National Bank Holdings Corporation · NYSE:NBHC
National Bank — Q3 2017 Earnings Presentation
34 slides from National Bank's earnings presentation, Nov 6, 2017
Slide 1: Q3 2017 Investor Presentation
Q3 2017 Investor Presentation
Slide 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,” “potential,” “will,” “estimate,”
Slide 3: About Non-GAAP Financial Measures
3 About Non-GAAP Financial Measures Certain of the financial measures and ratios we present, including “tangible book value” and “tangible book value per share” metrics, are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting pr
Slide 4: Company Overview
Company Overview i National Bank Holdings
Slide 5: Company Overview: A Foundation for Growth
Company Overview 5 A Foundation for Growth Began banking operation in 2010 with four acquisitions in 12 months Created meaningful scale and market share in attractive markets of Colorado and Greater Kansas City Region Announced Peoples, Inc. acquisition. See pages 14-17 Granular and well diversified
Slide 6: Key Actions and Results
6 Key Actions and Results Accelerated organic growth $922 million in TTM(1) loan originations driven by deeper market penetration Relationship banking focused strategies Organic loan growth covered $32 million or 20% decrease in acquired 310-30 loans since September 30, 2016 Grew Q3 2017 average tra
Slide 7: NBHC Markets and Family of Brands
7 NBHC Markets and Family of Brands ONE Charter, THREE Flags Attractive and Growing Markets CO MO Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver Denver
Slide 8: Key Statistics by MSA
Key Statistics by MSA 8 We Operate in Very Attractive Markets ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü Equal or Better Than U.S. Average ü % % % U.S. 2018 Population (mm) 326.5 2.9 4.6 2.1 Projected Population 5yr CAGR (‘18-’23E) 0.7 % 1.6 % 1.5 % 0.6 % 2018 Median Household Income $61.0K $
Slide 9: Organic Loan Growth is Accelerating
Total Loans 9 Organic Loan Growth is Accelerating Total Loan Composition New Loan Originations Commercial Related 71% ($ in millions; totals in billions) (1) Loans acquired from troubled banks $3.1 $2.9 1Q 2Q 3Q 15.2% annualized growth $181 $270 $197 Portfolio built on a relationship banking strateg
Slide 10: Uniquely Diversified $3.1 Billion Loan Portfolio
10 Uniquely Diversified $3.1 Billion Loan Portfolio Consumer, 24.1% Commercial & Industrial, 58.1% Non Owner-Occupied CRE, 17.8% Granular and Well Diversified Loan Portfolio Self-imposed concentration limits ensure a granular and diverse loan portfolio and protects against downside risk to any parti
Slide 11: Strong Credit Quality on Non 310-30 Loans
Strong Credit Quality on $3.0 Billion of Non 310-30 Loans 11 Stable Credit Quality Provision for Loan Losses on Non 310-30 Loans ($ in millions) High Yielding $126 Million 310-30 Loan Pools Stable Asset Credit Quality Annualized Net Charge-offs Allowance for Loan Losses(1) Change in Allowance Provis
Slide 12: Non-performing Loans Credit Quality
Non-performing Loans 12 Credit Quality Remains Strong in Non-Energy Portfolio Non 310-30 Classified Loans ($ in millions) Non-performing Assets Non-performing Asset Composition Non-performing Energy loans – 0.39% Acquired OREO OREO has been a source of income with net gains of $2.3 million and $4.1
Slide 13: Average Transaction Deposits Growing
Average Transaction Deposits 13 Growing Low Cost Transaction Accounts Average Time Deposits Deposit Composition Low Cost Deposits 13% (27)% 71% Non-Time ($ in billions) Average transaction deposits remain strong in attractive markets of Colorado and Greater Kansas City Region Grew YoY average deposi
Slide 14: Acquisition of Peoples, Inc.
Acquisition of Peoples, Inc. 14
Slide 15: Transaction Rationale: Strategic and Accretive
15 Transaction Rationale: Strategic and Accretive Transaction Rationale: Strategic and Accretive Transaction Rationale: Strategic and Accretive Enhances Our Scale in the Demographically Attractive Colorado Front Range and the Greater Kansas City Region $865 million of assets, $483 million of loans h
Slide 16: Summary of Terms
16 Summary of Terms Transaction Rationale: Strategic and Accretive Transaction Rationale: Strategic and Accretive Transaction Summary Acquisition of 100% of the common stock of Peoples, Inc. Peoples, Inc. to divest or wind down national mortgage business operated out of Kansas-based Peoples Bank pri
Slide 17: Financial impact and pro forma capital ratios
Cost savings of approximately 12%(1) of Peoples, Inc. expense base 75% phased-in in 2018, 100% in 2019 and thereafter 21% cost savings from core bank expense base (excluding retained mortgage business) Revenue enhancements expected, but none assumed Gross credit mark equal to existing loan loss rese
Slide 18: Adds penetration in the Greater Kansas City Region
18 Adds penetration in the Greater Kansas City Region(3) #2 Best City for Jobs (CBS MoneyWatch) 4th “Hot Startup” City (Entrepreneur Magazine) #15 on “50 Best Cities to Live” List (Bloomberg) #2 “Top Five Cities with Up-and-Coming Downtown” (Fortune) Expands presence in Overland Park, KS - central h
Slide 19: Pro forma loan portfolio and deposit mix
C&I 11.6% OO CRE 19.3% Res RE 21.6% Consumer 9.2% C&D 11.3% Other CRE 26.9% 19 Loan Portfolio Deposit Mix Peoples, Inc. NBHC Pro Forma(1) Peoples, Inc. NBHC Pro Forma Gross Loans HFI: $2,954mm Yield on Loans: 4.57% Total Deposits: $3,968mm Gross Loans HFI: $483mm Yield on Loans: 5.00% Gross Loans HF
Slide 20: Financial Overview
Financial Overview i National Bank Holdings
Slide 21: 3Q17 results summary
3Q17 EPS of $0.26 included a $0.10 negative impact from People’s merger costs, lower OREO gains against problem asset workout costs, and the additional provision for loan loss expense of $2.9 million related to a previously identified energy loan. Underlying EPS results driven by increasing revenues
Slide 22: Fully Diluted EPS
Fully Diluted EPS 22 Steady Progress Towards Long-term Profitability Targets YTD17 EPS of $0.89 and 3Q17 EPS of $0.26 driven by increasing revenues and prudent expense management Achieved revenue inflection point in 2017 as originated loans outpaced the impact of decreasing high yielding ASC 310-30
Slide 23: Net Interest Income
Net Interest Income(1) Replacing High-Yielding Acquired Loans with Originations 23 P&L Metrics Net Interest Margin(1) Strong Yields on Loan Portfolio Comments Fully taxable equivalent net interest income YTD grew $0.8 million due to benefiting from the continued shift of earning assets into the orig
Slide 24: Net Interest Income Sensitivity
24 Net Interest Income Sensitivity NBHC Balance Sheet Positioned to Benefit From Rising Rate Environment Net Interest Income Change(1) (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
Slide 25: Non-Interest Income & Expense
Steady trend of decreasing expenses over the years. Since 2012, expenses have decreased $74 million or 35.1%. Non-Interest Income 25 Non-Interest Income & Expense Non-Interest Expense Comments (1) Non-interest income includes: gain from sale of banking centers, gain on sale of building, and OREO inc
Slide 26: Conservative Investment Portfolio
26 Conservative Investment Portfolio 99.7% of portfolio is U.S. agency backed Duration improved to 2.9 years OCI fluctuations minimized by 25% of portfolio in Held-To-Maturity Investment portfolio mainly in run-off mode since Q4-13; using cash flows to fund loan growth Stable yields helped by limite
Slide 27: Long-Term Financial Goals
27 Long-Term Financial Goals Assets ~$6bn–$8bn Efficiency Ratio <60% ROATA ≥1.00% ROATCE 12%–14% Dividend Payout Ratio Approximation 30% Tier 1 Leverage 9%
Slide 28: Investment Highlights
28 Investment Highlights Attractive markets of Colorado and Greater Kansas City Region with a presence in Austin and Dallas, Texas and adding New Mexico Diversified revenue stream with high-performing, relationship-centric business model focused on earning the business of individuals, and small and
Slide 29: Appendix
Appendix Bi National Bank Holdings
Slide 30: NBHC Management Team
30 NBHC Management Team Head of Business Services at Regions Financial, where he also led the transformation of wholesale lines of business Senior management roles in small business, commercial banking, private banking, corporate marketing and change management, and Management Operating Committee me
Slide 31: Accomplished Board of Directors
31 Accomplished Board of Directors Name Title Experience Tim Laney Chairman, President and CEO Former Senior EVP and Head of Business Services of Regions Financial Former EVP and Management Operating Committee member at Bank of America Ralph Clermont Lead Director / Chairman of the Audit and Risk Co
Slide 32: Guide to Common Sense Banking
GUIDE TO COMMON SENSE BANKING a OURPROMISE BANK WITH COMMON SENSE NBH Bank champions a new era of common sense banking by building relationships with local communities as the accountable, straight-shooting and insightful alternative to big box banking-as-usual HOW WE DELIVER ON OUR PROMISE WE PUT ‘W
Slide 33: Reconciliation of Non-GAAP Measures
33 Reconciliation of Non-GAAP Measures ($ in millions, except per share) As of and for the years ended 30-Sep-16 30-Jun-17 30-Sep-17 30-Sep-16 30-Sep-17 31-Dec-16 Return on Average Tangible Assets and Return on Average Tangible Equity: Net income 8.3 $ 9.2 $ 7.2 $ 13.1 $ 24.7 $ 23.1 $ Add: impact of
Slide 34: Reconciliation of Non-GAAP Measures (cont'd)
34 Reconciliation of Non-GAAP Measures (cont’d) ($ in millions, except per share) 30-Sep-17 Tangible common equity calculations: Total shareholders' equity 550.2 $ Less: goodwill and intangible assets, net (62.5) Add: deferred tax liability related to goodwill 10.5 Tangible common equity (non-GAAP)
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