National Bank 8K Announces Second Quarter 2024 Financial Results | NBHC 23 Jul 24

Exhibit 99.1

National Bank Holdings Corporation Announces

Second Quarter 2024 Financial Results

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


	For the quarter⁽¹⁾						For the year⁽¹⁾
	2Q24		1Q24		2Q23		2024		2023
Net income ($000's)	$	26,135	$	31,391	$	32,557	$	57,526	$	72,840
Earnings per share - diluted	$	0.68	$	0.82	$	0.85	$	1.50	$	1.91
Return on average assets		1.06%		1.28%		1.34%		1.17%		1.52%
Return on average tangible assets⁽²⁾		1.17%		1.39%		1.45%		1.28%		1.63%
Return on average equity		8.46%		10.30%		11.35%		9.37%		12.94%
Return on average tangible common equity⁽²⁾		12.44%		15.14%		17.24%		13.77%		19.05%


(1)		Ratios are annualized.
(2)		See non-GAAP reconciliations starting on page 14.

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

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

Second Quarter 2024 Results

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

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

Net Interest Income

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

Loans

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

Asset Quality and Provision for Credit Losses

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

Deposits

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

Non-Interest Income

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

Non-Interest Expense

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

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

Capital

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

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

Year-Over-Year Review

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

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

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

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

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

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

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

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

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

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

Conference Call

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

About National Bank Holdings Corporation

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

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

About Non-GAAP Financial Measures

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

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

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, Investor Relations Director, (720) 554-6640, ir@nationalbankholdings.com

Aldis Birkans, Chief Financial Officer, (720) 529-3314, ir@nationalbankholdings.com

Media:

Jody Soper, Chief Marketing Officer, (303) 784-5925, Jody.Soper@nbhbank.com

NATIONAL BANK HOLDINGS CORPORATION

FINANCIAL SUMMARY

Consolidated Statements of Operations (Unaudited)

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


	For the three months ended						For the six months ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2024		2024		2023		2024		2023
Total interest and dividend income	$	132,447	$	131,732	$	121,069	$	264,179	$	234,602
Total interest expense		48,873		47,702		31,285		96,575		49,929
Net interest income		83,574		84,030		89,784		167,604		184,673
Taxable equivalent adjustment		1,711		1,692		1,442		3,403		2,857
Net interest income FTE⁽¹⁾		85,285		85,722		91,226		171,007		187,530
Provision expense for credit losses		2,776		—		1,700		2,776		2,600
Net interest income after provision for credit losses FTE⁽¹⁾		82,509		85,722		89,526		168,231		184,930
Non-interest income:
Service charges		4,295		4,391		4,444		8,686		8,545
Bank card fees		4,882		4,578		5,091		9,460		9,728
Mortgage banking income		3,296		2,655		3,710		5,951		6,926
Other non-interest income		1,556		6,070		578		7,626		3,289
Total non-interest income		14,029		17,694		13,823		31,723		28,488
Non-interest expense:
Salaries and benefits		36,933		36,520		35,215		73,453		68,204
Occupancy and equipment		10,120		9,941		9,126		20,061		18,199
Professional fees		1,706		1,646		3,146		3,352		5,736
Data processing		4,117		4,066		2,959		8,183		6,711
Other non-interest expense		8,222		8,653		8,528		16,875		17,053
Other intangible assets amortization		1,977		2,008		2,007		3,985		3,370
Total non-interest expense		63,075		62,834		60,981		125,909		119,273

Income before income taxes FTE⁽¹⁾		33,463		40,582		42,368		74,045		94,145
Taxable equivalent adjustment		1,711		1,692		1,442		3,403		2,857
Income before income taxes		31,752		38,890		40,926		70,642		91,288
Income tax expense		5,617		7,499		8,369		13,116		18,448
Net income	$	26,135	$	31,391	$	32,557	$	57,526	$	72,840
Earnings per share - basic	$	0.68	$	0.82	$	0.86	$	1.51	$	1.92
Earnings per share - diluted		0.68		0.82		0.85		1.50		1.91


(1)		Net interest income is presented on a GAAP basis and fully taxable equivalent (FTE) basis, as the Company believes this non-GAAP measure is the preferred industry measurement for this item. The FTE adjustment is for the tax benefit on certain tax exempt loans using the federal tax rate of 21% for each period presented.

NATIONAL BANK HOLDINGS CORPORATION

Consolidated Statements of Financial Condition (Unaudited)

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


	June 30, 2024		March 31, 2024		December 31, 2023		June 30, 2023
ASSETS
Cash and cash equivalents	$	144,993	$	292,931	$	190,826	$	323,832
Investment securities available-for-sale		691,076		685,666		628,829		659,347
Investment securities held-to-maturity		554,686		570,850		585,052		619,400
Non-marketable securities		72,987		73,439		90,477		88,849
Loans		7,722,153		7,569,052		7,698,758		7,414,357
Allowance for credit losses		(96,457)		(97,607)		(97,947)		(92,581)
Loans, net		7,625,696		7,471,445		7,600,811		7,321,776
Loans held for sale		18,787		14,065		18,854		25,172
Other real estate owned		1,526		4,064		4,088		3,458
Premises and equipment, net		177,456		168,956		162,733		147,853
Goodwill		306,043		306,043		306,043		306,043
Intangible assets, net		62,356		64,212		66,025		74,914
Other assets		315,245		315,805		297,326		301,313
Total assets	$	9,970,851	$	9,967,476	$	9,951,064	$	9,871,957
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Non-interest bearing demand deposits	$	2,229,432	$	2,292,917	$	2,361,367	$	2,628,942
Interest bearing demand deposits		1,420,942		1,427,856		1,480,042		1,324,292
Savings and money market		3,703,810		3,801,013		3,367,012		3,183,355
Total transaction deposits		7,354,184		7,521,786		7,208,421		7,136,589
Time deposits		1,022,741		995,976		981,970		984,269
Total deposits		8,376,925		8,517,762		8,190,391		8,120,858
Securities sold under agreements to repurchase		19,465		19,577		19,627		21,422
Long-term debt		54,356		54,278		54,200		54,045
Federal Home Loan Bank advances		35,000		—		340,000		385,000
Other liabilities		237,461		144,029		134,039		143,298
Total liabilities		8,723,207		8,735,646		8,738,257		8,724,623
Shareholders' equity:
Common stock		515		515		515		515
Additional paid in capital		1,161,804		1,163,773		1,162,269		1,158,727
Retained earnings		469,630		454,211		433,126		384,094
Treasury stock		(303,880)		(306,460)		(306,702)		(307,388)
Accumulated other comprehensive loss, net of tax		(80,425)		(80,209)		(76,401)		(88,614)
Total shareholders' equity		1,247,644		1,231,830		1,212,807		1,147,334
Total liabilities and shareholders' equity	$	9,970,851	$	9,967,476	$	9,951,064	$	9,871,957
SHARE DATA
Average basic shares outstanding		38,210,869		38,031,358		38,013,791		37,957,287
Average diluted shares outstanding		38,372,777		38,188,480		38,162,538		38,107,326
Ending shares outstanding		37,899,453		37,806,148		37,784,851		37,719,026
Common book value per share	$	32.92	$	32.58	$	32.10	$	30.42
Tangible common book value per share⁽¹⁾ (non-GAAP)		23.74		23.32		22.77		20.95
Tangible common book value per share, excluding accumulated other comprehensive loss⁽¹⁾ (non-GAAP)		25.86		25.44		24.79		23.30
CAPITAL RATIOS
Average equity to average assets		12.57%		12.40%		11.97%		11.78%
Tangible common equity to tangible assets⁽¹⁾		9.35%		9.17%		8.96%		8.30%
Tier 1 leverage ratio		10.20%		9.99%		9.74%		9.15%
Common equity tier 1 risk-based capital ratio		12.41%		12.35%		11.89%		11.08%
Tier 1 risk-based capital ratio		12.41%		12.35%		11.89%		11.08%
Total risk-based capital ratio		14.32%		14.30%		13.80%		12.95%


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

NATIONAL BANK HOLDINGS CORPORATION

Loan Portfolio

(Dollars in thousands)

Period End Loan Balances by Type


					June 30, 2024			June 30, 2024
					vs. March 31, 2024			vs. June 30, 2023
	June 30, 2024		March 31, 2024		% Change	June 30, 2023		% Change
Originated:
Commercial:
Commercial and industrial	$	1,906,095	$	1,777,328	7.2%	$	1,788,714	6.6%
Municipal and non-profit		1,063,706		1,062,287	0.1%		1,022,414	4.0%
Owner-occupied commercial real estate		921,122		875,303	5.2%		710,508	29.6%
Food and agribusiness		248,401		241,654	2.8%		263,086	(5.6)%
Total commercial		4,139,324		3,956,572	4.6%		3,784,722	9.4%
Commercial real estate non-owner occupied		1,116,424		1,092,780	2.2%		1,043,999	6.9%
Residential real estate		923,313		923,103	0.0%		877,907	5.2%
Consumer		14,385		14,936	(3.7)%		16,979	(15.3)%
Total originated		6,193,446		5,987,391	3.4%		5,723,607	8.2%

Acquired:
Commercial:
Commercial and industrial		124,104		132,532	(6.4)%		163,139	(23.9)%
Municipal and non-profit		288		294	(2.0)%		310	(7.1)%
Owner-occupied commercial real estate		232,890		234,486	(0.7)%		245,605	(5.2)%
Food and agribusiness		48,061		57,896	(17.0)%		62,918	(23.6)%
Total commercial		405,343		425,208	(4.7)%		471,972	(14.1)%
Commercial real estate non-owner occupied		752,040		767,419	(2.0)%		847,946	(11.3)%
Residential real estate		369,003		387,101	(4.7)%		367,998	0.3%
Consumer		2,321		1,933	20.1%		2,834	(18.1)%
Total acquired		1,528,707		1,581,661	(3.3)%		1,690,750	(9.6)%
Total loans	$	7,722,153	$	7,569,052	2.0%	$	7,414,357	4.2%

Loan Fundings⁽¹⁾


	Second quarter		First quarter		Fourth quarter		Third quarter		Second quarter
	2024		2024		2023		2023		2023
Commercial:
Commercial and industrial	$	241,910	$	53,978	$	135,954	$	89,297	$	111,717
Municipal and non-profit		28,785		14,564		79,650		18,657		39,331
Owner occupied commercial real estate		102,615		35,128		75,631		67,322		62,649
Food and agribusiness		11,040		(7,204)		10,646		16,191		6,017
Total commercial		384,350		96,466		301,881		191,467		219,714
Commercial real estate non-owner occupied		83,184		73,789		107,738		88,434		99,984
Residential real estate		36,124		29,468		48,925		42,514		40,814
Consumer		1,547		234		1,849		1,689		1,777
Total	$	505,205	$	199,957	$	460,393	$	324,104	$	362,289


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

NATIONAL BANK HOLDINGS CORPORATION

Summary of Net Interest Margin

(Dollars in thousands)


	For the three months ended						For the three months ended						For the three months ended
	June 30, 2024						March 31, 2024						June 30, 2023
	Average				Average		Average				Average		Average				Average
	balance		Interest		rate		balance		Interest		rate		balance		Interest		rate
Interest earning assets:
Originated loans FTE⁽¹⁾⁽²⁾	$	6,074,199	$	101,794		6.74%	$	6,046,849	$	100,914		6.71%	$	5,649,623	$	86,547		6.14%
Acquired loans		1,541,576		23,464		6.12%		1,611,521		24,289		6.06%		1,712,118		26,388		6.18%
Loans held for sale		16,862		318		7.59%		12,017		225		7.53%		26,572		460		6.94%
Investment securities available-for-sale		802,830		5,101		2.54%		751,168		4,103		2.18%		786,643		3,883		1.97%
Investment securities held-to-maturity		564,818		2,419		1.71%		579,160		2,514		1.74%		630,547		2,808		1.78%
Other securities		25,093		377		6.01%		35,036		616		7.03%		49,093		914		7.45%
Interest earning deposits		92,388		685		2.98%		91,579		763		3.35%		144,391		1,511		4.20%
Total interest earning assets FTE⁽²⁾	$	9,117,766	$	134,158		5.92%	$	9,127,330	$	133,424		5.88%	$	8,998,987	$	122,511		5.46%
Cash and due from banks	$	100,165					$	102,583					$	109,948
Other assets		771,475						756,230						746,864
Allowance for credit losses		(97,741)						(97,882)						(90,636)
Total assets	$	9,891,665					$	9,888,261					$	9,765,163
Interest bearing liabilities:
Interest bearing demand, savings and money market deposits	$	5,109,924	$	39,681		3.12%	$	4,947,811	$	36,413		2.96%	$	4,282,972	$	20,100		1.88%
Time deposits		1,015,371		8,536		3.38%		990,041		7,584		3.08%		981,201		5,043		2.06%
Securities sold under agreements to repurchase		17,449		5		0.12%		18,929		6		0.13%		20,264		5		0.10%
Long-term debt		54,307		518		3.84%		54,229		518		3.84%		53,997		518		3.85%
Federal Home Loan Bank advances		9,505		133		5.63%		228,236		3,181		5.61%		435,713		5,619		5.17%
Total interest bearing liabilities	$	6,206,556	$	48,873		3.17%	$	6,239,246	$	47,702		3.07%	$	5,774,147	$	31,285		2.17%
Demand deposits	$	2,254,454					$	2,280,997					$	2,701,306
Other liabilities		187,499						141,735						138,936
Total liabilities		8,648,509						8,661,978						8,614,389
Shareholders' equity		1,243,156						1,226,283						1,150,774
Total liabilities and shareholders' equity	$	9,891,665					$	9,888,261					$	9,765,163
Net interest income FTE⁽²⁾			$	85,285					$	85,722					$	91,226
Interest rate spread FTE⁽²⁾						2.75%						2.81%						3.29%
Net interest earning assets	$	2,911,210					$	2,888,084					$	3,224,840
Net interest margin FTE⁽²⁾						3.76%						3.78%						4.07%
Average transaction deposits	$	7,364,378					$	7,228,808					$	6,984,278
Average total deposits		8,379,749						8,218,849						7,965,479
Ratio of average interest earning assets to average interest bearing liabilities		146.91%						146.29%						155.85%


(1)		Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.
(2)		Presented on a fully taxable equivalent basis using the statutory tax rate of 21%. The tax equivalent adjustments included above are $1,711, $1,692 and $1,442 for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively.

NATIONAL BANK HOLDINGS CORPORATION

Summary of Net Interest Margin

(Dollars in thousands)


	For the six months ended June 30, 2024					For the six months ended June 30, 2023
	Average				Average	Average				Average
	balance		Interest		rate	balance		Interest		rate
Interest earning assets:
Originated loans FTE⁽¹⁾⁽²⁾	$	6,060,524	$	202,708	6.73%	$	5,582,536	$	165,715	5.99%
Acquired loans		1,576,548		47,753	6.09%		1,741,508		53,411	6.18%
Loans held for sale		14,440		543	7.56%		24,176		806	6.72%
Investment securities available-for-sale		776,999		9,204	2.37%		798,385		7,872	1.97%
Investment securities held-to-maturity		571,989		4,933	1.72%		638,552		5,679	1.78%
Other securities		30,065		993	6.61%		50,223		1,812	7.22%
Interest earning deposits		91,983		1,448	3.17%		115,750		2,164	3.77%
Total interest earning assets FTE⁽²⁾	$	9,122,548	$	267,582	5.90%	$	8,951,130	$	237,459	5.35%
Cash and due from banks	$	101,374				$	114,254
Other assets		763,853					717,563
Allowance for credit losses		(97,812)					(90,235)
Total assets	$	9,889,963				$	9,692,712
Interest bearing liabilities:
Interest bearing demand, savings and money market deposits	$	5,028,868	$	76,094	3.04%	$	4,026,015	$	27,859	1.40%
Time deposits		1,002,706		16,120	3.23%		952,023		8,333	1.77%
Securities sold under agreements to repurchase		18,189		11	0.12%		20,155		11	0.11%
Long-term debt		54,268		1,036	3.84%		53,958		1,036	3.87%
Federal Home Loan Bank advances		118,871		3,314	5.61%		516,326		12,690	4.96%
Total interest bearing liabilities	$	6,222,902	$	96,575	3.12%	$	5,568,477	$	49,929	1.81%
Demand deposits	$	2,267,725				$	2,852,137
Other liabilities		164,617					137,065
Total liabilities		8,655,244					8,557,679
Shareholders' equity		1,234,719					1,135,033
Total liabilities and shareholders' equity	$	9,889,963				$	9,692,712
Net interest income FTE⁽²⁾			$	171,007				$	187,530
Interest rate spread FTE⁽²⁾					2.78%					3.54%
Net interest earning assets	$	2,899,646				$	3,382,653
Net interest margin FTE⁽²⁾					3.77%					4.22%
Average transaction deposits	$	7,296,593				$	6,878,152
Average total deposits		8,299,299					7,830,175
Ratio of average interest earning assets to average interest bearing liabilities		146.60%					160.75%


(1)		Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.
(2)		Presented on a fully taxable equivalent basis using the statutory tax rate of 21%. The tax equivalent adjustments included above are $3,403 and $2,857 for the six months ended June 30, 2024 and June 30, 2023, respectively.

NATIONAL BANK HOLDINGS CORPORATION

Allowance for Credit Losses and Asset Quality

(Dollars in thousands)

Allowance for Credit Losses Analysis


	As of and for the three months ended
	June 30, 2024		March 31, 2024		June 30, 2023
Beginning allowance for credit losses	$	97,607	$	97,947	$	90,343
Charge-offs		(4,605)		(278)		(354)
Recoveries		499		188		42
Provision expense (release) for credit losses		2,956		(250)		2,550
Ending allowance for credit losses ("ACL")	$	96,457	$	97,607	$	92,581
Ratio of annualized net charge-offs to average total loans during the period		0.22%		0.00%		0.02%
Ratio of ACL to total loans outstanding at period end		1.25%		1.29%		1.25%
Ratio of ACL to total non-performing loans at period end		370.18%		272.52%		276.25%
Total loans	$	7,722,153	$	7,569,052	$	7,414,357
Average total loans during the period		7,582,506		7,632,635		7,338,585
Total non-performing loans		26,057		35,817		33,514

Past Due and Non-accrual Loans


	June 30, 2024		March 31, 2024		June 30, 2023
Loans 30-89 days past due and still accruing interest	$	27,159	$	3,495	$	7,261
Loans 90 days past due and still accruing interest		3,498		1		246
Non-accrual loans		26,057		35,817		33,514
Total past due and non-accrual loans	$	56,714	$	39,313	$	41,021
Total 90 days past due and still accruing interest and non-accrual loans to total loans		0.38%		0.47%		0.46%

Asset Quality Data


	June 30, 2024		March 31, 2024		June 30, 2023
Non-performing loans	$	26,057	$	35,817	$	33,514
OREO		1,526		4,064		3,458
Total non-performing assets	$	27,583	$	39,881	$	36,972
Total non-performing loans to total loans		0.34%		0.47%		0.45%
Total non-performing assets to total loans and OREO		0.36%		0.53%		0.50%

NATIONAL BANK HOLDINGS CORPORATION

Key Metrics⁽¹⁾


	As of and for the three months ended						As of and for the six months ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2024		2023		2023		2024		2023
Return on average assets		1.06%		1.28%		1.34%		1.17%		1.52%
Return on average tangible assets⁽²⁾		1.17%		1.39%		1.45%		1.28%		1.63%
Return on average equity		8.46%		10.30%		11.35%		9.37%		12.94%
Return on average tangible common equity⁽²⁾		12.44%		15.14%		17.24%		13.77%		19.05%
Loan to deposit ratio (end of period)		92.18%		88.86%		91.30%		92.18%		91.30%
Non-interest bearing deposits to total deposits (end of period)		26.61%		26.92%		32.37%		26.61%		32.37%
Net interest margin⁽³⁾		3.69%		3.70%		4.00%		3.69%		4.16%
Net interest margin FTE⁽²⁾⁽³⁾		3.76%		3.78%		4.07%		3.77%		4.22%
Interest rate spread FTE⁽²⁾⁽⁴⁾		2.75%		2.81%		3.29%		2.78%		3.54%
Yield on earning assets⁽⁵⁾		5.84%		5.80%		5.40%		5.82%		5.29%
Yield on earning assets FTE⁽²⁾⁽⁵⁾		5.92%		5.88%		5.46%		5.90%		5.35%
Cost of interest bearing liabilities		3.17%		3.07%		2.17%		3.12%		1.81%
Cost of deposits		2.31%		2.15%		1.27%		2.23%		0.93%
Non-interest income to total revenue FTE⁽²⁾		14.13%		17.11%		13.16%		15.65%		13.19%
Non-interest expense to average assets		2.56%		2.56%		2.50%		2.56%		2.48%
Efficiency ratio		64.62%		61.77%		58.86%		63.17%		55.95%
Efficiency ratio excluding other intangible assets amortization FTE⁽²⁾		61.52%		58.82%		56.14%		60.14%		53.65%
Pre-provision net revenue	$	34,528	$	38,890	$	42,626	$	73,418	$	93,888
Pre-provision net revenue FTE⁽²⁾		36,239		40,582		44,068		76,821		96,745

Total Loans Asset Quality Data^(6)(7)(8)
Non-performing loans to total loans		0.34%		0.47%		0.45%		0.34%		0.45%
Non-performing assets to total loans and OREO		0.36%		0.53%		0.50%		0.36%		0.50%
Allowance for credit losses to total loans		1.25%		1.29%		1.25%		1.25%		1.25%
Allowance for credit losses to non-performing loans		370.18%		272.52%		276.25%		370.18%		276.25%
Net charge-offs to average loans		0.22%		0.00%		0.02%		0.11%		0.02%


(1)		Ratios are annualized.
(2)		Ratio represents non-GAAP financial measure. See non-GAAP reconciliations starting on page 14.
(3)		Net interest margin represents net interest income, including accretion income on interest earning assets, as a percentage of average interest earning assets.
(4)		Interest rate spread represents the difference between the weighted average yield on interest earning assets and the weighted average cost of interest bearing liabilities.
(5)		Interest earning assets include assets that earn interest/accretion or dividends. Any market value adjustments on investment securities or loans are excluded from interest earning assets.
(6)		Non-performing loans consist of non-accruing loans and modified loans on non-accrual.
(7)		Non-performing assets include non-performing loans and other real estate owned.
(8)		Total loans are net of unearned discounts and fees.

NATIONAL BANK HOLDINGS CORPORATION

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

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

Tangible Common Book Value Ratios


	June 30, 2024		March 31, 2024		December 31, 2023		June 30, 2023
Total shareholders' equity	$	1,247,644	$	1,231,830	$	1,212,807	$	1,147,334
Less: goodwill and other intangible assets, net		(360,732)		(362,709)		(364,716)		(368,732)
Add: deferred tax liability related to goodwill		12,871		12,539		12,208		11,544
Tangible common equity (non-GAAP)	$	899,783	$	881,660	$	860,299	$	790,146

Total assets	$	9,970,851	$	9,967,476	$	9,951,064	$	9,871,957
Less: goodwill and other intangible assets, net		(360,732)		(362,709)		(364,716)		(368,732)
Add: deferred tax liability related to goodwill		12,871		12,539		12,208		11,544
Tangible assets (non-GAAP)	$	9,622,990	$	9,617,306	$	9,598,556	$	9,514,769

Tangible common equity to tangible assets calculations:
Total shareholders' equity to total assets		12.51%		12.36%		12.19%		11.62%
Less: impact of goodwill and other intangible assets, net		(3.16)%		(3.19)%		(3.23)%		(3.32)%
Tangible common equity to tangible assets (non-GAAP)		9.35%		9.17%		8.96%		8.30%

Tangible common book value per share calculations:
Tangible common equity (non-GAAP)	$	899,783	$	881,660	$	860,299	$	790,146
Divided by: ending shares outstanding		37,899,453		37,806,148		37,784,851		37,719,026
Tangible common book value per share (non-GAAP)	$	23.74	$	23.32	$	22.77	$	20.95

Tangible common book value per share, excluding accumulated other comprehensive loss calculations:
Tangible common equity (non-GAAP)	$	899,783	$	881,660	$	860,299	$	790,146
Accumulated other comprehensive loss, net of tax		80,425		80,209		76,401		88,614
Tangible common book value, excluding accumulated other comprehensive loss, net of tax (non-GAAP)		980,208		961,869		936,700		878,760
Divided by: ending shares outstanding		37,899,453		37,806,148		37,784,851		37,719,026
Tangible common book value per share, excluding accumulated other comprehensive loss, net of tax (non-GAAP)	$	25.86	$	25.44	$	24.79	$	23.30

NATIONAL BANK HOLDINGS CORPORATION

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

Return on Average Tangible Assets and Return on Average Tangible Equity


	As of and for the three months ended						As of and for the six months ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2024		2024		2023		2024		2023
Net income	$	26,135	$	31,391	$	32,557	$	57,526	$	72,840
Add: impact of other intangible assets amortization expense, after tax		1,516		1,534		1,546		3,055		2,596
Net income excluding the impact of other intangible assets amortization expense, after tax (non-GAAP)	$	27,651	$	32,925	$	34,103	$	60,581	$	75,436

Average assets	$	9,891,665	$	9,888,261	$	9,765,163	$	9,889,963	$	9,692,712
Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill		(349,030)		(351,383)		(357,446)		(350,040)		(336,420)
Average tangible assets (non-GAAP)	$	9,542,635	$	9,536,878	$	9,407,717	$	9,539,923	$	9,356,292

Average shareholders' equity	$	1,243,156	$	1,226,283	$	1,150,774	$	1,234,719	$	1,135,033
Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill		(349,030)		(351,383)		(357,446)		(350,040)		(336,420)
Average tangible common equity (non-GAAP)	$	894,126	$	874,900	$	793,328	$	884,679	$	798,613

Return on average assets		1.06%		1.28%		1.34%		1.17%		1.52%
Return on average tangible assets (non-GAAP)		1.17%		1.39%		1.45%		1.28%		1.63%
Return on average equity		8.46%		10.30%		11.35%		9.37%		12.94%
Return on average tangible common equity (non-GAAP)		12.44%		15.14%		17.24%		13.77%		19.05%

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin


	As of and for the three months ended						As of and for the six months ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2024		2024		2023		2024		2023
Interest income	$	132,447	$	131,732	$	121,069	$	264,179	$	234,602
Add: impact of taxable equivalent adjustment		1,711		1,692		1,442		3,403		2,857
Interest income FTE (non-GAAP)	$	134,158	$	133,424	$	122,511	$	267,582	$	237,459

Net interest income	$	83,574	$	84,030	$	89,784	$	167,604	$	184,673
Add: impact of taxable equivalent adjustment		1,711		1,692		1,442		3,403		2,857
Net interest income FTE (non-GAAP)	$	85,285	$	85,722	$	91,226	$	171,007	$	187,530

Average earning assets	$	9,117,766	$	9,127,330	$	8,998,987	$	9,122,548	$	8,951,130
Yield on earning assets		5.84%		5.80%		5.40%		5.82%		5.29%
Yield on earning assets FTE (non-GAAP)		5.92%		5.88%		5.46%		5.90%		5.35%
Net interest margin		3.69%		3.70%		4.00%		3.69%		4.16%
Net interest margin FTE (non-GAAP)		3.76%		3.78%		4.07%		3.77%		4.22%

Efficiency Ratio and Pre-Provision Net Revenue


	As of and for the three months ended						As of and for the six months ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2024		2024		2023		2024		2023
Net interest income	$	83,574	$	84,030	$	89,784	$	167,604	$	184,673
Add: impact of taxable equivalent adjustment		1,711		1,692		1,442		3,403		2,857
Net interest income FTE (non-GAAP)	$	85,285	$	85,722	$	91,226	$	171,007	$	187,530

Non-interest income	$	14,029	$	17,694	$	13,823	$	31,723	$	28,488

Non-interest expense	$	63,075	$	62,834	$	60,981	$	125,909	$	119,273
Less: other intangible assets amortization		(1,977)		(2,008)		(2,007)		(3,985)		(3,370)
Non-interest expense excluding other intangible assets amortization (non-GAAP)	$	61,098	$	60,826	$	58,974	$	121,924	$	115,903

Efficiency ratio		64.62%		61.77%		58.86%		63.17%		55.95%
Efficiency ratio excluding other intangible assets amortization FTE (non-GAAP)		61.52%		58.82%		56.14%		60.14%		53.65%
Pre-provision net revenue (non-GAAP)	$	34,528	$	38,890	$	42,626	$	73,418	$	93,888
Pre-provision net revenue, FTE (non-GAAP)		36,239		40,582		44,068		76,821		96,745

National Bank (NBHC) 8-KNational Bank Holdings Corporation Announces Second Quarter 2024 Financial Results