National Bank Holdings Corporation Announces Fourth Quarter and Record Full Year 2020 Financial Results

DENVER, Jan. 21, 2021 (GLOBE NEWSWIRE) — National Bank Holdings Corporation (NYSE: NBHC) reported:     For the quarter   For the quarter – adjusted(1)   For the year   For the year – adjusted (1)     4Q20   3Q20   4Q19   4Q20   3Q20     4Q19 […]

DENVER, Jan. 21, 2021 (GLOBE NEWSWIRE) — National Bank Holdings Corporation (NYSE: NBHC) reported:

    For the quarter   For the quarter – adjusted(1)   For the year   For the year – adjusted (1)
    4Q20   3Q20   4Q19   4Q20   3Q20     4Q19   2020     2019     2020     2019  
Net income ($000’s)   $ 27,169     $ 27,893     $ 19,519     $ 27,329     $ 28,224     $ 19,519     $ 88,591     $ 80,365     $ 90,397     $ 81,054  
Earnings per share – diluted   $ 0.87     $ 0.90     $ 0.62     $ 0.88     $ 0.91     $ 0.62     $ 2.85     $ 2.55     $ 2.91     $ 2.57  
Return on average tangible assets(2)     1.67 %     1.76 %     1.35 %     1.68 %     1.78 %     1.35 %     1.44 %     1.42 %     1.47 %     1.43 %
Return on average tangible common equity(2)     15.55 %     16.49 %     12.07 %     15.64 %     16.69 %     12.07 %     13.27 %     13.07 %     13.54 %     13.18 %

                                                      

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

In announcing these results, Chief Executive Officer Tim Laney shared, “I am pleased to announce that our solid performance during the fourth quarter contributed to record full year earnings of $2.85 per share. In the face of the pandemic, my teammates came together to serve our clients and communities while also taking care of each other. An intense focus on the safety and soundness of the Bank resulted in full-year net charge-offs of just six basis points. The diversity and granularity of our loan portfolio continues to produce desirable results. Further, we built on our relationship banking model to grow our low cost transaction deposits 28.8% in the fourth quarter, compared to the same period in the prior year.”

Mr. Laney added, “We are proud to have been recognized in Fortune’s 100 Fastest Growing Companies in 2020 and among the top public companies for shareholder value creation. With a strong Common Equity Tier 1 ratio of 14.70% coupled with a sizable liquidity position, we believe we are well positioned for growth in 2021. We will continue to execute our disciplined approach to pursuing growth opportunities while maintaining an intense focus on expense management as we prudently navigate the current economic challenges side-by-side with our clients and our communities.”

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

Net income totaled $27.2 million during the fourth quarter of 2020, or $0.87 per diluted share, compared to $27.9 million, or $0.90 per diluted share, during the third quarter of 2020. Adjusting for banking center consolidation-related expenses, net income totaled $27.3 million, or $0.88 per diluted share, compared to $28.2 million, or $0.91 per diluted share, during the third quarter of 2020. The return on average tangible assets was 1.67%, compared to 1.76% in the prior quarter, and the return on average tangible common equity was 15.55%, compared to 16.49%, in the prior quarter.

Net Interest Income
Fully taxable equivalent net interest income totaled $49.8 million, increasing $1.8 million, driven by an increase in PPP-related income from PPP loan forgiveness. PPP loan fees were $5.2 million in the fourth quarter of 2020, compared to $1.5 million in the prior quarter. As of December 31, 2020, the remaining unamortized PPP loan fees totaled $3.4 million. The fully taxable equivalent net interest margin was 3.24%, widening three basis points from the prior quarter. The yield on earning assets decreased four basis points largely due to the remix of assets into lower-yielding cash balances, partially offset by accelerated loan fee income from PPP loan forgiveness. Our cost of funds decreased by seven basis points to 0.33%.

Loans
Total loans ended the quarter at $4.4 billion, decreasing $202.4 million, of which $172.2 million was related to PPP loans forgiven during the quarter. Excluding PPP loans, total loans decreased by $30.2 million, or 2.9% annualized. During the quarter, we continued our careful approach to extending new credit as well as continuing an intense focus on managing credit risk and yield. Fourth quarter loan originations totaled $272.5 million, which were $140.0 million higher than the third quarter 2020 and $2.9 million higher than last year’s fourth quarter. 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
No provision for loan losses was recorded during the fourth quarter under the CECL model due to the impact of the model’s underlying economic forecast, qualitative factors and a low level of charge-offs. Annualized net charge-offs totaled 0.11% of total loans, compared to 0.04% in the prior quarter. Non-performing loans (comprised of non-accrual loans and non-accrual TDRs) totaled 0.47% of total loans, compared to 0.41% at September 30, 2020. The allowance for credit losses as a percentage of total loans increased three basis points to 1.37% at December 31, 2020. Excluding PPP loans, non-performing loans totaled 0.49% of total loans, and the allowance for credit losses as a percentage of totals loans totaled 1.43% at December 31, 2020.

Deposits
Average transaction deposits (defined as total deposits less time deposits) increased $172.1 million, or 15.3% annualized, and average total deposits increased $141.4 million, or 10.2% annualized, to $5.7 billion as of December 31, 2020. The mix of transaction deposits to total deposits improved 91 basis points to 82.6% at December 31, 2020. The loan to deposit ratio totaled 76.7% at December 31, 2020, compared to 81.1% at September 30, 2020.

The cost of transaction deposits decreased three basis points from the prior quarter to 0.15%. The cost of total deposits decreased seven basis points from the prior quarter to 0.33%.

Non-Interest Income
Non-interest income totaled $33.4 million during the fourth quarter, representing a decrease of $11.2 million, or 25.1%, entirely due to seasonal decreases in mortgage banking income. Service charges and bank card fees increased a combined $0.5 million, and OREO-related income increased $0.2 million.

Non-Interest Expense
Non-interest expense totaled $48.4 million during the fourth quarter, representing a decrease of $6.9 million largely due to lower mortgage banking performance-related compensation. The fully taxable equivalent efficiency ratio improved 160 basis points to 57.9% at December 31, 2020, compared to 59.5% at September 30, 2020. Adjusting for banking center consolidation-related expense, the fully taxable equivalent efficiency ratio improved to 57.6% at December 31, 2020.

Income tax expense totaled $6.3 million during the fourth quarter, compared to $6.8 million during the prior quarter. The effective tax rate was 18.9% and 19.7% for the fourth and third 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 December 31, 2020 for the consolidated company and NBH Bank was 10.70% and 9.23%, respectively. Shareholders’ equity totaled $820.7 million at December 31, 2020 and increased $21.3 million from the prior quarter due to higher retained earnings.

Common book value per share increased $0.66 to $26.79 at December 31, 2020. The quarter’s earnings, net of dividends paid, increased the tangible common book value per share by $0.69 to $23.09 at December 31, 2020. Excluding accumulated other comprehensive income, the tangible book value per share increased $0.73 to $22.77 at December 31, 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. 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. While the initial release of the vaccine is promising, the length of time that the government-mandated measures must remain in place to address COVID-19 is unknown. The pandemic has already had a significantly negative impact to the U.S. labor market, consumer spending and business operations, and it is not clear how quickly the vaccine can be widely deployed and when government-mandated measures will be removed.

Year-Over-Year Review
(All comparisons refer to the full year 2019, except as noted)

Net income totaled a record $88.6 million during 2020, or $2.85 per diluted share, an increase of $8.2 million, or 10.2%. Adjusting for banking center consolidation-related expenses, net income totaled $90.4 million, or $2.91 per diluted share, an increase of $9.3 million, or 11.5%. The return on average tangible assets was 1.44%, compared to 1.42% in the prior year, and the return on average tangible common equity was 13.27%, compared to 13.07%, in the prior year. The adjusted return on average tangible assets was 1.47%, compared to 1.43% in the prior year, and the adjusted return on average tangible common equity was 13.54%, compared to 13.18% during the prior year.

Fully taxable equivalent net interest income totaled $198.0 million, decreasing $12.8 million, or 6.1%, driven by declines in short-term interest rates as a result of monetary policy actions by the Federal Reserve. Average earning assets increased $427.8 million, or 8.0%, primarily driven by average loan growth of $255.7 million, including average PPP loan growth of $225.9 million, and average increases in interest-bearing cash balances of $182.8 million. These increases were partially offset by a decrease in average investment securities of $81.6 million. The fully taxable equivalent net interest margin narrowed 51 basis points to 3.42% due to lower earning asset yields. The yield on earning assets decreased 76 basis points, led by a 73 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 deposits decreased 19 basis points to 0.45%.

Loans outstanding totaled $4.4 billion, decreasing $61.7 million, or 1.4%, from the prior year, largely due to lower commercial and industrial loans of $140.9 million, or 10.0%, that were offset by PPP loans of $176.1 million. New loan originations over the trailing 12 months totaled $1.2 billion, led by commercial loan originations of $807.3 million, which included PPP loan originations of $358.9 million.

Average non-interest bearing demand deposits increased $338.9 million, or 29.2%. Average transaction deposits increased $642.8 million, or 17.9%, and average total deposits increased $606.4 million, or 13.0%, to $5.3 billion as of December 31, 2020. Spot transaction deposits increased $1.0 billion to $4.7 billion at December 31, 2020, improving the mix of transaction deposits to total deposits by 490 basis points to 82.6% at December 31, 2020. The mix of non-interest bearing demand deposits to total deposits improved to 37.2% from 25.0% at December 31, 2019.

A CECL model driven provision for loan losses of $17.6 million was recorded during 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. Net charge-offs on loans totaled 0.06% of total loans, compared to 0.19% in the prior year. Non-performing loans to total loans decreased two basis points to 0.47%, compared to 0.49% at December 31, 2019. The allowance for credit losses totaled 1.37% of total loans, compared to 0.88% at December 31, 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 to 1.43% at December 31, 2020.

Non-interest income totaled $140.3 million, representing an increase of $57.5 million, or 69.5%, driven by an increase in mortgage banking income. Service charges and bank card fees decreased a combined $2.1 million and were impacted by changes in consumer behavior due to COVID-19.

Non-interest expense totaled $206.2 million, representing an increase of $25.4 million, or 14.1%, largely due to higher mortgage banking performance-related compensation. Banking center consolidation-related expense totaled $2.3 million, compared to $0.9 million during the prior year. The consolidations of 12 banking centers were announced in the second quarter of 2020 and were substantially complete at December 31, 2020. Other non-interest expense decreased by $1.4 million largely due to decreases in travel as well as marketing and development expenses. 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 $20.8 million, compared to $15.8 million during 2019. Included in income tax expense was $2.2 million of benefit during 2019 from stock compensation activity. The effective tax rate for 2020 was 19.0%, compared to 18.7% in the prior year, adjusting for stock compensation activity. 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 Friday, January 22, 2021. Interested parties may listen to this call by dialing (877) 272-6762 / (615) 800-6832 (International) using the Conference ID of 4472264 and asking for the NBHC Fourth Quarter Earnings conference call. A telephonic replay of the call will be available beginning approximately four hours after the call’s completion through February 4, 2021, by dialing (855) 859-2056 (United States) / (404) 537-3406 (International) using the Conference ID of 4472264. 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 stakeholder results. Through its bank subsidiary, NBH Bank, National Bank Holdings Corporation operates a network of 89 banking centers, serving individual consumers, small, medium and large businesses, and government and non-profit entities. Its banking centers are located in its core footprint of Colorado, the greater Kansas City region, Texas, Utah and New Mexico. Its comprehensive residential mortgage banking group primarily serves the bank’s core footprint. 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, [email protected]
Media: Jody Soper, Chief Marketing Officer, (303) 784-5925, [email protected]

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 years ended
  December 31,       September 30,       December 31,       December 31,       December 31, 
  2020    2020    2019   2020
  2019 
Total interest and dividend income $ 53,288     $ 52,302     $ 59,616   $ 218,002     $ 242,601  
Total interest expense   4,732       5,587       9,228     25,056       36,771  
Net interest income   48,556       46,715       50,388     192,946       205,830  
Taxable equivalent adjustment   1,260       1,275       1,290     5,103       5,065  
Net interest income FTE(1)   49,816       47,990       51,678     198,049       210,895  
Provision for loan losses         1,200       1,180     17,630       11,643  
Net interest income after provision for loan losses FTE(1)   49,816       46,790       50,498     180,419       199,252  
Non-interest income:                            
Service charges   4,000       3,742       4,416     14,962       17,895  
Bank card fees   4,240       4,039       3,649     15,446       14,595  
Mortgage banking income   23,138       34,943       10,309     102,384       42,346  
Other non-interest income   1,695       1,733       1,740     7,079       7,601  
OREO-related income   284       75       168     387       315  
Total non-interest income   33,357       44,532       20,282     140,258       82,752  
Non-interest expense:                            
Salaries and benefits   32,919       38,614       30,653     141,170       122,732  
Occupancy and equipment   6,619       6,878       6,908     27,473       27,336  
Professional fees   864       714       658     2,946       3,256  
Other non-interest expense   6,725       7,443       6,849     27,947       29,347  
Problem asset workout   807       1,064       736     3,148       3,186  
(Gain) loss on sale of OREO, net   (13 )     (119 )     7     (38 )     (7,193 )
Core deposit intangible asset amortization   296       295       296     1,183       1,183  
Banking center consolidation-related expense   208       432           2,348       898  
Total non-interest expense   48,425       55,321       46,107     206,177       180,745  
                             
Income before income taxes FTE(1)   34,748       36,001       24,673     114,500       101,259  
Taxable equivalent adjustment   1,260       1,275       1,290     5,103       5,065  
Income before income taxes   33,488       34,726       23,383     109,397       96,194  
Income tax expense   6,319       6,833       3,864     20,806       15,829  
Net income $ 27,169     $ 27,893     $ 19,519   $ 88,591     $ 80,365  
Earnings per share – basic $ 0.88     $ 0.91     $ 0.62   $ 2.87     $ 2.57  
Earnings per share – diluted   0.87       0.90       0.62     2.85       2.55  

                                                      

 (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)

  December 31, 2020   September 30, 2020   December 31, 2019
ASSETS                
Cash and cash equivalents $ 605,565     $ 445,103     $ 110,190  
Investment securities available-for-sale   661,955       572,523       638,249  
Investment securities held-to-maturity   376,615       320,001       182,884  
Non-marketable securities   16,493       29,598       29,751  
Loans   4,353,726       4,556,121       4,415,406  
Allowance for credit losses   (59,777 )     (60,979 )     (39,064 )
Loans, net   4,293,949       4,495,142       4,376,342  
Loans held for sale   247,813       273,003       117,444  
Other real estate owned   4,730       4,590       7,300  
Premises and equipment, net   106,982       108,860       112,151  
Goodwill   115,027       115,027       115,027  
Intangible assets, net   17,928       15,017       11,361  
Other assets   212,893       221,812       194,813  
Total assets $ 6,659,950     $ 6,600,676     $ 5,895,512  
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Liabilities:                
Non-interest bearing demand deposits $ 2,111,045     $ 1,533,676     $ 1,184,945  
Interest bearing demand deposits   514,286       976,133       738,496  
Savings and money market   2,064,769       2,079,585       1,755,538  
Total transaction deposits   4,690,100       4,589,394       3,678,979  
Time deposits   986,132       1,027,066       1,058,153  
Total deposits   5,676,232       5,616,460       4,737,132  
Securities sold under agreements to repurchase   22,897       23,904       56,935  
Federal Home Loan Bank advances               207,675  
Other liabilities   140,130       160,955       126,850  
Total liabilities   5,839,259       5,801,319       5,128,592  
Shareholders’ equity:                
Common stock   515       515       515  
Additional paid in capital   1,011,362       1,010,145       1,009,223  
Retained earnings   223,175       202,238       164,082  
Treasury stock   (424,127 )     (424,621 )     (408,962 )
Accumulated other comprehensive income, net of tax   9,766       11,080       2,062  
Total shareholders’ equity   820,691       799,357       766,920  
Total liabilities and shareholders’ equity $ 6,659,950     $ 6,600,676     $ 5,895,512  
SHARE DATA                
Average basic shares outstanding   30,784,896       30,756,116       31,299,989  
Average diluted shares outstanding   31,032,648       30,924,223       31,525,911  
Ending shares outstanding   30,634,291       30,594,412       31,176,627  
Common book value per share $ 26.79     $ 26.13     $ 24.60  
Tangible common book value per share(1) (non-GAAP)   23.09       22.40       20.89  
Tangible common book value per share, excluding accumulated other comprehensive income(1) (non-GAAP)   22.77       22.04       20.83  
CAPITAL RATIOS                
Average equity to average assets   12.27 %     12.22 %     12.91 %
Tangible common equity to tangible assets(1)   10.80 %     10.57 %     11.27 %
Tier 1 leverage ratio   10.70 %     10.60 %     11.04 %
Common equity tier 1 risk-based capital ratio   14.70 %     14.25 %     13.21 %
Tier 1 risk-based capital ratio   14.70 %     14.25 %     13.21 %
Total risk-based capital ratio   15.83 %     15.40 %     14.08 %

                                                      

(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

          December 31, 2020       December 31, 2020
          vs. September 30, 2020       vs. December 31, 2019
  December 31, 2020   September 30, 2020   % Change   December 31, 2019   % Change
Originated:                        
Commercial:                        
Commercial and industrial $ 1,248,530   $ 1,228,550   1.6 %   $ 1,380,248   (9.5 )%
Municipal and non-profit   870,410     883,065   (1.4 )%     833,707   4.4 %
Owner-occupied commercial real estate   464,417     460,487   0.9 %     414,477   12.0 %
Food and agribusiness   205,189     210,818   (2.7 )%     245,320   (16.4 )%
PPP loans(1)   176,106     348,257   (49.4 )%       100.0 %
Total commercial   2,964,652     3,131,177   (5.3 )%     2,873,752   3.2 %
Commercial real estate non-owner occupied   542,642     515,415   5.3 %     505,479   7.4 %
Residential real estate   581,555     614,449   (5.4 )%     651,656   (10.8 )%
Consumer   18,581     20,196   (8.0 )%     21,030   (11.6 )%
Total originated   4,107,430     4,281,237   (4.1 )%     4,051,917   1.4 %
                         
Acquired:                        
Commercial:                        
Commercial and industrial   22,102     23,984   (7.8 )%     31,284   (29.4 )%
Municipal and non-profit   381     576   (33.9 )%     3,819   (90.0 )%
Owner-occupied commercial real estate   51,821     55,929   (7.3 )%     75,645   (31.5 )%
Food and agribusiness   5,108     5,740   (11.0 )%     7,807   (34.6 )%
Total commercial   79,412     86,229   (7.9 )%     118,555   (33.0 )%
Commercial real estate non-owner occupied   89,354     101,672   (12.1 )%     125,426   (28.8 )%
Residential real estate   77,105     86,478   (10.8 )%     118,762   (35.1 )%
Consumer   425     505   (15.8 )%     746   (43.0 )%
Total acquired   246,296     274,884   (10.4 )%     363,489   (32.2 )%
   Total loans $ 4,353,726   $ 4,556,121   (4.4 )%   $ 4,415,406   (1.4 )%

                                                      

(1 )      PPP loan balances are net of fees and costs and include principal totaling $179,531 and $356,913 as of December 31, 2020 and September 30, 2020, respectively.

Originations(1)

  Fourth quarter   Third quarter   Second quarter   First quarter   Fourth quarter
  2020   2020   2020   2020   2019
Commercial:                            
Commercial and industrial $ 96,625   $ 11,354   $ (8,726 )   $ 118,999     $ 69,048
Municipal and non-profit   25,348     6,083     49,679       13,968       46,114
Owner occupied commercial real estate   36,085     23,758     22,078       37,372       46,965
Food and agribusiness   19,191     13,876     (10,480 )     (6,787 )     20,348
PPP loans       122     358,798            
Total commercial   177,249     55,193     411,349       163,552       182,475
Commercial real estate non-owner occupied   52,018     24,937     18,992       80,792       41,256
Residential real estate   41,355     49,786     29,024       46,273       43,493
Consumer   1,858     2,980     2,206       2,320       2,315
Total $ 272,480   $ 132,896   $ 461,571     $ 292,937     $ 269,539

                                                      

(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 $50,982, ($27,899), ($55,826), $48,789 and $1,756 as of the fourth quarter 2020, third quarter 2020, second quarter 2020, first quarter 2020 and fourth 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
    December 31, 2020   September 30, 2020   December 31, 2019
    Average               Average      Average               Average      Average               Average
    balance   Interest   rate   balance   Interest   rate   balance   Interest   rate
Interest earning assets:                                                      
Originated loans FTE(1)(2)   $ 4,129,155     $ 43,200     4.16 %   $ 4,343,335     $ 40,973     3.75 %   $ 4,002,813     $ 46,466     4.61 %
Acquired loans     259,233       5,715     8.77 %     284,653       6,593     9.21 %     377,330       7,525     7.91 %
Loans held for sale     248,326       1,699     2.72 %     230,390       1,683     2.91 %     181,550       1,657     3.62 %
Investment securities available-for-sale     574,642       2,177     1.52 %     559,330       2,784     1.99 %     642,297       3,413     2.13 %
Investment securities held-to-maturity     369,812       1,410     1.53 %     242,511       1,253     2.07 %     187,274       1,257     2.68 %
Other securities     18,195       212     4.66 %     29,640       221     2.98 %     29,681       471     6.35 %
Interest earning deposits and securities purchased under agreements to resell     509,150       135     0.11 %     254,931       70     0.11 %     17,096       117     2.72 %
Total interest earning assets FTE(2)   $ 6,108,513     $ 54,548     3.55 %   $ 5,944,790     $ 53,577     3.59 %   $ 5,438,041     $ 60,906     4.44 %
Cash and due from banks   $ 73,768                 $ 73,274                 $ 76,568              
Other assets     514,053                   525,324                   448,596              
Allowance for credit losses     (60,844 )                 (60,372 )                 (38,746 )            
Total assets   $ 6,635,490                 $ 6,483,016                 $ 5,924,459              
Interest bearing liabilities:                                                      
Interest bearing demand, savings and money market deposits   $ 2,746,597     $ 1,776     0.26 %   $ 2,957,604     $ 1,990     0.27 %   $ 2,429,417     $ 3,101     0.51 %
Time deposits     1,008,297       2,949     1.16 %     1,038,983       3,501     1.34 %     1,062,511       4,464     1.67 %
Securities sold under agreements to repurchase     23,410       7     0.12 %     22,667       10     0.18 %     57,870       149     1.02 %
Federal Home Loan Bank advances               0.00 %     1,141       86     29.99 %     301,433       1,514     1.99 %
Total interest bearing liabilities   $ 3,778,304     $ 4,732     0.50 %   $ 4,020,395     $ 5,587     0.55 %   $ 3,851,231     $ 9,228     0.95 %
Demand deposits   $ 1,898,171                 $ 1,515,058                 $ 1,177,958              
Other liabilities     144,532                   155,205                   130,576              
Total liabilities     5,821,007                   5,690,658                   5,159,765              
Shareholders’ equity     814,483                   792,358                   764,694              
Total liabilities and shareholders’ equity   $ 6,635,490                 $ 6,483,016                 $ 5,924,459              
Net interest income FTE(2)         $ 49,816               $ 47,990               $ 51,678      
Interest rate spread FTE(2)                 3.05 %                 3.04 %                 3.49 %
Net interest earning assets   $ 2,330,209                 $ 1,924,395                 $ 1,586,810              
Net interest margin FTE(2)                 3.24 %                 3.21 %                 3.77 %
Average transaction deposits   $ 4,644,768                 $ 4,472,662                 $ 3,607,375              
Average total deposits     5,653,065                   5,511,645                   4,669,886              
Ratio of average interest earning assets to average interest bearing liabilities     161.67 %                 147.87 %                 141.20 %            

                                                      

(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 $1,260, $1,275 and $1,290 for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

NATIONAL BANK HOLDINGS CORPORATION
Summary of Net Interest Margin
(Dollars in thousands)

                               
  For the year ended December 31, 2020   For the year ended December 31, 2019
  Average              Average   Average              Average
  balance   Interest   rate   balance   Interest   rate
Interest earning assets:                              
Originated loans FTE(1)(2) $ 4,237,091     $ 171,592   4.05 %   $ 3,838,229     $ 183,502   4.78 %
Acquired loans   299,901       27,909   9.31 %     443,025       35,992   8.12 %
Loans held for sale   185,182       5,628   3.04 %     113,183       4,407   3.89 %
Investment securities available-for-sale   591,870       11,406   1.93 %     713,686       15,472   2.17 %
Investment securities held-to-maturity   248,006       5,099   2.06 %     207,784       5,825   2.80 %
Other securities   26,903       1,157   4.30 %     28,060       1,770   6.31 %
Interest earning deposits and securities purchased under agreements to resell   206,911       314   0.15 %     24,106       698   2.90 %
Total interest earning assets FTE(2) $ 5,795,864     $ 223,105   3.85 %   $ 5,368,073     $ 247,666   4.61 %
Cash and due from banks $ 74,461               $ 76,788            
Other assets   511,721                 430,402            
Allowance for credit losses   (55,778 )               (38,142 )          
Total assets $ 6,326,268               $ 5,837,121            
Interest bearing liabilities:                              
Interest bearing demand, savings and money market deposits $ 2,730,857     $ 8,605   0.32 %   $ 2,426,963     $ 13,277   0.55 %
Time deposits   1,038,107       15,024   1.45 %     1,074,506       16,526   1.54 %
Securities sold under agreements to repurchase   28,585       132   0.46 %     60,445       668   1.11 %
Federal Home Loan Bank advances   95,418       1,295   1.36 %     269,207       6,300   2.34 %
Total interest bearing liabilities $ 3,892,967     $ 25,056   0.64 %   $ 3,831,121     $ 36,771   0.96 %
Demand deposits $ 1,497,940               $ 1,159,080            
Other liabilities   147,075                 108,997            
Total liabilities   5,537,982                 5,099,198            
Shareholders’ equity   788,286                 737,923            
Total liabilities and shareholders’ equity $ 6,326,268               $ 5,837,121            
Net interest income FTE(2)       $ 198,049             $ 210,895    
Interest rate spread FTE(2)             3.21 %               3.65 %
Net interest earning assets $ 1,902,897               $ 1,536,952            
Net interest margin FTE(2)             3.42 %               3.93 %
Average transaction deposits $ 4,228,797               $ 3,586,043            
Average total deposits   5,266,904                 4,660,549            
Ratio of average interest earning assets to average interest bearing liabilities   148.88 %               140.12 %          

                                                      

(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 $5,103 and $5,065 for the years ended December 31, 2020 and December 31, 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
  December 31, 2020   September 30, 2020   December 31, 2019
Beginning allowance for credit losses $ 60,979     $ 60,465     $ 38,710  
Charge-offs   (1,259 )     (619 )     (937 )
Recoveries   57       133       111  
Provision         1,000       1,180  
Ending allowance for credit losses (“ACL”) $ 59,777     $ 60,979     $ 39,064  
Ratio of annualized net charge-offs to average total loans during the period   0.11 %     0.04 %     0.07 %
Ratio of annualized net charge-offs to average total loans excluding PPP loans during the period   0.11 %     0.04 %     0.07 %
Ratio of ACL to total loans outstanding at period end   1.37 %     1.34 %     0.88 %
Ratio of ACL to total loans outstanding excluding PPP loans at period end   1.43 %     1.45 %     0.88 %
Ratio of ACL to total non-performing loans at period end   293.21 %     322.95 %     179.62 %
Total loans $ 4,353,726     $ 4,556,121     $ 4,415,406  
Average total loans during the period   4,431,694       4,677,630       4,401,803  
Average total loans excluding PPP loans during the period   4,160,520       4,329,458       4,401,803  
Total non-performing loans   20,387       18,882       21,748  

Past Due and Non-accrual Loans

  December 31, 2020   September 30, 2020   December 31, 2019
Loans 30-89 days past due and still accruing interest $ 968     $ 6,587     $ 6,349  
Loans 90 days past due and still accruing interest   162       161       1,662  
Non-accrual loans   20,387       18,882       21,748  
Total past due and non-accrual loans $ 21,517     $ 25,630     $ 29,759  
Total 90 days past due and still accruing interest and non-accrual loans to total loans   0.47 %     0.42 %     0.53 %

Asset Quality Data

  December 31, 2020   September 30, 2020   December 31, 2019
Non-performing loans $ 20,387     $ 18,882     $ 21,748  
OREO   4,730       4,590       7,300  
Other repossessed assets   17              
Total non-performing assets $ 25,134     $ 23,472     $ 29,048  
Accruing restructured loans $ 13,945     $ 21,786     $ 6,885  
Total non-performing loans to total loans   0.47 %     0.41 %     0.49 %
Total non-performing loans to total loans excluding PPP loans   0.49 %     0.45 %     0.49 %
Total non-performing assets to total loans and OREO   0.58 %     0.51 %     0.66 %
Total non-performing assets to total loans and OREO excluding PPP loans   0.60 %     0.56 %     0.66 %

NATIONAL BANK HOLDINGS CORPORATION
Key Ratios

  As of and for the three months ended   As of and for the years ended
  December 31,       September 30,       December 31,       December 31,    December 31, 
  2020       2020       2019       2020    2019 
Key Ratios(1)                  
Return on average assets 1.63 %   1.71 %   1.31 %   1.40 %   1.38 %
Return on average tangible assets(2) 1.67 %   1.76 %   1.35 %   1.44 %   1.42 %
Return on average tangible assets, adjusted(2) 1.68 %   1.78 %   1.35 %   1.47 %   1.43 %
Return on average equity 13.27 %   14.00 %   10.13 %   11.24 %   10.89 %
Return on average tangible common equity(2) 15.55 %   16.49 %   12.07 %   13.27 %   13.07 %
Return on average tangible common equity, adjusted(2) 15.64 %   16.69 %   12.07 %   13.54 %   13.18 %
Loan to deposit ratio (end of period) 76.70 %   81.12 %   93.21 %   76.70 %   93.21 %
Non-interest bearing deposits to total deposits (end of period) 37.19 %   27.31 %   25.01 %   37.19 %   25.01 %
Net interest margin(4) 3.16 %   3.13 %   3.68 %   3.33 %   3.83 %
Net interest margin FTE(2)(4) 3.24 %   3.21 %   3.77 %   3.42 %   3.93 %
Interest rate spread FTE(2)(5) 3.05 %   3.04 %   3.49 %   3.21 %   3.65 %
Yield on earning assets(3) 3.47 %   3.50 %   4.35 %   3.76 %   4.52 %
Yield on earning assets FTE(2)(3) 3.55 %   3.59 %   4.44 %   3.85 %   4.61 %
Cost of interest bearing liabilities(3) 0.50 %   0.55 %   0.95 %   0.64 %   0.96 %
Cost of deposits 0.33 %   0.40 %   0.64 %   0.45 %   0.64 %
Non-interest income to total revenue FTE(2) 40.11 %   48.13 %   28.19 %   41.46 %   28.18 %
Non-interest expense to average assets 2.90 %   3.39 %   3.09 %   3.26 %   3.10 %
Non-interest expense to average assets, adjusted(2) 2.89 %   3.37 %   3.09 %   3.22 %   3.08 %
Efficiency ratio 58.76 %   60.30 %   64.82 %   61.52 %   62.22 %
Efficiency ratio FTE(2) 57.87 %   59.47 %   63.66 %   60.59 %   61.15 %
Efficiency ratio FTE, adjusted(2) 57.62 %   59.01 %   63.66 %   59.90 %   60.84 %
                   
Total Loans Asset Quality Data(6)(7)(8)                  
Non-performing loans to total loans 0.47 %   0.41 %   0.49 %   0.47 %   0.49 %
Non-performing loans to total loans excluding PPP loans 0.49 %   0.45 %   0.49 %   0.49 %   0.49 %
Non-performing assets to total loans and OREO 0.58 %   0.51 %   0.66 %   0.58 %   0.66 %
Non-performing assets to total loans and OREO excluding PPP loans 0.60 %   0.56 %   0.66 %   0.60 %   0.66 %
Allowance for credit losses to total loans 1.37 %   1.34 %   0.88 %   1.37 %   0.88 %
Allowance for credit losses to total loans excluding PPP loans 1.43 %   1.45 %   0.88 %   1.43 %   0.88 %
Allowance for credit losses to non-performing loans 293.21 %   322.95 %   179.62 %   293.21 %   179.62 %
Net charge-offs to average loans(1) 0.11 %   0.04 %   0.07 %   0.06 %   0.19 %

                                                      

(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

  December 31, 2020   September 30, 2020   December 31, 2019
Total shareholders’ equity $ 820,691     $ 799,357     $ 766,920  
Less: goodwill and core deposit intangible assets, net   (122,575 )     (122,871 )     (123,758 )
Add: deferred tax liability related to goodwill   9,155       8,927       8,241  
Tangible common equity (non-GAAP) $ 707,271     $ 685,413     $ 651,403  
                 
Total assets $ 6,659,950     $ 6,600,676     $ 5,895,512  
Less: goodwill and core deposit intangible assets, net   (122,575 )     (122,871 )     (123,758 )
Add: deferred tax liability related to goodwill   9,155       8,927       8,241  
Tangible assets (non-GAAP) $ 6,546,530     $ 6,486,732     $ 5,779,995  
                 
Tangible common equity to tangible assets calculations:                
Total shareholders’ equity to total assets   12.32 %     12.11 %     13.01 %
Less: impact of goodwill and core deposit intangible assets, net   (1.52 )%     (1.54 )%     (1.74 )%
Tangible common equity to tangible assets (non-GAAP)   10.80 %     10.57 %     11.27 %
                 
Tangible common book value per share calculations:                
Tangible common equity (non-GAAP) $ 707,271     $ 685,413     $ 651,403  
Divided by: ending shares outstanding   30,634,291       30,594,412       31,176,627  
Tangible common book value per share (non-GAAP) $ 23.09     $ 22.40     $ 20.89  
                 
Tangible common book value per share, excluding accumulated other comprehensive income calculations:                
Tangible common equity (non-GAAP) $ 707,271     $ 685,413     $ 651,403  
Accumulated other comprehensive income, net of tax   (9,766 )     (11,080 )     (2,062 )
Tangible common book value, excluding accumulated other comprehensive income, net of tax (non-GAAP)   697,505       674,333       649,341  
Divided by: ending shares outstanding   30,634,291       30,594,412       31,176,627  
Tangible common book value per share, excluding accumulated other comprehensive income, net of tax (non-GAAP) $ 22.77     $ 22.04     $ 20.83  

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 years ended
  December 31,       September 30,       December 31,       December 31,       December 31, 
  2020
     2020       2019       2020      2019 
Net income $ 27,169     $ 27,893     $ 19,519     $ 88,591     $ 80,365  
Add: impact of core deposit intangible amortization expense, after tax   228       226       225       910       899  
Net income adjusted for impact of core deposit intangible amortization expense, after tax $ 27,397     $ 28,119     $ 19,744     $ 89,501     $ 81,264  
                             
Average assets $ 6,635,490     $ 6,483,016     $ 5,924,459     $ 6,326,268     $ 5,837,121  
Less: average goodwill and core deposit intangible asset, net of deferred tax liability related to goodwill   (113,594 )     (114,122 )     (115,665 )     (114,031 )     (116,104 )
Average tangible assets (non-GAAP) $ 6,521,896     $ 6,368,894     $ 5,808,794     $ 6,212,237     $ 5,721,017  
                             
Average shareholders’ equity $ 814,483     $ 792,358     $ 764,694     $ 788,286     $ 737,923  
Less: average goodwill and core deposit intangible asset, net of deferred tax liability related to goodwill   (113,594 )     (114,122 )     (115,665 )     (114,031 )     (116,104 )
Average tangible common equity (non-GAAP) $ 700,889     $ 678,236     $ 649,029     $ 674,255     $ 621,819  
                             
Return on average assets   1.63 %     1.71 %     1.31 %     1.40 %     1.38 %
Return on average tangible assets (non-GAAP)   1.67 %     1.76 %     1.35 %     1.44 %     1.42 %
Return on average equity   13.27 %     14.00 %     10.13 %     11.24 %     10.89 %
Return on average tangible common equity (non-GAAP)   15.55 %     16.49 %     12.07 %     13.27 %     13.07 %

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

  As of and for the three months ended   As of and for the years ended
  December 31,    September 30,    December 31,    December 31,    December 31, 
  2020   2020   2019   2020   2019
Interest income $ 53,288        $ 52,302        $ 59,616        $ 218,002     $ 242,601  
Add: impact of taxable equivalent adjustment   1,260       1,275       1,290       5,103       5,065  
Interest income FTE (non-GAAP) $ 54,548     $ 53,577     $ 60,906     $ 223,105     $ 247,666  
                             
Net interest income $ 48,556     $ 46,715     $ 50,388     $ 192,946     $ 205,830  
Add: impact of taxable equivalent adjustment   1,260       1,275       1,290       5,103       5,065  
Net interest income FTE (non-GAAP) $ 49,816     $ 47,990     $ 51,678     $ 198,049     $ 210,895  
                             
Average earning assets $ 6,108,513     $ 5,944,790     $ 5,438,041     $ 5,795,864     $ 5,368,073  
Yield on earning assets   3.47 %     3.50 %     4.35 %     3.76 %     4.52 %
Yield on earning assets FTE (non-GAAP)   3.55 %     3.59 %     4.44 %     3.85 %     4.61 %
Net interest margin   3.16 %     3.13 %     3.68 %     3.33 %     3.83 %
Net interest margin FTE (non-GAAP)   3.24 %     3.21 %     3.77 %     3.42 %     3.93 %

Efficiency Ratio

  As of and for the three months ended   As of and for the years ended
  December 31,       September 30,       December 31,       December 31,       December 31, 
  2020      2020      2019      2020      2019
Net interest income $ 48,556     $ 46,715     $ 50,388     $ 192,946     $ 205,830  
Add: impact of taxable equivalent adjustment   1,260       1,275       1,290       5,103       5,065  
Net interest income, FTE (non-GAAP) $ 49,816     $ 47,990     $ 51,678     $ 198,049     $ 210,895  
                             
Non-interest income $ 33,357     $ 44,532     $ 20,282     $ 140,258     $ 82,752  
                             
Non-interest expense $ 48,425     $ 55,321     $ 46,107     $ 206,177     $ 180,745  
Less: core deposit intangible asset amortization   (296 )     (295 )     (296 )     (1,183 )     (1,183 )
Non-interest expense, adjusted for core deposit intangible asset amortization $ 48,129     $ 55,026     $ 45,811     $ 204,994     $ 179,562  
                             
Non-interest expense, adjusted for core deposit intangible asset amortization $ 48,129     $ 55,026     $ 45,811     $ 204,994     $ 179,562  
Banking center consolidation-related expense   (208 )     (432 )           (2,348 )     (898 )
Adjusted non-interest expense (non-GAAP) $ 47,921     $ 54,594     $ 45,811     $ 202,646     $ 178,664  
                             
Efficiency ratio   58.76 %     60.30 %     64.82 %     61.52 %     62.22 %
Efficiency ratio FTE (non-GAAP)   57.87 %     59.47 %     63.66 %     60.59 %     61.15 %
Adjusted efficiency ratio FTE (non-GAAP)   57.62 %     59.01 %     63.66 %     59.90 %     60.84 %

Adjusted Financial Results

    As of and for the three months ended   As of and for the years ended
    December 31,    September 30,    December 31,    December 31,    December 31, 
    2020   2020   2019   2020   2019
Adjustments to net income:                              
Net income   $ 27,169     $ 27,893     $ 19,519     $ 88,591     $ 80,365  
Adjustments(1)(2)     160       331             1,806       689  
Adjusted net income (non-GAAP)   $ 27,329     $ 28,224     $ 19,519     $ 90,397     $ 81,054  
                               
Adjustments to earnings per share:                              
Earnings per share – diluted   $ 0.87     $ 0.90     $ 0.62     $ 2.85     $ 2.55  
Adjustments(1)(2)     0.01       0.01             0.06       0.02  
Adjusted earnings per share – diluted (non-GAAP)   $ 0.88     $ 0.91     $ 0.62     $ 2.91     $ 2.57  
                               
Adjustments to return on average tangible assets:                              
Adjusted net income (non-GAAP)   $ 27,329     $ 28,224     $ 19,519     $ 90,397     $ 81,054  
Add: impact of core deposit intangible amortization expense, after tax     228       226       225       910       899  
Net income adjusted for impact of core deposit intangible amortization expense, after tax     27,557       28,450       19,744       91,307       81,953  
Average tangible assets (non-GAAP)     6,521,896       6,368,894       5,808,794       6,212,237       5,721,017  
Adjusted return on average tangible assets (non-GAAP)     1.68 %     1.78 %     1.35 %     1.47 %     1.43 %
                               
Adjustments to return on average tangible common equity:                              
Net income adjusted for impact of core deposit intangible amortization expense, after tax   $ 27,557     $ 28,450     $ 19,744     $ 91,307     $ 81,953  
Average tangible common equity (non-GAAP)     700,889       678,236       649,029       674,255       621,819  
Adjusted return on average tangible common equity (non-GAAP)     15.64 %     16.69 %     12.07 %     13.54 %     13.18 %
                               
Adjustments to non-interest expense:                              
Non-interest expense   $ 48,425     $ 55,321     $ 46,107     $ 206,177     $ 180,745  
Adjustments(1)(2)     208       432             2,348       898  
Adjusted non-interest expense (non-GAAP)     48,217       54,889       46,107       203,829       179,847  
Non-interest expense to average assets, adjusted (non-GAAP)     2.89 %     3.37 %     3.09 %     3.22 %     3.08 %
                               
(1) Adjustments:                              
Non-interest expense adjustments:                              
Banking center consolidation-related expense   $ 208     $ 432     $     $ 2,348     $ 898  
Tax expense impact     (48 )     (101 )           (542 )     (209 )
Adjustments (non-GAAP)   $ 160     $ 331     $     $ 1,806     $ 689  

                                                      

(2 )      Non-GAAP adjustments presented for the year ended December 31, 2019 have been updated to conform to the current period presentation.

A Media Snippet accompanying this announcement is available by clicking on the image or link below:


Della C. Mae

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