GlobeNewswire Inc | Jan 20, 2022 04:10PM EST

January 20, 2022

DENVER, Jan. 20, 2022 (GLOBE NEWSWIRE) -- National Bank Holdings Corporation (NYSE: NBHC) reported:

For the quarter For the year 4Q21 3Q21 4Q20 2021 2020Netincome $ 22,769 $ 19,825 $ 27,169 $ 93,606 $ 88,591 ($000's)Earningsper $ 0.74 $ 0.64 $ 0.87 $ 3.01 $ 2.85 share -dilutedReturnonaverage 1.30 % 1.14 % 1.67 % 1.37 % 1.44 %tangibleassets^(1)Returnonaveragetangible 12.37 % 10.65 % 15.55 % 12.87 % 13.27 %commonequity^(1)



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

In announcing these results, Chief Executive Officer Tim Laney shared, We finished the year with strong momentum delivering fourth quarter earnings of $0.74 per diluted share and record full year earnings of $3.01 per diluted share. For the second consecutive quarter, our team delivered record loan originations. We delivered annualized loan growth of 13.4% in the fourth quarter, excluding PPP loans. Our credit metrics remain solid with just three basis points of net charge-offs for the year and a record low non-performing loans ratio of 0.24%. We have carried our momentum into the new year, and we are well positioned to execute on our growth strategies with ample liquidity and a strong capital position.

Mr. Laney added, We will continue to focus on growing our core business while also innovating and building the partnerships that will help us deliver a comprehensive digital financial ecosystem for our clients. By reducing costs and providing real-time information for our small and medium sized businesses, we have an opportunity to reduce their stress and save them precious time that they can devote to executing their business strategies.

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

Net income totaled $22.8 million, or $0.74 per diluted share, an increase of $2.9 million or 14.8% over the third quarter. The return on average tangible assets increased sixteen basis points to 1.30%, and the return on average tangible common equity increased 172 basis points to 12.37%.

Net Interest IncomeFully taxable equivalent net interest income totaled $50.8 million during the fourth quarter of 2021, an increase of $1.9 million. Excluding Paycheck Protection Program (PPP) loan fee income of $1.8 million, which was $0.7 million lower than last quarter, net interest income increased $2.6 million or 22.5% annualized. The fully taxable equivalent net interest margin widened 10 basis points to 3.03% driven by excess cash liquidity being deployed into higher yielding originated loans. The yield on earnings assets increased nine basis points, with the cost of deposits decreasing three basis points to a record low 0.18%.

LoansTotal loans ended the quarter at $4.5 billion, an increase of $91.6 million over the prior quarter. Excluding PPP loans, total loans increased $146.7 million or 13.4% annualized, led by commercial loan growth of $150.2 million or 19.9% annualized. For the second consecutive quarter, we generated record quarterly loan originations totaling $475.4 million, led by commercial loan originations of $370.9 million.

Asset Quality and Provision for Loan LossesThe Company recorded $0.1 million of provision expense, compared to zero loan loss provision last quarter. The quarters provision was driven by loan growth partially offset by strong asset quality and an improved outlook in the CECL models underlying economic forecast. Annualized net charge-offs totaled 0.02% consistent with the prior quarter. Non-performing loans (comprised of non-accrual loans and non-accrual TDRs) improved five basis points to a record low 0.24% of total loans, and non-performing assets remained consistent at 0.39% of total loans and OREO. The allowance for credit losses as a percentage of total loans totaled 1.10%, compared to 1.11% at September 30, 2021.

DepositsAverage total deposits increased $28.4 million or 1.8% annualized, to $6.2 billion for the fourth quarter 2021. Average transaction deposits (defined as total deposits less time deposits) increased $80.6 million or 6.1% annualized. The mix of transaction deposits to total deposits improved 90 basis points to 86.6% at December 31, 2021. The loan to deposit ratio increased 39 basis points to 72.5%.

Non-Interest IncomeNon-interest income totaled $23.2 million, a decrease of $5.3 million largely driven by lower mortgage banking income. Included in other non-interest income were $2.0 million of unrealized gains from equity method investments. Included in the quarter was $1.1 million of banking center consolidation-related income, compared to $1.2 million in the prior quarter.

Non-Interest ExpenseNon-interest expense totaled $44.5 million, a decrease of $6.8 million from the prior quarter. Salaries and benefits decreased $2.6 million largely due to lower mortgage-related compensation. Included in the prior quarter were $2.4 million of transaction-related expenses for the strategic investment in Finstro Global Holdings Inc. and Figure Technologies. The fully taxable equivalent efficiency ratio improved to 59.7% at December 31, 2021, compared to 65.9% at September 30, 2021.

Income tax expense totaled $5.3 million during the fourth quarter, compared to $5.0 million. Included in income tax expense was $0.2 million of benefit from stock compensation activity during the fourth quarter. Adjusting for stock compensation activity, the effective tax rate was 19.8%, compared to 20.0% in 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 December 31, 2021 for the consolidated company and NBH Bank were 10.39% and 9.09%, respectively. Shareholders equity totaled $840.1 million at December 31, 2021, decreasing $4.6 million primarily due to higher accumulated other comprehensive loss.

Common book value per share increased $0.15 to $28.04 at December 31, 2021. Tangible common book value per share increased $0.13 to $24.33 at December 31, 2021 driven by the quarters earnings, net of dividends paid and share repurchases. Excluding accumulated other comprehensive loss, the tangible book value per share increased $0.32 to $24.56 at December 31, 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 how long new outbreaks of COVID-19 cases will have a continued impact.

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

Net income totaled a record $93.6 million, or $3.01 per diluted share, an increase of $5.0 million or 5.7% over the prior year. The return on average tangible assets was 1.37% compared to 1.44% in the prior year, and the return on average tangible common equity was 12.87%, compared to 13.27%.

Fully taxable equivalent net interest income totaled $192.3 million, decreasing $5.7 million or 2.9%, as a result of interest rate actions taken by the Federal Reserve during 2020. Average earning assets increased $725.4 million, or 12.5%, primarily driven by increases in average interest bearing cash balances of $544.9 million and average investment securities of $404.3 million. The fully taxable equivalent net interest margin narrowed 47 basis points to 2.95% due to lower earning asset yields. The yield on earning assets decreased 69 basis points, driven by the remix of assets into lower-yielding cash balances. The cost of deposits decreased 22 basis points to 0.23%.

Loans outstanding totaled $4.5 billion, increasing $159.7 million or 3.7%. Excluding PPP loans, total loans increased $314.1 million or 7.5%, led by commercial loan growth of $272.8 million, or 9.5%. New loan originations over the trailing 12 months totaled a record $1.5 billion, led by commercial loan originations of $1.1 billion including PPP loan originations of $121.1 million.

The Company recorded $9.3 million of net provision release during 2021, compared to $17.6 million of provision expense in the prior year. The provision release was driven by strong asset quality and an improved outlook in the CECL models underlying economic forecast. Net charge-offs totaled 0.03% of total loans, compared to 0.06% of total loans in the prior year. Non-performing loans to total loans improved 23 basis points to 0.24%, compared to 0.47% at December 31, 2020. The allowance for credit losses totaled 1.10% of total loans, compared to 1.37% at December 31, 2020.

Average total deposits increased $775.2 million or 14.7%, to $6.0 billion during 2021. Average non-interest bearing demand deposits increased $857.2 million or 57.2%, and average transaction deposits increased $898.5 million, or 21.2%. The mix of transaction deposits to total deposits increased by 400 basis points to 86.6%, and the mix of non-interest bearing demand deposits to total deposits improved 305 basis points to 40.2% at December 31, 2021.

Non-interest income totaled $110.4 million, a decrease of $29.9 million or 21.3%, driven by $39.0 million lower mortgage banking income due to slower refinance activity in 2021 and competition driving tighter gain on sale margins. Bank card fees increased $2.2 million. Other non-interest income increased $2.9 million due to unrealized gains from equity method investments. Included in 2021 was $4.6 million of banking center consolidation-related income, compared to $0.3 million in 2020.

Non-interest expense totaled $191.8 million, a decrease of $14.3 million or 7.0%, driven by lower mortgage-related compensation as well as the Companys strategic efforts to improve operating efficiency. Included in 2021 were $2.5 million of transaction-related professional fees for the previously announced investments in our digital financial ecosystem. Salaries and benefits decreased $13.7 million primarily due to lower mortgage banking related compensation. Occupancy and equipment decreased $2.2 million largely due to efficiencies gained from banking center consolidations. Problem asset workout expense decreased $1.1 million, and gain on sale of OREO increased $0.4 million.

Income tax expense totaled $21.4 million, an increase of $0.6 million, driven by 2021s higher pre-tax income. Included in income tax expense was $0.6 million of tax benefit and $0.1 million of tax expense from stock compensation activity during 2021 and 2020, respectively. Adjusting for stock compensation activity, the effective tax rate for 2021 was 19.1%, compared to 19.0% for 2020.

Conference CallManagement will host a conference call to review the results at 11:00 a.m. Eastern Time on Friday, January 21, 2022. Interested parties may listen to this call by dialing (800) 289-0720/+44 (0)330 336 9601 (United Kingdom) using the confirmation code of 2454367 and asking for the NBHC Q4 2021 Earnings Call. A telephonic replay of the call will be available beginning approximately four hours after the calls completion through January 26, 2022, by dialing (888) 203-1112 using the confirmation code of 2454367. 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 of 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 years ended December31, September30, December31, December31, December31, 2021 2021 2020 2021 2020Total interest and $ 52,501 $ 50,801 $ 53,288 $ 200,965 $ 218,002 dividend incomeTotal interest 3,015 3,232 4,732 13,821 25,056 expenseNet interest income 49,486 47,569 48,556 187,144 192,946 Taxable equivalent 1,299 1,315 1,260 5,161 5,103 adjustmentNet interest income 50,785 48,884 49,816 192,305 198,049 FTE^(1)Provision expense(release) for loan 132 ? ? (9,293 ) 17,630 lossesNet interest incomeafter provision for 50,653 48,884 49,816 201,598 180,419 loan losses FTE^(1)Non-interest income: Service charges 3,905 3,947 4,000 14,894 14,962 Bank card fees 4,476 4,530 4,240 17,693 15,446 Mortgage banking 10,387 16,615 23,138 63,360 102,384 incomeOther non-interest 3,388 2,266 1,493 9,752 6,823 incomeOREO-related income ? ? 284 35 387 Banking centerconsolidation-related 1,059 1,164 202 4,630 256 incomeTotal non-interest 23,215 28,522 33,357 110,364 140,258 incomeNon-interest expense: Salaries and benefits 29,986 32,556 32,919 127,504 141,170 Occupancy and 6,133 6,469 6,619 25,283 27,473 equipmentProfessional fees 781 3,251 864 5,423 2,946 Other non-interest 7,764 7,624 6,725 29,260 27,947 expenseProblem asset workout 212 1,119 807 2,063 3,148 Gain on sale of OREO, (667 ) ? (13 ) (475 ) (38 )netCore depositintangible asset 296 295 296 1,183 1,183 amortizationBanking centerconsolidation-related ? ? 208 1,589 2,348 expenseTotal non-interest 44,505 51,314 48,425 191,830 206,177 expense Income before income 29,363 26,092 34,748 120,132 114,500 taxes FTE^(1)Taxable equivalent 1,299 1,315 1,260 5,161 5,103 adjustmentIncome before income 28,064 24,777 33,488 114,971 109,397 taxesIncome tax expense 5,295 4,952 6,319 21,365 20,806 Net income $ 22,769 $ 19,825 $ 27,169 $ 93,606 $ 88,591 Earnings per share - $ 0.75 $ 0.64 $ 0.88 $ 3.04 $ 2.87 basicEarnings per share - 0.74 0.64 0.87 3.01 2.85 diluted



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)

December31,2021 September30,2021 December31,2020ASSETS Cash and cash $ 845,695 $ 807,370 $ 605,565 equivalentsInvestmentsecurities 691,847 657,833 661,955 available-for-saleInvestmentsecurities 609,012 642,636 376,615 held-to-maturityNon-marketable 50,740 46,964 22,073 securitiesLoans 4,513,383 4,421,760 4,353,726 Allowance for (49,694 ) (49,155 ) (59,777 )credit lossesLoans, net 4,463,689 4,372,605 4,293,949 Loans held for 139,142 158,066 247,813 saleOther real estate 7,005 4,325 4,730 ownedPremises and 96,747 94,114 106,982 equipment, netGoodwill 115,027 115,027 115,027 Intangible assets, 12,322 11,621 17,928 netOther assets 182,785 190,430 207,313 Total assets $ 7,214,011 $ 7,100,991 $ 6,659,950 LIABILITIES ANDSHAREHOLDERS' EQUITYLiabilities: Non-interestbearing demand $ 2,506,265 $ 2,447,099 $ 2,111,045 depositsInterest bearing 555,401 546,597 514,286 demand depositsSavings and money 2,332,591 2,264,083 2,064,769 marketTotal transaction 5,394,257 5,257,779 4,690,100 depositsTime deposits 833,916 876,841 986,132 Total deposits 6,228,173 6,134,620 5,676,232 Securities soldunder agreements 22,768 21,427 22,897 to repurchaseLong-term debt 39,478 ? ? Other liabilities 83,486 100,228 140,130 Total liabilities 6,373,905 6,256,275 5,839,259 Shareholders' equity:Common stock 515 515 515 Additional paid in 1,014,294 1,013,064 1,011,362 capitalRetained earnings 289,876 273,900 223,175 Treasury stock (457,616 ) (441,366 ) (424,127 )Accumulated othercomprehensive (6,963 ) (1,397 ) 9,766 (loss) income, netof taxTotalshareholders' 840,106 844,716 820,691 equityTotal liabilitiesand shareholders' $ 7,214,011 $ 7,100,991 $ 6,659,950 equitySHARE DATA Average basic 30,338,265 30,800,590 30,784,896 shares outstandingAverage diluted 30,715,500 31,064,815 31,032,648 shares outstandingEnding shares 29,958,764 30,288,131 30,634,291 outstandingCommon book value $ 28.04 $ 27.89 $ 26.79 per shareTangible commonbook value per 24.33 24.20 23.09 share^(1)(non-GAAP)Tangible commonbook value pershare, excludingaccumulated other 24.56 24.24 22.77 comprehensiveincome^(1)(non-GAAP)CAPITAL RATIOS Average equity to 11.88 % 12.07 % 12.27 %average assetsTangible commonequity to tangible 10.26 % 10.49 % 10.80 %assets^(1)Tier 1 leverage 10.39 % 10.43 % 10.70 %ratioCommon equity tier1 risk-based 14.26 % 14.57 % 14.70 %capital ratioTier 1 risk-based 14.26 % 14.57 % 14.70 %capital ratioTotal risk-based 15.92 % 15.48 % 15.83 %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

December31,2021 December31,2021 vs. September 30, vs. December 31, 2021 2020 December31,2021 September30,2021 % Change December31,2020 % ChangeOriginated: Commercial: Commercial and $ 1,458,218 $ 1,352,481 7.8 % $ 1,248,530 16.8 %industrialMunicipal and 928,705 878,988 5.7 % 870,410 6.7 %non-profitOwner-occupiedcommercial 503,663 504,415 (0.1 )% 464,417 8.5 %real estateFood and 200,412 195,766 2.4 % 205,189 (2.3 )%agribusinessPPP loans^(1) 21,677 76,794 (71.8 )% 176,106 (87.7 )%Total 3,112,675 3,008,444 3.5 % 2,964,652 5.0 %commercialCommercialreal estate 611,765 605,143 1.1 % 542,642 12.7 %non-owneroccupiedResidential 616,135 608,158 1.3 % 581,555 5.9 %real estateConsumer 17,336 17,735 (2.2 )% 18,581 (6.7 )%Total 4,357,911 4,239,480 2.8 % 4,107,430 6.1 %originated Acquired: Commercial: Commercial and 16,252 17,521 (7.2 )% 22,102 (26.5 )%industrialMunicipal and 340 347 (2.0 )% 381 (10.8 )%non-profitOwner-occupiedcommercial 29,973 37,335 (19.7 )% 51,821 (42.2 )%real estateFood and 3,177 3,653 (13.0 )% 5,108 (37.8 )%agribusinessTotal 49,742 58,856 (15.5 )% 79,412 (37.4 )%commercialCommercialreal estate 52,964 65,784 (19.5 )% 89,354 (40.7 )%non-owneroccupiedResidential 52,521 57,344 (8.4 )% 77,105 (31.9 )%real estateConsumer 245 296 (17.2 )% 425 (42.4 )%Total acquired 155,472 182,280 (14.7 )% 246,296 (36.9 )%Total loans $ 4,513,383 $ 4,421,760 2.1 % $ 4,353,726 3.7 %



PPP loan balances are net of fees and costs and include principal(1 ) totaling $22,300, $79,242 and $179,531 as of December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

Originations(1)

Fourth Third Second First Fourth quarter quarter quarter quarter quarter 2021 2021 2021 2021 2020Commercial: Commercial and $ 229,529 $ 196,289 $ 147,030 $ 23,390 $ 96,625industrialMunicipal and 101,450 43,516 25,131 7,999 25,348non-profitOwner occupiedcommercial real 28,914 53,445 48,225 27,093 36,085estateFood and 11,016 8,442 26,956 (10,104 ) 19,191agribusinessPPP loans ? ? ? 121,141 ?Total commercial 370,909 301,692 247,342 169,519 177,249Commercial realestate non-owner 46,128 55,392 58,532 49,195 52,018occupiedResidential real 55,873 54,442 53,962 74,145 41,355estateConsumer 2,524 1,810 2,267 1,353 1,858Total $ 475,434 $ 413,336 $ 362,103 $ 294,212 $ 272,480



Originations are defined as closed end funded loans and net fundings under revolving lines of credit. Net fundings (paydowns)(1 ) under revolving lines of credit were $138,777, $29,154, $59,520, ($26,395) and $50,982 as of the fourth, third, second and first quarters of 2021 and the fourth quarter 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 December31,2021 September30,2021 December31,2020 Average Average Average Average Average Average balance Interest rate balance Interest rate balance Interest rateInterest earning assets:Originated loans $ 4,296,318 $ 43,066 3.98 % $ 4,137,001 $ 41,865 4.01 % $ 4,129,155 $ 43,200 4.16 %FTE^(1)(2)Acquired loans 172,567 4,493 10.33 % 187,419 3,796 8.04 % 259,233 5,715 8.77 %Loans held for 166,470 1,214 2.89 % 157,381 1,166 2.94 % 248,326 1,699 2.72 %saleInvestmentsecurities 689,994 2,560 1.48 % 656,757 2,572 1.57 % 574,642 2,177 1.52 %available-for-saleInvestmentsecurities 637,250 1,994 1.25 % 671,053 2,178 1.30 % 369,812 1,410 1.53 %held-to-maturityOther securities 14,590 209 5.73 % 14,657 210 5.73 % 18,195 212 4.66 %Interest earningdeposits andsecurities 678,729 264 0.15 % 799,779 329 0.16 % 509,150 135 0.11 %purchased underagreements toresellTotal interestearning assets FTE $ 6,655,918 $ 53,800 3.21 % $ 6,624,047 $ 52,116 3.12 % $ 6,108,513 $ 54,548 3.55 %^(2)Cash and due from $ 79,058 $ 77,498 $ 73,768 banksOther assets 460,664 463,553 514,053 Allowance for (49,069 ) (48,957 ) (60,844 ) credit lossesTotal assets $ 7,146,571 $ 7,116,141 $ 6,635,490 Interest bearing liabilities:Interest bearingdemand, savings $ 2,847,562 $ 1,500 0.21 % $ 2,803,071 $ 1,516 0.21 % $ 2,746,597 $ 1,776 0.26 %and money marketdepositsTime deposits 851,779 1,312 0.61 % 903,935 1,711 0.75 % 1,008,297 2,949 1.16 %Securities soldunder agreements 20,420 7 0.14 % 19,681 5 0.10 % 23,410 7 0.12 %to repurchaseLong-term debt 24,599 196 3.16 % ? ? 0.00 % ? ? 0.00 %Total interestbearing $ 3,744,360 $ 3,015 0.32 % $ 3,726,687 $ 3,232 0.34 % $ 3,778,304 $ 4,732 0.50 %liabilitiesDemand deposits $ 2,459,063 $ 2,422,976 $ 1,898,171 Other liabilities 94,345 107,233 144,532 Total liabilities 6,297,768 6,256,896 5,821,007 Shareholders' 848,803 859,245 814,483 equityTotal liabilitiesand shareholders' $ 7,146,571 $ 7,116,141 $ 6,635,490 equityNet interest $ 50,785 $ 48,884 $ 49,816 income FTE^(2)Interest rate 2.89 % 2.78 % 3.05 %spread FTE^(2)Net interest $ 2,911,558 $ 2,897,360 $ 2,330,209 earning assetsNet interest 3.03 % 2.93 % 3.24 %margin FTE^(2)Averagetransaction $ 5,306,625 $ 5,226,047 $ 4,644,768 depositsAverage total 6,158,404 6,129,982 5,653,065 depositsRatio of averageinterest earningassets to average 177.76 % 177.75 % 161.67 % 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 $1,299, $1,315 and $1,260 for the three months ended December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

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

For the year ended December 31, 2021 For the year ended December 31, 2020 Average Average Average Average balance Interest rate balance Interest rateInterest earning assets:Originated loans $ 4,129,684 $ 164,527 3.98 % $ 4,237,091 $ 171,592 4.05 %FTE^(1)(2)Acquired loans 202,174 17,340 8.58 % 299,901 27,909 9.31 %Loans held for 178,373 5,110 2.86 % 185,182 5,628 3.04 %saleInvestmentsecurities 667,859 10,014 1.50 % 591,870 11,406 1.93 %available-for-saleInvestmentsecurities 576,343 7,311 1.27 % 248,006 5,099 2.06 %held-to-maturityOther securities 15,032 838 5.57 % 26,903 1,157 4.30 %Interest earningdeposits andsecurities 751,835 986 0.13 % 206,911 314 0.15 %purchased underagreements toresellTotal interestearning assets FTE $ 6,521,300 $ 206,126 3.16 % $ 5,795,864 $ 223,105 3.85 %^(2)Cash and due from $ 78,979 $ 74,461 banksOther assets 472,775 511,721 Allowance for (52,943 ) (55,778 ) credit lossesTotal assets $ 7,020,111 $ 6,326,268 Interest bearing liabilities:Interest bearingdemand, savings $ 2,772,091 $ 6,240 0.23 % $ 2,730,857 $ 8,605 0.32 %and money marketdepositsTime deposits 914,837 7,362 0.80 % 1,038,107 15,024 1.45 %Securities soldunder agreements 20,338 23 0.11 % 28,585 132 0.46 %to repurchaseLong-term debt 6,200 196 3.16 % ? ? 0.00 %Federal Home Loan ? ? 0.00 % 95,418 1,295 1.36 %Bank advancesTotal interestbearing $ 3,713,466 $ 13,821 0.37 % $ 3,892,967 $ 25,056 0.64 %liabilitiesDemand deposits $ 2,355,171 $ 1,497,940 Other liabilities 104,935 147,075 Total liabilities 6,173,572 5,537,982 Shareholders' 846,539 788,286 equityTotal liabilitiesand shareholders' $ 7,020,111 $ 6,326,268 equityNet interest $ 192,305 $ 198,049 income FTE^(2)Interest rate 2.79 % 3.21 %spread FTE^(2)Net interest $ 2,807,834 $ 1,902,897 earning assetsNet interest 2.95 % 3.42 %margin FTE^(2)Averagetransaction $ 5,127,262 $ 4,228,797 depositsAverage total 6,042,099 5,266,904 depositsRatio of averageinterest earningassets to average 175.61 % 148.88 % 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 $5,161 and $5,103 for the years ended December 31, 2021 and December 31, 2020, respectively.

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

Allowance for Credit Losses Analysis

Asofandforthethreemonthsended December31,2021 September30,2021 December31,2020Beginning allowance $ 49,155 $ 49,030 $ 60,979 for credit lossesCharge-offs (268 ) (322 ) (1,259 )Recoveries 72 101 57 Provision expense 735 346 ? Ending allowance forcredit losses $ 49,694 $ 49,155 $ 59,777 ("ACL")Ratio of annualizednet charge-offs to 0.02 % 0.02 % 0.11 %average total loansduring the periodRatio of annualizednet charge-offs toaverage total loans 0.02 % 0.02 % 0.11 %excluding PPP loansduring the periodRatio of ACL tototal loans 1.10 % 1.11 % 1.37 %outstanding atperiod endRatio of ACL tototal loansoutstanding 1.11 % 1.13 % 1.43 %excluding PPP loansat period endRatio of ACL tototal non-performing 458.77 % 382.59 % 293.21 %loans at period endTotal loans $ 4,513,383 $ 4,421,760 $ 4,353,726 Average total loans 4,490,391 4,352,557 4,431,694 during the periodAverage total loansexcluding PPP loans 4,437,880 4,245,524 4,160,520 during the periodTotal non-performing 10,832 12,848 20,387 loans

Past Due and Non-accrual Loans

December31,2021 September30,2021 December31,2020Loans 30-89days pastdue and $ 1,687 $ 1,302 $ 968 stillaccruinginterestLoans 90days pastdue and 420 495 162 stillaccruinginterestNon-accrual 10,832 12,848 20,387 loansTotal pastdue and $ 12,939 $ 14,645 $ 21,517 non-accrualloansTotal 90days pastdue andstillaccruing 0.25 % 0.30 % 0.47 %interest andnon-accrualloans tototal loans

Asset Quality Data

December31,2021 September30,2021 December31,2020Non-performing loans $ 10,832 $ 12,848 $ 20,387 OREO 7,005 4,325 4,730 Other repossessed ? ? 17 assetsTotal non-performing $ 17,837 $ 17,173 $ 25,134 assetsAccruing $ 7,186 $ 11,135 $ 13,945 restructured loansTotal non-performing 0.24 % 0.29 % 0.47 %loans to total loansTotal non-performingloans to total loans 0.24 % 0.30 % 0.49 %excluding PPP loansTotal non-performingassets to total 0.39 % 0.39 % 0.58 %loans and OREOTotal non-performingassets to total 0.40 % 0.39 % 0.60 %loans and OREOexcluding PPP loans

NATIONAL BANK HOLDINGS CORPORATIONKey Ratios(1)

As of and for the three months ended As of and for the years ended December31, September30, December31, December31, December31, 2021 2021 2020 2021 2020Return on 1.26 % 1.11 % 1.63 % 1.33 % 1.40 %average assetsReturn onaverage 1.30 % 1.14 % 1.67 % 1.37 % 1.44 %tangibleassets^(2)Return on 10.64 % 9.15 % 13.27 % 11.06 % 11.24 %average equityReturn onaveragetangible 12.37 % 10.65 % 15.55 % 12.87 % 13.27 %common equity^(2)Loan todeposit ratio 72.47 % 72.08 % 76.70 % 72.47 % 76.70 %(end ofperiod)Non-interestbearingdeposits to 40.24 % 39.89 % 37.19 % 40.24 % 37.19 %total deposits(end ofperiod)Net interest 2.95 % 2.85 % 3.16 % 2.87 % 3.33 %margin^(3)Net interestmargin FTE^(2) 3.03 % 2.93 % 3.24 % 2.95 % 3.42 %(3)Interest ratespread FTE^(2) 2.89 % 2.78 % 3.05 % 2.79 % 3.21 %(5)Yield onearning assets 3.13 % 3.04 % 3.47 % 3.08 % 3.76 %^(4)Yield onearning assets 3.21 % 3.12 % 3.55 % 3.16 % 3.85 %FTE^(2)(4)Cost ofinterestbearing 0.32 % 0.34 % 0.50 % 0.37 % 0.64 %liabilities^(4)Cost of 0.18 % 0.21 % 0.33 % 0.23 % 0.45 %depositsNon-interestincome to 31.37 % 36.85 % 40.11 % 36.46 % 41.46 %total revenueFTE^(2)Non-interestexpense to 2.47 % 2.86 % 2.90 % 2.73 % 3.26 %average assetsEfficiency 60.81 % 67.05 % 58.76 % 64.08 % 61.52 %ratioEfficiency 59.74 % 65.91 % 57.87 % 62.99 % 60.59 %ratio FTE^(2) Total LoansAsset Quality Data^(6)(7)(8)Non-performingloans to total 0.24 % 0.29 % 0.47 % 0.24 % 0.47 %loansNon-performingloans to totalloans 0.24 % 0.30 % 0.49 % 0.24 % 0.49 %excluding PPPloansNon-performingassets to 0.39 % 0.39 % 0.58 % 0.39 % 0.58 %total loansand OREONon-performingassets tototal loans 0.40 % 0.39 % 0.60 % 0.40 % 0.60 %and OREOexcluding PPPloansAllowance forcredit losses 1.10 % 1.11 % 1.37 % 1.10 % 1.37 %to total loansAllowance forcredit lossesto total loans 1.11 % 1.13 % 1.43 % 1.11 % 1.43 %excluding PPPloansAllowance forcredit lossesto 458.77 % 382.59 % 293.21 % 458.77 % 293.21 %non-performingloansNetcharge-offs to 0.02 % 0.02 % 0.11 % 0.03 % 0.06 %average loans^(1)



(1 ) Ratios are annualized.(2 ) Ratio represents non-GAAP financial measure. See non-GAAP reconciliations below. Net interest margin represents net interest income, including(3 ) accretion income on interest earning assets, as a percentage of average interest earning assets. Interest earning assets include assets that earn interest/(4 ) accretion or dividends. Any market value adjustments on investment securities or loans are excluded from 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

December31,2021 September30,2021 December31,2020Totalshareholders' $ 840,106 $ 844,716 $ 820,691 equityLess:goodwill andcore deposit (121,392 ) (121,688 ) (122,575 )intangibleassets, netAdd: deferredtax liability 10,070 9,841 9,155 related togoodwillTangiblecommon equity $ 728,784 $ 732,869 $ 707,271 (non-GAAP) Total assets $ 7,214,011 $ 7,100,991 $ 6,659,950 Less:goodwill andcore deposit (121,392 ) (121,688 ) (122,575 )intangibleassets, netAdd: deferredtax liability 10,070 9,841 9,155 related togoodwillTangibleassets $ 7,102,689 $ 6,989,144 $ 6,546,530 (non-GAAP) Tangiblecommon equityto tangible assetscalculations:Totalshareholders' 11.65 % 11.90 % 12.32 %equity tototal assetsLess: impactof goodwilland core (1.39 )% (1.41 )% (1.52 )%depositintangibleassets, netTangiblecommon equityto tangible 10.26 % 10.49 % 10.80 %assets(non-GAAP) Tangiblecommon bookvalue per sharecalculations:Tangiblecommon equity $ 728,784 $ 732,869 $ 707,271 (non-GAAP)Divided by:ending shares 29,958,764 30,288,131 30,634,291 outstandingTangiblecommon bookvalue per $ 24.33 $ 24.20 $ 23.09 share(non-GAAP) Tangiblecommon bookvalue pershare,excluding accumulatedothercomprehensiveincomecalculations:Tangiblecommon equity $ 728,784 $ 732,869 $ 707,271 (non-GAAP)Accumulatedothercomprehensive 6,963 1,397 (9,766 )loss(income), netof taxTangiblecommon bookvalue,excludingaccumulatedother 735,747 734,266 697,505 comprehensiveloss(income), netof tax(non-GAAP)Divided by:ending shares 29,958,764 30,288,131 30,634,291 outstandingTangiblecommon bookvalue pershare,excludingaccumulated $ 24.56 $ 24.24 $ 22.77 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 years ended December31, September30, December31, December31, December31, 2021 2021 2020 2021 2020Net income $ 22,769 $ 19,825 $ 27,169 $ 93,606 $ 88,591 Add: impactof coredepositintangible 227 227 228 909 910 amortizationexpense,after taxNet incomeadjusted forimpact ofcore deposit $ 22,996 $ 20,052 $ 27,397 $ 94,515 $ 89,501 intangibleamortizationexpense,after tax Average $ 7,146,571 $ 7,116,141 $ 6,635,490 $ 7,020,111 $ 6,326,268 assetsLess: averagegoodwill andcore depositintangibleasset, net of (111,508 ) (112,026 ) (113,594 ) (111,944 ) (114,031 )deferred taxliabilityrelated togoodwillAveragetangible $ 7,035,063 $ 7,004,115 $ 6,521,896 $ 6,908,167 $ 6,212,237 assets(non-GAAP) Averageshareholders' $ 848,803 $ 859,245 $ 814,483 $ 846,539 $ 788,286 equityLess: averagegoodwill andcore depositintangibleasset, net of (111,508 ) (112,026 ) (113,594 ) (111,944 ) (114,031 )deferred taxliabilityrelated togoodwillAveragetangible $ 737,295 $ 747,219 $ 700,889 $ 734,595 $ 674,255 common equity(non-GAAP) Return onaverage 1.26 % 1.11 % 1.63 % 1.33 % 1.40 %assetsReturn onaveragetangible 1.30 % 1.14 % 1.67 % 1.37 % 1.44 %assets(non-GAAP)Return onaverage 10.64 % 9.15 % 13.27 % 11.06 % 11.24 %equityReturn onaveragetangible 12.37 % 10.65 % 15.55 % 12.87 % 13.27 %common equity(non-GAAP)

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

Asofandforthe three months ended As of and for the years ended December31, September30, December31, December31, December31, 2021 2021 2020 2021 2020Interest $ 52,501 $ 50,801 $ 53,288 $ 200,965 $ 218,002 incomeAdd:impact oftaxable 1,299 1,315 1,260 5,161 5,103 equivalentadjustmentInterestincome FTE $ 53,800 $ 52,116 $ 54,548 $ 206,126 $ 223,105 (non-GAAP) Netinterest $ 49,486 $ 47,569 $ 48,556 $ 187,144 $ 192,946 incomeAdd:impact oftaxable 1,299 1,315 1,260 5,161 5,103 equivalentadjustmentNetinterest $ 50,785 $ 48,884 $ 49,816 $ 192,305 $ 198,049 income FTE(non-GAAP) Averageearning $ 6,655,918 $ 6,624,047 $ 6,108,513 $ 6,521,300 $ 5,795,864 assetsYield onearning 3.13 % 3.04 % 3.47 % 3.08 % 3.76 %assetsYield onearning 3.21 % 3.12 % 3.55 % 3.16 % 3.85 %assets FTE(non-GAAP)Netinterest 2.95 % 2.85 % 3.16 % 2.87 % 3.33 %marginNetinterest 3.03 % 2.93 % 3.24 % 2.95 % 3.42 %margin FTE(non-GAAP)

Efficiency Ratio

As of and for the three months ended As of and for the years ended December31, September30, December31, December31, December31, 2021 2021 2020 2021 2020Net interest $ 49,486 $ 47,569 $ 48,556 $ 187,144 $ 192,946 incomeAdd: impactof taxable 1,299 1,315 1,260 5,161 5,103 equivalentadjustmentNet interestincome, FTE $ 50,785 $ 48,884 $ 49,816 $ 192,305 $ 198,049 (non-GAAP) Non-interest $ 23,215 $ 28,522 $ 33,357 $ 110,364 $ 140,258 income Non-interest $ 44,505 $ 51,314 $ 48,425 $ 191,830 $ 206,177 expenseLess: coredepositintangible (296 ) (295 ) (296 ) (1,183 ) (1,183 )assetamortizationNon-interestexpense,adjusted forcore deposit $ 44,209 $ 51,019 $ 48,129 $ 190,647 $ 204,994 intangibleassetamortization Efficiency 60.81 % 67.05 % 58.76 % 64.08 % 61.52 %ratioEfficiencyratio FTE 59.74 % 65.91 % 57.87 % 62.99 % 60.59 %(non-GAAP)