National Bank Holdings Corporation · NYSE:NBHC
National Bank — Q4 2015 Earnings Presentation
34 slides from National Bank's earnings presentation, Feb 1, 2016
Slide 1: Forward-Looking Statements
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,” “poten
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Forward-tooking statements contain. ‘words such a8 “anticpate,"“believe,” “ean,” “would"*should"*could"“may,” “predict,” “sek,” “potential,”“
Slide 3: Company Overview: NBHC 4Q15 Snapshot
Created meaningful scale and market share in attractive markets of Colorado and Kansas City MSA Successful loan growth strategies with quality loan originations of $1.0 billion per year Maintaining excellent credit quality YTD Non 310-30 loan charge-offs of just 12 basis points Profitability emergin
Slide 4: Investment Highlights
Investment Highlights Successfully rebuilding failed banks with organic growth strategy: Record loan originations of $967 million in 2015, increase of 11% over prior year Client driven deposit base of $4 billion, led by 10% YoY transaction deposit growth Profitability emerging through the diminishin
Slide 5: Strategic Execution Highlights
Strategic Execution Highlights Increasing Loan Originations $967 million 2014: $869 million 2013: $714 million 2012: $434 million Loan Growth 32% $535 million Originated Loan Growth DDA Growth 13% $98 million Average DDA Growth Low Net Charge-Offs 12 bps Buybacks $440 million 42% Shares repurchased
Slide 6: NBHC Markets and Family of Brands
NBHC Markets and Family of Brands 53 banking centers (pro forma for Q2 2016 consolidations – 46 banking centers) Ranks #5 in deposit market share in the state of Colorado for local banks Population: Front Range – 4.5 million Favorable demographics vs. national levels in: Unemployment - Household Inc
Slide 7: Originated portfolio has excellent credit quality
Originated portfolio has excellent credit quality with 0.12% non 310-30 net charge-offs YTD 2015 Relationship banking model with a focus on the markets we serve Total loans grew 20% over prior year Strategic loans grew 26% YoY from Q4 2014 Total Loan Composition Total Loans ($ in millions) New Loan
Slide 8: Loans Credit Quality ($2.6 Billion Outstanding)
Loans Credit Quality ($2.6 Billion Outstanding) Portfolio Characteristics Strong Credit Quality of Originated Loans Non-Accrual Loans NA’s/Originated Loans $ in millions 1Includes owner-occupied CRE. Consumer, 27.7% Non Owner-Occupied CRE, 17.1% Commercial & Industrial1, 55.2% YTD non 310-30 net cha
Slide 9: $147 Million Energy Portfolio
$147 Million Energy Portfolio Energy Portfolio Profile 5.7% of loans, 3.4% of earning assets, 28.3% of Bank tier 1 capital Decreased $29 million or 16% from prior year end Granular - $5.2mm avg. balance per relationship Energy Production and Midstream sectors are performing well with no non-performi
Slide 10: Attractive $203 Million of 310-30 Loan Pools
Attractive $203 Million of 310-30 Loan Pools Strong Asset Credit Quality Provision for Loan Losses on Non 310-30 Loans Credit Quality ($ in millions) Net Charge-Offs Allowance for Loan Losses Nonperforming Non 310-30 Loans Nonperforming Assets Strong Credit Quality on $2.4 Billion of Non 310-30 Loan
Slide 11: Deposit Composition and Cost of Deposits
Deposit Composition Cost of Deposits Strong Transaction Deposit Growth ($ in millions) Average Transaction Deposits & Repos1 Average Time Deposits1 Growing Low Cost Transaction Accounts 17% (58)% (69) bps YTD Average transaction deposits and client repurchases increased $237.9 million from 2014, or
Slide 12: Deposit Composition (continued)
ng Low Cost Demand & NOW =Savings&MM -RetalTime = Jumbo Tine sas ay $503 4200 sass see saat 1% 06 1% 1% rol ™ co = ea a on» its rity if if iss Sy ge Yer ver vers yew YeIs wth e transaction deposits and client repurchases increased $237.9 million from 2014, 105% (2pm or 9.5% * YTD Average deposits de
Slide 13: Fourth Quarter 2015 Highlights
Grew total loans by $64.5 million, or 10.1% annualized, driven by $238.1 million in fourth quarter originations offset by higher than normal pay-downs. Strategic loans at December 31, 2015 increased a strong $507.2 million, or 25.9% since December 31, 2014 on the strength of $966.9 million in loan o
Slide 14: Building the Path to 1% ROATA
Noise from FDIC loss-share agreements terminated during Q4 2015 Reaching revenue inflection point as originated loans are outpacing the impact of decreasing 20% yielding ASC 310-30 acquired loans ($13.6 million decrease 2014 to 2015) Expenses managed down every year; 2012 totaled $210 million, down
Slide 15: Low-Risk Balance Sheet
Non 310-30 Loans $2,588mm 92% 310-30 Loan Pools $203mm 8% Total Assets Marked and Covered Loan Portfolio Low-Risk Balance Sheet 38% of total assets are in cash and securities (low-risk, high-quality agency residential MBS and CMOs) Low risk-weighted assets to average assets ratio of 65% 98% of total
Slide 16: Conservative Investment Portfolio
31-Dec 14 31-Dec 15 Book Value Available-for-Sale $ 1,484 $1,168 Held-to-Maturity 516 416 "Locked-in" Gains (HTM) 15 11 Total Book Value $ 2,015 $1,596 Available-for-Sale Unrealized Gains / (Losses) (5) (11) Held-to-Maturity Unrealized Gains / (Losses) 4 1 Fair Market Value of Portfolio $ 2, 014 $1,
Slide 17: Balance Sheet Positioned to Benefit From Rising Rates
. 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 to reflect less excess cash as a result of reducing excess capital to 9% leverage ratio. NBHC Balance Sheet Positioned to Ben
Slide 18: Net Interest Margin
Net Interest Margin1 ¹ Presented on a fully taxable equivalent basis using the statutory rate of 35% beginning in 2014. The tax equivalent adjustments included for FY13, FY14, FY15, 1Q15, 2Q15, 3Q15, and 4Q15 were $0, $930, $2,695, $395, $550, $822 and $928 thousand, respectively. Strong Yields on L
Slide 19: Non-Interest Income & Expense
Non-Interest Income & Expense 1 Adjusted non-interest income excludes gain on sale of securities, FDIC indemnification asset amortization/ gain on termination of FDIC agreement, FDIC loss sharing income (expense), gain on previously charged-off acquired loans and OREO related write-ups and bargain p
Slide 20: Annual Non-Interest Expense
(Sin miions) Annual Non-Interest Expense 4% $210 sie 154 “ 144% $150 S88 133% | | a) rye Fis rv rvs Non inorestincome =m Adjusted NII Ad, Fee Income Rao Operating Problem Asset Workouts Othe* Aste non.neret income exude gn on si of secures, FOC ndmncaton set smortza8 gan on mination of FOI agreement
Slide 21: Path to 1% ROATA
Path to 1% ROATA 1Please refer to the appendix for a reconciliation of non-GAAP financial metrics. 2Represents 4Q15 YTD adjustments to ROATA. FDIC indem asset negative amortization ending in Q4 2015 FDIC loss share ended Reduction in work-out expenses Ramp-up of loan production Maintain low cost of
Slide 22: Key Financial Targets
Fully Levered Targets Assets ~$8bn–$10bn Efficiency Ratio <60% ROATA >1.00% ROATCE 12%–14% Dividend Payout Ratio 25% Tier 1 Leverage 9% Key Financial Targets
Slide 23: Investment Highlights
Investment Highlights 1Please refer to the appendix for a reconciliation of non-GAAP financial measures. Successfully rebuilding failed banks with organic growth strategy: Record loan originations of $967 million in 2015, increase of 11% over prior year Client driven deposit base of $4 billion, led
Slide 24: Investment Highlights
nvestment Highlight = Successfully rebuilding failed banks with organic growth strategy: a Record loan originations of $967 millioi in 2015, increase of 11% over prior year a Client driven deposit base of $4 billion, led by 10% YoY transaction deposit growth a Profitability emerging through the dimi
Slide 25: Management Team
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 America;
Slide 26: Board of Directors
Title Past Experience Name 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 office of
Slide 27: Our Markets are Attractive: Key Statistics by MSA
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-15. Front Range unemployment based on a
Slide 28: Disciplined Acquirer with Future Opportunities
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 $135mm¹ Management team experienced with M&A Completed Acquisition of Pine River Valley Bank Potential In Footp
Slide 29: Guide to Common Sense Banking
GUIDE TO COMMON SENSE BANKING OUR PROMISE BANK WITH COMMON SENSE NBH Bank champions a new era of common sense banking by building relationships with local communities as the accountable, straight-shooting and insightful alternative to big box banking-as-usual. HOW WE DELIVER ON OUR PROMISE WE PUT PE
Slide 30: Reconciliation of Non-GAAP Measures
($ in millions) Reconciliation of Non-GAAP Measures 31-Dec-14 30-Sep-15 31-Dec-15 31-Dec-14 31-Dec-15 Net income 2.3 $ 1.6 $ 3.3 $ 9.2 $ 4.9 $ Add: impact of core deposit intangible amortization expense, after tax 0.8 0.9 0.8 3.3 3.3 Net income adjusted for impact of cored deposit intangible amortiz
Slide 31: Reconciliation of Non-GAAP Measures (cont'd)
($ in millions) Reconciliation of Non-GAAP Measures (cont’d) 31-Dec-14 30-Sep-15 31-Dec-15 31-Dec-14 31-Dec-15 Net interest income 42.6 $ 38.7 $ 39.9 $ 170.2 $ 156.9 $ Add: impact of taxable equivalent adjustment 0.3 0.8 0.9 0.9 2.7 Adjusted net interest income, fully taxable equivalent (non-GAAP) 4
Slide 32: Reconciliation of Non-GAAP Measures (cont'd)
($ in millions, except per share) Reconciliation of Non-GAAP Measures (cont’d) 31-Dec-14 30-Sep-15 31-Dec-15 31-Dec-14 31-Dec-15 Adjustments to diluted earnings per share: Income per share - diluted 0.06 $ 0.05 $ 0.11 $ 0.22 $ 0.14 $ Adjustments to diluted earnings per share (non-GAAP) (1) 0.13 0.12
Slide 33: Reconciliation of Non-GAAP Measures (cont'd)
Reconciliation of Non-GAAP Measures (cont’d) ($ in millions, except per share) 31-Dec-14 30-Sep-14 31-Dec-15 Tangible common equity calculations: Total shareholder's equity 794.6 $ 621.2 $ 617.5 $ Less goodwill and intabgible assets, net (76.5) (73.4) (72.1) Add: deferred tax liability related to go
Slide 34: Reconciliation of Non-GAAP Measures (cont'd)
(Sin milions, except per share) Tabet _s0Septd sree ts ‘Tangible common equity calculations: Total shareholder's equity S 7946 $ 6212 $ 6175 Less goodwill and intabgible assets, net (765) (734) (72.4) ‘Add: deferred taxliablity related to goodwill 62 74 78 ‘Tangible common book value per share calcu
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