GlobeNewswire Inc | Jul 26, 2021 04:10PM EDT

July 26, 2021

DENVER, July 26, 2021 (GLOBE NEWSWIRE) -- National Bank Holdings Corporation (NYSE: NBHC) reported:

For the quarter 2Q21 1Q21 2Q20Net income ($000's) $ 24,200 $ 26,812 $ 17,705 Earnings per share - diluted $ 0.77 $ 0.86 $ 0.57 Return on average tangible assets^(1) 1.41 % 1.65 % 1.16 %Return on average tangible common 13.41 % 15.20 % 10.98 %equity^(1)



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

In announcing these results, Chief Executive Officer Tim Laney shared, We built strong momentum during the second quarter, delivering solid loan growth and earnings of $0.77 per diluted share. Our resumed focus on new business development drove annualized loan growth of 8.4%, net of PPP loans, during the second quarter. We maintained our proven track record of exceptional credit quality with year-to-date annualized net charge-offs of just four basis points. We realized meaningful new relationship growth during the quarter and brought our cost of deposits down another four basis points.

Mr. Laney added, We are pleased with the economic recovery in our markets and are committed to delivering additional growth as we look to the second half of 2021. We are inspired by our clients fortitude during this economic recovery period, and we are well-positioned with a strong Common Equity Tier 1 ratio of 15.31% to provide our clients the tools they need to succeed.

Second Quarter 2021 Results(All comparisons refer to the first quarter of 2021, except as noted)

Net income totaled $24.2 million, or $0.77 per diluted share, during the second quarter of 2021, compared to $26.8 million, or $0.86 per diluted share during the first quarter. The return on average tangible assets was 1.41%, compared to 1.65%, and the return on average tangible common equity was 13.41%, compared to 15.20% last quarter.

Net Interest IncomeFully taxable equivalent net interest income totaled $46.1 million during the second quarter of 2021, a decrease of $0.3 million compared to the first quarter. Excluding PPP loan fee income of $2.0 million, which was $0.6 million lower than last quarter, net interest income increased $0.2 million. As of June 30, 2021, the remaining unamortized PPP loan fees totaled $5.0 million. The fully taxable equivalent net interest margin narrowed 20 basis points to 2.82% driven by higher levels of excess cash liquidity and lower PPP loan forgiveness income during the second quarter. The yield on earning assets decreased 24 basis points, and our cost of deposits decreased four basis points to 0.24%.

LoansTotal loans ended the quarter at $4.3 billion consistent with the prior quarter as the second quarters strong loan origination activity was offset by PPP loan balance declines. Excluding PPP loans, total loans increased $85.6 million or 8.4% annualized, led by commercial loan growth of $93.3 million, or 13.6% annualized. Second quarter loan originations totaled $362.1 million, led by commercial loan originations of $247.3 million. Excluding PPP loans, the second quarters loan originations more than doubled the first quarters loan origination level increasing $189.0 million over the first quarter or 109.2%.

Asset Quality and Provision for Loan LossesThe Company released $5.9 million of provision during the quarter, including a release of $0.6 of unfunded loan commitment reserves, driven by strong asset quality and an improved outlook in the CECL models underlying economic forecast. Annualized net charge-offs totaled 0.07% of total loans, compared to 0.01% in the prior quarter. Non-performing loans (comprised of non-accrual loans and non-accrual TDRs) improved six basis points to 0.32% of total loans, and non-performing assets improved seven basis points to 0.44% of total loans and OREO. The allowance for credit losses as a percentage of total loans totaled 1.14% at June 30, 2021. Excluding PPP loans, non-performing loans totaled 0.33% of total loans, non-performing assets totaled 0.46% of total loans and OREO, and the allowance for credit losses as a percentage of total loans totaled 1.18% at June 30, 2021.

DepositsAverage total deposits increased $317.3 million or 22.0% annualized, to $6.1 billion for the second quarter 2021. Average transaction deposits (defined as total deposits less time deposits) increased $347.1 million or 28.9% annualized. The mix of transaction deposits to total deposits improved 79 basis points to 85.0% at June 30, 2021. The loan to deposit ratio totaled 69.8% at June 30, 2021, compared to 71.7% at March 31, 2021. The cost of deposits decreased four basis points from the prior quarter to 0.24%.

Non-Interest IncomeNon-interest income totaled $25.3 million, a decrease of $8.1 million, driven by lower mortgage banking income. Service charges and bank card fees increased a combined $0.6 million during the quarter. Included in other non-interest income were $0.8 million and $1.6 million of gains on fixed assets sales from banking center consolidations during the second and first quarters, respectively.

Non-Interest ExpenseNon-interest expense totaled $46.3 million, a decrease of $3.3 million primarily due to lower mortgage banking related compensation and lower banking center consolidation-related expense. Occupancy and equipment decreased $0.4 million largely due to efficiencies gained from the completion of the previously announced banking center consolidations. Banking center consolidation-related expense totaled $0.3 million and $1.3 million during the second and first quarters, respectively. The fully taxable equivalent efficiency ratio totaled 64.5% at June 30, 2021, compared to 61.8% at March 31, 2021.

Income tax expense totaled $5.4 million during the second quarter, compared to $5.7 million. Included in income tax expense was $0.2 million of tax benefit from stock compensation activity during the second and first quarters 2021. Adjusting for stock compensation activity, the effective tax rate for the second quarter 2021 was 19.1%, compared to 18.0% during the prior quarter. The lower rate compared to the statutory rate reflects the continued success of our tax strategies and tax-exempt income.

CapitalCapital ratios continue to be strong and in excess of federal bank regulatory agency well capitalized thresholds. The Tier 1 leverage ratios at June 30, 2021 for the consolidated company and NBH Bank was 10.57% and 9.00%, respectively. Shareholders equity totaled $851.9 million at June 30, 2021 and increased $19.9 million from the prior quarter due to higher retained earnings and accumulated other comprehensive income.

Common book value per share increased $0.57 to $27.66 at June 30, 2021. The quarters earnings and higher accumulated other comprehensive income, net of dividends paid, increased the tangible common book value per share by $0.60 to $24.01 at June 30, 2021. Excluding accumulated other comprehensive income, the tangible book value per share increased $0.55 to $23.95 at June 30, 2021.

Recent EventsThe COVID-19 pandemic has caused substantial disruption to the communities we serve and has changed the way we live and work. We remain committed to ensuring our associates, clients and communities continue to receive the support they need. Our banking centers are fully operational, and we continue to leverage our digital banking platform with our clients. Our teams have been working diligently to support our clients who are experiencing financial hardship due to COVID-19 through participation in the SBAs Paycheck Protection Program, including assistance with PPP loan forgiveness applications, and loan modifications, as needed. The full extent to which COVID-19 impacts our business and financial results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact, the impacts of new variants of the virus, and the timing, distribution, efficacy and public acceptance of vaccines and other treatment for COVID-19.

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

Net income totaled $51.0 million, or $1.63 per diluted share, an increase of $17.5 million, or 52.1% over the first six months of 2020. The return on average tangible assets increased 39 basis points to 1.53%, and the return on average tangible common equity increased 391 basis points to 14.29%.

Fully taxable equivalent net interest income totaled $92.6 million, decreasing $7.6 million or 7.6%, as a result of interest rate actions taken by the Federal Reserve during 2020 and lower non-PPP loan balances. Average earning assets increased $838.1 million, or 15.1%, primarily driven by increases in average interest bearing cash balances of $734.8 million and average investment securities of $353.3 million. The fully taxable equivalent net interest margin narrowed 70 basis points to 2.92% due to lower earning asset yields. The yield on earning assets decreased 100 basis points, driven by the remix of assets into lower-yielding cash balances and an 18 basis point decrease in the originated loan portfolio yields. The cost of deposits decreased 29 basis points to 0.26%.

Loans outstanding totaled $4.3 billion, decreasing $481.6 million or 10.1%, due to loan payoffs including lower PPP loan balances of $219.0 million as a result of PPP loan forgiveness. New loan originations over the trailing 12 months totaled $1.1 billion, led by commercial loan originations of $649.3 million including PPP loan originations of $121.3 million.

Average total deposits increased $990.3 million, or 20.0%, to $5.9 billion for the first six months of 2021. Average non-interest bearing demand deposits increased $980.9 million or 76.2%, and average transaction deposits increased $1.1 billion, or 28.0%. The mix of transaction deposits to total deposits increased by 441 basis points to 85.0% at June 30, 2021. The mix of non-interest bearing demand deposits to total deposits improved to 39.6% from 27.8% at June 30, 2020.

The Company recorded $9.4 million of net provision release during the first six months of 2021, compared to $16.4 million of net provision expense during the same period in 2020. The provision release was driven by strong asset quality and an improved outlook in the CECL models underlying economic forecast. Net charge-offs totaled 0.04% of total loans during the first six months of 2021 and 2020. Non-performing loans to total loans improved 10 basis points to 0.32%, compared to 0.42% at June 30, 2020. The allowance for credit losses totaled 1.14% of total loans, compared to 1.26% at June 30, 2020.

Non-interest income totaled $58.6 million, representing a decrease of $3.7 million or 6.0%. Mortgage banking income decreased $7.9 million due to lower refinance activity during 2021. Service charges and bank card fees increased a combined $1.3 million. Other non-interest income increased $2.9 million due to $2.4 million of gains on fixed assets sales from the banking center consolidations during the first six months of 2021.

Non-interest expense totaled $96.0 million, a decrease of $6.4 million or 6.3% driven by lower mortgage-related compensation as well as the Companys strategic efforts to improve operating efficiency. Salaries and benefits decreased $4.7 million largely due to lower mortgage banking related compensation. Occupancy and equipment decreased $1.3 million largely due to efficiencies gained from the completion of the previously announced banking center consolidations. Problem asset workout expenses decreased $0.5 million.

Income tax expense totaled $11.1 million, an increase of $3.5 million, driven by 2021s higher pre-tax income. Included in income tax expense was $0.4 million of tax benefit and $0.1 million of tax expense from stock compensation activity during the first six months of 2021 and 2020, respectively. Adjusting for stock compensation activity, the effective tax rate for the first six months of 2021 was 18.5%, compared to 18.3% in the prior period.

Conference CallManagement will host a conference call to review the results at 11:00 a.m. Eastern Time on Tuesday, July 27, 2021. Interested parties may listen to this call by dialing (888) 394-8218 (United States) / 0800 358 6377 (United Kingdom) using the confirmation code of 8424776 and asking for the NBHC Q2 2021 Earnings Call. A telephonic replay of the call will be available beginning approximately four hours after the calls completion through August 1, 2021, by dialing (888) 203-1112 using the confirmation code of 8424776. The earnings release and an on-line replay of the call will also be available on the Companys website at www.nationalbankholdings.com by visiting the investor relations area.

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

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

A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

About National Bank Holdings CorporationNational Bank Holdings Corporation is a bank holding company created to build a leading community bank franchise delivering high quality client service and committed to stakeholder results. Through its bank subsidiary, NBH Bank, National Bank Holdings Corporation operates a network of 82 banking centers, serving individual consumers, small, medium and large businesses, and government and non-profit entities. Its banking centers are located in its core footprint of Colorado, the greater Kansas City region, Texas, Utah and New Mexico. Its comprehensive residential mortgage banking group primarily serves the banks core footprint. NBH Bank operates under the following brand names: Community Banks of Colorado and Community Banks Mortgage, a division of NBH Bank, in Colorado, Bank Midwest and Bank Midwest Mortgage in Kansas and Missouri, and Hillcrest Bank and Hillcrest Bank Mortgage in Texas, Utah and New Mexico. Additional information about National Bank Holdings Corporation can be found at www.nationalbankholdings.com.

For more information visit: cobnks.com, bankmw.com, hillcrestbank.com or nbhbank.com. Or, follow us on any of our social media sites:Community Banks of Colorado: facebook.com/cobnks, twitter.com/cobnks, instagram.com/cobnks; Bank Midwest: facebook.com/bankmw, twitter.com/bank_mw, instagram.com/bankmw;Hillcrest Bank: facebook.com/hillcrestbank, twitter.com/hillcrest_bank; NBH Bank: twitter.com/nbhbank; or connect with any of our brands on LinkedIn.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements contain words such as anticipate, believe, can, would, should, could, may, predict, seek, potential, will, estimate, target, plan, project, continuing, ongoing, expect, intend or similar expressions that relate to the Companys strategy, plans or intentions. Forward-looking statements involve certain important risks, uncertainties and other factors, any of which could cause actual results to differ materially from those in such statements. Such factors include, without limitation, the Risk Factors referenced in our most recent Form 10-K filed with the Securities and Exchange Commission (SEC), other risks and uncertainties listed from time to time in our reports and documents filed with the SEC, and the following factors: ability to execute our business strategy; business and economic conditions; effects of any potential government shutdowns; economic, market, operational, liquidity, credit and interest rate risks associated with the Companys business; effects of any changes in trade, monetary and fiscal policies and laws; changes imposed by regulatory agencies to increase capital standards; effects of inflation, as well as, interest rate, securities market and monetary supply fluctuations; changes in the economy or supply-demand imbalances affecting local real estate values; changes in consumer spending, borrowings and savings habits; with respect to our mortgage business, the inability to negotiate fees with investors for the purchase or our loans or our obligation to indemnify purchasers or repurchase related loans; the Companys ability to identify potential candidates for, consummate, integrate and realize operating efficiencies from, acquisitions, consolidations and other expansion opportunities; the Company's ability to realize anticipated benefits from enhancements or updates to its core operating systems from time to time without significant change in client service or risk to the Company's control environment; the Company's dependence on information technology and telecommunications systems of third party service providers and the risk of systems failures, interruptions or breaches of security; the Companys ability to achieve organic loan and deposit growth and the composition of such growth; changes in sources and uses of funds; increased competition in the financial services industry; the effect of changes in accounting policies and practices; the share price of the Companys stock; the Company's ability to realize deferred tax assets or the need for a valuation allowance; continued consolidation in the financial services industry; ability to maintain or increase market share and control expenses; costs and effects of changes in laws and regulations and of other legal and regulatory developments; technological changes; the timely development and acceptance of new products and services; the Companys continued ability to attract, hire and maintain qualified personnel; ability to implement and/or improve operational management and other internal risk controls and processes and reporting system and procedures; regulatory limitations on dividends from the Company's bank subsidiary; changes in estimates of future credit reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; widespread natural and other disasters, pandemics, dislocations, political instability, acts of war or terrorist activities, cyberattacks or international hostilities; adverse effects due to the novel Coronavirus Disease 2019 (COVID-19) on the Company and its clients, counterparties, employees, and third-party service providers, and the adverse impacts on our business, financial position, results of operations, and prospects; impact of reputational risk; and success at managing the risks involved in the foregoing items. The Company can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this press release, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

ContactAnalysts/Institutional Investors: Aldis Birkans, Chief Financial Officer, (720) 554-6640, ir@nationalbankholdings.comMedia: Jody Soper, Chief Marketing Officer, (303) 784-5925, Jody.Soper@nbhbank.com

NATIONAL BANK HOLDINGS CORPORATIONFINANCIAL SUMMARYConsolidated Statements of Operations (Unaudited)(Dollars in thousands, except share and per share data)

For the three months ended For the six months ended June30, March31, June30, June30, June30, 2021 2021 2020 2021 2020Total interest and $ 48,450 $ 49,213 $ 53,744 $ 97,663 $ 112,412dividend incomeTotal interest 3,582 3,992 6,416 7,574 14,737expenseNet interest income 44,868 45,221 47,328 90,089 97,675Taxable equivalent 1,279 1,268 1,301 2,547 2,568adjustmentNet interest income 46,147 46,489 48,629 92,636 100,243FTE^(1)Provision (release)expense for loan (5,850 ) (3,575 ) 10,271 (9,425 ) 16,430lossesNet interest incomeafter provision for 51,997 50,064 38,358 102,061 83,813loan losses FTE^(1)Non-interest income: Service charges 3,568 3,474 3,094 7,042 7,220Bank card fees 4,614 4,073 3,654 8,687 7,167Mortgage banking 13,979 22,379 30,630 36,358 44,303incomeOther non-interest 3,105 3,400 1,459 6,505 3,651incomeOREO-related income ? 35 ? 35 28Total non-interest 25,266 33,361 38,837 58,627 62,369incomeNon-interest expense: Salaries and benefits 31,439 33,523 36,457 64,962 69,637Occupancy and 6,131 6,550 7,078 12,681 13,976equipmentProfessional fees 649 742 759 1,391 1,368Other non-interest 7,019 6,853 6,778 13,872 13,779expenseProblem asset workout 294 438 629 732 1,277Loss (gain) on sale 221 (29 ) 55 192 94of OREO, netCore depositintangible asset 296 296 296 592 592amortizationBanking centerconsolidation-related 294 1,295 1,708 1,589 1,708expenseTotal non-interest 46,343 49,668 53,760 96,011 102,431expense Income before income 30,920 33,757 23,435 64,677 43,751taxes FTE^(1)Taxable equivalent 1,279 1,268 1,301 2,547 2,568adjustmentIncome before income 29,641 32,489 22,134 62,130 41,183taxesIncome tax expense 5,441 5,677 4,429 11,118 7,654Net income $ 24,200 $ 26,812 $ 17,705 $ 51,012 $ 33,529Earnings per share - $ 0.78 $ 0.87 $ 0.57 $ 1.65 $ 1.08basicEarnings per share - 0.77 0.86 0.57 1.63 1.08diluted



Net interest income is presented on a GAAP basis and fully taxable equivalent (FTE) basis, as the Company believes this(1 ) 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 CORPORATIONConsolidated Statements of Financial Condition (Unaudited)(Dollars in thousands, except share and per share data)

June30,2021 March31,2021 December31,2020 June30,2020ASSETS Cash and cash $ 1,004,493 $ 822,518 $ 605,565 $ 142,385 equivalentsInvestmentsecurities 605,798 666,915 661,955 610,735 available-for-saleInvestmentsecurities 687,635 520,823 376,615 215,183 held-to-maturityNon-marketable 14,741 15,493 16,493 30,188 securitiesLoans 4,300,757 4,303,246 4,353,726 4,782,383 Allowance for (49,030 ) (55,057 ) (59,777 ) (60,465 )credit lossesLoans, net 4,251,727 4,248,189 4,293,949 4,721,918 Loans held for 134,805 228,888 247,813 204,856 saleOther real estate 5,124 5,669 4,730 6,491 ownedPremises and 95,019 101,830 106,982 110,019 equipment, netGoodwill 115,027 115,027 115,027 115,027 Intangible assets, 22,360 20,205 17,928 12,175 netOther assets 199,399 203,944 212,893 216,454 Total assets $ 7,136,128 $ 6,949,501 $ 6,659,950 $ 6,385,431 LIABILITIES ANDSHAREHOLDERS' EQUITYLiabilities: Non-interestbearing demand $ 2,437,328 $ 2,295,704 $ 2,111,045 $ 1,502,948 depositsInterest bearing 555,865 557,850 514,286 955,951 demand depositsSavings and money 2,240,359 2,199,420 2,064,769 1,903,427 marketTotal transaction 5,233,552 5,052,974 4,690,100 4,362,326 depositsTime deposits 924,501 948,676 986,132 1,051,563 Total deposits 6,158,053 6,001,650 5,676,232 5,413,889 Securities soldunder agreements 22,957 19,405 22,897 24,504 to repurchaseFederal Home Loan ? ? ? 15,000 Bank advancesOther liabilities 103,252 96,456 140,130 155,071 Total liabilities 6,284,262 6,117,511 5,839,259 5,608,464 Shareholders' equity:Common stock 515 515 515 515 Additional paid in 1,011,200 1,010,798 1,011,362 1,008,773 capitalRetained earnings 260,821 243,446 223,175 180,537 Treasury stock (422,365 ) (423,254 ) (424,127 ) (425,053 )Accumulated othercomprehensive 1,695 485 9,766 12,195 income, net of taxTotalshareholders' 851,866 831,990 820,691 776,967 equityTotal liabilitiesand shareholders' $ 7,136,128 $ 6,949,501 $ 6,659,950 $ 6,385,431 equitySHARE DATA Average basic 30,947,206 30,828,262 30,784,896 30,731,758 shares outstandingAverage diluted 31,226,351 31,143,322 31,032,648 30,857,606 shares outstandingEnding shares 30,800,985 30,715,790 30,634,291 30,569,011 outstandingCommon book value $ 27.66 $ 27.09 $ 26.79 $ 25.42 per shareTangible commonbook value per 24.01 23.41 23.09 21.67 share^(1)(non-GAAP)Tangible commonbook value pershare, excludingaccumulated other 23.95 23.40 22.77 21.27 comprehensiveincome^(1)(non-GAAP)CAPITAL RATIOS Average equity to 11.95 % 12.36 % 12.27 % 12.21 %average assetsTangible commonequity to tangible 10.53 % 10.52 % 10.80 % 10.56 %assets^(1)Tier 1 leverage 10.57 % 10.80 % 10.70 % 10.53 %ratioCommon equity tier1 risk-based 15.31 % 15.23 % 14.70 % 13.21 %capital ratioTier 1 risk-based 15.31 % 15.23 % 14.70 % 13.21 %capital ratioTotal risk-based 16.27 % 16.30 % 15.83 % 14.26 %capital ratio



(1 ) Represents a non-GAAP financial measure. See non-GAAP reconciliations below.

NATIONAL BANK HOLDINGS CORPORATIONLoan Portfolio (Dollars in thousands)

Period End Loan Balances by Type

June30,2021 June30,2021 vs. March 31, vs. June 30, 2021 2020 June30,2021 March31,2021 % Change June30,2020 % ChangeOriginated: Commercial: Commercial and $ 1,253,745 $ 1,177,764 6.5 % $ 1,360,679 (7.9 )%industrialMunicipal and 860,740 850,663 1.2 % 912,287 (5.7 )%non-profitOwner-occupiedcommercial 479,286 476,625 0.6 % 455,846 5.1 %real estateFood and 195,095 178,419 9.3 % 213,789 (8.7 )%agribusinessPPP loans^(1) 129,643 217,697 (40.4 )% 348,689 (62.8 )%Total 2,918,509 2,901,168 0.6 % 3,291,290 (11.3 )%commercialCommercialreal estate 570,252 553,184 3.1 % 540,412 5.5 %non-owneroccupiedResidential 600,124 604,001 (0.6 )% 631,032 (4.9 )%real estateConsumer 17,942 17,671 1.5 % 20,370 (11.9 )%Total 4,106,827 4,076,024 0.8 % 4,483,104 (8.4 )%originated Acquired: Commercial: Commercial and 18,710 20,405 (8.3 )% 27,461 (31.9 )%industrialMunicipal and 359 370 (3.0 )% 593 (39.5 )%non-profitOwner-occupiedcommercial 40,435 50,607 (20.1 )% 65,052 (37.8 )%real estateFood and 3,913 4,129 (5.2 )% 6,237 (37.3 )%agribusinessTotal 63,417 75,511 (16.0 )% 99,343 (36.2 )%commercialCommercialreal estate 67,368 81,176 (17.0 )% 101,412 (33.6 )%non-owneroccupiedResidential 62,805 70,141 (10.5 )% 97,982 (35.9 )%real estateConsumer 340 394 (13.7 )% 542 (37.3 )%Total acquired 193,930 227,222 (14.7 )% 299,279 (35.2 )%Total loans $ 4,300,757 $ 4,303,246 (0.1 )% $ 4,782,383 (10.1 )%



PPP loan balances are net of fees and costs and include principal(1 ) totaling $134,632, $223,867 and $358,798 as of June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

Originations(1)

Second First Fourth Third Second quarter quarter quarter quarter quarter 2021 2021 2020 2020 2020 Commercial: Commercial and $ 147,030 $ 23,390 $ 96,625 $ 11,354 $ (8,726 )industrialMunicipal and 25,131 7,999 25,348 6,083 49,679 non-profitOwner occupiedcommercial real 48,225 27,093 36,085 23,758 22,078 estateFood and 26,956 (10,104 ) 19,191 13,876 (10,480 )agribusinessPPP loans ? 121,141 ? 122 358,798 Total commercial 247,342 169,519 177,249 55,193 411,349 Commercial realestate non-owner 58,532 49,195 52,018 24,937 18,992 occupiedResidential real 53,962 74,145 41,355 49,786 29,024 estateConsumer 2,267 1,353 1,858 2,980 2,206 Total $ 362,103 $ 294,212 $ 272,480 $ 132,896 $ 461,571



Originations are defined as closed end funded loans and net fundings under revolving lines of credit. Net funding under(1 ) revolving lines of credit were $59,520, ($26,395), $50,982, ($27,899) and ($55,826) as of the second and first quarters of 2021 and the fourth, third and second quarters of 2020, respectively.

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

For the three months ended For the three months ended For the three months ended June30,2021 March31,2021 June30,2020 Average Average Average Average Average Average balance Interest rate balance Interest rate balance Interest rateInterest earning assets:Originated loans $ 4,077,142 $ 40,036 3.94 % $ 4,004,994 $ 39,560 4.01 % $ 4,432,725 $ 42,440 3.85 %FTE^(1)(2)Acquired loans 211,126 3,923 7.45 % 238,468 5,128 8.72 % 312,723 6,722 8.65 %Loans held for 159,068 1,213 3.06 % 231,521 1,517 2.66 % 157,887 1,310 3.34 %saleInvestmentsecurities 638,039 2,397 1.50 % 686,731 2,485 1.45 % 607,132 3,050 2.01 %available-for-saleInvestmentsecurities 572,534 1,723 1.20 % 421,119 1,416 1.34 % 189,360 1,201 2.54 %held-to-maturityOther securities 15,079 209 5.54 % 15,818 210 5.31 % 30,087 310 4.12 %Interest earningdeposits andsecurities 888,600 228 0.10 % 639,273 165 0.10 % 36,758 12 0.13 %purchased underagreements toresellTotal interestearning assets FTE $ 6,561,588 $ 49,729 3.04 % $ 6,237,924 $ 50,481 3.28 % $ 5,766,672 $ 55,045 3.84 %^(2)Cash and due from $ 78,148 $ 81,253 $ 76,041 banksOther assets 472,142 495,222 532,867 Allowance for (54,984 ) (58,915 ) (56,984 ) credit lossesTotal assets $ 7,056,894 $ 6,755,484 $ 6,318,596 Interest bearing liabilities:Interest bearingdemand, savings $ 2,789,681 $ 1,572 0.23 % $ 2,645,487 $ 1,652 0.25 % $ 2,719,433 $ 1,951 0.29 %and money marketdepositsTime deposits 937,579 2,004 0.86 % 967,447 2,335 0.98 % 1,048,772 4,136 1.59 %Securities soldunder agreements 19,891 6 0.12 % 21,377 5 0.09 % 23,485 18 0.31 %to repurchaseFederal Home Loan ? ? 0.00 % ? ? 0.00 % 163,263 311 0.77 %Bank advancesTotal interestbearing $ 3,747,151 $ 3,582 0.38 % $ 3,634,311 $ 3,992 0.45 % $ 3,954,953 $ 6,416 0.65 %liabilitiesDemand deposits $ 2,368,810 $ 2,165,868 $ 1,436,671 Other liabilities 97,817 120,607 155,379 Total liabilities 6,213,778 5,920,786 5,547,003 Shareholders' 843,116 834,698 771,593 equityTotal liabilitiesand shareholders' $ 7,056,894 $ 6,755,484 $ 6,318,596 equityNet interest $ 46,147 $ 46,489 $ 48,629 income FTE^(2)Interest rate 2.66 % 2.83 % 3.19 %spread FTE^(2)Net interest $ 2,814,437 $ 2,603,613 $ 1,811,719 earning assetsNet interest 2.82 % 3.02 % 3.39 %margin FTE^(2)Averagetransaction $ 5,158,491 $ 4,811,355 $ 4,156,104 depositsAverage total 6,096,070 5,778,802 5,204,876 depositsRatio of averageinterest earningassets to average 175.11 % 171.64 % 145.81 % interest bearingliabilities



(1 ) Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan. Presented on a fully taxable equivalent basis using the statutory(2 ) tax rate of 21%. The tax equivalent adjustments included above are $1,279, $1,268 and $1,301 for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

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

For the six months ended June 30, 2021 For the six months ended June 30, 2020 Average Average Average Average balance Interest rate balance Interest rateInterest earning assets:Originated loans $ 4,041,268 $ 79,596 3.97 % $ 4,237,946 $ 87,419 4.15 %FTE^(1)(2)Acquired loans 224,722 9,051 8.12 % 328,165 15,601 9.56 %Loans held for 195,094 2,730 2.82 % 130,411 2,246 3.46 %saleInvestmentsecurities 662,250 4,882 1.47 % 617,027 6,445 2.09 %available-for-saleInvestmentsecurities 497,245 3,139 1.26 % 189,211 2,436 2.57 %held-to-maturityOther securities 15,446 419 5.43 % 29,920 724 4.84 %Interest earningdeposits andsecurities 764,626 393 0.10 % 29,858 109 0.73 %purchased underagreements toresellTotal interestearning assets FTE $ 6,400,651 $ 100,210 3.16 % $ 5,562,538 $ 114,980 4.16 %^(2)Cash and due from $ 79,692 $ 75,412 banksOther assets 483,617 503,669 Allowance for (56,938 ) (50,895 ) credit lossesTotal assets $ 6,907,022 $ 6,090,724 Interest bearing liabilities:Interest bearingdemand, savings $ 2,717,983 $ 3,224 0.24 % $ 2,608,281 $ 4,839 0.37 %and money marketdepositsTime deposits 952,431 4,339 0.92 % 1,052,732 8,574 1.64 %Securities soldunder agreements 20,630 11 0.11 % 34,192 115 0.68 %to repurchaseFederal Home Loan ? ? 0.00 % 191,308 1,209 1.27 %Bank advancesTotal interestbearing $ 3,691,044 $ 7,574 0.41 % $ 3,886,513 $ 14,737 0.76 %liabilitiesDemand deposits $ 2,267,900 $ 1,286,972 Other liabilities 109,148 144,253 Total liabilities 6,068,092 5,317,738 Shareholders' 838,930 772,986 equityTotal liabilitiesand shareholders' $ 6,907,022 $ 6,090,724 equityNet interest $ 92,636 $ 100,243 income FTE^(2)Interest rate 2.75 % 3.40 %spread FTE^(2)Net interest $ 2,709,607 $ 1,676,025 earning assetsNet interest 2.92 % 3.62 %margin FTE^(2)Averagetransaction $ 4,985,883 $ 3,895,253 depositsAverage total 5,938,314 4,947,985 depositsRatio of averageinterest earningassets to average 173.41 % 143.12 % interest bearingliabilities



(1 ) Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan. Presented on a fully taxable equivalent basis using the statutory(2 ) tax rate of 21%. The tax equivalent adjustments included above are $2,547 and $2,568 for the six months ended June 30, 2021 and June 30, 2020, respectively.

NATIONAL BANK HOLDINGS CORPORATIONAllowance for Credit Losses and Asset Quality(Dollars in thousands)

Allowance for Credit Losses Analysis

Asofandforthethreemonthsended June30,2021 March31,2021 June30,2020Beginning allowance for $ 55,057 $ 59,777 $ 50,956 credit lossesCharge-offs (925 ) (302 ) (852 )Recoveries 198 182 236 Provision (release) (5,300 ) (4,600 ) 10,125 expenseEnding allowance for $ 49,030 $ 55,057 $ 60,465 credit losses ("ACL")Ratio of annualized netcharge-offs to average 0.07 % 0.01 % 0.05 %total loans during theperiodRatio of annualized netcharge-offs to averagetotal loans excluding 0.07 % 0.01 % 0.05 %PPP loans during theperiodRatio of ACL to totalloans outstanding at 1.14 % 1.28 % 1.26 %period endRatio of ACL to totalloans outstanding 1.18 % 1.35 % 1.36 %excluding PPP loans atperiod endRatio of ACL to totalnon-performing loans at 353.22 % 336.25 % 302.34 %period endTotal loans $ 4,300,757 $ 4,303,246 $ 4,782,383 Average total loans 4,312,128 4,277,481 4,794,466 during the periodAverage total loansexcluding PPP loans 4,112,172 4,098,898 4,512,010 during the periodTotal non-performing 13,881 16,374 19,999 loans

Past Due and Non-accrual Loans

June30,2021 March31,2021 June30,2020Loans 30-89 days pastdue and still accruing $ 2,098 $ 1,867 $ 3,932 interestLoans 90 days past dueand still accruing 767 1,021 2,444 interestNon-accrual loans 13,881 16,374 19,999 Total past due and $ 16,746 $ 19,262 $ 26,375 non-accrual loansTotal 90 days past dueand still accruing 0.34 % 0.40 % 0.47 %interest and non-accrualloans to total loans



Asset Quality Data

June30,2021 March31,2021 June30,2020Non-performing loans $ 13,881 $ 16,374 $ 19,999 OREO 5,124 5,669 6,491 Other repossessed assets ? 17 ? Total non-performing assets $ 19,005 $ 22,060 $ 26,490 Accruing restructured loans $ 11,844 $ 13,822 $ 20,284 Total non-performing loans to 0.32 % 0.38 % 0.42 %total loansTotal non-performing loans to 0.33 % 0.40 % 0.45 %total loans excluding PPP loansTotal non-performing assets to 0.44 % 0.51 % 0.55 %total loans and OREOTotal non-performing assets tototal loans and OREO excluding 0.46 % 0.54 % 0.60 %PPP loans

NATIONAL BANK HOLDINGS CORPORATIONKey Ratios(1)

As of and for the three months ended As of and for the six months ended June30, March31, June30, June30, June30, 2021 2021 2020 2021 2020 Return on 1.38 % 1.61 % 1.13 % 1.49 % 1.11 %average assetsReturn onaverage 1.41 % 1.65 % 1.16 % 1.53 % 1.14 %tangibleassets^(2)Return on 11.51 % 13.03 % 9.23 % 12.26 % 8.72 %average equityReturn onaveragetangible 13.41 % 15.20 % 10.98 % 14.29 % 10.38 %common equity^(2)Loan todeposit ratio 69.84 % 71.70 % 88.34 % 69.84 % 88.34 %(end ofperiod)Non-interestbearingdeposits to 39.58 % 38.25 % 27.76 % 39.58 % 27.76 %total deposits(end ofperiod)Net interest 2.74 % 2.94 % 3.30 % 2.84 % 3.53 %margin^(4)Net interestmargin FTE^(2) 2.82 % 3.02 % 3.39 % 2.92 % 3.62 %(4)Interest ratespread FTE^(2) 2.66 % 2.83 % 3.19 % 2.75 % 3.40 %(5)Yield onearning assets 2.96 % 3.20 % 3.75 % 3.08 % 4.06 %^(3)Yield onearning assets 3.04 % 3.28 % 3.84 % 3.16 % 4.16 %FTE^(2)(3)Cost ofinterestbearing 0.38 % 0.45 % 0.65 % 0.41 % 0.76 %liabilities^(3)Cost of 0.24 % 0.28 % 0.47 % 0.26 % 0.55 %depositsNon-interestincome to 35.38 % 41.78 % 44.40 % 38.76 % 38.35 %total revenueFTE^(2)Non-interestexpense to 2.63 % 2.98 % 3.42 % 2.80 % 3.38 %average assetsEfficiency 65.66 % 62.83 % 62.05 % 64.16 % 63.63 %ratioEfficiency 64.48 % 61.83 % 61.13 % 63.08 % 62.63 %ratio FTE^(2) Total LoansAsset Quality Data^(6)(7)(8)Non-performingloans to total 0.32 % 0.38 % 0.42 % 0.32 % 0.42 %loansNon-performingloans to totalloans 0.33 % 0.40 % 0.45 % 0.33 % 0.45 %excluding PPPloansNon-performingassets to 0.44 % 0.51 % 0.55 % 0.44 % 0.55 %total loansand OREONon-performingassets tototal loans 0.46 % 0.54 % 0.60 % 0.46 % 0.60 %and OREOexcluding PPPloansAllowance forcredit losses 1.14 % 1.28 % 1.26 % 1.14 % 1.26 %to total loansAllowance forcredit lossesto total loans 1.18 % 1.35 % 1.36 % 1.18 % 1.36 %excluding PPPloansAllowance forcredit lossesto 353.22 % 336.25 % 302.34 % 353.22 % 302.34 %non-performingloansNetcharge-offs to 0.07 % 0.01 % 0.05 % 0.04 % 0.04 %average loans^(1)



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

NATIONAL BANK HOLDINGS CORPORATIONNON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS(Dollars in thousands, except share and per share data)

Tangible Common Book Value Ratios

June30,2021 March31,2021 December31,2020 June30,2020Totalshareholders' $ 851,866 $ 831,990 $ 820,691 $ 776,967 equityLess:goodwill andcore deposit (121,983 ) (122,280 ) (122,575 ) (123,166 )intangibleassets, netAdd: deferredtax liability 9,612 9,384 9,155 8,698 related togoodwillTangiblecommon equity $ 739,495 $ 719,094 $ 707,271 $ 662,499 (non-GAAP) Total assets $ 7,136,128 $ 6,949,501 $ 6,659,950 $ 6,385,431 Less:goodwill andcore deposit (121,983 ) (122,280 ) (122,575 ) (123,166 )intangibleassets, netAdd: deferredtax liability 9,612 9,384 9,155 8,698 related togoodwillTangibleassets $ 7,023,757 $ 6,836,605 $ 6,546,530 $ 6,270,963 (non-GAAP) Tangiblecommon equityto tangible assetscalculations:Totalshareholders' 11.94 % 11.97 % 12.32 % 12.17 %equity tototal assetsLess: impactof goodwilland core (1.41 )% (1.45 )% (1.52 )% (1.61 )%depositintangibleassets, netTangiblecommon equityto tangible 10.53 % 10.52 % 10.80 % 10.56 %assets(non-GAAP) Tangiblecommon bookvalue per sharecalculations:Tangiblecommon equity $ 739,495 $ 719,094 $ 707,271 $ 662,499 (non-GAAP)Divided by:ending shares 30,800,985 30,715,790 30,634,291 30,569,011 outstandingTangiblecommon bookvalue per $ 24.01 $ 23.41 $ 23.09 $ 21.67 share(non-GAAP) Tangiblecommon bookvalue pershare,excluding accumulatedothercomprehensiveincomecalculations:Tangiblecommon equity $ 739,495 $ 719,094 $ 707,271 $ 662,499 (non-GAAP)Accumulatedothercomprehensive (1,695 ) (485 ) (9,766 ) (12,195 )income, netof taxTangiblecommon bookvalue,excludingaccumulated 737,800 718,609 697,505 650,304 othercomprehensiveincome, netof tax(non-GAAP)Divided by:ending shares 30,800,985 30,715,790 30,634,291 30,569,011 outstandingTangiblecommon bookvalue pershare,excludingaccumulated $ 23.95 $ 23.40 $ 22.77 $ 21.27 othercomprehensiveincome, netof tax(non-GAAP)

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 June30, March31, June30, June30, June30, 2021 2021 2020 2021 2020 Net income $ 24,200 $ 26,812 $ 17,705 $ 51,012 $ 33,529 Add: impactof coredepositintangible 228 228 227 455 454 amortizationexpense,after taxNet incomeadjusted forimpact ofcore deposit $ 24,428 $ 27,040 $ 17,932 $ 51,467 $ 33,983 intangibleamortizationexpense,after tax Average $ 7,056,894 $ 6,755,484 $ 6,318,596 $ 6,907,022 $ 6,090,724 assetsLess: averagegoodwill andcore depositintangibleasset, net of (112,552 ) (113,074 ) (114,631 ) (112,698 ) (114,779 )deferred taxliabilityrelated togoodwillAveragetangible $ 6,944,342 $ 6,642,410 $ 6,203,965 $ 6,794,324 $ 5,975,945 assets(non-GAAP) Averageshareholders' $ 843,116 $ 834,698 $ 771,593 $ 838,930 $ 772,986 equityLess: averagegoodwill andcore depositintangibleasset, net of (112,552 ) (113,074 ) (114,631 ) (112,698 ) (114,779 )deferred taxliabilityrelated togoodwillAveragetangible $ 730,564 $ 721,624 $ 656,962 $ 726,232 $ 658,207 common equity(non-GAAP) Return onaverage 1.38 % 1.61 % 1.13 % 1.49 % 1.11 %assetsReturn onaveragetangible 1.41 % 1.65 % 1.16 % 1.53 % 1.14 %assets(non-GAAP)Return onaverage 11.51 % 13.03 % 9.23 % 12.26 % 8.72 %equityReturn onaveragetangible 13.41 % 15.20 % 10.98 % 14.29 % 10.38 %common equity(non-GAAP)

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

Asofandforthe three months ended As of and for the six months ended June30, March31, June30, June30, June30, 2021 2021 2020 2021 2020 Interest $ 48,450 $ 49,213 $ 53,744 $ 97,663 $ 112,412 incomeAdd:impact oftaxable 1,279 1,268 1,301 2,547 2,568 equivalentadjustmentInterestincome FTE $ 49,729 $ 50,481 $ 55,045 $ 100,210 $ 114,980 (non-GAAP) Netinterest $ 44,868 $ 45,221 $ 47,328 $ 90,089 $ 97,675 incomeAdd:impact oftaxable 1,279 1,268 1,301 2,547 2,568 equivalentadjustmentNetinterest $ 46,147 $ 46,489 $ 48,629 $ 92,636 $ 100,243 income FTE(non-GAAP) Averageearning $ 6,561,588 $ 6,237,924 $ 5,766,672 $ 6,400,651 $ 5,562,538 assetsYield onearning 2.96 % 3.20 % 3.75 % 3.08 % 4.06 %assetsYield onearning 3.04 % 3.28 % 3.84 % 3.16 % 4.16 %assets FTE(non-GAAP)Netinterest 2.74 % 2.94 % 3.30 % 2.84 % 3.53 %marginNetinterest 2.82 % 3.02 % 3.39 % 2.92 % 3.62 %margin FTE(non-GAAP)

Efficiency Ratio

As of and for the three months ended As of and for the six months ended June30, March31, June30, June30, June30, 2021 2021 2020 2021 2020 Net interest $ 44,868 $ 45,221 $ 47,328 $ 90,089 $ 97,675 incomeAdd: impactof taxable 1,279 1,268 1,301 2,547 2,568 equivalentadjustmentNet interestincome, FTE $ 46,147 $ 46,489 $ 48,629 $ 92,636 $ 100,243 (non-GAAP) Non-interest $ 25,266 $ 33,361 $ 38,837 $ 58,627 $ 62,369 income Non-interest $ 46,343 $ 49,668 $ 53,760 $ 96,011 $ 102,431 expenseLess: coredepositintangible (296 ) (296 ) (296 ) (592 ) (592 )assetamortizationNon-interestexpense,adjusted forcore deposit $ 46,047 $ 49,372 $ 53,464 $ 95,419 $ 101,839 intangibleassetamortization Efficiency 65.66 % 62.83 % 62.05 % 64.16 % 63.63 %ratioEfficiencyratio FTE 64.48 % 61.83 % 61.13 % 63.08 % 62.63 %(non-GAAP)