Good morning, everyone, and welcome to the National Bank Holdings Corporation 2013 Second Quarter Earnings Call. My name is Jay, and I will be your conference operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session following the presentation. As a reminder, this conference is being recorded for replay purposes. I would like to remind you that this conference call will contain forward-looking statements, including statements regarding the Company’s loans and loan growth, deposits, strategic capital, potential income streams, gross margin, taxes, and non-interest expense. Actual results could differ materially from those discussed today. These forward-looking statements are subject to risks and uncertainties, and they are disclosed in more detail in the company’s most recent filings with the U.S. Securities and Exchange Commission. These statements speak only as of the date July 26, 2013, and National Bank Holdings Corporation undertakes no obligation to update or revise these statements. It is now my pleasure to turn the call over and introduce National Bank Holdings Corporation’s President and CEO, Mr. Tim Laney.

Thank you, Jay. Well, good day, and thank you for joining National Bank Holdings 2013 second quarter earnings call. I’m joined today by Brian Lilly, our Chief Financial Officer; and Rick Newfield, our Chief Risk Officer. We are reporting another quarter of increased loan production of continued reduction in cost of deposits and increased earnings. Equally important, we believe that there remains significant capacity for improvement in these areas, as well as others. We remain focused on building the quality relationships with consumer and business clients that were resolved in the continued ramp up of our loan production, fee income, and low cost deposit growth. We will also be very focused on realizing expense reductions over the remainder of the year, while remaining well positioned to leverage our operating and risk management infrastructure through additional acquisitions. With respect to acquisitions, we agree with observations that a number of the recently announced deals that have demonstrated the pricing discipline required to achieve appropriate earnings accretion and tangible book value impact have represented win-win scenarios for buyers and sellers with the surviving company stock benefiting all of the merged company shareholders. We believe some more deals will be constructed and announced in our markets and we fully expect to be a part of that mix. Now, before turning the call over to Brian, I’ll also point out that during the quarter, we repurchased over 900,000 shares at a weighted average price of $18.21 and our intent is to remain opportunistic on this front. Brian?

Thank you, Tim, and good morning, everyone. We earned net income of $2.9 million in the second quarter, which equaled $0.06 per diluted share. As you saw in our results, we continue to make progress in building the organic growth capabilities of our franchise or working out of the non-strategic assets at attractive returns. Strategic loans grew $73 million or 26% annualized to end the quarter at $1.2 billion, and now comprised 71% of total loans outstanding. The increase is driven by organic loan growth as we had loan originations of $169 million, continuing progress to our quarterly goal of $250 million. The second quarter originations represented strong 54% increase over the first quarter, and it’s doubling from the second quarter last year. The linked quarter increase was led by both consumer and commercial lending. Within consumer banking, both the Colorado and Kansas City markets combined for record quarterly originations and then closing in on our goal of $400 million in annual originations from the banking centers. Commercial banking had good linked quarter growth in loan originations. But we are more excited by the opportunities represented in their pipelines and the quality of the associates choosing to join the NBH team. Our focus continues to be on driving to over $1 billion in annual originations. The credit quality of the strategic portfolio continues to be strong with only 0.8% as non-performing loans at the end of the second quarter. We continue to make steady progress exiting the non-strategic loan portfolio. These loans decreased to $116 million or 76% annualized to end the quarter at $496 million. The key evidence point in value pickup from our workout efforts is the continued quarterly accretable yield gain. The second quarter added $20 million in accretable yield transfers against only $1 million in loan…

Good, thank you, Brian. Jay, we are now ready to take questions.

(Operator instructions) Our first question comes from the line of Paul Miller with FBR. Your line is open.

Hey, good morning, guys. This is actually Tom [Laterno] on behalf of Paul.

Hi, Tom.

Hi, how are you? Brian, I think you mentioned sort of $1 billion of originations per year sort of a goal. Do you guys feel like you’re getting pretty closer to achieving that given the strong second quarter and would you sort of be expecting to grow on a net basis at that level?

Yes, most definitely. That’s been a focus of ours really through a year now. As we have put the resources in place to drive to that and as we model it getting to that level covers the runoff in our non-strategic portfolio and begins to add loan balances, but more importantly begins to add to the net interest income. So the progress that we make in each quarter is encouraging to that. The resources and teams that we put in place are building their books. And as we look as I mentioned, we are more excited about the pipelines that are sitting out there. So yes, we realized that is going to drive us to that level than the production that we’ve accomplished today.

Okay, great. And then one quick follow-up, on the expense reduction side, but I think you guys mentioned in your opening comments. Do you expect most of that to come through sort of reduced credit costs or are there other things you are looking at? Can you just provide a little more color there?

I think, it comes to maybe to broaden that. When you put together the four banks that we have in many cases failed and they will not just on a credit side, but even into the systems. It’s taken us time to pull together all the reporting and tracking and we have at the end of last year put in place all of the measures and the responsibility center accounting that we could align all the loan deposits expenses with the various operating groups. What that’s allowed us to do in the first six months of this year is track our performance and really get granular, look at our network, the banking network where we’re making it, where we’re not and asking ourselves when can we get those operations, which in many cases were failed to hurdle. And so we look at it in a broader perspective not just the credit related costs, but the number of our business segments and taking actions on those as we go forward.

Okay, prefect. Thanks very much, Brian.

Thank you, Thomas.

Next we have the line of Ryan Nash with Goldman Sachs. Your line is open. Ryan M. Nash –: Hey, good morning, guys. Goldman Sachs & Co.: Hey, good morning, guys.

Good morning, Ryan.

Good morning. Ryan M. Nash –: I guess, first question on the net-interest margin, it sounds like from your comments that we’re going to see continued declines until we see – potentially see the inflection loan growth, and obviously you have continued declines from the strategic run-offs there. I guess the first question I have is, shouldn’t we expect the pace of decline to remain similar to what we’ve seen this quarter or given the fact that reinvestment yields have improved, should we see the pace of decline slow from here? Goldman Sachs & Co.: I guess, first question on the net-interest margin, it sounds like from your comments that we’re going to see continued declines until we see – potentially see the inflection loan growth, and obviously you have continued declines from the strategic run-offs there. I guess the first question I have is, shouldn’t we expect the pace of decline to remain similar to what we’ve seen this quarter or given the fact that reinvestment yields have improved, should we see the pace of decline slow from here?

Ryan, that’s very good question. I’m glad you’ve asked that. When we look forward kind of a normal pace would be about 10 basis points range of a decrease from that non-strategic portfolio. A little bit of wild card though as you know is in that staff accounting and purchase accounting, there is a number of pieces that when loans will prepay, we get accelerated income recognition. And that’s a steady contributor in our quarterly, so we expect that contributor and we’ll bring that up, because it can be lumpy. And that would impact that 10 basis points as we go forward. Ryan M. Nash –: Okay. And then I guess, Tim, more of a big picture question. I think your opening comment sounded a little bit more optimistic about M&A I think than you were last quarter. So I guess, a couple of questions; have we seen the regulatory bar raised such that it’s hard to get deals done at this point. And given that, you said in your opening remarks you anticipate that you guys will be participating. I think last quarter you talked about whether it was bank acquisitions potentially buying branches or even looking for specialty finance base. Where the efforts focus right now and given the regulatory environment, do you see any issues with getting deals done? Goldman Sachs & Co.: Okay. And then I guess, Tim, more of a big picture question. I think your opening comment sounded a little bit more optimistic about M&A I think than you were last quarter. So I guess, a couple of questions; have we seen the regulatory bar raised such that it’s hard to get deals done at this point. And given that, you said in your opening remarks you anticipate that you guys will be participating. I think last quarter you talked about whether it was bank acquisitions potentially buying branches or even looking for specialty finance base. Where the efforts focus right now and given the regulatory environment, do you see any issues with getting deals done?

Look, I would tell you that we were actually confident in our pipeline in the first quarter, our M&A pipeline in the first quarter of this year. I will tell you, we’re more confident as we close out the second quarter. I think to your question around the regulatory bar, I think it’s reasonable to say that regulators are probably appropriately very careful coming out of the downturn that we’ve all experienced. I will tell you that the process is appropriately very methodical. At times it’s easy to come in patient with it. But we understand it, and we have been methodically working through – what we think is an appropriate process. Look, we just strongly believe that you have to construct mergers that are accretive to earnings based on reasonable revenue and expense assumptions. We think you have to have earned back periods within that three to five-year range in order to be well received in the marketplace. And, of course, our focus is on building franchise value in the area of the United States where we already operate. I will also add that while we have a bias to use cash in acquisitions, where we do end up using stock. Our plan is to immediately move into the market and use our capital to buy-in an equivalent number of shares. We have no intention of diluting ourselves in an acquisition. So that I think gives you a little color on our view on the regulator environment, gives you a little color on what we think about as it relates to the bars we need to hurdle to really create value for our company and maybe even a little color on how we might engineer a transaction to use our shares, but to do it in a way that…

To your first question, I think we’ve been pretty consistent in saying 95% of our focus has been on the markets where we operated. It’s really Missouri, Kansas, and Colorado. We like that I-70 corridor. We like certainly the attractive markets of Kansas City, Denver, Boulder, et cetera, but our core markets are Missouri, Kansas, and Colorado and that represents 95% of our focus. What’s interesting as it relates to the trouble banks that remain in our markets and the trouble banks that remain across the United States, they are not in our focus. But those that are in our markets obviously are, I will tell you that, we are increasingly interested in those institutions that we think represent smart merger partners that perhaps have less baggage and where we have greater confidence that they can immediately contribute to earnings on a traditional basis. Ryan M. Nash –: Great. Thanks for taking my question. Goldman Sachs & Co.: Great. Thanks for taking my question.

You bet, Ryan.

(Operator Instructions) Your next question comes from Chris McGratty with KBW. Your line is open. Christopher McGratty – Keefe, Bruyette & Woods, Inc.: Hey, good morning, guys.

Hi, Chris.

Hi, Chris. Christopher McGratty – Keefe, Bruyette & Woods, Inc.: Tim, on your acquisition comments the color on geography was helpful as is the financing aspect. Can you talk about size of things you are looking at today?

We still believe that it takes just as much work to integrate $1 billion and $1.5 billion acquisition as it does $0.5 billion. We are going to be opportunistic with around all of the right partners – perspective partners in our markets. But we still lean toward some of the – you might say, larger community banks in our markets. Christopher McGratty – Keefe, Bruyette & Woods, Inc.: So couple of billion dollars is certainly on the table, okay.

I would say, let’s say that 500 to $1.5 billion with the preference toward the large size. Christopher McGratty – Keefe, Bruyette & Woods, Inc.: Okay, that’s helpful. And then Brian on the expense guidance or the expense commentary aside from the credit numbers that are somewhat volatile. Should we be expecting kind of the core expense run rate to be growing from here, or maybe I missed the comment on the expense outlook.

We wouldn’t expect that it would be growing and we’re expecting that we’ll be able to take actions to bring that down as we go forward. Christopher McGratty – Keefe, Bruyette & Woods, Inc.: Okay. And then lastly on the securities book, how should we thinking about the overall? Did I hear you say, it was going to be flat essentially?

Yeah. I think comments on the side, but that would be fair to assume that the size of the balance sheet and the securities book would be similar. Christopher McGratty – Keefe, Bruyette & Woods, Inc.: Okay. Thanks.

Thank you, Chris.

Your next question comes from the line of Gary Tenner with DA Davidson. Your line is open. Gary Tenner – D.A. Davidson & Co.: Thanks, good morning, guys.

Good morning, Gary. Gary Tenner – D.A. Davidson & Co.: Just a follow-up question on your comments in terms of regulators and M&A. Have you gotten to the point on any perspective transactions over the first six months of the year where you kind of run things out the flagpole with regulators and it come back with comments that maybe were not as positive as you may have thought, I mean, are they conservative to that degree or cautious to that degree?

Gary, I appreciate the question. We are always tentative to comment on conversations with our regulators. What I would tell you is that, we don’t believe we have or would bring, I’m going to say this pretty definitively. We do not believe we would take a perspective acquisition to our regulators that they would find inappropriate. We believe our filters are appropriately, let’s say, conservative. Gary Tenner – D.A. Davidson & Co.: Okay. And then second question, in terms of the non-strategic loan runoff the paces remain pretty high. How do you think of in terms of the progression from here, does it stay high for other two maybe three quarters? And then there is a long tail at the end of it, maybe just some color on that?

Gary, that’s a good questions. We obviously we report each and every quarter and we even exceeded our estimates every quarter in a month that our team can pickup. We are certainly not putting any breaks on exiting these problem credits. We’ve done $200 million plus the first six months, as we currently forecasted out another $150 million approximately for the next six moths, and cutting the balance at the end of the year and half with another $200 next year. There is a life to it, but we also have some loss share agreements. So we have our teams focused on to get out of. We have plenty of run way to get the assets resolved before losing loss share, that’s why we’ve been into it. I would say the best guess at this point, but our teams have been very successful in exiting very attractive returns and we want to continue that. Gary Tenner – D.A. Davidson & Co.: And Brain, on a related note, you covered it in your comments, but should we reiterate where we are at on the economic value creation. I mean it’s not any significant.

Sure. And that’s a $100 million plus that we picked up since the day one and both acquisition conservative due diligence, but really lot of credit to the team for the way we’ve worked it out over the last few years. Every quarter that we have remeasured for our accretable yield we picked up net positive on that and that’s kind of what we would like that to continue. Those 11% yields are very good and it’s given us time to go after the opportunities that will create long-term value. Gary Tenner – D.A. Davidson & Co.: All right, thanks.

Thank you, Gary.

There are no further questions at this time. I turn the call back to the presenters.

All right. Well, everyone, thank you for your time and attention today. Thank you for your questions and have a good day.