National Bank Holdings Corporation Announces Fourth Quarter and Record Full Year 2019 Financial Results

Company Release - 1/23/2020 4:10 PM ET

DENVER, Jan. 23, 2020 (GLOBE NEWSWIRE) -- National Bank Holdings Corporation (NYSE: NBHC) reported:

                      
  For the quarter For the year For the year - adjusted (1)
  4Q19 3Q19 4Q18 2019
 2018
 2019
 2018
Net income ($000's) $ 19,519  $21,642  $17,235  $ 80,365  $61,451  $ 80,365  $67,772 
Earnings per share - diluted $ 0.62  $0.69  $0.55  $ 2.55  $1.95  $ 2.55  $2.16 
Return on average tangible assets(2)  1.35%  1.51%  1.26%  1.42%  1.15%  1.42%  1.26%
Return on average tangible common equity(2)  12.07%  13.68%  12.29%  13.07%  11.60%  13.07%  12.76%

                                                      

(1)  See non-GAAP reconciliations below.
(2)  Quarterly ratios are annualized.

Full Year 2019 Highlights

  • Record full year earnings of $2.55 per diluted share, 18.1% growth over 2018.
  • Fourth quarter 2019 average earning assets increased 5.5% over the fourth quarter 2018.
  • Grew loan balances 8.5% driven by $1.2 billion in new loan originations.
  • Grew fourth quarter average non-interest bearing deposits 6.7% compared to the prior year.
  • Increased non-interest income $12.0 million, or 16.9%, over last year.

In announcing these results, Chief Executive Officer Tim Laney shared, “We are proud to finish 2019 with record full-year earnings of $2.55 per share. Our teams delivered record-breaking fee income and full year loan growth of 8.5%, fueled by a second consecutive year of $1.2 billion of new loan originations. We built upon our relationship-based banking model with fourth quarter average non-interest bearing deposit growth of 6.7% compared to the prior year. We remain very focused on strong credit quality and expense management.”

Mr. Laney added, “Completing 2019 marks the 10th year in our Company’s exciting history. During our first decade, we completed six acquisitions and built a bank with a balance sheet and capital position that we believe will withstand any economic environment. We are proud of our industry-leading credit quality metrics and our high-quality client relationships. We have positioned ourselves in strong markets and created meaningful value for our clients, associates, communities and shareholders. We begin the next decade with a solid foundation, strong capital and momentum for future growth.”

Fourth Quarter 2019 Results
(All comparisons refer to the third quarter of 2019, except as noted)

Net income totaled $19.5 million during the fourth quarter of 2019, or $0.62 per diluted share, compared to $21.6 million during the last quarter, or $0.69 per diluted share. The decrease from the prior quarter is primarily driven by $6.5 million of OREO gains recorded during the third quarter of 2019. The return on average tangible assets was 1.35% compared to 1.51% last quarter and the return on average tangible common equity was 12.07% compared to 13.68% last quarter.

Net Interest Income
Fully taxable equivalent net interest income totaled $51.7 million and decreased $1.4 million, or 10.3% annualized, driven by lower earning asset yields. Fully taxable equivalent net interest margin narrowed 14 basis points from the prior quarter to 3.77%, entirely driven by the two 25 basis point fed funds rate cuts in September and October. The yield on earnings assets decreased 17 basis points and was partially offset by a five basis point decrease in the cost of funds.

Loans
Originated loans and acquired loans not accounted for under 310-30 (“acquired loans”) ended the quarter at $4.4 billion, increasing $16.6 million, or 1.5% annualized, led by originated and acquired commercial loan growth of $44.8 million, or 6.1% annualized. Total fourth quarter loan originations were $269.5 million, led by commercial loan originations of $182.5 million.

Acquired loans accounted for under 310-30 totaled $54.1 million at December 31, 2019 and decreased $3.1 million from the third quarter of 2019.

Asset Quality and Provision for Loan Losses
Provision for loan losses of $1.2 million was recorded during the quarter to support originated loan growth and net charge-offs. Annualized net charge-offs on originated and acquired loans totaled 0.08%, decreasing 58 basis points from the prior quarter. Non-performing originated and acquired loans (comprised of non-accrual loans and non-accrual TDRs) improved to 0.50% of total originated and acquired loans, compared to 0.58% at September 30, 2019. The originated and acquired allowance for loan losses remained consistent with the prior quarter at 0.89%.

Deposits
Average non-interest bearing demand deposits decreased $15.4 million, or 5.1% annualized. Average transaction deposits (defined as total deposits less time deposits) decreased $24.4 million, or 2.7% annualized, and average total deposits decreased $35.0 million to $4.7 billion, or 3.0% annualized. Spot transaction deposits increased $12.4 million to $3.7 billion at December 31, 2019, improving the mix of transaction deposits to total deposits to 77.7% compared to 77.5% at September 30, 2019.

The cost of transaction deposits decreased five basis points from the prior quarter to 0.34%. The cost of total deposits decreased three basis points from the prior quarter to 0.64%.

Non-Interest Income
Non-interest income totaled $20.3 million and decreased $4.5 million primarily due to seasonally lower mortgage banking income of $4.4 million. Service charges and bank card fees decreased a combined $0.3 million, and OREO-related income increased $0.1 million.

Non-Interest Expense
Non-interest expense totaled $46.1 million and increased $2.3 million from the prior quarter due to gains on the sale of OREO properties totaling $6.5 million during the prior quarter. Salaries and benefits decreased $2.9 million primarily due to lower mortgage banking commissions. Other non-interest expense decreased $1.5 million due to positive swap fair value adjustments of $1.1 million and a $0.9 million fair value impairment charge recorded in the third quarter of 2019, related to the consolidation of four banking centers in our Colorado and Kansas City markets.

Income tax expense totaled $3.9 million during the fourth quarter of 2019, compared to $5.4 million during the prior quarter. The effective tax rate for the fourth quarter of 2019 was 16.5%, compared to 20.0% during the third quarter of 2019.

Capital
Capital ratios continue to be strong and in excess of federal bank regulatory agency “well capitalized” thresholds. The leverage ratio at December 31, 2019 for the consolidated company and NBH Bank was 11.04% and 9.12%, respectively. Shareholders’ equity totaled $766.9 million at December 31, 2019 and increased $13.6 million from the prior quarter, primarily due to higher retained earnings.

Common book value per share increased $0.43 to $24.60 at December 31, 2019. The tangible common book value per share was $20.89 at December 31, 2019 and increased $0.44 due to higher retained earnings. Excluding accumulated other comprehensive income, the tangible book value was $20.83.

Year-Over-Year Review
(All comparisons refer to the full year 2018, except as noted)

Net income totaled a record $80.4 million during 2019, or $2.55 per diluted share, compared to $61.5 million during 2018, or $1.95 per diluted share. Adjusting for the Peoples acquisition, net income totaled $67.8 million, or $2.16 per diluted share during 2018. The return on average tangible assets was 1.42% compared to 1.15% last year, and the return on average tangible common equity was 13.07% compared to 11.60% last year. Adjusting for the Peoples acquisition, the return on average tangible assets was 1.26% and the return on average tangible common equity was 12.76% last year.

Fully taxable equivalent net interest income totaled $210.9 million and increased $9.0 million, or 4.4%. Average earning assets increased $236.4 million, or 4.6%, primarily driven by average originated and acquired loan growth of $492.2 million, partially offset by a decrease in average investment securities of $221.1 million. The fully taxable equivalent net interest margin remained consistent at 3.93% as the increase in average earning assets and earning asset yields were offset by an increase in the cost of funds. The yield on earning assets increased 21 basis points, led by a 28 basis point increase in the originated loan portfolio yields due to higher new loan yields. The cost of funds increased 33 basis points to 0.96% for the year ended December 31, 2019.

Originated and acquired loans outstanding totaled $4.4 billion and increased $339.9 million, or 8.5%, led by originated and acquired commercial loan growth of $352.8 million, or 13.4%. New loan originations for the year totaled $1.2 billion, led by commercial loan originations of $781.7 million. The 310-30 loan portfolio declined $16.8 million, or 23.7%, to $54.1 million at December 31, 2019.

Average non-interest bearing demand deposits increased $76.9 million, or 7.1%. Average transaction deposits increased $85.6 million, or 2.4%, and average total deposits increased $27.3 million, or 0.6%, to $4.7 billion. Spot transaction deposits increased $223.9 million to $3.7 billion at December 31, 2019, improving the mix of transaction deposits to total deposits to 77.7% from 76.2% at December 31, 2018. The mix of non-interest bearing demand deposits to total deposits improved to 25.0% from 23.6% at December 31, 2018.

Provision for loan loss expense was $11.6 million, compared to $5.2 million during 2018. Provision for loan loss expense during 2019 included $6.6 million related to the charge-off of one previously acquired commercial loan. Net charge-offs on originated and acquired loans totaled 0.20%, compared to 0.02% during 2018, increasing primarily due to the one acquired commercial loan charge-off. Non-performing originated and acquired loans decreased to 0.50% from 0.61% at December 31, 2018. The originated and acquired allowance for loan losses totaled 0.89% of originated and acquired loans compared to 0.88% at December 31, 2018.

Non-interest income totaled $82.8 million during 2019, representing an increase of $12.0 million, or 16.9%, from last year. Mortgage banking income increased $12.2 million, or 40.7%, other non-interest income increased $0.4 million, and service charges and bank card fees remained consistent with last year. Income on OREO properties decreased $0.6 million during the year.

Non-interest expense totaled $180.7 million during 2019, representing a decrease of $8.6 million, or 4.5%, driven by a $6.7 million increase in net gains on the sale of OREO properties and efficiencies gained from the integration of the Peoples acquisition. Salaries and benefits increased $7.8 million primarily due to higher mortgage banking commissions. Other non-interest expense included banking center consolidation expenses of $0.9 million recorded during 2019. Additionally, included in the prior year were $8.0 million of non-recurring acquisition costs.

Income tax expense totaled $15.8 million during 2019, compared to $12.2 million last year, an increase of $3.6 million. Included in income tax expense was $2.2 million and $1.3 million of tax benefit from stock compensation activity during 2019 and 2018, respectively. Adjusting for the stock compensation activity, the effective tax rate for 2019 was 18.7%, compared to 18.3% in the prior year. The lower rate compared to the statutory rate reflects the continued success of our tax strategies and tax exempt income.

Conference Call
Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Friday, January 24, 2020. Interested parties may listen to this call by dialing (877) 272-6762 / (615) 800-6832 (International) using the Conference ID of 6668206 and asking for the NBHC Fourth Quarter Earnings conference call. A telephonic replay of the call will be available beginning approximately four hours after the call’s completion through February 6, 2020, by dialing (855) 859-2056 (United States) / (404) 537-3406 (International) using the Conference ID of 6668206. The earnings release and an on-line replay of the call will also be available on the Company’s website at www.nationalbankholdings.com by visiting the investor relations area.

About Non-GAAP Financial Measures
Certain of the financial measures and ratios we present, including “tangible assets,” “return on average tangible assets,” “tangible common equity,” “return on average tangible common equity,” “tangible common book value per share,” “tangible common book value, excluding accumulated other comprehensive loss, net of tax,” “tangible common book value per share, excluding accumulated other comprehensive loss, net of tax,” “tangible common equity to tangible assets,” “adjusted efficiency ratio,” “adjusted non-interest expense,” “adjusted non-interest expense to average assets,” “adjusted net income,” “adjusted earnings per share - diluted,” “adjusted return on average tangible assets,” “adjusted return on average tangible common equity,” and “fully taxable equivalent” metrics, are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance.

A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

About National Bank Holdings Corporation
National Bank Holdings Corporation is a bank holding company created to build a leading community bank franchise delivering high quality client service and committed to shareholder results. Through its bank subsidiary, NBH Bank, National Bank Holdings Corporation operates a network of 101 banking centers, serving individual consumers, small, medium and large businesses, and government and non-profit entities. The bank’s core geographic footprint consists of Colorado, the greater Kansas City region, New Mexico, Texas and Utah. NBH Bank operates under the following brand names: Community Banks of Colorado in Colorado, Bank Midwest in Kansas and Missouri and Hillcrest Bank in New Mexico, Texas and Utah. It also operates as Community Banks Mortgage, a division of NBH Bank, in Colorado. Additional information about National Bank Holdings Corporation can be found at www.nationalbankholdings.com.

For more information visit: cobnks.com, bankmw.com, hillcrestbank.com or nbhbank.com. Or, follow us on any of our social media sites:
Community Banks of Colorado: facebook.com/cobnks, twitter.com/cobnks, instagram.com/cobnks;
Bank Midwest: facebook.com/bankmw, twitter.com/bank_mw, instagram.com/bankmw;
Hillcrest Bank: facebook.com/hillcrestbank, twitter.com/hillcrest_bank;
NBH Bank: twitter.com/nbhbank;
or connect with any of our brands on LinkedIn.

Forward-Looking Statements
This press release 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,” “target,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “intend” or similar expressions that relate to the Company’s strategy, plans or intentions. Forward-looking statements involve certain important risks, uncertainties and other factors, any of which could cause actual results to differ materially from those in such statements. Such factors include, without limitation, the “Risk Factors” referenced in our most recent Form 10-K filed with the Securities and Exchange Commission (SEC), other risks and uncertainties listed from time to time in our reports and documents filed with the SEC, and the following factors: ability to execute our business strategy; business and economic conditions; effects of a prolonged government shutdown; economic, market, operational, liquidity, credit and interest rate risks associated with the Company’s business; effects of any changes in trade, monetary and fiscal policies and laws; changes imposed by regulatory agencies to increase capital standards; effects of inflation, as well as, interest rate, securities market and monetary supply fluctuations; changes in the economy or supply-demand imbalances affecting local real estate values; changes in consumer spending, borrowings and savings habits; the Company’s ability to identify potential candidates for, consummate, integrate and realize operating efficiencies from, acquisitions, consolidations and other expansion opportunities; the Company's ability to realize anticipated benefits from enhancements or updates to its core operating systems from time to time without significant change in client service or risk to the Company's control environment; the Company's dependence on information technology and telecommunications systems of third party service providers and the risk of systems failures, interruptions or breaches of security; the Company’s ability to achieve organic loan and deposit growth and the composition of such growth; changes in sources and uses of funds; increased competition in the financial services industry; the effect of changes in accounting policies and practices; the share price of the Company’s stock; the Company's ability to realize deferred tax assets or the need for a valuation allowance; continued consolidation in the financial services industry; ability to maintain or increase market share and control expenses; costs and effects of changes in laws and regulations and of other legal and regulatory developments; technological changes; the timely development and acceptance of new products and services; the Company’s continued ability to attract, hire and maintain qualified personnel; ability to implement and/or improve operational management and other internal risk controls and processes and reporting system and procedures; regulatory limitations on dividends from the Company's bank subsidiary; changes in estimates of future loan reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; widespread natural and other disasters, dislocations, political instability, acts of war or terrorist activities, cyberattacks or international hostilities; impact of reputational risk; and success at managing the risks involved in the foregoing items. The Company can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this press release, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

Contact:
Analysts/Institutional Investors: Aldis Birkans, Chief Financial Officer, Treasurer, (720) 529-3314, [email protected]
Media: Whitney Bartelli, Chief Marketing Officer, (816) 298-2203, [email protected]

 
NATIONAL BANK HOLDINGS CORPORATION
FINANCIAL SUMMARY
Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except share and per share data)
               
 For the three months ended  For the years ended
 December 31,  September 30, December 31, December 31,  December 31,
 2019 2019 2018 2019
 2018
Total interest and dividend income$ 59,616 $61,372  $57,780  $ 242,601  $221,391 
Total interest expense  9,228  9,587   7,148    36,771   23,954 
Net interest income  50,388  51,785   50,632    205,830   197,437 
Taxable equivalent adjustment  1,290  1,264   1,195    5,065   4,482 
Net interest income FTE(1)  51,678  53,049   51,827    210,895   201,919 
Provision for loan losses  1,180  5,690   2,476    11,643   5,197 
Net interest income after provision for loan losses FTE(1)  50,498  47,359   49,351    199,252   196,722 
Non-interest income:              
Service charges  4,416  4,617   4,619    17,895   18,092 
Bank card fees  3,649  3,752   3,769    14,595   14,489 
Mortgage banking income  10,309  14,702   5,406    42,346   30,107 
Other non-interest income  1,740  1,661   1,519    7,601   7,170 
OREO-related income  168  27   4    315   917 
Total non-interest income  20,282  24,759   15,317    82,752   70,775 
Non-interest expense:              
Salaries and benefits  30,653  33,522   27,029    122,732   114,939 
Occupancy and equipment  6,908  6,825   6,423    27,336   28,493 
Professional fees  658  743   1,373    3,256   6,059 
Other non-interest expense  6,849  8,320   7,453    30,245   35,612 
Problem asset workout  736  602   328    3,186   2,549 
Loss (gain) on sale of OREO, net  7  (6,514)  (102)   (7,193)  (488)
Core deposit intangible asset amortization  296  295   353    1,183   2,170 
Total non-interest expense  46,107  43,793   42,857    180,745   189,334 
               
Income before income taxes FTE(1)  24,673  28,325   21,811    101,259   78,163 
Taxable equivalent adjustment  1,290  1,264   1,195    5,065   4,482 
Income before income taxes  23,383  27,061   20,616    96,194   73,681 
Income tax expense  3,864  5,419   3,381    15,829   12,230 
Net income$ 19,519 $21,642  $17,235  $ 80,365  $61,451 
Earnings per share - basic$ 0.62 $0.69  $0.56  $ 2.57  $2.00 
Earnings per share - diluted$ 0.62 $0.69  $0.55  $ 2.55  $1.95 

                                                      

(1)  Net interest income is presented on a GAAP basis and fully taxable equivalent (FTE) basis, as the Company believes this non-GAAP measure is the preferred industry measurement for this item. The FTE adjustment is for the tax benefit on certain tax exempt loans using the federal tax rate of 21% for each period presented. See non-GAAP reconciliations below.

 
NATIONAL BANK HOLDINGS CORPORATION
Consolidated Statements of Financial Condition (Unaudited)
(Dollars in thousands, except share and per share data)
         
 December 31, 2019 September 30, 2019 December 31, 2018
ASSETS        
Cash and cash equivalents$ 110,190  $116,919  $109,556 
Investment securities available-for-sale  638,249   661,129   791,102 
Investment securities held-to-maturity  182,884   189,982   235,398 
Non-marketable securities  29,751   27,277   27,555 
Loans  4,415,406   4,401,917   4,092,308 
Allowance for loan losses  (39,064)  (38,710)  (35,692)
Loans, net  4,376,342   4,363,207   4,056,616 
Loans held for sale  117,444   204,602   48,120 
Other real estate owned  7,300   7,904   10,596 
Premises and equipment, net  112,151   110,692   109,986 
Goodwill  115,027   115,027   115,027 
Intangible assets, net  11,361   11,578   13,470 
Other assets  194,813   181,733   159,240 
Total assets$ 5,895,512  $5,990,050  $5,676,666 
LIABILITIES AND SHAREHOLDERS' EQUITY        
Liabilities:        
Non-interest bearing demand deposits$ 1,184,945  $1,237,189  $1,072,029 
Interest bearing demand deposits  738,496   681,113   688,255 
Savings and money market  1,755,538   1,748,257   1,694,808 
Total transaction deposits  3,678,979   3,666,559   3,455,092 
Time deposits  1,058,153   1,067,301   1,080,529 
Total deposits  4,737,132   4,733,860   4,535,621 
Securities sold under agreements to repurchase  56,935   62,735   66,047 
Federal Home Loan Bank advances  207,675   303,897   301,660 
Other liabilities  126,850   136,232   78,332 
Total liabilities  5,128,592   5,236,724   4,981,660 
Shareholders' equity:        
Common stock  515   515   515 
Additional paid in capital  1,009,223   1,007,628   1,014,399 
Retained earnings  164,082   150,866   106,990 
Treasury stock  (408,962)  (408,770)  (415,623)
Accumulated other comprehensive income (loss), net of tax  2,062   3,087   (11,275)
Total shareholders' equity  766,920   753,326   695,006 
Total liabilities and shareholders' equity$ 5,895,512  $5,990,050  $5,676,666 
SHARE DATA        
Average basic shares outstanding  31,299,989   31,281,970   30,888,238 
Average diluted shares outstanding  31,525,911   31,508,999   31,492,342 
Ending shares outstanding  31,176,627   31,169,086   30,769,063 
Common book value per share$ 24.60  $24.17  $22.59 
Tangible common book value per share(1) (non-GAAP)$ 20.89  $20.45  $18.77 
Tangible common book value per share, excluding accumulated other comprehensive income (loss)(1) (non-GAAP)$ 20.83  $20.35  $19.13 
CAPITAL RATIOS        
Average equity to average assets 12.91%  12.79%  12.15%
Tangible common equity to tangible assets(1) 11.27%  10.85%  10.39%
Leverage ratio 11.04%  10.89%  10.51%
Tier 1 risk-based capital ratio 13.21%  12.93%  12.91%
Total risk-based capital ratio 14.08%  13.79%  13.79%

                                                      

(1)  Represents a non-GAAP financial measure. See non-GAAP reconciliations below.

 
NATIONAL BANK HOLDINGS CORPORATION
Loan Portfolio
(Dollars in thousands)
 
Period End Loan Balances by Type
             
     December 31, 2019   December 31, 2019
     vs. September 30, 2019   vs. December 31, 2018
 December 31, 2019 September 30, 2019 % Change December 31, 2018 % Change
Originated:            
Commercial:            
Commercial and industrial$ 2,171,436 $2,167,076 0.2% $1,877,221 15.7%
Owner-occupied commercial real estate  414,477  378,956 9.4%  337,258 22.9%
Food and agriculture  245,320  230,869 6.3%  217,294 12.9%
Energy  42,519  46,302 (8.2)%  49,204 (13.6)%
Total commercial  2,873,752  2,823,203 1.8%  2,480,977 15.8%
Commercial real estate non-owner occupied  505,479  501,771 0.7%  407,431 24.1%
Residential real estate  651,656  659,246 (1.2)%  657,633 (0.9)%
Consumer  21,030  21,378 (1.6)%  22,895 (8.1)%
Total originated  4,051,917  4,005,598 1.2%  3,568,936 13.5%
             
Acquired:            
Commercial:            
Commercial and industrial  34,561  37,613 (8.1)%  53,926 (35.9)%
Owner-occupied commercial real estate  65,429  67,673 (3.3)%  84,408 (22.5)%
Food and agriculture  3,265  3,716 (12.1)%  4,862 (32.8)%
Total commercial  103,255  109,002 (5.3)%  143,196 (27.9)%
Commercial real estate non-owner occupied  92,639  104,949 (11.7)%  144,388 (35.8)%
Residential real estate  112,755  124,354 (9.3)%  163,187 (30.9)%
Consumer  746  815 (8.5)%  1,722 (56.7)%
Total acquired  309,395  339,120 (8.8)%  452,493 (31.6)%
             
ASC 310-30 loans  54,094  57,199 (5.4)%  70,879 (23.7)%
Total loans$ 4,415,406 $4,401,917 0.3% $4,092,308 7.9%
               


 
Originated and Acquired Loan Balances by Loan Segment
             
     December 31, 2019    December 31, 2019
     vs. September 30, 2019    vs. December 31, 2018
 December 31, 2019 September 30, 2019 % Change December 31, 2018 % Change
Commercial$ 2,977,007 $2,932,205 1.5% $2,624,173 13.4%
Commercial real estate non-owner occupied  598,118  606,720 (1.4)%  551,819 8.4%
Residential real estate  764,411  783,600 (2.4)%  820,820 (6.9)%
Consumer  21,776  22,193 (1.9)%  24,617 (11.5)%
Total originated and acquired loans$ 4,361,312 $4,344,718 0.4% $4,021,429 8.5%
               


 
Originations(1)
                 
 Fourth quarter Third quarter Second quarter First quarter Fourth quarter
 2019 2019 2019 2019 2018
Commercial:                
Commercial and industrial$ 118,969  $172,969  $163,138  $153,547  $213,335 
Owner occupied commercial real estate  46,965   16,149   41,380   26,405   34,727 
Food and agriculture  20,348   (4,894)  18,217   15,213   14,046 
Energy  (3,807)  3,067   (12,098)  6,138   7,640 
Total commercial  182,475   187,291   210,637   201,303   269,748 
Commercial real estate non-owner occupied  41,256   79,929   36,632   69,125   41,031 
Residential real estate  43,493   49,022   40,012   38,627   51,017 
Consumer  2,315   2,986   3,264   1,958   2,592 
Total$ 269,539  $319,228  $290,545  $311,013  $364,388 
                    

                                                      

(1)  Originations are defined as closed end funded loans and net fundings under revolving lines of credit. Net funding under revolving lines of credit were $1,756, $37,062, $48,955, $105,235 and $6,263 as of the fourth quarter 2019, third quarter 2019, second quarter 2019, first quarter 2019 and fourth quarter 2018, respectively.

 
NATIONAL BANK HOLDINGS CORPORATION
Summary of Net Interest Margin
(Dollars in thousands)
                           
 For the three months ended  For the three months ended For the three months ended
 December 31, 2019 September 30, 2019 December 31, 2018
 Average     Average Average     Average Average     Average
 balance Interest rate balance Interest rate balance Interest rate
Interest earning assets:                          
Originated loans FTE(1)(2)$ 4,002,813  $ 46,466  4.61% $3,886,503  $46,736  4.77% $3,409,996  $40,347  4.69%
Acquired loans  321,561    4,716  5.82%  366,522   5,656  6.12%  482,774   7,102  5.84%
ASC 310-30 loans  55,769    2,809  20.15%  58,557   3,251  22.21%  72,634   4,146  22.83%
Loans held for sale  181,550    1,657  3.62%  139,281   1,328  3.78%  56,714   730  5.11%
Investment securities available-for-sale  642,297    3,413  2.13%  687,989   3,696  2.15%  826,462   4,396  2.13%
Investment securities held-to-maturity  187,274    1,257  2.68%  199,519   1,384  2.77%  243,421   1,724  2.83%
Other securities  29,681    471  6.35%  27,227   418  6.14%  21,457   335  6.25%
Interest earning deposits and securities purchased under agreements to resell  17,096    117  2.72%  19,809   167  3.34%  39,476   195  1.96%
Total interest earning assets FTE(2)$ 5,438,041  $ 60,906  4.44% $5,385,407  $62,636  4.61% $5,152,934  $58,975  4.54%
Cash and due from banks$ 76,568        $76,866        $79,747       
Other assets  448,596         443,724         422,136       
Allowance for loan losses  (38,746)        (40,212)        (34,366)      
Total assets$ 5,924,459        $5,865,785        $5,620,451       
Interest bearing liabilities:                          
Interest bearing demand, savings and money market deposits$ 2,429,417  $ 3,101  0.51% $2,438,399  $3,609  0.59% $2,415,627  $2,716  0.45%
Time deposits  1,062,511    4,464  1.67%  1,073,140   4,365  1.61%  1,099,205   3,375  1.22%
Securities sold under agreements to repurchase  57,870    149  1.02%  65,722   204  1.23%  63,837   158  0.98%
Federal Home Loan Bank advances  301,433    1,514  1.99%  231,926   1,409  2.41%  160,575   899  2.22%
Total interest bearing liabilities$ 3,851,231  $ 9,228  0.95% $3,809,187  $9,587  1.00% $3,739,244  $7,148  0.76%
Demand deposits$ 1,177,958        $1,193,357        $1,104,411       
Other liabilities  130,576         112,927         94,070       
Total liabilities  5,159,765         5,115,471         4,937,725       
Shareholders' equity  764,694         750,314         682,726       
Total liabilities and shareholders' equity$ 5,924,459        $5,865,785        $5,620,451       
Net interest income FTE(2)   $ 51,678       $53,049       $51,827   
Interest rate spread FTE(2)       3.49%        3.61%        3.78%
Net interest earning assets$ 1,586,810        $1,576,220        $1,413,690       
Net interest margin FTE(2)       3.77%        3.91%        3.99%
Average transaction deposits$ 3,607,375        $3,631,756        $3,520,038       
Average total deposits$ 4,669,886        $4,704,896        $4,619,243       
Ratio of average interest earning assets to average interest bearing liabilities 141.20%        141.38%        137.81%      

                                                      

(1)  Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.
(2)  Presented on a fully taxable equivalent basis using the statutory tax rate of 21%. The tax equivalent adjustments included above are $1,290, $1,264 and $1,195 for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

 
NATIONAL BANK HOLDINGS CORPORATION
Summary of Net Interest Margin
(Dollars in thousands)
                  
 For the year ended December 31, 2019 For the year ended December 31, 2018
 Average     Average Average     Average
 balance Interest rate balance Interest rate
Interest earning assets:                 
Originated loans FTE(1)(2)$ 3,838,229  $ 183,502  4.78% $3,166,374  $142,461  4.50%
Acquired loans  382,806    22,951  6.00%  562,443   32,610  5.80%
ASC 310-30 loans  60,219    13,041