Market Overview

National Bank's Valuation Discount Is 'Excessive,' DA Davidson Says In Upgrade

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National Bank Holdings Corp (NYSE: NBHC), a community bank franchise located mostly in Colorado and the greater Kansas City region, has seen its stock underperform its peers to the point where its valuation discount is "excessive," according to DA Davidson.

The Analyst

DA Davidson's Jeff Rulis upgraded National Bank's stock from Hold to Buy with a price target lifted from $36 to $38.

The Thesis

National Bank has seen many aspects of its business improve, Rulis said in the note. Throughout 2017, nonperforming assets fell 32 percent and non 310-30 classified assets assets dropped a greater 44 percent. The improvement could be attributed to the company's energy related credit issues mostly behind them and implies a "better credit picture ahead."

Dating back to 2012, the bank reduced its core none interest expense by 37 percent but the downward trend in operating expenses should revert in 2018 from the acquisition of Peoples, Inc, Rulis said. When excluding merger costs, however, the company's operating efficiency is on pace to continue improving and the bank should be on track to secure $7 million in cost savings from People's.

National Bank's stock has gained just 5 percent over the trailing 12-month period which is less than half of the NASDAQ Bank Index's gain and just one-fourth of the gains seen in its closest peers, including CoBiz Financial Inc (NASDAQ: COBZ) and Guaranty Bancorp (NASDAQ: GBNK), Rulis said. Given the company's improving performance, the stock should close the discount gap to its peers over time.

Price Action

Shares of National Bank were trading higher by 2.7 percent Tuesday afternoon.

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Latest Ratings for NBHC

DateFirmActionFromTo
Nov 2020DA DavidsonDowngradesBuyNeutral
Oct 2020Piper SandlerMaintainsNeutral
Jul 2020Piper SandlerMaintainsNeutral

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View the Latest Analyst Ratings

 

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Posted-In: banks DA Davidson Jeff Rulis regional banksAnalyst Color Price Target Initiation Analyst Ratings

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