_
0001475841false00014758412022-07-192022-07-19

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 19, 2022

NATIONAL BANK HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)

Delaware

001-35654

27-0563799

(State or other jurisdiction
of incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

7800 East Orchard Road, Suite 300, Greenwood Village, Colorado 80111
(Address of principal executive offices) (Zip Code)

303-892-8715
(Registrant’s telephone, including area code)

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Class A Common Stock

NBHC

NYSE

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02. Results of Operations and Financial Conditions. *

On July 19, 2022, National Bank Holdings Corporation (“NBHC”) issued a press release announcing its financial results for the quarter ended June 30, 2022, which press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

Item 7.01. Regulation FD Disclosure. *

On July 19, 2022, NBHC issued, distributed, made available to investors, and posted on its website, the press release and accompanying financial tables reflecting its financial results for the quarter ended June 30, 2022, also furnished as Exhibit 99.1 hereto and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits. *

(d) Exhibits

Exhibit No.

    

Description of Exhibit

99.1

Press release dated July 19, 2022

104

Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

*The information contained in Items 2.02, 7.01 and 9.01 of this Current Report on Form 8-K is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any registration statement or other filings of the Registrant under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

National Bank Holdings Corporation

By:

/s/ Angela N. Petrucci

Name: Angela N. Petrucci

Title: Chief Administrative Officer and General Counsel

Date: July 19, 2022

3

Exhibit 99.1

National Bank Holdings Corporation Announces

Second Quarter 2022 Financial Results

Denver, Colorado - (Globe Newswire) – National Bank Holdings Corporation (NYSE: NBHC) reported:

For the quarter

For the quarter - adjusted(1)

2Q22

1Q22

2Q21

2Q22

1Q22

2Q21

Net income ($000's)

$

20,362

$

18,352

$

24,200

$

21,135

$

18,547

$

24,200

Earnings per share - diluted

$

0.67

$

0.60

$

0.77

$

0.69

$

0.61

$

0.77

Return on average tangible assets(2)

1.16%

1.07%

1.41%

1.20%

1.08%

1.41%

Return on average tangible common equity(2)

11.64%

10.31%

13.41%

12.08%

10.42%

13.41%

                                                      

(1)

See non-GAAP reconciliations starting on page 14.

(2)

Ratios are annualized.

In announcing NBHC’s second quarter 2022 results, Tim Laney shared, “We are pleased to deliver strong quarterly earnings of $0.67 per diluted share and revenue growth of 42.4% annualized over the prior quarter. Our teams delivered another record quarter of loan fundings driving solid loan growth of 12.3% annualized. Our prudent approach to extending credit coupled with the diversity and granularity of our loan portfolio, continues to produce excellent credit quality with just three basis points of annualized net charge-offs for the quarter and a record low non-performing loans ratio of 0.20%. Our fortress levels of capital and excess liquidity provide meaningful optionality and leave us well positioned to tackle challenges from any potential economic downturn.”

Mr. Laney added, “We believe that our focus on building relationships will carry our positive momentum into the second half of the year. Our teams are well prepared to close on the two pending strategic acquisitions that will further enhance our service offerings and deepen our presence in the fast-growing and attractive Rocky Mountain region. Bank of Jackson Hole and Rock Canyon Bank each provide best-in-class scalable banking solutions for our clients and share our strong commitment to improving the communities we serve. We are making good progress on our regulatory approvals having just received regulatory approval from the Federal Reserve and Utah for Rock Canyon Bank and we remain on track for the Bank of Jackson Hole.”

Second Quarter 2022 Results

(All comparisons refer to the first quarter of 2022, except as noted)

Net income increased $2.0 million to $20.4 million, or $0.67 per diluted share, during the second quarter of 2022. Adjusting for $1.0 million of non-recurring expenses related to the previously announced acquisitions of Bank of Jackson Hole and Rock Canyon Bank, net income totaled $21.1 million, or $0.69 per diluted share. The return on average tangible assets was 1.16%, compared to 1.07%, and the return on average tangible common equity was 11.64%, compared to 10.31%. Adjusting for non-recurring acquisition-related expenses, the return on average tangible assets was 1.20%, and the return on average tangible common equity was 12.08%.

Net Interest Income

Fully taxable equivalent net interest income totaled a record $57.4 million during the second quarter of 2022, an increase of $9.4 million, or 78.4% annualized, driven by a $99.8 million increase in average earning assets and a 48 basis point widening of the fully taxable

1


equivalent net interest margin to 3.38%. The increase in average earning assets was primarily due to increases in average originated loans of $232.9 million and average investment securities of $117.2 million. The margin expansion was driven by a 47 basis point increase in earning asset yields, as a result of several increases in the federal funds rate since March 2022 and due to excess cash being deployed into originated loans. Additionally, this quarter’s net interest income benefitted from $2.2 million accelerated accretion income in acquired loans. The cost of deposits improved one basis point to a record low 0.16%.

Loans

Total loans increased $142.8 million or 12.3% annualized to $4.8 billion at June 30, 2022, led by commercial loan growth of $109.5 million or 13.3% annualized. We generated record quarterly loan fundings totaling $492.5 million, led by commercial loan fundings of $308.7 million.

Asset Quality and Provision for Loan Losses

The Company recorded $2.5 million of provision expense, compared to $0.3 million of provision release last quarter. The quarter’s provision was driven by strong loan growth and higher reserve requirements from changes in the CECL model’s underlying macro-economic forecast. Annualized net charge-offs totaled 0.03% of total loans, compared to 0.05%. Non-performing loans (comprised of non-accrual loans and non-accrual TDRs) decreased four basis points to a record low 0.20% of total loans, and non-performing assets decreased four basis points to a record low 0.31% of total loans and OREO. The allowance for credit losses as a percentage of loans totaled 1.06%, compared to 1.04% at March 31, 2022.

Deposits

Average total deposits increased $61.5 million or 4.0% annualized to $6.3 billion for the second quarter 2022. Average transaction deposits (defined as total deposits less time deposits) increased $92.4 million or 6.9% annualized. The mix of transaction deposits to total deposits remained at 87.4% at June 30, 2022. The loan to deposit ratio increased 432 basis points to 77.7%.

Non-Interest Income

Non-interest income totaled $16.8 million, a decrease of $2.3 million, primarily driven by $2.7 million lower mortgage banking income due to lower refinance activity. Service charges and bank card fees increased a combined $0.7 million during the quarter due to seasonality.

Non-Interest Expense

Non-interest expense totaled $45.6 million, an increase of $1.5 million from the prior quarter. Included in the quarter were $1.0 million of non-recurring acquisition-related expenses with $0.8 million included in professional fees and $0.2 million included in other non-interest expense. Salaries and benefits decreased $0.6 million largely due to lower mortgage banking-related compensation. The fully taxable equivalent efficiency ratio was 61.1% at June 30, 2022, compared to 65.3% at March 31, 2022. Adjusting for non-recurring acquisition-related expenses, the fully taxable equivalent efficiency ratio was 59.7%.

Income tax expense totaled $4.4 million during the second quarter, compared to $3.6 million, driven by the increase in the quarter’s pre-tax income. The effective tax rate was 17.6% and 16.4% for the second and first quarters, respectively. The lower rate compared to the statutory rate reflects the continued success of our tax strategies and tax-exempt income.

Capital

Capital ratios continue to be strong and in excess of federal bank regulatory agency “well capitalized” thresholds. The Tier 1 leverage ratios at June 30, 2022 for the consolidated company and NBH Bank were 10.54% and 9.07%, respectively. Shareholders’ equity totaled $815.6 million at June 30, 2022 decreasing $4.7 million primarily due to a $19.4 million higher accumulated other comprehensive loss, partially offset by a $13.4 million increase in retained earnings.

Common book value per share totaled $27.12 at June 30, 2022. Tangible common book value per share decreased $0.19 to $23.45 at June 30, 2022 as this quarter’s earnings, net of dividends paid, of $0.45 were outpaced by a $0.64 increase in accumulated other

2


comprehensive loss. Excluding accumulated other comprehensive loss, the tangible book value per share increased $0.45 to $25.38 at June 30, 2022.

Year-Over-Year Review

(All comparisons refer to the first six months of 2021, except as noted)

Net income totaled $38.7 million, or $1.27 per diluted share, for the first six months of 2022, compared to $51.0 million, or $1.63 per diluted share, in the same period prior year. Adjusting for $1.3 million of non-recurring acquisition-related expenses, net income totaled $39.7 million, or $1.30 per diluted share, for the first six months of 2022. The rise in mortgage rates in 2022 have resulted in lower mortgage banking income during the first six months of 2022. However, the increases in the Federal Reserve’s interest rates are driving higher loan yields resulting in increasing levels of net interest income. The return on average tangible assets was 1.11%, compared to 1.53% in the same period prior year, and the return on average tangible common equity was 10.97%, compared to 14.29%. Adjusting for non-recurring acquisition-related expenses, the return on average tangible assets was 1.14%, and the return on average tangible common equity was 11.24%.

Fully taxable equivalent net interest income totaled $105.3 million, an increase of $12.7 million or 13.7%. Average earning assets increased $352.0 million, or 5.5%, including average originated loan growth of $437.7 million. The fully taxable equivalent net interest margin widened 23 basis points to 3.15%, benefitting from a 16 basis point increase in earning asset yields to 3.32% and an 11 basis point decrease in the cost of funds to 0.30%.

Loans outstanding totaled $4.8 billion, increasing $516.3 million or 12.0%, led by commercial loan growth of $428.8 million, or 14.4%. New loan fundings over the trailing 12 months totaled a record $1.8 billion, led by commercial loan fundings of $1.3 billion.  

The Company recorded $2.2 million of loan loss provision expense during the first six months of 2022, compared to a provision release of $9.4 million in the same period prior year. The provision expense was driven by loan growth and higher reserve requirements from changes in the CECL model’s underlying macro-economic forecast. Annualized net charge-offs remained consistent at 0.04% of total loans. Non-performing loans to total loans improved 12 basis points to 0.20% at June 30, 2022. The allowance for credit losses totaled 1.06% of total loans, compared to 1.14% at June 30, 2021.

Average total deposits increased $284.8 million or 4.8% to $6.2 billion. Average transaction deposits increased $430.9 million or 8.6%, and average non-interest bearing demand deposits increased $184.2 million or 8.1%. The mix of transaction deposits to total deposits increased by 245 basis points to 87.4% at June 30, 2022, and the mix of non-interest bearing demand deposits to total deposits remained consistent at 39.6%.

Non-interest income totaled $35.8 million, a decrease of $22.8 million or 38.9%, driven by $19.7 million of lower mortgage banking income due to lower refinance activity in 2022, as well as competition driving tighter gain on sale margins. Other non-interest income decreased $2.0 million due to market adjustments on company-owned life insurance and equity method investments. Included in the first six months of 2022 was $0.8 million of banking center consolidation-related income, compared to $2.4 million in the same period last year. Service charges and bank card fees increased a combined $0.6 million compared to the first six months of 2021.

Non-interest expense totaled $89.6 million, a decrease of $6.4 million or 6.6%. Included in the first six months of 2022 were $1.3 million of non-recurring acquisition-related expenses, with $1.1 million included in professional fees and $0.2 million included in other non-interest expense. Salaries and benefits decreased $6.9 million largely due to lower mortgage banking-related compensation. Problem asset workout expense decreased $0.4 million, and gain on sale of OREO increased $0.5 million.

Income tax expense totaled $8.0 million, a decrease of $3.2 million from the same period prior year. The effective tax rate was 17.1% for the first six months of 2022, compared to 17.9%.

3


Conference Call

Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Wednesday, July 20, 2022. Interested parties may listen to this call by dialing (800) 207-0148 using the participant passcode of 656517 and asking for the NBHC Q2 2022 Earnings Call. A telephonic replay of the call will be available beginning approximately four hours after the call’s completion through July 25, 2022, by dialing (888) 203-1112 using the confirmation code of 8588483. 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 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 81 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 a single state charter through the following brand names as divisions of NBH Bank: in Colorado, Community Banks of Colorado and Community Banks Mortgage; in Kansas and Missouri, Bank Midwest and Bank Midwest Mortgage; and in Texas, Utah and New Mexico, Hillcrest Bank and Hillcrest Bank Mortgage. 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.

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 non-interest expense,” “adjusted efficiency ratio,” “adjusted net income,” “adjusted earnings per share – diluted,” “adjusted net income excluding core deposit intangible amortization expense, after tax,” “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

4


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.

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 obtain regulatory approvals and meet other closing conditions to the mergers on the expected terms and schedule; delay in closing the mergers; difficulties and delays in integrating the NBHC, Community Bancorporation, and Bancshares of Jackson Hole Incorporated businesses or fully realizing cost savings and other benefits; business disruption following the proposed transactions; ability to execute our business strategy; business and economic conditions; effects of any potential government shutdowns; 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 of 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; the effects of tax legislation, including the potential of future increases to prevailing tax rules, or challenges to our position; 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, including in the digital technology space our digital solution 2UniFi; 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 credit 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; a cybersecurity incident, data breach or a failure of a key information technology system; 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

5


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]

6


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 six months ended

June 30, 

    

March 31, 

    

June 30, 

    

June 30, 

    

June 30, 

2022

2022

2021

2022

2021

Total interest and dividend income

$

58,836

$

49,525

$

48,450

$

108,361

$

97,663

Total interest expense

 

2,819

 

2,864

 

3,582

 

5,683

 

7,574

Net interest income

 

56,017

 

46,661

 

44,868

 

102,678

 

90,089

Taxable equivalent adjustment

1,336

1,313

1,279

2,649

2,547

Net interest income FTE(1)

57,353

47,974

46,147

105,327

92,636

Provision expense (release) for loan losses

 

2,504

 

(322)

 

(5,850)

 

2,182

 

(9,425)

Net interest income after provision for loan losses FTE(1)

 

54,849

 

48,296

 

51,997

 

103,145

 

102,061

Non-interest income:

Service charges

 

3,956

 

3,710

 

3,568

 

7,666

 

7,042

Bank card fees

 

4,541

 

4,123

 

4,614

 

8,664

 

8,687

Mortgage banking income

 

6,948

 

9,666

 

13,979

 

16,614

 

36,358

Other non-interest income

 

1,252

 

847

 

3,105

 

2,099

 

4,098

OREO-related income

 

5

 

 

 

5

 

35

Banking center consolidation-related income

 

60

 

708

 

 

768

 

2,407

Total non-interest income

 

16,762

 

19,054

 

25,266

 

35,816

 

58,627

Non-interest expense:

Salaries and benefits

 

28,776

 

29,336

 

31,439

 

58,112

 

64,962

Occupancy and equipment

6,665

6,396

6,131

13,061

12,681

Professional fees

 

1,486

 

814

 

649

 

2,300

 

1,391

Other non-interest expense

 

8,180

 

7,352

 

7,019

 

15,532

 

13,872

Problem asset workout

 

144

 

163

 

294

 

307

 

732

Loss (gain) on sale of OREO, net

 

5

 

(275)

 

221

 

(270)

 

192

Core deposit intangible asset amortization

296

296

296

592

592

Banking center consolidation-related expense

294

1,589

Total non-interest expense

45,552

 

44,082

 

46,343

 

89,634

 

96,011

Income before income taxes FTE(1)

 

26,059

 

23,268

 

30,920

 

49,327

 

64,677

Taxable equivalent adjustment

1,336

1,313

1,279

2,649

2,547

Income before income taxes

24,723

21,955

29,641

46,678

62,130

Income tax expense

 

4,361

 

3,603

 

5,441

 

7,964

 

11,118

Net income

$

20,362

$

18,352

$

24,200

$

38,714

$

51,012

Earnings per share - basic

$

0.67

$

0.61

$

0.78

$

1.28

$

1.65

Earnings per share - diluted

0.67

0.60

0.77

1.27

1.63

                                                      

(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.

7


NATIONAL BANK HOLDINGS CORPORATION

Consolidated Statements of Financial Condition (Unaudited)

(Dollars in thousands, except share and per share data)

June 30, 2022

March 31, 2022

    

December 31, 2021

June 30, 2021

ASSETS

Cash and cash equivalents

$

448,375

$

786,385

$

845,695

$

1,004,493

Investment securities available-for-sale

 

805,858

 

790,384

 

691,847

 

605,798

Investment securities held-to-maturity

 

582,650

 

567,055

 

609,012

 

687,635

Non-marketable securities

 

59,754

 

54,568

 

50,740

 

14,741

Loans

 

4,817,070

 

4,674,238

 

4,513,383

 

4,300,757

Allowance for credit losses

 

(50,860)

 

(48,810)

 

(49,694)

 

(49,030)

Loans, net

 

4,766,210

 

4,625,428

 

4,463,689

 

4,251,727

Loans held for sale

 

48,816

 

90,152

 

139,142

 

134,805

Other real estate owned

 

4,992

 

5,063

 

7,005

 

5,124

Premises and equipment, net

 

103,690

 

95,133

 

96,747

 

95,019

Goodwill

 

115,027

 

115,027

 

115,027

 

115,027

Intangible assets, net

 

14,568

 

13,505

 

12,322

 

22,360

Other assets

 

218,059

 

198,812

 

182,785

 

199,399

Total assets

$

7,167,999

$

7,341,512

$

7,214,011

$

7,136,128

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

Non-interest bearing demand deposits

$

2,454,740

$

2,554,820

$

2,506,265

$

2,437,328

Interest bearing demand deposits

 

597,000

 

595,137

 

555,401

 

555,865

Savings and money market

 

2,364,681

 

2,412,081

 

2,332,591

 

2,240,359

Total transaction deposits

 

5,416,421

 

5,562,038

 

5,394,257

 

5,233,552

Time deposits

 

777,977

 

802,772

 

833,916

 

924,501

Total deposits

 

6,194,398

 

6,364,810

 

6,228,173

 

6,158,053

Securities sold under agreements to repurchase

 

24,396

 

24,744

 

22,768

 

22,957

Long-term debt

 

39,532

 

39,505

 

39,478

 

Other liabilities

 

94,122

 

92,238

 

83,486

 

103,252

Total liabilities

 

6,352,448

 

6,521,297

 

6,373,905

 

6,284,262

Shareholders' equity:

Common stock

 

515

 

515

 

515

 

515

Additional paid in capital

 

1,014,330

 

1,014,332

 

1,014,294

 

1,011,200

Retained earnings

 

314,616

 

301,220

 

289,876

 

260,821

Treasury stock

 

(455,909)

 

(457,219)

 

(457,616)

 

(422,365)

Accumulated other comprehensive (loss) income, net of tax

 

(58,001)

 

(38,633)

 

(6,963)

 

1,695

Total shareholders' equity

 

815,551

 

820,215

 

840,106

 

851,866

Total liabilities and shareholders' equity

$

7,167,999

$

7,341,512

$

7,214,011

$

7,136,128

SHARE DATA

Average basic shares outstanding

 

30,225,898

 

30,120,195

 

30,338,265

 

30,947,206

Average diluted shares outstanding

 

30,493,265

 

30,479,261

 

30,715,500

 

31,226,351

Ending shares outstanding

 

30,075,175

 

30,008,781

 

29,958,764

 

30,800,985

Common book value per share

$

27.12

$

27.33

$

28.04

$

27.66

Tangible common book value per share(1) (non-GAAP)

23.45

23.64

24.33

24.01

Tangible common book value per share, excluding accumulated other comprehensive income(1) (non-GAAP)

25.38

24.93

24.56

23.95

CAPITAL RATIOS

Average equity to average assets

11.32%

11.74%

11.88%

11.95%

Tangible common equity to tangible assets(1)

9.99%

9.81%

10.26%

10.53%

Tier 1 leverage ratio

10.54%

10.48%

10.39%

10.57%

Common equity tier 1 risk-based capital ratio

13.75%

13.94%

14.26%

15.31%

Tier 1 risk-based capital ratio

13.75%

13.94%

14.26%

15.31%

Total risk-based capital ratio

15.35%

15.56%

15.92%

16.27%

                                                      

(1)

    

Represents a non-GAAP financial measure. See non-GAAP reconciliations starting on page 14.

8


NATIONAL BANK HOLDINGS CORPORATION

Loan Portfolio

(Dollars in thousands)

Period End Loan Balances by Type

June 30, 2022

June 30, 2022

vs. March 31, 2022

vs. June 30, 2021

June 30, 2022

March 31, 2022

% Change

June 30, 2021

% Change

Originated:

Commercial:

Commercial and industrial

$

1,588,241

$

1,551,447

2.4%

$

1,383,388

14.8%

Municipal and non-profit

996,223

949,125

5.0%

860,740

15.7%

Owner-occupied commercial real estate

592,334

554,345

6.9%

479,286

23.6%

Food and agribusiness

196,829

205,899

(4.4)%

195,095

0.9%

Total commercial

3,373,627

3,260,816

3.5%

2,918,509

15.6%

Commercial real estate non-owner occupied

620,133

634,928

(2.3)%

570,252

8.7%

Residential real estate

682,272

626,763

8.9%

600,124

13.7%

Consumer

17,486

17,321

1.0%

17,942

(2.5)%

Total originated

4,693,518

4,539,828

3.4%

4,106,827

14.3%

Acquired:

Commercial:

Commercial and industrial

15,056

15,800

(4.7)%

18,710

(19.5)%

Municipal and non-profit

330

335

(1.5)%

359

(8.1)%

Owner-occupied commercial real estate

18,849

21,329

(11.6)%

40,435

(53.4)%

Food and agribusiness

2,849

2,976

(4.3)%

3,913

(27.2)%

Total commercial

37,084

40,440

(8.3)%

63,417

(41.5)%

Commercial real estate non-owner occupied

42,771

46,431

(7.9)%

67,368

(36.5)%

Residential real estate

43,486

47,314

(8.1)%

62,805

(30.8)%

Consumer

211

225

(6.2)%

340

(37.9)%

Total acquired

123,552

134,410

(8.1)%

193,930

(36.3)%

Total loans

$

4,817,070

$

4,674,238

3.1%

$

4,300,757

12.0%

Loan Fundings(1)

Second quarter

First quarter

Fourth quarter

Third quarter

Second quarter

2022

2022

2021

2021

2021

Commercial:

Commercial and industrial

$

152,550

$

169,168

$

229,529

$

196,289

$

147,030

Municipal and non-profit

81,428

49,906

101,450

43,516

25,131

Owner occupied commercial real estate

 

78,905

 

67,597

 

28,914

 

53,445

 

48,225

Food and agribusiness

 

(4,186)

 

18,620

 

11,016

 

8,442

 

26,956

Total commercial

308,697

305,291

370,909

301,692

247,342

Commercial real estate non-owner occupied

 

88,612

 

63,416

 

46,128

 

55,392

 

58,532

Residential real estate

 

93,220

 

49,040

 

55,873

 

54,442

 

53,962

Consumer

 

1,989

 

1,904

 

2,524

 

1,810

 

2,267

Total

$

492,518

$

419,651

$

475,434

$

413,336

$

362,103

                                                      

(1)

    

Loan fundings are defined as closed end funded loans and net fundings under revolving lines of credit. Net fundings under revolving lines of credit were $21,762, $66,430, $138,777, $29,154 and $59,520 as of the second and first quarters of 2022 and the fourth, third and second quarters of 2021, respectively.

9


NATIONAL BANK HOLDINGS CORPORATION

Summary of Net Interest Margin

(Dollars in thousands)

For the three months ended

For the three months ended

For the three months ended

June 30, 2022

March 31, 2022

June 30, 2021

Average

    

    

Average

    

Average

    

    

Average

    

Average

    

    

Average

balance

Interest

rate

balance

Interest

rate

balance

Interest

rate

Interest earning assets:

Originated loans FTE(1)(2)

$

4,594,799

$

47,787

4.17%

$

4,361,919

$

42,085

3.91%

$

4,077,142

$

40,036

3.94%

Acquired loans

 

128,107

 

4,403

13.79%

 

147,638

 

2,568

7.05%

 

211,126

3,923

7.45%

Loans held for sale

78,574

881

4.50%

93,639

756

3.27%

159,068

1,213

3.06%

Investment securities available-for-sale

 

898,928

 

3,808

1.69%

 

751,646

 

2,849

1.52%

 

638,039

2,397

1.50%

Investment securities held-to-maturity

 

559,712

 

2,067

1.48%

 

589,830

 

2,012

1.36%

 

572,534

1,723

1.20%

Other securities

 

14,591

 

211

5.78%

 

14,590

 

209

5.73%

 

15,079

209

5.54%

Interest earning deposits and securities purchased under agreements to resell

 

527,589

 

1,015

0.77%

 

743,239

 

359

0.20%

 

888,600

228

0.10%

Total interest earning assets FTE(2)

$

6,802,300

$

60,172

3.55%

$

6,702,501

$

50,838

3.08%

$

6,561,588

$

49,729

3.04%

Cash and due from banks

$

75,616

$

79,383

$

78,148

Other assets

 

402,529

 

442,098

 

472,142

Allowance for credit losses

 

(49,126)

 

(49,584)

 

(54,984)

Total assets

$

7,231,319

$

7,174,398

$

7,056,894

Interest bearing liabilities:

Interest bearing demand, savings and money market deposits

$

2,992,986

$

1,494

0.20%

$

2,936,158

$

1,437

0.20%

$

2,789,681

$

1,572

0.23%

Time deposits

 

790,998

 

991

0.50%

 

821,814

 

1,094

0.54%

 

937,579

2,004

0.86%

Securities sold under agreements to repurchase

 

21,761

 

6

0.11%

 

22,770

 

7

0.12%

 

19,891

6

0.12%

Long-term debt

39,516

328

3.33%

39,489

 

326

3.35%

0.00%

Total interest bearing liabilities

$

3,845,261

$

2,819

0.29%

$

3,820,231

$

2,864

0.30%

$

3,747,151

$

3,582

0.38%

Demand deposits

$

2,469,729

$

2,434,198

$

2,368,810

Other liabilities

 

96,715

 

78,027

 

97,817

Total liabilities

 

6,411,705

 

6,332,456

 

6,213,778

Shareholders' equity

 

819,614

 

841,942

 

843,116

Total liabilities and shareholders' equity

$

7,231,319

$

7,174,398

$

7,056,894

Net interest income FTE(2)

$

57,353

$

47,974

$

46,147

Interest rate spread FTE(2)

3.26%

2.78%

2.66%

Net interest earning assets

$

2,957,039

$

2,882,270

$

2,814,437

Net interest margin FTE(2)

3.38%

2.90%

2.82%

Average transaction deposits

$

5,462,715

$

5,370,356

$

5,158,491

Average total deposits

6,253,713

6,192,170

6,096,070

Ratio of average interest earning assets to average interest bearing liabilities

176.90%

175.45%

175.11%

                                                      

(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 $1,336, $1,313 and $1,279 for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

10


NATIONAL BANK HOLDINGS CORPORATION

Summary of Net Interest Margin

(Dollars in thousands)

For the six months ended June 30, 2022

For the six months ended June 30, 2021

Average

  

    

  

Average

Average

  

    

  

Average

balance

Interest

rate

balance

Interest

rate

Interest earning assets:

Originated loans FTE(1)(2)

$

4,479,002

$

89,872

4.05%

$

4,041,268

$

79,596

3.97%

Acquired loans

 

137,819

 

6,971

10.20%

 

224,722

 

9,051

8.12%

Loans held for sale

86,065

1,637

3.84%

195,094

2,730

2.82%

Investment securities available-for-sale

 

825,694

 

6,657

1.61%

 

662,250

 

4,882

1.47%

Investment securities held-to-maturity

 

574,688

 

4,079

1.42%

 

497,245

 

3,139

1.26%

Other securities

 

14,590

 

420

5.76%

 

15,446

 

419

5.43%

Interest earning deposits and securities purchased under agreements to resell

 

634,818

 

1,374

0.44%

 

764,626

 

393

0.10%

Total interest earning assets FTE(2)

$

6,752,676

$

111,010

3.32%

$

6,400,651

$

100,210

3.16%

Cash and due from banks

$

77,489

$

79,692

Other assets

 

422,205

 

483,617

Allowance for credit losses

 

(49,354)

 

(56,938)

Total assets

$

7,203,016

$

6,907,022

Interest bearing liabilities:

Interest bearing demand, savings and money market deposits

$

2,964,729

$

2,931

0.20%

$

2,717,983

$

3,224

0.24%

Time deposits

 

806,321

 

2,085

0.52%

 

952,431

4,339

0.92%

Securities sold under agreements to repurchase

 

22,263

 

13

0.12%

 

20,630

11

0.11%

Long-term debt

39,503

 

654

3.34%

 

0.00%

Total interest bearing liabilities

$

3,832,816

$

5,683

0.30%

$

3,691,044

$

7,574

0.41%

Demand deposits

$

2,452,062

$

2,267,900

Other liabilities

 

87,422

 

109,148

Total liabilities

 

6,372,300

 

6,068,092

Shareholders' equity

 

830,716

 

838,930

Total liabilities and shareholders' equity

$

7,203,016

$

6,907,022

Net interest income FTE(2)

$

105,327

$

92,636

Interest rate spread FTE(2)

3.02%

2.75%

Net interest earning assets

$

2,919,860

$

2,709,607

Net interest margin FTE(2)

3.15%

2.92%

Average transaction deposits

$

5,416,791

$

4,985,883

Average total deposits

6,223,112

5,938,314

Ratio of average interest earning assets to average interest bearing liabilities

176.18%

173.41%

                                                      

(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 $2,649 and $2,547 for the six months ended June 30, 2022 and June 30, 2021, respectively.

11


NATIONAL BANK HOLDINGS CORPORATION

Allowance for Credit Losses and Asset Quality

(Dollars in thousands)

Allowance for Credit Losses Analysis

As of and for the three months ended

June 30, 2022

March 31, 2022

June 30, 2021

Beginning allowance for credit losses

$

48,810

$

49,694

$

55,057

Charge-offs

 

(451)

 

(634)

(925)

Recoveries

115

75

198

Provision expense (release)

 

2,386

 

(325)

 

(5,300)

Ending allowance for credit losses ("ACL")

$

50,860

$

48,810

$

49,030

Ratio of annualized net charge-offs to average total loans during the period

0.03%

0.05%

0.07%

Ratio of ACL to total loans outstanding at period end

1.06%

1.04%

1.14%

Ratio of ACL to total non-performing loans at period end

515.72%

440.01%

353.22%

Total loans

$

4,817,070

$

4,674,238

$

4,300,757

Average total loans during the period

4,711,416

4,520,205

4,312,128

Total non-performing loans

9,862

11,093

13,881

Past Due and Non-accrual Loans

June 30, 2022

March 31, 2022

June 30, 2021

Loans 30-89 days past due and still accruing interest

$

1,781

$

3,034

$

2,098

Loans 90 days past due and still accruing interest

 

194

 

389

 

767

Non-accrual loans

 

9,862

 

11,093

 

13,881

Total past due and non-accrual loans

$

11,837

$

14,516

$

16,746

Total 90 days past due and still accruing interest and non-accrual loans to total loans

0.21%

0.25%

0.34%

Asset Quality Data

June 30, 2022

March 31, 2022

June 30, 2021

Non-performing loans

$

9,862

$

11,093

$

13,881

OREO

 

4,992

 

5,063

 

5,124

Total non-performing assets

$

14,854

$

16,156

$

19,005

Accruing restructured loans

$

7,208

$

4,979

$

11,844

Total non-performing loans to total loans

0.20%

0.24%

0.32%

Total non-performing assets to total loans and OREO

0.31%

0.35%

0.44%

12


NATIONAL BANK HOLDINGS CORPORATION

Key Ratios(1)

As of and for the three months ended

As of and for the six months ended

June 30, 

    

March 31, 

    

June 30, 

    

June 30, 

June 30, 

2022

    

2022

    

2021

    

2022

2021

Return on average assets

1.13%

1.04%

1.38%

1.08%

1.49%

Return on average tangible assets(2)

1.16%

1.07%

1.41%

1.11%

1.53%

Return on average tangible assets, adjusted(2)

1.20%

1.08%

1.41%

1.14%

1.53%

Return on average equity

9.96%

8.84%

11.51%

9.40%

12.26%

Return on average tangible common equity(2)

11.64%

10.31%

13.41%

10.97%

14.29%

Return on average tangible common equity, adjusted(2)

12.08%

10.42%

13.41%

11.24%

14.29%

Loan to deposit ratio (end of period)

77.76%

73.44%

69.84%

77.76%

69.84%

Non-interest bearing deposits to total deposits (end of period)

39.63%

40.14%

39.58%

39.63%

39.58%

Net interest margin(3)

3.30%

2.82%

2.74%

3.07%

2.84%

Net interest margin FTE(2)(3)

3.38%

2.90%

2.82%

3.15%

2.92%

Interest rate spread FTE(2)(4)

3.26%

2.78%

2.66%

3.02%

2.75%

Yield on earning assets(5)

3.47%

3.00%

2.96%

3.24%

3.08%

Yield on earning assets FTE(2)(5)

3.55%

3.08%

3.04%

3.32%

3.16%

Cost of interest bearing liabilities(5)

0.29%

0.30%

0.38%

0.30%

0.41%

Cost of deposits

0.16%

0.17%

0.24%

0.16%

0.26%

Non-interest income to total revenue FTE(2)

22.62%

28.43%

35.38%

25.38%

38.76%

Non-interest expense to average assets

2.53%

2.49%

2.63%

2.51%

2.80%

Efficiency ratio

62.18%

66.63%

65.66%

64.29%

64.16%

Efficiency ratio FTE(2)

61.06%

65.32%

64.48%

63.09%

63.08%

Efficiency ratio FTE, adjusted(2)

59.70%

64.95%

64.48%

62.19%

63.08%

Total Loans Asset Quality Data(6)(7)(8)

Non-performing loans to total loans

0.20%

0.24%

0.32%

0.20%

0.32%

Non-performing assets to total loans and OREO

0.31%

0.35%

0.44%

0.31%

0.44%

Allowance for credit losses to total loans

1.06%

1.04%

1.14%

1.06%

1.14%

Allowance for credit losses to non-performing loans

515.72%

440.01%

353.22%

515.72%

353.22%

Net charge-offs to average loans

0.03%

0.05%

0.07%

0.04%

0.04%

                                                      

(1)

    

Ratios are annualized.

(2)

    

Ratio represents non-GAAP financial measure. See non-GAAP reconciliations starting on page 14.

(3)

Net interest margin represents net interest income, including accretion income on interest earning assets, as a percentage of average interest earning assets.

(4)

    

Interest rate spread represents the difference between the weighted average yield on interest earning assets and the weighted average cost of interest bearing liabilities.

(5)

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.

(6)

Non-performing loans consist of non-accruing loans and restructured loans on non-accrual.

(7)

Non-performing assets include non-performing loans and other real estate owned.

(8)

Total loans are net of unearned discounts and fees.

13


NATIONAL BANK HOLDINGS CORPORATION

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(Dollars in thousands, except share and per share data)

Tangible Common Book Value Ratios

June 30, 2022

March 31, 2022

    

December 31, 2021

June 30, 2021

Total shareholders' equity

$

815,551

$

820,215

$

840,106

$

851,866

Less: goodwill and core deposit intangible (“CDI”) assets, net

 

(120,800)

 

(121,096)

 

(121,392)

 

(121,983)

Add: deferred tax liability related to goodwill

 

10,527

 

10,298

 

10,070

 

9,612

Tangible common equity (non-GAAP)

$

705,278

$

709,417

$

728,784

$

739,495

Total assets

$

7,167,999

$

7,341,512

$

7,214,011

$

7,136,128

Less: goodwill and CDI assets, net

 

(120,800)

 

(121,096)

 

(121,392)

 

(121,983)

Add: deferred tax liability related to goodwill

 

10,527

 

10,298

 

10,070

 

9,612

Tangible assets (non-GAAP)

$

7,057,726

$

7,230,714

$

7,102,689

$

7,023,757

Tangible common equity to tangible assets calculations:

Total shareholders' equity to total assets

11.38%

11.17%

11.65%

11.94%

Less: impact of goodwill and CDI assets, net

(1.39)%

(1.36)%

(1.39)%

(1.41)%

Tangible common equity to tangible assets (non-GAAP)

9.99%

9.81%

10.26%

10.53%

Tangible common book value per share calculations:

Tangible common equity (non-GAAP)

$

705,278

$

709,417

$

728,784

$

739,495

Divided by: ending shares outstanding

 

30,075,175

 

30,008,781

 

29,958,764

 

30,800,985

Tangible common book value per share (non-GAAP)

$

23.45

$

23.64

$

24.33

$

24.01

Tangible common book value per share, excluding accumulated other comprehensive income calculations:

Tangible common equity (non-GAAP)

$

705,278

$

709,417

$

728,784

$

739,495

Accumulated other comprehensive loss (income), net of tax

 

58,001

 

38,633

 

6,963

 

(1,695)

Tangible common book value, excluding accumulated other comprehensive loss (income), net of tax (non-GAAP)

 

763,279

 

748,050

 

735,747

 

737,800

Divided by: ending shares outstanding

 

30,075,175

 

30,008,781

 

29,958,764

 

30,800,985

Tangible common book value per share, excluding accumulated other comprehensive loss (income), net of tax (non-GAAP)

$

25.38

$

24.93

$

24.56

$

23.95

14


NATIONAL BANK HOLDINGS CORPORATION

(Dollars in thousands, except share and per share data)

Return on Average Tangible Assets and Return on Average Tangible Equity

As of and for the three months ended

As of and for the six months ended

June 30, 

    

March 31, 

    

June 30, 

    

June 30, 

    

June 30, 

2022

    

2022

    

2021

    

2022

    

2021

Net income

$

20,362

$

18,352

$

24,200

$

38,714

$

51,012

Add: impact of CDI amortization expense, after tax

 

227

 

227

 

228

 

455

 

455

Net income excluding the impact of CDI amortization expense, after tax

$

20,589

$

18,579

$

24,428

$

39,169

$

51,467

Average assets

$

7,231,319

$

7,174,398

$

7,056,894

$

7,203,016

$

6,907,022

Less: average goodwill and CDI asset, net of deferred tax liability related to goodwill

 

(110,446)

 

(110,973)

 

(112,552)

 

(110,594)

 

(112,698)

Average tangible assets (non-GAAP)

$

7,120,873

$

7,063,425

$

6,944,342

$

7,092,422

$

6,794,324

Average shareholders' equity

$

819,614

$

841,942

$

843,116

$

830,716

$

838,930

Less: average goodwill and CDI asset, net of deferred tax liability related to goodwill

 

(110,446)

 

(110,973)

 

(112,552)

 

(110,594)

 

(112,698)

Average tangible common equity (non-GAAP)

$

709,168

$

730,969

$

730,564

$

720,122

$

726,232

Return on average assets

1.13%

1.04%

1.38%

1.08%

1.49%

Return on average tangible assets (non-GAAP)

1.16%

1.07%

1.41%

1.11%

1.53%

Return on average equity

9.96%

8.84%

11.51%

9.40%

12.26%

Return on average tangible common equity (non-GAAP)

11.64%

10.31%

13.41%

10.97%

14.29%

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

As of and for the three months ended

As of and for the six months ended

June 30, 

March 31, 

June 30, 

June 30, 

June 30, 

2022

2022

2021

2022

2021

Interest income

$

58,836

    

$

49,525

    

$

48,450

    

$

108,361

$

97,663

Add: impact of taxable equivalent adjustment

 

1,336

 

1,313

 

1,279

 

2,649

 

2,547

Interest income FTE (non-GAAP)

$

60,172

$

50,838

$

49,729

$

111,010

$

100,210

Net interest income

$

56,017

$

46,661

$

44,868

$

102,678

$

90,089

Add: impact of taxable equivalent adjustment

 

1,336

 

1,313

 

1,279

 

2,649

 

2,547

Net interest income FTE (non-GAAP)

$

57,353

$

47,974

$

46,147

$

105,327

$

92,636

Average earning assets

$

6,802,300

$

6,702,501

$

6,561,588

$

6,752,676

$

6,400,651

Yield on earning assets

 

3.47%

 

3.00%

 

2.96%

 

3.24%

 

3.08%

Yield on earning assets FTE (non-GAAP)

 

3.55%

 

3.08%

 

3.04%

 

3.32%

 

3.16%

Net interest margin

 

3.30%

 

2.82%

 

2.74%

 

3.07%

 

2.84%

Net interest margin FTE (non-GAAP)

 

3.38%

 

2.90%

 

2.82%

 

3.15%

 

2.92%

15


Efficiency Ratio

As of and for the three months ended

As of and for the six months ended

    

June 30, 

    

March 31, 

    

June 30, 

    

June 30, 

    

June 30, 

    

2022

    

2022

    

2021

    

2022

    

2021

Net interest income

$

56,017

$

46,661

$

44,868

$

102,678

$

90,089

Add: impact of taxable equivalent adjustment

 

1,336

 

1,313

 

1,279

 

2,649

 

2,547

Net interest income, FTE (non-GAAP)

$

57,353

$

47,974

$

46,147

$

105,327

$

92,636

Non-interest income

$

16,762

$

19,054

$

25,266

$

35,816

$

58,627

Non-interest expense

$

45,552

$

44,082

$

46,343

$

89,634

$

96,011

Less: CDI asset amortization

(296)

 

(296)

 

(296)

 

(592)

 

(592)

Non-interest expense, excluding CDI asset amortization

$

45,256

$

43,786

$

46,047

$

89,042

$

95,419

Non-interest expense, excluding CDI asset amortization

$

45,256

$

43,786

$

46,047

$

89,042

$

95,419

Acquisition-related expenses

 

(1,006)

 

(254)

 

 

(1,260)

 

Adjusted non-interest expense (non-GAAP)

$

44,250

$

43,532

$

46,047

$

87,782

$

95,419

Efficiency ratio

62.18%

66.63%

65.66%

64.29%

64.16%

Efficiency ratio FTE (non-GAAP)

61.06%

65.32%

64.48%

63.09%

63.08%

Adjusted efficiency ratio FTE (non-GAAP)

59.70%

64.95%

64.48%

62.19%

63.08%

16


Adjusted Financial Results

As of and for the three months ended

As of and for the six months ended

    

June 30, 

    

March 31, 

    

June 30, 

    

June 30, 

    

June 30, 

    

2022

    

2022

    

2021

    

2022

    

2021

Adjustments to net income:

Net income

$

20,362

$

18,352

$

24,200

$

38,714

$

51,012

Adjustments(1)

 

773

 

195

 

 

968

 

Adjusted net income (non-GAAP)

$

21,135

$

18,547

$

24,200

$

39,682

$

51,012

Adjustments to earnings per share:

Earnings per share - diluted

$

0.67

$

0.60

$

0.77

$

1.27

$

1.63

Adjustments(1)

 

0.02

 

0.01

 

 

0.03

 

Adjusted earnings per share - diluted (non-GAAP)

$

0.69

$

0.61

$

0.77

$

1.30

$

1.63

Adjustments to return on average tangible assets:

Adjusted net income (non-GAAP)

$

21,135

$

18,547

$

24,200

$

39,682

$

51,012

Add: impact of CDI amortization expense, after tax

227

227

228

455

455

Adjusted net income excluding CDI amortization expense, after tax (non-GAAP)

21,362

18,774

24,428

40,137

51,467

Average tangible assets (non-GAAP)

 

7,120,873

 

7,063,425

 

6,944,342

 

7,092,422

 

6,794,324

Adjusted return on average tangible assets (non-GAAP)

1.20%

1.08%

1.41%

1.14%

1.53%

Adjustments to return on average tangible common equity:

Adjusted net income excluding CDI amortization expense, after tax (non-GAAP)

$

21,362

$

18,774

$

24,428

$

40,137

$

51,467

Average tangible common equity (non-GAAP)

709,168

730,969

730,564

720,122

726,232

Adjusted return on average tangible common equity (non-GAAP)

12.08%

10.42%

13.41%

11.24%

14.29%

Adjustments to non-interest expense:

Non-interest expense

$

45,552

$

44,082

$

46,343

$

89,634

$

96,011

Adjustments(1)

1,006

254

1,260

Adjusted non-interest expense (non-GAAP)

44,546

43,828

46,343

88,374

96,011

Non-interest expense to average assets, adjusted (non-GAAP)

2.47%

2.48%

2.63%

2.47%

2.80%

(1) Adjustments:

Non-interest expense adjustments:

Acquisition-related expenses

$

1,006

$

254

$

$

1,260

$

Tax expense impact

 

(233)

(59)

(292)

Adjustments (non-GAAP)

$

773

$

195

$

$

968

$

17