DENVER, May 16, 2020 – Shares of National Bank Holdings Corporation (NYSE: NBHC) lost -0.35% to $23.10. The stock grabbed the investor’s attention and traded 821.242K shares as compared to its average daily volume of 281.49K shares.
National Bank Holdings Corporation (NYSE: NBHC) reported Net income totaled a record $21.60M during the third quarter of 2019, or $0.69 per diluted share, contrast to $20.30M during the last quarter, or $0.64 per diluted share. The return on average tangible assets increased seven basis points to 1.51% and the return on average tangible common equity increased 23 basis points to 13.68%.
Net Interest Income:
Fully taxable equivalent net interest income totaled $53.00M and reduced $0.70M, or 5.4% annualized, driven by lower earning asset yields. Fully taxable equivalent net interest margin narrowed nine basis points from the prior quarter to 3.91%, entirely driven by the two 25 basis point fed funds rate cuts. The yield on earnings assets reduced 12 basis points and was slightly offset by a one basis point decrease in the cost of funds.
Originated loans and attained loans not accounted for under 310-30 (“attained loans”) ended the quarter at $4.30B, increasing $75.00M, or 7.0% annualized, led by originated and attained commercial loan growth of $69.10M, or 9.6% annualized. Total third quarter loan originations were $319.20M, led by commercial loan originations of $187.30M.
Attained loans accounted for under 310-30 totaled $57.20M at September 30, 2019 and reduced $3.40M from the second quarter of 2019.
Asset Quality and Provision for Loan Losses:
Provision for loan losses of $5.70M was recorded during the quarter to support originated loan growth and net charge-offs, and included $4.20M for one formerly identified attained commercial loan that was placed on non-accrual last quarter. Net charge-offs for the quarter totaled $7.10M, of which $6.60M was related to the loan described above. Annualized net charge-offs on originated and attained loans totaled 0.66%, increasing from 0.02% in the prior quarter, driven by the attained commercial loan charge-off. Non-performing originated and attained loans (comprised of non-accrual loans and non-accrual TDRs) improved to 0.58% of total originated and attained loans, contrast to 0.79% at June 30, 2019. The originated and attained allowance for loan losses was 0.89% of originated and attained loans, contrast to 0.93% in the prior quarter.
Average non-interest bearing demand deposits increased $37.60M, or 12.9% annualized. Average transaction deposits (defined as total deposits less time deposits) increased $46.40M, or 5.1% annualized, and average total deposits increased $35.50M to $4.70B, or 3.0% annualized. The cost of transaction deposits totaled 0.39%, a decrease of one basis point from the prior quarter. The cost of total deposits totaled 0.67%, a boost of one basis point from the prior quarter and 20 basis points over the third quarter of last year. The mix of transaction deposits to total deposits improved to 77.5% contrast to 76.9% at June 30, 2019, and the mix of non-interest bearing demand deposits to total deposits improved to 26.1% contrast to 24.9% at June 30, 2019.
Non-interest income totaled $24.80M and increased $4.10M mainly because of higher mortgage banking income of $4.30M, driven by higher levels of 1-4 family mortgage loans sold in the secondary market. Service charges and bank card fees remained consistent and other non-interest income reduced $0.20M.
Non-interest expense totaled $43.80M and reduced $2.70M from the prior quarter, mainly driven by gains on the sale of OREO properties totaling $6.50M, partially offset by higher residential banking commissions.
Income tax expense totaled $5.40M during the third quarter of 2019, contrast to $3.20M during the prior quarter. Included in income tax expense during the second quarter of 2019 was $1.30M of tax benefit from stock compensation activity. The effective tax rate for the third quarter of 2019 was 20.0%, contrast to 19.4% during the second quarter of 2019, adjusting for the stock compensation activity. The lower rate contrast to the statutory rate reflects the continued success of our tax strategies and tax exempt income.
Fully taxable equivalent net interest income totaled $159.20M and increased $9.10M, or 6.1%. Average earning assets increased $220.00M, or 4.3%, mainly driven by originated loan growth of $698.50M. The fully taxable equivalent net interest margin widened six basis points to 3.98%. The yield on earning assets increased 32 basis points, led by a 41 basis point increase in the originated loan portfolio yields because of higher new loan yields, and was partially offset by a boost in the cost of funds of 37 basis points from 0.59% to 0.96%.
Originated and attained loans outstanding totaled $4.30B and increased $514.30M, or 13.4%, led by originated and attained commercial loan growth of $512.40M, or 21.2%. New loan originations over the trailing 12 months totaled $1.30B, led by commercial loan originations of $869.00M. The 310-30 loan portfolio declined $17.70M, or 23.7%, to $57.20M at September 30, 2019.
Average non-interest bearing demand deposits increased $78.10M, or 7.3%. Average transaction deposits increased $85.00M, or 2.4%, and average total deposits increased $19.50M, or 0.4%, to $4.70B. Spot transaction deposits increased $172.20M to $3.70B at September 30, 2019, improving the mix of transaction deposits to total deposits to 77.5% from 75.7% at September 30, 2018. The mix of non-interest bearing demand deposits to total deposits improved to 26.1% from 23.6% at September 30, 2018.
Provision for loan loss expense was $10.50M, contrast to $2.70M during the first nine months of 2018. Provision for loan loss expense during the first nine months of 2019 included $6.60M related to one formerly attained commercial loan. Annualized net charge-offs on originated and attained loans totaled 0.24%, contrast to 0.00% during the first nine months of 2018, increasing because of the attained commercial loan charge-off. Non-performing originated and attained loans reduced to 0.58% from 0.64% at September 30, 2018. The originated and attained allowance for loan losses totaled 0.89% of originated and attained loans contrast to 0.88% at September 30, 2018.
Non-interest income totaled $62.50M during the first nine months of 2019, representing a boost of $7.00M, or 12.6%, from last year. Mortgage banking income increased $7.30M, or 29.7%, service charges and bank card fees increased a combined $0.20M and other non-interest income increased $0.20M. These increases were partially offset by a $0.80M decrease in income on OREO properties during the period.
Non-interest expense totaled $134.60M during the first nine months of 2019, representing a decrease of $11.80M, driven by $7.20M of net gains on the sale of OREO properties recorded during the period and efficiencies gained from the integration of the Peoples acquisition. In Addition To, included in the prior period were $8.00M of non-recurring acquisition costs. Other non-interest expense during the first nine months of 2019 included $0.90M of expense related to the consolidations of four banking centers.
Income tax expense totaled $12.00M during the first nine months of 2019, contrast to $8.80M last year, a boost of $3.20M. Included in income tax expense was $2.20M and $1.30M of tax benefit from stock compensation activity during the first nine months of 2019 and 2018, respectively. Adjusting for the stock compensation activity, the effective tax rate for the first nine months of 2019 was 19.4%, contrast to 19.1% in the prior period.
NBHC has a market value of $719.75M while its EPS was booked as $2.45 in the last 12 months. The stock has 31.16M shares outstanding. In the profitability analysis, the company has net profit margin of 31.90%. Beta value of the company was 1.16; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 2.80.