EX-99.1 2 nbhc-20201020xex99d1.htm EX-99.1

Exhibit 99.1

Graphic

National Bank Holdings Corporation Announces

Record Third Quarter 2020 Financial Results

Denver, Colorado - (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 reconciliation starting on page 14.

(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%.

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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.

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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

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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

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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

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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

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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.

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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 starting on page 14.

8


NATIONAL BANK HOLDINGS CORPORATION

Loan Portfolio

(Dollars in thousands)

Period End Loan Balances by Type

September 30, 2020

September 30, 2020

vs. June 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.

9


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.

10


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.

11


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%

12


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 starting on page 14.

(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.

13


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

14


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%

15


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

16