% | | | 61.83% |
14
Exhibit 99.2
| NBHC to Acquire<br>Rock Canyon Bank<br>Salt Lake City / Provo Region<br>(c) Copyright Statement<br>April 18,<br>2022<br>Further Accelerating Growth in Premier U.S. Markets |
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| (c) Copyright Statement<br>2<br>Forward<br>-<br>Looking Statements<br>This presentation contains “forward<br>-<br>looking statements” within the meaning of the Private Securities Litigation Reform Act of 19<br>95. Forward<br>-<br>looking statements contain<br>words such as “anticipate,” “believe,” “can,” “would,” “should,” “could,” “may,” “predict,” “seek,” “potential,” “will,” “est<br>ima<br>te,” “target,” “plan,” “project,” “continuing,”<br>“ongoing,” “expect,” “intend” or similar expressions that relate to the Company’s strategy, plans or intentions. Forward<br>-<br>looking<br>statements involve certain important risks,<br>uncertainties and other factors, any of which could cause actual results to differ materially from those in such statements.<br>Suc<br>h factors include, without limitation, the<br>“Risk Factors” referenced in our most recent Form 10<br>-<br>K filed with the Securities and Exchange Commission (SEC), other risks and<br>uncertainties listed from time to time<br>in our reports and documents filed with the SEC, and the following factors: ability to obtain regulatory approvals and meet o<br>the<br>r closing conditions to the mergers on the<br>expected terms and schedule; delay in closing the mergers; difficulties and delays in integrating the NBHC, Community Bancorp<br>ora<br>tion, and Bancshares of Jackson<br>Hole Incorporated businesses or fully realizing cost savings and other benefits; business disruption following the proposed<br>transactions;<br>ability to execute our business<br>strategy; business and economic conditions; effects of any potential government shutdowns; economic, market, operational, liq<br>uid<br>ity, credit and interest rate risks<br>associated with the Company’s business; effects of any changes in trade, monetary and fiscal policies and laws; changes impos<br>ed<br>by regulatory agencies to increase<br>capital standards; effects of inflation, as well as, interest rate, securities market and monetary supply fluctuations; chang<br>es<br>in the economy or supply<br>-<br>demand<br>imbalances affecting local real estate values; changes in consumer spending, borrowings and savings habits; with respect to o<br>ur<br>mortgage business, the inability to<br>negotiate fees with investors for the purchase of our loans or our obligation to indemnify purchasers or repurchase related l<br>oan<br>s; the Company’s ability to identify<br>potential candidates for, consummate, integrate and realize operating efficiencies from, acquisitions, consolidations and oth<br>er<br>expansion opportunities; the Company's<br>ability to realize anticipated benefits from enhancements or updates to its core operating systems from time to time without<br>sig<br>nificant change in client service or risk to<br>the Company's control environment; the Company's dependence on information technology and telecommunications systems of third<br>-<br>pa<br>rty service providers and the<br>risk of systems failures, interruptions or breaches of security; the Company’s ability to achieve organic loan and deposit gr<br>owt<br>h and the composition of such growth;<br>changes in sources and uses of funds; increased competition in the financial services industry; the effect of changes in acco<br>unt<br>ing policies and practices; the share<br>price of the Company’s stock; the Company's ability to realize deferred tax assets or the need for a valuation allowance; the<br>ef<br>fects of tax legislation, including the<br>potential of future increases to prevailing tax rules, or challenges to our position; continued consolidation in the financia<br>l s<br>ervices industry; ability to maintain or increase<br>market share and control expenses; costs and effects of changes in laws and regulations and of other legal and regulatory dev<br>elo<br>pments; technological changes; the<br>timely development and acceptance of new products and services, including in the digital technology space our digital solutio<br>n 2<br>UniFi; the Company’s continued ability<br>to attract, hire and maintain qualified personnel; ability to implement and/or improve operational management and other inter<br>nal<br>risk controls and processes and<br>reporting system and procedures; regulatory limitations on dividends from the Company's bank subsidiary; changes in estimates<br>of<br>future credit reserve requirements<br>based upon the periodic review thereof under relevant regulatory and accounting requirements; widespread natural and other di<br>sas<br>ters, pandemics, dislocations,<br>political instability, acts of war or terrorist activities, cyberattacks or international hostilities; a cybersecurity incide<br>nt,<br>data breach or a failure of a key information<br>technology system; adverse effects due to the novel Coronavirus Disease 2019 (COVID<br>-<br>19) on the Company and its clients, counterp<br>arties, employees, and third<br>-<br>party<br>service providers, and the adverse impacts on our business, financial position, results of operations, and prospects; impact<br>of<br>reputational risk; and success at<br>managing the risks involved in the foregoing items. The Company can give no assurance that any goal or plan or expectation se<br>t f<br>orth in forward<br>-<br>looking statements<br>can be achieved and readers are cautioned not to place undue reliance on such statements. The forward<br>-<br>looking statements are mad<br>e as of the date of this press<br>release, and the Company does not intend, and assumes no obligation, to update any forward<br>-<br>looking statement to reflect events o<br>r circumstances after the date on<br>which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by appl<br>ica<br>ble law. |
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| (c) Copyright Statement<br>3<br>About Non<br>-<br>GAAP Financial Measures<br>Certain<br>of the financial measures and ratios we present, including “tangible book value” and “tangible book value per share” metrics,<br>ar<br>e supplemental<br>measures that<br>are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer<br>to<br>these financial measures<br>and ratios<br>as “non<br>-<br>GAAP financial measures.” We consider the use of select non<br>-<br>GAAP financial measures and ratios to be useful for financia<br>l and<br>operational decision<br>making<br>and useful in evaluating period<br>-<br>to<br>-<br>period comparisons. We believe that these non<br>-<br>GAAP financial measures provide meaningful<br>supplemental information<br>regarding<br>our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operat<br>ing<br>results<br>or by<br>presenting certain<br>metrics on a fully taxable equivalent basis. We believe that management and investors benefit from referring to these non<br>-<br>GAAP<br>financial measures<br>in assessing our<br>performance and when planning, forecasting, analyzing and comparing past, present and future periods.<br>These<br>non<br>-<br>GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP an<br>d you should not<br>rely on<br>non<br>-<br>GAAP financial measures alone as measures of our performance. The non<br>-<br>GAAP financial measures we present may differ from non<br>-<br>GAAP<br>financial measures<br>used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever<br>we<br>present the<br>non<br>-<br>GAAP<br>financial measures and by including a reconciliation of the impact of the components adjusted for in the non<br>-<br>GAAP financial meas<br>ure so that<br>both measures<br>and the<br>individual components may be considered when analyzing our performance.<br>The<br>Company does not provide a reconciliation of forward<br>-<br>looking non<br>-<br>GAAP financial measures to its comparable GAAP financial measur<br>es because it<br>could not<br>do<br>so without unreasonable effort due to the unavailability of the information needed to calculate reconciling items and the var<br>iab<br>ility, complexity and limited<br>visibility of the adjusting items that would be excluded from the non<br>-<br>GAAP financial measures in future periods. When planning,<br>forecasting and analyzing<br>future periods, the Company does so primarily on a non<br>-<br>GAAP basis without preparing a GAAP analysis as that would require estima<br>tes for various cash and<br>non<br>-<br>cash reconciling items (including items such as expected credit losses, stock<br>-<br>based compensation, acquisition<br>-<br>and dispositi<br>on<br>-<br>related expenses, and<br>restructuring costs) that would be difficult to predict with reasonable accuracy. For example, future expectations for credit<br>lo<br>sses depend on a variety of factors<br>including general economic conditions that make estimation on a GAAP basis impractical. Similarly, equity compensation expens<br>e w<br>ould be difficult to estimate<br>because it depends on the Company’s future hiring and retention needs, as well as the future fair market value of the Company<br>’s<br>common stock, all of which<br>are<br>difficult<br>to predict and subject to constant change. It is also difficult to anticipate the need for or magnitude of a presently unfore<br>see<br>n one<br>-<br>time restructuring<br>expenses. As a result, the Company does not believe that a GAAP reconciliation to forward<br>-<br>looking non<br>-<br>GAAP financial measures wo<br>uld provide meaningful<br>supplemental information about the Company’s forward<br>-<br>looking measures. |
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| (c) Copyright Statement<br>4<br>Well Structured Transaction Drives Value<br>(1)<br>Based upon market data as of April 14, 2022.<br>(2)<br>TBVPS is based on Rock Canyon Bank’s financials as of December 31, 2021 and utilize NBHC projections.<br><br>~88% stock / ~12% Cash Consideration<br>(1<br>)<br><br>Stock: Fixed Exchange Ratio of 0.2859x<br><br>Cash: $1.49 per share<br><br>Deal Value per Share: $12.55 per share<br>Structure<br><br>Transaction Value of $136mm<br>(1)<br><br>1.80x Price to Tangible Book Value per Share<br>(2)<br><br>10.4x<br>Price to 2023E<br>Earnings per Share<br><br>6.7x Price to 2023E Earnings per Share with Synergies<br>Pricing<br><br>Approved by both Boards of Directors<br><br>No NBHC shareholder approval required, Voting Agreements in place for RCB<br><br>Customary regulatory approval with closing expected in 2<br>nd<br>half 2022<br>Timing &<br>Approval<br>Other<br><br>No change to NBHC Board of Directors<br><br>Local leadership to remain in place |
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| (c) Copyright Statement<br>5<br>Creating a Dominant Rocky Mountain Franchise<br>Low Risk<br>Transaction<br><br>Comprehensive due diligence completed with low risk loan portfolios<br>and<br>solid credit quality<br><br>Combined company is an engine for accelerated growth and shareholder value creation<br>Attractive Deployment of<br>Excess Capital<br><br>Strong returns and capital levels with<br>13%<br>estimated CET1 at<br>close, 12%<br>pro forma for RCB and<br>BoJH<br><br>Scale and synergies will enhance operating leverage with meaningful pro forma platform revenue enhancement<br>opportunities<br>Culturally Aligned with<br>Consistent Risk Management<br><br>Strong cultural fit<br>through<br>similar client centric models and community engagement<br><br>Culture of stewardship has established robust and transferrable risk management practices across business lines<br>Seizing Opportunity in<br>Difficult to Enter Markets<br><br>Significant scarcity of opportunities to enter attractive markets efficiently and at<br>-<br>scale<br><br>NBH<br>gains a foothold across the attractive greater<br>Wasatch Front, Utah area<br>Enhanced Growth Driven<br>by Revenue Diversification<br><br>Rock<br>Canyon Bank (“RCB”) operates a best<br>-<br>in class SBA<br>program, which ranks #1 in<br>Utah, adding scale and<br>expertise to the pro forma<br>franchise including 504, 504 refinance, and 7(a), FSA and USDA programs<br><br>Will leverage best<br>-<br>in<br>-<br>class capabilities<br>across our markets and within 2UniFi to deliver increased fee income<br>Expansion into Fast<br>-<br>Growing Rocky Mountain<br>Markets<br><br>Accelerates NBH strategy of expansion<br>in fast<br>-<br>growing and strategically important<br>markets<br><br>5<br>-<br>year projected population growth in<br>Salt<br>Lake City, Provo and St. George<br>is<br>7<br>..0%,<br>8<br>..5% and 8.7%<br>respectively<br>Attractive Financial Returns<br><br>Strong<br>EPS<br>accretion of<br>13<br>%,<br>IRR of<br>35<br>%,<br>earnback<br>of<br>~<br>2.5<br>years, and 2023E pro forma ROATCE of<br>14%<br><br>Enhances NBH’s leading financial performance and growth profile with higher yielding loans, diversified fee income<br>and<br>low cost deposit<br>base<br>Note: Financial return metrics utilize NBHC financials as of March 31, 2022; Rock Canyon Bank financials as of December 31, 2<br>021<br>; street estimates for NBHC<br>as of March 31, 2022 and assumes transaction close of September 30, 2022. |
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| (1)<br>BLS<br>February<br>2022<br>(2)<br>Forbes<br>(3)<br>U.S. Census, ranked by population growth<br>(4)<br>Milken Institute<br>Source: S&P Capital IQ for all other data points<br>(c) Copyright Statement<br>6<br>Attractive<br>& Fast Growing Markets<br>32.1%<br>Provo Population<br>Growth from ’10<br>-<br>’22<br>#1<br>Provo was the #1 Best<br>-<br>Performing City in<br>2021<br>(4)<br>Median Household Income<br>Historical Population Growth (’10<br>-<br>’22)<br>$89,073<br>$72,465<br>Provo, UT<br>United States<br>Expansion Market<br>Existing Markets<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>NBH Bank<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>Bank of Jackson Hole<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>l<br>Rock Canyon Bank<br>+23%<br>32.1%<br>8.3%<br>Provo, UT<br>United States<br>+23.8%<br>Colo<br>r<br>ado<br>K<br>ansas<br>Missouri<br>N<br>e<br>w M<br>e<br>xi<br>c<br>o<br>T<br>ex<br>as<br>U<br>t<br>ah<br>Idaho<br>W<br>y<br>oming<br>Name: 0001489779_Map<br>2.1%<br>Lowest Unemployment<br>in Nation<br>(1)<br>#2<br>Fastest growing state<br>from 2010<br>-<br>2021<br>#1<br>Best State for<br>Entrepreneurs 2020<br>(2)<br>#3<br>Best state for business<br>2019<br>(2)<br><br>5 of the top 10 Best<br>-<br>Performing Cities in<br>America by the Milken Institute in 2021<br><br>Utah Ranks #1 for State Pandemic<br>Response by National Bureau of Economic<br>Research<br><br>Utah Ranked #1 in the Nation for GDP<br>Growth per Forbes<br>Notable Employers |
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| (c) Copyright Statement<br>7<br>Source: S&P Global Market Intelligence. As of December 31, 2021<br>Note<br>: Excludes pro forma<br>adjustments, with the exception of CET1 and Tier 1 Leverage.<br>(1)<br>Announced April 1, 2022.<br>(dollars in millions)<br>$7,214<br>$814<br>$9,627<br>4,513<br>494<br>6,003<br>Total Deposits<br>6,228<br>737<br>8,417<br>Total Loans<br>14.3%<br>105<br>85<br>Deposits / # of Banking Centers<br>Scale Enhances the NBH Franchise<br>Total Assets<br>Pro Forma<br>$1,599<br>1,452<br>121<br>996<br>(1)<br>CET1<br>Tier 1 Leverage<br>10.4%<br>78<br>12.0%<br>9.0% |
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| (c) Copyright Statement<br>8<br>Source: S&P Global Market Intelligence. As of December 31, 2021<br>(1) Announced April 1, 2022.<br>(2) Loan yields exclude the impact of PPP.<br>(3) Based<br>on<br>MRY<br>yields and excluding the impact of accretion from Non<br>-<br>PCD component of loan<br>mark.<br>Loans<br>Deposits<br>Non<br>-<br>Interest<br>Bearing<br>Interest Checking<br>MMDA & Savings<br>Retail and Jumbo Time<br>CDs<br>39%<br>3%<br>46%<br>12%<br>Deposits:<br>$737mm<br>Cost of Deposits:<br>0.45%<br>Non<br>-<br>Interest<br>Bearing<br>Interest Checking<br>MMDA & Savings<br>Retail and Jumbo Time<br>CDs<br>39%<br>10%<br>39%<br>12%<br>Deposits:<br>$8,417mm<br>Cost of Deposits:<br>0.19%<br>Non<br>-<br>Interest<br>Bearing<br>Interest<br>Checking<br>MMDA &<br>Savings<br>Retail and Jumbo<br>Time CDs<br>40%<br>9%<br>37%<br>14%<br>Deposits: $6,228mm<br>Cost of Deposits: 0.18%<br>C&I<br>OO<br>-<br>CRE<br>CRE<br>1<br>-<br>4 Family<br>C&D<br>Consumer<br>54%<br>16%<br>13%<br>15%<br>2%<br>0.4%<br>Total: $<br>4,513mm<br>Yield on<br>Loans<br>(2)<br>: 4.09%<br>C&I<br>OO<br>-<br>CRE<br>CRE<br>1<br>-<br>4 Family<br>C&D<br>Consumer<br>7%<br>14%<br>31%<br>32%<br>16%<br>0.2%<br>Total:<br>$494mm<br>Yield on<br>Loans<br>(2)<br>: 7.04%<br>C&I<br>OO<br>-<br>CRE<br>CRE<br>1<br>-<br>4 Family<br>C&D<br>Consumer<br>43%<br>14%<br>19%<br>18%<br>5%<br>0.4%<br>Total:<br>$6,003mm<br>Yield on<br>Loans<br>(2)<br>: 4.40% (+32bps<br>(3)<br>)<br>Diversified Balance Sheet Mix<br>Pro Forma<br>Non<br>-<br>Interest<br>Bearing<br>Interest<br>Checking<br>MMDA &<br>Savings<br>Retail and Jumbo<br>Time CDs<br>32%<br>20%<br>42%<br>6%<br>Deposits: $1,452mm<br>Cost of Deposits: 0.12%<br>C&I<br>OO<br>-<br>CRE<br>CRE<br>1<br>-<br>4 Family<br>C&D<br>Consumer<br>10%<br>6%<br>43%<br>28%<br>14%<br>0.4%<br>Total: $996mm<br>Yield on<br>Loans<br>(2)<br>: 4.54<br>%<br>(1) |
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| (c) Copyright Statement<br>9<br>Source: S&P Global Market Intelligence.<br>(1)<br>Per NAGL database. Third Party 504 Originations as of 2/28/22<br>(2)<br>Utah District Office 2020 and 2019 SBA Annual Report<br>(3)<br>2019 Colorado Lending Source Annual Meeting (via<br>Transworld<br>)<br>(4)<br>Includes activity for SBA, FSA, and USDA programs<br>Overview<br><br>Rock Canyon Bank ranks as #1 for SBA loans in Utah and is one of<br>the top SBA lenders in the United<br>States<br><br>SBA team was formed in 2012 and is distinguished as a Preferred<br>Lender by both the SBA and<br>FSA<br><br>Deep expertise in 7a, 504, USDA, and FSA loan<br>p<br>rograms<br><br>Efficient and scalable<br>i<br>nfrastructure supports origination, servicing,<br>and compliance that will serve as a solid foundation to leverage the<br>NBH footprint and the build out of 2UniFi<br>#1 Utah SBA Producer<br>Rock Canyon SBA Division<br>Rank<br>Institution<br>(1)<br>Awards<br>Top Community<br>Lender based on 7(a)<br>Dollars Approved<br>#1<br>Most 7(a) Loan Dollars<br>for<br>Rural Businesses<br>#1<br>Top SBA 7(a) Partner<br>Bank<br>#1<br>2021: #2<br>Utah District Office bank lender by 7(a) loan amount<br>2Q21: #1 Utah District Office bank lender by 7(a) loan amount<br>1Q21:<br>#1 Utah District Office bank lender by 7(a) loan<br>amount<br>4Q20<br>: #1 Utah District Office bank lender by 7(a) loan amount<br>25<br>Full<br>-<br>Time Associates<br>#1<br>Utah SBA Rank<br>$173mm<br>2021 Total Loan<br>Production<br>1<br>/<br>1<br>2<br>3<br>4<br>5<br>Deep SBA Expertise Drives Opportunity<br>(4)<br>(<br>2),<br>(3) |
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| (c) Copyright Statement<br>10<br>Enhances Leading Financial Performance<br>Source: S&P Global Market Intelligence. Transaction metrics based upon market data as of April 14, 2022, financial data MRQ a<br>s a<br>vailable.<br>Note: Dual<br>earnback<br>calculation assumes 9/30 close for Bank of Jackson Hole<br>(1)<br>Pro forma returns in 2023, first full year post<br>-<br>closing<br>(2)<br>Announced April 1, 2022.<br>$8.0B<br>Pro Forma Assets<br>$7.0B<br>Pro Forma Deposits<br>72%<br>Pro Forma Loans/Dep.<br>14.3%<br>Pro Forma ROATCE<br>(1)<br>1.32%<br>Pro Forma ROAA<br>(1)<br>13%<br>Pro Forma CET1<br>P / TBV<br>P / ’23 EPS<br>With Synergies<br>P / ’23 EPS<br>1.80x<br>6.7x<br>10.4x<br>13%<br>2023 EPS Accretion<br>~2.5 years<br>TBVPS Earnback<br>35%<br>Pro Forma IRR<br>Deal<br>Standalone<br>Multiples<br>Pro<br>Forma<br>Impact and<br>Metrics<br>Pro Forma<br>including Bank of<br>Jackson Hole<br>(2)<br>25%<br>2023 EPS Accretion<br>~2.6 years<br>TBVPS Earnback<br>12%<br>Pro Forma CET1 |
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| (c) Copyright Statement<br>11<br>Conservative Transaction Assumptions<br>(1)<br>Based<br>upon market data as of<br>April 14,<br>2022<br>(2)<br>Revenue<br>enhancement quantified but excluded from<br>pro forma analysis<br>Cost Synergies<br>29%<br>of 2023E NIX<br>Loan Mark<br>1.83%<br>of loans (23% PCD)<br>Core Deposit Intangible<br>0.65%<br>SOYD over 10 years<br>Revenue<br>Opportunities<br>(2)<br>•<br>SBA Lending<br>•<br>Significant excess<br>liquidity<br>•<br>Product suite cross<br>-<br>selling opportunities<br>Consideration<br>(1)<br>$136mm<br>Deal Value<br>~88%<br>Stock /<br>~12%<br>Cash<br>Transaction Expense<br>$9.0mm<br>After<br>-<br>tax |
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| (c) Copyright Statement<br>12<br>Attractive Deployment of Excess Capital<br>Strong<br>Financial<br>Performance<br>=<br>Attractive<br>Shareholder Returns<br>Retaining Strong<br>Capital<br>=<br>Optionality for Future<br>Capital Deployment<br>Internal Rate of Return<br>Fully<br>-<br>synergized EPS Accretion<br>28%<br>25%<br>Combined<br>Institution<br>is a<br>Platform<br>for<br>Accelerated<br>Growth<br>and<br>Greater Earnings<br>Distribution<br>Resulting in<br>Pro Forma ’23E<br>ROATCE of 16%<br>NBH CET1 (%) Estimated Impact<br>14%<br>12%<br>12/31/2021<br>Estimated at Close<br>Note: Pro Forma transaction metrics and returns analysis reflect Rock Canyon Bank and Bank of Jackson Hole. |
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| (c) Copyright Statement<br>13<br>Comprehensive Due Diligence Completed<br>Comprehensive<br>Due Diligence<br>•<br>Credit Risk and Underwriting<br>•<br>Financial and Accounting<br>•<br>Regulatory<br>•<br>Compliance<br>•<br>Cultural<br>Alignment<br>•<br>Internal Audit<br>•<br>Legal<br>•<br>Operational Risk<br>•<br>Technology<br>•<br>SBA operations<br>•<br>Human Resources<br>76%<br>Total Exposure<br>Reviewed<br>91%<br>Commercial Loans<br>>$500k Reviewed<br>1.83%<br>Total Loan Mark<br>Non<br>-<br>PCD = 1.41%<br>PCD = 0.42%<br>74%<br>Total<br>Fundings<br>Reviewed<br>100%<br>Substandard Loans<br>Reviewed<br>Loan Credit<br>Review<br>Management Credit Review supplemented by extensive<br>third<br>-<br>party due diligence on the loan portfolio |
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| (c) Copyright Statement<br>14<br>Strategically Compelling Rocky Mountain Expansion<br>Enhanced Growth Driven by Revenue Diversification<br>Expansion into Fast<br>-<br>Growing Western Markets<br>Culturally Aligned with Consistent Risk Management<br>Attractive Financial Returns<br>Low Risk<br>Transaction<br>Attractive Deployment of Excess Capital<br>Seizing Opportunity in Difficult to Enter Markets<br>Experienced Merger Partner and Strong Integration Teams:<br><br>Strong regulatory relationships<br><br>Completed 7 bank acquisitions since formation<br><br>Closed or consolidated 48 banking centers<br><br>Track record of exceeding projected cost savings |
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| Thank you.<br>(c) Copyright Statement |
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