National Bank Holdings (NBHC) risk factors, FY2024 10-K

Risks Relating to Our Banking Operations

1. 01Changes in general business and economic conditions as well as external events such as natural disasters, pandemics, cyberattacks, political instability, international trade policies, tariffs, severe weather or acts of war could materially and adversely affect us
2. 02Our business is highly susceptible to credit risk and fluctuations in the value of real estate and other collateral securing such credit
3. 03Our allowance for credit losses and fair value adjustments may prove to be insufficient to absorb losses inherent in our loan portfolio
4. 04We may not be able to meet the cash flow requirements of deposit withdrawals and other business needs unless we maintain sufficient liquidity
5. 05Like other financial services institutions, our asset and liability structures are monetary in nature. Such structures are affected by a variety of factors, including changes in interest rates, which can impact our earnings, cash flows, the value of financial instruments held by us and our mortgage business
6. 06The fair value of our investment securities can fluctuate due to market conditions outside of our control
7. 07Our investments in financial technology companies and initiatives subject us to material financial, reputational and strategic risks
8. 08We depend on our executive officers and key personnel to implement our strategy and the loss of their services could have a material adverse effect on our ability to conduct our business operations
9. 09We provide our clients with the ability to bank remotely, including via online, mobile and phone. The secure transmission of confidential information over the internet and other remote channels is a critical element of remote banking
10. 10We are highly dependent on the internet, cloud technologies and third-party providers. Systems failures or interruptions could have a material adverse effect on our results of operations or financial condition
11. 11Our Business may be adversely affected by an increasing prevalence of fraud and other financial crimes
12. 12We face significant competition from other financial institutions and financial services providers, which may materially and adversely affect us
13. 13industry and general economic trends
14. 14If we violate U.S. Department of Housing and Urban Development (“HUD”) lending requirements or if the federal government shuts down or otherwise fails to fully fund the federal budget, our commercial Federal Housing Administration (“FHA”) origination business could be adversely affected
15. 15The expanding body of federal, state and local regulation of loan servicing, collections or other aspects of our business may increase the cost of compliance and the risks of noncompliance
16. 16The value of our mortgage and SBA servicing rights can decline during periods of falling interest rates, and we may be required to take a charge against earnings for the decreased value
17. 17Changes in the assumptions underlying our acquisition method of accounting, including methodology regarding the recording of goodwill as a result of acquisitions, or other significant accounting estimates could affect our financial information and have a material adverse effect on our financial results
18. 18We may be required to repurchase mortgage loans or reimburse investors and others as a result of breaches in contractual representations and warranties
19. 19We face risks due to our mortgage banking activities that could negatively impact net income and profitability

Risks Relating to our Growth Strategy

1. 20We may not be able to effectively manage our growth or other expansionary activity
2. 21attract and retain management talent
3. 22Our digital growth strategy may subject us to additional operational, strategic, reputational and regulatory risks
4. 23Our acquisitions generally will require regulatory approvals, and failure to obtain them would restrict our growth
5. 24the effectiveness of the applicant in combating money laundering activities
6. 25If we are unable to identify and consummate attractive acquisitions, or continue to increase loans through organic loan growth, we may be unable to successfully implement our growth strategy, and our results of operations and financial condition could be materially and adversely affected
7. 26We may face increased risk of claims and litigation relating to our fiduciary responsibilities in connection with our trust and wealth management business

Risks Relating to the Regulation of Our Industry

1. 27We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could materially and adversely affect us
2. 28We will be subject to increased regulation once our total consolidated assets exceed $10 billion
3. 29The Federal Reserve may require us to commit capital resources to support our subsidiary banks
4. 30Our and our subsidiaries’ ability to pay dividends is subject to regulatory limitations
5. 31The FDIC’s restoration plan for the DIF and any related increased assessment rates could materially and adversely affect us
6. 32Federal and state banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any supervisory actions to which we become subject as a result of such examinations could materially and adversely affect us
7. 33We are subject to the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions
8. 34We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations
9. 35Tax legislation initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition