• National Bank Holdings Corporation Announces Second Quarter 2022 Financial Results

    المصدر: Nasdaq GlobeNewswire / 19 يوليو 2022 15:10:44   America/Chicago

    DENVER, July 19, 2022 (GLOBE NEWSWIRE) -- National Bank Holdings Corporation (NYSE: NBHC) reported:

                       
      For the quarter For the quarter - adjusted(1)
      2Q22 1Q22 2Q21 2Q22 1Q22 2Q21
    Net income ($000's) $ 20,362  $18,352  $24,200  $ 21,135  $18,547  $24,200 
    Earnings per share - diluted $ 0.67  $0.60  $0.77  $ 0.69  $0.61  $0.77 
    Return on average tangible assets(2)  1.16%   1.07%   1.41%   1.20%   1.08%   1.41% 
    Return on average tangible common equity(2)  11.64%   10.31%   13.41%   12.08%   10.42%   13.41% 

                                                          

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

    In announcing NBHC’s second quarter 2022 results, Tim Laney shared, “We are pleased to deliver strong quarterly earnings of $0.67 per diluted share and revenue growth of 42.4% annualized over the prior quarter. Our teams delivered another record quarter of loan fundings driving solid loan growth of 12.3% annualized. Our prudent approach to extending credit coupled with the diversity and granularity of our loan portfolio, continues to produce excellent credit quality with just three basis points of annualized net charge-offs for the quarter and a record low non-performing loans ratio of 0.20%. Our fortress levels of capital and excess liquidity provide meaningful optionality and leave us well positioned to tackle challenges from any potential economic downturn.”

    Mr. Laney added, “We believe that our focus on building relationships will carry our positive momentum into the second half of the year. Our teams are well prepared to close on the two pending strategic acquisitions that will further enhance our service offerings and deepen our presence in the fast-growing and attractive Rocky Mountain region. Bank of Jackson Hole and Rock Canyon Bank each provide best-in-class scalable banking solutions for our clients and share our strong commitment to improving the communities we serve. We are making good progress on our regulatory approvals having just received regulatory approval from the Federal Reserve and Utah for Rock Canyon Bank and we remain on track for the Bank of Jackson Hole.”

    Second Quarter 2022 Results
    (All comparisons refer to the first quarter of 2022, except as noted)

    Net income increased $2.0 million to $20.4 million, or $0.67 per diluted share, during the second quarter of 2022. Adjusting for $1.0 million of non-recurring expenses related to the previously announced acquisitions of Bank of Jackson Hole and Rock Canyon Bank, net income totaled $21.1 million, or $0.69 per diluted share. The return on average tangible assets was 1.16%, compared to 1.07%, and the return on average tangible common equity was 11.64%, compared to 10.31%. Adjusting for non-recurring acquisition-related expenses, the return on average tangible assets was 1.20%, and the return on average tangible common equity was 12.08%.

    Net Interest Income
    Fully taxable equivalent net interest income totaled a record $57.4 million during the second quarter of 2022, an increase of $9.4 million, or 78.4% annualized, driven by a $99.8 million increase in average earning assets and a 48 basis point widening of the fully taxable equivalent net interest margin to 3.38%. The increase in average earning assets was primarily due to increases in average originated loans of $232.9 million and average investment securities of $117.2 million. The margin expansion was driven by a 47 basis point increase in earning asset yields, as a result of several increases in the federal funds rate since March 2022 and due to excess cash being deployed into originated loans. Additionally, this quarter’s net interest income benefitted from $2.2 million accelerated accretion income in acquired loans. The cost of deposits improved one basis point to a record low 0.16%.

    Loans
    Total loans increased $142.8 million or 12.3% annualized to $4.8 billion at June 30, 2022, led by commercial loan growth of $109.5 million or 13.3% annualized. We generated record quarterly loan fundings totaling $492.5 million, led by commercial loan fundings of $308.7 million.

    Asset Quality and Provision for Loan Losses
    The Company recorded $2.5 million of provision expense, compared to $0.3 million of provision release last quarter. The quarter’s provision was driven by strong loan growth and higher reserve requirements from changes in the CECL model’s underlying macro-economic forecast. Annualized net charge-offs totaled 0.03% of total loans, compared to 0.05%. Non-performing loans (comprised of non-accrual loans and non-accrual TDRs) decreased four basis points to a record low 0.20% of total loans, and non-performing assets decreased four basis points to a record low 0.31% of total loans and OREO. The allowance for credit losses as a percentage of loans totaled 1.06%, compared to 1.04% at March 31, 2022.

    Deposits
    Average total deposits increased $61.5 million or 4.0% annualized to $6.3 billion for the second quarter 2022. Average transaction deposits (defined as total deposits less time deposits) increased $92.4 million or 6.9% annualized. The mix of transaction deposits to total deposits remained at 87.4% at June 30, 2022. The loan to deposit ratio increased 432 basis points to 77.7%.

    Non-Interest Income
    Non-interest income totaled $16.8 million, a decrease of $2.3 million, primarily driven by $2.7 million lower mortgage banking income due to lower refinance activity. Service charges and bank card fees increased a combined $0.7 million during the quarter due to seasonality.

    Non-Interest Expense
    Non-interest expense totaled $45.6 million, an increase of $1.5 million from the prior quarter. Included in the quarter were $1.0 million of non-recurring acquisition-related expenses with $0.8 million included in professional fees and $0.2 million included in other non-interest expense. Salaries and benefits decreased $0.6 million largely due to lower mortgage banking-related compensation. The fully taxable equivalent efficiency ratio was 61.1% at June 30, 2022, compared to 65.3% at March 31, 2022. Adjusting for non-recurring acquisition-related expenses, the fully taxable equivalent efficiency ratio was 59.7%.

    Income tax expense totaled $4.4 million during the second quarter, compared to $3.6 million, driven by the increase in the quarter’s pre-tax income. The effective tax rate was 17.6% and 16.4% for the second and first quarters, respectively. The lower rate compared to the statutory rate reflects the continued success of our tax strategies and tax-exempt income.

    Capital
    Capital ratios continue to be strong and in excess of federal bank regulatory agency “well capitalized” thresholds. The Tier 1 leverage ratios at June 30, 2022 for the consolidated company and NBH Bank were 10.54% and 9.07%, respectively. Shareholders’ equity totaled $815.6 million at June 30, 2022 decreasing $4.7 million primarily due to a $19.4 million higher accumulated other comprehensive loss, partially offset by a $13.4 million increase in retained earnings.

    Common book value per share totaled $27.12 at June 30, 2022. Tangible common book value per share decreased $0.19 to $23.45 at June 30, 2022 as this quarter’s earnings, net of dividends paid, of $0.45 were outpaced by a $0.64 increase in accumulated other comprehensive loss. Excluding accumulated other comprehensive loss, the tangible book value per share increased $0.45 to $25.38 at June 30, 2022.

    Year-Over-Year Review
    (All comparisons refer to the first six months of 2021, except as noted)

    Net income totaled $38.7 million, or $1.27 per diluted share, for the first six months of 2022, compared to $51.0 million, or $1.63 per diluted share, in the same period prior year. Adjusting for $1.3 million of non-recurring acquisition-related expenses, net income totaled $39.7 million, or $1.30 per diluted share, for the first six months of 2022. The rise in mortgage rates in 2022 have resulted in lower mortgage banking income during the first six months of 2022. However, the increases in the Federal Reserve’s interest rates are driving higher loan yields resulting in increasing levels of net interest income. The return on average tangible assets was 1.11%, compared to 1.53% in the same period prior year, and the return on average tangible common equity was 10.97%, compared to 14.29%. Adjusting for non-recurring acquisition-related expenses, the return on average tangible assets was 1.14%, and the return on average tangible common equity was 11.24%.

    Fully taxable equivalent net interest income totaled $105.3 million, an increase of $12.7 million or 13.7%. Average earning assets increased $352.0 million, or 5.5%, including average originated loan growth of $437.7 million. The fully taxable equivalent net interest margin widened 23 basis points to 3.15%, benefitting from a 16 basis point increase in earning asset yields to 3.32% and an 11 basis point decrease in the cost of funds to 0.30%.

    Loans outstanding totaled $4.8 billion, increasing $516.3 million or 12.0%, led by commercial loan growth of $428.8 million, or 14.4%. New loan fundings over the trailing 12 months totaled a record $1.8 billion, led by commercial loan fundings of $1.3 billion.  

    The Company recorded $2.2 million of loan loss provision expense during the first six months of 2022, compared to a provision release of $9.4 million in the same period prior year. The provision expense was driven by loan growth and higher reserve requirements from changes in the CECL model’s underlying macro-economic forecast. Annualized net charge-offs remained consistent at 0.04% of total loans. Non-performing loans to total loans improved 12 basis points to 0.20% at June 30, 2022. The allowance for credit losses totaled 1.06% of total loans, compared to 1.14% at June 30, 2021.

    Average total deposits increased $284.8 million or 4.8% to $6.2 billion. Average transaction deposits increased $430.9 million or 8.6%, and average non-interest bearing demand deposits increased $184.2 million or 8.1%. The mix of transaction deposits to total deposits increased by 245 basis points to 87.4% at June 30, 2022, and the mix of non-interest bearing demand deposits to total deposits remained consistent at 39.6%.

    Non-interest income totaled $35.8 million, a decrease of $22.8 million or 38.9%, driven by $19.7 million of lower mortgage banking income due to lower refinance activity in 2022, as well as competition driving tighter gain on sale margins. Other non-interest income decreased $2.0 million due to market adjustments on company-owned life insurance and equity method investments. Included in the first six months of 2022 was $0.8 million of banking center consolidation-related income, compared to $2.4 million in the same period last year. Service charges and bank card fees increased a combined $0.6 million compared to the first six months of 2021.

    Non-interest expense totaled $89.6 million, a decrease of $6.4 million or 6.6%. Included in the first six months of 2022 were $1.3 million of non-recurring acquisition-related expenses, with $1.1 million included in professional fees and $0.2 million included in other non-interest expense. Salaries and benefits decreased $6.9 million largely due to lower mortgage banking-related compensation. Problem asset workout expense decreased $0.4 million, and gain on sale of OREO increased $0.5 million.

    Income tax expense totaled $8.0 million, a decrease of $3.2 million from the same period prior year. The effective tax rate was 17.1% for the first six months of 2022, compared to 17.9%.

    Conference Call
    Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Wednesday, July 20, 2022. Interested parties may listen to this call by dialing (800) 207-0148 using the participant passcode of 656517 and asking for the NBHC Q2 2022 Earnings Call. A telephonic replay of the call will be available beginning approximately four hours after the call’s completion through July 25, 2022, by dialing (888) 203-1112 using the confirmation code of 8588483. 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 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 subsidiary, NBH Bank, National Bank Holdings Corporation operates a network of 81 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, Texas, Utah and New Mexico. Its comprehensive residential mortgage banking group primarily serves the bank’s core footprint. 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; and in Texas, Utah and New Mexico, Hillcrest Bank and Hillcrest Bank 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 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.

    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 non-interest expense,” “adjusted efficiency ratio,” “adjusted net income,” “adjusted earnings per share – diluted,” “adjusted net income excluding core deposit intangible amortization expense, after tax,” “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.

    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 obtain regulatory approvals and meet other closing conditions to the mergers on the expected terms and schedule; delay in closing the mergers; difficulties and delays in integrating the NBHC, Community Bancorporation, and Bancshares of Jackson Hole Incorporated businesses or fully realizing cost savings and other benefits; business disruption following the proposed transactions; ability to execute our business strategy; 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; 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; 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; 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; the effects of tax legislation, including the potential of future increases to prevailing tax rules, or challenges to our position; 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, including in the digital technology space our digital solution 2UniFi; 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 credit reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; widespread natural and other disasters, pandemics, dislocations, political instability, acts of war or terrorist activities, cyberattacks or international hostilities; a cybersecurity incident, data breach or a failure of a key information technology system; adverse effects due to the novel Coronavirus Disease 2019 (COVID-19) on the Company and its clients, counterparties, employees, and third-party service providers, and the adverse impacts on our business, financial position, results of operations, and prospects; 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, (720) 554-6640, ir@nationalbankholdings.com
    Media: Jody Soper, Chief Marketing Officer, (303) 784-5925, Jody.Soper@nbhbank.com  

    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, March31, June30, June 30, June30,
     2022 2022 2021 2022
     2021
    Total interest and dividend income$58,836  $49,525  $48,450  $108,361  $97,663 
    Total interest expense 2,819   2,864   3,582   5,683   7,574 
    Net interest income 56,017   46,661   44,868   102,678   90,089 
    Taxable equivalent adjustment 1,336   1,313   1,279   2,649   2,547 
    Net interest income FTE(1) 57,353   47,974   46,147   105,327   92,636 
    Provision expense (release) for loan losses 2,504   (322)  (5,850)  2,182   (9,425)
    Net interest income after provision for loan losses FTE(1) 54,849   48,296   51,997   103,145   102,061 
    Non-interest income:               
    Service charges 3,956   3,710   3,568   7,666   7,042 
    Bank card fees 4,541   4,123   4,614   8,664   8,687 
    Mortgage banking income 6,948   9,666   13,979   16,614   36,358 
    Other non-interest income 1,252   847   3,105   2,099   4,098 
    OREO-related income 5         5   35 
    Banking center consolidation-related income 60   708      768   2,407 
    Total non-interest income 16,762   19,054   25,266   35,816   58,627 
    Non-interest expense:               
    Salaries and benefits 28,776   29,336   31,439   58,112   64,962 
    Occupancy and equipment 6,665   6,396   6,131   13,061   12,681 
    Professional fees 1,486   814   649   2,300   1,391 
    Other non-interest expense 8,180   7,352   7,019   15,532   13,872 
    Problem asset workout 144   163   294   307   732 
    Loss (gain) on sale of OREO, net 5   (275)  221   (270)  192 
    Core deposit intangible asset amortization 296   296   296   592   592 
    Banking center consolidation-related expense       294      1,589 
    Total non-interest expense 45,552   44,082   46,343   89,634   96,011 
                    
    Income before income taxes FTE(1) 26,059   23,268   30,920   49,327   64,677 
    Taxable equivalent adjustment 1,336   1,313   1,279   2,649   2,547 
    Income before income taxes 24,723   21,955   29,641   46,678   62,130 
    Income tax expense 4,361   3,603   5,441   7,964   11,118 
    Net income$20,362  $18,352  $24,200  $38,714  $51,012 
    Earnings per share - basic$0.67  $0.61  $0.78  $1.28  $1.65 
    Earnings per share - diluted 0.67   0.60   0.77   1.27   1.63 

                                                          

    (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.
       

    NATIONAL BANK HOLDINGS CORPORATION
    Consolidated Statements of Financial Condition (Unaudited)
    (Dollars in thousands, except share and per share data)

                
     June 30, 2022 March 31, 2022 December 31, 2021 June 30, 2021
    ASSETS           
    Cash and cash equivalents$448,375  $786,385  $845,695  $1,004,493 
    Investment securities available-for-sale 805,858   790,384   691,847   605,798 
    Investment securities held-to-maturity 582,650   567,055   609,012   687,635 
    Non-marketable securities 59,754   54,568   50,740   14,741 
    Loans 4,817,070   4,674,238   4,513,383   4,300,757 
    Allowance for credit losses (50,860)  (48,810)  (49,694)  (49,030)
    Loans, net 4,766,210   4,625,428   4,463,689   4,251,727 
    Loans held for sale 48,816   90,152   139,142   134,805 
    Other real estate owned 4,992   5,063   7,005   5,124 
    Premises and equipment, net 103,690   95,133   96,747   95,019 
    Goodwill 115,027   115,027   115,027   115,027 
    Intangible assets, net 14,568   13,505   12,322   22,360 
    Other assets 218,059   198,812   182,785   199,399 
    Total assets$7,167,999  $7,341,512  $7,214,011  $7,136,128 
    LIABILITIES AND SHAREHOLDERS' EQUITY           
    Liabilities:           
    Non-interest bearing demand deposits$2,454,740  $2,554,820  $2,506,265  $2,437,328 
    Interest bearing demand deposits 597,000   595,137   555,401   555,865 
    Savings and money market 2,364,681   2,412,081   2,332,591   2,240,359 
    Total transaction deposits 5,416,421   5,562,038   5,394,257   5,233,552 
    Time deposits 777,977   802,772   833,916   924,501 
    Total deposits 6,194,398   6,364,810   6,228,173   6,158,053 
    Securities sold under agreements to repurchase 24,396   24,744   22,768   22,957 
    Long-term debt 39,532   39,505   39,478    
    Other liabilities 94,122   92,238   83,486   103,252 
    Total liabilities 6,352,448   6,521,297   6,373,905   6,284,262 
    Shareholders' equity:           
    Common stock 515   515   515   515 
    Additional paid in capital 1,014,330   1,014,332   1,014,294   1,011,200 
    Retained earnings 314,616   301,220   289,876   260,821 
    Treasury stock (455,909)  (457,219)  (457,616)  (422,365)
    Accumulated other comprehensive (loss) income, net of tax (58,001)  (38,633)  (6,963)  1,695 
    Total shareholders' equity 815,551   820,215   840,106   851,866 
    Total liabilities and shareholders' equity$7,167,999  $7,341,512  $7,214,011  $7,136,128 
    SHARE DATA           
    Average basic shares outstanding 30,225,898   30,120,195   30,338,265   30,947,206 
    Average diluted shares outstanding 30,493,265   30,479,261   30,715,500   31,226,351 
    Ending shares outstanding 30,075,175   30,008,781   29,958,764   30,800,985 
    Common book value per share$27.12  $27.33  $28.04  $27.66 
    Tangible common book value per share(1)(non-GAAP) 23.45   23.64   24.33   24.01 
    Tangible common book value per share, excluding accumulated other comprehensive income(1)(non-GAAP) 25.38   24.93   24.56   23.95 
    CAPITAL RATIOS           
    Average equity to average assets 11.32%   11.74%   11.88%   11.95% 
    Tangible common equity to tangible assets(1) 9.99%   9.81%   10.26%   10.53% 
    Tier 1 leverage ratio 10.54%   10.48%   10.39%   10.57% 
    Common equity tier 1 risk-based capital ratio 13.75%   13.94%   14.26%   15.31% 
    Tier 1 risk-based capital ratio 13.75%   13.94%   14.26%   15.31% 
    Total risk-based capital ratio 15.35%   15.56%   15.92%   16.27% 

                                                          

    (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

                    
         June 30, 2022   June 30, 2022
         vs. March 31, 2022   vs. June 30, 2021
     June 30, 2022 March 31, 2022 % Change June 30, 2021 % Change
    Originated:               
    Commercial:               
    Commercial and industrial$1,588,241  $1,551,447  2.4% $1,383,388  14.8%
    Municipal and non-profit 996,223   949,125  5.0%  860,740  15.7%
    Owner-occupied commercial real estate 592,334   554,345  6.9%  479,286  23.6%
    Food and agribusiness 196,829   205,899  (4.4)%  195,095  0.9%
    Total commercial 3,373,627   3,260,816  3.5%  2,918,509  15.6%
    Commercial real estate non-owner occupied 620,133   634,928  (2.3)%  570,252  8.7%
    Residential real estate 682,272   626,763  8.9%  600,124  13.7%
    Consumer 17,486   17,321  1.0%  17,942  (2.5)%
    Total originated 4,693,518   4,539,828  3.4%  4,106,827  14.3%
                    
    Acquired:               
    Commercial:               
    Commercial and industrial 15,056   15,800  (4.7)%  18,710  (19.5)%
    Municipal and non-profit 330   335  (1.5)%  359  (8.1)%
    Owner-occupied commercial real estate 18,849   21,329  (11.6)%  40,435  (53.4)%
    Food and agribusiness 2,849   2,976  (4.3)%  3,913  (27.2)%
    Total commercial 37,084   40,440  (8.3)%  63,417  (41.5)%
    Commercial real estate non-owner occupied 42,771   46,431  (7.9)%  67,368  (36.5)%
    Residential real estate 43,486   47,314  (8.1)%  62,805  (30.8)%
    Consumer 211   225  (6.2)%  340  (37.9)%
    Total acquired 123,552   134,410  (8.1)%  193,930  (36.3)%
    Total loans$4,817,070  $4,674,238  3.1% $4,300,757  12.0%
                      

    Loan Fundings(1)

                       
     Second quarter First quarter Fourth quarter Third quarter Second quarter
     2022
     2022 2021 2021 2021
    Commercial:                  
    Commercial and industrial$152,550  $169,168  $229,529  $196,289  $147,030 
    Municipal and non-profit 81,428   49,906   101,450   43,516   25,131 
    Owner occupied commercial real estate 78,905   67,597   28,914   53,445   48,225 
    Food and agribusiness (4,186)  18,620   11,016   8,442   26,956 
    Total commercial 308,697   305,291   370,909   301,692   247,342 
    Commercial real estate non-owner occupied 88,612   63,416   46,128   55,392   58,532 
    Residential real estate 93,220   49,040   55,873   54,442   53,962 
    Consumer 1,989   1,904   2,524   1,810   2,267 
    Total$492,518  $419,651  $475,434  $413,336  $362,103 

                                                          

    (1) Loan fundings are defined as closed end funded loans and net fundings under revolving lines of credit. Net fundings under revolving lines of credit were $21,762, $66,430, $138,777, $29,154 and $59,520 as of the second and first quarters of 2022 and the fourth, third and second quarters of 2021, 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
      June 30, 2022 March 31, 2022 June 30, 2021
      Average    Average Average    Average Average    Average
      balance Interest rate balance Interest rate balance Interest rate
    Interest earning assets:                           
    Originated loans FTE(1)(2) $4,594,799  $47,787  4.17% $4,361,919  $42,085  3.91% $4,077,142  $40,036  3.94%
    Acquired loans  128,107   4,403  13.79%  147,638   2,568  7.05%  211,126   3,923  7.45%
    Loans held for sale  78,574   881  4.50%  93,639   756  3.27%  159,068   1,213  3.06%
    Investment securities available-for-sale  898,928   3,808  1.69%  751,646   2,849  1.52%  638,039   2,397  1.50%
    Investment securities held-to-maturity  559,712   2,067  1.48%  589,830   2,012  1.36%  572,534   1,723  1.20%
    Other securities  14,591   211  5.78%  14,590   209  5.73%  15,079   209  5.54%
    Interest earning deposits and securities purchased under agreements to resell  527,589   1,015  0.77%  743,239   359  0.20%  888,600   228  0.10%
    Total interest earning assets FTE(2) $6,802,300  $60,172  3.55% $6,702,501  $50,838  3.08% $6,561,588  $49,729  3.04%
    Cash and due from banks $75,616        $79,383        $78,148       
    Other assets  402,529         442,098         472,142       
    Allowance for credit losses  (49,126)        (49,584)        (54,984)      
    Total assets $7,231,319        $7,174,398        $7,056,894       
    Interest bearing liabilities:                           
    Interest bearing demand, savings and money market deposits $2,992,986  $1,494  0.20% $2,936,158  $1,437  0.20% $2,789,681  $1,572  0.23%
    Time deposits  790,998   991  0.50%  821,814   1,094  0.54%  937,579   2,004  0.86%
    Securities sold under agreements to repurchase  21,761   6  0.11%  22,770   7  0.12%  19,891   6  0.12%
    Long-term debt  39,516   328  3.33%  39,489   326  3.35%       0.00%
    Total interest bearing liabilities $3,845,261  $2,819  0.29% $3,820,231  $2,864  0.30% $3,747,151  $3,582  0.38%
    Demand deposits $2,469,729        $2,434,198        $2,368,810       
    Other liabilities  96,715         78,027         97,817       
    Total liabilities  6,411,705         6,332,456         6,213,778       
    Shareholders' equity  819,614         841,942         843,116       
    Total liabilities and shareholders' equity $7,231,319        $7,174,398        $7,056,894       
    Net interest income FTE(2)    $57,353       $47,974       $46,147   
    Interest rate spread FTE(2)        3.26%        2.78%        2.66%
    Net interest earning assets $2,957,039        $2,882,270        $2,814,437       
    Net interest margin FTE(2)        3.38%        2.90%        2.82%
    Average transaction deposits $5,462,715        $5,370,356        $5,158,491       
    Average total deposits  6,253,713         6,192,170         6,096,070       
    Ratio of average interest earning assets to average interest bearing liabilities  176.90%         175.45%         175.11%       

                                                          

    (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 $1,336, $1,313 and $1,279 for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.
       

    NATIONAL BANK HOLDINGS CORPORATION
    Summary of Net Interest Margin
    (Dollars in thousands)

                    
     For the six months ended June 30, 2022 For the six months ended June 30, 2021
     Average    Average Average    Average
     balance Interest rate balance Interest rate
    Interest earning assets:               
    Originated loans FTE(1)(2)$4,479,002  $89,872 4.05% $4,041,268  $79,596 3.97%
    Acquired loans 137,819   6,971 10.20%  224,722   9,051 8.12%
    Loans held for sale 86,065   1,637 3.84%  195,094   2,730 2.82%
    Investment securities available-for-sale 825,694   6,657 1.61%  662,250   4,882 1.47%
    Investment securities held-to-maturity 574,688   4,079 1.42%  497,245   3,139 1.26%
    Other securities 14,590   420 5.76%  15,446   419 5.43%
    Interest earning deposits and securities purchased under agreements to resell 634,818   1,374 0.44%  764,626   393 0.10%
    Total interest earning assets FTE(2)$6,752,676  $111,010 3.32% $6,400,651  $100,210 3.16%
    Cash and due from banks$77,489       $79,692      
    Other assets 422,205        483,617      
    Allowance for credit losses (49,354)       (56,938)     
    Total assets$7,203,016       $6,907,022      
    Interest bearing liabilities:               
    Interest bearing demand, savings and money market deposits$2,964,729  $2,931 0.20% $2,717,983  $3,224 0.24%
    Time deposits 806,321   2,085 0.52%  952,431   4,339 0.92%
    Securities sold under agreements to repurchase 22,263   13 0.12%  20,630   11 0.11%
    Long-term debt 39,503   654 3.34%      0.00%
    Total interest bearing liabilities$3,832,816  $5,683 0.30% $3,691,044  $7,574 0.41%
    Demand deposits$2,452,062       $2,267,900      
    Other liabilities 87,422        109,148      
    Total liabilities 6,372,300        6,068,092      
    Shareholders' equity 830,716        838,930      
    Total liabilities and shareholders' equity$7,203,016       $6,907,022      
    Net interest income FTE(2)   $105,327      $92,636  
    Interest rate spread FTE(2)      3.02%       2.75%
    Net interest earning assets$2,919,860       $2,709,607      
    Net interest margin FTE(2)      3.15%       2.92%
    Average transaction deposits$5,416,791       $4,985,883      
    Average total deposits 6,223,112        5,938,314      
    Ratio of average interest earning assets to average interest bearing liabilities 176.18%        173.41%      

                                                          

    (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 $2,649 and $2,547 for the six months ended June 30, 2022 and June 30, 2021, respectively.
       

    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, 2022 March 31, 2022 June 30, 2021
    Beginning allowance for credit losses$ 48,810  $49,694  $55,057 
    Charge-offs  (451)  (634)  (925)
    Recoveries  115   75   198 
    Provision expense (release)  2,386   (325)  (5,300)
    Ending allowance for credit losses ("ACL")$ 50,860  $48,810  $49,030 
    Ratio of annualized net charge-offs to average total loans during the period 0.03%   0.05%   0.07% 
    Ratio of ACL to total loans outstanding at period end 1.06%   1.04%   1.14% 
    Ratio of ACL to total non-performing loans at period end 515.72%   440.01%   353.22% 
    Total loans$ 4,817,070  $4,674,238  $4,300,757 
    Average total loans during the period  4,711,416   4,520,205   4,312,128 
    Total non-performing loans  9,862   11,093   13,881 
                

    Past Due and Non-accrual Loans

             
     June 30, 2022 March 31, 2022 June 30, 2021
    Loans 30-89 days past due and still accruing interest$1,781  $3,034  $2,098 
    Loans 90 days past due and still accruing interest 194   389   767 
    Non-accrual loans 9,862   11,093   13,881 
    Total past due and non-accrual loans$11,837  $14,516  $16,746 
    Total 90 days past due and still accruing interest and non-accrual loans to total loans 0.21%   0.25%   0.34% 
                

    Asset Quality Data

             
     June 30, 2022 March 31, 2022 June 30, 2021
    Non-performing loans$9,862  $11,093  $13,881 
    OREO 4,992   5,063   5,124 
    Total non-performing assets$14,854  $16,156  $19,005 
    Accruing restructured loans$7,208  $4,979  $11,844 
    Total non-performing loans to total loans 0.20%   0.24%   0.32% 
    Total non-performing assets to total loans and OREO 0.31%   0.35%   0.44% 
                

    NATIONAL BANK HOLDINGS CORPORATION
    Key Ratios(1)

              
     As of and for the three months ended As of and for the six months ended
     June 30, March31, June30, June 30, June30,
     2022
     2022
     2021
     2022
     2021
    Return on average assets1.13% 1.04% 1.38% 1.08% 1.49%
    Return on average tangible assets(2)1.16% 1.07% 1.41% 1.11% 1.53%
    Return on average tangible assets, adjusted(2)1.20% 1.08% 1.41% 1.14% 1.53%
    Return on average equity9.96% 8.84% 11.51% 9.40% 12.26%
    Return on average tangible common equity(2)11.64% 10.31% 13.41% 10.97% 14.29%
    Return on average tangible common equity, adjusted(2)12.08% 10.42% 13.41% 11.24% 14.29%
    Loan to deposit ratio (end of period)77.76% 73.44% 69.84% 77.76% 69.84%
    Non-interest bearing deposits to total deposits (end of period)39.63% 40.14% 39.58% 39.63% 39.58%
    Net interest margin(3)3.30% 2.82% 2.74% 3.07% 2.84%
    Net interest margin FTE(2)(3)3.38% 2.90% 2.82% 3.15% 2.92%
    Interest rate spread FTE(2)(4)3.26% 2.78% 2.66% 3.02% 2.75%
    Yield on earning assets(5)3.47% 3.00% 2.96% 3.24% 3.08%
    Yield on earning assets FTE(2)(5)3.55% 3.08% 3.04% 3.32% 3.16%
    Cost of interest bearing liabilities(5)0.29% 0.30% 0.38% 0.30% 0.41%
    Cost of deposits0.16% 0.17% 0.24% 0.16% 0.26%
    Non-interest income to total revenue FTE(2)22.62% 28.43% 35.38% 25.38% 38.76%
    Non-interest expense to average assets2.53% 2.49% 2.63% 2.51% 2.80%
    Efficiency ratio62.18% 66.63% 65.66% 64.29% 64.16%
    Efficiency ratio FTE(2)61.06% 65.32% 64.48% 63.09% 63.08%
    Efficiency ratio FTE, adjusted(2)59.70% 64.95% 64.48% 62.19% 63.08%
              
    Total Loans Asset Quality Data(6)(7)(8)         
    Non-performing loans to total loans0.20% 0.24% 0.32% 0.20% 0.32%
    Non-performing assets to total loans and OREO0.31% 0.35% 0.44% 0.31% 0.44%
    Allowance for credit losses to total loans1.06% 1.04% 1.14% 1.06% 1.14%
    Allowance for credit losses to non-performing loans515.72% 440.01% 353.22% 515.72% 353.22%
    Net charge-offs to average loans0.03% 0.05% 0.07% 0.04% 0.04%

                                                          

    (1) Ratios are annualized.
    (2) Ratio represents non-GAAP financial measure. See non-GAAP reconciliations below.
    (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 restructured 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.
       

    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, 2022 March 31, 2022 December 31, 2021 June 30, 2021
    Total shareholders' equity $815,551  $820,215  $840,106  $851,866 
    Less: goodwill and core deposit intangible (“CDI”) assets, net  (120,800)  (121,096)  (121,392)  (121,983)
    Add: deferred tax liability related to goodwill  10,527   10,298   10,070   9,612 
    Tangible common equity (non-GAAP) $705,278  $709,417  $728,784  $739,495 
                 
    Total assets $7,167,999  $7,341,512  $7,214,011  $7,136,128 
    Less: goodwill and CDI assets, net  (120,800)  (121,096)  (121,392)  (121,983)
    Add: deferred tax liability related to goodwill  10,527   10,298   10,070   9,612 
    Tangible assets (non-GAAP) $7,057,726  $7,230,714  $7,102,689  $7,023,757 
                 
    Tangible common equity to tangible assets calculations:            
    Total shareholders' equity to total assets  11.38%   11.17%   11.65%   11.94% 
    Less: impact of goodwill and CDI assets, net  (1.39)%   (1.36)%   (1.39)%   (1.41)% 
    Tangible common equity to tangible assets (non-GAAP)  9.99%   9.81%   10.26%   10.53% 
                 
    Tangible common book value per share calculations:            
    Tangible common equity (non-GAAP) $705,278  $709,417  $728,784  $739,495 
    Divided by: ending shares outstanding  30,075,175   30,008,781   29,958,764   30,800,985 
    Tangible common book value per share (non-GAAP) $23.45  $23.64  $24.33  $24.01 
                 
    Tangible common book value per share, excluding accumulated other comprehensive income calculations:            
    Tangible common equity (non-GAAP) $705,278  $709,417  $728,784  $739,495 
    Accumulated other comprehensive loss (income), net of tax  58,001   38,633   6,963   (1,695)
    Tangible common book value, excluding accumulated other comprehensive loss (income), net of tax (non-GAAP)  763,279   748,050   735,747   737,800 
    Divided by: ending shares outstanding  30,075,175   30,008,781   29,958,764   30,800,985 
    Tangible common book value per share, excluding accumulated other comprehensive loss (income), net of tax (non-GAAP) $25.38  $24.93  $24.56  $23.95 
                     

    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, March31, June30, June 30, June30,
      2022
     2022 2021 2022
     2021
    Net income $20,362  $18,352  $24,200  $38,714  $51,012 
    Add: impact of CDI amortization expense, after tax  227   227   228   455   455 
    Net income excluding the impact of CDI amortization expense, after tax $20,589  $18,579  $24,428  $39,169  $51,467 
                    
    Average assets $7,231,319  $7,174,398  $7,056,894  $7,203,016  $6,907,022 
    Less: average goodwill and CDI asset, net of deferred tax liability related to goodwill  (110,446)  (110,973)  (112,552)  (110,594)  (112,698)
    Average tangible assets (non-GAAP) $7,120,873  $7,063,425  $6,944,342  $7,092,422  $6,794,324 
                    
    Average shareholders' equity $819,614  $841,942  $843,116  $830,716  $838,930 
    Less: average goodwill and CDI asset, net of deferred tax liability related to goodwill  (110,446)  (110,973)  (112,552)  (110,594)  (112,698)
    Average tangible common equity (non-GAAP) $709,168  $730,969  $730,564  $720,122  $726,232 
                    
    Return on average assets  1.13%   1.04%   1.38%   1.08%   1.49% 
    Return on average tangible assets (non-GAAP)  1.16%   1.07%   1.41%   1.11%   1.53% 
    Return on average equity  9.96%   8.84%   11.51%   9.40%   12.26% 
    Return on average tangible common equity (non-GAAP)  11.64%   10.31%   13.41%   10.97%   14.29% 
                         

    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, March31, June30, June 30, June30,
      2022
     2022
     2021
     2022
     2021
    Interest income $58,836  $49,525  $48,450  $108,361  $97,663 
    Add: impact of taxable equivalent adjustment  1,336   1,313   1,279   2,649   2,547 
    Interest income FTE (non-GAAP) $60,172  $50,838  $49,729  $111,010  $100,210 
                    
    Net interest income $56,017  $46,661  $44,868  $102,678  $90,089 
    Add: impact of taxable equivalent adjustment  1,336   1,313   1,279   2,649   2,547 
    Net interest income FTE (non-GAAP) $57,353  $47,974  $46,147  $105,327  $92,636 
                    
    Average earning assets $6,802,300  $6,702,501  $6,561,588  $6,752,676  $6,400,651 
    Yield on earning assets  3.47%   3.00%   2.96%   3.24%   3.08% 
    Yield on earning assets FTE (non-GAAP)  3.55%   3.08%   3.04%   3.32%   3.16% 
    Net interest margin  3.30%   2.82%   2.74%   3.07%   2.84% 
    Net interest margin FTE (non-GAAP)  3.38%   2.90%   2.82%   3.15%   2.92% 
                         

    Efficiency Ratio

                    
      As of and for the three months ended As of and for the six months ended
      June 30, March31, June30, June 30, June30,
      2022
     2022 2021 2022
     2021
    Net interest income $56,017  $46,661  $44,868  $102,678  $90,089 
    Add: impact of taxable equivalent adjustment  1,336   1,313   1,279   2,649   2,547 
    Net interest income, FTE (non-GAAP) $57,353  $47,974  $46,147  $105,327  $92,636 
                    
    Non-interest income $16,762  $19,054  $25,266  $35,816  $58,627 
                    
    Non-interest expense $45,552  $44,082  $46,343  $89,634  $96,011 
    Less: CDI asset amortization  (296)  (296)  (296)  (592)  (592)
    Non-interest expense, excluding CDI asset amortization $45,256  $43,786  $46,047  $89,042  $95,419 
                    
    Non-interest expense, excluding CDI asset amortization $45,256  $43,786  $46,047  $89,042  $95,419 
    Acquisition-related expenses  (1,006)  (254)     (1,260)   
    Adjusted non-interest expense (non-GAAP) $44,250  $43,532  $46,047  $87,782  $95,419 
                    
    Efficiency ratio  62.18%   66.63%   65.66%   64.29%   64.16% 
    Efficiency ratio FTE (non-GAAP)  61.06%   65.32%   64.48%   63.09%   63.08% 
    Adjusted efficiency ratio FTE (non-GAAP)  59.70%   64.95%   64.48%   62.19%   63.08% 
                         

    Adjusted Financial Results

                    
      As of and for the three months ended As of and for the six months ended
      June 30, March31, June30, June 30, June30,
      2022
     2022 2021 2022
     2021
    Adjustments to net income:               
    Net income $20,362  $18,352  $24,200  $38,714  $51,012 
    Adjustments(1)  773   195      968    
    Adjusted net income (non-GAAP) $21,135  $18,547  $24,200  $39,682  $51,012 
                    
    Adjustments to earnings per share:               
    Earnings per share - diluted $0.67  $0.60  $0.77  $1.27  $1.63 
    Adjustments(1)  0.02   0.01      0.03    
    Adjusted earnings per share - diluted (non-GAAP) $0.69  $0.61  $0.77  $1.30  $1.63 
                    
    Adjustments to return on average tangible assets:               
    Adjusted net income (non-GAAP) $21,135  $18,547  $24,200  $39,682  $51,012 
    Add: impact of CDI amortization expense, after tax  227   227   228   455   455 
    Adjusted net income excluding CDI amortization expense, after tax (non-GAAP)  21,362   18,774   24,428   40,137   51,467 
    Average tangible assets (non-GAAP)  7,120,873   7,063,425   6,944,342   7,092,422   6,794,324 
    Adjusted return on average tangible assets (non-GAAP)  1.20%   1.08%   1.41%   1.14%   1.53% 
                    
    Adjustments to return on average tangible common equity:               
    Adjusted net income excluding CDI amortization expense, after tax (non-GAAP) $21,362  $18,774  $24,428  $40,137  $51,467 
    Average tangible common equity (non-GAAP)  709,168   730,969   730,564   720,122   726,232 
    Adjusted return on average tangible common equity (non-GAAP)  12.08%   10.42%   13.41%   11.24%   14.29% 
                    
    Adjustments to non-interest expense:               
    Non-interest expense $45,552  $44,082  $46,343  $89,634  $96,011 
    Adjustments(1)  1,006   254      1,260    
    Adjusted non-interest expense (non-GAAP)  44,546   43,828   46,343   88,374   96,011 
    Non-interest expense to average assets, adjusted (non-GAAP)  2.47%   2.48%   2.63%   2.47%   2.80% 
                    
    (1) Adjustments:               
    Non-interest expense adjustments:               
    Acquisition-related expenses $1,006  $254  $  $1,260  $ 
    Tax expense impact  (233)  (59)     (292)   
    Adjustments (non-GAAP) $773  $195  $  $968  $ 
                         

     


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