National Bank Holdings Corporation

07/23/2024 | Press release | Distributed by Public on 07/23/2024 14:15

Results of Operations and Financial Condition Form 8 K

​

National Bank Holdings Corporation Announces

Second Quarter 2024 Financial Results

Denver, Colorado - (Globe Newswire) - National Bank Holdings Corporation (NYSE: NBHC) reported:

​

For the quarter(1)

For the year(1)

2Q24

1Q24

2Q23

2024

2023

Net income ($000's)

$

26,135

$

31,391

$

32,557

$

57,526

$

72,840

Earnings per share - diluted

$

0.68

$

0.82

$

0.85

$

1.50

$

1.91

Return on average assets

1.06%

1.28%

1.34%

1.17%

1.52%

Return on average tangible assets(2)

1.17%

1.39%

1.45%

1.28%

1.63%

Return on average equity

8.46%

10.30%

11.35%

9.37%

12.94%

Return on average tangible common equity(2)

12.44%

15.14%

17.24%

13.77%

19.05%

(1)

Ratios are annualized.

(2)

See non-GAAP reconciliations starting on page 14.

In announcing these results, Chief Executive Officer Tim Laney shared, "During the second quarter, we delivered quarterly earnings of $0.68 per diluted share and continued to strengthen our balance sheet. We maintained a strong net interest margin of 3.76% and are prepared to take action should the Federal Reserve Bank lower interest rates this year. We are leveraging diverse revenue streams across our franchise, resulting in an increase in year-to-date fee income of 11.4% over the prior period. Our teams generated strong balance sheet growth by delivering 8.1% annualized net loan growth and 7.9% annualized average deposit growth during the second quarter."

​

Mr. Laney added, "We made meaningful progress resolving our non-performing loans. We continue to adhere to sound banking practices by maintaining a prudent approach to extending credit along with a granular and diversified loan portfolio. We believe our strong Common Equity Tier 1 capital ratio of 12.41%, ample liquidity position, and diversified funding sources provide strength in any economic environment and provide optionality that we will leverage for future growth."

Second Quarter 2024 Results

(All comparisons refer to the first quarter of 2024, except as noted)

Net income totaled $26.1 million or $0.68 per diluted share, compared to $31.4 million or $0.82 per diluted share, a decrease from the prior quarter largely due to impairment of venture capital investments and increased provision expense driven by loan growth. Fully taxable equivalent pre-provision net revenue totaled $36.2 million, compared to $40.6 million. The return on average tangible assets totaled 1.17%, compared to 1.39%, and the return on average tangible common equity totaled 12.44%, compared to 15.14%.

Net Interest Income

Fully taxable equivalent net interest income totaled $85.3 million, compared to $85.7 million in the prior quarter. The fully taxable equivalent net interest margin was 3.76%, narrowing two basis points as a four basis point increase in earning asset yields was more than offset by a seven basis point increase in the cost of funds.

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Loans

Total loans increased $153.1 million, or 8.1% annualized, to $7.7 billion at June 30, 2024. We generated quarterly loan fundings totaling $505.2 million, led by commercial loan fundings of $384.4 million. The average interest rate on the second quarter's loan originations was 8.4%.

Asset Quality and Provision for Credit Losses

The Company recorded $2.8 million of provision expense for credit losses, compared to no provision expense in the prior quarter. The current quarter's provision expense was driven by loan growth and higher reserve requirements from changes in the CECL model's underlying economic forecast. Annualized net charge-offs were 0.22% of average total loans, compared to 0.00% in the prior quarter, driven by one previously reserved credit that was resolved during the quarter. Non-performing loans decreased 13 basis points to 0.34% of total loans at June 30, 2024, and non-performing assets decreased 17 basis points to 0.36% of total loans and OREO at June 30, 2024. The allowance for credit losses as a percentage of loans totaled 1.25% at June 30, 2024, compared to 1.29% in the prior quarter.

Deposits

Average total deposits increased $160.9 million, or 7.9% annualized, to $8.4 billion during the second quarter 2024. The loan to deposit ratio totaled 92.2% at June 30, 2024. Average transaction deposits (defined as total deposits less time deposits) increased $135.6 million to $7.4 billion. The mix of transaction deposits to total deposits was 87.8% and 88.3% at June 30, 2024 and March 31, 2024, respectively.

Non-Interest Income

Non-interest income totaled $14.0 million, compared to $17.7 million during the first quarter. Included in the second quarter was $3.9 million of impairment related to venture capital investments classified as non-marketable securities. Included in the prior quarter was a $0.6 million gain from the sale of a banking center building. Excluding these items, non-interest income increased $0.9 million driven by our diversified sources of fee revenue including increases in SBA loan income, trust income, Cambr income and mortgage banking income.

Non-Interest Expense

Non-interest expense increased $0.2 million to $63.1 million during the second quarter. Salaries and benefits increased $0.4 million and occupancy and equipment increased $0.2 million. Partially offsetting these increases was a decrease in other non-interest expense of $0.4 million. The efficiency ratio totaled 64.6% for the second quarter, compared to 61.8% for the first quarter. The fully taxable equivalent efficiency ratio, excluding other intangible assets amortization, totaled 61.5% for the second quarter, compared to 58.8%.

Income tax expense totaled $5.6 million, compared to $7.5 million in the prior quarter, due to lower pre-tax income. The effective tax rate was 17.7%, compared to 19.3% for the first quarter.

Capital

Capital ratios continue to be strong and in excess of federal bank regulatory agency "well capitalized" thresholds. The tier 1 leverage ratio totaled 10.20%, and the common equity tier 1 capital ratio totaled 12.41% at June 30, 2024. Shareholders' equity totaled $1.2 billion at June 30, 2024, increasing $15.8 million, largely due to $15.4 million of growth in retained earnings.

Common book value per share increased $0.34 to $32.92 at June 30, 2024. Tangible common book value per share increased $0.42 to $23.74 as this quarter's earnings outpaced the quarterly dividend.

Year-Over-Year Review

(All comparisons refer to the first six months of 2023, except as noted)

Net income totaled $57.5 million, or $1.50 per diluted share, compared to net income of $72.8 million, or $1.91 per diluted share, for the first six months of 2023. The decrease over the same period prior year was largely driven by lower net interest income, due to an increase in cost of funds outpacing the increase in interest income. Partially offsetting this decrease was an increase in our non-interest income discussed below. Fully taxable equivalent pre-provision net revenue totaled $76.8 million, compared to $96.7 million. The return

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on average tangible assets totaled 1.28%, compared to 1.63%, and the return on average tangible common equity was 13.77%, compared to 19.05%.

Fully taxable equivalent net interest income totaled $171.0 million, compared to $187.5 million. Average earning assets increased $171.4 million, including average loan growth of $313.0 million, which was partially offset by a decrease in average investment securities of $87.9 million. The fully taxable equivalent net interest margin narrowed 45 basis points to 3.77%, as the increase in earning asset yields was more than offset by an increase in the cost of funds. Average interest bearing liabilities increased $654.4 million due to higher deposit balances, and the cost of funds totaled 2.29%, compared to 1.20% in the same period prior year.

Loans outstanding totaled $7.7 billion, increasing $307.8 million or 4.2%. New loan fundings over the trailing twelve months totaled $1.5 billion, led by commercial loan fundings of $1.0 billion.

The Company recorded $2.8 million of provision expense for credit losses for the first six months of 2024, compared to provision expense of $2.6 million in the same period prior year. Annualized net charge-offs totaled 0.11% of average total loans during the first six months of 2024, compared to 0.02% of average total loans during the first six months of 2023. Non-performing loans decreased 11 basis points to 0.34% of total loans at June 30, 2024, and non-performing assets decreased 14 basis points to 0.36% of total loans and OREO at June 30, 2024. The allowance for credit losses as a percentage of loans totaled 1.25% at June 30, 2024 and 2023.

Average total deposits increased $469.1 million or 6.0% to $8.3 billion, and average transaction deposits increased $418.4 million or 6.1%. The mix of transaction deposits to total deposits was 87.8%, compared to 87.9% at June 30, 2023.

Non-interest income totaled $31.7 million, an increase of $3.2 million or 11.4%, driven by our diversified sources of fee revenue. Other non-interest income increased $4.3 million and included increases in SBA loan income, trust income, Cambr income and swap fee income. Mortgage banking income decreased $1.0 million as the sustained high-interest rate environment has lowered mortgage volume.

Non-interest expense totaled $125.9 million, an increase of $6.6 million or 5.6%, largely due to ongoing investments in technology. Salaries and benefits increased $5.2 million, occupancy and equipment increased $1.9 million and data processing increased $1.5 million. Other intangible assets amortization increased $0.6 million due to our Cambr acquisition in April of 2023. These increases were partially offset by a decrease of $2.4 million in professional fees.

Income tax expense totaled $13.1 million, a decrease of $5.3 million from the same period prior year, driven by lower pre-tax income. The effective tax rate was 18.6% for the first six months of 2024, compared to 20.2%.

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Conference Call

Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Wednesday, July 24, 2024. Interested parties may listen to this call by dialing (877) 400-0505 using the participant passcode of 1616066 and asking for the NBHC Q2 2024 Earnings Call. The earnings release and a link to the replay of the call will be available on the Company's website at www.nationalbankholdings.com by visiting the investor relations area.

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 stakeholder results. Through its bank subsidiaries, NBH Bank and Bank of Jackson Hole Trust, National Bank Holdings Corporation operates a network of over 90 banking centers, serving individual consumers, small, medium and large businesses, and government and non-profit entities. Its banking centers are located in its core footprint of Colorado, the greater Kansas City region, Utah, Wyoming, Texas, New Mexico and Idaho. Its comprehensive residential mortgage banking group primarily serves the bank's core footprint. Its trust and wealth management business is operated in its core footprint under the Bank of Jackson Hole Trust charter. NBH Bank operates under a single state charter through the following brand names as divisions of NBH Bank: in Colorado, Community Banks of Colorado and Community Banks Mortgage; in Kansas and Missouri, Bank Midwest and Bank Midwest Mortgage; in Texas, Utah, New Mexico and Idaho, Hillcrest Bank and Hillcrest Bank Mortgage; and in Wyoming, Bank of Jackson Hole and Bank of Jackson Hole Mortgage. Additional information about National Bank Holdings Corporation can be found at www.nationalbankholdings.com.

For more information visit: cobnks.com, bankmw.com, hillcrestbank.com, bankofjacksonhole.com, or nbhbank.com, or connect with any of our brands on LinkedIn.

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," "non-interest expense excluding other intangible assets amortization," "efficiency ratio excluding other intangible assets amortization," "net income excluding the impact of other intangible assets amortization expense, after tax," "pre-provision net revenue," 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.

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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: the impact of potential regulatory changes to capital requirements, treatment of investment securities and FDIC deposit insurance levels and costs; our ability to execute our business strategy, including our digital strategy, as well as changes in our business strategy or development plans; business and economic conditions; effects of any potential government shutdowns; economic, market, operational, liquidity, credit and interest rate risks associated with the Company's business, including increased competition for deposits due to prevailing market interest rates and banking sector volatility; effects of any changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; 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; changes in the fair value of our investment securities due to market conditions outside of our control; financial or reputational impacts associated with the increased prevalence of fraud or other financial crimes; with respect to our mortgage business, the inability to negotiate fees with investors for the purchase of our loans or our obligation to indemnify purchasers or repurchase related loans if the loans fail to meet certain criteria, or higher rate of delinquencies and defaults as a result of the geographic concentration of our servicing portfolio; the Company's ability to identify potential candidates for, obtain regulatory approval for, and consummate, integrate and realize operating efficiencies from, acquisitions, consolidations and other expansion opportunities; our ability to integrate acquisitions or consolidations and to achieve synergies, operating efficiencies and/or other expected benefits within expected timeframes, or at all, or within expected cost projections, and to preserve the goodwill of acquired financial institutions; 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, including those that could result in disclosure or misuse of confidential or proprietary client or other information; the Company's ability to achieve organic loan and deposit growth and the competition for, and composition of, such growth; changes in sources and uses of funds; increased competition in the financial services industry; regulatory and financial impacts associated with the Company growing to over $10 billion in consolidated assets; increases in claims and litigation related to our fiduciary responsibilities in connection with our trust and wealth management business; the effect of changes in accounting policies and practices as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board ("FASB") and other accounting standard setters; the share price of the Company's stock; the Company's ability to realize deferred tax assets or the need for a valuation allowance, or the effects of changes in tax laws on our deferred tax assets; the effects of tax legislation, including the potential of future increases to prevailing tax rules, or challenges to our positions; 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, including, but not limited to, changes in regulation that affect the fees that we charge, the resolution of legal proceedings or regulatory or other government inquiries, and the results of regulatory examinations, reviews or other inquiries, and changes in regulations that apply to us as a Colorado state-chartered bank and a Wyoming state-chartered bank; technological changes, including with respect to the advancement of artificial intelligence; the timely development and acceptance of new products and services, including in the digital technology space our digital solution 2UniFi; changes in our management personnel and 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 our bank subsidiaries; changes in estimates of future credit reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; financial, reputational, or strategic risks associated with our investments in financial technology companies and initiatives; widespread

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natural and other disasters, pandemics, dislocations, political instability, acts of war or terrorist activities, cyberattacks or international hostilities through impacts on the economy and financial markets generally or on us or our counterparties specifically; a cybersecurity incident, data breach or a failure of a key information technology system; impact of reputational risk; other risks and uncertainties listed from time to time in the Company's reports and documents filed with the Securities and Exchange Commission; 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.

Contacts:

Analysts/Institutional Investors:

Emily Gooden, Investor Relations Director, (720) 554-6640, [email protected]

Aldis Birkans, Chief Financial Officer, (720) 529-3314, [email protected]

Media:

Jody Soper, Chief Marketing Officer, (303) 784-5925, [email protected]

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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 six months ended

June 30,

March 31,

June 30,

June 30,

June 30,

2024

2024

2023

2024

2023

Total interest and dividend income

$

132,447

$

131,732

$

121,069

$

264,179

$

234,602

Total interest expense

48,873

47,702

31,285

96,575

49,929

Net interest income

83,574

84,030

89,784

167,604

184,673

Taxable equivalent adjustment

1,711

1,692

1,442

3,403

2,857

Net interest income FTE(1)

85,285

85,722

91,226

171,007

187,530

Provision expense for credit losses

2,776

-

1,700

2,776

2,600

Net interest income after provision for credit losses FTE(1)

82,509

85,722

89,526

168,231

184,930

Non-interest income:

Service charges

4,295

4,391

4,444

8,686

8,545

Bank card fees

4,882

4,578

5,091

9,460

9,728

Mortgage banking income

3,296

2,655

3,710

5,951

6,926

Other non-interest income

1,556

6,070

578

7,626

3,289

Total non-interest income

14,029

17,694

13,823

31,723

28,488

Non-interest expense:

Salaries and benefits

36,933

36,520

35,215

73,453

68,204

Occupancy and equipment

10,120

9,941

9,126

20,061

18,199

Professional fees

1,706

1,646

3,146

3,352

5,736

Data processing

4,117

4,066

2,959

8,183

6,711

Other non-interest expense

8,222

8,653

8,528

16,875

17,053

Other intangible assets amortization

1,977

2,008

2,007

3,985

3,370

Total non-interest expense

63,075

62,834

60,981

125,909

119,273

Income before income taxes FTE(1)

33,463

40,582

42,368

74,045

94,145

Taxable equivalent adjustment

1,711

1,692

1,442

3,403

2,857

Income before income taxes

31,752

38,890

40,926

70,642

91,288

Income tax expense

5,617

7,499

8,369

13,116

18,448

Net income

$

26,135

$

31,391

$

32,557

$

57,526

$

72,840

Earnings per share - basic

$

0.68

$

0.82

$

0.86

$

1.51

$

1.92

Earnings per share - diluted

0.68

0.82

0.85

1.50

1.91

(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.

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NATIONAL BANK HOLDINGS CORPORATION

Consolidated Statements of Financial Condition (Unaudited)

(Dollars in thousands, except share and per share data)

June 30, 2024

March 31, 2024

December 31, 2023

June 30, 2023

ASSETS

Cash and cash equivalents

$

144,993

$

292,931

$

190,826

$

323,832

Investment securities available-for-sale

691,076

685,666

628,829

659,347

Investment securities held-to-maturity

554,686

570,850

585,052

619,400

Non-marketable securities

72,987

73,439

90,477

88,849

Loans

7,722,153

7,569,052

7,698,758

7,414,357

Allowance for credit losses

(96,457)

(97,607)

(97,947)

(92,581)

Loans, net

7,625,696

7,471,445

7,600,811

7,321,776

Loans held for sale

18,787

14,065

18,854

25,172

Other real estate owned

1,526

4,064

4,088

3,458

Premises and equipment, net

177,456

168,956

162,733

147,853

Goodwill

306,043

306,043

306,043

306,043

Intangible assets, net

62,356

64,212

66,025

74,914

Other assets

315,245

315,805

297,326

301,313

Total assets

$

9,970,851

$

9,967,476

$

9,951,064

$

9,871,957

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

Non-interest bearing demand deposits

$

2,229,432

$

2,292,917

$

2,361,367

$

2,628,942

Interest bearing demand deposits

1,420,942

1,427,856

1,480,042

1,324,292

Savings and money market

3,703,810

3,801,013

3,367,012

3,183,355

Total transaction deposits

7,354,184

7,521,786

7,208,421

7,136,589

Time deposits

1,022,741

995,976

981,970

984,269

Total deposits

8,376,925

8,517,762

8,190,391

8,120,858

Securities sold under agreements to repurchase

19,465

19,577

19,627

21,422

Long-term debt

54,356

54,278

54,200

54,045

Federal Home Loan Bank advances

35,000

-

340,000

385,000

Other liabilities

237,461

144,029

134,039

143,298

Total liabilities

8,723,207

8,735,646

8,738,257

8,724,623

Shareholders' equity:

Common stock

515

515

515

515

Additional paid in capital

1,161,804

1,163,773

1,162,269

1,158,727

Retained earnings

469,630

454,211

433,126

384,094

Treasury stock

(303,880)

(306,460)

(306,702)

(307,388)

Accumulated other comprehensive loss, net of tax

(80,425)

(80,209)

(76,401)

(88,614)

Total shareholders' equity

1,247,644

1,231,830

1,212,807

1,147,334

Total liabilities and shareholders' equity

$

9,970,851

$

9,967,476

$

9,951,064

$

9,871,957

SHARE DATA

Average basic shares outstanding

38,210,869

38,031,358

38,013,791

37,957,287

Average diluted shares outstanding

38,372,777

38,188,480

38,162,538

38,107,326

Ending shares outstanding

37,899,453

37,806,148

37,784,851

37,719,026

Common book value per share

$

32.92

$

32.58

$

32.10

$

30.42

Tangible common book value per share(1) (non-GAAP)

23.74

23.32

22.77

20.95

Tangible common book value per share, excluding accumulated other comprehensive loss(1) (non-GAAP)

25.86

25.44

24.79

23.30

CAPITAL RATIOS

Average equity to average assets

12.57%

12.40%

11.97%

11.78%

Tangible common equity to tangible assets(1)

9.35%

9.17%

8.96%

8.30%

Tier 1 leverage ratio

10.20%

9.99%

9.74%

9.15%

Common equity tier 1 risk-based capital ratio

12.41%

12.35%

11.89%

11.08%

Tier 1 risk-based capital ratio

12.41%

12.35%

11.89%

11.08%

Total risk-based capital ratio

14.32%

14.30%

13.80%

12.95%

(1)

Represents a non-GAAP financial measure. See non-GAAP reconciliations starting on page 14.

8

NATIONAL BANK HOLDINGS CORPORATION

Loan Portfolio

(Dollars in thousands)

Period End Loan Balances by Type

June 30, 2024

June 30, 2024

vs. March 31, 2024

vs. June 30, 2023

June 30, 2024

March 31, 2024

% Change

June 30, 2023

% Change

Originated:

Commercial:

Commercial and industrial

$

1,906,095

$

1,777,328

7.2%

$

1,788,714

6.6%

Municipal and non-profit

1,063,706

1,062,287

0.1%

1,022,414

4.0%

Owner-occupied commercial real estate

921,122

875,303

5.2%

710,508

29.6%

Food and agribusiness

248,401

241,654

2.8%

263,086

(5.6)%

Total commercial

4,139,324

3,956,572

4.6%

3,784,722

9.4%

Commercial real estate non-owner occupied

1,116,424

1,092,780

2.2%

1,043,999

6.9%

Residential real estate

923,313

923,103

0.0%

877,907

5.2%

Consumer

14,385

14,936

(3.7)%

16,979

(15.3)%

Total originated

6,193,446

5,987,391

3.4%

5,723,607

8.2%

Acquired:

Commercial:

Commercial and industrial

124,104

132,532

(6.4)%

163,139

(23.9)%

Municipal and non-profit

288

294

(2.0)%

310

(7.1)%

Owner-occupied commercial real estate

232,890

234,486

(0.7)%

245,605

(5.2)%

Food and agribusiness

48,061

57,896

(17.0)%

62,918

(23.6)%

Total commercial

405,343

425,208

(4.7)%

471,972

(14.1)%

Commercial real estate non-owner occupied

752,040

767,419

(2.0)%

847,946

(11.3)%

Residential real estate

369,003

387,101

(4.7)%

367,998

0.3%

Consumer

2,321

1,933

20.1%

2,834

(18.1)%

Total acquired

1,528,707

1,581,661

(3.3)%

1,690,750

(9.6)%

Total loans

$

7,722,153

$

7,569,052

2.0%

$

7,414,357

4.2%

Loan Fundings(1)

Second quarter

First quarter

Fourth quarter

Third quarter

Second quarter

2024

2024

2023

2023

2023

Commercial:

Commercial and industrial

$

241,910

$

53,978

$

135,954

$

89,297

$

111,717

Municipal and non-profit

28,785

14,564

79,650

18,657

39,331

Owner occupied commercial real estate

102,615

35,128

75,631

67,322

62,649

Food and agribusiness

11,040

(7,204)

10,646

16,191

6,017

Total commercial

384,350

96,466

301,881

191,467

219,714

Commercial real estate non-owner occupied

83,184

73,789

107,738

88,434

99,984

Residential real estate

36,124

29,468

48,925

42,514

40,814

Consumer

1,547

234

1,849

1,689

1,777

Total

$

505,205

$

199,957

$

460,393

$

324,104

$

362,289

(1)

Loan fundings are defined as closed end funded loans and net fundings under revolving lines of credit. Net fundings (paydowns) under revolving lines of credit were $19,281, ($59,523), $16,954, ($12,877) and $13,766 for the periods noted in the table above, respectively.

9

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

June 30, 2024

March 31, 2024

June 30, 2023

Average

Average

Average

Average

Average

Average

balance

Interest

rate

balance

Interest

rate

balance

Interest

rate

Interest earning assets:

Originated loans FTE(1)(2)

$

6,074,199

$

101,794

6.74%

$

6,046,849

$

100,914

6.71%

$

5,649,623

$

86,547

6.14%

Acquired loans

1,541,576

23,464

6.12%

1,611,521

24,289

6.06%

1,712,118

26,388

6.18%

Loans held for sale

16,862

318

7.59%

12,017

225

7.53%

26,572

460

6.94%

Investment securities available-for-sale

802,830

5,101

2.54%

751,168

4,103

2.18%

786,643

3,883

1.97%

Investment securities held-to-maturity

564,818

2,419

1.71%

579,160

2,514

1.74%

630,547

2,808

1.78%

Other securities

25,093

377

6.01%

35,036

616

7.03%

49,093

914

7.45%

Interest earning deposits

92,388

685

2.98%

91,579

763

3.35%

144,391

1,511

4.20%

Total interest earning assets FTE(2)

$

9,117,766

$

134,158

5.92%

$

9,127,330

$

133,424

5.88%

$

8,998,987

$

122,511

5.46%

Cash and due from banks

$

100,165

$

102,583

$

109,948

Other assets

771,475

756,230

746,864

Allowance for credit losses

(97,741)

(97,882)

(90,636)

Total assets

$

9,891,665

$

9,888,261

$

9,765,163

Interest bearing liabilities:

Interest bearing demand, savings and money market deposits

$

5,109,924

$

39,681

3.12%

$

4,947,811

$

36,413

2.96%

$

4,282,972

$

20,100

1.88%

Time deposits

1,015,371

8,536

3.38%

990,041

7,584

3.08%

981,201

5,043

2.06%

Securities sold under agreements to repurchase

17,449

5

0.12%

18,929

6

0.13%

20,264

5

0.10%

Long-term debt

54,307

518

3.84%

54,229

518

3.84%

53,997

518

3.85%

Federal Home Loan Bank advances

9,505

133

5.63%

228,236

3,181

5.61%

435,713

5,619

5.17%

Total interest bearing liabilities

$

6,206,556

$

48,873

3.17%

$

6,239,246

$

47,702

3.07%

$

5,774,147

$

31,285

2.17%

Demand deposits

$

2,254,454

$

2,280,997

$

2,701,306

Other liabilities

187,499

141,735

138,936

Total liabilities

8,648,509

8,661,978

8,614,389

Shareholders' equity

1,243,156

1,226,283

1,150,774

Total liabilities and shareholders' equity

$

9,891,665

$

9,888,261

$

9,765,163

Net interest income FTE(2)

$

85,285

$

85,722

$

91,226

Interest rate spread FTE(2)

2.75%

2.81%

3.29%

Net interest earning assets

$

2,911,210

$

2,888,084

$

3,224,840

Net interest margin FTE(2)

3.76%

3.78%

4.07%

Average transaction deposits

$

7,364,378

$

7,228,808

$

6,984,278

Average total deposits

8,379,749

8,218,849

7,965,479

Ratio of average interest earning assets to average interest bearing liabilities

146.91%

146.29%

155.85%

(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 $1,711, $1,692 and $1,442 for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively.

10

NATIONAL BANK HOLDINGS CORPORATION

Summary of Net Interest Margin

(Dollars in thousands)

For the six months ended June 30, 2024

For the six months ended June 30, 2023

Average

Average

Average

Average

balance

Interest

rate

balance

Interest

rate

Interest earning assets:

Originated loans FTE(1)(2)

$

6,060,524

$

202,708

6.73%

$

5,582,536

$

165,715

5.99%

Acquired loans

1,576,548

47,753

6.09%

1,741,508

53,411

6.18%

Loans held for sale

14,440

543

7.56%

24,176

806

6.72%

Investment securities available-for-sale

776,999

9,204

2.37%

798,385

7,872

1.97%

Investment securities held-to-maturity

571,989

4,933

1.72%

638,552

5,679

1.78%

Other securities

30,065

993

6.61%

50,223

1,812

7.22%

Interest earning deposits

91,983

1,448

3.17%

115,750

2,164

3.77%

Total interest earning assets FTE(2)

$

9,122,548

$

267,582

5.90%

$

8,951,130

$

237,459

5.35%

Cash and due from banks

$

101,374

$

114,254

Other assets

763,853

717,563

Allowance for credit losses

(97,812)

(90,235)

Total assets

$

9,889,963

$

9,692,712

Interest bearing liabilities:

Interest bearing demand, savings and money market deposits

$

5,028,868

$

76,094

3.04%

$

4,026,015

$

27,859

1.40%

Time deposits

1,002,706

16,120

3.23%

952,023

8,333

1.77%

Securities sold under agreements to repurchase

18,189

11

0.12%

20,155

11

0.11%

Long-term debt

54,268

1,036

3.84%

53,958

1,036

3.87%

Federal Home Loan Bank advances

118,871

3,314

5.61%

516,326

12,690

4.96%

Total interest bearing liabilities

$

6,222,902

$

96,575

3.12%

$

5,568,477

$

49,929

1.81%

Demand deposits

$

2,267,725

$

2,852,137

Other liabilities

164,617

137,065

Total liabilities

8,655,244

8,557,679

Shareholders' equity

1,234,719

1,135,033

Total liabilities and shareholders' equity

$

9,889,963

$

9,692,712

Net interest income FTE(2)

$

171,007

$

187,530

Interest rate spread FTE(2)

2.78%

3.54%

Net interest earning assets

$

2,899,646

$

3,382,653

Net interest margin FTE(2)

3.77%

4.22%

Average transaction deposits

$

7,296,593

$

6,878,152

Average total deposits

8,299,299

7,830,175

Ratio of average interest earning assets to average interest bearing liabilities

146.60%

160.75%

(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 $3,403 and $2,857 for the six months ended June 30, 2024 and June 30, 2023, respectively.

11

NATIONAL BANK HOLDINGS CORPORATION

Allowance for Credit Losses and Asset Quality

(Dollars in thousands)

Allowance for Credit Losses Analysis

As of and for the three months ended

June 30, 2024

March 31, 2024

June 30, 2023

Beginning allowance for credit losses

$

97,607

$

97,947

$

90,343

Charge-offs

(4,605)

(278)

(354)

Recoveries

499

188

42

Provision expense (release) for credit losses

2,956

(250)

2,550

Ending allowance for credit losses ("ACL")

$

96,457

$

97,607

$

92,581

Ratio of annualized net charge-offs to average total loans during the period

0.22%

0.00%

0.02%

Ratio of ACL to total loans outstanding at period end

1.25%

1.29%

1.25%

Ratio of ACL to total non-performing loans at period end

370.18%

272.52%

276.25%

Total loans

$

7,722,153

$

7,569,052

$

7,414,357

Average total loans during the period

7,582,506

7,632,635

7,338,585

Total non-performing loans

26,057

35,817

33,514

Past Due and Non-accrual Loans

June 30, 2024

March 31, 2024

June 30, 2023

Loans 30-89 days past due and still accruing interest

$

27,159

$

3,495

$

7,261

Loans 90 days past due and still accruing interest

3,498

1

246

Non-accrual loans

26,057

35,817

33,514

Total past due and non-accrual loans

$

56,714

$

39,313

$

41,021

Total 90 days past due and still accruing interest and non-accrual loans to total loans

0.38%

0.47%

0.46%

Asset Quality Data

June 30, 2024

March 31, 2024

June 30, 2023

Non-performing loans

$

26,057

$

35,817

$

33,514

OREO

1,526

4,064

3,458

Total non-performing assets

$

27,583

$

39,881

$

36,972

Total non-performing loans to total loans

0.34%

0.47%

0.45%

Total non-performing assets to total loans and OREO

0.36%

0.53%

0.50%

12

NATIONAL BANK HOLDINGS CORPORATION

Key Metrics(1)

As of and for the three months ended

As of and for the six months ended

June 30,

March 31,

June 30,

June 30,

June 30,

2024

2023

2023

2024

2023

Return on average assets

1.06%

1.28%

1.34%

1.17%

1.52%

Return on average tangible assets(2)

1.17%

1.39%

1.45%

1.28%

1.63%

Return on average equity

8.46%

10.30%

11.35%

9.37%

12.94%

Return on average tangible common equity(2)

12.44%

15.14%

17.24%

13.77%

19.05%

Loan to deposit ratio (end of period)

92.18%

88.86%

91.30%

92.18%

91.30%

Non-interest bearing deposits to total deposits (end of period)

26.61%

26.92%

32.37%

26.61%

32.37%

Net interest margin(3)

3.69%

3.70%

4.00%

3.69%

4.16%

Net interest margin FTE(2)(3)

3.76%

3.78%

4.07%

3.77%

4.22%

Interest rate spread FTE(2)(4)

2.75%

2.81%

3.29%

2.78%

3.54%

Yield on earning assets(5)

5.84%

5.80%

5.40%

5.82%

5.29%

Yield on earning assets FTE(2)(5)

5.92%

5.88%

5.46%

5.90%

5.35%

Cost of interest bearing liabilities

3.17%

3.07%

2.17%

3.12%

1.81%

Cost of deposits

2.31%

2.15%

1.27%

2.23%

0.93%

Non-interest income to total revenue FTE(2)

14.13%

17.11%

13.16%

15.65%

13.19%

Non-interest expense to average assets

2.56%

2.56%

2.50%

2.56%

2.48%

Efficiency ratio

64.62%

61.77%

58.86%

63.17%

55.95%

Efficiency ratio excluding other intangible assets amortization FTE(2)

61.52%

58.82%

56.14%

60.14%

53.65%

Pre-provision net revenue

$

34,528

$

38,890

$

42,626

$

73,418

$

93,888

Pre-provision net revenue FTE(2)

36,239

40,582

44,068

76,821

96,745

Total Loans Asset Quality Data(6)(7)(8)

Non-performing loans to total loans

0.34%

0.47%

0.45%

0.34%

0.45%

Non-performing assets to total loans and OREO

0.36%

0.53%

0.50%

0.36%

0.50%

Allowance for credit losses to total loans

1.25%

1.29%

1.25%

1.25%

1.25%

Allowance for credit losses to non-performing loans

370.18%

272.52%

276.25%

370.18%

276.25%

Net charge-offs to average loans

0.22%

0.00%

0.02%

0.11%

0.02%

(1)

Ratios are annualized.

(2)

Ratio represents non-GAAP financial measure. See non-GAAP reconciliations starting on page 14.

(3)

Net interest margin represents net interest income, including accretion income on interest earning assets, as a percentage of average interest earning assets.

(4)

Interest rate spread represents the difference between the weighted average yield on interest earning assets and the weighted average cost of interest bearing liabilities.

(5)

Interest earning assets include assets that earn interest/accretion or dividends. Any market value adjustments on investment securities or loans are excluded from interest earning assets.

(6)

Non-performing loans consist of non-accruing loans and modified loans on non-accrual.

(7)

Non-performing assets include non-performing loans and other real estate owned.

(8)

Total loans are net of unearned discounts and fees.

13

NATIONAL BANK HOLDINGS CORPORATION

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(Dollars in thousands, except share and per share data)

Tangible Common Book Value Ratios

June 30, 2024

March 31, 2024

December 31, 2023

June 30, 2023

Total shareholders' equity

$

1,247,644

$

1,231,830

$

1,212,807

$

1,147,334

Less: goodwill and other intangible assets, net

(360,732)

(362,709)

(364,716)

(368,732)

Add: deferred tax liability related to goodwill

12,871

12,539

12,208

11,544

Tangible common equity (non-GAAP)

$

899,783

$

881,660

$

860,299

$

790,146

Total assets

$

9,970,851

$

9,967,476

$

9,951,064

$

9,871,957

Less: goodwill and other intangible assets, net

(360,732)

(362,709)

(364,716)

(368,732)

Add: deferred tax liability related to goodwill

12,871

12,539

12,208

11,544

Tangible assets (non-GAAP)

$

9,622,990

$

9,617,306

$

9,598,556

$

9,514,769

Tangible common equity to tangible assets calculations:

Total shareholders' equity to total assets

12.51%

12.36%

12.19%

11.62%

Less: impact of goodwill and other intangible assets, net

(3.16)%

(3.19)%

(3.23)%

(3.32)%

Tangible common equity to tangible assets (non-GAAP)

9.35%

9.17%

8.96%

8.30%

Tangible common book value per share calculations:

Tangible common equity (non-GAAP)

$

899,783

$

881,660

$

860,299

$

790,146

Divided by: ending shares outstanding

37,899,453

37,806,148

37,784,851

37,719,026

Tangible common book value per share (non-GAAP)

$

23.74

$

23.32

$

22.77

$

20.95

Tangible common book value per share, excluding accumulated other comprehensive loss calculations:

Tangible common equity (non-GAAP)

$

899,783

$

881,660

$

860,299

$

790,146

Accumulated other comprehensive loss, net of tax

80,425

80,209

76,401

88,614

Tangible common book value, excluding accumulated other comprehensive loss, net of tax (non-GAAP)

980,208

961,869

936,700

878,760

Divided by: ending shares outstanding

37,899,453

37,806,148

37,784,851

37,719,026

Tangible common book value per share, excluding accumulated other comprehensive loss, net of tax (non-GAAP)

$

25.86

$

25.44

$

24.79

$

23.30

14

NATIONAL BANK HOLDINGS CORPORATION

(Dollars in thousands, except share and per share data)

Return on Average Tangible Assets and Return on Average Tangible Equity

As of and for the three months ended

As of and for the six months ended

June 30,

March 31,

June 30,

June 30,

June 30,

2024

2024

2023

2024

2023

Net income

$

26,135

$

31,391

$

32,557

$

57,526

$

72,840

Add: impact of other intangible assets amortization expense, after tax

1,516

1,534

1,546

3,055

2,596

Net income excluding the impact of other intangible assets amortization expense, after tax (non-GAAP)

$

27,651

$

32,925

$

34,103

$

60,581

$

75,436

Average assets

$

9,891,665

$

9,888,261

$

9,765,163

$

9,889,963

$

9,692,712

Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill

(349,030)

(351,383)

(357,446)

(350,040)

(336,420)

Average tangible assets (non-GAAP)

$

9,542,635

$

9,536,878

$

9,407,717

$

9,539,923

$

9,356,292

Average shareholders' equity

$

1,243,156

$

1,226,283

$

1,150,774

$

1,234,719

$

1,135,033

Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill

(349,030)

(351,383)

(357,446)

(350,040)

(336,420)

Average tangible common equity (non-GAAP)

$

894,126

$

874,900

$

793,328

$

884,679

$

798,613

Return on average assets

1.06%

1.28%

1.34%

1.17%

1.52%

Return on average tangible assets (non-GAAP)

1.17%

1.39%

1.45%

1.28%

1.63%

Return on average equity

8.46%

10.30%

11.35%

9.37%

12.94%

Return on average tangible common equity (non-GAAP)

12.44%

15.14%

17.24%

13.77%

19.05%

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

As of and for the three months ended

As of and for the six months ended

June 30,

March 31,

June 30,

June 30,

June 30,

2024

2024

2023

2024

2023

Interest income

$

132,447

$

131,732

$

121,069

$

264,179

$

234,602

Add: impact of taxable equivalent adjustment

1,711

1,692

1,442

3,403

2,857

Interest income FTE (non-GAAP)

$

134,158

$

133,424

$

122,511

$

267,582

$

237,459

Net interest income

$

83,574

$

84,030

$

89,784

$

167,604

$

184,673

Add: impact of taxable equivalent adjustment

1,711

1,692

1,442

3,403

2,857

Net interest income FTE (non-GAAP)

$

85,285

$

85,722

$

91,226

$

171,007

$

187,530

Average earning assets

$

9,117,766

$

9,127,330

$

8,998,987

$

9,122,548

$

8,951,130

Yield on earning assets

5.84%

5.80%

5.40%

5.82%

5.29%

Yield on earning assets FTE (non-GAAP)

5.92%

5.88%

5.46%

5.90%

5.35%

Net interest margin

3.69%

3.70%

4.00%

3.69%

4.16%

Net interest margin FTE (non-GAAP)

3.76%

3.78%

4.07%

3.77%

4.22%

Efficiency Ratio and Pre-Provision Net Revenue

As of and for the three months ended

As of and for the six months ended

June 30,

March 31,

June 30,

June 30,

June 30,

2024

2024

2023

2024

2023

Net interest income

$

83,574

$

84,030

$

89,784

$

167,604

$

184,673

Add: impact of taxable equivalent adjustment

1,711

1,692

1,442

3,403

2,857

Net interest income FTE (non-GAAP)

$

85,285

$

85,722

$

91,226

$

171,007

$

187,530

Non-interest income

$

14,029

$

17,694

$

13,823

$

31,723

$

28,488

Non-interest expense

$

63,075

$

62,834

$

60,981

$

125,909

$

119,273

Less: other intangible assets amortization

(1,977)

(2,008)

(2,007)

(3,985)

(3,370)

Non-interest expense excluding other intangible assets amortization (non-GAAP)

$

61,098

$

60,826

$

58,974

$

121,924

$

115,903

Efficiency ratio

64.62%

61.77%

58.86%

63.17%

55.95%

Efficiency ratio excluding other intangible assets amortization FTE (non-GAAP)

61.52%

58.82%

56.14%

60.14%

53.65%

Pre-provision net revenue (non-GAAP)

$

34,528

$

38,890

$

42,626

$

73,418

$

93,888

Pre-provision net revenue, FTE (non-GAAP)

36,239

40,582

44,068

76,821

96,745

15