National Bank Holdings Corporation Announces Record Third Quarter 2020 Financial Results

Rhea-AI Summary

National Bank Holdings Corporation (NYSE: NBHC) reported significant growth in 3Q20, with net income of $27.9 million, or $0.90 per diluted share, marking a 57.5% increase from the previous quarter. The return on average tangible assets rose to 1.76%. However, net interest income slightly decreased to $48 million, attributed to lower earning asset yields. Loans decreased by $226 million, and the provision for loan losses was $1.2 million. Non-interest income increased by 14.7% to $44.5 million, driven by record mortgage banking income. Total deposits rose by 23.4% annualized to $5.5 billion.

Positive

• Record quarterly earnings of $27.9 million, or $0.90 per diluted share, up 57.5% from Q2.
• Non-interest income rose 14.7% to $44.5 million, led by record mortgage banking income.
• Average transaction deposits increased by 30.3% annualized to $5.5 billion.
• Return on average tangible common equity improved to 16.49%.

Negative

• Net interest income decreased by $0.6 million due to lower earning asset yields.
• Total loans dropped by $226.3 million, an annualized decrease of 18.8%.
• Provision for loan losses recorded at $1.2 million under CECL model.

DENVER, Oct. 20, 2020 (GLOBE NEWSWIRE) -- National Bank Holdings Corporation (NYSE: NBHC) reported:

		For the quarter												For the quarter - adjusted(1)
		3Q20				2Q20				3Q19				3Q20				2Q20					3Q19
Net income ($000's)		$	27,893			$	17,705			$	21,642			$	28,224			$	19,015			$	22,331
Earnings per share - diluted		$	0.90			$	0.57			$	0.69			$	0.91			$	0.62			$	0.71
Return on average tangible assets(2)			1.76	%			1.16	%			1.51	%			1.78	%			1.25	%			1.56	%
Return on average tangible common equity(2)			16.49	%			10.98	%			13.68	%			16.69	%			11.78	%			14.11	%

                                                      

(1	)		See non-GAAP reconciliations below.
(2	)		Quarterly ratios are annualized.

In announcing these results, Chief Executive Officer Tim Laney shared, “Despite the challenges presented in 2020, we delivered record quarterly earnings of $0.90 per diluted share and record-breaking fee income. We are prudently supporting our clients and ensuring the safety and soundness of our bank all while maintaining excellent credit quality with annualized net charge-offs of just four basis points.” 

Mr. Laney added, “I am proud of our teammates tireless efforts to support our clients and communities, and we are honored to be recognized as the Small Business Association’s Colorado 2020 Job Creation Lender of the Year. We feel confident that our strong Common Equity Tier 1 ratio of 14.25%, coupled with a diverse and granular credit portfolio and a sizable liquidity position, continues to enable us to navigate this challenging economy from a position of strength.” 

Third Quarter 2020 Results
(All comparisons refer to the second quarter of 2020, except as noted)

Net income totaled $27.9 million during the third quarter of 2020, or $0.90 per diluted share, an increase of $10.2 million, or 57.5%. Adjusting for banking center consolidation-related expenses, net income totaled $28.2 million, or $0.91 per diluted share, an increase of $9.2 million, or 48.4%. The return on average tangible assets was 1.76%, compared to 1.16% in the prior quarter, and the return on average tangible common equity was 16.49%, compared to 10.98%, in the prior quarter. The adjusted return on average tangible assets was 1.78%, compared to 1.25% in the prior quarter, and the adjusted return on average tangible common equity was 16.69%, compared to 11.78% during the second quarter.

Net Interest Income
Fully taxable equivalent net interest income totaled $48.0 million, decreasing $0.6 million, driven by lower earning asset yields due to changes in the mix of earning assets. The fully taxable equivalent net interest margin narrowed 18 basis points from the prior quarter to 3.21%, 13 basis points of which was driven by elevated cash balances. The yield on earning assets decreased 25 basis points due to the excess cash liquidity and the continued impact of the decline in short-term interest rates. Our cost of funds decreased by 10 basis points to 0.55%.

Loans
Total loans ended the quarter at $4.6 billion, decreasing $226.3 million, or 18.8% annualized. During the quarter, we took a very careful approach to extending new credit as well as continuing an intense focus on managing credit risk and yield. This led to third quarter loan originations of $132.9 million, which were more than offset by higher levels of paydowns and payoffs. We continue to maintain a granular and well diversified loan portfolio with self-imposed concentration limits. In light of the strain placed on industries by the COVID-19 pandemic, we have carefully evaluated and continue to closely monitor our entire loan portfolio. We have highlighted our current highly impacted industries and COVID-19 related loan modifications within the accompanying Supplemental Disclosure.

Asset Quality and Provision for Loan Losses
Provision for loan losses of $1.2 million was recorded during the quarter under the CECL model and included a $0.2 million provision for unfunded loan commitment reserves. Annualized net charge-offs improved to 0.04% of total loans, compared to 0.05% in the prior quarter. Non-performing loans (comprised of non-accrual loans and non-accrual TDRs) decreased during the quarter, and the ratio of non-performing loans to total loans improved one basis point to 0.41%. The allowance for credit losses as a percentage of total loans increased eight basis points to 1.34% at September 30, 2020. Excluding PPP loans, non-performing loans remained at 0.45% of total loans, and the allowance for credit losses as a percentage of totals loans increased nine basis points to 1.45% at September 30, 2020.

Deposits
Average transaction deposits (defined as total deposits less time deposits) increased $316.6 million, or 30.3% annualized, and average total deposits increased $306.8 million, or 23.4% annualized, to $5.5 billion as of September 30, 2020. Average non-interest bearing demand deposits increased $78.4 million, and average interest-bearing demand, savings and money market deposits increased $238.2 million. The mix of transaction deposits to total deposits improved 114 basis points to 81.7% at September 30, 2020. The loan to deposit ratio totaled 81.1% at September 30, 2020, compared to 88.3% at June 30, 2020.

The cost of transaction deposits decreased one basis point from the prior quarter to 0.18%. The cost of total deposits decreased seven basis points from the prior quarter to 0.40%, and the total cost of funds decreased 10 basis points.

Non-Interest Income
Non-interest income totaled $44.5 million during the third quarter, representing an increase of $5.7 million, or 14.7%. Mortgage banking income reached a quarterly record of $34.9 million, an increase of $4.3 million. Service charges and bank card fees increased a combined $1.0 million, and other non-interest income increased $0.3 million.

Non-Interest Expense
Non-interest expense totaled $55.3 million during the third quarter, representing an increase of $1.6 million, due to higher mortgage banking performance-related compensation. Banking center consolidation-related expenses of $0.4 million were recorded during the third quarter as compared to $1.7 million during the prior quarter. The consolidations of 12 banking centers were announced in the second quarter of 2020 and are expected to be substantially completed by year end. The fully taxable equivalent efficiency ratio improved to 59.5% at September 30, 2020, compared to 61.1% at June 30, 2020. Adjusting for banking center consolidation-related expense, the fully taxable equivalent efficiency ratio improved 16 basis points to 59.0% at September 30, 2020.

Income tax expense totaled $6.8 million during the third quarter, compared to $4.4 million during the prior quarter. The effective tax rate was 19.7% and 20.0% for the third and second quarters, respectively.

Capital
Capital ratios continue to be strong and in excess of federal bank regulatory agency “well capitalized” thresholds. The Tier 1 leverage ratio at September 30, 2020 for the consolidated company and NBH Bank was 10.60% and 9.23%, respectively. Shareholders’ equity totaled $799.4 million at September 30, 2020 and increased $22.4 million from the prior quarter due to higher retained earnings.

Common book value per share increased $0.71 to $26.13 at September 30, 2020. The quarter’s earnings, net of dividends paid, increased the tangible common book value per share by $0.73 to $22.40 at September 30, 2020. Excluding accumulated other comprehensive income, the tangible book value per share increased $0.77 to $22.04 at September 30, 2020.

Recent Events
The COVID-19 pandemic has caused substantial disruption to the communities we serve and has changed the way we live and work.  We continue to remain committed to ensuring our associates, clients and communities are receiving the support they need during these challenging times. All of our banking centers remain operational through our drive-thru services and on an appointment-only basis in the lobbies. We have continued to leverage our digital banking platform with our clients. Our teams have been working diligently to support our clients who are experiencing financial hardship due to COVID-19 through participation in the SBA’s Paycheck Protection Program, including assistance with PPP loan forgiveness applications, and loan modifications, as needed. The length of the pandemic and the efficacy of the extraordinary government-mandated measures that have been put into place to address it are unknown, but have already had, and are likely to continue to have, a significantly negative impact to the U.S. labor market, consumer spending and business operations.

Year-Over-Year Review
(All comparisons refer to the first nine months of 2019, except as noted)

Net income totaled a record $61.4 million during the first nine months of 2020, or $1.97 per diluted share, an increase of $0.6 million. Adjusting for banking center consolidation-related expenses, net income totaled $63.1 million, or $2.03 per diluted share, an increase of $1.5 million. The return on average tangible assets was 1.36%, compared to 1.45% in the prior period, and the return on average tangible common equity was 12.47%, compared to 13.43%, in the prior period. The adjusted return on average tangible assets was 1.39%, compared to 1.46% in the prior period, and the adjusted return on average tangible common equity was 12.80%, compared to 13.58% during the prior period.

Fully taxable equivalent net interest income totaled $148.2 million, decreasing $11.0 million, or 6.9%. Average earning assets increased $346.4 million, or 6.5%, primarily driven by average loan growth of $339.0 million, including average PPP loan growth of $210.7 million, partially offset by a decrease in average investment securities of $147.7 million. The fully taxable equivalent net interest margin narrowed 50 basis points to 3.48% due to lower earning asset yields. The yield on earning assets decreased 71 basis points, led by an 83 basis point decrease in the originated loan portfolio yields that resulted from a decline in short-term interest rates as a result of monetary policy actions by the Federal Reserve. The cost of funds decreased 27 basis points to 0.69%.

Loans outstanding totaled $4.6 billion and increased $154.2 million, or 3.5%, led by PPP loans of $348.3 million that were partially offset by lower commercial and industrial loans of $151.5 million, or 10.8%. New loan originations over the trailing 12 months totaled $1.2 billion, led by commercial loan originations of $812.6 million, which included PPP loan originations of $358.9 million.

Average non-interest bearing demand deposits increased $210.8 million, or 18.3%. Average transaction deposits increased $510.3 million, or 14.3%, and average total deposits increased $479.8 million, or 10.3%, to $5.1 billion as of September 30, 2020. Spot transaction deposits increased $922.8 million to $4.6 billion at September 30, 2020, improving the mix of transaction deposits to total deposits by 420 basis points to 81.7% at September 30, 2020. The mix of non-interest bearing demand deposits to total deposits improved 117 basis points to 27.3% at September 30, 2020.

A CECL model driven provision for loan losses of $17.6 million was recorded during the first nine months of 2020, including a $0.1 million provision for unfunded loan commitment reserves, to provide coverage for the impact of deteriorating economic conditions as a result of COVID-19. Annualized net charge-offs on loans totaled 0.04% of total loans, compared to 0.23% in the prior period. Non-performing loans to total loans decreased 17 basis points to 0.41%, compared to 0.58% at September 30, 2019. The allowance for credit losses totaled 1.34% of total loans, compared to 0.88% at September 30, 2019 and included a CECL adoption day 1 increase of $5.8 million. Excluding PPP loans, the allowance for credit losses as a percentage of total loans increased 57 basis points to 1.45% at September 30, 2020.

Non-interest income totaled $106.9 million, representing an increase of $44.4 million, or 71.1%, driven by an increase in mortgage banking income. Service charges and bank card fees decreased a combined $2.3 million and other non-interest income decreased $0.5 million.

Non-interest expense totaled $157.8 million, representing an increase of $23.1 million, or 17.2%. Mortgage banking commissions increased by $12.9 million, and banking center consolidation-related expense totaled $2.1 million compared to $0.9 million during the prior period. Other non-interest expense decreased by $1.3 million largely due to a decrease in FDIC deposit insurance fees and marketing and development expense. Additionally, included in the prior period were net gains on the sale of OREO of $7.2 million, compared to minimal net gains on the sale of OREO recorded in 2020.

Income tax expense totaled $14.5 million, compared to $12.0 million during the first nine months of 2019. Included in income tax expense was $0.1 million of expense during the first nine months of 2020 and $2.2 million of benefit during the first nine months of 2019 from stock compensation activity. Adjusting for stock compensation activity, the effective tax rate for the first nine months of 2020 was 18.9%, compared to 19.4% in the prior period. The lower rate compared to the statutory rate reflects the continued success of our tax strategies and tax exempt income.

Conference Call
Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Wednesday, October 21, 2020. Interested parties may listen to this call by dialing (877) 272-6762 / (615) 800-6832 (International) using the Conference ID of 2471788 and asking for the NBHC Third Quarter Earnings conference call. A telephonic replay of the call will be available beginning approximately four hours after the call’s completion through November 4, 2020, by dialing (855) 859-2056 (United States) / (404) 537-3406 (International) using the Conference ID of 2471788. The earnings release and an on-line replay of the call will also be available on the Company’s website at www.nationalbankholdings.com by visiting the investor relations area.

About Non-GAAP Financial Measures
Certain of the financial measures and ratios we present, including “tangible assets,” “return on average tangible assets,” “tangible common equity,” “return on average tangible common equity,” “tangible common book value per share,” “tangible common book value, excluding accumulated other comprehensive loss, net of tax,” “tangible common book value per share, excluding accumulated other comprehensive loss, net of tax,” “tangible common equity to tangible assets,” “adjusted efficiency ratio,” “adjusted non-interest expense,” “adjusted non-interest expense to average assets,” “adjusted net income,” “adjusted earnings per share - diluted,” “adjusted return on average tangible assets,” “adjusted return on average tangible common equity,” and “fully taxable equivalent” metrics, are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance.

A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

About National Bank Holdings Corporation
National Bank Holdings Corporation is a bank holding company created to build a leading community bank franchise delivering high quality client service and committed to shareholder results. Through its bank subsidiary, NBH Bank, National Bank Holdings Corporation operates a network of 97 banking centers, serving individual consumers, small, medium and large businesses, and government and non-profit entities. The bank’s core geographic footprint consists of Colorado, the greater Kansas City region, Texas, Utah and New Mexico. NBH Bank operates under the following brand names: Community Banks of Colorado and Community Banks Mortgage, a division of NBH Bank, in Colorado, Bank Midwest and Bank Midwest Mortgage in Kansas and Missouri, and Hillcrest Bank and Hillcrest Bank Mortgage in Texas, Utah and New Mexico.  Additional information about National Bank Holdings Corporation can be found at www.nationalbankholdings.com.

For more information visit: cobnks.com, bankmw.com, hillcrestbank.com or nbhbank.com. Or, follow us on any of our social media sites:
Community Banks of Colorado: facebook.com/cobnks, twitter.com/cobnks, instagram.com/cobnks;
Bank Midwest: facebook.com/bankmw, twitter.com/bank_mw, instagram.com/bankmw;
Hillcrest Bank: facebook.com/hillcrestbank, twitter.com/hillcrest_bank;
NBH Bank: twitter.com/nbhbank;
or connect with any of our brands on LinkedIn.

Forward-Looking Statements

This press release 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,” “potential,” “will,” “estimate,” “target,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “intend” or similar expressions that relate to the Company’s strategy, plans or intentions. Forward-looking statements involve certain important risks, uncertainties and other factors, any of which could cause actual results to differ materially from those in such statements. Such factors include, without limitation, the “Risk Factors” referenced in our most recent Form 10-K filed with the Securities and Exchange Commission (SEC), other risks and uncertainties listed from time to time in our reports and documents filed with the SEC, and the following factors: ability to execute our business strategy; business and economic conditions; effects of a prolonged government shutdown; economic, market, operational, liquidity, credit and interest rate risks associated with the Company’s business; effects of any changes in trade, monetary and fiscal policies and laws; changes imposed by regulatory agencies to increase capital standards; effects of inflation, as well as, interest rate, securities market and monetary supply fluctuations; changes in the economy or supply-demand imbalances affecting local real estate values; changes in consumer spending, borrowings and savings habits; with respect to our mortgage business, the inability to negotiate fees with investors for the purchase or our loans or our obligation to indemnify purchasers or repurchase related loans; the Company’s ability to identify potential candidates for, consummate, integrate and realize operating efficiencies from, acquisitions, consolidations and other expansion opportunities; the Company's ability to realize anticipated benefits from enhancements or updates to its core operating systems from time to time without significant change in client service or risk to the Company's control environment; the Company's dependence on information technology and telecommunications systems of third party service providers and the risk of systems failures, interruptions or breaches of security; the Company’s ability to achieve organic loan and deposit growth and the composition of such growth; changes in sources and uses of funds; increased competition in the financial services industry; the effect of changes in accounting policies and practices; the share price of the Company’s stock; the Company's ability to realize deferred tax assets or the need for a valuation allowance; continued consolidation in the financial services industry; ability to maintain or increase market share and control expenses; costs and effects of changes in laws and regulations and of other legal and regulatory developments; technological changes; the timely development and acceptance of new products and services; the Company’s continued ability to attract, hire and maintain qualified personnel; ability to implement and/or improve operational management and other internal risk controls and processes and reporting system and procedures; regulatory limitations on dividends from the Company's bank subsidiary; changes in estimates of future loan reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; widespread natural and other disasters, pandemics, dislocations, political instability, acts of war or terrorist activities, cyberattacks or international hostilities; adverse effects due to the novel Coronavirus Disease 2019 (COVID-19) on the Company and its clients, counterparties, employees, and third-party service providers, and the adverse impacts on our business, financial position, results of operations, and prospects; impact of reputational risk; and success at managing the risks involved in the foregoing items. The Company can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this press release, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

Contact:
Analysts/Institutional Investors: Aldis Birkans, Chief Financial Officer, (720) 554-6640, ir@nationalbankholdings.com
Media: Angela Petrucci, Chief Administrative Officer, (720) 529-3349, media@nbhbank.com

NATIONAL BANK HOLDINGS CORPORATION FINANCIAL SUMMARY Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except share and per share data)
	For the three months ended											For the nine months ended
	September 30,				June 30,			September 30,				September 30,				September 30,
	2020				2020			2019				2020				2019
Total interest and dividend income	$	52,302			$	53,744		$	61,372			$	164,714			$	182,985
Total interest expense		5,587				6,416			9,587				20,324				27,543
Net interest income		46,715				47,328			51,785				144,390				155,442
Taxable equivalent adjustment		1,275				1,301			1,264				3,843				3,775
Net interest income FTE(1)		47,990				48,629			53,049				148,233				159,217
Provision for loan losses		1,200				10,271			5,690				17,630				10,463
Net interest income after provision for loan losses FTE(1)		46,790				38,358			47,359				130,603				148,754
Non-interest income:
Service charges		3,742				3,094			4,617				10,962				13,479
Bank card fees		4,039				3,654			3,752				11,206				10,946
Mortgage banking income		34,943				30,630			14,702				79,246				32,037
Other non-interest income		1,733				1,459			1,661				5,384				5,861
OREO-related income		75				—			27				103				147
Total non-interest income		44,532				38,837			24,759				106,901				62,470
Non-interest expense:
Salaries and benefits		38,614				36,457			33,522				108,251				92,079
Occupancy and equipment		6,878				7,078			6,825				20,854				20,428
Professional fees		714				759			743				2,082				2,598
Other non-interest expense		7,443				6,778			7,422				21,222				22,498
Problem asset workout		1,064				629			602				2,341				2,450
(Gain) loss on sale of OREO, net		(119	)			55			(6,514	)			(25	)			(7,200	)
Core deposit intangible asset amortization		295				296			295				887				887
Banking center consolidation-related expense		432				1,708			898				2,140				898
Total non-interest expense		55,321				53,760			43,793				157,752				134,638
Income before income taxes FTE(1)		36,001				23,435			28,325				79,752				76,586
Taxable equivalent adjustment		1,275				1,301			1,264				3,843				3,775
Income before income taxes		34,726				22,134			27,061				75,909				72,811
Income tax expense		6,833				4,429			5,419				14,487				11,965
Net income	$	27,893			$	17,705		$	21,642			$	61,422			$	60,846
Earnings per share - basic	$	0.91			$	0.57		$	0.69			$	1.99			$	1.95
Earnings per share - diluted		0.90				0.57			0.69				1.97				1.93

                                                      

(1

)

Net interest income is presented on a GAAP basis and fully taxable equivalent (FTE) basis, as the Company believes this non-GAAP measure is the preferred industry measurement for this item. The FTE adjustment is for the tax benefit on certain tax exempt loans using the federal tax rate of 21% for each period presented.

NATIONAL BANK HOLDINGS CORPORATION Consolidated Statements of Financial Condition (Unaudited) (Dollars in thousands, except share and per share data)
	September 30, 2020				June 30, 2020				December 31, 2019				September 30, 2019
ASSETS
Cash and cash equivalents	$	445,103			$	142,385			$	110,190			$	116,919
Investment securities available-for-sale		572,523				610,735				638,249				661,129
Investment securities held-to-maturity		320,001				215,183				182,884				189,982
Non-marketable securities		29,598				30,188				29,751				27,277
Loans		4,556,121				4,782,383				4,415,406				4,401,917
Allowance for credit losses		(60,979	)			(60,465	)			(39,064	)			(38,710	)
Loans, net		4,495,142				4,721,918				4,376,342				4,363,207
Loans held for sale		273,003				204,856				117,444				204,602
Other real estate owned		4,590				6,491				7,300				7,904
Premises and equipment, net		108,860				110,019				112,151				110,692
Goodwill		115,027				115,027				115,027				115,027
Intangible assets, net		15,017				12,175				11,361				11,578
Other assets		221,812				216,454				194,813				181,733
Total assets	$	6,600,676			$	6,385,431			$	5,895,512			$	5,990,050
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Non-interest bearing demand deposits	$	1,533,676			$	1,502,948			$	1,184,945			$	1,237,189
Interest bearing demand deposits		976,133				955,951				738,496				681,113
Savings and money market		2,079,585				1,903,427				1,755,538				1,748,257
Total transaction deposits		4,589,394				4,362,326				3,678,979				3,666,559
Time deposits		1,027,066				1,051,563				1,058,153				1,067,301
Total deposits		5,616,460				5,413,889				4,737,132				4,733,860
Securities sold under agreements to repurchase		23,904				24,504				56,935				62,735
Federal Home Loan Bank advances		—				15,000				207,675				303,897
Other liabilities		160,955				155,071				126,850				136,232
Total liabilities		5,801,319				5,608,464				5,128,592				5,236,724
Shareholders' equity:
Common stock		515				515				515				515
Additional paid in capital		1,010,145				1,008,773				1,009,223				1,007,628
Retained earnings		202,238				180,537				164,082				150,866
Treasury stock		(424,621	)			(425,053	)			(408,962	)			(408,770	)
Accumulated other comprehensive income, net of tax		11,080				12,195				2,062				3,087
Total shareholders' equity		799,357				776,967				766,920				753,326
Total liabilities and shareholders' equity	$	6,600,676			$	6,385,431			$	5,895,512			$	5,990,050
SHARE DATA
Average basic shares outstanding		30,756,116				30,731,758				31,299,989				31,281,970
Average diluted shares outstanding		30,924,223				30,857,606				31,525,911				31,508,999
Ending shares outstanding		30,594,412				30,569,011				31,176,627				31,169,086
Common book value per share	$	26.13			$	25.42			$	24.60			$	24.17
Tangible common book value per share(1) (non-GAAP)		22.40				21.67				20.89				20.45
Tangible common book value per share, excluding accumulated other comprehensive income(1) (non-GAAP)		22.04				21.27				20.83				20.35
CAPITAL RATIOS
Average equity to average assets		12.22	%			12.21	%			12.91	%			12.79	%
Tangible common equity to tangible assets(1)		10.57	%			10.56	%			11.27	%			10.85	%
Tier 1 leverage ratio		10.60	%			10.53	%			11.04	%			10.89	%
Common equity tier 1 risk-based capital ratio		14.25	%			13.21	%			13.21	%			12.93	%
Total risk-based capital ratio		15.40	%			14.26	%			14.08	%			13.79	%

                                                      

(1

)

Represents a non-GAAP financial measure. See non-GAAP reconciliations below.

NATIONAL BANK HOLDINGS CORPORATION Loan Portfolio (Dollars in thousands)
Period End Loan Balances by Type
							September 30, 2020 vs. June 30, 2020						September 30, 2020 vs. September 30, 2019
	September 30, 2020			June 30, 2020			% Change			September 30, 2019			% Change
Originated:
Commercial:
Commercial and industrial	$	1,228,550		$	1,360,679		(9.7	)%		$	1,369,615		(10.3	)%
Municipal and non-profit		883,065			912,287		(3.2	)%			843,763		4.7	%
Owner-occupied commercial real estate		460,487			455,846		1.0	%			378,956		21.5	%
Food and agribusiness		210,818			213,789		(1.4	)%			230,869		(8.7	)%
PPP loans(1)		348,257			348,689		(0.1	)%			—		100.0	%
Total commercial		3,131,177			3,291,290		(4.9	)%			2,823,203		10.9	%
Commercial real estate non-owner occupied		515,415			540,412		(4.6	)%			501,771		2.7	%
Residential real estate		614,449			631,032		(2.6	)%			659,246		(6.8	)%
Consumer		20,196			20,370		(0.9	)%			21,378		(5.5	)%
Total originated		4,281,237			4,483,104		(4.5	)%			4,005,598		6.9	%
Acquired:
Commercial:
Commercial and industrial		23,984			27,461		(12.7	)%			34,409		(30.3	)%
Municipal and non-profit		576			593		(2.9	)%			3,939		(85.4	)%
Owner-occupied commercial real estate		55,929			65,052		(14.0	)%			78,297		(28.6	)%
Food and agribusiness		5,740			6,237		(8.0	)%			8,618		(33.4	)%
Total commercial		86,229			99,343		(13.2	)%			125,263		(31.2	)%
Commercial real estate non-owner occupied		101,672			101,412		0.3	%			139,410		(27.1	)%
Residential real estate		86,478			97,982		(11.7	)%			130,831		(33.9	)%
Consumer		505			542		(6.8	)%			815		(38.0	)%
Total acquired		274,884			299,279		(8.2	)%			396,319		(30.6	)%
Total loans	$	4,556,121		$	4,782,383		(4.7	)%		$	4,401,917		3.5	%

                                                      

(1

)

PPP loan balances are net of fees and costs and include principal totaling $356,913.

Originations(1)
	Third quarter			Second quarter				First quarter				Fourth quarter			Third quarter
	2020			2020				2020				2019			2019
Commercial:
Commercial and industrial	$	11,354		$	(8,726	)		$	118,999			$	69,048		$	144,554
Municipal and non-profit		6,083			49,679				13,968				46,114			31,482
Owner occupied commercial real estate		23,758			22,078				37,372				46,965			16,149
Food and agribusiness		13,876			(10,480	)			(6,787	)			20,348			(4,894	)
PPP loans		122			358,798				—				—			—
Total commercial		55,193			411,349				163,552				182,475			187,291
Commercial real estate non-owner occupied		24,937			18,992				80,792				41,256			79,929
Residential real estate		49,786			29,024				46,273				43,493			49,022
Consumer		2,980			2,206				2,320				2,315			2,986
Total	$	132,896		$	461,571			$	292,937			$	269,539		$	319,228

                                                      

(1

)

Originations are defined as closed end funded loans and net fundings under revolving lines of credit. Net funding under revolving lines of credit were ($27,899), ($55,826), $48,789, $1,756 and $37,062 as of the third quarter 2020, second quarter 2020, first quarter 2020, fourth quarter 2019, and third quarter 2019, respectively.

NATIONAL BANK HOLDINGS CORPORATION Summary of Net Interest Margin (Dollars in thousands)
		For the three months ended											For the three months ended											For the three months ended
		September 30, 2020											June 30, 2020											September 30, 2019
		Average							Average				Average							Average				Average							Average
		balance				Interest			rate				balance				Interest			rate				balance				Interest			rate
Interest earning assets:
Originated loans FTE(1)(2)		$	4,343,335			$	40,973			3.75	%		$	4,432,725			$	42,440			3.85	%		$	3,886,503			$	46,736			4.77	%
Acquired loans			284,653				6,593			9.21	%			312,723				6,722			8.65	%			425,079				8,907			8.31	%
Loans held for sale			230,390				1,683			2.91	%			157,887				1,310			3.34	%			139,281				1,328			3.78	%
Investment securities available-for-sale			559,330				2,784			1.99	%			607,132				3,050			2.01	%			687,989				3,696			2.15	%
Investment securities held-to-maturity			242,511				1,253			2.07	%			189,360				1,201			2.54	%			199,519				1,384			2.77	%
Other securities			29,640				221			2.98	%			30,087				310			4.12	%			27,227				418			6.14	%
Interest earning deposits and securities purchased under agreements to resell			254,931				70			0.11	%			36,758				12			0.13	%			19,809				167			3.34	%
Total interest earning assets FTE(2)		$	5,944,790			$	53,577			3.59	%		$	5,766,672			$	55,045			3.84	%		$	5,385,407			$	62,636			4.61	%
Cash and due from banks		$	73,274										$	76,041										$	76,866
Other assets			525,324											532,867											443,724
Allowance for credit losses			(60,372	)										(56,984	)										(40,212	)
Total assets		$	6,483,016										$	6,318,596										$	5,865,785
Interest bearing liabilities:
Interest bearing demand, savings and money market deposits		$	2,957,604			$	1,990			0.27	%		$	2,719,433			$	1,951			0.29	%		$	2,438,399			$	3,609			0.59	%
Time deposits			1,038,983				3,501			1.34	%			1,048,772				4,136			1.59	%			1,073,140				4,365			1.61	%
Securities sold under agreements to repurchase			22,667				10			0.18	%			23,485				18			0.31	%			65,722				204			1.23	%
Federal Home Loan Bank advances			1,141				86			29.99	%			163,263				311			0.77	%			231,926				1,409			2.41	%
Total interest bearing liabilities		$	4,020,395			$	5,587			0.55	%		$	3,954,953			$	6,416			0.65	%		$	3,809,187			$	9,587			1.00	%
Demand deposits		$	1,515,058										$	1,436,671										$	1,193,357
Other liabilities			155,205											155,379											112,927
Total liabilities			5,690,658											5,547,003											5,115,471
Shareholders' equity			792,358											771,593											750,314
Total liabilities and shareholders' equity		$	6,483,016										$	6,318,596										$	5,865,785
Net interest income FTE(2)						$	47,990										$	48,629										$	53,049
Interest rate spread FTE(2)										3.04	%										3.19	%										3.61	%
Net interest earning assets		$	1,924,395										$	1,811,719										$	1,576,220
Net interest margin FTE(2)										3.21	%										3.39	%										3.91	%
Average transaction deposits		$	4,472,662										$	4,156,104										$	3,631,756
Average total deposits			5,511,645											5,204,876											4,704,896
Ratio of average interest earning assets to average interest bearing liabilities			147.87	%										145.81	%										141.38	%

                                                      

(1	)		Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.
(2	)		Presented on a fully taxable equivalent basis using the statutory tax rate of 21%. The tax equivalent adjustments included above are $1,275, $1,301 and $1,264 for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.

NATIONAL BANK HOLDINGS CORPORATION Summary of Net Interest Margin (Dollars in thousands)
	For the nine months ended September 30, 2020										For the nine months ended September 30, 2019
	Average							Average			Average							Average
	balance				Interest			rate			balance				Interest			rate
Interest earning assets:
Originated loans FTE(1)(2)	$	4,273,332			$	128,392		4.01	%		$	3,782,765			$	137,036		4.84	%
Acquired loans		313,555				22,194		9.45	%			465,165				28,467		8.18	%
Loans held for sale		163,980				3,929		3.20	%			90,143				2,750		4.08	%
Investment securities available-for-sale		597,654				9,229		2.06	%			737,744				12,059		2.18	%
Investment securities held-to-maturity		207,107				3,689		2.37	%			214,696				4,568		2.84	%
Other securities		29,826				945		4.22	%			27,513				1,299		6.30	%
Interest earning deposits and securities purchased under agreements to resell		105,430				179		0.23	%			26,468				581		2.93	%
Total interest earning assets FTE(2)	$	5,690,884			$	168,557		3.96	%		$	5,344,494			$	186,760		4.67	%
Cash and due from banks	$	74,694									$	76,863
Other assets		510,941										424,271
Allowance for credit losses		(54,077	)									(37,939	)
Total assets	$	6,222,442									$	5,807,689
Interest bearing liabilities:
Interest bearing demand, savings and money market deposits	$	2,725,572			$	6,829		0.33	%		$	2,426,136			$	10,176		0.56	%
Time deposits		1,048,116				12,075		1.54	%			1,078,549				12,062		1.50	%
Securities sold under agreements to repurchase		30,322				125		0.55	%			61,313				519		1.13	%
Federal Home Loan Bank advances		127,456				1,295		1.36	%			258,348				4,786		2.48	%
Total interest bearing liabilities	$	3,931,466			$	20,324		0.69	%		$	3,824,346			$	27,543		0.96	%
Demand deposits	$	1,363,556									$	1,152,718
Other liabilities		147,929										101,724
Total liabilities		5,442,951										5,078,788
Shareholders' equity		779,491										728,901
Total liabilities and shareholders' equity	$	6,222,442									$	5,807,689
Net interest income FTE(2)					$	148,233									$	159,217
Interest rate spread FTE(2)								3.27	%									3.71	%
Net interest earning assets	$	1,759,418									$	1,520,148
Net interest margin FTE(2)								3.48	%									3.98	%
Average transaction deposits	$	4,089,128									$	3,578,854
Average total deposits		5,137,244										4,657,403
Ratio of average interest earning assets to average interest bearing liabilities		144.75	%									139.75	%

                                                      

(1	)		Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.
(2	)		Presented on a fully taxable equivalent basis using the statutory tax rate of 21%. The tax equivalent adjustments included above are $3,843 and $3,775 for the nine months ended September 30, 2020 and September 30, 2019, respectively.

NATIONAL BANK HOLDINGS CORPORATION Allowance for Credit Losses and Asset Quality (Dollars in thousands)
Allowance for Credit Losses Analysis
	As of and for the three months ended
	September 30, 2020				June 30, 2020				September 30, 2019
Beginning allowance for credit losses	$	60,465			$	50,956			$	40,082
Charge-offs		(619	)			(852	)			(7,101	)
Recoveries		133				236				39
Provision		1,000				10,125				5,690
Ending allowance for credit losses ("ACL")	$	60,979			$	60,465			$	38,710
Ratio of annualized net charge-offs to average total loans during the period		0.04	%			0.05	%			0.65	%
Ratio of annualized net charge-offs to average total loans excluding PPP loans during the period		0.04	%			0.05	%			0.65	%
Ratio of ACL to total loans outstanding at period end		1.34	%			1.26	%			0.88	%
Ratio of ACL to total loans outstanding excluding PPP loans at period end		1.45	%			1.36	%			0.88	%
Ratio of ACL to total non-performing loans at period end		322.95	%			302.34	%			152.41	%
Total loans	$	4,556,121			$	4,782,383			$	4,401,917
Average total loans during the period		4,677,630				4,794,466				4,329,590
Average total loans excluding PPP loans during the period		4,329,458				4,512,010				4,329,590
Total non-performing loans		18,882				19,999				25,398

Past Due and Non-accrual Loans
	September 30, 2020				June 30, 2020				September 30, 2019
Loans 30-89 days past due and still accruing interest	$	6,587			$	3,932			$	6,723
Loans 90 days past due and still accruing interest		161				2,444				1,968
Non-accrual loans		18,882				19,999				25,398
Total past due and non-accrual loans	$	25,630			$	26,375			$	34,089
Total 90 days past due and still accruing interest and non-accrual loans to total loans		0.42	%			0.47	%			0.62	%

Asset Quality Data
	September 30, 2020				June 30, 2020				September 30, 2019
Non-performing loans	$	18,882			$	19,999			$	25,398
OREO		4,590				6,491				7,904
Total non-performing assets	$	23,472			$	26,490			$	33,302
Accruing restructured loans	$	21,786			$	20,284			$	7,384
Total non-performing loans to total loans		0.41	%			0.42	%			0.58	%
Total non-performing loans to total loans excluding PPP loans		0.45	%			0.45	%			0.58	%
Total non-performing assets to total loans and OREO		0.51	%			0.55	%			0.76	%
Total non-performing assets to total loans and OREO excluding PPP loans		0.56	%			0.60	%			0.76	%

NATIONAL BANK HOLDINGS CORPORATION Key Ratios
	As of and for the three months ended									As of and for the nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2020			2020			2019			2020			2019
Key Ratios(1)
Return on average assets	1.71	%		1.13	%		1.46	%		1.32	%		1.40	%
Return on average tangible assets(2)	1.76	%		1.16	%		1.51	%		1.36	%		1.45	%
Return on average tangible assets, adjusted(2)	1.78	%		1.25	%		1.56	%		1.39	%		1.46	%
Return on average equity	14.00	%		9.23	%		11.44	%		10.53	%		11.16	%
Return on average tangible common equity(2)	16.49	%		10.98	%		13.68	%		12.47	%		13.43	%
Return on average tangible common equity, adjusted(2)	16.69	%		11.78	%		14.11	%		12.80	%		13.58	%
Loan to deposit ratio (end of period)	81.12	%		88.34	%		92.99	%		81.12	%		92.99	%
Non-interest bearing deposits to total deposits (end of period)	27.31	%		27.76	%		26.13	%		27.31	%		26.13	%
Net interest margin(4)	3.13	%		3.30	%		3.81	%		3.39	%		3.89	%
Net interest margin FTE(2)(4)	3.21	%		3.39	%		3.91	%		3.48	%		3.98	%
Interest rate spread FTE(2)(5)	3.04	%		3.19	%		3.61	%		3.27	%		3.71	%
Yield on earning assets(3)	3.50	%		3.75	%		4.52	%		3.87	%		4.58	%
Yield on earning assets FTE(2)(3)	3.59	%		3.84	%		4.61	%		3.96	%		4.67	%
Cost of interest bearing liabilities(3)	0.55	%		0.65	%		1.00	%		0.69	%		0.96	%
Cost of deposits	0.40	%		0.47	%		0.67	%		0.49	%		0.64	%
Non-interest income to total revenue FTE(2)	48.13	%		44.40	%		31.82	%		41.90	%		28.18	%
Non-interest expense to average assets	3.39	%		3.42	%		2.96	%		3.39	%		3.10	%
Non-interest expense to average assets, adjusted(2)	3.37	%		3.31	%		2.90	%		3.34	%		3.08	%
Efficiency ratio	60.30	%		62.05	%		56.83	%		62.42	%		61.38	%
Efficiency ratio FTE(2)	59.47	%		61.13	%		55.90	%		61.48	%		60.33	%
Efficiency ratio FTE, adjusted(2)	59.01	%		59.17	%		54.75	%		60.64	%		59.93	%
Total Loans Asset Quality Data(6)(7)(8)
Non-performing loans to total loans	0.41	%		0.42	%		0.58	%		0.41	%		0.58	%
Non-performing loans to total loans excluding PPP loans	0.45	%		0.45	%		0.58	%		0.45	%		0.58	%
Non-performing assets to total loans and OREO	0.51	%		0.55	%		0.76	%		0.51	%		0.76	%
Non-performing assets to total loans and OREO excluding PPP loans	0.56	%		0.60	%		0.76	%		0.56	%		0.76	%
Allowance for credit losses to total loans	1.34	%		1.26	%		0.88	%		1.34	%		0.88	%
Allowance for credit losses to total loans excluding PPP loans	1.45	%		1.36	%		0.88	%		1.45	%		0.88	%
Allowance for credit losses to non-performing loans	322.95	%		302.34	%		152.41	%		322.95	%		152.41	%
Net charge-offs to average loans(1)	0.04	%		0.05	%		0.65	%		0.04	%		0.23	%

                                                      

(1	)		Quarter-to-date ratios are annualized.
(2	)		Ratio represents non-GAAP financial measure. See non-GAAP reconciliations below.
(3	)		Interest earning assets include assets that earn interest/accretion or dividends. Any market value adjustments on investment securities or loans are excluded from interest earning assets.
(4	)		Net interest margin represents net interest income, including accretion income on interest earning assets, as a percentage of average interest earning assets.
(5	)		Interest rate spread represents the difference between the weighted average yield on interest earning assets and the weighted average cost of interest bearing liabilities.
(6	)		Non-performing loans consist of non-accruing loans and restructured loans on non-accrual.
(7	)		Non-performing assets include non-performing loans and other real estate owned.
(8	)		Total loans are net of unearned discounts and fees.

NATIONAL BANK HOLDINGS CORPORATION NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (Dollars in thousands, except share and per share data)
Tangible Common Book Value Ratios
	September 30, 2020				June 30, 2020				December 31, 2019				September 30, 2019
Total shareholders' equity	$	799,357			$	776,967			$	766,920			$	753,326
Less: goodwill and core deposit intangible assets, net		(122,871	)			(123,166	)			(123,758	)			(124,054	)
Add: deferred tax liability related to goodwill		8,927				8,698				8,241				8,012
Tangible common equity (non-GAAP)	$	685,413			$	662,499			$	651,403			$	637,284
Total assets	$	6,600,676			$	6,385,431			$	5,895,512			$	5,990,050
Less: goodwill and core deposit intangible assets, net		(122,871	)			(123,166	)			(123,758	)			(124,054	)
Add: deferred tax liability related to goodwill		8,927				8,698				8,241				8,012
Tangible assets (non-GAAP)	$	6,486,732			$	6,270,963			$	5,779,995			$	5,874,008
Tangible common equity to tangible assets calculations:
Total shareholders' equity to total assets		12.11	%			12.17	%			13.01	%			12.58	%
Less: impact of goodwill and core deposit intangible assets, net		(1.54	)%			(1.61	)%			(1.74	)%			(1.73	)%
Tangible common equity to tangible assets (non-GAAP)		10.57	%			10.56	%			11.27	%			10.85	%
Tangible common book value per share calculations:
Tangible common equity (non-GAAP)	$	685,413			$	662,499			$	651,403			$	637,284
Divided by: ending shares outstanding		30,594,412				30,569,011				31,176,627				31,169,086
Tangible common book value per share (non-GAAP)	$	22.40			$	21.67			$	20.89			$	20.45
Tangible common book value per share, excluding accumulated other comprehensive income calculations:
Tangible common equity (non-GAAP)	$	685,413			$	662,499			$	651,403			$	637,284
Accumulated other comprehensive income, net of tax		(11,080	)			(12,195	)			(2,062	)			(3,087	)
Tangible common book value, excluding accumulated other comprehensive income, net of tax (non-GAAP)		674,333				650,304				649,341				634,197
Divided by: ending shares outstanding		30,594,412				30,569,011				31,176,627				31,169,086
Tangible common book value per share, excluding accumulated other comprehensive income, net of tax (non-GAAP)	$	22.04			$	21.27			$	20.83			$	20.35

NATIONAL BANK HOLDINGS CORPORATION (Dollars in thousands, except share and per share data)
Return on Average Tangible Assets and Return on Average Tangible Equity
	As of and for the three months ended												As of and for the nine months ended
	September 30,				June 30,				September 30,				September 30,				September 30,
	2020				2020				2019				2020				2019
Net income	$	27,893			$	17,705			$	21,642			$	61,422			$	60,846
Add: impact of core deposit intangible amortization expense, after tax		226				227				224				680				674
Net income adjusted for impact of core deposit intangible amortization expense, after tax	$	28,119			$	17,932			$	21,866			$	62,102			$	61,520
Average assets	$	6,483,016			$	6,318,596			$	5,865,785			$	6,222,442			$	5,807,689
Less: average goodwill and core deposit intangible asset, net of deferred tax liability related to goodwill		(114,122	)			(114,631	)			(116,188	)			(114,406	)			(116,481	)
Average tangible assets (non-GAAP)	$	6,368,894			$	6,203,965			$	5,749,597			$	6,108,036			$	5,691,208
Average shareholders' equity	$	792,358			$	771,593			$	750,314			$	779,491			$	728,901
Less: average goodwill and core deposit intangible asset, net of deferred tax liability related to goodwill		(114,122	)			(114,631	)			(116,188	)			(114,406	)			(116,481	)
Average tangible common equity (non-GAAP)	$	678,236			$	656,962			$	634,126			$	665,085			$	612,420
Return on average assets		1.71	%			1.13	%			1.46	%			1.32	%			1.40	%
Return on average tangible assets (non-GAAP)		1.76	%			1.16	%			1.51	%			1.36	%			1.45	%
Return on average equity		14.00	%			9.23	%			11.44	%			10.53	%			11.16	%
Return on average tangible common equity (non-GAAP)		16.49	%			10.98	%			13.68	%			12.47	%			13.43	%

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin
	As of and for the three months ended												As of and for the nine months ended
	September 30,				June 30,				September 30,				September 30,				September 30,
	2020				2020				2019				2020				2019
Interest income	$	52,302			$	53,744			$	61,372			$	164,714			$	182,985
Add: impact of taxable equivalent adjustment		1,275				1,301				1,264				3,843				3,775
Interest income FTE (non-GAAP)	$	53,577			$	55,045			$	62,636			$	168,557			$	186,760
Net interest income	$	46,715			$	47,328			$	51,785			$	144,390			$	155,442
Add: impact of taxable equivalent adjustment		1,275				1,301				1,264				3,843				3,775
Net interest income FTE (non-GAAP)	$	47,990			$	48,629			$	53,049			$	148,233			$	159,217
Average earning assets	$	5,944,790			$	5,766,672			$	5,385,407			$	5,690,884			$	5,344,494
Yield on earning assets		3.50	%			3.75	%			4.52	%			3.87	%			4.58	%
Yield on earning assets FTE (non-GAAP)		3.59	%			3.84	%			4.61	%			3.96	%			4.67	%
Net interest margin		3.13	%			3.30	%			3.81	%			3.39	%			3.89	%
Net interest margin FTE (non-GAAP)		3.21	%			3.39	%			3.91	%			3.48	%			3.98	%

Efficiency Ratio
	As of and for the three months ended												As of and for the nine months ended
	September 30,				June 30,				September 30,				September 30,				September 30,
	2020				2020				2019				2020				2019
Net interest income	$	46,715			$	47,328			$	51,785			$	144,390			$	155,442
Add: impact of taxable equivalent adjustment		1,275				1,301				1,264				3,843				3,775
Net interest income, FTE (non-GAAP)	$	47,990			$	48,629			$	53,049			$	148,233			$	159,217
Non-interest income	$	44,532			$	38,837			$	24,759			$	106,901			$	62,470
Non-interest expense	$	55,321			$	53,760			$	43,793			$	157,752			$	134,638
Less: core deposit intangible asset amortization		(295	)			(296	)			(295	)			(887	)			(887	)
Non-interest expense, adjusted for core deposit intangible asset amortization	$	55,026			$	53,464			$	43,498			$	156,865			$	133,751
Non-interest expense, adjusted for core deposit intangible asset amortization	$	55,026			$	53,464			$	43,498			$	156,865			$	133,751
Banking center consolidation-related expense		(432	)			(1,708	)			(898	)			(2,140	)			(898	)
Adjusted non-interest expense (non-GAAP)	$	54,594			$	51,756			$	42,600			$	154,725			$	132,853
Efficiency ratio		60.30	%			62.05	%			56.83	%			62.42	%			61.38	%
Efficiency ratio FTE (non-GAAP)		59.47	%			61.13	%			55.90	%			61.48	%			60.33	%
Adjusted efficiency ratio FTE (non-GAAP)		59.01	%			59.17	%			54.75	%			60.64	%			59.93	%

Adjusted Financial Results
		As of and for the three months ended												As of and for the nine months ended
		September 30,				June 30,				September 30,				September 30,				September 30,
		2020				2020				2019				2020				2019
Adjustments to net income:
Net income		$	27,893			$	17,705			$	21,642			$	61,422			$	60,846
Adjustments(1)			331				1,310				689				1,641				689
Adjusted net income (non-GAAP)		$	28,224			$	19,015			$	22,331			$	63,063			$	61,535
Adjustments to earnings per share:
Earnings per share - diluted		$	0.90			$	0.57			$	0.69			$	1.97			$	1.93
Adjustments(1)			0.01				0.05				0.02				0.06				0.02
Adjusted earnings per share - diluted (non-GAAP)		$	0.91			$	0.62			$	0.71			$	2.03			$	1.95
Adjustments to return on average tangible assets:
Adjusted net income (non-GAAP)		$	28,224			$	19,015			$	22,331			$	63,063			$	61,535
Add: impact of core deposit intangible amortization expense, after tax			226				227				224				680				674
Net income adjusted for impact of core deposit intangible amortization expense, after tax			28,450				19,242				22,555				63,743				62,209
Average tangible assets (non-GAAP)			6,368,894				6,203,965				5,749,597				6,108,036				5,691,208
Adjusted return on average tangible assets (non-GAAP)			1.78	%			1.25	%			1.56	%			1.39	%			1.46	%
Adjustments to return on average tangible common equity:
Net income adjusted for impact of core deposit intangible amortization expense, after tax		$	28,450			$	19,242			$	22,555			$	63,743			$	62,209
Average tangible common equity (non-GAAP)			678,236				656,962				634,126				665,085				612,420
Adjusted return on average tangible common equity (non-GAAP)			16.69	%			11.78	%			14.11	%			12.80	%			13.58	%
Adjustments to non-interest expense:
Non-interest expense		$	55,321			$	53,760			$	43,793			$	157,752			$	134,638
Adjustments(1)			432				1,708				898				2,140				898
Adjusted non-interest expense (non-GAAP)			54,889				52,052				42,895				155,612				133,740
Non-interest expense to average assets, adjusted (non-GAAP)			3.37	%			3.31	%			2.90	%			3.34	%			3.08	%
(1) Adjustments:
Non-interest expense adjustments:
Banking center consolidation-related expense		$	432			$	1,708			$	898			$	2,140			$	898
Tax expense impact			(101	)			(398	)			(209	)			(499	)			(209	)
Adjustments (non-GAAP)		$	331			$	1,310			$	689			$	1,641			$	689

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FAQ

What were the earnings results for National Bank Holdings Corporation in 3Q20?

National Bank Holdings Corporation reported net income of $27.9 million, or $0.90 per diluted share, in 3Q20.

How did NBHC's loan portfolio perform in the third quarter of 2020?

Total loans decreased by $226.3 million, or 18.8% annualized, in 3Q20.

What was the impact of net interest margins on NBHC's earnings in 3Q20?

Net interest income totaled $48 million, reflecting a decrease attributed to lower earning asset yields.

What was the change in deposits for NBHC in 3Q20?

Average total deposits increased by 23.4% annualized to $5.5 billion in 3Q20.

What is the outlook for NBHC's performance given the current economic conditions?

Despite challenges from the COVID-19 pandemic, NBHC remains well-capitalized with a strong Common Equity Tier 1 ratio of 14.25%.