GlobeNewswire Inc | Oct 19, 2021 04:10PM EDT

October 19, 2021

DENVER, Oct. 19, 2021 (GLOBE NEWSWIRE) --

National Bank Holdings Corporation (NYSE: NBHC) reported:

For the quarter 3Q21 2Q21 3Q20Net income ($000's) $ 19,825 $ 24,200 $ 27,893 Earnings per share - diluted $ 0.64 $ 0.77 $ 0.90 Return on average tangible 1.14 % 1.41 % 1.76 %assets^(1)Return on average tangible 10.65 % 13.41 % 16.49 %common equity^(1)



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

In announcing these results, Chief Executive Officer Tim Laney shared, We are pleased with this quarters results, delivering quarterly earnings of $0.64 per diluted share and pre-provision net revenue growth of 16.2% annualized over the prior quarter. Excluding PPP loans, our teams delivered impressive annualized loan growth of 16.5% fueled by record quarterly loan originations. Our prudent approach to extending new credit continues to result in excellent credit quality with just two basis points of annualized net charge-offs for the quarter. We maintain ample liquidity and a strong Common Equity Tier 1 ratio of 14.57% which serves as a source of strength as we execute on our growth strategies.

Mr. Laney added, Earlier this quarter, we announced strategic investments in two fintech firms, Finstro Global Holdings Inc. and Figure Technologies. Finstro and Figure are our initial partners working with NBH to introduce a comprehensive digital financial ecosystem serving small and medium-sized businesses. We believe we are on the verge of creating a business that will provide small and medium-sized businesses with access to a full range of banking services and block chain payment alternatives.

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

Net income totaled $19.8 million, or $0.64 per diluted share, during the third quarter of 2021, compared to $24.2 million, or $0.77 per diluted share during the second quarter. The return on average tangible assets was 1.14%, compared to 1.41%, and the return on average tangible common equity was 10.65%, compared to 13.41% last quarter.

Net Interest IncomeFully taxable equivalent net interest income totaled $48.9 million during the third quarter of 2021, an increase of $2.7 million. Excluding PPP loan fee income of $2.6 million, which was $0.5 million higher than last quarter, net interest income increased $2.2 million or 19.8% annualized. As of September 30, 2021, the remaining unamortized PPP loan fees totaled $2.4 million. The fully taxable equivalent net interest margin widened 11 basis points to 2.93% driven by excess cash liquidity being deployed into higher yielding originated loans. The yield on earning assets increased eight basis points, with the cost of deposits decreasing three basis points to 0.21%.

LoansTotal loans ended the quarter at $4.4 billion, an increase of $121.0 million over the prior quarter. Excluding PPP loans, total loans increased $173.9 million or 16.5% annualized, led by commercial loan growth of $138.2 million, or 19.2% annualized. Third quarter loan originations totaled a record $413.3 million, led by commercial loan originations of $301.7 million.

Asset Quality and Provision for Loan LossesNet loan loss provision recorded during the quarter was zero compared to a release of $5.9 million in the prior quarter. The quarters loan growth was offset by strong asset quality and an improved outlook in the CECL models underlying economic forecast. Annualized net charge-offs totaled 0.02% of total loans, compared to 0.07%. Non-performing loans (comprised of non-accrual loans and non-accrual TDRs) improved three basis points to 0.29% of total loans, and non-performing assets improved five basis points to 0.39% of total loans and OREO. The allowance for credit losses as a percentage of total loans totaled 1.11%, compared to 1.14% at June 30, 2021.

DepositsAverage total deposits increased $33.9 million or 2.2% annualized, to $6.1 billion for the third quarter 2021. Average transaction deposits (defined as total deposits less time deposits) increased $67.6 million or 5.2% annualized. The mix of transaction deposits to total deposits improved 72 basis points to 85.7% at September 30, 2021. The loan to deposit ratio totaled 72.1% at September 30, 2021, compared to 69.8% at June 30, 2021.

Non-Interest IncomeNon-interest income totaled $28.5 million, an increase of $3.3 million largely driven by higher mortgage banking income, which included a $1.3 million gain from the sale of mortgage servicing rights. Service charges and bank card fees increased a combined $0.3 million during the quarter. Included in other non-interest income was $0.8 million of deposit premium gain from the sale of one banking center during the third quarter. Additionally, other non-interest income included $0.4 million and $0.8 million of gains from fixed assets sales from banking center consolidations during the third and second quarters, respectively.

Non-Interest ExpenseNon-interest expense totaled $51.3 million, an increase of $5.0 million, primarily due to transaction-related costs and higher performance-related compensation. Included in the quarter were $2.4 million of transaction-related expenses for the previously announced strategic investments in Finstro Global Holdings Inc. and Figure Technologies to further our vision for building a comprehensive digital financial ecosystem. Salaries and benefits increased $1.1 million largely due to higher performance-related compensation. Problem asset workout expense increased $0.8 million due to the write-down of one previously acquired OREO property. The fully taxable equivalent efficiency ratio totaled 65.9% at September 30, 2021, compared to 64.5% at June 30, 2021.

Income tax expense totaled $5.0 million during the third quarter, compared to $5.4 million. The effective tax rate for the third quarter 2021 was 20.0%, compared to 18.4% during the prior quarter, driven by an increase in the full year projected income. 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 September 30, 2021 for the consolidated company and NBH Bank were 10.43% and 8.91%, respectively. Shareholders equity totaled $844.7 million at September 30, 2021, decreasing $7.2 million primarily due to stock repurchase activity during the quarter.

Common book value per share increased $0.23 to $27.89 at September 30, 2021. The quarters earnings, net of dividends paid and share repurchases, increased the tangible common book value per share by $0.19 to $24.20 at September 30, 2021. Excluding accumulated other comprehensive income, the tangible book value per share increased $0.29 to $24.24 at September 30, 2021.

Recent EventsThe COVID-19 pandemic has caused disruption and is likely to continue to present challenges to our business. We continue to remain committed to ensuring our associates, clients and communities are receiving the support they need through our banking centers and our digital banking platform. 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. While access to vaccines in the United States has increased, the efficacy of those vaccines, the impact of emerging targeted vaccine mandates and new variants of the virus, and the length of time that the government-mandated measures must remain in place or potentially be reinstituted to address COVID-19 are unknown. The pandemic has had a negative impact to the U.S. labor market, consumer spending and business operations, and it is not clear whether new outbreaks of COVID-19 cases will have further impact.

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

Net income totaled $70.8 million, or $2.27 per diluted share, an increase of $9.4 million or 15.3% over the first nine months of 2020. The return on average tangible assets increased three basis points to 1.39%, and the return on average tangible common equity increased 57 basis points to 13.04%.

Fully taxable equivalent net interest income totaled $141.5 million, decreasing $6.7 million or 4.5%, as a result of interest rate actions taken by the Federal Reserve during 2020 and lower non-PPP loan balances. Average earning assets increased $785.1 million, or 13.8%, primarily driven by increases in average interest bearing cash balances of $671.0 million and average investment securities of $411.5 million. The fully taxable equivalent net interest margin narrowed 56 basis points to 2.92% due to lower earning asset yields. The yield on earning assets decreased 82 basis points, driven by the remix of assets into lower-yielding cash balances. The cost of deposits decreased 25 basis points to 0.24%.

Loans outstanding totaled $4.4 billion, decreasing $134.4 million or 2.9%, due to loan payoffs including lower PPP loan balances of $271.5 million as a result of PPP loan forgiveness, which were partially offset by non-PPP loan growth. New loan originations over the trailing 12 months totaled $1.3 billion, led by commercial loan originations of $895.8 million including PPP loan originations of $121.1 million.

The Company recorded $9.4 million of net provision release during the first nine months of 2021, compared to $17.6 million of 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. Annualized net charge-offs totaled 0.03% of total loans, compared to 0.04% of total loans during the first nine months of 2020. Non-performing loans to total loans improved 12 basis points to 0.29%, compared to 0.41% at September 30, 2020. The allowance for credit losses totaled 1.11% of total loans, compared to 1.34% at September 30, 2020.

Average total deposits increased $865.7 million or 16.9%, to $6.0 billion for the first nine months of 2021. Average non-interest bearing demand deposits increased $956.6 million or 70.2%, and average transaction deposits increased $977.7 million, or 23.9%. The mix of transaction deposits to total deposits increased by 400 basis points to 85.7% at September 30, 2021. The mix of non-interest bearing demand deposits to total deposits improved to 39.9% from 27.3% at September 30, 2020.

Non-interest income totaled $87.1 million, representing a decrease of $19.8 million or 18.5%, driven by $26.3 million lower mortgage banking income due to slower refinance activity in 2021 and competition driving tighter gain on sale margins. Service charges and bank card fees increased a combined $2.0 million. Other non-interest income increased $4.6 million due to $3.5 million of gains from banking center-related sales activities during the first nine months of 2021.

Non-interest expense totaled $147.3 million, a decrease of $10.4 million or 6.6% driven by lower mortgage-related compensation as well as the Companys strategic efforts to improve operating efficiency. Included in the nine months of 2021 were $2.5 million of transaction-related expenses for the previously announced investments in our digital financial ecosystem. Salaries and benefits decreased $10.7 million primarily due to lower mortgage banking related compensation. Occupancy and equipment decreased $1.7 million largely due to efficiencies gained from the completion of the previously announced banking center consolidations. Problem asset workout expense decreased $0.5 million.

Income tax expense totaled $16.1 million, an increase of $1.6 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 nine months of 2021 and 2020, respectively. Adjusting for stock compensation activity, the effective tax rate for the first nine months of 2021 was 18.9%, consistent with 2020.

Conference CallManagement will host a conference call to review the results at 11:00 a.m. Eastern Time on Wednesday, October 20, 2021. Interested parties may listen to this call by dialing (800) 367-2403 (United States) / 0800 031 4838 (United Kingdom) using the confirmation code of 7577774 and asking for the NBHC Q3 2021 Earnings Call. A telephonic replay of the call will be available beginning approximately four hours after the calls completion through October 25, 2021, by dialing (888) 203-1112 using the confirmation code of 7577774. 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 81 banking centers, serving individual consumers, small, medium and large businesses, and government and non-profit entities. Its banking centers are located in its core footprint of Colorado, the greater Kansas City region, Texas, Utah and New Mexico. Its comprehensive residential mortgage banking group primarily serves the 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 nine months ended September30, June30, September30, September30, September30, 2021 2021 2020 2021 2020Total interest and $ 50,801 $ 48,450 $ 52,302 $ 148,464 $ 164,714 dividend incomeTotal interest 3,232 3,582 5,587 10,806 20,324 expenseNet interest income 47,569 44,868 46,715 137,658 144,390 Taxable equivalent 1,315 1,279 1,275 3,862 3,843 adjustmentNet interest income 48,884 46,147 47,990 141,520 148,233 FTE^(1)Provision (release)expense for loan ? (5,850 ) 1,200 (9,425 ) 17,630 lossesNet interest incomeafter provision for 48,884 51,997 46,790 150,945 130,603 loan losses FTE^(1)Non-interest income: Service charges 3,947 3,568 3,742 10,989 10,962 Bank card fees 4,530 4,614 4,039 13,217 11,206 Mortgage banking 16,615 13,979 34,943 52,973 79,246 incomeOther non-interest 3,430 3,105 1,733 9,935 5,384 incomeOREO-related income ? ? 75 35 103 Total non-interest 28,522 25,266 44,532 87,149 106,901 incomeNon-interest expense: Salaries and benefits 32,556 31,439 38,614 97,518 108,251 Occupancy and 6,469 6,131 6,878 19,150 20,854 equipmentProfessional fees 3,251 649 714 4,642 2,082 Other non-interest 7,624 7,019 7,443 21,496 21,222 expenseProblem asset workout 1,119 294 1,064 1,851 2,341 Loss (gain) on sale ? 221 (119 ) 192 (25 )of OREO, netCore depositintangible asset 295 296 295 887 887 amortizationBanking centerconsolidation-related ? 294 432 1,589 2,140 expenseTotal non-interest 51,314 46,343 55,321 147,325 157,752 expense Income before income 26,092 30,920 36,001 90,769 79,752 taxes FTE^(1)Taxable equivalent 1,315 1,279 1,275 3,862 3,843 adjustmentIncome before income 24,777 29,641 34,726 86,907 75,909 taxesIncome tax expense 4,952 5,441 6,833 16,070 14,487 Net income $ 19,825 $ 24,200 $ 27,893 $ 70,837 $ 61,422 Earnings per share - $ 0.64 $ 0.78 $ 0.91 $ 2.29 $ 1.99 basicEarnings per share - 0.64 0.77 0.90 2.27 1.97 diluted



Net interest income is presented on a GAAP basis and fully taxable equivalent (FTE) basis, as the Company believes this non-GAAP measure is(1) 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) September30,2021 June30,2021 December31,2020 September30,2020ASSETS Cash and cash $ 807,370 $ 1,004,493 $ 605,565 $ 445,103 equivalentsInvestmentsecurities 657,833 605,798 661,955 572,523 available-for-saleInvestmentsecurities 642,636 687,635 376,615 320,001 held-to-maturityNon-marketable 46,964 24,637 22,073 33,614 securitiesLoans 4,421,760 4,300,757 4,353,726 4,556,121 Allowance for (49,155 ) (49,030 ) (59,777 ) (60,979 )credit lossesLoans, net 4,372,605 4,251,727 4,293,949 4,495,142 Loans held for 158,066 134,805 247,813 273,003 saleOther real estate 4,325 5,124 4,730 4,590 ownedPremises and 94,114 95,019 106,982 108,860 equipment, netGoodwill 115,027 115,027 115,027 115,027 Intangible assets, 11,621 22,360 17,928 15,017 netOther assets 190,430 189,503 207,313 217,796 Total assets $ 7,100,991 $ 7,136,128 $ 6,659,950 $ 6,600,676 LIABILITIES ANDSHAREHOLDERS' EQUITYLiabilities: Non-interestbearing demand $ 2,447,099 $ 2,437,328 $ 2,111,045 $ 1,533,676 depositsInterest bearing 546,597 555,865 514,286 976,133 demand depositsSavings and money 2,264,083 2,240,359 2,064,769 2,079,585 marketTotal transaction 5,257,779 5,233,552 4,690,100 4,589,394 depositsTime deposits 876,841 924,501 986,132 1,027,066 Total deposits 6,134,620 6,158,053 5,676,232 5,616,460 Securities soldunder agreements 21,427 22,957 22,897 23,904 to repurchaseOther liabilities 100,228 103,252 140,130 160,955 Total liabilities 6,256,275 6,284,262 5,839,259 5,801,319 Shareholders' equity:Common stock 515 515 515 515 Additional paid in 1,013,064 1,011,200 1,011,362 1,010,145 capitalRetained earnings 273,900 260,821 223,175 202,238 Treasury stock (441,366 ) (422,365 ) (424,127 ) (424,621 )Accumulated othercomprehensive (1,397 ) 1,695 9,766 11,080 (loss) income, netof taxTotalshareholders' 844,716 851,866 820,691 799,357 equityTotal liabilitiesand shareholders' $ 7,100,991 $ 7,136,128 $ 6,659,950 $ 6,600,676 equitySHARE DATA Average basic 30,800,590 30,947,206 30,784,896 30,756,116 shares outstandingAverage diluted 31,064,815 31,226,351 31,032,648 30,924,223 shares outstandingEnding shares 30,288,131 30,800,985 30,634,291 30,594,412 outstandingCommon book value $ 27.89 $ 27.66 $ 26.79 $ 26.13 per shareTangible commonbook value per 24.20 24.01 23.09 22.40 share^(1)(non-GAAP)Tangible commonbook value pershare, excludingaccumulated other 24.24 23.95 22.77 22.04 comprehensiveincome^(1)(non-GAAP)CAPITAL RATIOS Average equity to 12.07 % 11.95 % 12.27 % 12.22 %average assetsTangible commonequity to tangible 10.49 % 10.53 % 10.80 % 10.57 %assets^(1)Tier 1 leverage 10.43 % 10.57 % 10.70 % 10.60 %ratioCommon equity tier1 risk-based 14.57 % 15.31 % 14.70 % 14.25 %capital ratioTier 1 risk-based 14.57 % 15.31 % 14.70 % 15.40 %capital ratioTotal risk-based 15.48 % 16.27 % 15.83 % 15.40 %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 September30,2021 September30,2021 vs. June 30, 2021 vs. September 30, 2020 September30,2021 June30,2021 % Change September30,2020 % ChangeOriginated: Commercial: Commercial and $ 1,352,481 $ 1,253,745 7.9 % $ 1,228,550 10.1 %industrialMunicipal and 878,988 860,740 2.1 % 883,065 (0.5 )%non-profitOwner-occupiedcommercial real 504,415 479,286 5.2 % 460,487 9.5 %estateFood and 195,766 195,095 0.3 % 210,818 (7.1 )%agribusinessPPP loans^(1) 76,794 129,643 (40.8 )% 348,257 (77.9 )%Total commercial 3,008,444 2,918,509 3.1 % 3,131,177 (3.9 )%Commercial realestate non-owner 605,143 570,252 6.1 % 515,415 17.4 %occupiedResidential real 608,158 600,124 1.3 % 614,449 (1.0 )%estateConsumer 17,735 17,942 (1.2 )% 20,196 (12.2 )%Total 4,239,480 4,106,827 3.2 % 4,281,237 (1.0 )%originated Acquired: Commercial: Commercial and 17,521 18,710 (6.4 )% 23,984 (26.9 )%industrialMunicipal and 347 359 (3.3 )% 576 (39.8 )%non-profitOwner-occupiedcommercial real 37,335 40,435 (7.7 )% 55,929 (33.2 )%estateFood and 3,653 3,913 (6.6 )% 5,740 (36.4 )%agribusinessTotal commercial 58,856 63,417 (7.2 )% 86,229 (31.7 )%Commercial realestate non-owner 65,784 67,368 (2.4 )% 101,672 (35.3 )%occupiedResidential real 57,344 62,805 (8.7 )% 86,478 (33.7 )%estateConsumer 296 340 (12.9 )% 505 (41.4 )%Total acquired 182,280 193,930 (6.0 )% 274,884 (33.7 )% Total loans $ 4,421,760 $ 4,300,757 2.8 % $ 4,556,121 (2.9 )%



PPP loan balances are net of fees and costs and include principal totaling(1) $79,242, $134,632 and $356,913 as of September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

Originations^(^1) Third Second First Fourth Third quarter quarter quarter quarter quarter 2021 2021 2021 2020 2020Commercial: Commercial and $ 196,289 $ 147,030 $ 23,390 $ 96,625 $ 11,354industrialMunicipal and 43,516 25,131 7,999 25,348 6,083non-profitOwner occupiedcommercial real 53,445 48,225 27,093 36,085 23,758estateFood and 8,442 26,956 (10,104 ) 19,191 13,876agribusinessPPP loans ? ? 121,141 ? 122Total commercial 301,692 247,342 169,519 177,249 55,193Commercial realestate non-owner 55,392 58,532 49,195 52,018 24,937occupiedResidential real 54,442 53,962 74,145 41,355 49,786estateConsumer 1,810 2,267 1,353 1,858 2,980Total $ 413,336 $ 362,103 $ 294,212 $ 272,480 $ 132,896



Originations are defined as closed end funded loans and net fundings under revolving lines of credit. Net fundings (paydowns) under revolving lines of(1) credit were $29,154, $59,520, ($26,395), $50,982 and ($27,899) as of the third, second and first quarters of 2021 and the fourth and third 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 September30,2021 June30,2021 September30,2020 Average Average Average Average Average Average balance Interest rate balance Interest rate balance Interest rateInterest earning assets:Originated loans $ 4,137,001 $ 41,865 4.01 % $ 4,077,142 $ 40,036 3.94 % $ 4,343,335 $ 40,973 3.75 %FTE^(1)(2)Acquired loans 187,419 3,796 8.04 % 211,126 3,923 7.45 % 284,653 6,593 9.21 %Loans held for 157,381 1,166 2.94 % 159,068 1,213 3.06 % 230,390 1,683 2.91 %saleInvestmentsecurities 656,757 2,572 1.57 % 638,039 2,397 1.50 % 559,330 2,784 1.99 %available-for-saleInvestmentsecurities 671,053 2,178 1.30 % 572,534 1,723 1.20 % 242,511 1,253 2.07 %held-to-maturityOther securities 14,657 210 5.73 % 15,079 209 5.54 % 29,640 221 2.98 %Interest earningdeposits andsecurities 799,779 329 0.16 % 888,600 228 0.10 % 254,931 70 0.11 %purchased underagreements toresellTotal interestearning assets FTE $ 6,624,047 $ 52,116 3.12 % $ 6,561,588 $ 49,729 3.04 % $ 5,944,790 $ 53,577 3.59 %^(2)Cash and due from $ 77,498 $ 78,148 $ 73,274 banksOther assets 463,553 472,142 525,324 Allowance for (48,957 ) (54,984 ) (60,372 ) credit lossesTotal assets $ 7,116,141 $ 7,056,894 $ 6,483,016 Interest bearing liabilities:Interest bearingdemand, savings $ 2,803,071 $ 1,516 0.21 % $ 2,789,681 $ 1,572 0.23 % $ 2,957,604 $ 1,990 0.27 %and money marketdepositsTime deposits 903,935 1,711 0.75 % 937,579 2,004 0.86 % 1,038,983 3,501 1.34 %Securities soldunder agreements 19,681 5 0.10 % 19,891 6 0.12 % 22,667 10 0.18 %to repurchaseFederal Home Loan ? ? 0.00 % ? ? 0.00 % 1,141 86 29.99 %Bank advancesTotal interestbearing $ 3,726,687 $ 3,232 0.34 % $ 3,747,151 $ 3,582 0.38 % $ 4,020,395 $ 5,587 0.55 %liabilitiesDemand deposits $ 2,422,976 $ 2,368,810 $ 1,515,058 Other liabilities 107,233 97,817 155,205 Total liabilities 6,256,896 6,213,778 5,690,658 Shareholders' 859,245 843,116 792,358 equityTotal liabilitiesand shareholders' $ 7,116,141 $ 7,056,894 $ 6,483,016 equityNet interest $ 48,884 $ 46,147 $ 47,990 income FTE^(2)Interest rate 2.78 % 2.66 % 3.04 %spread FTE^(2)Net interest $ 2,897,360 $ 2,814,437 $ 1,924,395 earning assetsNet interest 2.93 % 2.82 % 3.21 %margin FTE^(2)Averagetransaction $ 5,226,047 $ 5,158,491 $ 4,472,662 depositsAverage total 6,129,982 6,096,070 5,511,645 depositsRatio of averageinterest earningassets to average 177.75 % 175.11 % 147.87 % 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 tax rate(2) of 21%. The tax equivalent adjustments included above are $1,315, $1,279 and $1,275 for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

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

For the nine months ended September For the nine months ended September 30, 2021 30, 2020 Average Average Average Average balance Interest rate balance Interest rateInterest earning assets:Originated loans $ 4,073,529 $ 121,461 3.99 % $ 4,273,332 $ 128,392 4.01 %FTE^(1)(2)Acquired loans 212,151 12,847 8.10 % 313,555 22,194 9.45 %Loans held for 182,385 3,896 2.86 % 163,980 3,929 3.20 %saleInvestmentsecurities 660,399 7,454 1.50 % 597,654 9,229 2.06 %available-for-saleInvestmentsecurities 555,818 5,317 1.28 % 207,107 3,689 2.37 %held-to-maturityOther securities 15,180 629 5.52 % 29,826 945 4.22 %Interest earningdeposits andsecurities 776,472 722 0.12 % 105,430 179 0.23 %purchased underagreements toresellTotal interestearning assets FTE $ 6,475,934 $ 152,326 3.14 % $ 5,690,884 $ 168,557 3.96 %^(2)Cash and due from $ 78,953 $ 74,694 banksOther assets 476,856 510,941 Allowance for (54,249 ) (54,077 ) credit lossesTotal assets $ 6,977,494 $ 6,222,442 Interest bearing liabilities:Interest bearingdemand, savings $ 2,746,657 $ 4,740 0.23 % $ 2,725,572 $ 6,829 0.33 %and money marketdepositsTime deposits 936,088 6,050 0.86 % 1,048,116 12,075 1.54 %Securities soldunder agreements 20,310 16 0.11 % 30,322 125 0.55 %to repurchaseFederal Home Loan ? ? 0.00 % 127,456 1,295 1.36 %Bank advancesTotal interestbearing $ 3,703,055 $ 10,806 0.39 % $ 3,931,466 $ 20,324 0.69 %liabilitiesDemand deposits $ 2,320,160 $ 1,363,556 Other liabilities 108,503 147,929 Total liabilities 6,131,718 5,442,951 Shareholders' 845,776 779,491 equityTotal liabilitiesand shareholders' $ 6,977,494 $ 6,222,442 equityNet interest $ 141,520 $ 148,233 income FTE^(2)Interest rate 2.75 % 3.27 %spread FTE^(2)Net interest $ 2,772,879 $ 1,759,418 earning assetsNet interest 2.92 % 3.48 %margin FTE^(2)Averagetransaction $ 5,066,817 $ 4,089,128 depositsAverage total 6,002,905 5,137,244 depositsRatio of averageinterest earningassets to average 174.88 % 144.75 % 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 tax rate(2) of 21%. The tax equivalent adjustments included above are $3,862 and $3,843 for the nine months ended September 30, 2021 and September 30, 2020, respectively.

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

Allowance for Credit Losses Analysis Asofandforthethreemonthsended September30,2021 June30,2021 September30,2020Beginningallowance for $ 49,030 $ 55,057 $ 60,465 credit lossesCharge-offs (322 ) (925 ) (619 )Recoveries 101 198 133 Provisionexpense 346 (5,300 ) 1,000 (release)Endingallowance for $ 49,155 $ 49,030 $ 60,979 credit losses("ACL")Ratio ofannualized netcharge-offs to 0.02 % 0.07 % 0.04 %average totalloans duringthe periodRatio ofannualized netcharge-offs toaverage total 0.02 % 0.07 % 0.04 %loans excludingPPP loansduring theperiodRatio of ACL tototal loans 1.11 % 1.14 % 1.34 %outstanding atperiod endRatio of ACL tototal loansoutstanding 1.13 % 1.18 % 1.45 %excluding PPPloans at periodendRatio of ACL tototalnon-performing 382.59 % 353.22 % 322.95 %loans at periodendTotal loans $ 4,421,760 $ 4,300,757 $ 4,556,121 Average totalloans during 4,352,557 4,312,128 4,677,630 the periodAverage totalloans excludingPPP loans 4,245,524 4,112,172 4,329,458 during theperiodTotalnon-performing 12,848 13,881 18,882 loans

Past Due and Non-accrual Loans

September30,2021 June30,2021 September30,2020Loans 30-89days past dueand still $ 1,302 $ 2,098 $ 6,587 accruinginterestLoans 90 dayspast due and 495 767 161 still accruinginterestNon-accrual 12,848 13,881 18,882 loansTotal past dueand non-accrual $ 14,645 $ 16,746 $ 25,630 loansTotal 90 dayspast due andstill accruinginterest and 0.30 % 0.34 % 0.42 %non-accrualloans to totalloans

Asset Quality Data

September30,2021 June30,2021 September30,2020Non-performing $ 12,848 $ 13,881 $ 18,882 loansOREO 4,325 5,124 4,590 Totalnon-performing $ 17,173 $ 19,005 $ 23,472 assetsAccruingrestructured $ 11,135 $ 11,844 $ 21,786 loansTotalnon-performing 0.29 % 0.32 % 0.41 %loans to totalloansTotalnon-performingloans to total 0.30 % 0.33 % 0.45 %loans excludingPPP loansTotalnon-performing 0.39 % 0.44 % 0.51 %assets to totalloans and OREOTotalnon-performingassets to total 0.39 % 0.46 % 0.56 %loans and OREOexcluding PPPloans

NATIONAL BANK HOLDINGS CORPORATIONKey Ratios^(^1) As of and for the three months ended As of and for the nine months ended September30, June30, September30, September30, September30, 2021 2021 2020 2021 2020Return on 1.11 % 1.38 % 1.71 % 1.36 % 1.32 %average assetsReturn onaverage 1.14 % 1.41 % 1.76 % 1.39 % 1.36 %tangibleassets^(2)Return on 9.15 % 11.51 % 14.00 % 11.20 % 10.53 %average equityReturn onaveragetangible 10.65 % 13.41 % 16.49 % 13.04 % 12.47 %common equity^(2)Loan todeposit ratio 72.08 % 69.84 % 81.12 % 72.08 % 81.12 %(end ofperiod)Non-interestbearingdeposits to 39.89 % 39.58 % 27.31 % 39.89 % 27.31 %total deposits(end ofperiod)Net interest 2.85 % 2.74 % 3.13 % 2.84 % 3.39 %margin^(4)Net interestmargin FTE^(2) 2.93 % 2.82 % 3.21 % 2.92 % 3.48 %(4)Interest ratespread FTE^(2) 2.78 % 2.66 % 3.04 % 2.75 % 3.27 %(5)Yield onearning assets 3.04 % 2.96 % 3.50 % 3.07 % 3.87 %^(3)Yield onearning assets 3.12 % 3.04 % 3.59 % 3.14 % 3.96 %FTE^(2)(3)Cost ofinterestbearing 0.34 % 0.38 % 0.55 % 0.39 % 0.69 %liabilities^(3)Cost of 0.21 % 0.24 % 0.40 % 0.24 % 0.49 %depositsNon-interestincome to 36.85 % 35.38 % 48.13 % 38.11 % 41.90 %total revenueFTE^(2)Non-interestexpense to 2.86 % 2.63 % 3.39 % 2.82 % 3.39 %average assetsEfficiency 67.05 % 65.66 % 60.30 % 65.14 % 62.42 %ratioEfficiency 65.91 % 64.48 % 59.47 % 64.04 % 61.48 %ratio FTE^(2) Total LoansAsset Quality Data^(6)(7)(8)Non-performingloans to total 0.29 % 0.32 % 0.41 % 0.29 % 0.41 %loansNon-performingloans to totalloans 0.30 % 0.33 % 0.45 % 0.30 % 0.45 %excluding PPPloansNon-performingassets to 0.39 % 0.44 % 0.51 % 0.39 % 0.51 %total loansand OREONon-performingassets tototal loans 0.39 % 0.46 % 0.56 % 0.39 % 0.56 %and OREOexcluding PPPloansAllowance forcredit losses 1.11 % 1.14 % 1.34 % 1.11 % 1.34 %to total loansAllowance forcredit lossesto total loans 1.13 % 1.18 % 1.45 % 1.13 % 1.45 %excluding PPPloansAllowance forcredit lossesto 382.59 % 353.22 % 322.95 % 382.59 % 322.95 %non-performingloansNetcharge-offs to 0.02 % 0.07 % 0.04 % 0.03 % 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/accretion or(3) dividends. Any market value adjustments on investment securities or loans are excluded from interest earning assets. Net interest margin represents net interest income, including accretion(4) income on interest earning assets, as a percentage of average interest earning assets. Interest rate spread represents the difference between the weighted average(5) 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 September30,2021 June30,2021 December31,2020 September30,2020Totalshareholders' $ 844,716 $ 851,866 $ 820,691 $ 799,357 equityLess:goodwill andcore deposit (121,688 ) (121,983 ) (122,575 ) (122,871 )intangibleassets, netAdd: deferredtax liability 9,841 9,612 9,155 8,927 related togoodwillTangiblecommon equity $ 732,869 $ 739,495 $ 707,271 $ 685,413 (non-GAAP) Total assets $ 7,100,991 $ 7,136,128 $ 6,659,950 $ 6,600,676 Less:goodwill andcore deposit (121,688 ) (121,983 ) (122,575 ) (122,871 )intangibleassets, netAdd: deferredtax liability 9,841 9,612 9,155 8,927 related togoodwillTangibleassets $ 6,989,144 $ 7,023,757 $ 6,546,530 $ 6,486,732 (non-GAAP) Tangiblecommon equityto tangible assetscalculations:Totalshareholders' 11.90 % 11.94 % 12.32 % 12.11 %equity tototal assetsLess: impactof goodwilland core (1.41 )% (1.41 )% (1.52 )% (1.54 )%depositintangibleassets, netTangiblecommon equityto tangible 10.49 % 10.53 % 10.80 % 10.57 %assets(non-GAAP) Tangiblecommon bookvalue per sharecalculations:Tangiblecommon equity $ 732,869 $ 739,495 $ 707,271 $ 685,413 (non-GAAP)Divided by:ending shares 30,288,131 30,800,985 30,634,291 30,594,412 outstandingTangiblecommon bookvalue per $ 24.20 $ 24.01 $ 23.09 $ 22.40 share(non-GAAP) Tangiblecommon bookvalue pershare,excluding accumulatedothercomprehensiveincomecalculations:Tangiblecommon equity $ 732,869 $ 739,495 $ 707,271 $ 685,413 (non-GAAP)Accumulatedothercomprehensive 1,397 (1,695 ) (9,766 ) (11,080 )loss(income), netof taxTangiblecommon bookvalue,excludingaccumulatedother 734,266 737,800 697,505 674,333 comprehensiveloss(income), netof tax(non-GAAP)Divided by:ending shares 30,288,131 30,800,985 30,634,291 30,594,412 outstandingTangiblecommon bookvalue pershare,excludingaccumulated $ 24.24 $ 23.95 $ 22.77 $ 22.04 othercomprehensiveloss(income), 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 nine months ended September30, June30, September30, September30, September30, 2021 2021 2020 2021 2020Net income $ 19,825 $ 24,200 $ 27,893 $ 70,837 $ 61,422 Add: impactof coredepositintangible 227 228 226 682 680 amortizationexpense,after taxNet incomeadjusted forimpact ofcore deposit $ 20,052 $ 24,428 $ 28,119 $ 71,519 $ 62,102 intangibleamortizationexpense,after tax Average $ 7,116,141 $ 7,056,894 $ 6,483,016 $ 6,977,494 $ 6,222,442 assetsLess: averagegoodwill andcore depositintangibleasset, net of (112,026 ) (112,552 ) (114,122 ) (112,320 ) (114,406 )deferred taxliabilityrelated togoodwillAveragetangible $ 7,004,115 $ 6,944,342 $ 6,368,894 $ 6,865,174 $ 6,108,036 assets(non-GAAP) Averageshareholders' $ 859,245 $ 843,116 $ 792,358 $ 845,776 $ 779,491 equityLess: averagegoodwill andcore depositintangibleasset, net of (112,026 ) (112,552 ) (114,122 ) (112,320 ) (114,406 )deferred taxliabilityrelated togoodwillAveragetangible $ 747,219 $ 730,564 $ 678,236 $ 733,456 $ 665,085 common equity(non-GAAP) Return onaverage 1.11 % 1.38 % 1.71 % 1.36 % 1.32 %assetsReturn onaveragetangible 1.14 % 1.41 % 1.76 % 1.39 % 1.36 %assets(non-GAAP)Return onaverage 9.15 % 11.51 % 14.00 % 11.20 % 10.53 %equityReturn onaveragetangible 10.65 % 13.41 % 16.49 % 13.04 % 12.47 %common equity(non-GAAP)

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin Asofandforthe three months ended As of and for the nine months ended September30, June30, September30, September30, September30, 2021 2021 2020 2021 2020Interest $ 50,801 $ 48,450 $ 52,302 $ 148,464 $ 164,714 incomeAdd:impact oftaxable 1,315 1,279 1,275 3,862 3,843 equivalentadjustmentInterestincome FTE $ 52,116 $ 49,729 $ 53,577 $ 152,326 $ 168,557 (non-GAAP) Netinterest $ 47,569 $ 44,868 $ 46,715 $ 137,658 $ 144,390 incomeAdd:impact oftaxable 1,315 1,279 1,275 3,862 3,843 equivalentadjustmentNetinterest $ 48,884 $ 46,147 $ 47,990 $ 141,520 $ 148,233 income FTE(non-GAAP) Averageearning $ 6,624,047 $ 6,561,588 $ 5,944,790 $ 6,475,934 $ 5,690,884 assetsYield onearning 3.04 % 2.96 % 3.50 % 3.07 % 3.87 %assetsYield onearning 3.12 % 3.04 % 3.59 % 3.14 % 3.96 %assets FTE(non-GAAP)Netinterest 2.85 % 2.74 % 3.13 % 2.84 % 3.39 %marginNetinterest 2.93 % 2.82 % 3.21 % 2.92 % 3.48 %margin FTE(non-GAAP)

Efficiency Ratio As of and for the three months ended As of and for the nine months ended September30, June30, September30, September30, September30, 2021 2021 2020 2021 2020Net interest $ 47,569 $ 44,868 $ 46,715 $ 137,658 $ 144,390 incomeAdd: impactof taxable 1,315 1,279 1,275 3,862 3,843 equivalentadjustmentNet interestincome, FTE $ 48,884 $ 46,147 $ 47,990 $ 141,520 $ 148,233 (non-GAAP) Non-interest $ 28,522 $ 25,266 $ 44,532 $ 87,149 $ 106,901 income Non-interest $ 51,314 $ 46,343 $ 55,321 $ 147,325 $ 157,752 expenseLess: coredepositintangible (295 ) (296 ) (295 ) (887 ) (887 )assetamortizationNon-interestexpense,adjusted forcore deposit $ 51,019 $ 46,047 $ 55,026 $ 146,438 $ 156,865 intangibleassetamortization Efficiency 67.05 % 65.66 % 60.30 % 65.14 % 62.42 %ratioEfficiencyratio FTE 65.91 % 64.48 % 59.47 % 64.04 % 61.48 %(non-GAAP)