National Bank misses first-quarter earnings estimate, but finds silver lining

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National Bank Holding Corporation (NYSE: CSNB) earnings for the first quarter of 2022 were 1.6% lower than the consensus estimate. At the same time, the bank announced that it had signed an agreement to buy Community Bancorporation.

National Bank shares edged up 0.4% to close at $38.86 on Monday.

Financial Highlights

Earnings were $0.60 per share, below the consensus estimate of $0.61 per share and down 30.2% from the company’s total of $0.86 per share. last year.

Net interest income for the quarter rose 3.2% year over year to $46,661 million. However, total non-interest revenue in the quarter fell 42.9% to $19.1 million. Non-interest expense decreased 11.2% year over year to $44.1 million.

At the end of the quarter, National Bank’s cash and cash equivalents stood at $786.4 million, down 4.4% from the year-ago quarter. Loans, net, increased 8.6% to $4,674.2 million.

Total deposits were $6,364.8 million, up 6.1% from the prior year quarter. The bank’s long-term debt was $39.5 million.

Other key measures

National Bank’s net interest margin during the quarter was 2.82%, compared to 2.94% for the corresponding quarter of the previous fiscal year. The efficiency ratio was 66.63%, compared to 62.83% at the end of the prior year quarter.

Return on average assets slipped to 1.04% from 1.61%, and return on average equity fell to 8.84% from 13.03%. The Tier 1 leverage ratio was 10.48%, compared to 10.80% at the end of the prior year quarter.

Total non-performing loans to total loans was 0.24% versus 0.38% in the prior year quarter.

Acquisition of Community Bancorporation

Community Bancorporation is the holding company of Rock Canyon Bank, based in Provo, UT. Community Bancorporation’s share capital will be exchanged for $16.1 million in cash and 3.1 million National Bank shares.

Following the closing of the agreement, Rock Canyon Bank will be renamed Hillcrest Bank.

National Bank President and CEO Tim Laney said, “Rock Canyon Bank’s highly successful SBA business strategy reduces balance sheet risk, generates strong fee income and is scalable across the our franchise.

“Equally important, this acquisition strengthens our position as a leading regional bank serving the fast-growing Salt Lake City region,” he added.

Analyst’s point of view

A few days ago, Stephens’ Andrew Terrell reiterated a Hold rating on National Bank with a price target of $48 (upside potential of 23.52%).

Overall, the bank has a moderate buy consensus rating based on a buy and hold. The National Bank price forecast of $50 reflects a 28.67% upside from current levels.

Over the past year, National Bank shares have fallen 1.7%.

Blogger sentiments

According to data from TipRanks, the opinions of financial bloggers are 100% bullish on NBHC, compared to the industry average of 69%.

Conclusion

Despite weaker-than-expected earnings, National Bank’s healthy liquidity position allows it to weather any economic turbulence and invest in growth opportunities going forward.

Additionally, the acquisition of Community Bancorporation will help the company expand into the small business administration lending category.

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