National Bank Holdings Corporation · NYSE:NBHC
National Bank — Q4 2020 Earnings Presentation
42 slides from National Bank's earnings presentation, Jan 22, 2021
Slide 1: Q4 2020 Investor Presentation
Q4 – 2020 INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking statements” within the meaning of the deferred tax assets or the need for a valuation allowance; continued consolidation Private Securities Litigation Reform Act of 1995. Forward-looking statements in the financial services indus
Slide 3: About Non-GAAP Financial Measures
ABOUT NON-GAAP FINANCIAL MEASURES Certain of the financial measures and ratios we present, including “average should not be considered a substitute for financial information presented in tangible assets,” “return on average tangible assets,” “average tangible common accordance with GAAP and you shou
Slide 4: Well-Positioned to Support Our Clients and Navigate Uncertain Markets
WELL-POSITIONED TO SUPPORT OUR CLIENTS AND NAVIGATE UNCERTAIN MARKETS ‒ 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-posi
Slide 5: Supporting Associates, Clients & Communities
SUPPORTING ASSOCIATES, CLIENTS & COMMUNITIES ASSOCIATES CLIENTS COMMUNITIES Provided premium pay for Funded $359 million in SBA Donated to nonprofits making banking center and operations Paycheck Protection Program masks and hand sanitizer for teams loans for 2,164 clients, saving an healthcare work
Slide 6: Recent Recognition
RECENT RECOGNITION U.S.News: Best Places to Live Rankings #1 Fortress Balance Sheet Largest Publicly Traded Bank HQ’ed in Colorado Robust #1 Through #5 Profitability Market Presence in All Top 5 Best Places to Live(1) #3 Positioned in Attractive Markets Colorado Market Share (Among Local Banks
Slide 7: Q4-2020 Company Highlights
Q4-2020 COMPANY HIGHLIGHTS 7
Slide 8: 2020 Financial Highlights
2020 FINANCIAL HIGHLIGHTS CAPITAL RATIOS ‒ Strong capital levels with $365 million in excess capital over 14.7% Common Equity Tier 1 Ratio 7.0% common equity tier 1 risk-based regulatory requirement LIQUIDITY ‒ Ample liquidity with access to $2.2 billion in readily available funds Loan to deposit ra
Slide 9: Regulatory Capital
REGULATORY CAPITAL Capital Ratios – 4Q20 TIER 1 LEVERAGE 10.7% COMMON EQUITY TIER 1 RISK-BASED 14.7% TIER 1 RISK-BASED 14.7% TOTAL RISK-BASED 15.8% TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS(1) 10.8% (1)Represents a non-GAAP financial measure. See Appendix for a reconciliation of these measures. – $3
Slide 10: Liquidity
LIQUIDITY As of 12/31/2020 ($ in millions) On-Balance Sheet Liquidity Cash $527.1 Unencumbered Securities 513.9 Total On-Balance Sheet Liquidity 1,041.0 Off-Balance Sheet Liquidity FHLB Facility 932.5 Other 210.6 Total Off-Balance Sheet Liquidity 1,143.1 Total Readily Available Funds $2,184.1 10
Slide 11: Company Highlights Attractive Markets
COMPANY HIGHLIGHTS ATTRACTIVE MARKETS Headquarters Denver, CO Banking Centers(4) 89 Listing NYSE: NBHC BALANCE SHEET 4Q20 Total Assets (mm) $6,660 Total Loans (mm) $4,354 Total Deposits (mm) $5,676 KEY RATIOS 2020 Common Equity Tier 1 14.7% Tier 1 Leverage 10.7% ROATA(1) 1.44% / 1.47%(2) 45 banking
Slide 12: Shareholder Returns
SHAREHOLDER RETURNS Total Shareholder Returns Since 2017 (Through 12/31/2020) 40% 30% 20% 10% 7.5% 0% (6.7%) (10%) (20%) (30%) (40%) NBHC KRX Regional Bank Index (1) (50%) 12/31/17 03/31/18 06/30/18 09/30/18 12/31/18 03/31/19 06/30/19 09/30/19 12/31/19 03/31/20 06/30/20 09/30/20 12/31/20 Historical
Slide 13: Financial Performance
FINANCIAL PERFORMANCE Bm National Bank Holdings
Slide 14: Profitable Steady Growth
PROFITABLE STEADY GROWTH Net Income $90.4 Pre-Provision Net Revenue FTE(1) EPS (Fully Diluted) $1.8 ($ in millions) ($ in millions) $132.1 $81.1 $0.7 Non-Adjusted $112.9 Non-Adjusted $2.91 Adjusted $67.8 Adjusted $0.06 $2.57 $6.3 $0.02 $83.4 $2.16 $0.21 $88.6 $80.4 $2.55 $35.0 $61.5 $53.7 $54.7 $1.2
Slide 15: Growth Trends
GROWTH TRENDS – Steadily growing our total assets and loans throughout the years Total Assets Total Loans Tangible Common Equity(2) ($ in billions) ($ in billions) ($ in millions) $6.7 $4.4 $4.4 $724.3 $707.3 $5.9 $5.7 $4.1 $651.4 $4.8 $4.8 $577.4 $4.7 $553.3 $4.6 $3.2 $2.9 $478.9 $482.0 $2.6 $2.2 (
Slide 16: Focus on Efficiency
FOCUS ON EFFICIENCY – YTD efficiency ratio FTE of 60.6%, or 59.9% adjusted for $2.3 million of banking center consolidated-related expenses – Including the seven banking center consolidations announced in January 2021, we will have consolidated or sold 47 banking centers, or 46%, since 4Q11 Banking
Slide 17: Credit
CREDIT Bm National Bank Holdings
Slide 18: Uniquely Diversified $4.4 Billion Loan Portfolio
UNIQUELY DIVERSIFIED $4.4 BILLION LOAN PORTFOLIO ‒ Granular and well-diversified loan portfolio ‒ Self-imposed concentration limits; majority of industry sectors COMMERCIAL, EXCLUDING PPP limited to 5% or less of total loan commitments 66% of portfolio ‒ Industries requiring in-depth knowledge are m
Slide 19: COVID-19 High Impact Industries as of 12/31/20
COVID-19 HIGH IMPACT INDUSTRIES AS OF 12/31/20 COMMERCIAL $209.9 INDUSTRIES AND MILLION 4.8% 95 80% LOAN TYPES RESTAURANTS LOANS OF TOTAL CLIENTS QUICK WITH NO OUTSTANDING LOANS SERVICE DIRECT EXPOSURE $126.9 MILLION 2.9% 157 58% RETAILERS Aviation LOANS OF TOTAL CLIENTS ESSENTIAL OUTSTANDING LOANS
Slide 20: COVID Modifications as of 12/31/20
COVID MODIFICATIONS AS OF 12/31/20 ‒ Modification requests handled individually on a relationship basis; weekly cash flow forecast monitoring implemented for business clients; and as appropriate, cash equity injections required ‒ Recognizing that certain clients could face a longer revenue recovery
Slide 21: Strong Credit Quality History
STRONG CREDIT QUALITY HISTORY – Ended 2020 with only three basis points of past dues of 30 days or greater, the lowest level in our company’s history – Allowance for loan losses coverage equal to 293% of non-performing loans – Acquisition fair value marks on acquired loans total $11.0 million, 4.5%
Slide 22: Drivers of Allowance for Credit Losses
DRIVERS OF ALLOWANCE FOR CREDIT LOSSES 2020 Primary Changes ACL/Total Loans 1.37% / 1.43%* $14.9 Q1 – Q4 ALLL/Total Loans $2.3 macro-economic 0.88% $3.5 CECL Day 1 variables model impact $59.8** Allowance required for acquired loan portfolio $39.1 ALLL CECL Day 1 Q1-Q4 2020 ACL 12/31/2019 Adjustment
Slide 23: Balance Sheet
BALANCE SHEET Bm National Bank Holdings
Slide 24: Solid Loan Growth
SOLID LOAN GROWTH Total Loan Originations(1) Total Loans(1) Loan Composition ($ in billions) ($ in billions) ($4.4 Billion) $1.2 $1.2 $1.2 $4.4 $4.4 $4.1 $1.0 $1.0 $3.2 $0.9 $0.9 Owner $2.9 Occupied $2.6 CRE 17% $2.2 CRE C&I 14% 49% Resi Mortgage 15% PPP FY14 FY15 FY16 FY17 FY18 FY19 FY20 4Q14 4Q15
Slide 25: High Quality, Highly Liquid Investment Portfolio
HIGH QUALITY, HIGHLY LIQUID INVESTMENT PORTFOLIO $1.0 Billion Investment Portfolio(1) 0.3% U.S. Agency/Sponsored Agency MBS 48.6% U.S. Agency/Sponsored Agency CMO 51.1% Other (1) Excludes FHLB/FRB stock. – 99.7% of portfolio is U.S. agency/sponsored agency backed – 4Q20 yield of 1.58% – 36% of portf
Slide 26: Low Cost Transaction Deposits
LOW COST TRANSACTION DEPOSITS ($ in billions) Growing Low Cost Transaction Accounts Deposit Composition Average Transaction Deposits Average Time Deposits Demand & NOW Savings & MM CDs < $250k CDs >= $250k Total $4.2 $4.0 $4.5 $4.7 $5.7 $3.5 $3.6 100% 4% 3% 3% 3% 19% 14% 24% 21% $2.9 36% 37% 37% 37%
Slide 27: Management Team
MANAGEMENT TEAM Bm National Bank Holdings
Slide 28: Experienced Management Team
EXPERIENCED MANAGEMENT TEAM Tim Laney Aldis Birkans Chairman, President & CEO Chief Financial Officer (39 years in banking) (22 years in financial industry) • Head of Business Services at Regions Financial, where he also • Senior Vice President, Treasurer at NBHC led the transformation of wholesale
Slide 29: Management & Directors Beneficial Ownership
MANAGEMENT & DIRECTORS Beneficial Ownership (as of 12/31/20) BENEFICIAL NBHC MANAGEMENT & DIRECTORS PERCENT OF CLASS(2) OWNERSHIP(1) G. Timothy Laney 786,703 2.54% Aldis Birkans 54,261 0.18% Richard U. Newfield, Jr. 169,421 0.55% Angela Petrucci 8,771 0.03% Ralph W. Clermont 80,097 0.26% Robert E. D
Slide 30: Corporate Governance Overview
CORPORATE GOVERNANCE OVERVIEW 30
Slide 31: Best Practices in Governance and Compensation
BEST PRACTICES IN GOVERNANCE AND COMPENSATION NBHC’s corporate governance policies and executive compensation practices support our business and align with best practices Corporate Governance Executive Compensation Lead Independent Director with robust role and Provide the majority of compensati
Slide 32: Overview of NBHC's Board of Directors
OVERVIEW OF NBHC’S BOARD OF DIRECTORS G. Timothy Laney • President, CEO and Chairman Appointed within last five years • Former Senior Executive Vice President and Head of Business Services at Regions Financial • 24-year tenure at Bank of America, including as a member of Bank of America’s Management
Slide 33: NBHC Board Represents a Diverse Range of Qualifications and Skills
NBHC BOARD REPRESENTS A DIVERSE RANGE OF QUALIFICATIONS AND SKILLS Experience or Number of Directors Expertise CEO or President of Private or Public Company 4 Experienced leaders capable of overseeing Other Public Board Experience 3 execution and challenging management Financial or Audit Background
Slide 34: Board's Role in Oversight of Risk
BOARD’S ROLE IN OVERSIGHT OF RISK The Board is actively engaged in NBHC’s risk management. Robust Risk Oversight at Board Level Risk Board Oversight Actions Cybersecurity NBHC Audit and Risk Committee is responsible Employs detection and response mechanisms Evolving nature and complexity of the thre
Slide 35: Overview of NBH Bank Board of Directors
OVERVIEW OF NBH BANK BOARD OF DIRECTORS In addition to the NBHC Board, there is an added layer of oversight through the Board of Directors of NBH Bank, NBHC’s wholly-owned subsidiary NBH Bank Board Composition Aldis Birkans Christopher Randall Chief Financial Officer EVP, Head of Commercial & Specia
Slide 36: Executive Compensation Program
EXECUTIVE COMPENSATION PROGRAM NBH’s executive compensation practices align management incentives with long-term shareholder interests Components of Executive Compensation (2020) Compensation Metrics Tied to Long-Term Strategy Component Metrics Link to Strategy Base Salary • Reviewed annually • Amon
Slide 37: Corporate Social Responsibility at NBH
CORPORATE SOCIAL RESPONSIBILITY AT NBH NBH has a long-standing commitment to corporate social responsibility in all of its business activities • Our Corporate Social Responsibility strategy guides our focus to contribute to education, workforce development and affordable housing in our communities.
Slide 38: Appendix
APPENDIX im National Bank Holdings
Slide 39: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES ($ in millions, except per share) As of and for the years ended Return on Average Tangible Assets and Return on Average Tangible Equity 31-Dec-20 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14 Net income $ 88.6 $ 80.4 $ 61.5 $ 14.6 $ 23.1 $ 4.9 $ 9.2
Slide 40: Reconciliation of Non-GAAP Measures (cont'd)
RECONCILIATION OF NON-GAAP MEASURES (cont’d) ($ in millions, except per share) As of and for the years ended Adjusted Financial Results 31-Dec-20 31-Dec-19 31-Dec-18 31-Dec-17 Adjustments to net income: Net income $ 88.6 $ 80.4 $ 61.5 $ 14.6 Adjustments (1)(2) 1.8 0.7 6.3 20.4 Adjusted net income (n
Slide 41: Reconciliation of Non-GAAP Measures (cont'd)
RECONCILIATION OF NON-GAAP MEASURES (cont’d) ($ in millions, except per share) As of and for the years ended Efficiency Ratio 31-Dec-20 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14 Net interest income $ 192.9 $ 205.8 $ 197.4 $ 146.3 $ 145.6 $ 156.9 $ 170.2 Add: impact of taxable equiv
Slide 42: Reconciliation of Non-GAAP Measures (cont'd)
RECONCILIATION OF NON-GAAP MEASURES (cont’d) ($ in millions, except per share) As of and for the years ended Tangible Common Book Value Ratios 31-Dec-20 31-Dec-19 31-Dec-19 31-Dec-18 31-Dec-16 31-Dec-15 31-Dec-14 Total shareholders' equity $ 820.7 $ 766.9 $ 695.0 $ 532.4 $ 536.2 $ 617.5 $ 794.6 Less
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