National Bank Holdings Corporation Announces Third Quarter 2024 Financial Results and Increase to Quarterly Dividend

DENVER, Oct. 22, 2024 (GLOBE NEWSWIRE) -- National Bank Holdings Corporation (NYSE:NBHC) reported:

		For the quarter(1)												For the year(1)
		3Q24				2Q24				3Q23				2024				2023
Net income ($000's)		$	33,105			$	26,135			$	36,087			$	90,631			$	108,927
Earnings per share - diluted		$	0.86			$	0.68			$	0.94			$	2.36			$	2.85
Return on average assets			1.32	%			1.06	%			1.46	%			1.22	%			1.50	%
Return on average tangible assets(2)			1.43	%			1.17	%			1.58	%			1.33	%			1.61	%
Return on average equity			10.33	%			8.46	%			12.26	%			9.70	%			12.71	%
Return on average tangible common equity(2)			14.84	%			12.44	%			18.38	%			14.14	%			18.81	%

                                                      

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

In announcing these results, Chief Executive Officer Tim Laney shared, "We delivered quarterly earnings of $0.86 per diluted share and a return on average tangible common equity of 14.84%. On the strength of our balance sheet, capital position and earnings, we are pleased to announce a 3.6% increase in our quarterly dividend to $0.29 per share. During the quarter, our disciplined approach to loan and deposit pricing drove 11 basis points of net interest margin expansion to 3.87%. Our teams delivered solid quarterly growth in our core banking fees, and we continued to leverage our diverse revenue streams across our franchise resulting in meaningful year-to-date fee income growth."

Mr. Laney added, "We continue to remain vigilant in monitoring our loan portfolio, delivering the lowest non-performing loan ratio since early 2023. Our teams adhere to prudent, disciplined approaches that limit concentrations in our loan book and our depositor base, and we regularly perform robust stress testing on our loan portfolio. We enter the fourth quarter from a position of strength and stability and expect to finish the year strong. We believe our Common Equity Tier 1 capital ratio of 12.88%, ample liquidity position, and diversified funding sources provide optionality for future growth."

Third Quarter 2024 Results

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

Net income increased $7.0 million or 26.7% to $33.1 million or $0.86 per diluted share, compared to $26.1 million or $0.68 per diluted share. The quarter's increase was driven by net interest income and fee income growth. Included in the prior quarter was $3.9 million of impairment related to venture capital investments. Fully taxable equivalent pre-provision net revenue increased $7.5 million or 20.6% to $43.7 million. The return on average tangible assets increased 26 basis points to 1.43%, and the return on average tangible common equity increased 240 basis points to 14.84%.

Net Interest Income

Fully taxable equivalent net interest income increased $4.2 million to $89.5 million, driven by a $74.7 million increase in average interest earning assets, a 12 basis point increase in average loan yields and one extra day in the quarter. The fully taxable equivalent net interest margin widened 11 basis points to 3.87%, driven by a 13 basis point increase in earning asset yields which was partially offset by a two basis point increase in the cost of funds.

Loans

Loans totaled $7.7 billion at September 30, 2024, consistent with the prior quarter. We generated quarterly loan fundings totaling $359.3 million, led by commercial loan fundings of $219.1 million. The average interest rate on the third quarter's loan originations was 8.5%.

Asset Quality and Provision for Credit Losses

The Company recorded $2.0 million of provision expense for credit losses, compared to $2.8 million in the prior quarter. The current quarter's provision expense was primarily driven by higher reserve requirements from changes in the CECL model's underlying economic forecast. Annualized net charge-offs decreased four basis points to 0.18% of average total loans and included the resolution of one previously reserved credit during the quarter. Non-performing loans decreased three basis points to 0.31% of total loans at September 30, 2024, and non-performing assets decreased four basis points to 0.32% of total loans and OREO at September 30, 2024. The allowance for credit losses as a percentage of loans totaled 1.23% at September 30, 2024, compared to 1.25% in the prior quarter.

Deposits

Average total deposits increased $21.3 million to $8.4 billion during the third quarter 2024. The loan to deposit ratio totaled 90.8% at September 30, 2024. Average transaction deposits (defined as total deposits less time deposits) totaled $7.4 billion, consistent with the prior quarter. The mix of transaction deposits to total deposits was 88% at September 30, 2024, consistent with June 30, 2024.

Non-Interest Income

Non-interest income increased $4.4 million to $18.4 million driven by increases in our diversified sources of fee revenue. Service charges increased $0.6 million, swap fee income increased $0.3 million and trust fee income increased $0.1 million. These increases were partially offset by a $0.3 million decrease in mortgage banking income. Included in the prior quarter was $3.9 million of impairment related to venture capital investments.

Non-Interest Expense

Non-interest expense totaled $64.2 million during the third quarter, compared to $63.1 million in the prior quarter. Salaries and benefits increased $0.4 million driven by one additional payroll day in the quarter. Professional fees increased $0.4 million and data processing increased $0.3 million driven by our continued investments in technology. These increases were partially offset by a decrease in occupancy and equipment of $0.4 million. The fully taxable equivalent efficiency ratio, excluding other intangible assets amortization, improved 387 basis points to 57.7% for the third quarter.

Income tax expense increased $1.2 million to $6.8 million, compared to $5.6 million in the prior quarter, due to the third quarter's higher pre-tax income. The effective tax rate was 17.0%, compared to 17.7% for the second quarter.

Capital

Capital ratios continue to be strong and in excess of federal bank regulatory agency "well capitalized" thresholds. The tier 1 leverage ratio totaled 10.44%, and the common equity tier 1 capital ratio totaled 12.88% at September 30, 2024. Shareholders' equity totaled $1.3 billion at September 30, 2024, increasing $44.4 million. The third quarter's net income drove $22.2 million of growth in retained earnings, and changes in the interest rate environment led to a $17.9 million improvement in accumulated other comprehensive loss.

Common book value per share increased $1.09 to $34.01 at September 30, 2024. Tangible common book value per share increased $1.17 to $24.91 as this quarter's earnings and a decrease in accumulated other comprehensive loss outpaced the quarterly dividend.

Dividend Announcement

The quarterly cash dividend will increase 3.6% from $0.28 per share to $0.29 per share. The dividend will be payable on December 13, 2024 to shareholders of record at the close of business on November 29, 2024. This is the eighth consecutive semiannual increase to the quarterly dividend since early 2021.

Year-Over-Year Review

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

Net income totaled $90.6 million, or $2.36 per diluted share, compared to net income of $108.9 million, or $2.85 per diluted share, for the first nine months of 2023. The decrease over the same period prior year was largely driven by lower net interest income, due to an increase in cost of funds outpacing the increase in interest income. Partially offsetting this decrease was a 4.7% increase in non-interest income driven by our diversified sources of fee revenue. Fully taxable equivalent pre-provision net revenue totaled $120.5 million, compared to $144.9 million. The return on average tangible assets totaled 1.33%, compared to 1.61%, and the return on average tangible common equity was 14.14%, compared to 18.81%.

Fully taxable equivalent net interest income totaled $260.5 million, compared to $276.9 million. Average earning assets increased $165.0 million, including average loan growth of $296.4 million, which was partially offset by a decrease in average investment securities of $70.2 million. The fully taxable equivalent net interest margin narrowed 32 basis points to 3.80%, as the increase in earning asset yields was more than offset by an increase in the cost of funds. Average interest bearing liabilities increased $555.3 million due to higher deposit balances, and the cost of funds totaled 2.31%, compared to 1.40% in the same period prior year.

Loans outstanding totaled $7.7 billion, increasing $236.1 million or 3.2%. New loan fundings over the trailing twelve months totaled $1.5 billion, led by commercial loan fundings of $1.0 billion.  

The Company recorded $4.8 million of provision expense for credit losses for the first nine months of 2024, compared to provision expense of $3.7 million in the same period prior year. Annualized net charge-offs totaled 0.13% of average total loans during the first nine months of 2024, compared to 0.02% of average total loans during the first nine months of 2023. Non-performing loans decreased 13 basis points to 0.31% of total loans at September 30, 2024, and non-performing assets decreased 17 basis points to 0.32% of total loans and OREO at September 30, 2024. The allowance for credit losses as a percentage of loans totaled 1.23% at September 30, 2024, compared to 1.25% at September 30, 2023.

Average total deposits increased $418.6 million or 5.3% to $8.3 billion, and average transaction deposits increased $369.2 million or 5.3%. The mix of transaction deposits to total deposits was 88%, consistent with September 30, 2023.

Non-interest income totaled $50.1 million, an increase of $2.3 million or 4.7%, driven by increases in our diversified sources of fee revenue. Other non-interest income increased $5.2 million, or 63.6%, and included increases in SBA loan income, trust income, Cambr income and swap fee income. Mortgage banking income decreased $2.7 million as the sustained higher-interest rate environment has lowered mortgage volume.

Non-interest expense totaled $190.1 million, an increase of $10.2 million or 5.7%, largely due to ongoing investments in technology. Salaries and benefits increased $7.6 million, occupancy and equipment increased $2.4 million and data processing increased $2.3 million. Other intangible assets amortization increased $0.6 million due to our Cambr acquisition in April of 2023. These increases were partially offset by a decrease of $2.5 million in professional fees.

Income tax expense totaled $19.9 million, a decrease of $7.9 million from the same period prior year, driven by lower pre-tax income. The effective tax rate was 18.0% for the first nine months of 2024, compared to 20.3%.

Conference Call

Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Wednesday, October 23, 2024. Interested parties may listen to this call by dialing (888) 204-4368 using the participant passcode of 3279876 and asking for the NBHC Q3 2024 Earnings Call. The earnings release and a link to the replay of the call will be available on the Company's website at www.nationalbankholdings.com by visiting the investor relations area.

About National Bank Holdings Corporation

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

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

About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including "tangible assets," "return on average tangible assets," "tangible common equity," "return on average tangible common equity," "tangible common book value per share," "tangible common book value, excluding accumulated other comprehensive loss, net of tax," "tangible common book value per share, excluding accumulated other comprehensive loss, net of tax," "tangible common equity to tangible assets," "non-interest expense excluding other intangible assets amortization," "efficiency ratio excluding other intangible assets amortization," "net income excluding the impact of other intangible assets amortization expense, after tax," "pre-provision net revenue," and "fully taxable equivalent" metrics, are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as "non-GAAP financial measures." We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance. A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements contain words such as "anticipate," "believe," "can," "would," "should," "could," "may," "predict," "seek," "potential," "will," "estimate," "target," "plan," "project," "continuing," "ongoing," "expect," "intend" or similar expressions that relate to the Company's strategy, plans or intentions. Forward-looking statements involve certain important risks, uncertainties and other factors, any of which could cause actual results to differ materially from those in such statements. Such factors include, without limitation, the "Risk Factors" referenced in our most recent Form 10-K filed with the Securities and Exchange Commission (SEC), other risks and uncertainties listed from time to time in our reports and documents filed with the SEC, and the following factors: the impact of potential regulatory changes to capital requirements, treatment of investment securities and FDIC deposit insurance levels and costs; our ability to execute our business strategy, including our digital strategy, as well as changes in our business strategy or development plans; business and economic conditions; effects of any potential government shutdowns; economic, market, operational, liquidity, credit and interest rate risks associated with the Company's business, including increased competition for deposits due to prevailing market interest rates and banking sector volatility; effects of any changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; changes imposed by regulatory agencies to increase capital standards; effects of inflation, as well as interest rate, securities market and monetary supply fluctuations; changes in the economy or supply-demand imbalances affecting local real estate values; changes in consumer spending, borrowings and savings habits; changes in the fair value of our investment securities due to market conditions outside of our control; financial or reputational impacts associated with the increased prevalence of fraud or other financial crimes; with respect to our mortgage business, the inability to negotiate fees with investors for the purchase of our loans or our obligation to indemnify purchasers or repurchase related loans if the loans fail to meet certain criteria, or higher rate of delinquencies and defaults as a result of the geographic concentration of our servicing portfolio; the Company's ability to identify potential candidates for, obtain regulatory approval for, and consummate, integrate and realize operating efficiencies from, acquisitions, consolidations and other expansion opportunities; our ability to integrate acquisitions or consolidations and to achieve synergies, operating efficiencies and/or other expected benefits within expected timeframes, or at all, or within expected cost projections, and to preserve the goodwill of acquired financial institutions; the Company's ability to realize anticipated benefits from enhancements or updates to its core operating systems from time to time without significant change in client service or risk to the Company's control environment; the Company's dependence on information technology and telecommunications systems of third-party service providers and the risk of systems failures, interruptions or breaches of security, including those that could result in disclosure or misuse of confidential or proprietary client or other information; the Company's ability to achieve organic loan and deposit growth and the competition for, and composition of, such growth; changes in sources and uses of funds; increased competition in the financial services industry; regulatory and financial impacts associated with the Company growing to over $10 billion in consolidated assets; increases in claims and litigation related to our fiduciary responsibilities in connection with our trust and wealth management business; the effect of changes in accounting policies and practices as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board ("FASB") and other accounting standard setters; the share price of the Company's stock; the Company's ability to realize deferred tax assets or the need for a valuation allowance, or the effects of changes in tax laws on our deferred tax assets; the effects of tax legislation, including the potential of future increases to prevailing tax rules, or challenges to our positions; continued consolidation in the financial services industry; ability to maintain or increase market share and control expenses; costs and effects of changes in laws and regulations and of other legal and regulatory developments, including, but not limited to, changes in regulation that affect the fees that we charge, the resolution of legal proceedings or regulatory or other government inquiries, and the results of regulatory examinations, reviews or other inquiries, and changes in regulations that apply to us as a Colorado state-chartered bank and a Wyoming state-chartered bank; technological changes, including with respect to the advancement of artificial intelligence; the timely development and acceptance of new products and services, including in the digital technology space our digital solution 2UniFi; changes in our management personnel and the Company's continued ability to attract, hire and maintain qualified personnel; ability to implement and/or improve operational management and other internal risk controls and processes and reporting system and procedures; regulatory limitations on dividends from our bank subsidiaries; changes in estimates of future credit reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; financial, reputational, or strategic risks associated with our investments in financial technology companies and initiatives; widespread natural and other disasters, pandemics, dislocations, political instability, acts of war or terrorist activities, cyberattacks or international hostilities through impacts on the economy and financial markets generally or on us or our counterparties specifically; a cybersecurity incident, data breach or a failure of a key information technology system; impact of reputational risk; other risks and uncertainties listed from time to time in the Company's reports and documents filed with the Securities and Exchange Commission; and success at managing the risks involved in the foregoing items. The Company can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this press release, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

Contacts:

Analysts/Institutional Investors:

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

Nicole Van Denabeele, Chief Financial Officer, (720) 529-3370, [email protected]

Media:

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



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 nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2024			2024			2023			2024			2023
Total interest and dividend income	$	138,003		$	132,447		$	126,110		$	402,182		$	360,712
Total interest expense		50,350			48,873			38,333			146,925			88,262
Net interest income		87,653			83,574			87,777			255,257			272,450
Taxable equivalent adjustment		1,816			1,711			1,575			5,220			4,432
Net interest income FTE(1)		89,469			85,285			89,352			260,477			276,882
Provision expense for credit losses		2,000			2,776			1,125			4,776			3,725
Net interest income after provision for credit losses FTE(1)		87,469			82,509			88,227			255,701			273,157
Non-interest income:
Service charges		4,912			4,295			4,849			13,598			13,394
Bank card fees		4,832			4,882			4,993			14,292			14,721
Mortgage banking income		2,981			3,296			4,688			8,932			11,614
Other non-interest income		5,664			1,556			4,835			13,290			8,124
Total non-interest income		18,389			14,029			19,365			50,112			47,853
Non-interest expense:
Salaries and benefits		37,331			36,933			35,027			110,784			103,231
Occupancy and equipment		9,697			10,120			9,167			29,758			27,366
Professional fees		2,111			1,706			2,215			5,463			7,951
Data processing		4,398			4,117			3,546			12,581			10,257
Other non-interest expense		8,648			8,222			8,640			25,523			25,693
Other intangible assets amortization		1,977			1,977			2,008			5,962			5,378
Total non-interest expense		64,162			63,075			60,603			190,071			179,876
Income before income taxes FTE(1)		41,696			33,463			46,989			115,742			141,134
Taxable equivalent adjustment		1,816			1,711			1,575			5,220			4,432
Income before income taxes		39,880			31,752			45,414			110,522			136,702
Income tax expense		6,775			5,617			9,327			19,891			27,775
Net income	$	33,105		$	26,135		$	36,087		$	90,631		$	108,927
Earnings per share - basic	$	0.86		$	0.68		$	0.95		$	2.37		$	2.87
Earnings per share - diluted		0.86			0.68			0.94			2.36			2.85

                                                      

(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)

	September 30, 2024				June 30, 2024				December 31, 2023				September 30, 2023
ASSETS
Cash and cash equivalents	$	180,796			$	144,993			$	190,826			$	291,291
Investment securities available-for-sale		708,987				691,076				628,829				620,445
Investment securities held-to-maturity		538,157				554,686				585,052				600,501
Non-marketable securities		72,353				72,987				90,477				87,817
Loans		7,714,495				7,722,153				7,698,758				7,478,438
Allowance for credit losses		(95,047	)			(96,457	)			(97,947	)			(93,446	)
Loans, net		7,619,448				7,625,696				7,600,811				7,384,992
Loans held for sale		16,765				18,787				18,854				19,048
Other real estate owned		1,432				1,526				4,088				3,416
Premises and equipment, net		191,889				177,456				162,733				153,553
Goodwill		306,043				306,043				306,043				306,043
Intangible assets, net		60,390				62,356				66,025				68,283
Other assets		297,023				315,245				297,326				330,894
Total assets	$	9,993,283			$	9,970,851			$	9,951,064			$	9,866,283
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Non-interest bearing demand deposits	$	2,268,801			$	2,229,432			$	2,361,367			$	2,483,174
Interest bearing demand deposits		1,407,667				1,420,942				1,480,042				1,358,445
Savings and money market		3,768,211				3,703,810				3,367,012				3,314,895
Total transaction deposits		7,444,679				7,354,184				7,208,421				7,156,514
Time deposits		1,052,449				1,022,741				981,970				992,494
Total deposits		8,497,128				8,376,925				8,190,391				8,149,008
Securities sold under agreements to repurchase		19,517				19,465				19,627				20,273
Long-term debt		54,433				54,356				54,200				54,123
Federal Home Loan Bank advances		—				35,000				340,000				316,770
Other liabilities		130,208				237,461				134,039				162,524
Total liabilities		8,701,286				8,723,207				8,738,257				8,702,698
Shareholders' equity:
Common stock		515				515				515				515
Additional paid in capital		1,164,395				1,161,804				1,162,269				1,160,706
Retained earnings		491,849				469,630				433,126				410,243
Treasury stock		(302,277	)			(303,880	)			(306,702	)			(307,026	)
Accumulated other comprehensive loss, net of tax		(62,485	)			(80,425	)			(76,401	)			(100,853	)
Total shareholders' equity		1,291,997				1,247,644				1,212,807				1,163,585
Total liabilities and shareholders' equity	$	9,993,283			$	9,970,851			$	9,951,064			$	9,866,283
SHARE DATA
Average basic shares outstanding		38,277,042				38,210,869				38,013,791				37,990,659
Average diluted shares outstanding		38,495,091				38,372,777				38,162,538				38,134,338
Ending shares outstanding		37,988,364				37,899,453				37,784,851				37,739,776
Common book value per share	$	34.01			$	32.92			$	32.10			$	30.83
Tangible common book value per share(1) (non-GAAP)		24.91				23.74				22.77				21.43
Tangible common book value per share, excluding accumulated other comprehensive loss(1) (non-GAAP)		26.56				25.86				24.79				24.10
CAPITAL RATIOS
Average equity to average assets		12.80	%			12.57	%			11.97	%			11.93	%
Tangible common equity to tangible assets(1)		9.81	%			9.35	%			8.96	%			8.50	%
Tier 1 leverage ratio		10.44	%			10.20	%			9.74	%			9.56	%
Common equity tier 1 risk-based capital ratio		12.88	%			12.41	%			11.89	%			11.61	%
Tier 1 risk-based capital ratio		12.88	%			12.41	%			11.89	%			11.61	%
Total risk-based capital ratio		14.79	%			14.32	%			13.80	%			13.49	%

                                                      

(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

							September 30, 2024						September 30, 2024
							vs. June 30, 2024						vs. September 30, 2023
	September 30, 2024			June 30, 2024			% Change			September 30, 2023			% Change
Originated:
Commercial:
Commercial and industrial	$	1,894,830		$	1,906,095		(0.6	)%		$	1,784,188		6.2	%
Municipal and non-profit		1,096,843			1,063,706		3.1	%			1,012,967		8.3	%
Owner-occupied commercial real estate		949,330			921,122		3.1	%			827,679		14.7	%
Food and agribusiness		257,743			248,401		3.8	%			258,609		(0.3	)%
Total commercial		4,198,746			4,139,324		1.4	%			3,883,443		8.1	%
Commercial real estate non-owner occupied		1,113,796			1,116,424		(0.2	)%			1,026,133		8.5	%
Residential real estate		933,644			923,313		1.1	%			897,804		4.0	%
Consumer		13,600			14,385		(5.5	)%			16,700		(18.6	)%
Total originated		6,259,786			6,193,446		1.1	%			5,824,080		7.5	%
Acquired:
Commercial:
Commercial and industrial		116,683			124,104		(6.0	)%			156,012		(25.2	)%
Municipal and non-profit		282			288		(2.1	)%			305		(7.5	)%
Owner-occupied commercial real estate		221,928			232,890		(4.7	)%			247,701		(10.4	)%
Food and agribusiness		43,733			48,061		(9.0	)%			61,551		(28.9	)%
Total commercial		382,626			405,343		(5.6	)%			465,569		(17.8	)%
Commercial real estate non-owner occupied		720,384			752,040		(4.2	)%			787,926		(8.6	)%
Residential real estate		349,916			369,003		(5.2	)%			398,187		(12.1	)%
Consumer		1,783			2,321		(23.2	)%			2,676		(33.4	)%
Total acquired		1,454,709			1,528,707		(4.8	)%			1,654,358		(12.1	)%
Total loans	$	7,714,495		$	7,722,153		(0.1	)%		$	7,478,438		3.2	%

Loan Fundings⁽¹⁾

	Third quarter			Second quarter			First quarter				Fourth quarter			Third quarter
	2024			2024			2024				2023			2023
Commercial:
Commercial and industrial	$	93,711		$	241,910		$	53,978			$	135,954		$	89,297
Municipal and non-profit		35,677			28,785			14,564				79,650			18,657
Owner occupied commercial real estate		70,517			102,615			35,128				75,631			67,322
Food and agribusiness		19,205			11,040			(7,204	)			10,646			16,191
Total commercial		219,110			384,350			96,466				301,881			191,467
Commercial real estate non-owner occupied		91,809			83,184			73,789				107,738			88,434
Residential real estate		47,322			36,124			29,468				48,925			42,514
Consumer		1,010			1,547			234				1,849			1,689
Total	$	359,251		$	505,205		$	199,957			$	460,393		$	324,104

                                                      

(1	)		Loan fundings are defined as closed end funded loans and net fundings under revolving lines of credit. Net fundings (paydowns) under revolving lines of credit were $16,302, $19,281, ($59,523), $16,954 and ($12,877) for the periods noted in the table above, 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
		September 30, 2024											June 30, 2024											September 30, 2023
		Average							Average				Average							Average				Average							Average
		balance				Interest			rate				balance				Interest			rate				balance				Interest			rate
Interest earning assets:
Originated loans FTE(1)(2)		$	6,251,827			$	108,403			6.90	%		$	6,074,199			$	101,794			6.74	%		$	5,803,157			$	92,813			6.35	%
Acquired loans			1,487,002				22,660			6.06	%			1,541,576				23,464			6.12	%			1,671,595				26,115			6.20	%
Loans held for sale			18,078				319			7.02	%			16,862				318			7.59	%			22,154				383			6.86	%
Investment securities available-for-sale			790,268				5,132			2.60	%			802,830				5,101			2.54	%			761,892				3,783			1.99	%
Investment securities held-to-maturity			548,120				2,344			1.71	%			564,818				2,419			1.71	%			611,712				2,685			1.76	%
Other securities			26,213				405			6.18	%			25,093				377			6.01	%			39,115				701			7.17	%
Interest earning deposits			70,946				556			3.12	%			92,388				685			2.98	%			130,239				1,205			3.67	%
Total interest earning assets FTE(2)		$	9,192,454			$	139,819			6.05	%		$	9,117,766			$	134,158			5.92	%		$	9,039,864			$	127,685			5.60	%
Cash and due from banks		$	86,887										$	100,165										$	104,308
Other assets			777,758											771,475											737,568
Allowance for credit losses			(96,369	)										(97,741	)										(92,831	)
Total assets		$	9,960,730										$	9,891,665										$	9,788,909
Interest bearing liabilities:
Interest bearing demand, savings and money market deposits		$	5,134,650			$	40,146			3.11	%		$	5,109,924			$	39,681			3.12	%		$	4,535,183			$	27,211			2.38	%
Time deposits			1,039,563				9,220			3.53	%			1,015,371				8,536			3.38	%			992,755				6,212			2.48	%
Securities sold under agreements to repurchase			17,146				5			0.12	%			17,449				5			0.12	%			19,288				6			0.12	%
Long-term debt			54,383				519			3.80	%			54,307				518			3.84	%			54,074				519			3.81	%
Federal Home Loan Bank advances			32,641				460			5.61	%			9,505				133			5.63	%			316,723				4,385			5.49	%
Total interest bearing liabilities		$	6,278,383			$	50,350			3.19	%		$	6,206,556			$	48,873			3.17	%		$	5,918,023			$	38,333			2.57	%
Demand deposits		$	2,226,807										$	2,254,454										$	2,553,619
Other liabilities			180,667											187,499											149,068
Total liabilities			8,685,857											8,648,509											8,620,710
Shareholders' equity			1,274,873											1,243,156											1,168,199
Total liabilities and shareholders' equity		$	9,960,730										$	9,891,665										$	9,788,909
Net interest income FTE(2)						$	89,469										$	85,285										$	89,352
Interest rate spread FTE(2)										2.86	%										2.75	%										3.03	%
Net interest earning assets		$	2,914,071										$	2,911,210										$	3,121,841
Net interest margin FTE(2)										3.87	%										3.76	%										3.92	%
Average transaction deposits		$	7,361,457										$	7,364,378										$	7,088,802
Average total deposits			8,401,020											8,379,749											8,081,557
Ratio of average interest earning assets to average interest bearing liabilities			146.41	%										146.91	%										152.75	%

                                                      

(1	)		Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.
(2	)		Presented on a fully taxable equivalent basis using the statutory tax rate of 21%. The tax equivalent adjustments included above are $1,816, $1,711 and $1,575 for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively.

NATIONAL BANK HOLDINGS CORPORATION

Summary of Net Interest Margin

(Dollars in thousands)

	For the nine months ended September 30, 2024										For the nine months ended September 30, 2023
	Average							Average			Average							Average
	balance				Interest			rate			balance				Interest			rate
Interest earning assets:
Originated loans FTE(1)(2)	$	6,124,757			$	311,112		6.79	%		$	5,656,309			$	258,528		6.11	%
Acquired loans		1,546,482				70,413		6.08	%			1,718,523				79,526		6.19	%
Loans held for sale		15,661				862		7.35	%			23,494				1,189		6.77	%
Investment securities available-for-sale		781,454				14,336		2.45	%			786,087				11,655		1.98	%
Investment securities held-to-maturity		563,975				7,277		1.72	%			629,507				8,364		1.77	%
Other securities		28,771				1,398		6.48	%			46,480				2,513		7.21	%
Interest earning deposits		84,920				2,004		3.15	%			120,633				3,369		3.73	%
Total interest earning assets FTE(2)	$	9,146,020			$	407,402		5.95	%		$	8,981,033			$	365,144		5.44	%
Cash and due from banks	$	96,510									$	110,902
Other assets		768,521										724,305
Allowance for credit losses		(97,327	)									(91,110	)
Total assets	$	9,913,724									$	9,725,130
Interest bearing liabilities:
Interest bearing demand, savings and money market deposits	$	5,064,386			$	116,240		3.07	%		$	4,197,603			$	55,070		1.75	%
Time deposits		1,015,081				25,340		3.33	%			965,750				14,545		2.01	%
Securities sold under agreements to repurchase		17,839				16		0.12	%			19,863				17		0.11	%
Long-term debt		54,307				1,555		3.82	%			53,997				1,555		3.85	%
Federal Home Loan Bank advances		89,918				3,774		5.61	%			449,060				17,075		5.08	%
Total interest bearing liabilities	$	6,241,531			$	146,925		3.14	%		$	5,686,273			$	88,262		2.08	%
Demand deposits	$	2,253,986									$	2,751,537
Other liabilities		170,005										141,110
Total liabilities		8,665,522										8,578,920
Shareholders' equity		1,248,202										1,146,210
Total liabilities and shareholders' equity	$	9,913,724									$	9,725,130
Net interest income FTE(2)					$	260,477									$	276,882
Interest rate spread FTE(2)								2.81	%									3.36	%
Net interest earning assets	$	2,904,489									$	3,294,760
Net interest margin FTE(2)								3.80	%									4.12	%
Average transaction deposits	$	7,318,372									$	6,949,140
Average total deposits		8,333,453										7,914,890
Ratio of average interest earning assets to average interest bearing liabilities		146.53	%									157.94	%

                                                      

(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 $5,220 and $4,432 for the nine months ended September 30, 2024 and September 30, 2023, 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
	September 30, 2024				June 30, 2024				September 30, 2023
Beginning allowance for credit losses	$	96,457			$	97,607			$	92,581
Charge-offs		(3,505	)			(4,605	)			(540	)
Recoveries		95				499				280
Provision expense for credit losses		2,000				2,956				1,125
Ending allowance for credit losses ("ACL")	$	95,047			$	96,457			$	93,446
Ratio of annualized net charge-offs to average total loans during the period		0.18	%			0.22	%			0.01	%
Ratio of ACL to total loans outstanding at period end		1.23	%			1.25	%			1.25	%
Ratio of ACL to total non-performing loans at period end		403.68	%			370.18	%			281.36	%
Total loans	$	7,714,495			$	7,722,153			$	7,478,438
Average total loans during the period		7,714,765				7,582,506				7,443,869
Total non-performing loans		23,545				26,057				33,212

Past Due and Non-accrual Loans

	September 30, 2024				June 30, 2024				September 30, 2023
Loans 30-89 days past due and still accruing interest	$	31,253			$	27,159			$	8,144
Loans 90 days past due and still accruing interest		9,509				3,498				154
Non-accrual loans		23,545				26,057				33,212
Total past due and non-accrual loans	$	64,307			$	56,714			$	41,510
Total 90 days past due and still accruing interest and non-accrual loans to total loans		0.43	%			0.38	%			0.45	%

Asset Quality Data

	September 30, 2024				June 30, 2024				September 30, 2023
Non-performing loans	$	23,545			$	26,057			$	33,212
OREO		1,432				1,526				3,416
Total non-performing assets	$	24,977			$	27,583			$	36,628
Total non-performing loans to total loans		0.31	%			0.34	%			0.44	%
Total non-performing assets to total loans and OREO		0.32	%			0.36	%			0.49	%

NATIONAL BANK HOLDINGS CORPORATION

Key Metrics⁽¹⁾

	As of and for the three months ended												As of and for the nine months ended
	September 30,				June 30,				September 30,				September 30,				September 30,
	2024				2024				2023				2024				2023
Return on average assets		1.32	%			1.06	%			1.46	%			1.22	%			1.50	%
Return on average tangible assets(2)		1.43	%			1.17	%			1.58	%			1.33	%			1.61	%
Return on average equity		10.33	%			8.46	%			12.26	%			9.70	%			12.71	%
Return on average tangible common equity(2)		14.84	%			12.44	%			18.38	%			14.14	%			18.81	%
Loan to deposit ratio (end of period)		90.79	%			92.18	%			91.77	%			90.79	%			91.77	%
Non-interest bearing deposits to total deposits (end of period)		26.70	%			26.61	%			30.47	%			26.70	%			30.47	%
Net interest margin(3)		3.79	%			3.69	%			3.85	%			3.73	%			4.06	%
Net interest margin FTE(2)(3)		3.87	%			3.76	%			3.92	%			3.80	%			4.12	%
Interest rate spread FTE(4)		2.86	%			2.75	%			3.03	%			2.81	%			3.36	%
Yield on earning assets(5)		5.97	%			5.84	%			5.53	%			5.87	%			5.37	%
Yield on earning assets FTE(2)(5)		6.05	%			5.92	%			5.60	%			5.95	%			5.44	%
Cost of interest bearing liabilities		3.19	%			3.17	%			2.57	%			3.14	%			2.08	%
Cost of deposits		2.34	%			2.31	%			1.64	%			2.27	%			1.18	%
Non-interest income to total revenue FTE(9)		17.05	%			14.13	%			17.81	%			16.13	%			14.74	%
Non-interest expense to average assets		2.56	%			2.56	%			2.46	%			2.56	%			2.47	%
Efficiency ratio		60.51	%			64.62	%			56.56	%			62.24	%			56.16	%
Efficiency ratio excluding other intangible assets amortization FTE(2)		57.65	%			61.52	%			53.90	%			59.28	%			53.74	%
Pre-provision net revenue	$	41,880			$	34,528			$	46,539			$	115,298			$	140,427
Pre-provision net revenue FTE(2)		43,696				36,239				48,114				120,518				144,859
Total Loans Asset Quality Data(6)(7)(8)
Non-performing loans to total loans		0.31	%			0.34	%			0.44	%			0.31	%			0.44	%
Non-performing assets to total loans and OREO		0.32	%			0.36	%			0.49	%			0.32	%			0.49	%
Allowance for credit losses to total loans		1.23	%			1.25	%			1.25	%			1.23	%			1.33	%
Allowance for credit losses to non-performing loans		403.68	%			370.18	%			281.36	%			403.68	%			281.36	%
Net charge-offs to average loans		0.18	%			0.22	%			0.01	%			0.13	%			0.02	%

                                                      

(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, including FTE income, and the weighted average cost of interest bearing liabilities. Ratio represents a non-GAAP financial measure.
(5	)		Interest earning assets include assets that earn interest/accretion or dividends. Any market value adjustments on investment securities or loans are excluded from interest earning assets.
(6	)		Non-performing loans consist of non-accruing loans and modified loans on non-accrual.
(7	)		Non-performing assets include non-performing loans and other real estate owned.
(8	)		Total loans are net of unearned discounts and fees.
(9	)		Non-interest income to total revenue represents non-interest income divided by the sum of net interest income FTE and non-interest income. Ratio represents a non-GAAP financial measure.

NATIONAL BANK HOLDINGS CORPORATION

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

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

Tangible Common Book Value Ratios

		September 30, 2024				June 30, 2024				December 31, 2023				September 30, 2023
Total shareholders' equity		$	1,291,997			$	1,247,644			$	1,212,807			$	1,163,585
Less: goodwill and other intangible assets, net			(358,754	)			(360,732	)			(364,716	)			(366,724	)
Add: deferred tax liability related to goodwill			13,203				12,871				12,208				11,876
Tangible common equity (non-GAAP)		$	946,446			$	899,783			$	860,299			$	808,737
Total assets		$	9,993,283			$	9,970,851			$	9,951,064			$	9,866,283
Less: goodwill and other intangible assets, net			(358,754	)			(360,732	)			(364,716	)			(366,724	)
Add: deferred tax liability related to goodwill			13,203				12,871				12,208				11,876
Tangible assets (non-GAAP)		$	9,647,732			$	9,622,990			$	9,598,556			$	9,511,435
Tangible common equity to tangible assets calculations:
Total shareholders' equity to total assets			12.93	%			12.51	%			12.19	%			11.79	%
Less: impact of goodwill and other intangible assets, net			(3.12	)%			(3.16	)%			(3.23	)%			(3.29	)%
Tangible common equity to tangible assets (non-GAAP)			9.81	%			9.35	%			8.96	%			8.50	%
Tangible common book value per share calculations:
Tangible common equity (non-GAAP)		$	946,446			$	899,783			$	860,299			$	808,737
Divided by: ending shares outstanding			37,988,364				37,899,453				37,784,851				37,739,776
Tangible common book value per share (non-GAAP)		$	24.91			$	23.74			$	22.77			$	21.43
Tangible common book value per share, excluding accumulated other comprehensive loss calculations:
Tangible common equity (non-GAAP)		$	946,446			$	899,783			$	860,299			$	808,737
Accumulated other comprehensive loss, net of tax			62,485				80,425				76,401				100,853
Tangible common book value, excluding accumulated other comprehensive loss, net of tax (non-GAAP)			1,008,931				980,208				936,700				909,590
Divided by: ending shares outstanding			37,988,364				37,899,453				37,784,851				37,739,776
Tangible common book value per share, excluding accumulated other comprehensive loss, net of tax (non-GAAP)		$	26.56			$	25.86			$	24.79			$	24.10

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 nine months ended
		September 30,				June 30,				September 30,				September 30,				September 30,
		2024				2024				2023				2024				2023
Net income		$	33,105			$	26,135			$	36,087			$	90,631			$	108,927
Add: impact of other intangible assets amortization expense, after tax			1,517				1,516				1,541				4,575				4,128
Net income excluding the impact of other intangible assets amortization expense, after tax (non-GAAP)		$	34,622			$	27,651			$	37,628			$	95,206			$	113,055
Average assets		$	9,960,730			$	9,891,665			$	9,788,909			$	9,913,724			$	9,725,130
Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill			(346,757	)			(349,030	)			(356,083	)			(348,717	)			(342,826	)
Average tangible assets (non-GAAP)		$	9,613,973			$	9,542,635			$	9,432,826			$	9,565,007			$	9,382,304
Average shareholders' equity		$	1,274,873			$	1,243,156			$	1,168,199			$	1,248,202			$	1,146,210
Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill			(346,757	)			(349,030	)			(356,083	)			(348,717	)			(342,826	)
Average tangible common equity (non-GAAP)		$	928,116			$	894,126			$	812,116			$	899,485			$	803,384
Return on average assets			1.32	%			1.06	%			1.46	%			1.22	%			1.50	%
Return on average tangible assets (non-GAAP)			1.43	%			1.17	%			1.58	%			1.33	%			1.61	%
Return on average equity			10.33	%			8.46	%			12.26	%			9.70	%			12.71	%
Return on average tangible common equity (non-GAAP)			14.84	%			12.44	%			18.38	%			14.14	%			18.81	%

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

		As of and for the three months ended												As of and for the nine months ended
		September 30,				June 30,				September 30,				September 30,				September 30,
		2024				2024				2023				2024				2023
Interest income		$	138,003			$	132,447			$	126,110			$	402,182			$	360,712
Add: impact of taxable equivalent adjustment			1,816				1,711				1,575				5,220				4,432
Interest income FTE (non-GAAP)		$	139,819			$	134,158			$	127,685			$	407,402			$	365,144
Net interest income		$	87,653			$	83,574			$	87,777			$	255,257			$	272,450
Add: impact of taxable equivalent adjustment			1,816				1,711				1,575				5,220				4,432
Net interest income FTE (non-GAAP)		$	89,469			$	85,285			$	89,352			$	260,477			$	276,882
Average earning assets		$	9,192,454			$	9,117,766			$	9,039,864			$	9,146,020			$	8,981,033
Yield on earning assets			5.97	%			5.84	%			5.53	%			5.87	%			5.37	%
Yield on earning assets FTE (non-GAAP)			6.05	%			5.92	%			5.60	%			5.95	%			5.44	%
Net interest margin			3.79	%			3.69	%			3.85	%			3.73	%			4.06	%
Net interest margin FTE (non-GAAP)			3.87	%			3.76	%			3.92	%			3.80	%			4.12	%

Efficiency Ratio and Pre-Provision Net Revenue

		As of and for the three months ended												As of and for the nine months ended
		September 30,				June 30,				September 30,				September 30,				September 30,
		2024				2024				2023				2024				2023
Net interest income		$	87,653			$	83,574			$	87,777			$	255,257			$	272,450
Add: impact of taxable equivalent adjustment			1,816				1,711				1,575				5,220				4,432
Net interest income FTE (non-GAAP)		$	89,469			$	85,285			$	89,352			$	260,477			$	276,882
Non-interest income		$	18,389			$	14,029			$	19,365			$	50,112			$	47,853
Non-interest expense		$	64,162			$	63,075			$	60,603			$	190,071			$	179,876
Less: other intangible assets amortization			(1,977	)			(1,977	)			(2,008	)			(5,962	)			(5,378	)
Non-interest expense excluding other intangible assets amortization (non-GAAP)		$	62,185			$	61,098			$	58,595			$	184,109			$	174,498
Efficiency ratio			60.51	%			64.62	%			56.56	%			62.24	%			56.16	%
Efficiency ratio excluding other intangible assets amortization FTE (non-GAAP)			57.65	%			61.52	%			53.90	%			59.28	%			53.74	%
Pre-provision net revenue (non-GAAP)		$	41,880			$	34,528			$	46,539			$	115,298			$	140,427
Pre-provision net revenue, FTE (non-GAAP)			43,696				36,239				48,114				120,518				144,859