National Bank Holdings Corporation · NYSE:NBHC
National Bank — Q1 2020 Earnings Presentation
32 slides from National Bank's earnings presentation, May 5, 2020
Slide 1: Q1 – 2020 Investor Presentation
Q1 – 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,” and “fully t
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: COVID-19 Response: Supporting Associates, Clients & Communities
COVID-19 RESPONSE: SUPPORTING ASSOCIATES, CLIENTS & COMMUNITIES ASSOCIATES CLIENTS COMMUNITIES Implemented company-wide remote working arrangements Issued premium pay for banking center and operations teams Implemented appointment-only services in lobbies, and maintained drive-thru services Providin
Slide 6: Q1-2020 Company Highlights
6 Q1-2020 COMPANY HIGHLIGHTS
Slide 7: First Quarter 2020 Financial Highlights
FIRST QUARTER 2020 FINANCIAL HIGHLIGHTS CAPITAL RATIOS 11.1% Tier 1 Leverage 12.9% Common Equity Tier 1 LIQUIDITY Loan to deposit ratio of 95% EARNINGS PER SHARE $0.50 PRE-PROVISION NET REVENUE $26.5 million NET INTEREST MARGIN 3.87% LOAN GROWTH 8.2% annualized on linked quarter basis ACL / LOANS 1.
Slide 8: Regulatory Capital
REGULATORY CAPITAL 8 – $270 million in excess capital over 7.0% common equity tier 1 risk-based capital regulatory requirement with the capital conservation buffer – Double-leverage ratio just 88.8% – Holding company cash reserves of $83 million sufficient to support 12 quarters of shareholder divid
Slide 9: Company Highlights
COMPANY HIGHLIGHTS 9 ATTRACTIVE MARKETS Headquarters Denver, CO Banking Centers 101 Listing NYSE: NBHC BALANCE SHEET 1Q20 Total Assets (mm) $6,028 Total Loans (mm) $4,506 Total Deposits (mm) $4,742 KEY RATIOS 1Q20 Common Equity Tier 1 12.9% Tier 1 Leverage 11.1% ROATA(1)(2) 1.12% ROATCE(1)(2) 9.79%
Slide 10: Credit
CREDIT ational Bank Holdings
Slide 11: Uniquely Diversified $4.5 Billion Loan Portfolio
UNIQUELY DIVERSIFIED $4.5 BILLION LOAN PORTFOLIO 11 COMMERCIAL 68% of portfolio RESIDENTIAL REAL ESTATE 17% of portfolio CRE NON-OWNER OCCUPIED 14% of portfolio CONSUMER 1% of portfolio ‒ Granular and well-diversified loan portfolio ‒ Self imposed concentration limits; majority of industry sectors l
Slide 12: COVID-19 High Impact Industries
COVID-19 HIGH IMPACT INDUSTRIES RESTAURANTS OIL & GAS RETAILERS LOAN OUTSTANDINGS $223.1 MILLION $120.8 MILLION $30.6 MILLION OF TOTAL LOANS 5.0% OF TOTAL LOANS 2.7% OF TOTAL LOANS 0.7% CLIENTS 93 CLIENTS 160 QUICK SERVICE 77% ESSENTIAL BUSINESSES 52% AVERAGE SR DEBT TO CAP 34% MIDSTREAM & NAT GAS 9
Slide 13: Strong Credit Quality History
0.38% 0.16% YE17 YE18 YE19 1Q20 Originated loan charge-offs Acquired loan charge-offs 0.53% 0.25% 0.26% 0.23% 0.46% 0.60% 0.40% 0.40% YE17 YE18 YE19 1Q20 Non-performing loans Acquired non-performing loans and OREO Non-performing Asset Composition 13 ($ in millions) Non-performing Loans Net Charge-Of
Slide 14: Drivers of Allowance for Credit Losses
DRIVERS OF ALLOWANCE FOR CREDIT LOSSES First Quarter 2020 Primary Changes All dollars in millions ALLL 12/31/2019 ACL 03/31/2020 Allowance required for acquired loan portfolio CECL Day 1 model impact New loans CECL Day 2 changes to macro- economic variables $39.1 $51.0* $5.2 $3.5 CECL Day 1 Adjustme
Slide 15: Balance Sheet
15 BALANCE SHEET
Slide 16: Loan Composition ($4.5 Billion): Solid Loan Growth
Loan Composition ($4.5 Billion) $0.9 $1.0 $1.0 $1.2 $1.2 $1.2 FY14 FY15 FY16 FY17 FY18 FY19 1Q20 SOLID LOAN GROWTH 16 – Portfolio built on a relationship banking strategy, with emphasis on depository and treasury management relationships – Self-imposed concentration limits; majority of industry sect
Slide 17: High Quality, Highly Liquid Investment Portfolio
$0.8 Billion Investment Portfolio(1) HIGH QUALITY, HIGHLY LIQUID INVESTMENT PORTFOLIO 17 U.S. Agency MBS U.S. Agency CMO Other – 99.9% of portfolio is U.S. agency backed – Q120 yield 2.39% – 24% of portfolio in Held-To-Maturity – Zero allowance for credit losses needed on investment securities portf
Slide 18: Deposit Composition: Low Cost Transaction Deposits
Deposit Composition LOW COST TRANSACTION DEPOSITS 18 ($ 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 $3.6 $1.1 $1.1 $1.1 $1.1 4Q17 4Q18 4Q19 1Q20 Average Transaction Deposits Average Time Deposits 35% 39% 41%
Slide 19: Management Team
19 MANAGEMENT TEAM
Slide 20: 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 21: Management & Directors Beneficial Ownership
MANAGEMENT & DIRECTORS 21 NBHC MANAGEMENT & DIRECTORS BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS(2) G. Timothy Laney 776,798 2.52% Aldis Birkans 51,008 0.17% Richard U. Newfield, Jr. 215,976 0.70% Zsolt K. Besskó 71,579 0.23% Ralph W. Clermont 76,149 0.25% Robert E. Dean 31,290 0.10% Fred J. Joseph 12
Slide 22: Corporate Governance Overview
22 CORPORATE GOVERNANCE OVERVIEW
Slide 23: 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 24: Overview of NBHC's Board of Directors
OVERVIEW OF NBHC’S BOARD OF DIRECTORS 24 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 25: 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 26: Board's Role in Oversight of Risk
The Board is actively engaged in NBHC’s risk management. 26 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 27: Overview of NBH Bank Board of Directors
OVERVIEW OF NBH BANK BOARD OF DIRECTORS 27 NBH Bank Board Composition Whitney Bartelli Chief Marketing Officer Richard Newfield Chief Risk Management Officer Zsolt Besskó Chief Administrative Officer Christopher Randall EVP, Head of Commercial & Specialty Banking Aldis Birkans CFO Patrick Sobers EVP
Slide 28: Executive Compensation Program
NBH’s executive compensation practices align management incentives with long-term shareholder interests 28 EXECUTIVE COMPENSATION PROGRAM Components of Executive Compensation (2019) 2019 Compensation Breakdown Additional Compensation Features Component Metrics Base Salary (Cash) Reviewed annually
Slide 29: 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 30: Appendix
APPENDIX National Bank Holdings
Slide 31: 31-Mar-20 Net income 15.8 $ Add: impact of core deposit intangible amortization expense, after
31-Mar-20 Net income 15.8 $ Add: impact of core deposit intangible amortization expense, after tax 0.2 Net income adjusted for impact of core deposit intangible amortization expense, after tax 16.0 $ Average assets 5,862.9 $ Less: average goodwill and core deposit intangible, net of deferred tax ass
Slide 32: 31-Mar-20 Net interest income 50.3 $ Add: impact of taxable equiv alent adjustment 1.3
31-Mar-20 Net interest income 50.3 $ Add: impact of taxable equiv alent adjustment 1.3 Net interest income, FTE (non-GAAP) 51.6 $ Non-interest income 23.5 $ Non-interest expense 48.7 $ Less: core deposit intangible asset amortization (0.3) Non-interest expense, adjusted for core deposit intangible a
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