National Bank Holdings Corporation · NYSE:NBHC
National Bank — Q4 2014 Earnings Presentation
39 slides from National Bank's earnings presentation, Feb 6, 2015
Slide 1: Q4 2014 Investor Presentation
1 Q4 2014 Investor Presentation Exhibit 99.1
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements This presentation 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,” “pot
Slide 3: Company Overview
Company Overview i National Bank Holdings
Slide 4: Company overview and key statistics
4 Began banking operations in 2010/2011 with four acquisitions in 12 months (three failed banks) Created meaningful scale and market share in attractive markets of Colorado and Kansas City MSA Successful organic asset generation strategy with quality loan originations averaging over $200mm/qua
Slide 5: Investment Highlights
5 Investment Highlights Disciplined focus on building meaningful scale and market share in attractive markets Successfully rebuilding failed banks with organic growth strategy: Strong loan growth momentum: originations of $869mm in 2014, $714mm in 2013 and $434mm in 2012 Net interest income
Slide 6: Guide to Common Sense Banking
GUIDE TO COMMON SENSE BANKING a OUR PROMISE BANK WITH COMMON SENSE NBH Bank champions a new era of common sense banki relationships with local communities as the accountable, straight, “roating jand insightful alternative to big box banking-as-usual. ELIVER ON OUR PROM WEFOCUSON WE PUT NEEDS-BASED W
Slide 7: Executive Team
7 Executive Team Tim Laney Chairman, President & Chief Executive Officer Brian Lilly Richard Newfield Chief Financial Officer Chief Risk Officer Zsolt Bessko Tom Metzger Chief Administrative Officer Chief of Enterprise Technology & Integration & General Counsel Market President, Bank Midwest & Hillc
Slide 8: Our Objectives
8 Acquisition Growth Organic Growth Attractive Markets Disciplined Acquisitions Client-Centered, Relationship-Driven Enhanced Product Offerings Scalable Operating Platform & Efficiencies Leading Regional Bank Holding Company Our Objectives Opportunistic Capital Management
Slide 9: Strategic Execution Highlights
9 Strategic Execution Highlights Expanded Efficiency Initiatives Managed Capital Opportunistically Further Franchise Development Expanded product offerings Launch of Capital Finance Team Launch of Specialty Gov’t and Non-Profit Banking Unit Enhancements to Small Business Banking Successful sal
Slide 10: NBHC Markets and Family of Brands
10 NBHC Markets and Family of Brands Banking Centers (97) 50 banking centers 22 commercial bankers 11 NBH Specialty Banking 1.4% deposit market share across Colorado Ranks #5 in market share of Colorado headquartered banks 45 banking centers 14 commercial bankers 3.6% deposit mar
Slide 11: Key Statistics by MSA
11 Key Statistics by MSA Source: FHFA, SNL Financial, U.S. Census, U.S. Bureau of Economic Analysis. Note: “Front Range” statistics include populated weighted values for Denver, Boulder, Colorado Springs, Fort Collins, and Greeley MSAs. Deposit data as of 30-Jun-14. Front Range unemployment based on
Slide 12: Organic Loan Growth Strategy is Accelerating
12 $518 $1,083 $1,645 $1,315 $771 $517 $1.8 $1.9 $2.2 4QE12 4QE13 4QE14 Originated Purchased $711 $350 $202 4QE12 4QE13 4QE14 Comm. 39% Agriculture 7% Owner Occupied 7% CRE 14% Resi 31% Consumer 2% Originated portfolio has excellent credit quality with 0.06% non 310-30 net charge-offs FY14 Relat
Slide 13: Loans Credit Quality
13 8% 6% 5% 5% 5% 3% 3% 2% 1% 1%1% 10%5% 3% 2% 1%>1% 0% 7% 27% 2% 2% Loans Credit Quality ($2.2 Billion Outstanding) Portfolio Characteristics Note: Concentration chart includes unfunded commitments. 1Includes owner-occupied CRE. Consumer, 30.9% Non Owner- Occupied CRE, 18.6% Commercial & Industrial
Slide 14: $176 Million Energy Portfolio
14 $176 Million Energy Portfolio Energy Portfolio Profile 8% of loans, 4% of earning assets Granular - $7mm avg. balance per relationship Strong credit quality at 12/31/14 Prolonged/further pricing pressure could increase stress on energy clients; however, client capital and liquidity, as we
Slide 15: Credit Quality
15 $ 210.4 $ 24.3 $ 186.2 Inc. in Accr. Yield (Recog. Over Time) Impairments ( 310-30 Provision) Net Economic Impact Attractive $280 Million of 310-30 Loan Pools Strong Credit Quality of Non 310-30 Loans Strong Loss Share Coverage of Total NPA’s Credit Quality ($ in millions) Net Charge-Offs Allowan
Slide 16: Deposit Composition and Cost of Deposits
16 0.64% 0.41% 0.37% FY12 FY13 FY14 Deposit Composition Cost of Deposits Time Deposit Maturity (YE14) ($ in millions) Average Transaction Deposits & Repos Average Time Deposits Avg Rate 0.51% 0.71% 0.89% 1.05% 1.24% 1.32% Growing Low Cost Transaction Accounts $2,402 $2,453 $2,520 4Q12 4Q13 4Q14 $1,8
Slide 17: Delivering on Commercial Banking Strategy
17 Delivering on Commercial Banking Strategy Invested in Commercial Capabilities Team of 53 experienced commercial bankers Committed to consistent top-grading of bankers (39 new commercial bankers recruited in 2013/2014) Established Capital Finance, Government and Non-Profit Banking specialty
Slide 18: Delivering on Consumer & Small Business Banking Strategy
18 Delivering on Consumer & Small Business Banking Strategy Optimized Banking Center Distribution Exited California and retirement center locations Rolled out teller staffing efficiency model Consolidated management responsibilities Built culture of accountability Well Positioned For Growth
Slide 19: Disciplined Acquirer with Future Opportunities
19 Disciplined Acquirer with Future Opportunities M&A Focus Target Geographies Positioned to consolidate targets along the I-25, I-70 and I-35 corridors across CO, KS and MO Excess capital of $200mm¹ Management team experienced with M&A Announced Acquisition of Pine River Bank Potential In Foo
Slide 20: Financial Overview
Financial Overview i National Bank Holdings
Slide 21: Fourth quarter highlights
21 Grew the strategic loan portfolio by $40.5 million, or 8.4% annualized, driven by $182.2 million in fourth quarter originations. The originations were offset by higher than normal pay-downs and early pay-offs, particularly in the agriculture portfolio. Strategic loans at December 31, 2014 incre
Slide 22: On the Path to 1% ROATA
22 0.20% 0.26% 0.37% 0.40% 0.57% 0.66% FY13 FY14 Reported Adjusted On the Path to 1% ROATA Reported and Adjusted1 ROATA $0.14 $0.22 $0.37 $0.45 $0.51 $0.67 FY13 FY14 Reported Adjusted Reported and Adjusted1 Diluted EPS Accounting “noise” is burning-off: • Significant impact of non-cash FDIC indemnif
Slide 23: Low-Risk Balance Sheet
23 Originated $1,647 Covered $33 Non-Covered $202 Covered $161 Non- Covered $119 Originated 76% Acquisition Marked 15% Acquisition Marked & Covered 9% 34% 38% 45% 43% 50% 42% 14% 4% 5%2% 1% 1% 7% 7% 7% 4Q12 4Q13 4Q14 Loans Investment Securities Cash FDIC Indemnification Asset Other Assets ($ in bill
Slide 24: Strong Covered Asset Performance
24 $48 $45 $17 $39 $20 $22 $87 $64 $39 YE12 YE13 YE14 Projected Improved Client Cash Flows Projected FDIC Loss-Share Billings Covered Assets Covered Assets Strong Covered Asset Performance FDIC Loss-Share Related ($ in millions) Quarterly valuations continue to show cash flow improvements in cover
Slide 25: Investment Securities Portfolio
25 37% 4% 58% 1% Mortgage Backed Securities - Fixed Rate Mortgage Backed Securities - ARMs Collateralized Mortgage Obligations - Fixed Rate Collateralized Mortgage Obligations - Floating Rate 31-Dec-13 31-Dec14 Book Value Available-for-Sale $ 1,816 $ 1,484 Held-to-Maturity 622 516 "Locked-in" Gains
Slide 26: Net Interest Income Sensitivity
26 . 1 12-month simulated net interest income impact using management projected balance sheet and an immediate parallel shift in the yield curve. Rate risk measures are adjusted as of 31-Dec-14 to reflect less excess cash as a result of reducing excess capital to 10% leverage ratio. NBHC Balance She
Slide 27: Net interest income, non-interest income and margin
27 $204.3 $179.0 $170.2 $43.3 $44.4 $41.9 $42.6 FY12 FY13 FY14 1Q14 2Q14 3Q14 4Q14 $ 37.4 $ 20.2 $(1.7) $(0.4) $ 2.2 $ 1.6 $(5.1) $31.2 $30.2 $30.4 $6.9 $7.5 $7.9 $8.0 13.3 % 14.4 % 15.1 % 13.8 % 15.1 % 15.9 % 15.9 % FY12 FY13 FY14 1Q14 2Q14 3Q14 4Q14 Non-interest income Adjusted NII Adj. Fee Income
Slide 28: Expenses and efficiency actions
28 $41 $42 $41 $39 $38 $38 $37 $38 $7 $3 $2 $4 $2 $3 $2 $(9)$(1) $ 0 $ 4 $ 1 $(1) $(1) $(1) $ 4 $48 $45 $47 $44 $39 $40 $38 $33 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Operating Problem Loan / OREO Other¹ $174 $163 $151 $29 $17 $(2) $7 $4 $1 $210 $184 $150 FY12 FY13 FY14 Operating Problem Loan / ORE
Slide 29: Looking Ahead
Looking Ahead i National Bank Holdings
Slide 30: Path to 1% ROATA
30 Path to 1% ROATA 1Please refer to the appendix for a reconciliation of non-GAAP financial metrics. 2Represents FY14 adjustments to ROATA. Stabilizing net interest income FDIC indem asset negative amortization ending < two years FDIC loss share ending Reduction in work- out expenses Ramp
Slide 31: Key 2017 Financial Targets
31 Fully Levered Targets Assets ~$10bn Efficiency Ratio <60% ROATA ≥1.00% ROATCE 12% - 14% Dividend Payout Ratio 25% Tier 1 Leverage 9% Key 2017 Financial Targets
Slide 32: Investment Highlights
32 Investment Highlights 1Please refer to the appendix for a reconciliation of non-GAAP financial measures. Disciplined focus on building meaningful scale and market share in attractive markets Successfully rebuilding failed banks with organic growth strategy: Strong loan growth momentum: orig
Slide 33: Appendix
Appendix i National Bank Holdings
Slide 34: Acquisition transactions summary
34 2.2% 3.0% 3.5% Bank Midwest National Branch Deals Midwest Branch Deals Bank Midwest Hillcrest Bank Bank of Choice CBoC Source: SNL Financial. 1 Defined as capital deployed divided by post mark-to-market adjusted fair value of net assets (bargain purchase gain or goodwill) plus capital deployed. 2
Slide 35: Executive team experience
35 Head of Business Services at Regions Financial, where he also led the transformation of wholesale lines of business Senior management roles in small business, commercial banking, private banking, corporate marketing and change management, and Management Operating Committee member at Bank of A
Slide 36: Board of Directors
36 Title Past ExperienceName Tim Laney Chairman, President and CEO Senior EVP and Head of Business Services of Regions Financial EVP and Management Operating Committee at Bank of America Ralph Clermont Lead Director / Chairman of the Audit and Risk Committee Managing Partner of the St. Louis o
Slide 37: Reconciliation of Non-GAAP Measures
37 ($ in millions) Reconciliation of Non-GAAP Measures 31-Mar-14 30-Jun-14 30-Sep-14 31-Dec-14 31-Dec-13 31-Dec-14 Net income 1.4$ 2.1$ 3.3$ 2.3$ 6.9$ 9.2$ Add: impact of core deposit intangible amortization expense, after tax 0.8 0.8 0.8 0.8 3.2 3.3 Net income adjusted for impact of cored deposit i
Slide 38: Reconciliation of Non-GAAP Measures (cont'd)
38 ($ in millions) Reconciliation of Non-GAAP Measures (cont’d) 31-Mar-14 30-Jun-14 30-Sep-14 31-Dec-14 31-Dec-13 31-Dec-14 Net interest income 43.3$ 42.4$ 41.9$ 42.6$ 179.0$ 170.2$ Add: impact of taxable equivalent adjustment 0.2 0.2 0.2 0.3 - 0.9 Adjusted net interest income, fully taxable equival
Slide 39: Reconciliation of Non-GAAP Measures (cont'd)
39 ($ in millions, except per share) Reconciliation of Non-GAAP Measures (cont’d) 31-Mar-14 30-Jun-14 30-Sep-14 31-Dec-14 31-Dec-13 31-Dec-14 Adjustments to diluted earnings per share: Income per share - diluted 0.03$ 0.05$ 0.08$ 0.06$ 0.14$ 0.22$ Adjustments to diluted earnings per share (non-GAAP)
National Bank Holdings — Q4 2014 Earnings Presentation on 6ix