NBHC National Bank Holdings Corporation

In announcing these results, Chief Executive Officer Tim Laney shared, “We delivered quarterly earnings of $0.86 per diluted share and a return on average tangible common equity of 14.40%, adjusted for the impact of security sales during the quarter. We remain focused on disciplined loan and deposit pricing, delivering net interest income growth of 11.3% annualized during the quarter, and 12 basis points of margin expansion with a strong net interest margin of 3.99%. Our teams generated loan originations of $1.5 billion and grew total average deposits 4.7% during 2024. We are committed to growing full client relationships by delivering best-in-class banking solutions, while adhering to prudent and disciplined banking practices.”

Mr. Laney added, “We enter 2025 from a position of strength with optionality for future growth and are pleased with our new business pipelines. We delivered 11% growth in our tangible book value per share in 2024 and maintain strong capital with a Common Equity Tier 1 capital ratio of 13.2%. Our earnings and capital strength allow us to continue to invest in 2UniFi and Cambr, which we believe will provide unique opportunities for future growth. We remain well positioned to serve our clients and communities in 2025.”

Fourth Quarter 2024 Results(All comparisons refer to the third quarter of 2024, except as noted)

Net income totaled $28.2 million or $0.73 per diluted share, compared to $33.1 million or $0.86 per diluted share. Fully taxable equivalent pre-provision net revenue totaled $38.6 million, compared to $43.7 million. The return on average tangible assets totaled 1.23%, compared to 1.43%, and the return on average tangible common equity totaled 12.31%, compared to 14.84%.

As previously announced, during the fourth quarter of 2024, the Company sold approximately $130 million of available-for-sale (“AFS”) investment securities on the open market as part of the Company’s strategic balance sheet management. The securities sold resulted in a pre-tax loss of $6.6 million. Proceeds from the sale will be redeployed over time into higher yielding securities.

Adjusting for the non-recurring loss on AFS security sales, net income increased $0.1 million to $33.2 million or $0.86 per diluted share. Adjusted fully taxable equivalent pre-provision net revenue increased $1.5 million to $45.2 million. The adjusted return on average tangible assets was 1.44%, and the adjusted return on average tangible common equity was 14.40%.

Net Interest IncomeFully taxable equivalent net interest income increased $2.5 million to $92.0 million, driven by the quarter’s loan growth and disciplined deposit pricing. Average earning assets decreased $14.6 million as $55.2 million of average loan growth was more than offset by a $64.4 million decrease in average investment securities as a result of strategic balance sheet repositioning. The fully taxable equivalent net interest margin widened 12 basis points to 3.99%, driven by a 21 basis point improvement in the cost of funds to 2.15%, which was partially offset by a seven basis point decrease in earning asset yields.

LoansTotal loans increased $36.6 million or 1.9% annualized to $7.8 billion at December 31, 2024. We generated quarterly loan fundings of $480.0 million, led by commercial loan fundings of $329.4 million. The fourth quarter weighted average rate on new loans at the time of origination was 7.9%, compared to the year to date weighted average yield of 6.6% on our loan portfolio.

Asset Quality and Provision for Credit LossesThe Company recorded $2.0 million of provision expense for credit losses, consistent with the prior quarter. The current quarter’s provision expense was primarily driven by loan growth and higher reserve requirements. Annualized net charge-offs totaled 0.11% of average total loans, primarily driven by one previously reserved credit during the quarter. Non-performing loans totaled 0.46% of total loans at December 31, 2024, compared to 0.31%, and non-performing assets totaled 0.47% of total loans and OREO at December 31, 2024, compared to 0.32%. The allowance for credit losses as a percentage of loans totaled 1.22% at December 31, 2024, compared to 1.23% at September 30, 2024.

DepositsAverage total deposits decreased $29.0 million to $8.4 billion during the fourth quarter 2024, and average transaction deposits (defined as total deposits less time deposits) decreased $24.0 million to $7.3 billion. The loan to deposit ratio totaled 94.1% at December 31, 2024, and the mix of transaction deposits to total deposits was 88% at December 31, 2024, consistent with September 30, 2024.

Non-Interest IncomeNon-interest income totaled $11.1 million during the fourth quarter, compared to $18.4 million. Included in the quarter was $6.6 million of non-recurring loss on AFS security sales. Excluding this non-recurring item, non-interest income decreased $0.7 million, primarily driven by a $0.7 million decrease in mortgage banking income due to seasonality and a decrease in service charges and bank card income. Partially offsetting these decreases was a $0.7 million increase in other non-interest income driven by our diversified sources of fee revenue.

Non-Interest ExpenseNon-interest expense totaled $64.5 million during the fourth quarter, compared to $64.2 million in the prior quarter. Included in the fourth quarter was $1.2 million of banking center consolidation-related expense. Excluding this item, non-interest expense decreased $0.9 million driven by a $1.9 million decrease in salaries and benefits primarily due to lower performance-based compensation, and a $0.5 million decrease in professional fees. Partially offsetting these decreases was an increase in data processing and occupancy and equipment, both driven by investments in technology. The fully taxable equivalent efficiency ratio, excluding other intangible assets amortization and non-recurring loss on AFS security sales, improved 62 basis points during the fourth quarter to 57.0%.

Income tax expense decreased $0.2 million to $6.5 million, due to the fourth quarter’s lower pre-tax income. The effective tax rate was 18.8% for the fourth quarter, and the full year’s effective tax rate was 18.2%.

CapitalCapital ratios continue to be strong and in excess of federal bank regulatory agency “well capitalized” thresholds. The tier 1 leverage ratio totaled 10.69%, and the common equity tier 1 capital ratio totaled 13.20% at December 31, 2024. Shareholders’ equity increased $13.1 million to $1.3 billion at December 31, 2024. The fourth quarter’s net income drove $17.0 million of growth in retained earnings after covering the quarter’s dividend, partially offset by a $7.6 million increase in accumulated other comprehensive loss due to changes in the interest rate environment.

Common book value per share increased $0.28 to $34.29 at December 31, 2024. Tangible common book value per share increased $0.37 to $25.28 driven by the quarter’s earnings, partially offset by the quarterly dividend and a $0.19 increase in accumulated other comprehensive loss.

Dividend AnnouncementOn January 22, 2025, the Company’s Board of Directors approved a cash dividend to shareholders. The quarterly cash dividend of $0.29 per share of common stock will be payable on March 14, 2025 to shareholders of record at the close of business on February 28, 2025.

Year-Over-Year Review(All comparisons refer to the full year 2023, except as noted)

Net income totaled $118.8 million, or $3.08 per diluted share, compared to net income of $142.0 million, or $3.72 per diluted share in the prior year. The decrease compared to the prior year was largely driven by lower net interest income, due to an increase in cost of funds outpacing the increase in interest income, and $6.6 million of non-recurring loss on AFS security sales. Fully taxable equivalent pre-provision net revenue totaled $159.1 million, compared to $190.0 million. The return on average tangible assets totaled 1.30%, compared to 1.57%, and the return on average tangible common equity was 13.65%, compared to 18.23%.

Adjusting for $6.6 million of non-recurring loss on AFS security sales included in the fourth quarter, net income totaled $123.9 million or $3.22 per diluted share. Adjusted fully taxable equivalent pre-provision net revenue totaled $165.7 million. The adjusted return on average tangible assets was 1.36%, and the adjusted return on average tangible common equity was 14.20%.

Fully taxable equivalent net interest income totaled $352.5 million, compared to $368.1 million. Average earning assets increased $130.9 million, including average loan growth of $262.4 million, which was partially offset by a decrease in average investment securities of $67.5 million. The fully taxable equivalent net interest margin narrowed 23 basis points to 3.85%, as the increase in earning asset yields was more than offset by an increase in the cost of funds. Average interest bearing liabilities increased $441.2 million due to higher average deposit balances, and the cost of funds totaled 2.27%, compared to 1.58% in the prior year.

Loans outstanding totaled $7.8 billion, increasing $52.4 million or 0.7%. New loan fundings during 2024 totaled $1.5 billion, led by commercial loan fundings of $1.0 billion.

The Company recorded $6.8 million of provision expense for credit losses during 2024, compared to $8.3 million in the prior year. The current year’s provision expense was primarily driven by loan growth and higher reserve requirements. Annualized net charge-offs totaled 0.13% of average total loans during 2024, compared to 0.02% of average total loans during 2023. Non-performing loans totaled 0.46% of total loans at December 31, 2024, compared to 0.37%, and non-performing assets totaled 0.47% of total loans and OREO at December 31, 2024, compared to 0.42%. The allowance for credit losses as a percentage of loans totaled 1.22% at December 31, 2024, compared to 1.27% at December 31, 2023.

Average total deposits increased $374.4 million or 4.7% to $8.3 billion, and average transaction deposits increased $325.4 million or 4.7%. The mix of transaction deposits to total deposits was 88%, consistent with December 31, 2023.

Non-interest income totaled $61.2 million, compared to $63.9 million during 2023. Excluding $6.6 million of non-recurring loss on AFS security sales in 2024, non-interest income increased $3.9 million primarily driven by increases in our diversified sources of fee revenue including increases in SBA loan income, trust income, Cambr income and swap fee income. Partially offsetting these increases was a $2.4 million decrease in mortgage banking income as the sustained higher-interest rate environment during the year has resulted in lower mortgage volume.

Non-interest expense totaled $254.6 million, an increase of $12.6 million or 5.2%, largely due to an ongoing investment in technology including specialized technology associates hired in 2024. Salaries and benefits increased $8.5 million, data processing increased $4.4 million and occupancy and equipment increased $2.4 million. Other intangible assets amortization increased $0.6 million due to our Cambr acquisition in April 2023. These increases were partially offset by a decrease of $3.4 million in professional fees.

Income tax expense totaled $26.4 million, a decrease of $7.1 million from the prior year, driven by lower pre-tax income. The effective tax rate was 18.2%, compared to 19.1% in the prior year.

Conference CallManagement will host a conference call to review the results at 11:00 a.m. Eastern Time on Thursday, January 23, 2025. Interested parties may listen to this call by dialing (888) 394-8218 using the participant passcode of 9370973 and asking for the NBHC Q4 2024 Earnings Call. The earnings release and a link to the replay of the call will be available on the Company’s website at www.nationalbankholdings.com by visiting the investor relations area.

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

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

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

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

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

Contacts:Analysts/Institutional Investors:Emily Gooden, Chief Accounting Officer and Investor Relations Director, (720) 554-6640, ir@nationalbankholdings.comNicole Van Denabeele, Chief Financial Officer, (720) 529-3370, ir@nationalbankholdings.com

Media:Jody Soper, Chief Marketing Officer, (303) 784-5925, Jody.Soper@nbhbank.comNATIONAL BANK HOLDINGS CORPORATIONFINANCIAL SUMMARYConsolidated Statements of Operations (Unaudited)(Dollars in thousands, except share and per share data)

NATIONAL BANK HOLDINGS CORPORATIONConsolidated Statements of Financial Condition (Unaudited)(Dollars in thousands, except share and per share data)

NATIONAL BANK HOLDINGS CORPORATIONLoan Portfolio (Dollars in thousands)

Period End Loan Balances by Type

Loan Fundings(1)

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

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

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

Allowance for Credit Losses Analysis

Past Due and Non-accrual Loans

Asset Quality Data

NATIONAL BANK HOLDINGS CORPORATIONKey Metrics(1)

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

Tangible Common Book Value Ratios

NATIONAL BANK HOLDINGS CORPORATION(Dollars in thousands, except share and per share data)Return on Average Tangible Assets and Return on Average Tangible Equity

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

Efficiency Ratio and Pre-Provision Net Revenue