GlobeNewswire Inc | Jul 21, 2020 04:10PM EDT

July 21, 2020

DENVER, July 21, 2020 (GLOBE NEWSWIRE) -- National Bank Holdings Corporation (NYSE: NBHC) reported:

For the quarter For the quarter - adjusted^(1) 2Q20 1Q20 2Q19 2Q20 1Q20 2Q19Netincome $ 17,705 $ 15,824 $ 20,282 $ 19,015 $ 15,824 $ 20,282 ($000's)Earningsper $ 0.57 $ 0.50 $ 0.64 $ 0.62 $ 0.50 $ 0.64 share -dilutedReturnonaverage 1.16 % 1.12 % 1.44 % 1.25 % 1.12 % 1.44 %tangibleassets^(2)Returnonaveragetangible 10.98 % 9.79 % 13.45 % 11.78 % 9.79 % 13.45 %commonequity^(2)



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

In announcing these results, Chief Executive Officer Tim Laney shared, My teammates continue to tackle the challenges presented by the COVID-19 pandemic head on. We remain focused on our priorities to 1) protect the health of our associates and clients, 2) ensure the safety and soundness of our bank, and 3) act on every opportunity to prudently support our clients and the communities where we do business. While executing on these priorities during the second quarter, we delivered adjusted net income of $0.62 per diluted share, $0.12 per share higher than the first quarter. We maintained excellent credit quality with low annualized net charge-offs of just 0.05% during the second quarter, and our non-performing loan ratio decreased five basis points from the prior quarter to 0.42% of total loans.

Mr. Laney added, We continue to hold high levels of capital with a strong Common Equity Tier 1 capital ratio of 13.2% and grew our tangible book value per share by $0.40 during the quarter to $21.67. The pandemic has created operating stress for many businesses, and our teams are working with great intensity to monitor the financial health of our clients and manage the increased risk presented by the pandemic. Our strong capital and liquidity are allowing us to prudently navigate a challenging economy, and we are well positioned to support our clients and communities.

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

Net income totaled $17.7 million during the second quarter of 2020, or $0.57 per diluted share, compared to $15.8 million during the first quarter, or $0.50 per diluted share. Adjusting for banking center consolidation-related expenses incurred during the second quarter, net income totaled $19.0 million, or $0.62 per diluted share, an increase of $0.12 per diluted share over the first quarter. The return on average tangible assets was 1.16%, compared to 1.12% in the prior quarter, and the return on average tangible common equity was 10.98%, compared to 9.79%, in the prior quarter. The adjusted return on average tangible assets was 1.25%, and the adjusted return on average tangible common equity was 11.78% during the second quarter.

Net Interest IncomeFully taxable equivalent net interest income totaled $48.6 million, decreasing $3.0 million from the prior quarter, driven by lower earning asset yields due to the decline in short-term interest rates as a result of monetary policy actions by the Federal Reserve in March 2020. Partially offsetting this decrease was strong earning asset growth of $408.3 million, or 30.6% annualized, which included average Paycheck Protection Program (PPP) loans totaling $282.5 million. The fully taxable equivalent net interest margin narrowed 48 basis points from the prior quarter to 3.39% and included a six basis point decrease due to the lower yielding PPP loans originated during the second quarter and a nine basis point decrease due to the accelerated accretion benefits recognized in the prior quarter. The yield on earning assets decreased 66 basis points due to the decline in short-term interest rates, and the cost of funds decreased 23 basis points to 0.65%.

LoansTotal loans ended the quarter at $4.8 billion, increasing $276.6 million, or 24.7% annualized, due to $348.7 million of PPP loans. Total second quarter loan originations were $461.6 million, led by PPP loan originations of $358.8 million and commercial loan originations of $52.6 million. We 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 higher impacted industries and COVID-19 related loan modifications within the accompanying Supplemental Disclosure.

Asset Quality and Provision for Loan LossesProvision for loan losses of $10.3 million was recorded during the quarter under the CECL model and included a $0.1 million provision for unfunded loan commitment reserves. The quarters provision expense was primarily driven by further declines in the macro-economic forecast within the CECL model as a result of COVID-19. Annualized net charge-offs on loans totaled 0.05% of total loans, compared to 0.03% in the prior quarter. Non-performing loans (comprised of non-accrual loans and non-accrual TDRs) improved to 0.42% of total loans, decreasing 0.05% from 0.47% at March 31, 2020. The allowance for credit losses as a percentage of total loans increased 13 basis points to 1.26% at June 30, 2020. Excluding PPP loans, non-performing loans improved to 0.45% of total loans and the allowance for credit losses as a percentage of totals loans increased 23 basis points to 1.36% at June 30, 2020.

DepositsAverage transaction deposits (defined as total deposits less time deposits) increased $521.7 million, or 57.7% annualized, and average total deposits increased $513.8 million, or 44.0% annualized, to $5.2 billion as of June 30, 2020. Average non-interest bearing demand deposits increased $299.4 million and average interest-bearing demand, savings and money market deposits increased $222.3 million. The mix of transaction deposits to total deposits improved 280 basis points to 80.6% at June 30, 2020, compared to 77.8% at March 31, 2020. The loan to deposit ratio totaled 88.3% at June 30, 2020, compared to 95.0% at March 31, 2020.

The cost of transaction deposits decreased 13 basis points from the prior quarter to 0.19%. The cost of total deposits decreased 16 basis point from the prior quarter to 0.47%.

Non-Interest IncomeNon-interest income totaled $38.8 million during the second quarter, representing an increase of $15.3 million, or 65.0%. Mortgage banking income reached a quarterly record of $30.6 million, an increase of $17.0 million from the prior quarter. Service charges and bank card fees decreased a combined $0.9 million and were impacted by changes in consumer behavior due to COVID-19. Other non-interest income decreased $0.7 million from the prior quarter, primarily due to decreased swap-fee income.

Non-Interest ExpenseNon-interest expense totaled $53.8 million during the second quarter, representing an increase of $5.1 million, largely due to higher mortgage banking commissions of $3.3 million. A fair value impairment charge of $1.7 million was recorded during the second quarter related to the consolidation of 12 banking center locations throughout the Community Banks of Colorado, Bank Midwest and Hillcrest Bank markets. The fully taxable equivalent efficiency ratio improved to 61.1% at June 30, 2020, compared to 64.4% at March 31, 2020. Adjusting for banking center consolidation-related expense, the fully taxable equivalent efficiency ratio improved to 59.2% at June 30, 2020.

Income tax expense totaled $4.4 million during the second quarter, compared to $3.2 million during the prior quarter. The effective tax rate was 20.0% and 16.9% for the second and first quarter, respectively.

CapitalCapital ratios continue to be strong and in excess of federal bank regulatory agency well capitalized thresholds. The Tier 1 leverage ratio at June 30, 2020 for the consolidated company and NBH Bank was 10.53% and 9.14%, respectively. Shareholders equity totaled $777.0 million at June 30, 2020 and increased $13.5 million from the prior quarter due to higher retained earnings.

Common book value per share increased $0.38 to $25.42 at June 30, 2020. The tangible common book value per share increased $0.40 to $21.67 at June 30, 2020 as the quarters earnings outpaced the quarterly dividend. Excluding accumulated other comprehensive income, the tangible book value per share increased $0.40 to $21.27 at June 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 leveraged our digital banking platform with our clients, and we have implemented a four-phase return to office plan for our associates. 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 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 six month of 2019, except as noted)

Fully taxable equivalent net interest income totaled $100.2 million, decreasing $5.9 million, or 5.6%. Average earning assets increased $244.9 million, or 4.6%, primarily driven by average loan growth of $356.6 million, including average PPP loans of $141.2 million, partially offset by a decrease in average investment securities of $179.2 million. The fully taxable equivalent net interest margin narrowed 41 basis points to 3.62% due to lower earning asset yields. The yield on earning assets decreased 55 basis points, led by a 74 basis point decrease in the originated loan portfolio yields due to fed funds rate cuts. The cost of funds decreased 18 basis points to 0.76%.

Loans outstanding totaled $4.8 billion and increased $452.1 million, or 10.4%, led by PPP loans of $348.7 million and commercial loan growth of $160.6 million, or 5.6%. New loan originations over the trailing 12 months totaled $1.3 billion, led by commercial loan originations of $585.9 million and PPP loan originations of $358.8 million.

Average non-interest bearing demand deposits increased $154.9 million, or 13.7%. Average transaction deposits increased $343.3 million, or 9.7%, and average total deposits increased $314.7 million, or 6.8%, to $4.9 billion as of June 30, 2020. Spot transaction deposits increased $756.0 million to $4.4 billion at June 30, 2020, improving the mix of transaction deposits to total deposits by 370 basis points to 80.6% at June 30, 2020. The mix of non-interest bearing demand deposits to total deposits improved 290 basis points to 27.8% at June 30, 2020.

A CECL model driven provision for loan losses of $16.4 million was recorded during the first six months of 2020, net of a $0.1 million reduction in 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 0.02% last year. Non-performing loans to total loans decreased 36 basis points to 0.42%, compared to 0.78% at June 30, 2019. The allowance for credit losses totaled 1.26% of total loans, compared to 0.93% at June 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 43 basis points to 1.36% at June 30, 2020, compared to the same period last year.

Non-interest income totaled $62.4 million, representing an increase of $24.7 million, or 65.4%, from the prior year, primarily driven by an increase of $27.0 million, or 155.6%, in mortgage banking income. Service charges and bank card fees decreased a combined $1.7 million and other non-interest income decreased $0.5 million from the prior year.

Non-interest expense totaled $102.4 million, representing an increase of $11.6 million, or 12.8%, from the prior year. Mortgage banking commissions increased by $11.1 million and banking center consolidation-related expense totaled $1.7 million during 2020. Other non-interest expense decreased by $1.3 million largely due to a decrease in FDIC deposit insurance fees and marketing and development expense.

Income tax expense totaled $7.7 million, compared to $6.5 million during the first six months of 2019, an increase of $1.2 million. Included in income tax expense was $0.1 million of expense and $2.1 million of benefit from stock compensation activity during the first six months of 2020 and 2019, respectively. Adjusting for stock compensation activity, the effective tax rate for the first six months of 2020 was 18.3%, compared to 19.0% 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, July 22, 2020. Interested parties may listen to this call by dialing (877) 272-6762 / (615) 800-6832 (International) using the Conference ID of 8919639 and asking for the NBHC Second Quarter Earnings conference call. A telephonic replay of the call will be available beginning approximately four hours after the calls completion through August 5, 2020, by dialing (855) 859-2056 (United States) / (404) 537-3406 (International) using the Conference ID of 8919639. 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 101 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, New Mexico, Texas and Utah. NBH Bank operates under the following brand names: Community Banks of Colorado in Colorado, Bank Midwest in Kansas and Missouri and Hillcrest Bank in New Mexico, Texas and Utah. It also operates as Community Banks Mortgage, a division of NBH Bank, in Colorado. 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 such as the outbreak of the novel Coronavirus Disease 2019 (COVID-19), dislocations, political instability, acts of war or terrorist activities, cyberattacks or international hostilities; adverse effects due to 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: Whitney Bartelli, Chief Marketing Officer, (816) 298-2203, 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 six months ended June30, March31, June30, June30, June30, 2020 2020 2019 2020 2019Total interest and $ 53,744 $ 58,668 $ 62,193 $ 112,412 $ 121,613 dividend incomeTotal interest 6,416 8,321 9,702 14,737 17,956 expenseNet interest income 47,328 50,347 52,491 97,675 103,657 Taxable equivalent 1,301 1,268 1,285 2,568 2,512 adjustmentNet interest income 48,629 51,615 53,776 100,243 106,169 FTE^(1)Provision for loan 10,271 6,159 3,239 16,430 4,773 lossesNet interest incomeafter provision for 38,358 45,456 50,537 83,813 101,396 loan losses FTE^(1)Non-interest income: Service charges 3,094 4,126 4,541 7,220 8,862 Bank card fees 3,654 3,513 3,766 7,167 7,194 Mortgage banking 30,630 13,673 10,398 44,303 17,335 incomeOther non-interest 1,459 2,192 1,896 3,651 4,200 incomeOREO-related income ? 28 59 28 120 Total non-interest 38,837 23,532 20,660 62,369 37,711 incomeNon-interest expense: Salaries and benefits 36,457 33,180 30,667 69,637 58,557 Occupancy and 7,078 6,898 6,721 13,976 13,603 equipmentProfessional fees 759 609 1,041 1,368 1,855 Other non-interest 6,778 7,001 7,319 13,779 15,076 expenseProblem asset workout 629 648 725 1,277 1,848 Loss (gain) on sale 55 39 (318 ) 94 (686 )of OREO, netCore depositintangible asset 296 296 296 592 592 amortizationBanking centerconsolidation-related 1,708 ? ? 1,708 ? expenseTotal non-interest 53,760 48,671 46,451 102,431 90,845 expense Income before income 23,435 20,317 24,746 43,751 48,262 taxes FTE^(1)Taxable equivalent 1,301 1,268 1,285 2,568 2,512 adjustmentIncome before income 22,134 19,049 23,461 41,183 45,750 taxesIncome tax expense 4,429 3,225 3,179 7,654 6,546 Net income $ 17,705 $ 15,824 $ 20,282 $ 33,529 $ 39,204 Earnings per share - $ 0.57 $ 0.51 $ 0.65 $ 1.08 $ 1.26 basicEarnings per share - 0.57 0.50 0.64 1.08 1.24 diluted



Net interest income is presented on a GAAP basis and fully taxable equivalent (FTE) basis, as the Company believes this non-GAAP measure is(1) 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)

June30,2020 March31,2020 December31,2019 June30,2019ASSETS Cash and cash $ 142,385 $ 133,926 $ 110,190 $ 91,159 equivalentsInvestmentsecurities 610,735 629,396 638,249 710,206 available-for-saleInvestmentsecurities 215,183 192,902 182,884 206,361 held-to-maturityNon-marketable 30,188 29,948 29,751 30,726 securitiesLoans 4,782,383 4,505,735 4,415,406 4,330,263 Allowance for (60,465 ) (50,956 ) (39,064 ) (40,082 )credit lossesLoans, net 4,721,918 4,454,779 4,376,342 4,290,181 Loans held for 204,856 127,439 117,444 105,866 saleOther real estate 6,491 7,051 7,300 7,054 ownedPremises and 110,019 112,393 112,151 111,171 equipment, netGoodwill 115,027 115,027 115,027 115,027 Intangible assets, 12,175 10,489 11,361 12,267 netOther assets 216,454 214,980 194,813 177,984 Total assets $ 6,385,431 $ 6,028,330 $ 5,895,512 $ 5,858,002 LIABILITIES ANDSHAREHOLDERS' EQUITYLiabilities: Non-interestbearing demand $ 1,502,948 $ 1,150,437 $ 1,184,945 $ 1,167,399 depositsInterest bearing 955,951 846,824 738,496 691,527 demand depositsSavings and money 1,903,427 1,693,614 1,755,538 1,747,434 marketTotal transaction 4,362,326 3,690,875 3,678,979 3,606,360 depositsTime deposits 1,051,563 1,050,981 1,058,153 1,081,637 Total deposits 5,413,889 4,741,856 4,737,132 4,687,997 Securities soldunder agreements 24,504 23,703 56,935 60,430 to repurchaseFederal Home Loan 15,000 341,506 207,675 272,414 Bank advancesOther liabilities 155,071 157,811 126,850 103,244 Total liabilities 5,608,464 5,264,876 5,128,592 5,124,085 Shareholders' equity:Common stock 515 515 515 515 Additional paid in 1,008,773 1,009,478 1,009,223 1,006,008 capitalRetained earnings 180,537 168,984 164,082 135,210 Treasury stock (425,053 ) (427,890 ) (408,962 ) (409,322 )Accumulated othercomprehensive 12,195 12,367 2,062 1,506 income, net of taxTotalshareholders' 776,967 763,454 766,920 733,917 equityTotal liabilitiesand shareholders' $ 6,385,431 $ 6,028,330 $ 5,895,512 $ 5,858,002 equitySHARE DATA Average basic 30,731,758 31,157,476 31,299,989 31,155,264 shares outstandingAverage diluted 30,857,606 31,361,296 31,525,911 31,604,658 shares outstandingEnding shares 30,569,011 30,483,361 31,176,627 31,139,044 outstandingCommon book value $ 25.42 $ 25.04 $ 24.60 $ 23.57 per shareTangible commonbook value per 21.67 21.27 20.89 19.83 share^(1)(non-GAAP)Tangible commonbook value pershare, excludingaccumulated other 21.27 20.87 20.83 19.78 comprehensiveincome^(1)(non-GAAP)CAPITAL RATIOS Average equity to 12.21 % 13.21 % 12.91 % 12.46 %average assetsTangible commonequity to tangible 10.56 % 10.97 % 11.27 % 10.75 %assets^(1)Tier 1 leverage 10.53 % 11.05 % 11.04 % 10.60 %ratioCommon equity tier1 risk-based 13.21 % 12.87 % 13.21 % 12.87 %capital ratioTotal risk-based 14.26 % 13.82 % 14.08 % 13.78 %capital ratio



(1) Represents a non-GAAP financial measure.

NATIONAL BANK HOLDINGS CORPORATIONLoan Portfolio (Dollars in thousands)

Period End Loan Balances by Type

June30,2020 June30,2020 vs. March 31, vs. June 30, 2020 2019 June30,2020 March31,2020 % Change June30,2019 % ChangeOriginated: Commercial: Commercial and $ 1,360,679 $ 1,409,040 (3.4 )% $ 1,315,420 3.4 %industrialMunicipal and 912,287 876,178 4.1 % 807,634 13.0 %non-profitOwner-occupiedcommercial 455,846 446,145 2.2 % 379,462 20.1 %real estateFood and 213,789 235,389 (9.2 )% 236,865 (9.7 )%agribusinessTotal 2,942,601 2,966,752 (0.8 )% 2,739,381 7.4 %commercialCommercialreal estate 540,412 536,637 0.7 % 459,242 17.7 %non-owneroccupiedResidential 631,032 656,924 (3.9 )% 660,657 (4.5 )%real estateConsumer 20,370 20,960 (2.8 )% 21,731 (6.3 )%PPP loans^(1) 348,689 ? 100.0 % ? 100.0 %Total 4,483,104 4,181,273 7.2 % 3,881,011 15.5 %originated Acquired: Commercial: Commercial and 27,461 29,510 (6.9 )% 41,386 (33.6 )%industrialMunicipal and 593 906 (34.5 )% 3,969 (85.1 )%non-profitOwner-occupiedcommercial 65,052 69,769 (6.8 )% 87,567 (25.7 )%real estateFood and 6,237 7,159 (12.9 )% 9,060 (31.2 )%agribusinessTotal 99,343 107,344 (7.5 )% 141,982 (30.0 )%commercialCommercialreal estate 101,412 107,090 (5.3 )% 160,606 (36.9 )%non-owneroccupiedResidential 97,982 109,400 (10.4 )% 145,670 (32.7 )%real estateConsumer 542 628 (13.7 )% 994 (45.5 )%Total acquired 299,279 324,462 (7.8 )% 449,252 (33.4 )% Total loans $ 4,782,383 $ 4,505,735 6.1 % $ 4,330,263 10.4 %



(1) PPP loan balances are net of fees and costs and include principal totaling $358,798.

Originations(1)

Second First Fourth Third Second quarter quarter quarter quarter quarter 2020 2020 2019 2019 2019Commercial: Commercialand $ (8,726 ) $ 118,999 $ 69,048 $ 144,554 $ 125,527industrialMunicipaland 49,679 13,968 46,114 31,482 25,513non-profitOwneroccupied 22,078 37,372 46,965 16,149 41,380commercialreal estateFood and (10,480 ) (6,787 ) 20,348 (4,894 ) 18,217agribusinessTotal 52,551 163,552 182,475 187,291 210,637commercialCommercialreal estate 18,992 80,792 41,256 79,929 36,632non-owneroccupiedResidential 29,024 46,273 43,493 49,022 40,012real estateConsumer 2,206 2,320 2,315 2,986 3,264PPP loans 358,798 ? ? ? ?Total $ 461,571 $ 292,937 $ 269,539 $ 319,228 $ 290,545



Originations are defined as closed end funded loans and net fundings under revolving lines of credit. Net funding under revolving lines of credit were(1) ($55,826), $48,789, $1,756, $37,062 and $48,955 as of the second quarter 2020, first quarter 2020, fourth quarter 2019, third quarter 2019 and second 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 June30,2020 March31,2020 June30,2019 Average Average Average Average Average Average balance Interest rate balance Interest rate balance Interest rateInterest earning assets:Originated loans $ 4,432,725 $ 42,440 3.85 % $ 4,043,168 $ 44,980 4.47 % $ 3,821,981 $ 46,728 4.90 %FTE^(1)(2)Acquired loans 312,723 6,722 8.65 % 343,608 8,879 10.39 % 467,982 9,619 8.24 %Loans held for 157,887 1,310 3.34 % 102,935 936 3.66 % 87,222 934 4.30 %saleInvestmentsecurities 607,132 3,050 2.01 % 626,921 3,395 2.17 % 738,970 4,002 2.17 %available-for-saleInvestmentsecurities 189,360 1,201 2.54 % 189,062 1,235 2.61 % 215,497 1,533 2.85 %held-to-maturityOther securities 30,087 310 4.12 % 29,753 414 5.57 % 28,425 458 6.45 %Interest earningdeposits andsecurities 36,758 12 0.13 % 22,957 97 1.70 % 27,079 204 3.02 %purchased underagreements toresellTotal interestearning assets FTE $ 5,766,672 $ 55,045 3.84 % $ 5,358,404 $ 59,936 4.50 % $ 5,387,156 $ 63,478 4.73 %^(2)Cash and due from $ 76,041 $ 74,784 $ 75,780 banksOther assets 532,867 474,470 419,368 Allowance for (56,984 ) (44,807 ) (37,743 ) credit lossesTotal assets $ 6,318,596 $ 5,862,851 $ 5,844,561 Interest bearing liabilities:Interest bearingdemand, savings $ 2,719,433 $ 1,951 0.29 % $ 2,497,129 $ 2,888 0.47 % $ 2,429,686 $ 3,559 0.59 %and money marketdepositsTime deposits 1,048,772 4,136 1.59 % 1,056,692 4,438 1.69 % 1,084,011 4,090 1.51 %Securities soldunder agreements 23,485 18 0.31 % 44,898 97 0.87 % 57,571 162 1.13 %to repurchaseFederal Home Loan 163,263 311 0.77 % 219,353 898 1.65 % 294,524 1,891 2.58 %Bank advancesTotal interestbearing $ 3,954,953 $ 6,416 0.65 % $ 3,818,072 $ 8,321 0.88 % $ 3,865,792 $ 9,702 1.01 %liabilitiesDemand deposits $ 1,436,671 $ 1,137,273 $ 1,155,710 Other liabilities 155,379 133,126 94,968 Total liabilities 5,547,003 5,088,471 5,116,470 Shareholders' 771,593 774,380 728,091 equity Totalliabilities and $ 6,318,596 $ 5,862,851 $ 5,844,561 shareholders'equityNet interest $ 48,629 $ 51,615 $ 53,776 income FTE^(2)Interest rate 3.19 % 3.62 % 3.72 %spread FTE^(2)Net interest $ 1,811,719 $ 1,540,332 $ 1,521,364 earning assetsNet interest 3.39 % 3.87 % 4.00 %margin FTE^(2)Averagetransaction $ 4,156,104 $ 3,634,402 $ 3,585,396 depositsAverage total 5,204,876 4,691,094 4,669,407 depositsRatio of averageinterest earningassets to average 145.81 % 140.34 % 139.35 % 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(2) of 21%. The tax equivalent adjustments included above are $1,301, $1,268 and $1,285 for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively.

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

For the six months ended June30,2020 For the six months ended June30,2019 Average Average Average Average balance Interest rate balance Interest rateInterest earning assets:Originated loans $ 4,237,946 $ 87,419 4.15 % $ 3,723,932 $ 90,301 4.89 %FTE^(1)(2)Acquired loans 328,165 15,601 9.56 % 485,540 19,560 8.12 %Loans held for 130,411 2,246 3.46 % 65,167 1,422 4.40 %saleInvestmentsecurities 617,027 6,445 2.09 % 763,034 8,363 2.19 %available-for-saleInvestmentsecurities 189,211 2,436 2.57 % 222,411 3,184 2.86 %held-to-maturityOther securities 29,920 724 4.84 % 27,659 881 6.37 %Interest earningdeposits andsecurities 29,858 109 0.73 % 29,853 414 2.80 %purchased underagreements toresellTotal interestearning assets FTE $ 5,562,538 $ 114,980 4.16 % $ 5,317,596 $ 124,125 4.71 %^(2)Cash and due from $ 75,412 $ 76,861 banksOther assets 503,669 420,486 Allowance for (50,895 ) (36,784 ) credit lossesTotal assets $ 6,090,724 $ 5,778,159 Interest bearing liabilities:Interest bearingdemand, savings $ 2,608,281 $ 4,839 0.37 % $ 2,419,902 $ 6,567 0.55 %and money marketdepositsTime deposits 1,052,732 8,574 1.64 % 1,081,297 7,697 1.44 %Securities soldunder agreements 34,192 115 0.68 % 59,072 315 1.08 %to repurchaseFederal Home Loan 191,308 1,209 1.27 % 271,778 3,377 2.51 %Bank advancesTotal interestbearing $ 3,886,513 $ 14,737 0.76 % $ 3,832,049 $ 17,956 0.94 %liabilitiesDemand deposits $ 1,286,972 $ 1,132,062 Other liabilities 144,253 96,031 Total liabilities 5,317,738 5,060,142 Shareholders' 772,986 718,017 equityTotal liabilitiesand shareholders' $ 6,090,724 $ 5,778,159 equityNet interest $ 100,243 $ 106,169 income FTE^(2)Interest rate 3.40 % 3.77 %spread FTE^(2)Net interest $ 1,676,025 $ 1,485,547 earning assetsNet interest 3.62 % 4.03 %margin FTE^(2)Averagetransaction $ 3,895,253 $ 3,551,964 depositsAverage total 4,947,985 4,633,261 depositsRatio of averageinterest earningassets to average 143.12 % 138.77 % 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(2) of 21%. The tax equivalent adjustments included above are $2,568 and $2,512 for the six months ended June 30, 2020 and June 30, 2019, respectively.

NATIONAL BANK HOLDINGS CORPORATIONAllowance for Credit Losses and Asset Quality(Dollars in thousands)

Allowance for Credit Losses Analysis

Asofandforthethreemonthsended June30,2020 March31,2020 June30,2019Beginning allowance for credit $ 50,956 $ 39,064 $ 37,055 lossesCumulative effect adjustment^ ? 5,836 ? (1)Charge-offs (852 ) (497 ) (294 )Recoveries 236 144 82 Provision 10,125 6,409 3,239 Ending allowance for credit $ 60,465 $ 50,956 $ 40,082 losses ("ACL")Ratio of annualized netcharge-offs to average total 0.05 % 0.03 % 0.02 %loans during the periodRatio of annualized netcharge-offs to average total 0.05 % 0.03 % 0.02 %loans excluding PPP loansduring the periodRatio of ACL to total loans 1.26 % 1.13 % 0.93 %outstanding at period endRatio of ACL to total loansoutstanding excluding PPP 1.36 % 1.13 % 0.93 %loans at period endRatio of ACL to totalnon-performing loans at period 302.34 % 238.93 % 118.93 %endTotal loans $ 4,782,383 $ 4,505,735 $ 4,330,263 Average total loans during the 4,794,466 4,412,320 4,289,963 periodAverage total loans excluding 4,512,010 4,412,320 4,289,963 PPP loans during the periodTotal non-performing loans 19,999 21,327 33,703



(1) Related to the adoption of Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments.

Past Due and Non-accrual Loans

June30,2020 March31,2020 June30,2019Loans 30-89 days pastdue and still accruing $ 3,932 $ 10,693 $ 11,514 interestLoans 90 days past dueand still accruing 2,444 1,364 200 interestNon-accrual loans 19,999 21,327 33,703 Total past due and $ 26,375 $ 33,384 $ 45,417 non-accrual loansTotal 90 days past dueand still accruing 0.47 % 0.50 % 0.78 %interest and non-accrualloans to total loansTotal non-accrual loans 0.42 % 0.47 % 0.78 %to total loansTotal non-accrual loansto total loans excluding 0.45 % 0.47 % 0.78 %PPP loans

Asset Quality Data

June30,2020 March31,2020 June30,2019Non-performing loans $ 19,999 $ 21,327 $ 33,703 OREO 6,491 7,051 7,054 Total non-performing $ 26,490 $ 28,378 $ 40,757 assetsAccruing restructured $ 20,284 $ 10,285 $ 2,633 loansTotal non-performing 0.42 % 0.47 % 0.78 %loans to total loansTotal non-performingloans to total loans 0.45 % 0.47 % 0.78 %excluding PPP loansTotal non-performingassets to total loans 0.55 % 0.63 % 0.94 %and OREOTotal non-performingassets to total loans 0.60 % 0.63 % 0.94 %and OREO excluding PPPloans

NATIONAL BANK HOLDINGS CORPORATIONKey Ratios

As of and for the three months ended As of and for the six months ended June30, March31, June30, June30, June30, 2020 2020 2019 2020 2019Key Ratios^(1) Return on 1.13 % 1.09 % 1.39 % 1.11 % 1.37 %average assetsReturn onaverage 1.16 % 1.12 % 1.44 % 1.14 % 1.41 %tangibleassets^(2)Return onaveragetangible 1.25 % 1.12 % 1.44 % 1.19 % 1.41 %assets,adjusted^(2)Return on 9.23 % 8.22 % 11.17 % 8.72 % 11.01 %average equityReturn onaveragetangible 10.98 % 9.79 % 13.45 % 10.38 % 13.30 %common equity^(2)Return onaveragetangible 11.78 % 9.79 % 13.45 % 10.78 % 13.30 %common equity,adjusted^(2)Loan todeposit ratio 88.34 % 95.02 % 92.37 % 88.34 % 92.37 %(end ofperiod)Non-interestbearingdeposits to 27.76 % 24.26 % 24.90 % 27.76 % 24.90 %total deposits(end ofperiod)Net interest 3.30 % 3.78 % 3.91 % 3.53 % 3.93 %margin^(4)Net interestmargin FTE^(2) 3.39 % 3.87 % 4.00 % 3.62 % 4.03 %(4)Interest ratespread FTE^(2) 3.19 % 3.62 % 3.72 % 3.40 % 3.77 %(5)Yield onearning assets 3.75 % 4.40 % 4.63 % 4.06 % 4.61 %^(3)Yield onearning assets 3.84 % 4.50 % 4.73 % 4.16 % 4.71 %FTE^(2)(3)Cost ofinterestbearing 0.65 % 0.88 % 1.01 % 0.76 % 0.94 %liabilities^(3)Cost of 0.47 % 0.63 % 0.66 % 0.55 % 0.62 %depositsNon-interestincome to 44.40 % 31.31 % 27.76 % 38.35 % 26.21 %total revenueFTE^(2)Non-interestexpense to 3.42 % 3.34 % 3.19 % 3.38 % 3.17 %average assetsNon-interestexpense toaverage 3.31 % 3.34 % 3.19 % 3.33 % 3.17 %assets,adjusted^(2)Efficiency 62.05 % 65.48 % 63.10 % 63.63 % 63.84 %ratioEfficiency 61.13 % 64.37 % 62.01 % 62.63 % 62.73 %ratio FTE^(2)Efficiencyratio FTE, 59.17 % 64.37 % 62.01 % 61.58 % 62.73 %adjusted^(2) Total LoansAsset Quality Data^(6)(7)(8)Non-performingloans to total 0.42 % 0.47 % 0.78 % 0.42 % 0.78 %loansNon-performingloans to totalloans 0.45 % 0.47 % 0.78 % 0.45 % 0.78 %excluding PPPloansNon-performingassets to 0.55 % 0.63 % 0.94 % 0.55 % 0.94 %total loansand OREONon-performingassets tototal loans 0.60 % 0.63 % 0.94 % 0.60 % 0.94 %and OREOexcluding PPPloansAllowance forcredit losses 1.26 % 1.13 % 0.93 % 1.26 % 0.93 %to total loansAllowance forcredit lossesto total loans 1.36 % 1.13 % 0.93 % 1.36 % 0.93 %excluding PPPloansAllowance forcredit lossesto 302.34 % 238.93 % 118.93 % 302.34 % 118.93 %non-performingloansNetcharge-offs to 0.05 % 0.03 % 0.02 % 0.04 % 0.02 %average loans^(1)Netcharge-offs toaverage loans 0.05 % 0.03 % 0.02 % 0.04 % 0.02 %excluding PPPloans^(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/accretion or(3) dividends. Any market value adjustments on investment securities or loans are excluded from interest earning assets. Net interest margin represents net interest income, including accretion(4) income on interest earning assets, as a percentage of average interest earning assets. Interest rate spread represents the difference between the weighted average(5) 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)

Tangible Common Book Value Ratios

June30,2020 March31,2020 December31,2019 June30,2019Totalshareholders' $ 776,967 $ 763,454 $ 766,920 $ 733,917 equityLess:goodwill andcore deposit (123,166 ) (123,462 ) (123,758 ) (124,350 )intangibleassets, netAdd: deferredtax liability 8,698 8,469 8,241 7,784 related togoodwillTangiblecommon equity $ 662,499 $ 648,461 $ 651,403 $ 617,351 (non-GAAP) Total assets $ 6,385,431 $ 6,028,330 $ 5,895,512 $ 5,858,002 Less:goodwill andcore deposit (123,166 ) (123,462 ) (123,758 ) (124,350 )intangibleassets, netAdd: deferredtax liability 8,698 8,469 8,241 7,784 related togoodwillTangibleassets $ 6,270,963 $ 5,913,337 $ 5,779,995 $ 5,741,436 (non-GAAP) Tangiblecommon equityto tangible assetscalculations:Totalshareholders' 12.17 % 12.66 % 13.01 % 12.53 %equity tototal assetsLess: impactof goodwilland core (1.61 )% (1.69 )% (1.74 )% (1.78 )%depositintangibleassets, netTangiblecommon equityto tangible 10.56 % 10.97 % 11.27 % 10.75 %assets(non-GAAP) Tangiblecommon bookvalue per sharecalculations:Tangiblecommon equity $ 662,499 $ 648,461 $ 651,403 $ 617,351 (non-GAAP)Divided by:ending shares 30,569,011 30,483,361 31,176,627 31,139,044 outstandingTangiblecommon bookvalue per $ 21.67 $ 21.27 $ 20.89 $ 19.83 share(non-GAAP) Tangiblecommon bookvalue pershare,excluding accumulatedothercomprehensiveincomecalculations:Tangiblecommon equity $ 662,499 $ 648,461 $ 651,403 $ 617,351 (non-GAAP)Accumulatedothercomprehensive (12,195 ) (12,367 ) (2,062 ) (1,506 )income, netof taxTangiblecommon bookvalue,excludingaccumulated 650,304 636,094 649,341 615,845 othercomprehensiveincome, netof tax(non-GAAP)Divided by:ending shares 30,569,011 30,483,361 31,176,627 31,139,044 outstandingTangiblecommon bookvalue pershare,excludingaccumulated $ 21.27 $ 20.87 $ 20.83 $ 19.78 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 six months ended June30, March31, June30, June30, June30, 2020 2020 2019 2020 2019Net income $ 17,705 $ 15,824 $ 20,282 $ 33,529 $ 39,204 Add: impactof coredepositintangible 227 225 225 454 450 amortizationexpense,after taxNet incomeadjusted forimpact ofcore deposit $ 17,932 $ 16,049 $ 20,507 $ 33,983 $ 39,654 intangibleamortizationexpense,after tax Average $ 6,318,596 $ 5,862,851 $ 5,844,561 $ 6,090,724 $ 5,778,159 assetsLess: averagegoodwill andcore depositintangibleasset, net of (114,631 ) (115,156 ) (116,712 ) (114,779 ) (116,858 )deferred taxliabilityrelated togoodwillAveragetangible $ 6,203,965 $ 5,747,695 $ 5,727,849 $ 5,975,945 $ 5,661,301 assets(non-GAAP) Averageshareholders' $ 771,593 $ 774,380 $ 728,091 $ 772,986 $ 718,017 equityLess: averagegoodwill andcore depositintangibleasset, net of (114,631 ) (115,156 ) (116,712 ) (114,779 ) (116,858 )deferred taxliabilityrelated togoodwillAveragetangible $ 656,962 $ 659,224 $ 611,379 $ 658,207 $ 601,159 common equity(non-GAAP) Return onaverage 1.13 % 1.09 % 1.39 % 1.11 % 1.37 %assetsReturn onaveragetangible 1.16 % 1.12 % 1.44 % 1.14 % 1.41 %assets(non-GAAP)Return onaverage 9.23 % 8.22 % 11.17 % 8.72 % 11.01 %equityReturn onaveragetangible 10.98 % 9.79 % 13.45 % 10.38 % 13.30 %common equity(non-GAAP)

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

Asofandforthe three months ended As of and for the six months ended June30, March31, June30, June30, June30, 2020 2020 2019 2020 2019Interest $ 53,744 $ 58,668 $ 62,193 $ 112,412 $ 121,613 incomeAdd:impact oftaxable 1,301 1,268 1,285 2,568 2,512 equivalentadjustmentInterestincome FTE $ 55,045 $ 59,936 $ 63,478 $ 114,980 $ 124,125 (non-GAAP) Netinterest $ 47,328 $ 50,347 $ 52,491 $ 97,675 $ 103,657 incomeAdd:impact oftaxable 1,301 1,268 1,285 2,568 2,512 equivalentadjustmentNetinterest $ 48,629 $ 51,615 $ 53,776 $ 100,243 $ 106,169 income FTE(non-GAAP) Averageearning $ 5,766,672 $ 5,358,404 $ 5,387,156 $ 5,562,538 $ 5,317,596 assetsYield onearning 3.75 % 4.40 % 4.63 % 4.06 % 4.61 %assetsYield onearning 3.84 % 4.50 % 4.73 % 4.16 % 4.71 %assets FTE(non-GAAP)Netinterest 3.30 % 3.78 % 3.91 % 3.53 % 3.93 %marginNetinterest 3.39 % 3.87 % 4.00 % 3.62 % 4.03 %margin FTE(non-GAAP)

Efficiency Ratio

As of and for the three months ended As of and for the six months ended June30, March31, June30, June30, June30, 2020 2020 2019 2020 2019Net interest income $ 47,328 $ 50,347 $ 52,491 $ 97,675 $ 103,657 Add: impact oftaxable equivalent 1,301 1,268 1,285 2,568 2,512 adjustmentNet interest income, $ 48,629 $ 51,615 $ 53,776 $ 100,243 $ 106,169 FTE (non-GAAP) Non-interest income $ 38,837 $ 23,532 $ 20,660 $ 62,369 $ 37,711 Non-interest expense $ 53,760 $ 48,671 $ 46,451 $ 102,431 $ 90,845 Less: core depositintangible asset (296 ) (296 ) (296 ) (592 ) (592 )amortizationNon-interest expense,adjusted for core $ 53,464 $ 48,375 $ 46,155 $ 101,839 $ 90,253 deposit intangibleasset amortization Non-interest expense,adjusted for core $ 53,464 $ 48,375 $ 46,155 $ 101,839 $ 90,253 deposit intangibleasset amortizationBanking centerconsolidation-related (1,708 ) ? ? (1,708 ) ? expenseAdjusted non-interest $ 51,756 $ 48,375 $ 46,155 $ 100,131 $ 90,253 expense (non-GAAP) Efficiency ratio 62.05 % 65.48 % 63.10 % 63.63 % 63.84 %Efficiency ratio FTE 61.13 % 64.37 % 62.01 % 62.63 % 62.73 %(non-GAAP)Adjusted efficiency 59.17 % 64.37 % 62.01 % 61.58 % 62.73 %ratio FTE (non-GAAP)

Adjusted Financial Results

As of and for the three months ended As of and for the six months ended June30, March31, June30, June30, June30, 2020 2020 2019 2020 2019Adjustments to net income:Net income $ 17,705 $ 15,824 $ 20,282 $ 33,529 $ 39,204 Adjustments^(1) 1,310 ? ? 1,310 ? Adjusted net income $ 19,015 $ 15,824 $ 20,282 $ 34,839 $ 39,204 (non-GAAP) Adjustments to earnings per share:Earnings per share - $ 0.57 $ 0.50 $ 0.64 $ 1.08 $ 1.24 dilutedAdjustments^(1) 0.05 ? ? 0.04 ? Adjusted earnings pershare - diluted $ 0.62 $ 0.50 $ 0.64 $ 1.12 $ 1.24 (non-GAAP) Adjustments to returnon average tangible assets:Adjusted net income $ 19,015 $ 15,824 $ 20,282 $ 34,839 $ 39,204 (non-GAAP)Add: impact of coredeposit intangible 227 225 225 454 450 amortization expense,after taxNet income adjustedfor impact of coredeposit intangible 19,242 16,049 20,507 35,293 39,654 amortization expense,after taxAverage tangible 6,203,965 5,747,695 5,727,849 5,975,945 5,661,301 assets (non-GAAP)Adjusted return onaverage tangible 1.25 % 1.12 % 1.44 % 1.19 % 1.41 %assets (non-GAAP) Adjustments to returnon average tangible common equity:Net income adjustedfor impact of coredeposit intangible $ 19,242 $ 16,049 $ 20,507 $ 35,293 $ 39,654 amortization expense,after taxAverage tangiblecommon equity 656,962 659,224 611,379 658,207 601,159 (non-GAAP)Adjusted return onaverage tangible 11.78 % 9.79 % 13.45 % 10.78 % 13.30 %common equity(non-GAAP) Adjustments to non-interest expense:Non-interest expense $ 53,760 $ 48,671 $ 46,451 $ 102,431 $ 90,845 Adjustments^(1) 1,708 ? ? 1,708 ? Adjusted non-interest 52,052 48,671 46,451 100,723 90,845 expense (non-GAAP)Non-interest expenseto average assets, 3.31 % 3.34 % 3.19 % 3.33 % 3.17 %adjusted (non-GAAP) (1) Adjustments: Non-interest expense adjustments:Banking centerconsolidation-related $ 1,708 $ ? $ ? $ 1,708 $ ? expenseTax expense impact (398 ) ? ? (398 ) ? Adjustments $ 1,310 $ ? $ ? $ 1,310 $ ? (non-GAAP)

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