NBHC

Business Context and Reporting Period

National Bank Holdings Corp (NBHC) is a bank holding company headquartered in Greenwood Village, Colorado, operating primarily through its subsidiaries NBH Bank and Bank of Jackson Hole Trust. The company serves commercial and consumer clients across Colorado, the greater Kansas City region, Texas, Utah, Wyoming, New Mexico, and Idaho. This filing covers the fiscal year ended December 31, 2025. As of the reporting date, the company held $9.9 billion in total assets, $7.4 billion in loans, and $8.3 billion in deposits. A significant strategic development occurred shortly after year-end: on January 7, 2026, NBHC completed the acquisition of Vista Bancshares, Inc., expanding its footprint in Texas and Florida and pushing pro forma assets to approximately $12.4 billion.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Decline: Net income decreased 7.8% year-over-year, primarily driven by higher provision for credit losses ($17.8 million in 2025 vs. $6.8 million in 2024) and acquisition-related expenses of $7.2 million. Adjusted net income (excluding acquisition costs and security sale losses) was $117.6 million.
• Asset Quality Deterioration: Net charge-offs more than doubled to $25.2 million, driven by proactive credit actions on three credits in Q4 and an $8.9 million charge-off in Q1 related to suspected borrower fraud. Non-performing loans improved as a percentage of total loans (0.34% vs. 0.46%) due to the resolution of non-performing assets, despite the higher absolute charge-offs.
• Expense Growth: Non-interest expense increased 3.9% to $264.6 million. This included $7.2 million in acquisition costs and a $5.9 million increase in occupancy and equipment expenses, largely due to depreciation of capitalized assets for the 2UniFi digital platform launch.
• Deposit Mix: Total deposits grew slightly to $8.3 billion. The cost of deposits improved by 21 basis points to 2.02% as the Federal Reserve lowered rates, though transaction deposits as a percentage of total deposits declined slightly to 86.1%.
• Loan Portfolio: Total loans decreased 4.1% to $7.4 billion, reflecting runoff in acquired loans and a strategic shift in portfolio composition. Non-owner occupied commercial real estate (CRE) loans represented 21.3% of the portfolio.

Guidance, Outlook, and Risks

Outlook and Strategy: Management continues to focus on organic growth and selective acquisitions. The company launched the initial phase of its 2UniFi digital financial ecosystem in July 2025, aiming to provide digital banking services to small and medium-sized businesses. Following the Vista acquisition, the company expects to exceed the $10 billion asset threshold, which will subject it to heightened regulatory scrutiny, including examination by the Consumer Financial Protection Bureau (CFPB) and the loss of the Durbin Amendment exemption for debit card interchange fees.

Risks and Contingencies:

• Regulatory Changes: Crossing the $10 billion asset threshold triggers increased capital, leverage, and liquidity standards, as well as CFPB oversight. The company is monitoring potential changes in the regulatory environment under the new administration.
• Credit Risk: The company faces risks related to commercial real estate values and the transportation industry. While concentrations are managed within self-imposed limits, a deterioration in economic conditions could increase charge-offs.
• Integration Risk: The integration of Vista Bank presents execution risks, including potential disruption to operations, loss of key personnel, and the possibility that anticipated cost savings may not be realized as quickly as expected.
• Technology and Cybersecurity: Investments in 2UniFi and reliance on third-party vendors expose the company to operational, cybersecurity, and reputational risks. The company maintains a layered cybersecurity approach but acknowledges the evolving threat landscape.
• Interest Rate Sensitivity: The company is in an asset-sensitive position. While a rise in rates would generally benefit net interest income, the company manages this risk through derivatives and a focus on low-cost transaction deposits.

Key Facts for Investor Verification

• Vista Acquisition Impact: Verify the final purchase accounting adjustments and the timeline for system conversion (expected Q3 2026) to assess the true pro forma financial impact of the $377.7 million acquisition.
• Credit Loss Drivers: Review the specific details of the $8.9 million fraud-related charge-off and the three Q4 credits that drove the provision expense to ensure these are isolated incidents and not indicative of broader underwriting weaknesses.
• 2UniFi Viability: Assess the progress and capital requirements for the 2UniFi platform, which incurred $21.6 million in expenses in 2025, to determine its potential as a revenue driver versus a cost center.
• Regulatory Thresholds: Confirm the timing of the loss of the Durbin Amendment exemption and the associated impact on debit card fee revenue, as well as the increased FDIC assessment rates applicable to institutions over $10 billion.
• Capital Allocation: Note the new $100 million stock repurchase program authorized in January 2026 and the quarterly dividend of $0.32 per share declared for Q1 2026, indicating continued commitment to shareholder returns despite the acquisition.