National Bank Holdings Corporation · NYSE:NBHC
National Bank — Q2 2020 Earnings Presentation
41 slides from National Bank's earnings presentation, Jul 23, 2020
Slide 1: Q2 – 2020 Investor Presentation
Q2 – 2020 INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 2 This presentation 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,” “pot
Slide 3: About Non-GAAP Financial Measures
ABOUT NON-GAAP FINANCIAL MEASURES Certain of the financial measures and ratios we present, including “average tangible assets,” “return on average tangible assets,” “average tangible common equity,” “return on average tangible common equity,” “tangible common equity to tangible assets,” “adjusted ef
Slide 4: Well-Positioned to Support Our Clients and Navigate Uncertain Markets
WELL-POSITIONED TO SUPPORT OUR CLIENTS AND NAVIGATE UNCERTAIN MARKETS 4 ‒ Fast and comprehensive COVID-19 response to: .. Protect the health and safety of our associates .. Ensure the safety and soundness of the bank .. Act on every opportunity to prudently support our clients and communities ‒ Well
Slide 5: Supporting Associates, Clients & Communities
SUPPORTING ASSOCIATES, CLIENTS & COMMUNITIES ASSOCIATES CLIENTS COMMUNITIES Executing on four-phase plan to safely return to office including daily health screenings Provided premium pay for banking center and operations teams Implemented appointment-only services in lobbies, and maintained drive-th
Slide 6: Q2-2020 Company Highlights
6 Q2-2020 COMPANY HIGHLIGHTS
Slide 7: Second Quarter 2020 Financial Highlights
SECOND QUARTER 2020 FINANCIAL HIGHLIGHTS CAPITAL RATIOS 13.2% Common Equity Tier 1 LIQUIDITY Loan to deposit ratio of 88% PRE-PROVISION NET REVENUE $33.7 million FTE(1) TRANSACTION DEPOSIT GROWTH 57.7% annualized linked quarter ACL / LOANS 1.26% 1.36% excluding PPP loans EXPENSE 61.1% FTE efficiency
Slide 8: Regulatory Capital
REGULATORY CAPITAL 8 – $300 million in excess capital over 7.0% common equity tier 1 risk-based regulatory requirement – Double-leverage ratio just 88.9% – Holding company cash reserves of $83 million sufficient to support 12 quarters of shareholder dividend payouts TIER 1 LEVERAGE 10.5% COMMON EQUI
Slide 9: Liquidity
LIQUIDITY As of 6/30/2020 ($ in millions) On-Balance Sheet Liquidity Cash $78.8 Unencumbered Securities 255.9 Total On-Balance Sheet Liquidity 334.7 Off-Balance Sheet Liquidity FHLB Facility 1,026.0 PPPLF Facility 358.8 Other 190.5 Total Off-Balance Sheet Liquidity 1,575.3 Fed Discount Window 32.9 T
Slide 10: Company Highlights
COMPANY HIGHLIGHTS 10 ATTRACTIVE MARKETS Headquarters Denver, CO Banking Centers 101 Listing NYSE: NBHC BALANCE SHEET 2Q20 Total Assets (mm) $6,385 Total Loans (mm) $4,782 Total Deposits (mm) $5,414 KEY RATIOS YTD20 Common Equity Tier 1 13.2% Tier 1 Leverage 10.5% ROATA(1)(2) 1.14% / 1.19%(3) ROATCE
Slide 11: U.S. Unemployment Rates by State
U.S. UNEMPLOYMENT RATES BY STATE WA 9.8% OR 11.2% CA 14.9% NV 15.0% ID 5.6% MT 7.1% WY 7.6% UT 5.1% AZ 10.0% CO 10.5% NM 8.3% TX 8.6% OK 6.6% ND 6.1% SD 7.2% NE 6.7% KS 7.5% MN 8.6% IA 8.0% MO 7.9% AR 8.0% LA 9.7% FL 10.4% IL 14.6% MI 14.8% OH 10.9% NC 7.6% SC 8.7% TN 9.7% IN 11.2% KY 4.3% PA 13.0%
Slide 12: Financial Performance
FINANCIAL PERFORMANCE
Slide 13: Profitable Steady Growth
PROFITABLE STEADY GROWTH $19.5 $23.1 $53.7 $54.7 $83.4 $112.9 $60.2 YE14 YE15 YE16 YE17 YE18 YE19 YTD20 $9.2 $4.9 $23.1 $14.6 $61.5 $80.4 $20.4 $6.3 YE14 YE15 YE16 YE17 YE18 YE19 YTD20 Net Income Non-Adjusted Adjusted $0.22 $0.14 $0.79 $0.53 $1.95 $2.55 $1.08 YE14 YE15 YE16 YE17 YE18 YE19 YTD20 EPS
Slide 14: Growth Trends
GROWTH TRENDS $4.8 $4.7 $4.6 $4.8 $5.7 $5.9 $6.4 YE14 YE15 YE16 YE17 YE18 YE19 2Q20 Total Assets $2.2 $2.6 $2.9 $3.2 $4.1 $4.4 $4.8 YE14 YE15 YE16 YE17 YE18 YE19 2Q20 Total Loans $724.3 $553.3 $478.9 $482.0 $577.4 $651.4 $662.5 YE14 YE15 YE16 YE17 YE18 YE19 2Q20 ($ in billions) ($ in billions) ($ in
Slide 15: Focus on Efficiency
FOCUS ON EFFICIENCY – In July 2020, announced the consolidation of 12 banking center locations, which will result in annual expense savings of $3.5 million. – QTD efficiency ratio of 61.1%, or 59.2% adjusted for banking center consolidated-related expenses – Including the 12 previously-announced ban
Slide 16: Credit
CREDIT ational Bank Holdings
Slide 17: Uniquely Diversified $4.8 Billion Loan Portfolio
UNIQUELY DIVERSIFIED $4.8 BILLION LOAN PORTFOLIO 17 COMMERCIAL 64% of portfolio RESIDENTIAL REAL ESTATE 15% of portfolio CRE NON-OWNER OCCUPIED 13% of portfolio ‒ Granular and well-diversified loan portfolio ‒ Self-imposed concentration limits; majority of industry sectors limited to 5% or less of t
Slide 18: COVID-19 High Impact Industries
COVID-19 HIGH IMPACT INDUSTRIES AS OF 6/30/20 RESTAURANTS OIL & GAS RETAILERS LOANS OUTSTANDING $213.1 MILLION $121.5 MILLION $34.1 MILLION OF TOTAL LOANS 4.5% OF TOTAL LOANS 2.5% OF TOTAL LOANS 1.0% CLIENTS 99 CLIENTS 170 QUICK SERVICE 75% ESSENTIAL BUSINESSES 53% AVERAGE SR DEBT TO CAP 32% MIDSTRE
Slide 19: Loan Modifications
LOANS OUTSTANDING LOANS MODIFIED 3 MONTH INTEREST ONLY 3 MONTH FULL PMT DEFERRAL >3 MONTH PMT MOD COMMERCIAL 3,042.0 63.7% 265.6 8.7% 195.0 66.8 3.8 CRE NON-OWNER OCCUPIED 641.8 13.4% 199.2 31.0% 45.2 149.5 4.5 RESIDENTIAL REAL ESTATE 729.0 15.2% 27.5 3.8% 15.1 12.4 - CONSUMER 20.9 0.4% 0.2 1.0% 0.2
Slide 20: Strong Credit Quality History
0.38% 0.16% YE17 YE18 YE19 YTD20 Originated loan charge-offs Acquired loan charge-offs 0.53% 0.25% 0.26% 0.22% 0.46% 0.60% 0.40% 0.38% YE17 YE18 YE19 YTD20* Non-performing loans Acquired non-performing loans and OREO Non-performing Asset Composition 20 ($ in millions) Non-performing Loans Net Charge
Slide 21: Drivers of Allowance for Credit Losses
DRIVERS OF ALLOWANCE FOR CREDIT LOSSES 2020 Primary Changes All dollars in millions ALLL 12/31/2019 ACL 06/30/2020 Allowance required for acquired loan portfolio CECL Day 1 model impact New loans Q1 macro- economic variables $39.1 $60.5** $5.2 $3.5 CECL Day 1 Adjustment Q1-20 Changes ALLL/Total Loan
Slide 22: Balance Sheet
22 BALANCE SHEET
Slide 23: Loan Composition: Solid Loan Growth
Loan Composition ($4.8 Billion) $0.9 $1.0 $1.0 $1.2 $1.2 $1.3 FY14 FY15 FY16 FY17 FY18 FY19 2Q20 SOLID LOAN GROWTH 23 – Portfolio built on a relationship banking strategy, with emphasis on depository and treasury management relationships – Self-imposed concentration limits; majority of industry sect
Slide 24: High Quality, Highly Liquid Investment Portfolio
$0.8 Billion Investment Portfolio(1) HIGH QUALITY, HIGHLY LIQUID INVESTMENT PORTFOLIO 24 U.S. Agency/Sponsored Agency MBS U.S. Agency/Sponsored Agency CMO Other – 99.6% of portfolio is U.S. agency/sponsored agency backed – 2Q20 yield 2.03% – 26% of portfolio in Held-To-Maturity – Zero allowance for
Slide 25: Deposit Composition: Low Cost Transaction Deposits
Deposit Composition LOW COST TRANSACTION DEPOSITS 25 ($ in billions) $12.0 Growing Low Cost Transaction Accounts $12.0 $12.0 Strong Transaction Deposit Growth Low Cost Deposits $2.9 $3.5 $3.6 $3.9 $1.1 $1.1 $1.1 $1.1 YE17 YE18 YE19 YTD20 Average Transaction Deposits Average Time Deposits 35% 39% 41%
Slide 26: Management Team
26 MANAGEMENT TEAM
Slide 27: Experienced Management Team
EXPERIENCED MANAGEMENT TEAM Whitney Bartelli EVP, Chief Marketing Officer and President, Bank Midwest • 25+ years of financial services experience • Core expertise in branding, marketing and communications; SVP, Retail Brand Strategy at Bank of America; Director, Corporate Partnerships and Brand Man
Slide 28: Management & Directors Beneficial Ownership
MANAGEMENT & DIRECTORS 28 NBHC MANAGEMENT & DIRECTORS BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS(2) G. Timothy Laney 785,886 2.54% Aldis Birkans 53,271 0.17% Richard U. Newfield, Jr. 168,967 0.55% Angela Petrucci 7,073 0.02% Ralph W. Clermont 81,159 0.26% Robert E. Dean 35,698 0.12% Fred J. Joseph 16,
Slide 29: Corporate Governance Overview
29 CORPORATE GOVERNANCE OVERVIEW
Slide 30: Best Practices in Governance and Compensation
BEST PRACTICES IN GOVERNANCE AND COMPENSATION Corporate Governance Lead Independent Director with robust role and responsibilities Majority independent Board No short-selling, hedging, or pledging of NBHC shares (applies to NBHC Board and all NBH Bank associates) Annual election of Board mem
Slide 31: Overview of NBHC's Board of Directors
OVERVIEW OF NBHC’S BOARD OF DIRECTORS 31 N Governance & Nominating C Compensation Committee Chair * Ralph W. Clermont • Lead Independent Director • Former Managing Partner of KPMG, St. Louis office • Over 39 years of banking and audit experience A Audit & Risk I Independent Robust Lead Director Resp
Slide 32: NBHC Board Represents a Diverse Range of Qualifications and Skills
4 3 7 6 4 7 3 2 CEO or President of Private or Public Company Other Public Board Experience Financial or Audit Background Banking Industry Marketing or Sales Background Community or Governmental Service Legal or Regulatory Experience IT, Cyber, or Telecom Background NBHC BOARD REPRESENTS A DIVERSE R
Slide 33: Board's Role in Oversight of Risk
The Board is actively engaged in NBHC’s risk management. 33 BOARD’S ROLE IN OVERSIGHT OF RISK Robust Risk Oversight at Board Level Risk Board Oversight Actions Cybersecurity Evolving nature and complexity of the threats from organized cybercriminals and hackers NBHC Audit and Risk Committee is respo
Slide 34: Overview of NBH Bank Board of Directors
OVERVIEW OF NBH BANK BOARD OF DIRECTORS 34 NBH Bank Board Composition Whitney Bartelli Chief Marketing Officer Richard Newfield Chief Risk Management Officer Angela Petrucci Chief Administrative Officer Christopher Randall EVP, Head of Commercial & Specialty Banking Aldis Birkans CFO Patrick Sobers
Slide 35: Executive Compensation Program
NBH’s executive compensation practices align management incentives with long-term shareholder interests 35 EXECUTIVE COMPENSATION PROGRAM Components of Executive Compensation (2019) 2019 Compensation Breakdown Additional Compensation Features Component Metrics Base Salary (Cash) Reviewed annually
Slide 36: Community Building
Community Building Our Corporate Social Responsibility strategy guides our focus to contribute to education, workforce development and affordable housing in our communities. We offer thought leadership, volunteerism and financial support for each of these causes across the numerous communities we
Slide 37: Appendix
APPENDIX National Bank Holdings
Slide 38: 30-Jun-20 31-Dec-18 31-Dec-17 Net income 33.5 $ 61.5 $ 14.6 $ Add: impact of
30-Jun-20 31-Dec-18 31-Dec-17 Net income 33.5 $ 61.5 $ 14.6 $ Add: impact of core deposit intangible amortization expense, after tax 0.5 1.6 3.3 Net income adjusted for impact of core deposit intangible amortization expense, after tax 34.0 $ 63.1 $ 17.8 $ Average assets 6,090.7 $ 5,607.5 $ 4,705.2 $
Slide 39: 30-Jun-20 31-Dec-18 31-Dec-17 Adjustments to net income: Net income 33.5 $ 61.5 $ 14.6
30-Jun-20 31-Dec-18 31-Dec-17 Adjustments to net income: Net income 33.5 $ 61.5 $ 14.6 $ Adjustments (1) 1.3 6.3 20.4 Adjusted net income (non-GAAP) 34.8 $ 67.8 $ 35.0 $ Adjustments to earnings per share: Earnings per share - diluted 1.08 $ 1.95 $ 0.53 $ Adjustments (1) 0.04 0.21 0.73 Adjusted earni
Slide 40: 30-Jun-20 30-Jun-20 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14 Net interest income 47.3 $ 97.7
30-Jun-20 30-Jun-20 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14 Net interest income 47.3 $ 97.7 $ 205.8 $ 197.4 $ 146.3 $ 145.6 $ 156.9 $ 170.2 $ Add: impact of taxable equiv alent adjustment 1.3 2.5 5.1 4.5 5.9 4.1 2.7 0.9 Net interest income, FTE (non-GAAP) 48.6 $ 100.2 $ 210.9 $ 2
Slide 41: As of and for the six months ended 30-Jun-20 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15
As of and for the six months ended 30-Jun-20 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14 Total shareholders' equity 777.0 $ 766.9 $ 695.0 $ 532.4 $ 536.2 $ 617.5 $ 794.6 $ Less: goodwill and core deposit intangibles, net (123.2) (123.8) (124.9) (61.2) (66.6) (72.1) (76.5) Add: deferr
National Bank Holdings — Q2 2020 Earnings Presentation on 6ix