National Bank Holdings Corporation · NYSE:NBHC
National Bank — Q3 2020 Earnings Presentation
41 slides from National Bank's earnings presentation, Oct 21, 2020
Slide 1: Q3 2020 Investor Presentation
Q3 – 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: Q3-2020 Company Highlights
Q3-2020 COMPANY HIGHLIGHTS 7
Slide 8: Third Quarter 2020 Financial Highlights
THIRD QUARTER 2020 FINANCIAL HIGHLIGHTS CAPITAL RATIOS ‒ Strong capital levels with $340 million in excess capital over 14.3% Common Equity Tier 1 7.0% common equity tier 1 risk-based regulatory requirement LIQUIDITY ‒ Ample liquidity with access to $2.3 billion in readily available funds Loan to de
Slide 9: Regulatory Capital
REGULATORY CAPITAL Capital Ratios – 3Q20 TIER 1 LEVERAGE 10.6% COMMON EQUITY TIER 1 RISK-BASED 14.3% TIER 1 RISK-BASED 14.3% TOTAL RISK-BASED 15.4% TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS(1) 10.6% (1)Represents a non-GAAP financial measure. See Appendix for a reconciliation of these measures. – $3
Slide 10: Liquidity
LIQUIDITY As of 9/30/2020 ($ in millions) On-Balance Sheet Liquidity Cash $374.0 Unencumbered Securities 345.4 Total On-Balance Sheet Liquidity 719.4 Off-Balance Sheet Liquidity FHLB Facility 998.2 PPPLF Facility 356.9 Other 248.4 Total Off-Balance Sheet Liquidity 1,603.5 Fed Discount Window 27.8 To
Slide 11: Company Highlights, Attractive Markets
COMPANY HIGHLIGHTS ATTRACTIVE MARKETS Headquarters Denver, CO Banking Centers(5) 90 Listing NYSE: NBHC BALANCE SHEET 3Q20 Total Assets (mm) $6,601 Total Loans (mm) $4,556 Total Deposits (mm) $5,616 KEY RATIOS YTD20 Common Equity Tier 1 14.3% Tier 1 Leverage 10.6% ROATA(1)(2) 1.36% / 1.39%(3) 45 bank
Slide 12: Financial Performance
FINANCIAL PERFORMANCE Bm National Bank Holdings
Slide 13: Profitable Steady Growth
PROFITABLE STEADY GROWTH Net Income Pre-Provision Net Revenue FTE(2) EPS (Fully Diluted) ($ in millions) ($ in millions) $112.9 $2.57 $81.1 $0.02 $0.7 Non-Adjusted $97.4 Non-Adjusted $2.16 Adjusted $67.8 Adjusted $2.03 $63.1 $83.4 $0.21 $0.06 $6.3 $1.7 $2.55 $53.7 $54.7 $1.26 $61.5 $80.4 $1.95 $35.0
Slide 14: Growth Trends
GROWTH TRENDS – Steadily growing our total assets and loans throughout the years Total Assets Total Loans Tangible Common Equity(2) ($ in billions) ($ in billions) ($ in millions) $6.6 $4.6 $4.4 $724.3 $5.9 $685.4 $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 15: Focus on Efficiency
FOCUS ON EFFICIENCY – QTD efficiency ratio FTE of 59.5%, or 59.0% adjusted for $0.4 million of banking center consolidated-related expenses – Including the 12 previously-announced banking center consolidations, we will have consolidated or sold 40 banking centers, or 39%, since 4Q11 Banking Center R
Slide 16: Credit
CREDIT Bm National Bank Holdings
Slide 17: Uniquely Diversified $4.6 Billion Loan Portfolio
UNIQUELY DIVERSIFIED $4.6 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 63% of portfolio ‒ Industries requiring in-depth knowledge are m
Slide 18: COVID-19 High Impact Industries as of 9/30/20
COVID-19 HIGH IMPACT INDUSTRIES AS OF 9/30/20 COMMERCIAL INDUSTRIES AND $209.0 LOAN TYPES MILLION 4.6% 97 75% RESTAURANTS WITH NO LOANS QUICK OUTSTANDING OF TOTAL LOANS CLIENTS SERVICE DIRECT EXPOSURE Aviation $118.1 MILLION 2.6% 165 52% RETAILERS Cruise Lines LOANS OF TOTAL CLIENTS ESSENTIAL OUTSTA
Slide 19: COVID Modifications as of 9/30/20
COVID MODIFICATIONS AS OF 9/30/20 ‒ 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 p
Slide 20: Strong Credit Quality History
STRONG CREDIT QUALITY HISTORY – Allowance for loan losses coverage equal to 323% of non-performing loans – Acquisition fair value marks on acquired loans total $12.6 million, 4.6% of acquired loans or 0.28% of total loans ($ in millions) Non-performing Loans Non-performing Asset Composition 0.66% 0.
Slide 21: Drivers of Allowance for Credit Losses
DRIVERS OF ALLOWANCE FOR CREDIT LOSSES 2020 Primary Changes ACL/Total Loans 1.34% / 1.45%* $16.1 Q1 – Q3 ALLL/Total Loans $2.3 macro-economic 0.88% $3.5 CECL Day 1 variables model impact $61.0** Allowance required for acquired loan portfolio $39.1 ALLL CECL Day 1 Q1-Q3 2020 ACL 12/31/2019 Adjustment
Slide 22: Balance Sheet
BALANCE SHEET Bm National Bank Holdings
Slide 23: Solid Loan Growth
SOLID LOAN GROWTH Total Loan Originations(1) Total Loans(1) Loan Composition ($ in billions) ($ in billions) $4.6 ($4.6 Billion) $1.2 $1.2 $1.2 $4.4 $4.1 $1.0 $1.0 $3.2 $0.9 $0.9 Owner $2.9 Occupied $2.6 CRE 16% $2.2 CRE C&I 14% 47% Resi Mortgage 15% PPP 7% FY14 FY15 FY16 FY17 FY18 FY19 3Q20 TTM 4Q1
Slide 24: High Quality, Highly Liquid Investment Portfolio
HIGH QUALITY, HIGHLY LIQUID INVESTMENT PORTFOLIO $0.9 Billion Investment Portfolio(1) 0.4% U.S. Agency/Sponsored Agency MBS 38.7% U.S. Agency/Sponsored Agency CMO 60.9% Other (1) Excludes FHLB/FRB stock. – 99.6% of portfolio is U.S. agency/sponsored agency backed – 3Q20 yield of 1.87% – 36% of portf
Slide 25: Low Cost Transaction Deposits
LOW COST TRANSACTION DEPOSITS ($ in billions) Growing Low Cost Transaction Accounts Deposit Composition Average Transaction Deposits Average Time Deposits Demand & NOW Savings & MM CDs < $250k CDs >= $250k Total $4.1 $4.0 $4.5 $4.7 $5.6 $3.5 $3.6 100% 4% 3% 3% 3% 21% 19% 15% $2.9 24% 37% 37% 37% 37%
Slide 26: Management Team
MANAGEMENT TEAM Bm National Bank Holdings
Slide 27: 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 28: Management & Directors Beneficial Ownership
MANAGEMENT & DIRECTORS Beneficial Ownership (as of 9/30/20) 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 81,159 0.26% Robert E. De
Slide 29: Corporate Governance Overview
CORPORATE GOVERNANCE OVERVIEW 29
Slide 30: 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 31: 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 32: 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 33: 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 34: 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 35: Executive Compensation Program
EXECUTIVE COMPENSATION PROGRAM NBH’s executive compensation practices align management incentives with long-term shareholder interests Components of Executive Compensation (2019) Compensation Metrics Tied to Long-Term Strategy Component Metrics Link to Strategy Base Salary • Reviewed annually • Amon
Slide 36: 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 37: Appendix
APPENDIX im National Bank Holdings
Slide 38: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES Nine month ratios are annualized ($ in millions, except per share) As of and for the nine months ended As of and for the years ended Return on Average Tangible Assets and Return on Average Tangible Equity 30-Sep-20 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15
Slide 39: Reconciliation of Non-GAAP Measures (cont'd)
RECONCILIATION OF NON-GAAP MEASURES (cont’d) Nine month ratios are annualized ($ in millions, except per share) As of and for the nine months ended As of and for the years ended Adjusted Financial Results 30-Sep-20 31-Dec-19 31-Dec-18 31-Dec-17 Adjustments to net income: Net income $ 61.4 $ 80.4 $ 6
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 As of and for the three months ended nine months ended As of and for the years ended Efficiency Ratio 30-Sep-20 30-Sep-20 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14 Net interest income $
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 nine months ended As of and for the years ended Tangible Common Book Value Ratios 30-Sep-20 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14 Total shareholders' equity $ 799.4 $ 766.9 $ 695.0
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