Exhibit 99.4
Selected Unaudited Pro Forma Condensed Combined Financial Information
The following tables show selected unaudited pro forma condensed combined financial information about the financial condition and results of operations of National Bank Holdings Corporation (“NBHC”), including per share data, after giving effect to the merger with Bancshares of Jackson Hole Incorporated (“BOJH”) and other pro forma adjustments. The selected unaudited pro forma condensed combined financial information assumes that the merger is accounted for under the acquisition method of accounting for business combinations in accordance with U.S. generally accepted accounting principles (“GAAP”) and that the assets and liabilities of BOJH will be recorded by NBHC at their respective fair values as of the date the merger is completed. The unaudited pro forma condensed combined statement of financial condition gives effect to the transaction as if the transaction had occurred on June 30, 2022. The unaudited pro forma combined statements of operations for the six months ended June 30, 2022, and the year ended December 31, 2021, give effect to the transaction as if the transaction had become effective on January 1, 2021.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined company had the companies actually been combined at the beginning of each period presented. The unaudited pro forma condensed combined financial information also does not consider any expense efficiencies, increased revenue or other potential financial benefits of the merger. The fair values are estimates as of the date hereof and actual amounts are still in the process of being finalized. Given the recent volatility in the interest rate environment, material changes in the fair value estimates may occur. Fair values are subject to refinement for up to one year after the closing date as additional information regarding the closing date fair values becomes available. The BOJH consolidated unaudited condensed financial information have been reclassified to conform to the current NBHC presentation.
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NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Combined Statement of Financial Condition
June 30, 2022
(In thousands, except per share and per share data)
| | | | | | | | | | | | | |
| | NBHC | | BOJH | | Pro Forma | | | Pro Forma | ||||
| | Consolidated | | Consolidated | | Adjustments | | | Combined | ||||
ASSETS | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 448,375 | | $ | 274,731 | | $ | (62,385) | A,B | | $ | 660,721 |
Investment securities available-for-sale (at fair value) | |
| 805,858 | | | 2,029 | | | — | | | | 807,887 |
Investment securities held-to-maturity | |
| 582,650 | | | 222,415 | | | (34,030) | C | | | 771,035 |
Non-marketable securities | |
| 59,754 | | | 4,314 | | | — | | | | 64,068 |
Loans | |
| 4,817,070 | | | 1,123,736 | | | (40,914) | D | | | 5,899,892 |
Allowance for credit losses | |
| (50,860) | | | (12,058) | | | (2,252) | E | | | (65,170) |
Loans, net | |
| 4,766,210 | | | 1,111,678 | | | (43,166) | | | | 5,834,722 |
Loans held for sale | |
| 48,816 | | | 2,619 | | | — | | | | 51,435 |
Other real estate owned | |
| 4,992 | | | — | | | — | | | | 4,992 |
Premises and equipment, net | |
| 103,690 | | | 26,584 | | | 3,522 | F | | | 133,796 |
Goodwill | |
| 115,027 | | | 540 | | | 124,659 | G | | | 240,226 |
Intangible assets, net | |
| 14,568 | | | — | | | 26,141 | H,I | | | 40,709 |
Other assets | |
| 218,059 | | | 21,291 | | | 14,498 | J,K | | | 253,848 |
Total assets | | $ | 7,167,999 | | $ | 1,666,201 | | $ | 29,239 | | | $ | 8,863,439 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | |
Non-interest bearing demand deposits | | $ | 2,454,740 | | $ | 549,237 | | $ | — | | | $ | 3,003,977 |
Interest bearing demand deposits | | | 597,000 | | | 275,964 | | | — | | | | 872,964 |
Savings and money market | | | 2,364,681 | | | 620,895 | | | — | | | | 2,985,576 |
Time deposits | | | 777,977 | | | 80,995 | | | 501 | L | | | 859,473 |
Total deposits | |
| 6,194,398 | | | 1,527,091 | | | 501 | | | | 7,721,990 |
Securities sold under agreements to repurchase | |
| 24,396 | | | — | | | — | | | | 24,396 |
Long-term debt, net | | | 39,532 | | | 14,733 | | | (1,663) | M | | | 52,602 |
Other liabilities | |
| 94,122 | | | 5,114 | | | 3,991 | N | | | 103,227 |
Total liabilities | |
| 6,352,448 | | | 1,546,938 | | | 2,830 | | | | 7,902,216 |
Shareholders’ equity: | | | | | | | | | | | | | |
Total shareholders’ equity | |
| 815,551 | | | 119,263 | | | 26,409 | O | | | 961,223 |
Total liabilities and shareholders’ equity | | $ | 7,167,999 | | $ | 1,666,201 | | $ | 29,239 | | | $ | 8,863,439 |
| | | | | | | | | | | | | |
Common shares outstanding | | | 30,075,175 | | | — | | | 4,391,964 | | | | 34,467,139 |
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NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Combined Statement of Operations
For the Six Months Ended June 30, 2022
(In thousands, except per share and per share data)
| | | | | | | | | | | | |
| | NBHC | | BOJH | | Pro Forma | | Pro Forma | ||||
| | Consolidated | | Consolidated | | Adjustments | | Combined | ||||
Interest and dividend income: | | | | | | | | | | | | |
Interest and fees on loans | | $ | 95,832 | | $ | 21,778 | | $ | 4,091 | P | $ | 121,701 |
Interest and dividends on investment securities | |
| 10,735 | | | 1,805 | | | 3,403 | Q | | 15,943 |
Dividends on non-marketable securities | |
| 420 | | | 86 | | | — | | | 506 |
Interest on interest-bearing bank deposits | |
| 1,374 | | | 483 | | | — | | | 1,857 |
Total interest and dividend income | |
| 108,361 | | | 24,152 | | | 7,494 | | | 140,007 |
Interest expense: | | | | | | | | | | | | |
Interest on deposits | |
| 5,016 | | | 905 | | | (89) | R | | 5,832 |
Interest on borrowings | |
| 667 | | | 412 | | | 151 | S | | 1,230 |
Total interest expense | |
| 5,683 | | | 1,317 | | | 62 | | | 7,062 |
Net interest income before provision for loan losses | |
| 102,678 | | | 22,835 | | | 7,432 | | | 132,945 |
Provision expense for loan losses | |
| 2,182 | | | 450 | | | — | | | 2,632 |
Net interest income after provision for loan losses | |
| 100,496 | | | 22,385 | | | 7,432 | | | 130,313 |
Non-interest income: | | | | | | | | | | | | |
Service charges | |
| 7,666 | | | 311 | | | — | | | 7,977 |
Bank card fees | |
| 8,664 | | | 33 | | | — | | | 8,697 |
Mortgage banking income | |
| 16,614 | | | 536 | | | — | | | 17,150 |
Bank-owned life insurance income | | | 1,072 | | | 111 | | | — | | | 1,183 |
Other non-interest income | |
| 1,800 | | | 3,525 | | | — | | | 5,325 |
Total non-interest income | |
| 35,816 | | | 4,516 | | | — | | | 40,332 |
Non-interest expense: | | | | | | | | | | | | |
Salaries and benefits | |
| 58,112 | | | 10,061 | | | — | | | 68,173 |
Occupancy and equipment | |
| 13,061 | | | 1,773 | | | (4) | U | | 14,830 |
Telecommunications and data processing | |
| 4,834 | | | 1,213 | | | (82) | U | | 5,965 |
Marketing and business development | |
| 1,347 | | | 514 | | | — | | | 1,861 |
FDIC deposit insurance | |
| 968 | | | 429 | | | — | | | 1,397 |
Bank card expenses | |
| 2,666 | | | 5 | | | — | | | 2,671 |
Professional fees | |
| 2,300 | | | (361) | | | (824) | U | | 1,115 |
Other non-interest expense | |
| 5,717 | | | 2,192 | | | (47) | U | | 7,862 |
Problem asset workout | | | 307 | | | — | | | — | | | 307 |
Gain on OREO sales, net | | | (270) | | | — | | | — | | | (270) |
Intangible asset amortization | |
| 592 | | | — | | | 1,307 | V,W | | 1,899 |
Total non-interest expense | |
| 89,634 | | | 15,826 | | | 349 | | | 105,809 |
Income before income taxes | |
| 46,678 | | | 11,075 | | | 7,083 | | | 64,836 |
Income tax expense | |
| 7,964 | | | 2,503 | | | 1,629 | X | | 12,096 |
Net income | | $ | 38,714 | | $ | 8,572 | | $ | 5,454 | | $ | 52,740 |
Earnings per share—basic | | $ | 1.28 | | | | | | | | $ | 1.53 |
Earnings per share—diluted | | $ | 1.27 | | | | | | | | $ | 1.51 |
Weighted average number of common shares outstanding: | | | | | | | | | | | | |
Basic | |
| 30,173,338 | | | | | | 4,391,964 | | | 34,565,302 |
Diluted | |
| 30,492,613 | | | | | | 4,391,964 | | | 34,884,577 |
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NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Combined Statement of Operations
For the Year Ended December 31, 2021
(In thousands, except per share and per share data)
| | | | | | | | | | | | |
| | NBHC | | BOJH | | Pro Forma | | Pro Forma | ||||
| | Consolidated | | Consolidated | | Adjustments | | Combined | ||||
Interest and dividend income: | | | | | | | | | | | | |
Interest and fees on loans | | $ | 181,816 | | $ | 39,679 | | $ | 8,183 | P | $ | 229,678 |
Interest and dividends on investment securities | |
| 17,325 | | | 3,147 | | | 6,806 | Q | | 27,278 |
Dividends on non-marketable securities | |
| 838 | | | 154 | | | — | | | 992 |
Interest on interest-bearing bank deposits | |
| 986 | | | 255 | | | — | | | 1,241 |
Total interest and dividend income | |
| 200,965 | | | 43,235 | | | 14,989 | | | 259,189 |
Interest expense: | | | | | | | | | | | | |
Interest on deposits | |
| 13,602 | | | 1,775 | | | (178) | R | | 15,199 |
Interest on borrowings | |
| 219 | | | 938 | | | 302 | S | | 1,459 |
Total interest expense | |
| 13,821 | | | 2,713 | | | 124 | | | 16,658 |
Net interest income before provision for loan losses | |
| 187,144 | | | 40,522 | | | 14,864 | | | 242,530 |
Provision (release) expense for loan losses | |
| (9,293) | | | 750 | | | 11,912 | T | | 3,369 |
Net interest income after provision for loan losses | |
| 196,437 | | | 39,772 | | | 2,952 | | | 239,161 |
Non-interest income: | | | | | | | | | | | | |
Service charges | |
| 14,894 | | | 537 | | | — | | | 15,431 |
Bank card fees | |
| 17,693 | | | 150 | | | — | | | 17,843 |
Mortgage banking income | |
| 63,360 | | | 2,128 | | | — | | | 65,488 |
Bank-owned life insurance income | |
| 2,208 | | | 230 | | | — | | | 2,438 |
Other non-interest income | |
| 12,174 | | | 3,010 | | | — | | | 15,184 |
OREO-related income | |
| 35 | | | — | | | — | | | 35 |
Total non-interest income | |
| 110,364 | | | 6,055 | | | — | | | 116,419 |
Non-interest expense: | | | | | | | | | | | | |
Salaries and benefits | |
| 127,504 | | | 19,661 | | | — | | | 147,165 |
Occupancy and equipment | |
| 25,283 | | | 3,483 | | | — | | | 28,766 |
Telecommunications and data processing | |
| 9,310 | | | 2,307 | | | — | | | 11,617 |
Marketing and business development | |
| 2,509 | | | 846 | | | — | | | 3,355 |
FDIC deposit insurance | |
| 1,850 | | | 631 | | | — | | | 2,481 |
Bank card expenses | |
| 5,177 | | | 13 | | | — | | | 5,190 |
Professional fees | |
| 5,423 | | | 1,203 | | | — | | | 6,626 |
Other non-interest expense | |
| 12,003 | | | 3,636 | | | — | | | 15,639 |
Problem asset workout | | | 2,063 | | | 4 | | | — | | | 2,067 |
Gain on OREO sales, net | | | (475) | | | — | | | — | | | (475) |
Intangible asset amortization | |
| 1,183 | | | — | | | 2,514 | V,W | | 3,697 |
Total non-interest expense | |
| 191,830 | | | 31,784 | | | 2,514 | | | 226,128 |
Income before income taxes | | $ | 114,971 | | $ | 14,043 | | $ | 438 | | $ | 129,452 |
Income tax expense | |
| 21,365 | | | 2,766 | | | 101 | X | | 24,232 |
Net income | | $ | 93,606 | | $ | 11,277 | | $ | 338 | | $ | 105,221 |
Income per share—basic | | $ | 3.04 | | | | | | | | $ | 3.00 |
Income per share—diluted | | $ | 3.01 | | | | | | | | $ | 2.97 |
Weighted average number of common shares outstanding: | | | | | | | | | | | | |
Basic | |
| 30,727,566 | | | | | | 4,391,964 | | | 35,119,530 |
Diluted | |
| 31,068,159 | | | | | | 4,391,964 | | | 35,460,123 |
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Pro Forma Adjustments Footnotes
The following pro forma adjustments are reflected in the unaudited pro forma combined financial information. All taxable adjustments were calculated using a 23% tax rate to arrive at deferred tax asset or liability adjustments. All adjustments are based on current assumptions and valuations, which are subject to change:
A – To record purchase price consideration of $51.0 million.
B – To record reduction for cash paid for non-controlling interest totaling $2.8 million. Adjustment also includes estimated transaction costs of $9.3 million, net of tax of $2.3 million, and the disposition of fixed assets totaling $0.7 million.
C – To record estimated fair value adjustment on held-to-maturity investments. The fair value adjustment is estimated to be accreted on a straight line basis over a five-year remaining life.
D – To record estimated fair value adjustment on loans based on a $40.9 million net discount related to interest rate and credit adjustments of the acquired portfolio. The fair value adjustment is estimated to be accreted over an estimated five-year remaining life of the respective loans in a manner that approximates level yield.
E – To eliminate BOJH allowance for loan losses of $12.1 million and to record Day 1 allowance for credit losses of $14.3 million.
F – To record estimated fair value adjustment on premises and equipment of $4.2 million, offset by $0.7 million of equipment dispositions.
G – To record estimate of goodwill that will be recognized as part of the transaction. See the allocation of purchase price at Note 3.
H – To record estimate of core deposit intangible asset totaling $25.1 million which is estimated to be amortized on a straight line basis over 10 years.
I – To record estimated fair value adjustment on wealth management intangible of $1.0 million which is estimated to be amortized on a straight line basis over 10 years.
J – To record adjustment to deferred tax asset of $10.5 million related to the pro forma adjustments.
K – To record estimated right-of-use lease asset of $4.0 million, related to the target bank’s adoption of ASC Topic 842.
L – To record estimated fair value adjustment on time deposits which is estimated to be accreted on a straight line basis over a five-year remaining life.
M – To record estimated fair value adjustment on subordinated debt which is estimated to be amortized on a straight line basis over an estimated five-year remaining life.
N – To record estimated lease liability of $4.0 million, related to the target bank’s adoption of ASC Topic 842.
O – To eliminate BOJH stockholders’ equity of $119.3 million, including the buyout of a $1.4 million non-controlling interest, and to record re-issuance of 4.4 million shares of NBHC’s treasury stock at cost totaling $162.5 million, including a gain on the re-issuance of treasury stock of $78.2 million included in additional paid-in capital. Adjustment also includes estimated NBH transaction costs of $6.2 million, net of tax of $1.7 million and Day 1 provision expense of $9.2 million, net of tax of $2.7 million.
P – To record accretion of the loan portfolio fair value adjustment. The fair value adjustment is estimated to be accreted over an estimated five-year remaining life in a manner that approximates level yield.
Q – To record estimated accretion from fair value adjustment on held-to-maturity investments. The fair value adjustment is estimated to be accreted on a straight line basis over an estimated five-year remaining life.
R – To record estimated accretion of the time deposits fair value adjustment. The fair value adjustment is estimated to be accreted on a straight line basis over an estimated five-year remaining life.
S – To record estimated amortization of the fair value adjustment on subordinated debt. The fair value adjustment is estimated to be amortized on a straight line basis over an estimated five-year remaining life.
T – To record $11.9 million Day 1 allowance for credit losses provision expense within the CECL model.
U – To record elimination of directly attributable transaction costs incurred during the six months ended June 30, 2022 of $1.0 million.
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V – To record estimated amortization of core deposit intangible asset of $1.3 million and $2.5 million during the six months ended June 30, 2022 and year ended December 31, 2021, respectively. The core deposit intangible asset is estimated to be amortized on a straight line basis over ten years.
W – To record estimated amortization of wealth management intangible asset of $50 thousand and $100 thousand during the six months ended June 30, 2022 and year ended December 31, 2021, respectively. The wealth management intangible asset is estimated to be amortized on a straight line basis over a five-year life.
X – To record tax effect at a marginal rate of 23%.
Note 1 Basis of Presentation
NBHC completed the acquisition of BOJH on October 1, 2022, with total consideration a mix of approximately 76% common stock and 24% cash. The acquisition is accounted for under the acquisition method of accounting and, accordingly, the assets and liabilities of BOJH presented in these pro forma condensed combined financial statements have been adjusted to their estimated fair values based upon conditions as of the merger date and as if the transaction had been effective on January 1, 2021 for statements of operations data. Since these are pro forma statements, we cannot assure that the amounts reflected in these financial statements would have been representative of the actual amounts earned had the companies been combined at that time. The fair values are estimates as of the date hereof and actual amounts are still in the process of being finalized. Fair values are subject to refinement for up to one year after the closing date as additional information regarding the closing date fair values becomes available.
Note 2 Purchase Price
NBHC completed the acquisition of BOJH on October 1, 2022. Pursuant to the merger agreement, BOJH shareholders received $45.5million in cash and 4.4 million shares of NBHC common stock, with a closing price of $36.99 on September 30, 2022 implying a total value of $213.4 million. Of the consideration to be received by BOJH shareholders in connection with the Merger, 231,317 shares of the Company’s Class A common stock (approximately $8.6 million based on the Company’s closing stock price on September 30, 2022) will be held in escrow to support certain indemnification obligations under the Merger Agreement (the “Stock Escrow”), and $200,000 will be held in escrow to serve as security for reimbursement of the expenses incurred by Thomas Biolchini as the representative of BOJH under the Merger Agreement (the “Cash Escrow”). NBHC also paid approximately $5.5 million in option cancellation payments to the holders of BOJH stock options.
Note 3 Allocation of Purchase Price
Under the acquisition method of accounting, the total purchase price is allocated to the acquired tangible and intangible assets and assumed liabilities of BOJH based on their estimated fair value as of the closing of the transaction. The excess of the purchase price over the fair value of the net assets acquired, net of deferred taxes, is allocated to goodwill. Estimated fair value adjustments included in the pro forma unaudited financial statements are based upon available information and certain assumptions considered reasonable may be revised as additional information becomes available.
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The following are the pro forma adjustments made to record the acquisition and adjust BOJH assets and liabilities to their estimated fair values at June 30, 2022.
| | |
(in thousands) | | |
Purchase price allocation: | | |
NBHC common stock paid at a closing price of $36.99 as of September 30, 2022 | $ | 162,459 |
Cash paid to seller | | 50,989 |
Purchase price | | 213,448 |
Allocated to: | | |
Historical book value of BOJH assets and liabilities as of June 30, 2022 | | 117,853 |
Less: Transaction expenses incurred by BOJH, net of tax | | (3,063) |
Adjusted net historical book value of BOJH assets and liabilities | | 114,790 |
Adjustments to record assets and liabilities at fair value: | | |
Investment securities | | (34,030) |
Loans | | (43,312) |
Allowance for credit losses | | 12,058 |
Premises and equipment | | 4,213 |
Intangible assets | | 26,141 |
Deferred taxes | | 7,767 |
Other assets | | 3,991 |
Time deposits | | (501) |
Long-term debt, net | | 1,663 |
Other liabilities | | (3,991) |
Preliminary pro forma goodwill | $ | 124,659 |
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