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National Bank Holdings Corporation Announces First Quarter 2021 Financial Results

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  • NBHC

DENVER, April 22, 2021 (GLOBE NEWSWIRE) -- National Bank Holdings Corporation (NYSE: NBHC) reported:

For the quarter

1Q21

4Q20

1Q20

Net income ($000's)

$

26,812

$

27,169

$

15,824

Earnings per share - diluted

$

0.86

$

0.87

$

0.50

Return on average tangible assets(1)

1.65

%

1.67

%

1.12

%

Return on average tangible common equity(1)

15.20

%

15.55

%

9.79

%

__________________________

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

In announcing these results, Chief Executive Officer Tim Laney shared, “We are off to a solid start in 2021 with quarterly earnings of $0.86 per diluted share, and we delivered an impressive return on average tangible equity of 15.20% on a strong capital base. We continue to generate positive returns through our diverse revenue streams, excellent credit quality and prudent expense management. Net charge-offs were a record low one basis point annualized of total loans. We continue to build upon our relationship-based banking model with low cost transaction deposit growth of 14.5% annualized, compared to the prior quarter.”

Mr. Laney added, “We are optimistic about our growth potential as we continue to see signs of strong economic recovery in our markets. Our pipeline for new business generation during the second quarter is very encouraging. We tackled the challenges faced during 2020 head-on from a position of strength and continue to be well positioned for growth with a strong common equity tier 1 ratio of 15.23% and sizable liquidity. We are fueled by our clients' determination to succeed and our associates' resolve to provide fair and simple solutions that enable them to realize their dreams.”

First Quarter 2021 Results
(All comparisons refer to the fourth quarter of 2020, except as noted)

Net income totaled $26.8 million, or $0.86 per diluted share, compared to $27.2 million, or $0.87 per diluted share. The return on average tangible assets was 1.65%, compared to 1.67%, and the return on average tangible common equity was 15.20%, compared to 15.55% last quarter.

Net Interest Income
Fully taxable equivalent net interest income totaled $46.5 million, a decrease of $3.3 million, largely driven by $2.6 million lower PPP loan fee income from PPP loan forgiveness and two fewer calendar days. As of March 31, 2021, the remaining unamortized PPP loan fees totaled $6.2 million. The fully taxable equivalent net interest margin narrowed 22 basis points to 3.02%. Excess liquidity drove a 32 basis point dilutive impact to this quarter’s margin. The yield on earning assets decreased 27 basis points largely due to the remix of assets into lower-yielding cash balances and lower PPP loan forgiveness activity during the first quarter. Our cost of funds decreased five basis points to 0.28%.

Loans
During the quarter, we continued our careful approach to extending new credit as well as continuing an intense focus on managing credit risk and yield. Total loans ended the quarter at $4.3 billion, decreasing $50.5 million, or 4.7% annualized. Excluding PPP loans, total loans decreased by $92.1 million. First quarter loan originations totaled $294.2 million and included $121.1 million of PPP loan originations. We continue to maintain a granular and well-diversified loan portfolio with self-imposed concentration limits.

Asset Quality and Provision for Loan Losses
The Company released $3.6 million of net provision during the quarter driven by improved outlook in the CECL model’s underlying economic forecast as well as strong asset quality. Included in the quarter was a $1.0 million provision expense for unfunded loan commitment reserves. Annualized net charge-offs totaled only 0.01% of total loans, compared to 0.11% in the prior quarter. Non-performing loans (comprised of non-accrual loans and non-accrual TDRs) improved nine basis points to 0.38% of total loans and non-performing assets improved seven basis points to 0.51% of total loans and OREO. The allowance for credit losses as a percentage of total loans decreased nine basis points to 1.28% at March 31, 2021. Excluding PPP loans, non-performing loans totaled 0.40% of total loans, non-performing assets totaled 0.54% of total loans and OREO, and the allowance for credit losses as a percentage of total loans totaled 1.35% at March 31, 2021.

Deposits
Average transaction deposits (defined as total deposits less time deposits) increased $166.6 million, or 14.5% annualized, and average total deposits increased $125.7 million, or 9.0% annualized, to $5.8 billion for the first quarter 2021. The mix of transaction deposits to total deposits improved 160 basis points to 84.2% at March 31, 2021. The loan to deposit ratio totaled 71.7% at March 31, 2021, compared to 76.7% at December 31, 2020. The cost of transaction deposits decreased one basis point from the prior quarter to 0.14%, and the cost of deposits decreased five basis points from the prior quarter to 0.28%.

Non-Interest Income
Non-interest income totaled $33.4 million during the first quarter of 2021, consistent with the fourth quarter of 2020. Included in other non-interest income for the first quarter were $1.6 million of gains on fixed assets sales from the banking center consolidations. Mortgage banking income decreased $0.8 million during the quarter, and service charges and bank card fees decreased $0.7 million during the quarter due to seasonality and the continued impact of the economic stimulus funds.

Non-Interest Expense
Non-interest expense totaled $49.7 million during the first quarter, representing an increase of $1.2 million. Included in the quarter was $1.3 million of banking center consolidation expense related to the consolidation of seven banking center locations announced in January 2021. The fully taxable equivalent efficiency ratio totaled 61.8% at March 31, 2021, compared to 57.9% at December 31, 2020.

Income tax expense totaled $5.7 million during the first quarter, compared to $6.3 million during the prior quarter. Included in income tax expense was $0.2 million of benefit during the first quarter of 2021 from stock compensation activity. The effective tax rate for the first quarter 2021 was 18.0%, adjusted for stock compensation activity, compared to 19.0% for the full year 2020. 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 ratio at March 31, 2021 for the consolidated company and NBH Bank was 10.80% and 9.26%, respectively. Shareholders’ equity totaled $832.0 million at March 31, 2021 and increased $11.3 million from the prior quarter due to higher retained earnings, partially offset by lower accumulated other comprehensive income.

Common book value per share increased $0.30 to $27.09 at March 31, 2021. The quarter’s earnings, net of dividends paid and lower accumulated other comprehensive income, increased the tangible common book value per share by $0.32 to $23.41 at March 31, 2021. Excluding accumulated other comprehensive income, the tangible book value per share increased $0.63 to $23.40 at March 31, 2021.

Recent Events
The COVID-19 pandemic has caused substantial disruption to the communities we serve and has changed the way we live and work. We continue to remain committed to ensuring our associates, clients and communities are receiving the support they need during these challenging times. Our banking centers remain operational through our drive-thru services and on an appointment-only basis in the lobbies. We have continued to leverage our digital banking platform with our clients. Our teams have been working diligently to support our clients who are experiencing financial hardship due to COVID-19 through participation in the SBA’s Paycheck Protection Program, including assistance with PPP loan forgiveness applications, and loan modifications, as needed. While vaccination rates are improving, the length of time that the government-mandated measures must remain in place to address COVID-19 is unknown. The pandemic has had a significantly negative impact to the U.S. labor market, consumer spending and business operations, and it is not clear when government-mandated measures will be removed.

Year-Over-Year Review
(All comparisons refer to the first quarter 2020, except as noted)

Net income totaled $26.8 million, or $0.86 per diluted share, an increase of $11.0 million, or 69.4%. The return on average tangible assets was 1.65%, compared to 1.12%, and the return on average tangible common equity was 15.20%, compared to 9.79%.

Fully taxable equivalent net interest income totaled $46.5 million, decreasing $5.1 million, or 9.9%, as a result of monetary policy actions by the Federal Reserve during 2020. Average earning assets increased $879.5 million, or 16.4%, primarily driven by increases in average interest bearing cash balances of $616.3 million and increases in investments of $291.9 million. The fully taxable equivalent net interest margin narrowed 85 basis points to 3.02% due to lower earning asset yields. The yield on earning assets decreased 122 basis points, led by a 46 basis point decrease in the originated loan portfolio yields and the remix of assets into lower-yielding cash balances. The cost of deposits decreased 35 basis points to 0.28%.

Loans outstanding totaled $4.3 billion, decreasing $202.5 million, or 4.5%, due to payoffs that were partially offset by PPP loans of $217.7 million. New loan originations over the trailing 12 months totaled $1.2 billion, led by commercial loan originations of $813.3 million including PPP loan originations of $480.1 million.

Average non-interest bearing demand deposits increased $1.0 billion, or 90.4%. Average transaction deposits increased $1.2 billion, or 32.4%, and average total deposits increased $1.1 billion, or 23.2%, to $5.8 billion for the first quarter of 2021. Spot transaction deposits increased $1.4 billion to $5.1 billion at March 31, 2021, improving the mix of transaction deposits to total deposits by 640 basis points to 84.2% at March 31, 2021. The mix of non-interest bearing demand deposits to total deposits improved to 38.3% from 24.3% at March 31, 2020.

The Company recorded $3.6 million of net provision release during the first quarter of 2021, compared to $6.2 million of provision expense during the same period in 2020. First quarter 2021’s provision release was driven by strong asset quality and an improved outlook in the CECL model’s underlying economic forecast. Included in the first quarter of 2021 was $1.0 million of provision expense for unfunded loan commitment reserves. Net charge-offs on loans totaled 0.01% of total loans, compared to 0.03% during the first quarter of 2020. Non-performing loans to total loans improved nine basis points to 0.38%, compared to 0.47% at March 31, 2020. The allowance for credit losses totaled 1.28% of total loans, compared to 1.13% at March 31, 2020.

Non-interest income totaled $33.4 million, representing an increase of $9.9 million, or 41.8%, driven by an increase in mortgage banking income and gains on fixed assets sales. Service charges and bank card fees decreased a combined $0.1 million and continue to be impacted by economic stimulus funds and changes in consumer behavior due to COVID-19.

Non-interest expense totaled $49.7 million, representing an increase of $1.0 million, or 2.0%, due to $1.3 million of banking center consolidation-related expense. Salaries and benefits increased $0.3 million due to higher mortgage banking performance-related compensation. Occupancy and equipment decreased $0.3 million largely due to efficiencies gained from the completion of the previously announced banking center consolidations, and problem asset workout expense decreased $0.2 million.

Income tax expense totaled $5.7 million, an increase of $2.5 million from the first quarter last year, driven by the increase in pre-tax income.

Conference Call
Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Friday, April 23, 2021. Interested parties may listen to this call by dialing (877) 272-6762 / (615) 800-6832 (International) using the Conference ID of 9588935 and asking for the NBHC First Quarter Earnings conference call. A telephonic replay of the call will be available beginning approximately four hours after the call’s completion through May 6, 2021, by dialing (855) 859-2056 (United States) / (404) 537-3406 (International) using the Conference ID of 9588935. 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 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,” 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.

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 89 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 the following brand names: Community Banks of Colorado and Community Banks Mortgage, a division of NBH Bank, in Colorado, Bank Midwest and Bank Midwest Mortgage in Kansas and Missouri, and Hillcrest Bank and Hillcrest Bank Mortgage in Texas, Utah and New Mexico. 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.

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 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 or 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; 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; 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; 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

March 31,

December 31,

March 31,

2021

2020

2020

Total interest and dividend income

$

49,213

$

53,288

$

58,668

Total interest expense

3,992

4,732

8,321

Net interest income

45,221

48,556

50,347

Taxable equivalent adjustment

1,268

1,260

1,268

Net interest income FTE(1)

46,489

49,816

51,615

Provision for loan losses

(3,575

)

6,159

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

50,064

49,816

45,456

Non-interest income:

Service charges

3,474

4,000

4,126

Bank card fees

4,073

4,240

3,513

Mortgage banking income

22,379

23,138

13,673

Other non-interest income

3,400

1,695

2,192

OREO-related income

35

284

28

Total non-interest income

33,361

33,357

23,532

Non-interest expense:

Salaries and benefits

33,523

32,919

33,180

Occupancy and equipment

6,550

6,619

6,898

Professional fees

742

864

609

Other non-interest expense

6,853

6,725

7,001

Problem asset workout

438

807

648

(Gain) loss on sale of OREO, net

(29

)

(13

)

39

Core deposit intangible asset amortization

296

296

296

Banking center consolidation-related expense

1,295

208

Total non-interest expense

49,668

48,425

48,671

Income before income taxes FTE(1)

33,757

34,748

20,317

Taxable equivalent adjustment

1,268

1,260

1,268

Income before income taxes

32,489

33,488

19,049

Income tax expense

5,677

6,319

3,225

Net income

$

26,812

$

27,169

$

15,824

Earnings per share - basic

$

0.87

$

0.88

$

0.51

Earnings per share - diluted

0.86

0.87

0.50

__________________________

(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)

March 31, 2021

December 31, 2020

March 31, 2020

ASSETS

Cash and cash equivalents

$

822,518

$

605,565

$

133,926

Investment securities available-for-sale

666,915

661,955

629,396

Investment securities held-to-maturity

520,823

376,615

192,902

Non-marketable securities

15,493

16,493

29,948

Loans

4,303,246

4,353,726

4,505,735

Allowance for credit losses

(55,057

)

(59,777

)

(50,956

)

Loans, net

4,248,189

4,293,949

4,454,779

Loans held for sale

228,888

247,813

127,439

Other real estate owned

5,669

4,730

7,051

Premises and equipment, net

101,830

106,982

112,393

Goodwill

115,027

115,027

115,027

Intangible assets, net

20,205

17,928

10,489

Other assets

203,944

212,893

214,980

Total assets

$

6,949,501

$

6,659,950

$

6,028,330

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

Non-interest bearing demand deposits

$

2,295,704

$

2,111,045

$

1,150,437

Interest bearing demand deposits

557,850

514,286

846,824

Savings and money market

2,199,420

2,064,769

1,693,614

Total transaction deposits

5,052,974

4,690,100

3,690,875

Time deposits

948,676

986,132

1,050,981

Total deposits

6,001,650

5,676,232

4,741,856

Securities sold under agreements to repurchase

19,405

22,897

23,703

Federal Home Loan Bank advances

341,506

Other liabilities

96,456

140,130

157,811

Total liabilities

6,117,511

5,839,259

5,264,876

Shareholders' equity:

Common stock

515

515

515

Additional paid in capital

1,010,798

1,011,362

1,009,478

Retained earnings

243,446

223,175

168,984

Treasury stock

(423,254

)

(424,127

)

(427,890

)

Accumulated other comprehensive income, net of tax

485

9,766

12,367

Total shareholders' equity

831,990

820,691

763,454

Total liabilities and shareholders' equity

$

6,949,501

$

6,659,950

$

6,028,330

SHARE DATA

Average basic shares outstanding

30,828,262

30,784,896

31,157,476

Average diluted shares outstanding

31,143,322

31,032,648

31,361,296

Ending shares outstanding

30,715,790

30,634,291

30,483,361

Common book value per share

$

27.09

$

26.79

$

25.04

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

23.41

23.09

21.27

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

23.40

22.77

20.87

CAPITAL RATIOS

Average equity to average assets

12.36

%

12.27

%

13.21

%

Tangible common equity to tangible assets(1)

10.52

%

10.80

%

10.97

%

Tier 1 leverage ratio

10.80

%

10.70

%

11.05

%

Common equity tier 1 risk-based capital ratio

15.23

%

14.70

%

12.87

%

Tier 1 risk-based capital ratio

15.23

%

14.70

%

12.87

%

Total risk-based capital ratio

16.30

%

15.83

%

13.82

%

__________________________

(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

March 31, 2021

March 31, 2021

vs. December 31, 2020

vs. March 31, 2020

March 31, 2021

December 31, 2020

% Change

March 31, 2020

% Change

Originated:

Commercial:

Commercial and industrial

$

1,177,764

$

1,248,530

(5.7

)%

$

1,409,040

(16.4

)%

Municipal and non-profit

850,663

870,410

(2.3

)%

876,178

(2.9

)%

Owner-occupied commercial real estate

476,625

464,417

2.6

%

446,145

6.8

%

Food and agribusiness

178,419

205,189

(13.0

)%

235,389

(24.2

)%

PPP loans(1)

217,697

176,106

23.6

%

100.0

%

Total commercial

2,901,168

2,964,652

(2.1

)%

2,966,752

(2.2

)%

Commercial real estate non-owner occupied

553,184

542,642

1.9

%

536,637

3.1

%

Residential real estate

604,001

581,555

3.9

%

656,924

(8.1

)%

Consumer

17,671

18,581

(4.9

)%

20,960

(15.7

)%

Total originated

4,076,024

4,107,430

(0.8

)%

4,181,273

(2.5

)%

Acquired:

Commercial:

Commercial and industrial

20,405

22,102

(7.7

)%

29,510

(30.9

)%

Municipal and non-profit

370

381

(2.9

)%

906

(59.2

)%

Owner-occupied commercial real estate

50,607

51,821

(2.3

)%

69,769

(27.5

)%

Food and agribusiness

4,129

5,108

(19.2

)%

7,159

(42.3

)%

Total commercial

75,511

79,412

(4.9

)%

107,344

(29.7

)%

Commercial real estate non-owner occupied

81,176

89,354

(9.2

)%

107,090

(24.2

)%

Residential real estate

70,141

77,105

(9.0

)%

109,400

(35.9

)%

Consumer

394

425

(7.3

)%

628

(37.3

)%

Total acquired

227,222

246,296

(7.7

)%

324,462

(30.0

)%

Total loans

$

4,303,246

$

4,353,726

(1.2

)%

$

4,505,735

(4.5

)%

__________________________

(1) PPP loan balances are net of fees and costs and include principal totaling $223,867 and $179,531 as of March 31, 2021 and December 31, 2020, respectively.



Originations(1)

First quarter

Fourth quarter

Third quarter

Second quarter

First quarter

2021

2020

2020

2020

2020

Commercial:

Commercial and industrial

$

23,390

$

96,625

$

11,354

$

(8,726

)

$

118,999

Municipal and non-profit

7,999

25,348

6,083

49,679

13,968

Owner occupied commercial real estate

27,093

36,085

23,758

22,078

37,372

Food and agribusiness

(10,104

)

19,191

13,876

(10,480

)

(6,787

)

PPP loans

121,141

122

358,798

Total commercial

169,519

177,249

55,193

411,349

163,552

Commercial real estate non-owner occupied

49,195

52,018

24,937

18,992

80,792

Residential real estate

74,145

41,355

49,786

29,024

46,273

Consumer

1,353

1,858

2,980

2,206

2,320

Total

$

294,212

$

272,480

$

132,896

$

461,571

$

292,937

__________________________

(1) Originations are defined as closed end funded loans and net fundings under revolving lines of credit. Net funding under revolving lines of credit were ($26,395), $50,982, ($27,899), ($55,826) and $48,789 as of the first quarter 2021, fourth quarter 2020, third quarter 2020, second quarter 2020 and first quarter 2020, 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

March 31, 2021

December 31, 2020

March 31, 2020

Average

Average

Average

Average

Average

Average

balance

Interest

rate

balance

Interest

rate

balance

Interest

rate

Interest earning assets:

Originated loans FTE(1)(2)

$

4,004,994

$

39,560

4.01

%

$

4,129,155

$

43,200

4.16

%

$

4,043,168

$

44,980

4.47

%

Acquired loans

238,468

5,128

8.72

%

259,233

5,715

8.77

%

343,608

8,879

10.39

%

Loans held for sale

231,521

1,517

2.66

%

248,326

1,699

2.72

%

102,935

936

3.66

%

Investment securities available-for-sale

686,731

2,485

1.45

%

574,642

2,177

1.52

%

626,921

3,395

2.17

%

Investment securities held-to-maturity

421,119

1,416

1.34

%

369,812

1,410

1.53

%

189,062

1,235

2.61

%

Other securities

15,818

210

5.31

%

18,195

212

4.66

%

29,753

414

5.57

%

Interest earning deposits and
securities purchased under
agreements to resell

639,273

165

0.10

%

509,150

135

0.11

%

22,957

97

1.70

%

Total interest earning assets FTE(2)

$

6,237,924

$

50,481

3.28

%

$

6,108,513

$

54,548

3.55

%

$

5,358,404

$

59,936

4.50

%

Cash and due from banks

$

81,253

$

73,768

$

74,784

Other assets

495,222

514,053

474,470

Allowance for credit losses

(58,915

)

(60,844

)

(44,807

)

Total assets

$

6,755,484

$

6,635,490

$

5,862,851

Interest bearing liabilities:

Interest bearing demand, savings
and money market deposits

$

2,645,487

$

1,652

0.25

%

$

2,746,597

$

1,776

0.26

%

$

2,497,129

$

2,888

0.47

%

Time deposits

967,447

2,335

0.98

%

1,008,297

2,949

1.16

%

1,056,692

4,438

1.69

%

Securities sold under agreements to repurchase

21,377

5

0.09

%

23,410

7

0.12

%

44,898

97

0.87

%

Federal Home Loan Bank advances

0.00

%

0.00

%

219,353

898

1.65

%

Total interest bearing liabilities

$

3,634,311

$

3,992

0.45

%

$

3,778,304

$

4,732

0.50

%

$

3,818,072

$

8,321

0.88

%

Demand deposits

$

2,165,868

$

1,898,171

$

1,137,273

Other liabilities

120,607

144,532

133,126

Total liabilities

5,920,786

5,821,007

5,088,471

Shareholders' equity

834,698

814,483

774,380

Total liabilities and shareholders' equity

$

6,755,484

$

6,635,490

$

5,862,851

Net interest income FTE(2)

$

46,489

$

49,816

$

51,615

Interest rate spread FTE(2)

2.83

%

3.05

%

3.62

%

Net interest earning assets

$

2,603,613

$

2,330,209

$

1,540,332

Net interest margin FTE(2)

3.02

%

3.24

%

3.87

%

Average transaction deposits

$

4,811,355

$

4,644,768

$

3,634,402

Average total deposits

5,778,802

5,653,065

4,691,094

Ratio of average interest earning assets to average
interest bearing liabilities

171.64

%

161.67

%

140.34

%

__________________________

(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 $1,268, $1,260 and $1,268 for the three months ended March 31, 2021, December 31, 2020 and March 31, 2020, 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

March 31, 2021

December 31, 2020

March 31, 2020

Beginning allowance for credit losses

$

59,777

$

60,979

$

39,064

Cumulative effect adjustment(1)

5,836

Charge-offs

(302

)

(1,259

)

(497

)

Recoveries

182

57

144

Provision

(4,600

)

6,409

Ending allowance for credit losses ("ACL")

$

55,057

$

59,777

$

50,956

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

0.01

%

0.11

%

0.03

%

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

0.01

%

0.11

%

0.03

%

Ratio of ACL to total loans outstanding at period end

1.28

%

1.37

%

1.13

%

Ratio of ACL to total loans outstanding excluding PPP loans at period end

1.35

%

1.43

%

1.13

%

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

336.25

%

293.21

%

238.93

%

Total loans

$

4,303,246

$

4,353,726

$

4,505,735

Average total loans during the period

4,277,481

4,431,694

4,412,320

Average total loans excluding PPP loans during the period

4,098,898

4,160,520

4,412,320

Total non-performing loans

16,374

20,387

21,327

__________________________

(1) Related to the adoption of Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments.


Past Due and Non-accrual Loans

March 31, 2021

December 31, 2020

March 31, 2020

Loans 30-89 days past due and still accruing interest

$

1,867

$

968

$

10,693

Loans 90 days past due and still accruing interest

1,021

162

1,364

Non-accrual loans

16,374

20,387

21,327

Total past due and non-accrual loans

$

19,262

$

21,517

$

33,384

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

0.40

%

0.47

%

0.50

%


Asset Quality Data

March 31, 2021

December 31, 2020

March 31, 2020

Non-performing loans

$

16,374

$

20,387

$

21,327

OREO

5,669

4,730

7,051

Other repossessed assets

17

17

Total non-performing assets

$

22,060

$

25,134

$

28,378

Accruing restructured loans

$

13,822

$

13,945

$

10,285

Total non-performing loans to total loans

0.38

%

0.47

%

0.47

%

Total non-performing loans to total loans excluding PPP loans

0.40

%

0.49

%

0.47

%

Total non-performing assets to total loans and OREO

0.51

%

0.58

%

0.63

%

Total non-performing assets to total loans and OREO excluding PPP loans

0.54

%

0.60

%

0.63

%


NATIONAL BANK HOLDINGS CORPORATION
Key Ratios

As of and for the three months ended

March 31,

December 31,

March 31,

2021

2020

2020

Key Ratios(1)

Return on average assets

1.61

%

1.63

%

1.09

%

Return on average tangible assets(2)

1.65

%

1.67

%

1.12

%

Return on average equity

13.03

%

13.27

%

8.22

%

Return on average tangible common equity(2)

15.20

%

15.55

%

9.79

%

Loan to deposit ratio (end of period)

71.70

%

76.70

%

95.02

%

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

38.25

%

37.19

%

24.26

%

Net interest margin(4)

2.94

%

3.16

%

3.78

%

Net interest margin FTE(2)(4)

3.02

%

3.24

%

3.87

%

Interest rate spread FTE(2)(5)

2.83

%

3.05

%

3.62

%

Yield on earning assets(3)

3.20

%

3.47

%

4.40

%

Yield on earning assets FTE(2)(3)

3.28

%

3.55

%

4.50

%

Cost of interest bearing liabilities(3)

0.45

%

0.50

%

0.88

%

Cost of deposits

0.28

%

0.33

%

0.63

%

Non-interest income to total revenue FTE(2)

41.78

%

40.11

%

31.31

%

Non-interest expense to average assets

2.98

%

2.90

%

3.34

%

Efficiency ratio

62.83

%

58.76

%

65.48

%

Efficiency ratio FTE(2)

61.83

%

57.87

%

64.37

%

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

Non-performing loans to total loans

0.38

%

0.47

%

0.47

%

Non-performing loans to total loans excluding PPP loans

0.40

%

0.49

%

0.47

%

Non-performing assets to total loans and OREO

0.51

%

0.58

%

0.63

%

Non-performing assets to total loans and OREO excluding PPP loans

0.54

%

0.60

%

0.63

%

Allowance for credit losses to total loans

1.28

%

1.37

%

1.13

%

Allowance for credit losses to total loans excluding PPP loans

1.35

%

1.43

%

1.13

%

Allowance for credit losses to non-performing loans

336.25

%

293.21

%

238.93

%

Net charge-offs to average loans(1)

0.01

%

0.11

%

0.03

%

__________________________

(1) Quarter-to-date ratios are annualized.

(2) Ratio represents non-GAAP financial measure. See non-GAAP reconciliations below.

(3) 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.

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

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

(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

March 31, 2021

December 31, 2020

March 31, 2020

Total shareholders' equity

$

831,990

$

820,691

$

763,454

Less: goodwill and core deposit intangible assets, net

(122,280

)

(122,575

)

(123,462

)

Add: deferred tax liability related to goodwill

9,384

9,155

8,469

Tangible common equity (non-GAAP)

$

719,094

$

707,271

$

648,461

Total assets

$

6,949,501

$

6,659,950

$

6,028,330

Less: goodwill and core deposit intangible assets, net

(122,280

)

(122,575

)

(123,462

)

Add: deferred tax liability related to goodwill

9,384

9,155

8,469

Tangible assets (non-GAAP)

$

6,836,605

$

6,546,530

$

5,913,337

Tangible common equity to tangible assets calculations:

Total shareholders' equity to total assets

11.97

%

12.32

%

12.66

%

Less: impact of goodwill and core deposit intangible assets, net

(1.45

)%

(1.52

)%

(1.69

)%

Tangible common equity to tangible assets (non-GAAP)

10.52

%

10.80

%

10.97

%

Tangible common book value per share calculations:

Tangible common equity (non-GAAP)

$

719,094

$

707,271

$

648,461

Divided by: ending shares outstanding

30,715,790

30,634,291

30,483,361

Tangible common book value per share (non-GAAP)

$

23.41

$

23.09

$

21.27

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

Tangible common equity (non-GAAP)

$

719,094

$

707,271

$

648,461

Accumulated other comprehensive income, net of tax

(485

)

(9,766

)

(12,367

)

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

718,609

697,505

636,094

Divided by: ending shares outstanding

30,715,790

30,634,291

30,483,361

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

$

23.40

$

22.77

$

20.87


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

March 31,

December 31,

March 31,

2021

2020

2020

Net income

$

26,812

$

27,169

$

15,824

Add: impact of core deposit intangible amortization expense, after tax

228

228

225

Net income adjusted for impact of core deposit intangible amortization
expense, after tax

$

27,040

$

27,397

$

16,049

Average assets

$

6,755,484

$

6,635,490

$

5,862,851

Less: average goodwill and core deposit intangible asset, net of deferred tax
liability related to goodwill

(113,074

)

(113,594

)

(115,156

)

Average tangible assets (non-GAAP)

$

6,642,410

$

6,521,896

$

5,747,695

Average shareholders' equity

$

834,698

$

814,483

$

774,380

Less: average goodwill and core deposit intangible asset, net of deferred tax
liability related to goodwill

(113,074

)

(113,594

)

(115,156

)

Average tangible common equity (non-GAAP)

$

721,624

$

700,889

$

659,224

Return on average assets

1.61

%

1.63

%

1.09

%

Return on average tangible assets (non-GAAP)

1.65

%

1.67

%

1.12

%

Return on average equity

13.03

%

13.27

%

8.22

%

Return on average tangible common equity (non-GAAP)

15.20

%

15.55

%

9.79

%


Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

As of and for the three months ended

March 31,

December 31,

March 31,

2021

2020

2020

Interest income

$

49,213

$

53,288

$

58,668

Add: impact of taxable equivalent adjustment

1,268

1,260

1,268

Interest income FTE (non-GAAP)

$

50,481

$

54,548

$

59,936

Net interest income

$

45,221

$

48,556

$

50,347

Add: impact of taxable equivalent adjustment

1,268

1,260

1,268

Net interest income FTE (non-GAAP)

$

46,489

$

49,816

$

51,615

Average earning assets

$

6,237,924

$

6,108,513

$

5,358,404

Yield on earning assets

3.20

%

3.47

%

4.40

%

Yield on earning assets FTE (non-GAAP)

3.28

%

3.55

%

4.50

%

Net interest margin

2.94

%

3.16

%

3.78

%

Net interest margin FTE (non-GAAP)

3.02

%

3.24

%

3.87

%


Efficiency Ratio

As of and for the three months ended

March 31,

December 31,

March 31,

2021

2020

2020

Net interest income

$

45,221

$

48,556

$

50,347

Add: impact of taxable equivalent adjustment

1,268

1,260

1,268

Net interest income, FTE (non-GAAP)

$

46,489

$

49,816

$

51,615

Non-interest income

$

33,361

$

33,357

$

23,532

Non-interest expense

$

49,668

$

48,425

$

48,671

Less: core deposit intangible asset amortization

(296

)

(296

)

(296

)

Non-interest expense, adjusted for core deposit intangible asset amortization

$

49,372

$

48,129

$

48,375

Efficiency ratio

62.83

%

58.76

%

65.48

%

Efficiency ratio FTE (non-GAAP)

61.83

%

57.87

%

64.37

%