National Bank Holdings Corporation · NYSE:NBHC
National Bank — Q2 2014 Earnings Presentation
38 slides from National Bank's earnings presentation, Aug 11, 2014
Slide 1: Q2 2014 Investor Presentation
1 Q2 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: NBHC 2Q14 Snapshot
4 Raised $974 million in late 2009 Completed four acquisitions in 12 months ̶ Three failed banks, one 39 banking center purchase Profitable since inception of banking operations¹ Created meaningful scale and market share in attractive markets of Colorado and Kansas City MSA Fully integrate
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: Loan balance inflection point achieved early as a result of strong organic growth Net interest income stabilizing
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 Successful sales production initiatives Expanded sale
Slide 10: NBHC Markets and Family of Brands
10 NBHC Markets and Family of Brands Banking Centers (97) 50 banking centers 26 commercial bankers 9 NBH Capital Finance bankers 1.3% deposit market share across Colorado Ranks #6 in market share of Colorado headquartered banks 45 banking centers 14 commercial bankers 3.9% deposi
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-13. Front Range unemployment based on
Slide 12: Organic Loan Growth Strategy is Accelerating
12 $158 $518 $1,083 $1,261 $1,457 $2,116 $1,315 $771 $701 $630 $2,274 $1,833 $1,854 $1,962 $2,087 4QE11 4QE12 4QE13 1QE14 2QE14 Originated Purchased $1,189 $711 $350 $321 $288 Comm. 35% Agriculture 9% Owner Occupied 7% CRE 14% Resi 33% Consumer 2% Relationship banking model with a focus on the mar
Slide 13: Originated Loans Credit Quality
13 14% 8% 6% 5% 4% 3% 2% 2%2%1% <1%12% 3% 2% 1% <1% 5% 24% 4% 1% Originated Loans Credit Quality ($1.5 Billion Outstanding) Portfolio Characteristics 1Includes owner-occupied CRE. Consumer, 29% Non Owner- Occupied CRE, 12% Commercial & Industrial1, 59% YTD 2014 Net charge-offs of 6 bps FY13 Net
Slide 14: Credit Quality
14 $184.4 $159.7 $24.7 Inc. in Accr. Yield (Recog. Over Time) Impairments ( 310-30 Provision) Net Economic Impact Attractive $358 Million of 310-30 Loan Pools Strong Credit Quality of Non 310-30 Loans Strong Loss-Share Coverage of Total NPA’s Credit Quality ($ in millions) Net Charge-Offs Allowance
Slide 15: Deposit Composition and Cost of Deposits
15 1.05% 0.64% 0.41% 0.37% 0.37% FY11 FY12 FY13 1Q14 2Q14 Deposit Composition Cost of Deposits Time Deposit Maturity (2QE14) ($ in millions) Average Transaction Deposits & Repos Average Time Deposits Avg Rate 0.47% 0.58% 0.94% 1.22% 1.28% 1.31% Growing Low Cost Transaction Accounts $2,258 $2,402 $2,
Slide 16: Delivering on Commercial Banking Strategy
16 Delivering on Commercial Banking Strategy Invested in Commercial Capabilities Team of 56 experienced commercial bankers Committed to consistent top-grading of bankers (23 new commercial bankers recruited in 2013/2014) Established Capital Finance, Government Banking and Non Profit specialty
Slide 17: Delivering on Consumer & Small Business Banking Strategy
17 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 18: Acquisition Track Record
18 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 19: Disciplined Acquirer with Significant Future Opportunities
19 Disciplined Acquirer with Significant 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 $275mm¹ Management team experienced with M&A Well Positioned for Growth Potential In Footp
Slide 20: Financial Overview
Financial Overview i National Bank Holdings
Slide 21: Second Quarter 2014 Highlights
21 Grew the strategic loan portfolio by $159.1 million, or 38.9% annualized, driven by $266.8 million in originations, a 58.1% increase over the second quarter of 2013. Successfully exited $32.9 million, or 41.1% annualized, of the non-strategic loan portfolio. Added a net $12.2 million to acc
Slide 22: On the Path to 1% ROATA
22 0.26% 0.22% 0.24% 0.38% 0.50% 0.60% YTD 2Q13 YTD 2Q14 Reported Adjusted On the Path to 1% ROATA Adjusted1 ROATA $0.10 $0.08 $0.12 $0.21 $0.22 $0.29 YTD 2Q13 YTD 2Q14 Reported Adjusted Adjusted1 Diluted EPS Accounting “noise” is burning-off • Significant impact of FDIC indemnification asset amorti
Slide 23: Low-Risk Balance Sheet
23 Originated $1,457 Covered $46 Non-Covered $226 Covered $217Non- Covered $141 Loans 42% Investment Securities 46% Cash 4% Other Assets 8% Non 310-30 Loans $1,729mm 83% 310-30 Loan Pools $358mm 17% Total Assets Marked and Covered Loan Portfolio Low-Risk Balance Sheet 55% of total assets are in ca
Slide 24: Strong Covered Asset Performance
24 $171 $48 $45 $42 $36 $52 $39 $20 $15 $15 $223 $87 $64 $57 $51 YE11 YE12 YE13 1QE14 2QE14 Projected Improved Client Cash Flows Projected FDIC Loss-Share Billings Covered Assets Covered Assets Strong Covered Asset Performance Forecast Amortization of FDIC Indemnification Asset ($ in millions) Qua
Slide 25: Conservative Investment Portfolio
25 31-Dec-13 31-Mar-14 30-June-14 Book Value Available-for-Sale $ 1,816 $ 1,739 $ 1,656 Held-to-Maturity 622 598 571 "Locked-in" Gains (HTM) 20 18 17 Total Book Value $ 2,458 $ 2,355 $ 2,244 Available-for-Sale Unrealized Gains / (Losses) (31) (18) (9) Fair Market Value of Portfolio $ 2,427 $ 2,337 $
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. NBHC Balance Sheet Positioned to Benefit From Rising Rate Environment Net Interest Income Change1 (1.11)% 2.32 % 4.09 % (1.60)% 3.72 % 7.05 % (4.0)% 0.0 %
Slide 27: Net Interest Margin and P&L Metrics
27 Net Interest Margin1 Note: Please refer to the appendix for a reconciliation of non-GAAP financial metrics. ¹ Presented on a fully taxable equivalent basis using the statutory rate of 35% beginning in 2014. The tax equivalent adjustments included for 1Q14 and 2Q14 were $159 and $220 thousand, res
Slide 28: Operating Improvement Initiatives
28 $141 $174 $163 $152 $151 $14 $29 $17 $9 $10$1 $7 $4 $(3) $(3) $156 $210 $184 $158 $158 FY11 FY12 FY13 1Q14 Annualized 2Q14 Annualized Operating Problem Loan / OREO Other¹ Expenses Exited four non-core California banking centers Consolidated 32 retirement centers into existing traditional bank
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 YTD 2014 adjustments to ROATA. Stabilizing net interest income FDIC indem asset negative amortization ending < two years FDIC loss-share ending Reduction in work- out expenses
Slide 31: Key Long-Term Financial Targets
31 Fully Levered Targets Assets ~$10bn Efficiency Ratio <60% ROATA 1.00% - 1.25% ROATCE 13% - 16% Dividend Payout Ratio 25% Tier 1 Leverage 8% Key Long-Term Financial Targets
Slide 32: Investment Highlights
32 Investment Highlights Disciplined focus on building meaningful scale and market share in attractive markets Successfully rebuilding failed banks with organic growth strategy: Loan balance inflection point achieved early as a result of strong organic growth Net interest income stabilizing
Slide 33: Appendix
Appendix i National Bank Holdings
Slide 34: NBHC Management Team
34 Head of Business Services at Regions Financial, where he also led the transformation of wholesale lines of business Senior management roles in small business, commercial banking, private banking, corporate marketing and change management, and Management Operating Committee member at Bank of A
Slide 35: Board of Directors
35 Title Past ExperienceName Tim Laney Chairman, President and CEO Senior EVP and Head of Business Services of Regions Financial EVP and Management Operating Committee at Bank of America Ralph Clermont Lead Director / Chairman of the Audit and Risk Committee Managing Partner of the St. Louis o
Slide 36: Reconciliation of Non-GAAP Measures
36 ($ in millions, except per share) Reconciliation of Non-GAAP Measures As of and for the 3-months Ended As of and for the Six Months Ended 31-Mar-14 30-Jun-14 30-Jun-13 30-Jun-14 Total stockholders' equity $896 $864 $1,044 $864 Less: goodwill (60) (60) (60) (60) Add: deferred tax liability related
Slide 37: Reconciliation of Non-GAAP Measures (cont'd)
37 ($ in millions, except per share) Reconciliation of Non-GAAP Measures (cont’d) As of and for the Three Months Ended 31-Mar-14 30-Jun-14 30-Jun-13 30-Jun-14 0.12% 0.17% 0.19% 0.15% 0.00% 0.01% 0.00% 0.00% 0.07% 0.07% 0.07% 0.07% 0.19% 0.25% 0.26% 0.22% 0.40% 0.30% 0.18% 0.33% 0.05% 0.03% -0.11% 0.
Slide 38: As of and for the Three Months Ended As of and for the Six
38 As of and for the Three Months Ended As of and for the Six Months Ended 31-Mar-14 30-Jun-14 30-Jun-13 30-Jun-14 Reported non-interest income $(0.4) $2.2 $14.5 $1.8 Less: impact of FDIC indemnification asset amortization 7.6 6.0 7.6 13.6 Less: impact of FDIC loss sharing (income) expense 1.0 0.6 (
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