GlobeNewswire Inc | Oct 20, 2020 04:10PM EDT

October 20, 2020

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

For the quarter For the quarter - adjusted^(1) 3Q20 2Q20 3Q19 3Q20 2Q20 3Q19Netincome $ 27,893 $ 17,705 $ 21,642 $ 28,224 $ 19,015 $ 22,331 ($000's)Earningsper $ 0.90 $ 0.57 $ 0.69 $ 0.91 $ 0.62 $ 0.71 share -dilutedReturnonaverage 1.76 % 1.16 % 1.51 % 1.78 % 1.25 % 1.56 %tangibleassets^(2)Returnonaveragetangible 16.49 % 10.98 % 13.68 % 16.69 % 11.78 % 14.11 %commonequity^(2)



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

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

Mr. Laney added, I am proud of our teammates tireless efforts to support our clients and communities, and we are honored to be recognized as the Small Business Associations 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 IncomeFully 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%.

LoansTotal 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 LossesProvision 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.

DepositsAverage 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 IncomeNon-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 ExpenseNon-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.

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

Common book value per share increased $0.71 to $26.13 at September 30, 2020. The quarters 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 EventsThe 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 SBAs Paycheck Protection Program, including assistance with PPP loan forgiveness applications, and loan modifications, as needed. The length of the pandemic and the efficacy of the extraordinary government-mandated measures that have been put into place to address it are unknown, but have already had, and are likely to continue to have, a significantly negative impact to the U.S. labor market, consumer spending and business operations.

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

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

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

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

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

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

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

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

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

Conference CallManagement 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 calls 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 Companys website at www.nationalbankholdings.com by visiting the investor relations area.

About Non-GAAP Financial MeasuresCertain 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 CorporationNational 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 banks 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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.

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

NATIONAL BANK HOLDINGS CORPORATIONFINANCIAL SUMMARYConsolidated Statements of Operations (Unaudited)(Dollars in thousands, except share and per share data) For the three months ended For the nine months ended September30, June30, September30, September30, September30, 2020 2020 2019 2020 2019Total interest and $ 52,302 $ 53,744 $ 61,372 $ 164,714 $ 182,985 dividend incomeTotal interest 5,587 6,416 9,587 20,324 27,543 expenseNet interest income 46,715 47,328 51,785 144,390 155,442 Taxable equivalent 1,275 1,301 1,264 3,843 3,775 adjustmentNet interest income 47,990 48,629 53,049 148,233 159,217 FTE^(1)Provision for loan 1,200 10,271 5,690 17,630 10,463 lossesNet interest incomeafter provision for 46,790 38,358 47,359 130,603 148,754 loan losses FTE^(1)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 34,943 30,630 14,702 79,246 32,037 incomeOther non-interest 1,733 1,459 1,661 5,384 5,861 incomeOREO-related income 75 ? 27 103 147 Total non-interest 44,532 38,837 24,759 106,901 62,470 incomeNon-interest expense: Salaries and benefits 38,614 36,457 33,522 108,251 92,079 Occupancy and 6,878 7,078 6,825 20,854 20,428 equipmentProfessional fees 714 759 743 2,082 2,598 Other non-interest 7,443 6,778 7,422 21,222 22,498 expenseProblem asset workout 1,064 629 602 2,341 2,450 (Gain) loss on sale (119 ) 55 (6,514 ) (25 ) (7,200 )of OREO, netCore depositintangible asset 295 296 295 887 887 amortizationBanking centerconsolidation-related 432 1,708 898 2,140 898 expenseTotal non-interest 55,321 53,760 43,793 157,752 134,638 expense Income before income 36,001 23,435 28,325 79,752 76,586 taxes FTE^(1)Taxable equivalent 1,275 1,301 1,264 3,843 3,775 adjustmentIncome before income 34,726 22,134 27,061 75,909 72,811 taxesIncome 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 - $ 0.91 $ 0.57 $ 0.69 $ 1.99 $ 1.95 basicEarnings per share - 0.90 0.57 0.69 1.97 1.93 diluted



Net interest income is presented on a GAAP basis and fully taxable equivalent (FTE) basis, as the Company believes this(1 ) 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 CORPORATIONConsolidated Statements of Financial Condition (Unaudited)(Dollars in thousands, except share and per share data) September30,2020 June30,2020 December31,2019 September30,2019ASSETS Cash and cash $ 445,103 $ 142,385 $ 110,190 $ 116,919 equivalentsInvestmentsecurities 572,523 610,735 638,249 661,129 available-for-saleInvestmentsecurities 320,001 215,183 182,884 189,982 held-to-maturityNon-marketable 29,598 30,188 29,751 27,277 securitiesLoans 4,556,121 4,782,383 4,415,406 4,401,917 Allowance for (60,979 ) (60,465 ) (39,064 ) (38,710 )credit lossesLoans, net 4,495,142 4,721,918 4,376,342 4,363,207 Loans held for 273,003 204,856 117,444 204,602 saleOther real estate 4,590 6,491 7,300 7,904 ownedPremises and 108,860 110,019 112,151 110,692 equipment, netGoodwill 115,027 115,027 115,027 115,027 Intangible assets, 15,017 12,175 11,361 11,578 netOther assets 221,812 216,454 194,813 181,733 Total assets $ 6,600,676 $ 6,385,431 $ 5,895,512 $ 5,990,050 LIABILITIES ANDSHAREHOLDERS' EQUITYLiabilities: Non-interestbearing demand $ 1,533,676 $ 1,502,948 $ 1,184,945 $ 1,237,189 depositsInterest bearing 976,133 955,951 738,496 681,113 demand depositsSavings and money 2,079,585 1,903,427 1,755,538 1,748,257 marketTotal transaction 4,589,394 4,362,326 3,678,979 3,666,559 depositsTime 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 soldunder agreements 23,904 24,504 56,935 62,735 to repurchaseFederal Home Loan ? 15,000 207,675 303,897 Bank advancesOther 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 1,010,145 1,008,773 1,009,223 1,007,628 capitalRetained earnings 202,238 180,537 164,082 150,866 Treasury stock (424,621 ) (425,053 ) (408,962 ) (408,770 )Accumulated othercomprehensive 11,080 12,195 2,062 3,087 income, net of taxTotalshareholders' 799,357 776,967 766,920 753,326 equityTotal liabilitiesand shareholders' $ 6,600,676 $ 6,385,431 $ 5,895,512 $ 5,990,050 equitySHARE DATA Average basic 30,756,116 30,731,758 31,299,989 31,281,970 shares outstandingAverage diluted 30,924,223 30,857,606 31,525,911 31,508,999 shares outstandingEnding shares 30,594,412 30,569,011 31,176,627 31,169,086 outstandingCommon book value $ 26.13 $ 25.42 $ 24.60 $ 24.17 per shareTangible commonbook value per 22.40 21.67 20.89 20.45 share^(1)(non-GAAP)Tangible commonbook value pershare, excludingaccumulated other 22.04 21.27 20.83 20.35 comprehensiveincome^(1)(non-GAAP)CAPITAL RATIOS Average equity to 12.22 % 12.21 % 12.91 % 12.79 %average assetsTangible commonequity to tangible 10.57 % 10.56 % 11.27 % 10.85 %assets^(1)Tier 1 leverage 10.60 % 10.53 % 11.04 % 10.89 %ratioCommon equity tier1 risk-based 14.25 % 13.21 % 13.21 % 12.93 %capital ratioTotal risk-based 15.40 % 14.26 % 14.08 % 13.79 %capital ratio



(1 ) Represents a non-GAAP financial measure. See non-GAAP reconciliations below.

NATIONAL BANK HOLDINGS CORPORATIONLoan Portfolio(Dollars in thousands) Period End Loan Balances by Type September30,2020 September30,2020 vs. June 30, 2020 vs. September 30, 2019 September30,2020 June30,2020 % Change September30,2019 % ChangeOriginated: Commercial: Commercial and $ 1,228,550 $ 1,360,679 (9.7 )% $ 1,369,615 (10.3 )%industrialMunicipal and 883,065 912,287 (3.2 )% 843,763 4.7 %non-profitOwner-occupiedcommercial 460,487 455,846 1.0 % 378,956 21.5 %real estateFood and 210,818 213,789 (1.4 )% 230,869 (8.7 )%agribusinessPPP loans^(1) 348,257 348,689 (0.1 )% ? 100.0 %Total 3,131,177 3,291,290 (4.9 )% 2,823,203 10.9 %commercialCommercialreal estate 515,415 540,412 (4.6 )% 501,771 2.7 %non-owneroccupiedResidential 614,449 631,032 (2.6 )% 659,246 (6.8 )%real estateConsumer 20,196 20,370 (0.9 )% 21,378 (5.5 )%Total 4,281,237 4,483,104 (4.5 )% 4,005,598 6.9 %originated Acquired: Commercial: Commercial and 23,984 27,461 (12.7 )% 34,409 (30.3 )%industrialMunicipal and 576 593 (2.9 )% 3,939 (85.4 )%non-profitOwner-occupiedcommercial 55,929 65,052 (14.0 )% 78,297 (28.6 )%real estateFood and 5,740 6,237 (8.0 )% 8,618 (33.4 )%agribusinessTotal 86,229 99,343 (13.2 )% 125,263 (31.2 )%commercialCommercialreal estate 101,672 101,412 0.3 % 139,410 (27.1 )%non-owneroccupiedResidential 86,478 97,982 (11.7 )% 130,831 (33.9 )%real estateConsumer 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 Second First Fourth Third quarter quarter quarter quarter quarter 2020 2020 2020 2019 2019Commercial: Commercial and $ 11,354 $ (8,726 ) $ 118,999 $ 69,048 $ 144,554 industrialMunicipal and 6,083 49,679 13,968 46,114 31,482 non-profitOwner occupiedcommercial 23,758 22,078 37,372 46,965 16,149 real estateFood and 13,876 (10,480 ) (6,787 ) 20,348 (4,894 )agribusinessPPP loans 122 358,798 ? ? ? Total 55,193 411,349 163,552 182,475 187,291 commercialCommercialreal estate 24,937 18,992 80,792 41,256 79,929 non-owneroccupiedResidential 49,786 29,024 46,273 43,493 49,022 real estateConsumer 2,980 2,206 2,320 2,315 2,986 Total $ 132,896 $ 461,571 $ 292,937 $ 269,539 $ 319,228



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

NATIONAL BANK HOLDINGS CORPORATIONSummary of Net Interest Margin(Dollars in thousands) For the three months ended For the three months ended For the three months ended September30,2020 June30,2020 September30,2019 Average Average Average Average Average Average balance Interest rate balance Interest rate balance Interest rateInterest earning assets:Originated loans $ 4,343,335 $ 40,973 3.75 % $ 4,432,725 $ 42,440 3.85 % $ 3,886,503 $ 46,736 4.77 %FTE^(1)(2)Acquired loans 284,653 6,593 9.21 % 312,723 6,722 8.65 % 425,079 8,907 8.31 %Loans held for 230,390 1,683 2.91 % 157,887 1,310 3.34 % 139,281 1,328 3.78 %saleInvestmentsecurities 559,330 2,784 1.99 % 607,132 3,050 2.01 % 687,989 3,696 2.15 %available-for-saleInvestmentsecurities 242,511 1,253 2.07 % 189,360 1,201 2.54 % 199,519 1,384 2.77 %held-to-maturityOther securities 29,640 221 2.98 % 30,087 310 4.12 % 27,227 418 6.14 %Interest earningdeposits andsecurities 254,931 70 0.11 % 36,758 12 0.13 % 19,809 167 3.34 %purchased underagreements toresellTotal interestearning assets FTE $ 5,944,790 $ 53,577 3.59 % $ 5,766,672 $ 55,045 3.84 % $ 5,385,407 $ 62,636 4.61 %^(2)Cash and due from $ 73,274 $ 76,041 $ 76,866 banksOther assets 525,324 532,867 443,724 Allowance for (60,372 ) (56,984 ) (40,212 ) credit lossesTotal assets $ 6,483,016 $ 6,318,596 $ 5,865,785 Interest bearing liabilities:Interest bearingdemand, savings $ 2,957,604 $ 1,990 0.27 % $ 2,719,433 $ 1,951 0.29 % $ 2,438,399 $ 3,609 0.59 %and money marketdepositsTime deposits 1,038,983 3,501 1.34 % 1,048,772 4,136 1.59 % 1,073,140 4,365 1.61 %Securities soldunder agreements 22,667 10 0.18 % 23,485 18 0.31 % 65,722 204 1.23 %to repurchaseFederal Home Loan 1,141 86 29.99 % 163,263 311 0.77 % 231,926 1,409 2.41 %Bank advancesTotal interestbearing $ 4,020,395 $ 5,587 0.55 % $ 3,954,953 $ 6,416 0.65 % $ 3,809,187 $ 9,587 1.00 %liabilitiesDemand 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' 792,358 771,593 750,314 equityTotal liabilitiesand shareholders' $ 6,483,016 $ 6,318,596 $ 5,865,785 equityNet interest $ 47,990 $ 48,629 $ 53,049 income FTE^(2)Interest rate 3.04 % 3.19 % 3.61 %spread FTE^(2)Net interest $ 1,924,395 $ 1,811,719 $ 1,576,220 earning assetsNet interest 3.21 % 3.39 % 3.91 %margin FTE^(2)Averagetransaction $ 4,472,662 $ 4,156,104 $ 3,631,756 depositsAverage total 5,511,645 5,204,876 4,704,896 depositsRatio of averageinterest earningassets to average 147.87 % 145.81 % 141.38 % interest bearingliabilities



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

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

For the nine months ended September30,2020 For the nine months ended September30,2019 Average Average Average Average balance Interest rate balance Interest rateInterest earning assets:Originated loans $ 4,273,332 $ 128,392 4.01 % $ 3,782,765 $ 137,036 4.84 %FTE^(1)(2)Acquired loans 313,555 22,194 9.45 % 465,165 28,467 8.18 %Loans held for 163,980 3,929 3.20 % 90,143 2,750 4.08 %saleInvestmentsecurities 597,654 9,229 2.06 % 737,744 12,059 2.18 %available-for-saleInvestmentsecurities 207,107 3,689 2.37 % 214,696 4,568 2.84 %held-to-maturityOther securities 29,826 945 4.22 % 27,513 1,299 6.30 %Interest earningdeposits andsecurities 105,430 179 0.23 % 26,468 581 2.93 %purchased underagreements toresellTotal interestearning assets FTE $ 5,690,884 $ 168,557 3.96 % $ 5,344,494 $ 186,760 4.67 %^(2)Cash and due from $ 74,694 $ 76,863 banksOther assets 510,941 424,271 Allowance for (54,077 ) (37,939 ) credit lossesTotal assets $ 6,222,442 $ 5,807,689 Interest bearing liabilities:Interest bearingdemand, savings $ 2,725,572 $ 6,829 0.33 % $ 2,426,136 $ 10,176 0.56 %and money marketdepositsTime deposits 1,048,116 12,075 1.54 % 1,078,549 12,062 1.50 %Securities soldunder agreements 30,322 125 0.55 % 61,313 519 1.13 %to repurchaseFederal Home Loan 127,456 1,295 1.36 % 258,348 4,786 2.48 %Bank advancesTotal interestbearing $ 3,931,466 $ 20,324 0.69 % $ 3,824,346 $ 27,543 0.96 %liabilitiesDemand deposits $ 1,363,556 $ 1,152,718 Other liabilities 147,929 101,724 Total liabilities 5,442,951 5,078,788 Shareholders' 779,491 728,901 equityTotal liabilitiesand shareholders' $ 6,222,442 $ 5,807,689 equityNet interest $ 148,233 $ 159,217 income FTE^(2)Interest rate 3.27 % 3.71 %spread FTE^(2)Net interest $ 1,759,418 $ 1,520,148 earning assetsNet interest 3.48 % 3.98 %margin FTE^(2)Averagetransaction $ 4,089,128 $ 3,578,854 depositsAverage total 5,137,244 4,657,403 depositsRatio of averageinterest earningassets to average 144.75 % 139.75 % interest bearingliabilities



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

NATIONAL BANK HOLDINGS CORPORATIONAllowance for Credit Losses and Asset Quality(Dollars in thousands) Allowance for Credit Losses Analysis Asofandforthethreemonthsended September30,2020 June30,2020 September30,2019Beginningallowance for $ 60,465 $ 50,956 $ 40,082 credit lossesCharge-offs (619 ) (852 ) (7,101 )Recoveries 133 236 39 Provision 1,000 10,125 5,690 Endingallowance for $ 60,979 $ 60,465 $ 38,710 credit losses("ACL")Ratio ofannualized netcharge-offs to 0.04 % 0.05 % 0.65 %average totalloans duringthe periodRatio ofannualized netcharge-offs toaverage total 0.04 % 0.05 % 0.65 %loans excludingPPP loansduring theperiodRatio of ACL tototal loans 1.34 % 1.26 % 0.88 %outstanding atperiod endRatio of ACL tototal loansoutstanding 1.45 % 1.36 % 0.88 %excluding PPPloans at periodendRatio of ACL tototalnon-performing 322.95 % 302.34 % 152.41 %loans at periodendTotal loans $ 4,556,121 $ 4,782,383 $ 4,401,917 Average totalloans during 4,677,630 4,794,466 4,329,590 the periodAverage totalloans excludingPPP loans 4,329,458 4,512,010 4,329,590 during theperiodTotalnon-performing 18,882 19,999 25,398 loans

Past Due andNon-accrual Loans September30,2020 June30,2020 September30,2019Loans 30-89days past dueand still $ 6,587 $ 3,932 $ 6,723 accruinginterestLoans 90 dayspast due and 161 2,444 1,968 still accruinginterestNon-accrual 18,882 19,999 25,398 loansTotal past dueand non-accrual $ 25,630 $ 26,375 $ 34,089 loansTotal 90 dayspast due andstill accruinginterest and 0.42 % 0.47 % 0.62 %non-accrualloans to totalloans

Asset Quality Data September30,2020 June30,2020 September30,2019Non-performing $ 18,882 $ 19,999 $ 25,398 loansOREO 4,590 6,491 7,904 Totalnon-performing $ 23,472 $ 26,490 $ 33,302 assetsAccruingrestructured $ 21,786 $ 20,284 $ 7,384 loansTotalnon-performing 0.41 % 0.42 % 0.58 %loans to totalloansTotalnon-performingloans to total 0.45 % 0.45 % 0.58 %loans excludingPPP loansTotalnon-performing 0.51 % 0.55 % 0.76 %assets to totalloans and OREOTotalnon-performingassets to total 0.56 % 0.60 % 0.76 %loans and OREOexcluding PPPloans

NATIONAL BANK HOLDINGS CORPORATIONKey Ratios As of and for the three months ended As of and for the nine months ended September30, June30, September30, September30, September30, 2020 2020 2019 2020 2019Key Ratios^(1) Return on 1.71 % 1.13 % 1.46 % 1.32 % 1.40 %average assetsReturn onaverage 1.76 % 1.16 % 1.51 % 1.36 % 1.45 %tangibleassets^(2)Return onaveragetangible 1.78 % 1.25 % 1.56 % 1.39 % 1.46 %assets,adjusted^(2)Return on 14.00 % 9.23 % 11.44 % 10.53 % 11.16 %average equityReturn onaveragetangible 16.49 % 10.98 % 13.68 % 12.47 % 13.43 %common equity^(2)Return onaveragetangible 16.69 % 11.78 % 14.11 % 12.80 % 13.58 %common equity,adjusted^(2)Loan todeposit ratio 81.12 % 88.34 % 92.99 % 81.12 % 92.99 %(end ofperiod)Non-interestbearingdeposits to 27.31 % 27.76 % 26.13 % 27.31 % 26.13 %total deposits(end ofperiod)Net interest 3.13 % 3.30 % 3.81 % 3.39 % 3.89 %margin^(4)Net interestmargin FTE^(2) 3.21 % 3.39 % 3.91 % 3.48 % 3.98 %(4)Interest ratespread FTE^(2) 3.04 % 3.19 % 3.61 % 3.27 % 3.71 %(5)Yield onearning assets 3.50 % 3.75 % 4.52 % 3.87 % 4.58 %^(3)Yield onearning assets 3.59 % 3.84 % 4.61 % 3.96 % 4.67 %FTE^(2)(3)Cost ofinterestbearing 0.55 % 0.65 % 1.00 % 0.69 % 0.96 %liabilities^(3)Cost of 0.40 % 0.47 % 0.67 % 0.49 % 0.64 %depositsNon-interestincome to 48.13 % 44.40 % 31.82 % 41.90 % 28.18 %total revenueFTE^(2)Non-interestexpense to 3.39 % 3.42 % 2.96 % 3.39 % 3.10 %average assetsNon-interestexpense toaverage 3.37 % 3.31 % 2.90 % 3.34 % 3.08 %assets,adjusted^(2)Efficiency 60.30 % 62.05 % 56.83 % 62.42 % 61.38 %ratioEfficiency 59.47 % 61.13 % 55.90 % 61.48 % 60.33 %ratio FTE^(2)Efficiencyratio FTE, 59.01 % 59.17 % 54.75 % 60.64 % 59.93 %adjusted^(2) Total LoansAsset Quality Data^(6)(7)(8)Non-performingloans to total 0.41 % 0.42 % 0.58 % 0.41 % 0.58 %loansNon-performingloans to totalloans 0.45 % 0.45 % 0.58 % 0.45 % 0.58 %excluding PPPloansNon-performingassets to 0.51 % 0.55 % 0.76 % 0.51 % 0.76 %total loansand OREONon-performingassets tototal loans 0.56 % 0.60 % 0.76 % 0.56 % 0.76 %and OREOexcluding PPPloansAllowance forcredit losses 1.34 % 1.26 % 0.88 % 1.34 % 0.88 %to total loansAllowance forcredit lossesto total loans 1.45 % 1.36 % 0.88 % 1.45 % 0.88 %excluding PPPloansAllowance forcredit lossesto 322.95 % 302.34 % 152.41 % 322.95 % 152.41 %non-performingloansNetcharge-offs to 0.04 % 0.05 % 0.65 % 0.04 % 0.23 %average loans^(1)



(1 ) Quarter-to-date ratios are annualized.(2 ) Ratio represents non-GAAP financial measure. See non-GAAP reconciliations below. Interest earning assets include assets that earn interest/(3 ) accretion or dividends. Any market value adjustments on investment securities or loans are excluded from interest earning assets. Net interest margin represents net interest income, including(4 ) accretion income on interest earning assets, as a percentage of average interest earning assets. Interest rate spread represents the difference between the(5 ) 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 CORPORATIONNON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS(Dollars in thousands, except share and per share data) TangibleCommon Book Value Ratios September30,2020 June30,2020 December31,2019 September30,2019Totalshareholders' $ 799,357 $ 776,967 $ 766,920 $ 753,326 equityLess:goodwill andcore deposit (122,871 ) (123,166 ) (123,758 ) (124,054 )intangibleassets, netAdd: deferredtax liability 8,927 8,698 8,241 8,012 related togoodwillTangiblecommon equity $ 685,413 $ 662,499 $ 651,403 $ 637,284 (non-GAAP) Total assets $ 6,600,676 $ 6,385,431 $ 5,895,512 $ 5,990,050 Less:goodwill andcore deposit (122,871 ) (123,166 ) (123,758 ) (124,054 )intangibleassets, netAdd: deferredtax liability 8,927 8,698 8,241 8,012 related togoodwillTangibleassets $ 6,486,732 $ 6,270,963 $ 5,779,995 $ 5,874,008 (non-GAAP) Tangiblecommon equityto tangible assetscalculations:Totalshareholders' 12.11 % 12.17 % 13.01 % 12.58 %equity tototal assetsLess: impactof goodwilland core (1.54 )% (1.61 )% (1.74 )% (1.73 )%depositintangibleassets, netTangiblecommon equityto tangible 10.57 % 10.56 % 11.27 % 10.85 %assets(non-GAAP) Tangiblecommon bookvalue per sharecalculations:Tangiblecommon equity $ 685,413 $ 662,499 $ 651,403 $ 637,284 (non-GAAP)Divided by:ending shares 30,594,412 30,569,011 31,176,627 31,169,086 outstandingTangiblecommon bookvalue per $ 22.40 $ 21.67 $ 20.89 $ 20.45 share(non-GAAP) Tangiblecommon bookvalue pershare,excluding accumulatedothercomprehensiveincomecalculations:Tangiblecommon equity $ 685,413 $ 662,499 $ 651,403 $ 637,284 (non-GAAP)Accumulatedothercomprehensive (11,080 ) (12,195 ) (2,062 ) (3,087 )income, netof taxTangiblecommon bookvalue,excludingaccumulated 674,333 650,304 649,341 634,197 othercomprehensiveincome, netof tax(non-GAAP)Divided by:ending shares 30,594,412 30,569,011 31,176,627 31,169,086 outstandingTangiblecommon bookvalue pershare,excludingaccumulated $ 22.04 $ 21.27 $ 20.83 $ 20.35 othercomprehensiveincome, netof tax(non-GAAP)

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 September30, June30, September30, September30, September30, 2020 2020 2019 2020 2019Net income $ 27,893 $ 17,705 $ 21,642 $ 61,422 $ 60,846 Add: impactof coredepositintangible 226 227 224 680 674 amortizationexpense,after taxNet incomeadjusted forimpact ofcore deposit $ 28,119 $ 17,932 $ 21,866 $ 62,102 $ 61,520 intangibleamortizationexpense,after tax Average $ 6,483,016 $ 6,318,596 $ 5,865,785 $ 6,222,442 $ 5,807,689 assetsLess: averagegoodwill andcore depositintangibleasset, net of (114,122 ) (114,631 ) (116,188 ) (114,406 ) (116,481 )deferred taxliabilityrelated togoodwillAveragetangible $ 6,368,894 $ 6,203,965 $ 5,749,597 $ 6,108,036 $ 5,691,208 assets(non-GAAP) Averageshareholders' $ 792,358 $ 771,593 $ 750,314 $ 779,491 $ 728,901 equityLess: averagegoodwill andcore depositintangibleasset, net of (114,122 ) (114,631 ) (116,188 ) (114,406 ) (116,481 )deferred taxliabilityrelated togoodwillAveragetangible $ 678,236 $ 656,962 $ 634,126 $ 665,085 $ 612,420 common equity(non-GAAP) Return onaverage 1.71 % 1.13 % 1.46 % 1.32 % 1.40 %assetsReturn onaveragetangible 1.76 % 1.16 % 1.51 % 1.36 % 1.45 %assets(non-GAAP)Return onaverage 14.00 % 9.23 % 11.44 % 10.53 % 11.16 %equityReturn onaveragetangible 16.49 % 10.98 % 13.68 % 12.47 % 13.43 %common equity(non-GAAP)

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin Asofandforthe three months ended As of and for the nine months ended September30, June30, September30, September30, September30, 2020 2020 2019 2020 2019Interest $ 52,302 $ 53,744 $ 61,372 $ 164,714 $ 182,985 incomeAdd:impact oftaxable 1,275 1,301 1,264 3,843 3,775 equivalentadjustmentInterestincome FTE $ 53,577 $ 55,045 $ 62,636 $ 168,557 $ 186,760 (non-GAAP) Netinterest $ 46,715 $ 47,328 $ 51,785 $ 144,390 $ 155,442 incomeAdd:impact oftaxable 1,275 1,301 1,264 3,843 3,775 equivalentadjustmentNetinterest $ 47,990 $ 48,629 $ 53,049 $ 148,233 $ 159,217 income FTE(non-GAAP) Averageearning $ 5,944,790 $ 5,766,672 $ 5,385,407 $ 5,690,884 $ 5,344,494 assetsYield onearning 3.50 % 3.75 % 4.52 % 3.87 % 4.58 %assetsYield onearning 3.59 % 3.84 % 4.61 % 3.96 % 4.67 %assets FTE(non-GAAP)Netinterest 3.13 % 3.30 % 3.81 % 3.39 % 3.89 %marginNetinterest 3.21 % 3.39 % 3.91 % 3.48 % 3.98 %margin FTE(non-GAAP)

Efficiency Ratio As of and for the three months ended As of and for the nine months ended September30, June30, September30, September30, September30, 2020 2020 2019 2020 2019Net interest income $ 46,715 $ 47,328 $ 51,785 $ 144,390 $ 155,442 Add: impact oftaxable equivalent 1,275 1,301 1,264 3,843 3,775 adjustmentNet interest income, $ 47,990 $ 48,629 $ 53,049 $ 148,233 $ 159,217 FTE (non-GAAP) 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 depositintangible asset (295 ) (296 ) (295 ) (887 ) (887 )amortizationNon-interest expense,adjusted for core $ 55,026 $ 53,464 $ 43,498 $ 156,865 $ 133,751 deposit intangibleasset amortization Non-interest expense,adjusted for core $ 55,026 $ 53,464 $ 43,498 $ 156,865 $ 133,751 deposit intangibleasset amortizationBanking centerconsolidation-related (432 ) (1,708 ) (898 ) (2,140 ) (898 )expenseAdjusted non-interest $ 54,594 $ 51,756 $ 42,600 $ 154,725 $ 132,853 expense (non-GAAP) Efficiency ratio 60.30 % 62.05 % 56.83 % 62.42 % 61.38 %Efficiency ratio FTE 59.47 % 61.13 % 55.90 % 61.48 % 60.33 %(non-GAAP)Adjusted efficiency 59.01 % 59.17 % 54.75 % 60.64 % 59.93 %ratio FTE (non-GAAP)

Adjusted Financial Results As of and for the three months ended As of and for the nine months ended September30, June30, September30, September30, September30, 2020 2020 2019 2020 2019Adjustments 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 $ 28,224 $ 19,015 $ 22,331 $ 63,063 $ 61,535 (non-GAAP) Adjustments to earnings per share:Earnings per share - $ 0.90 $ 0.57 $ 0.69 $ 1.97 $ 1.93 dilutedAdjustments^(1) 0.01 0.05 0.02 0.06 0.02 Adjusted earnings pershare - diluted $ 0.91 $ 0.62 $ 0.71 $ 2.03 $ 1.95 (non-GAAP) Adjustments to returnon average tangible assets:Adjusted net income $ 28,224 $ 19,015 $ 22,331 $ 63,063 $ 61,535 (non-GAAP)Add: impact of coredeposit intangible 226 227 224 680 674 amortization expense,after taxNet income adjustedfor impact of coredeposit intangible 28,450 19,242 22,555 63,743 62,209 amortization expense,after taxAverage tangible 6,368,894 6,203,965 5,749,597 6,108,036 5,691,208 assets (non-GAAP)Adjusted return onaverage tangible 1.78 % 1.25 % 1.56 % 1.39 % 1.46 %assets (non-GAAP) Adjustments to returnon average tangible common equity:Net income adjustedfor impact of coredeposit intangible $ 28,450 $ 19,242 $ 22,555 $ 63,743 $ 62,209 amortization expense,after taxAverage tangiblecommon equity 678,236 656,962 634,126 665,085 612,420 (non-GAAP)Adjusted return onaverage tangible 16.69 % 11.78 % 14.11 % 12.80 % 13.58 %common equity(non-GAAP) 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 54,889 52,052 42,895 155,612 133,740 expense (non-GAAP)Non-interest expenseto average assets, 3.37 % 3.31 % 2.90 % 3.34 % 3.08 %adjusted (non-GAAP) (1) Adjustments: Non-interest expense adjustments:Banking centerconsolidation-related $ 432 $ 1,708 $ 898 $ 2,140 $ 898 expenseTax expense impact (101 ) (398 ) (209 ) (499 ) (209 )Adjustments $ 331 $ 1,310 $ 689 $ 1,641 $ 689 (non-GAAP)

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