National Bank Holdings Corporation · NYSE:NBHC

National Bank — Q1 2014 Earnings Presentation

37 slides from National Bank's earnings presentation, May 12, 2014

  1. Slide 1: Q1 2014 Investor Presentation

    1 Q1 2014 Investor Presentation

  2. Slide 2: Forward-Looking Statements

    2 Forward-Looking Statements 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

  3. Slide 3: Company Overview

    Company Overview Ea National Bank Holdings

  4. Slide 4: NBHC 1Q14 Snapshot

    4  Raised $974 million in late 2009  Completed four acquisitions in 12 months ̶ Three failed banks, one 39 banking center purchase  Profitable since inception of banking operations¹  Created meaningful scale and market share in attractive markets of Colorado and Kansas City MSA  Fully integrate

  5. Slide 5: Guide to Common Sense Banking

    GUIDE TO COMMON SENSE BANKING OUR PROMISE BANK WITH COMMON SENSE NBH Bank champions a new era of common sense banking by felled relationst ‘communities as the accountable, nd ins sight akornat eto big box bankong-ae oe WE FOCUS ON WE PUT NEEDS-BASED WE VALUE WE BELIEVE IN WE DELIVER PEOPLE FIRST SOL

  6. Slide 6: Investment Highlights

    6 Investment Highlights  Disciplined focus on building meaningful scale and market share in attractive markets  Successfully rebuilding failed banks with organic growth strategy:  Loan balance inflection point achieved early as a result of strong organic growth  Net interest income has stabilize

  7. Slide 7: Our Objectives

    7 Acquisition Growth Organic Growth Attractive Markets Disciplined Acquisitions Client-Centered, Relationship-Driven Enhanced Product Offerings Scalable Operating Platform & Efficiencies Leading Regional Bank Holding Company Our Objectives Opportunistic Capital Management

  8. Slide 8: Strategic Execution Highlights

    8 Strategic Execution Highlights Expanded Efficiency Initiatives Managed Capital Opportunistically Further Franchise Development  Expanded Product Offerings  2Q13 – Launch of Capital Finance Team  4Q13 – Launch of Specialty Gov’t and Non-Profit Banking Unit  Successful sales production initiativ

  9. Slide 9: NBHC Markets and Family of Brands

    9     NBHC Markets and Family of Brands Banking Centers (97)  50 full-service banking centers  28 commercial bankers  5 NBH Capital Finance bankers  1.3% deposit market share across Colorado  Ranks #6 in market share of Colorado headquartered banks  45 full-service banking centers  15

  10. Slide 10: Key Statistics by MSA

    10 Key Statistics by MSA Source: SNL Financial, U.S. Census, U.S. Bureau of Economic Analysis. Note: “Front Range” statistics include populated weighted values for Denver, Boulder, Colorado Springs, Fort Collins, and Greeley MSAs. Deposit data as of 30-Jun-13. Front Range unemployment based on a wei

  11. Slide 11: Organic Loan Growth Strategy is Accelerating

    11 $158 $518 $1,083 $1,261 $2,116 $1,315 $771 $701 $2,274 $1,833 $1,854 $1,962 4QE11 4QE12 4QE13 1QE14 Originated Purchased $1,189 $711 $350 $321 4QE11 4QE12 4QE13 1QE14 Comm. 31% Agriculture 9% Owner Occupied 8% CRE 14% Resi 35% Consumer 2%  Loan growth inflection point achieved in 3Q13  Investme

  12. Slide 12: Strong Credit Quality of Originated Loans

    12 7% 9% 5% 7% 6% 2% 5% 2% 1% 2% 2% 11% 2% 3% 1% <1% 1% 25% 5% 1% Consumer, 31% Commercial & Industrial1, 60% Non Owner- Occupied CRE, 9% Non Owner-Occupied CRE, 9% Consumer, 31% Commercial & Industrial1, 60% Residential Sr. Lien, 25% Residential Jr. Lien, 5% Consumer, 1% Originated Loans Credit Qua

  13. Slide 13: Credit Quality of Non 310-30 Loans

    13 Attractive $407 Million of 310-30 Loan Pools Strong Credit Quality of Non 310-30 Loans Strong Loss-Share Coverage of Total NPA’s Credit Quality ($ in millions) Net Charge-Offs Allowance for Loan Losses1 Nonperforming Non 310-30 Originated Nonperforming Loans 1Does not include $9.9 million of purc

  14. Slide 14: Growing Low Cost Transaction Accounts

    14 Deposit Composition Cost of Deposits Time Deposit Maturity (1QE14) ($ in millions) Average Transaction Deposits & Repos Average Time Deposits Avg Rate 0.49% 0.52% 0.92% 1.21% 1.34% 1.31% Growing Low Cost Transaction Accounts $2,258 $2,402 $2,453 $2,478 4Q11 4Q12 4Q13 1Q14 $2,932 $1,833 $1,544 $1,

  15. Slide 15: Delivering on Commercial Banking Strategy

    15 Delivering on Commercial Banking Strategy Invested in Commercial Capabilities  Team of 55 experienced commercial bankers  Committed to consistent top-grading of bankers (19 new commercial bankers recruited in 2013)  Established Capital Finance, Government Banking and Non Profit specialty lines

  16. Slide 16: Delivering on Consumer & Small Business Banking Strategy

    16 Delivering on Consumer & Small Business Banking Strategy Optimized Banking Center Distribution  Exited California and retirement center locations  Rolled out teller staffing efficiency model  Consolidated management responsibilities  Built culture of accountability Well Positioned For Growth

  17. Slide 17: Acquisition Track Record

    17 2.2% 3.0% 3.5% Bank Midwest National Branch Deals Midwest Branch Deals Bank Midwest Hillcrest Bank Bank of Choice CBoC Source: SNL Financial. 1 Defined as capital deployed divided by post mark-to-market adjusted fair value of net assets (bargain purchase gain or goodwill) plus capital deployed. 2

  18. Slide 18: Disciplined Acquirer with Significant Future Opportunities

    18 Disciplined Acquirer with Significant Future Opportunities M&A Focus Target Geographies  Positioned to consolidate targets along the I-25, I-70 and I-35 corridors across CO, KS and MO  Excess capital of $300mm¹  Management team experienced with M&A Well Positioned for Growth Potential In Footp

  19. Slide 19: Financial Overview

    Financial Overview Ea National Bank Holdings

  20. Slide 20: First Quarter 2014 Highlights

    20  Grew the strategic loan portfolio by $136.2 million, or 36.7% annualized, driven by $217.0 million in originations, a 98.4% increase over the first quarter of 2013.  Successfully exited $28.7 million, or 33.3% annualized, of the non-strategic loan portfolio.  Added a net $5.6 million to accre

  21. Slide 21: On the Path to 1% ROATA

    21 0.22% 0.19% 0.30% 0.45% 0.52% 0.64% 1Q13 1Q14 Reported Adjustments On the Path to 1% ROATA Adjusted1 ROATA $0.04 $0.03 $0.07 $0.12 $0.11 $0.15 1Q13 1Q14 Reported Adjustments Adjusted1 Diluted EPS Accounting “noise” is burning-off • Significant impact of FDIC IA amortization non-cash charges decli

  22. Slide 22: Low-Risk Balance Sheet

    22 Originated $1,261 Covered $43 Non-Covered $251 Covered $245 Non- Covered $162 Loans 40% Investment Securities 48% Cash 4% Other Assets 7% Non 310-30 Loans $1,555mm 79% 310-30 Loan Pools $407mm 21% Total Assets Marked and Covered Loan Portfolio Low-Risk Balance Sheet  58% of total assets are in c

  23. Slide 23: Strong Covered Asset Performance

    23 $171 $48 $45 $42 $52 $39 $20 $15 $223 $87 $64 $57 YE11 YE12 YE13 1QE14 Projected Improved Client Cash Flows Projected FDIC Loss-Share Billings Covered Assets Covered Assets Strong Covered Asset Performance Forecast Amortization of FDIC Indemnification Asset ($ in millions)  Quarterly valuations

  24. Slide 24: Investment Portfolio Summary

    24 31-Dec-11 31-Dec-12 31-Dec-13 31-Mar-14 Book Value Available-for-Sale $ 1,786 $ 1,681 $ 1,816 $ 1,739 Held-to-Maturity 7 548 622 598 "Locked-in" Gains (HTM) 0 29 20 18 Total Book Value $ 1,793 $ 2,258 $ 2,458 $ 2,355 Available-for-Sale Unrealized Gains / (Losses) 77 37 (31) (18) Fair Market Value

  25. Slide 25: Balance Sheet Positioned to Benefit From Rising Rates

    25 Note: Interest Rate Risk as of 31-March-2014. 1 12-month simulated net interest income impact using management projected balance sheet and an immediate parallel shift in the yield curve. NBHC Balance Sheet Positioned to Benefit From Rising Rate Environment Net Interest Income Change1 (1.11)% 2.32

  26. Slide 26: Net Interest Income Stabilized

    26 Net Interest Margin2 Note: Please refer to the appendix for a reconciliation of non-GAAP financial metrics. ¹ Adjusted non-interest income excludes gain on sale of securities, FDIC indemnification asset amortization, FDIC loss sharing income (expense), gain on previously charged-off acquired loan

  27. Slide 27: Operating Improvement Initiatives

    27 $141 $174 $163 $152 $14 $29 $17 $9 $1 $7 $4 $(3) $156 $210 $184 $158 FY11 FY12 FY13 1Q14 Annualized Operating Problem Loan / OREO Other¹ Expenses  Exited four non-core California banking centers  Consolidated 32 retirement centers into existing traditional banking centers  Bank-wide operationa

  28. Slide 28: Looking Ahead

    Looking Ahead i National Bank Holdings

  29. Slide 29: Organic Earnings Potential

    29 ROATA 1Please refer to the appendix for a reconciliation of non-GAAP financial metrics. 2Represents 1Q14 adjustments to ROATA.  Stable net interest income  FDIC IA negative amortization ending < two years  FDIC Loss Share Ending  Reduction in work- out expenses  Ramp-up of loan production 

  30. Slide 30: Key Long-Term Financial Targets

    30 Fully Levered Targets Assets ~$10bn Efficiency Ratio <60% ROATA 1.00% - 1.25% ROATCE 13% - 16% Dividend Payout Ratio 25% Tier 1 Leverage 8% Key Long-Term Financial Targets

  31. Slide 31: Investment Highlights

    31 Investment Highlights  Disciplined focus on building meaningful scale and market share in attractive markets  Successfully rebuilding failed banks with organic growth strategy:  Loan balance inflection point achieved early as a result of strong organic growth  Net interest income has stabiliz

  32. Slide 32: Appendix

    Appendix i National Bank Holdings

  33. Slide 33: NBHC Management Team

    33  Head of Business Services at Regions Financial, where he also led the transformation of wholesale lines of business  Senior management roles in small business, commercial banking, private banking, corporate marketing and change management, and Management Operating Committee member at Bank of A

  34. Slide 34: Board of Directors

    34 Title Past Experience Name Tim Laney Chairman, President and CEO  Senior EVP and Head of Business Services of Regions Financial  EVP and Management Operating Committee at Bank of America Ralph Clermont Lead Director / Chairman of the Audit and Risk Committee  Managing Partner of the St. Louis

  35. Slide 35: Reconciliation of Non-GAAP Measures

    35 ($ in millions, except per share) Reconciliation of Non-GAAP Measures As of and for the Year Ended As of and for the 3-months Ended 31-Dec-11 31-Dec-12 31-Dec-13 31-Mar-13 30-Jun-13 30-Sep-13 31-Dec-13 31-Mar- 14 Total stockholders' equity $1,089 $1,091 $898 $1,087 $1,044 $1,031 $898 $896 Less: g

  36. Slide 36: Reconciliation of Non-GAAP Measures (cont'd)

    36 ($ in millions, except per share) Reconciliation of Non-GAAP Measures (cont’d) As of and for the Year Ended As of and for the 3-months Ended 31-Dec-11 31-Dec-12 31-Dec-13 31-Mar-13 30-Jun-13 30-Sep-13 31-Dec-13 31-Mar-14 Return on average equity 4.01% (0.05)% 0.67% 0.78% 1.08% 0.36% 0.42% 0.64% A

  37. Slide 37: Reconciliation of Non-GAAP Measures (cont'd)

    37 ($ in millions, except per share) Reconciliation of Non-GAAP Measures (cont’d) As of and for the Year Ended As of and for the 3-months Ended 31-Dec-11 31-Dec-12 31-Dec-13 31-Mar-13 30-Jun-13 30-Sep-13 31-Dec-13 31-Mar-14 Reported non-interest income $89.5 $37.4 $20.2 $7.2 $7.3 $3.3 $2.4 $(0.4) Le

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