National Bank Holdings Corporation’s (NYSE: NBHC) earnings in the first quarter of 2022 fell short of the consensus estimate by 1.6%. Concurrently, the bank announced that it has signed an agreement to purchase Community Bancorporation.
Shares of National Bank inched up 0.4% to close at $38.86 on Monday.
Financial Highlights
Earnings stood at $0.60 per share, below the consensus estimate of $0.61 per share and down 30.2% from the year-ago tally of $0.86 per share.
Net interest income in the quarter expanded 3.2% year-over-year to $46,661 million. However, total noninterest income in the quarter fell 42.9% to $19.1 million. Noninterest expenses were down 11.2% year-over-year to $44.1 million.
Exiting the quarter, National Bank’s cash and cash equivalents stood at $786.4 million, down 4.4% from the year-ago quarter. Loans, net, grew 8.6% to $4,674.2 million.
Total deposits were at $6,364.8 million, representing a rise of 6.1% from the year-ago quarter. The long-term debts of the bank stood at $39.5 million.
Other Key Metrics
National Bank’s net interest margin in the quarter was 2.82%, compared with 2.94% in the year-ago quarter. The efficiency ratio was 66.63%, compared with 62.83% at the end of the year-ago quarter.
Return on average assets slipped to 1.04% from 1.61%, and return on average equity declined to 8.84% from 13.03%. Tier 1 leverage ratio was 10.48%, down from 10.80% at the end of the year-ago quarter.
Total nonperforming loans to total loans were 0.24% versus 0.38% in the year-ago quarter.
Acquisition of Community Bancorporation
Community Bancorporation is the holding company of Provo, UT-based Rock Canyon Bank. The share capital of Community Bancorporation will be exchanged for $16.1 million in cash and 3.1 million shares of National Bank.
Post the completion of the deal, Rock Canyon Bank will be renamed Hillcrest Bank.
National Bank’s President and CEO, Tim Laney, said, “Rock Canyon Bank’s highly successful SBA business strategy de-risks the balance sheet, produces strong fee income, and is scalable across our franchise.”
“Equally important, this acquisition strengthens our position as a premier regional bank serving the fast-growing Salt Lake City region,” he added.
Analyst’s Take
A few days ago, Andrew Terrell of Stephens reiterated a Hold rating on National Bank with a price target of $48 (23.52% upside potential).
Overall, the bank has a Moderate Buy consensus rating based on one Buy and one Hold. National Bank’s price forecast of $50 mirrors 28.67% upside from current levels.
Over the past year, shares of National Bank have decreased 1.7%.
Bloggers’ Sentiments
Per TipRanks data, the financial blogger opinions are 100% Bullish on NBHC, as compared with the sector average of 69%.
Conclusion
Despite weaker-than-expected earnings, National Bank’s healthy liquidity position equips it well to deal with any economic turbulence and invest in growth opportunities going forward.
In addition, the buyout of Community Bancorporation will help the company expand in the small business administration loan category.
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