National Bank Holdings Corporation (NYSE:NBHC) Q1 2021 Earnings Conference Call April 22, 2021 11:00 AM ET Company Participants Tim Laney - Chairman, President and CEO, Aldis Birkans - CFO Conference Call Participants Levi Posen - D.A. Davidson Andrew Liesch - Piper Sandler Andrew Terrell - Stephens Operator Good morning, everyone, and welcome to the National Bank Holdings Corporation 2021 First Quarter Earnings Call. My name is Mariama, and I will be your conference operator for today. [Operator Instructi ...

PART I [Business](index=9&type=section&id=Item%201.%20Business) National Bank Holdings Corporation (NBHC) is a bank holding company operating through NBH Bank with $6.7 billion in assets and 90 banking centers, focusing on client-centered banking and significantly impacted by COVID-19 and PPP in 2020 [Summary and Market Area](index=9&type=section&id=Summary%20and%20Market%20Area) NBHC is a Denver-based bank holding company with $6.7 billion in assets and 90 banking centers across five states, targeting attractive demographic markets with significant presence in Colorado and Kansas City Company Snapshot (as of Dec 31, 2020) | Metric | Value | | :--- | :--- | | Total Assets | $6.7 billion | | Total Loans | $4.4 billion | | Total Deposits | $5.7 billion | | Shareholders' Equity | $0.8 billion | | Banking Centers | 90 | - The company operates under several brand names: Community Banks of Colorado, Bank Midwest (in Kansas and Missouri), and Hillcrest Bank (in Texas, Utah, and New Mexico)[15](index=15&type=chunk) Key Market Demographics (2020) | Market | Deposits (billions) | Population (millions) | Unemployment Rate | Median Household Income | | :--- | :--- | :--- | :--- | :--- | | Denver, CO | $106.6 | 3.0 | 8.5% | $83,768 | | Kansas City, MO-KS MSA | $72.4 | 2.2 | 4.8% | $69,742 | | Austin, TX | $51.3 | 2.2 | 5.4% | $82,650 | | Dallas, TX | $375.1 | 7.7 | 6.7% | $73,009 | | Salt Lake City, UT | $59.7 | 1.2 | 3.8% | $78,785 | | U.S. | | | 6.7% | $66,010 | [Business Strategy](index=11&type=section&id=Business%20Strategy) The company's strategy focuses on becoming a leading regional community bank through organic growth and disciplined acquisitions, emphasizing client-centered banking, efficiency, and conservative risk management, with a 2020 adaptation to COVID-19 and PPP support - In 2020, due to the COVID-19 pandemic, the company shifted its immediate focus to three priorities: protecting the health of associates and clients, ensuring the safety and soundness of the bank, and supporting clients and communities, including active participation in the SBA's Paycheck Protection Program (PPP)[22](index=22&type=chunk) - Key strategic components include: **client-centered banking**, **commercial expansion**, **organic growth**, **profitability and efficiency initiatives**, **conservative risk management**, and **disciplined acquisitions**[23](index=23&type=chunk)[27](index=27&type=chunk) [Products and Services](index=15&type=section&id=Products%20and%20Services) The company offers a full range of traditional banking products and financial services to commercial, business, and consumer clients through 90 banking centers and digital platforms, segmented into Commercial and Specialty Banking and Business, Residential, and Consumer Banking - The company's distribution network as of December 31, 2020, includes **90 banking centers**, **128 ATMs**, and fully integrated online and mobile banking services[30](index=30&type=chunk) - Commercial and Specialty Banking offers **Commercial and Industrial Loans**, **Non-Owner Occupied CRE Loans**, **SBA Loans** (including extensive PPP participation), and **Treasury Management** services[31](index=31&type=chunk)[33](index=33&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - Business, Residential, and Consumer Banking provides **Business Loans**, **Residential Real Estate Loans** (including home equity and construction), **Consumer Loans**, and a variety of **Deposit Products** with digital support[38](index=38&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) [Lending Activities and Competition](index=19&type=section&id=Lending%20Activities%20and%20Competition) The company's lending activities are guided by a comprehensive credit policy and concentration limits, with a cautious approach in 2020 due to COVID-19, operating in a highly competitive and fragmented banking market against traditional and FinTech institutions - The company's credit policy requires careful evaluation of a borrower's industry, operating performance, and financial condition, with underwriting based on multiple repayment sources, and adheres to concentration limits for its portfolio[45](index=45&type=chunk)[46](index=46&type=chunk) - The banking markets in Colorado, the Kansas City region, Texas, Utah, and New Mexico are highly competitive, with competition from national, regional, and local banks, credit unions, and FinTech companies[48](index=48&type=chunk) - Competition is based on interest rates, fees, client service levels, range of products, location, and digital banking capabilities, with the company believing its advisory approach and personalized service provide a competitive advantage[49](index=49&type=chunk) [Human Capital](index=21&type=section&id=Human%20Capital) The company's human capital strategy, based on core values, employed 1,224 associates as of December 31, 2020, emphasizing equity, diversity, and inclusion, associate development, comprehensive benefits, and COVID-19 safety measures Workforce Diversity and Promotion Statistics (2020) | Metric | Percentage | | :--- | :--- | | **Workforce Composition** | | | Female Workforce | 68% | | Female Managerial Roles | 57% | | Minority Workforce | 24% | | Minority Managerial Roles | 20% | | **New Hires (390 total)** | | | Female New Hires | 74% | | Minority New Hires | 33% | | **Promotions (228 total)** | | | Female Promotions | 68% | | Minority Promotions | 21% | - The company offers comprehensive benefits, including medical insurance, a **401(k) plan** with a company match, and an **Associate Stock Purchase Plan (ASPP)** with a **10% discount**[58](index=58&type=chunk)[59](index=59&type=chunk) - In response to COVID-19, the company implemented safety measures such as premium pay for essential on-site staff, restricted lobby services, paid time off for affected associates, waived medical costs for testing/treatment, and daily health assessments[62](index=62&type=chunk) [Supervision and Regulation](index=25&type=section&id=Supervision%20and%20Regulation) NBHC, as a bank holding company, and its subsidiary NBH Bank are extensively regulated by the Federal Reserve and state authorities, subject to comprehensive frameworks covering capital, activities, and consumer protection, with 2020 operations impacted by COVID-19 regulatory responses like the CARES Act - NBHC is a bank holding company subject to supervision by the Federal Reserve, and its subsidiary, NBH Bank, is a Colorado state-chartered bank supervised by the Colorado Division of Banking and the Federal Reserve[66](index=66&type=chunk) - The company and bank are subject to minimum capital requirements, including a **common equity tier 1 ratio of 4.5%**, a **total tier 1 ratio of 6%**, a **total capital ratio of 8%**, and a **leverage ratio of 4%**, plus a **2.5% capital conservation buffer**[78](index=78&type=chunk)[80](index=80&type=chunk) - Regulatory responses to the COVID-19 pandemic, including the CARES Act, impacted the company by providing flexibility for working with affected borrowers, establishing the PPP, and offering forbearance options for federally-backed mortgage loans[113](index=113&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks across its banking operations, growth strategy, and regulatory environment, including adverse COVID-19 impacts, credit risk, cybersecurity threats, competition, acquisition challenges, and stringent regulatory compliance [Risks Relating to Our Banking Operations](index=38&type=section&id=Risks%20Relating%20to%20Our%20Banking%20Operations) The company's banking operations are exposed to significant risks including the adverse effects of the COVID-19 pandemic, credit risk, economic sensitivity, competition, liquidity challenges, interest rate changes, and cybersecurity threats - The COVID-19 pandemic has adversely affected the company's business and financial results and could continue to do so through reduced economic activity, higher credit losses, and operational disruptions[121](index=121&type=chunk)[122](index=122&type=chunk) - The company is highly susceptible to credit risk, as borrowers may be unable to repay loans, and the value of underlying collateral, particularly real estate, may decline, which could be exacerbated by the pandemic's impact on hospitality, office, and retail properties[130](index=130&type=chunk) - A failure or breach of security systems, from internal or third-party providers, could result in financial losses, disclosure of confidential information, and reputational damage, with these risks heightened by increased remote banking and sophisticated cyber-attacks[161](index=161&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk) - The planned cessation of LIBOR after 2021 creates uncertainty that may adversely affect the value and return on financial assets and liabilities linked to the benchmark, potentially leading to litigation and increased regulatory scrutiny[156](index=156&type=chunk)[157](index=157&type=chunk) [Risks Relating to our Growth Strategy](index=56&type=section&id=Risks%20Relating%20to%20our%20Growth%20Strategy) The company's growth strategy, relying on organic expansion and acquisitions, faces risks including managing growth demands, obtaining regulatory approvals, and intense competition for limited acquisition targets, which could hinder successful implementation - Expansionary activity places significant demands on operations and management, and the inability to effectively integrate acquisitions, scale technology, and attract talent could materially and adversely affect the company[175](index=175&type=chunk)[176](index=176&type=chunk) - Strategic acquisitions require regulatory approvals from agencies like the Federal Reserve, which could deny applications or impose conditions that restrict growth or reduce the benefits of a transaction[176](index=176&type=chunk)[178](index=178&type=chunk) - There is intense competition for a limited number of acquisition opportunities from other banking organizations and investment funds, which may drive up prices and make it difficult to consummate acquisitions on attractive terms[180](index=180&type=chunk) [Risks Relating to the Regulation of Our Industry](index=61&type=section&id=Risks%20Relating%20to%20the%20Regulation%20of%20Our%20Industry) Operating in a highly regulated environment, the company faces risks from extensive federal and state laws, with non-compliance potentially leading to fines, penalties, business restrictions, increased FDIC assessments, adverse regulatory findings, and limitations on capital support and dividend payments - The company is subject to extensive and costly regulation, and failure to comply with laws governing capital, business activities, and dividends could lead to fines, penalties, and other adverse effects[189](index=189&type=chunk) - The Federal Reserve expects a bank holding company to act as a **"source of strength"** for its subsidiary bank, which could require the company to make capital injections into NBH Bank if it experiences financial distress[195](index=195&type=chunk) - Failure to comply with the Bank Secrecy Act and other anti-money laundering regulations could result in significant civil money penalties, restrictions on business plans (including acquisitions), and serious reputational consequences[197](index=197&type=chunk) - The company's ability to pay dividends is subject to limitations by the Federal Reserve and Delaware corporate law, and depends on receiving dividends from its bank subsidiary, whose payments are also restricted by federal and state law[199](index=199&type=chunk) [Unresolved Staff Comments](index=65&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) None - The company reports no unresolved staff comments[201](index=201&type=chunk) [Properties](index=65&type=section&id=Item%202.%20Properties) The company's principal executive offices are located south of Denver, Colorado, with significant operations space in Kansas City, Missouri, and as of December 31, 2020, it operated 90 banking centers across six states, 66 owned and 24 leased - As of December 31, 2020, the company operated **90 banking centers**: **45 in Colorado**, **37 in Kansas and Missouri**, **five in New Mexico**, **two in Texas**, and **one in Utah**[201](index=201&type=chunk) - Of the 90 banking center locations, **66 were owned** by the company and **24 were leased**[201](index=201&type=chunk) [Legal Proceedings](index=67&type=section&id=Item%203.%20Legal%20Proceedings) The company is periodically involved in litigation incidental to its business but does not anticipate any material adverse effects from pending proceedings - The company does not believe that any of its pending legal proceedings, individually or in the aggregate, will have a material adverse effect on its business, prospects, financial condition, results of operations or liquidity[202](index=202&type=chunk) [Mine Safety Disclosures](index=67&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - The company reports no mine safety disclosures[203](index=203&type=chunk) PART II [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=67&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A common stock trades on the NYSE under "NBHC", with 184 shareholders of record as of February 22, 2021, and a stock repurchase program with **$43.1 million** remaining available at year-end 2020, alongside details on equity compensation plans - The company's common stock is traded on the NYSE under the symbol **"NBHC"**[205](index=205&type=chunk) Stock Performance vs. Indices (Dec 31, 2015 - Dec 31, 2020) | Index | 12/31/15 | 12/31/16 | 12/31/17 | 12/31/18 | 12/31/19 | 12/31/20 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **NBHC** | 100.00 | 150.66 | 154.84 | 149.53 | 174.28 | 166.50 | | **KBW Regional Banking Index** | 100.00 | 139.12 | 141.63 | 116.86 | 144.76 | 132.18 | | **Russell 2000 Index** | 100.00 | 121.28 | 139.02 | 123.69 | 155.21 | 186.15 | - On February 26, 2020, the Board of Directors authorized the repurchase of up to an additional **$50.0 million** of common stock, with **$43.1 million** remaining available for purchase under this authorization as of December 31, 2020[208](index=208&type=chunk) [Selected Financial Data](index=70&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year summary of the company's selected historical consolidated financial data from 2016 to 2020, including key financial condition and operations figures, per-share data, and performance ratios, showing consistent growth in assets, loans, and deposits, and an increase in net income from **$23.1 million** to **$88.6 million**[214](index=214&type=chunk)[215](index=215&type=chunk) Selected Consolidated Financial Data (2016-2020, in thousands) | Metric | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | $6,659,950 | $5,895,512 | $5,676,666 | $4,843,465 | $4,573,046 | | **Loans, net** | $4,293,949 | $4,376,342 | $4,056,616 | $3,147,683 | $2,831,747 | | **Total Deposits** | $5,676,232 | $4,737,132 | $4,535,621 | $3,979,559 | $3,868,649 | | **Total Shareholders' Equity** | $820,691 | $766,920 | $695,006 | $532,407 | $536,189 | | **Net Interest Income** | $192,946 | $205,830 | $197,437 | $146,306 | $145,640 | | **Net Income** | $88,591 | $80,365 | $61,451 | $14,579 | $23,060 | | **Earnings Per Share, diluted** | $2.85 | $2.55 | $1.95 | $0.53 | $0.79 | Selected Key Ratios (2016-2020) | Ratio | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Return on average assets** | 1.40% | 1.38% | 1.10% | 0.31% | 0.50% | | **Return on average equity** | 11.24% | 10.89% | 9.28% | 2.67% | 3.95% | | **Net interest margin** | 3.33% | 3.83% | 3.85% | 3.36% | 3.39% | | **Efficiency ratio** | 61.52% | 62.22% | 69.78% | 70.80% | 70.30% | | **Non-performing loans to total loans** | 0.47% | 0.49% | 0.60% | 0.66% | 1.07% | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=82&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition and results for 2020 versus 2019, highlighting its COVID-19 response, strong deposit and liquidity growth, record mortgage banking income, net interest margin pressure, **13.0%** asset growth to **$6.7 billion**, and **10.2%** net income increase to **$88.6 million**[237](index=237&type=chunk) [Overview and Key Challenges](index=82&type=section&id=Overview%20and%20Key%20Challenges) Management's overview highlights the company's relationship-focused model and COVID-19 response, including PPP participation, while facing challenges like intense competition, low interest rates, credit risk, and rising regulatory costs, yet achieving a **10.2%** net income increase to **$88.6 million** in 2020[237](index=237&type=chunk) - Net income for 2020 increased **10.2%** to **$88.6 million**, or **$2.85 per diluted share**, with adjusted net income (excluding banking center consolidation expenses) at **$90.4 million**, or **$2.91 per diluted share**[237](index=237&type=chunk)[323](index=323&type=chunk) - The company funded **$358.9 million** in SBA PPP loans and consolidated **11 banking centers** in 2020 to improve operating efficiencies[243](index=243&type=chunk) - Key challenges include the **low interest rate environment**, economic strain from the **COVID-19 pandemic**, and increased competition from traditional banks and FinTechs[249](index=249&type=chunk)[252](index=252&type=chunk)[254](index=254&type=chunk)[258](index=258&type=chunk) - The company has **low exposure** to industries highly impacted by COVID-19, with no single high-impact industry sector (e.g., restaurants, hotels, retail) exceeding **5% of total loans**[255](index=255&type=chunk) [Financial Condition](index=90&type=section&id=Financial%20Condition) As of December 31, 2020, total assets increased **13.0%** to **$6.7 billion** due to strong deposit growth, while total loans decreased **1.4%** to **$4.4 billion**; asset quality remained strong, the allowance for credit losses increased **53.0%** to **$59.8 million** with CECL adoption, and total deposits grew **19.8%** to **$5.7 billion**, maintaining robust capital ratios Loan Portfolio Composition (in thousands) | Loan Category | Dec 31, 2020 | Dec 31, 2019 | % Change | | :--- | :--- | :--- | :--- | | **Total Commercial** | $3,044,065 | $2,992,307 | 1.7% | | *PPP Loans* | *$176,106* | *$0* | *100.0%* | | **Commercial real estate non-owner occupied** | $631,996 | $630,906 | 0.2% | | **Residential real estate** | $658,659 | $770,417 | (14.5)% | | **Consumer** | $19,006 | $21,776 | (12.7)% | | **Total Loans** | **$4,353,726** | **$4,415,406** | **(1.4)%** | Asset Quality Ratios | Ratio | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Non-performing loans to total loans | 0.47% | 0.49% | | Non-performing assets to total loans and OREO | 0.58% | 0.66% | | Allowance for credit losses to total loans | 1.37% | 0.88% | | Allowance for credit losses to total loans (ex-PPP) | 1.43% | 0.88% | - In response to the pandemic, the company executed COVID-related loan modifications totaling **$519.0 million**, with **$173.6 million** (**4.0% of total loans**) remaining on a payment deferral plan as of year-end[302](index=302&type=chunk)[304](index=304&type=chunk) Deposit Composition (in thousands) | Deposit Type | Dec 31, 2020 | Dec 31, 2019 | % Change | | :--- | :--- | :--- | :--- | | Non-interest bearing demand | $2,111,045 | $1,184,945 | 78.2% | | Total transaction deposits | $4,690,100 | $3,678,979 | 27.5% | | Total time deposits | $986,132 | $1,058,153 | (6.8)% | | **Total Deposits** | **$5,676,232** | **$4,737,132** | **19.8%** | [Results of Operations](index=113&type=section&id=Results%20of%20Operations) For 2020, net income increased to **$88.6 million** from **$80.4 million** in 2019, driven by a **$60.0 million** (**141.8%**) rise in mortgage banking income, offsetting a **$12.9 million** decline in net interest income and a **51 basis point** compression in net interest margin to **3.42%** (FTE), with provision for loan losses increasing to **$17.6 million** and non-interest expense rising **14.1%**[250](index=250&type=chunk)[327](index=327&type=chunk)[329](index=329&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk)[340](index=340&type=chunk) - Fully taxable equivalent (FTE) net interest income decreased by **$12.8 million** (**6.1%**) to **$198.0 million** in 2020, as the FTE net interest margin narrowed **51 basis points** to **3.42%** due to lower earning asset yields[250](index=250&type=chunk)[327](index=327&type=chunk)[329](index=329&type=chunk) - Non-interest income increased by **$57.5 million** (**69.5%**) to **$140.3 million**, driven by record mortgage banking income of **$102.4 million**, a **141.8%** increase from 2019[339](index=339&type=chunk) - Non-interest expense increased by **$25.4 million** (**14.1%**) to **$206.2 million**, primarily due to an **$18.4 million** increase in salaries and benefits related to higher mortgage banking compensation[340](index=340&type=chunk) - The provision for loan losses was **$17.6 million** in 2020, compared to **$11.6 million** in 2019, with the 2020 provision recorded under the CECL model and driven by deteriorating economic conditions from COVID-19[338](index=338&type=chunk) [Liquidity and Capital Resources](index=123&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity and capital in 2020, with on-balance sheet liquidity increasing to **$1.1 billion** from **$435.1 million** in 2019 due to strong deposit growth, access to **$0.9 billion** in FHLB credit lines, and robust capital ratios including a **10.70%** consolidated Tier 1 leverage ratio and **14.70%** common equity Tier 1 ratio[344](index=344&type=chunk)[350](index=350&type=chunk)[522](index=522&type=chunk) On-Balance Sheet Liquidity (in thousands) | Component | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and due from banks | $605,065 | $109,690 | | Unencumbered investment securities | $513,945 | $324,918 | | **Total** | **$1,119,510** | **$435,108** | Consolidated Capital Ratios (as of Dec 31, 2020) | Ratio | Actual | Well-Capitalized Minimum | | :--- | :--- | :--- | | Tier 1 Leverage | 10.70% | N/A (Bank: 5.0%) | | Common Equity Tier 1 | 14.70% | N/A (Bank: 6.5%) | | Tier 1 Risk Based Capital | 14.70% | N/A (Bank: 8.0%) | | Total Risk Based Capital | 15.82% | N/A (Bank: 10.0%) | - The company has a share repurchase program authorized by the Board of Directors, with **$43.1 million** remaining available for repurchase under the program authorized in February 2020 as of December 31, 2020[352](index=352&type=chunk) [Asset/Liability Management and Interest Rate Risk](index=125&type=section&id=Asset%2FLiability%20Management%20and%20Interest%20Rate%20Risk) The company actively manages interest rate risk through its Asset Liability Committee, with its balance sheet being asset sensitive as of December 31, 2020, expecting net interest income to increase in a rising rate environment, and a strategy focusing on shorter-duration, variable-rate loans and growing low-cost transaction deposits Interest Rate Sensitivity Analysis (% Change in Projected NII) | Hypothetical Rate Shift (bps) | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | +200 | 14.22% | 6.16% | | +100 | 7.46% | 3.13% | | -25 | (0.46)% | (0.54)% | - The company's asset/liability management strategy emphasizes a balanced approach to loan origination with a focus on shorter duration and variable rate loans, and growth in non-maturing transaction accounts[361](index=361&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=129&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Information for this item is incorporated by reference from the "Asset/Liability Management and Interest Rate Risk" section within Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - This section incorporates by reference the information provided under the caption Asset/Liability Management and Interest Rate Risk in Part I, Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations[365](index=365&type=chunk) [Financial Statements and Supplementary Data](index=130&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the company's audited consolidated financial statements for the three-year period ended December 31, 2020, and KPMG LLP's unqualified audit report on both financial statements and internal controls, highlighting CECL adoption as a critical audit matter [Report of Independent Registered Public Accounting Firm](index=130&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on the company's consolidated financial statements and internal control over financial reporting for the period ended December 31, 2020, identifying the assessment of the allowance for credit losses (ACL) under CECL as a critical audit matter due to complex judgment - The independent auditor, KPMG LLP, issued an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting[367](index=367&type=chunk)[368](index=368&type=chunk) - The auditor identified the assessment of the Allowance for Credit Losses (ACL) for loans evaluated on a collective basis under the new CECL standard (ASC Topic 326) as a **Critical Audit Matter**, due to the complex and subjective judgments involved in the methodology and assumptions[372](index=372&type=chunk)[373](index=373&type=chunk)[374](index=374&type=chunk) [Consolidated Financial Statements](index=135&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of **$6.7 billion** at year-end 2020, up from **$5.9 billion** in 2019, with net income of **$88.6 million** for 2020 compared to **$80.4 million** in 2019, and significant cash flow changes from financing, investing, and operating activities[379](index=379&type=chunk)[381](index=381&type=chunk) Consolidated Statement of Financial Condition Highlights (in thousands) | Account | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | **$6,659,950** | **$5,895,512** | | Cash and cash equivalents | $605,565 | $110,190 | | Loans, net | $4,293,949 | $4,376,342 | | **Total Liabilities** | **$5,839,259** | **$5,128,592** | | Total deposits | $5,676,232 | $4,737,132 | | **Total Shareholders' Equity** | **$820,691** | **$766,920** | Consolidated Statement of Operations Highlights (in thousands) | Account | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net interest income | $192,946 | $205,830 | $197,437 | | Provision for loan losses | $17,630 | $11,643 | $5,197 | | Non-interest income | $140,258 | $82,752 | $70,775 | | Non-interest expense | $206,177 | $180,745 | $189,334 | | **Net Income** | **$88,591** | **$80,365** | **$61,451** | [Notes to Consolidated Financial Statements](index=142&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies and account composition, including the adoption of CECL and lease standards, breakdowns of investment and loan portfolios, asset quality, allowance for credit losses, deposits, borrowings, regulatory capital, stock-based compensation, earnings per share, derivatives, and fair value measurements - **Note 3 (Recent Accounting Pronouncements):** The company adopted ASU 2016-13 (CECL) on January 1, 2020, resulting in a **$5.8 million** increase to the allowance for credit losses and a corresponding **$4.6 million** reduction to retained earnings, net of tax[450](index=450&type=chunk) - **Note 7 (Allowance for Credit Losses):** The ACL increased from **$39.1 million** at year-end 2019 to **$59.8 million** at year-end 2020, driven by a **$5.8 million** cumulative effect adjustment from adopting CECL and a **$17.5 million** provision for loan losses during the year[495](index=495&type=chunk) - **Note 14 (Regulatory Capital):** As of December 31, 2020, both the consolidated company and NBH Bank exceeded all regulatory capital requirements to be considered **"well-capitalized,"** with the consolidated Common Equity Tier 1 ratio at **14.7%**[521](index=521&type=chunk)[522](index=522&type=chunk) - **Note 26 (Acquisition Activities):** On January 1, 2018, the company completed its acquisition of Peoples, Inc. for total consideration of **$146.4 million**, resulting in the recognition of **$55.4 million** in goodwill[614](index=614&type=chunk)[616](index=616&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=222&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) There were no changes in or disagreements with accountants on accounting and financial disclosures - The company reports no changes in or disagreements with its accountants[619](index=619&type=chunk) [Controls and Procedures](index=222&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2020, an assessment also affirmed by KPMG LLP's unqualified opinion, with no material changes reported - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[620](index=620&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2020, an assessment audited by KPMG LLP, which also issued an unqualified opinion[621](index=621&type=chunk)[624](index=624&type=chunk) [Other Information](index=225&type=section&id=Item%209B.%20Other%20Information) None - The company reports no other information under this item[631](index=631&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=225&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive proxy statement for its 2021 Annual Meeting of Shareholders - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2021 Proxy Statement[633](index=633&type=chunk) [Executive Compensation](index=225&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement for its 2021 Annual Meeting of Shareholders - Information regarding executive compensation is incorporated by reference from the 2021 Proxy Statement[635](index=635&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=225&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information regarding security ownership of certain beneficial owners and management, and related shareholder matters, is incorporated by reference from the company's definitive proxy statement for its 2021 Annual Meeting of Shareholders - Information regarding security ownership is incorporated by reference from the 2021 Proxy Statement[636](index=636&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=225&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships and related transactions, and director independence, is incorporated by reference from the company's definitive proxy statement for its 2021 Annual Meeting of Shareholders - Information regarding related transactions and director independence is incorporated by reference from the 2021 Proxy Statement[637](index=637&type=chunk) [Principal Accountant Fees and Services](index=225&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's definitive proxy statement for its 2021 Annual Meeting of Shareholders - Information regarding principal accountant fees and services is incorporated by reference from the 2021 Proxy Statement[638](index=638&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=226&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K report, noting the omission of inapplicable schedules and providing an index of filed or incorporated exhibits - This section lists the financial statements and exhibits filed with the Form 10-K, with all financial statement schedules omitted as they are inapplicable or the required information is included elsewhere in the report[641](index=641&type=chunk)[642](index=642&type=chunk)

Financial Data and Key Metrics Changes - The company reported record full-year earnings of $2.85 per share, with tangible book value growing to $23.09 per share [7] - For Q4, earnings per diluted share were $0.87, and the full-year EPS adjusted for banking center consolidation expenses was a record $2.91 [14] - The net interest margin for the quarter was 3.24%, with net interest income of $49.8 million, including $5.2 million from Paycheck Protection Program (PPP) fee recognition [17] Business Line Data and Key Metrics Changes - Q4 loan production was $272.5 million, doubling the production from Q3 and increasing by 1.1% from Q4 2019 [14] - Loans outstanding decreased by $202.4 million, primarily due to successful PPP loan forgiveness efforts [15] - Total non-interest income for the quarter was $33.4 million, a 64% increase from the same quarter last year [20] Market Data and Key Metrics Changes - The company experienced solid deposit growth, with average transaction deposits growing by $172.1 million on a linked-quarter basis, representing a 15.3% annualized growth [16] - The company noted that its markets have generally fared better during the pandemic, with unemployment levels lower than national averages [12] Company Strategy and Development Direction - The company aims to continue its relationship banking model while focusing on building a diverse and granular loan portfolio [7] - Plans for 2021 include further banking center consolidations, with a total reduction of 22% in the banking center network since Q3 2019 [23] - The company is exploring M&A opportunities, focusing on both tactical and transformational acquisitions, as well as investments in the digital space [44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic recovery in their markets, although they remain conservative in their guidance [36] - The company is well-positioned to deliver solid dividends while growing tangible book value and providing attractive total shareholder returns [26] - Management highlighted the importance of maintaining strong capital and liquidity levels to navigate economic uncertainties [26] Other Important Information - The allowance for credit losses (ACL) to total loans, excluding PPP, was 1.43% at year-end [19] - The effective tax rate for 2021 is expected to be around 18%, excluding the FTE adjustment for net interest income [24] Q&A Session Summary Question: Loan growth appetite and segments - Management indicated a return to historical levels of loan production and identified opportunities in logistics real estate and specialized industry groups like quick service restaurants [31][33] Question: Capital and buybacks - Management is open to buybacks, especially if they can engage in M&A, given their strong capital position [37][38] Question: M&A market outlook - Management sees current market opportunities for acquisitions and is also exploring transformational opportunities to improve profitability [44] Question: Mortgage-related expenses - Management noted that mortgage operations have been running efficiently, with a significant portion of expenses attributed to mortgage commissions [49] Question: Seasonal payroll taxes and liquidity trends - Management confirmed no significant increase in expenses due to bonuses and noted that deposits have continued to build positively [60][61]

[FORM 10-Q Cover Page](index=1&type=section&id=FORM%2010-Q) This section identifies the filing as a Quarterly Report (Form 10-Q) for National Bank Holdings Corporation, detailing key registrant information - This is a Quarterly Report (Form 10-Q) for the period ended **September 30, 2020**, filed by National Bank Holdings Corporation (NBHC)[1](index=1&type=chunk)[2](index=2&type=chunk) Registrant Information | Field | Value | | :--- | :--- | | Registrant Name | NATIONAL BANK HOLDINGS CORPORATION | | Commission File Number | 001-35654 | | State of Incorporation | Delaware | | Address | 7800 East Orchard, Suite 300, Greenwood Village, Colorado 80111 | | Telephone | (303) 892-8715 | | Trading Symbol | NBHC | | Exchange | NYSE | | Filer Status | Large accelerated filer | | Shares Outstanding (as of Nov 3, 2020) | **30,604,461** Class A voting common stock | | Par Value per Share | **$0.01** | | Restricted Class A Common Stock (unvested) | **161,503** shares | [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns that forward-looking statements are subject to various risks, including business strategy, economic conditions, regulatory changes, and COVID-19 impacts, which could cause actual results to differ materially - Forward-looking statements are identified by words like "anticipate," "believe," "expect," and "intend," and are based on current expectations and projections about future events and financial trends[8](index=8&type=chunk) - **Significant risk factors** include the ability to execute business strategy, general economic and financial services industry conditions, effects of government shutdowns, economic/market/operational/liquidity/credit/interest rate risks, regulatory changes, inflation, real estate value changes, consumer habits, mortgage business risks, acquisition integration, dependence on third-party IT, loan and deposit growth, increased competition, accounting policy changes, tax legislation, legal/regulatory developments, technological changes, personnel changes, internal controls, dividend limitations, loan reserve estimates, natural disasters, cyberattacks, and the **adverse effects of the COVID-19 pandemic**[9](index=9&type=chunk)[11](index=11&type=chunk) - The company undertakes **no obligation** to update forward-looking statements, except as required by applicable law[11](index=11&type=chunk) [Part I. Financial Information](index=5&type=section&id=Part%20I.%20Financial%20Information) This section presents the unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements, including statements of financial condition, operations, comprehensive income, changes in shareholders' equity, and cash flows, with detailed notes on accounting policies and significant financial items [Consolidated Statements of Financial Condition](index=5&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) The Consolidated Statements of Financial Condition show a **significant increase** in total assets, primarily driven by a **surge in cash and cash equivalents** and an increase in loans, partially offset by a higher allowance for credit losses. Total liabilities also **rose due to substantial deposit growth** Consolidated Statements of Financial Condition (Unaudited) - Key Metrics | Metric | Sep 30, 2020 (Thousands) | Dec 31, 2019 (Thousands) | Change (Thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | **ASSETS** | | | | | | Cash and cash equivalents | $445,103 | $110,190 | $334,913 | **303.9%** | | Investment securities available-for-sale | $572,523 | $638,249 | $(65,726) | **-10.3%** | | Investment securities held-to-maturity | $320,001 | $182,884 | $137,117 | **75.0%** | | Loans, net | $4,495,142 | $4,376,342 | $118,800 | **2.7%** | | Allowance for credit losses | $(60,979) | $(39,064) | $(21,915) | **56.1%** | | Total assets | $6,600,676 | $5,895,512 | $705,164 | **12.0%** | | **LIABILITIES** | | | | | | Total deposits | $5,616,460 | $4,737,132 | $879,328 | **18.6%** | | Federal Home Loan Bank advances | $— | $207,675 | $(207,675) | **-100.0%** | | Total liabilities | $5,801,319 | $5,128,592 | $672,727 | **13.1%** | | **SHAREHOLDERS' EQUITY** | | | | | | Total shareholders' equity | $799,357 | $766,920 | $32,437 | **4.2%** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) The Consolidated Statements of Operations show an increase in net income for both the three and nine months ended **September 30, 2020**, compared to the prior year, **primarily driven by a significant increase in non-interest income**, particularly mortgage banking income, despite a decrease in net interest income and an increase in provision for loan losses Consolidated Statements of Operations (Unaudited) - Key Metrics | Metric (Thousands) | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | % Change (3M) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | % Change (9M) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total interest and dividend income | $52,302 | $61,372 | **-14.8%** | $164,714 | $182,985 | **-9.9%** | | Total interest expense | $5,587 | $9,587 | **-41.7%** | $20,324 | $27,543 | **-26.2%** | | Net interest income before provision | $46,715 | $51,785 | **-9.8%** | $144,390 | $155,442 | **-7.1%** | | Provision for loan losses | $1,200 | $5,690 | **-78.9%** | $17,630 | $10,463 | **68.5%** | | Total non-interest income | $44,532 | $24,759 | **79.9%** | $106,901 | $62,470 | **71.1%** | | Total non-interest expense | $55,321 | $43,793 | **26.3%** | $157,752 | $134,638 | **17.2%** | | Income before income taxes | $34,726 | $27,061 | **28.3%** | $75,909 | $72,811 | **4.3%** | | Net income | $27,893 | $21,642 | **28.9%** | $61,422 | $60,846 | **0.9%** | | Earnings per share—basic | $0.91 | $0.69 | **31.9%** | $1.99 | $1.95 | **2.1%** | | Earnings per share—diluted | $0.90 | $0.69 | **30.4%** | $1.97 | $1.93 | **2.1%** | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The Consolidated Statements of Comprehensive Income show that while net income increased, other comprehensive income experienced a loss in the three months ended **September 30, 2020**, **primarily due to net unrealized losses on available-for-sale securities**, though for the nine-month period, other comprehensive income remained positive, contributing to an overall increase in comprehensive income Consolidated Statements of Comprehensive Income (Unaudited) - Key Metrics | Metric (Thousands) | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | % Change (3M) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | % Change (9M) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net income | $27,893 | $21,642 | **28.9%** | $61,422 | $60,846 | **0.9%** | | Net unrealized (losses) gains on AFS securities, net of tax | $(925) | $1,828 | **-150.6%** | $9,627 | $15,150 | **-36.4%** | | Amortization of net unrealized holding gains to income, net of tax | $(190) | $(247) | **-23.1%** | $(609) | $(788) | **-22.7%** | | Other comprehensive (loss) income | $(1,115) | $1,581 | **-170.5%** | $9,018 | $14,362 | **-37.2%** | | Comprehensive income | $26,778 | $23,223 | **15.3%** | $70,440 | $75,208 | **-6.4%** | [Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) The Consolidated Statements of Changes in Shareholders' Equity reflect an increase in total shareholders' equity, driven by net income and stock-based compensation, partially offset by cash dividends and share repurchases, with the adoption of ASU 2016-13 (CECL) resulting in a cumulative effect adjustment reducing retained earnings Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - Key Metrics | Metric (Thousands) | Sep 30, 2020 | Dec 31, 2019 | Sep 30, 2019 | | :--- | :--- | :--- | :--- | | Balance, beginning of period (9M 2020: Dec 31, 2019; 9M 2019: Dec 31, 2018) | $766,920 | $766,920 | $695,006 | | Net income | $61,422 | $19,519 | $60,846 | | Stock-based compensation | $4,028 | $1,441 | $3,325 | | Repurchase of common stock | $(19,476) | $— | $— | | Cash dividends declared | $(18,643) | $(6,192) | $(17,226) | | Cumulative effect adjustment (ASU 2016-13) | $(4,623) | $— | $— | | Other comprehensive income | $9,018 | $(1,115) | $14,362 | | Balance, end of period | $799,357 | $766,920 | $753,326 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The Consolidated Statements of Cash Flows show a **significant increase in cash and cash equivalents**, **primarily driven by a substantial net increase in deposits from financing activities**, while operating and investing activities both used considerable amounts of cash, mainly due to investment securities purchases and net increase in loans Consolidated Statements of Cash Flows (Unaudited) - Key Metrics (Nine Months Ended Sep 30) | Metric (Thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(61,713) | $(60,604) | | Net cash used in investing activities | $(204,506) | $(108,628) | | Net cash provided by financing activities | $601,132 | $176,595 | | Increase in cash, cash equivalents and restricted cash | $334,913 | $7,363 | | Cash, cash equivalents and restricted cash at end of period | $455,103 | $126,919 | - Key drivers for cash flows from operating activities in **2020** included net income (**$61.4 million**), provision for loan losses (**$17.6 million**), and **significant non-cash adjustments** like gain on sale of mortgages, net (**$(76.4 million)**) and origination of loans held for sale, net of repayments (**$(1.7 billion)**) offset by proceeds from sales of loans held for sale (**$1.6 billion**)[24](index=24&type=chunk) - Investing activities in **2020** were **significantly impacted by purchases of held-to-maturity investment securities** (**$(196.7 million)**) and available-for-sale investment securities (**$(114.7 million)**), partially offset by proceeds from maturities of these securities[24](index=24&type=chunk) - Financing activities in **2020** saw a **large net increase in deposits** (**$879.3 million**) and FHLB advances (**$947.4 million**) offset by FHLB repayments (**$(1,155.1 million)**), contributing to the overall cash increase[24](index=24&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the accounting policies, significant estimates, and financial instruments presented in the consolidated financial statements, covering areas such as basis of presentation, accounting pronouncements, investment securities, loans, credit losses, goodwill, borrowings, regulatory capital, revenue, stock-based compensation, EPS, derivatives, commitments, contingencies, and fair value measurements [Note 1 Basis of Presentation](index=10&type=section&id=Note%201%20Basis%20of%20Presentation) This note outlines the company's structure as a bank holding company operating through NBH Bank, providing banking products in Colorado and the greater Kansas City region, detailing the preparation of unaudited financial statements in accordance with GAAP, the **significant impact of the COVID-19 pandemic** on economic conditions, and the adoption of ASU 2016-13 (CECL) for allowance for credit losses - National Bank Holdings Corporation (NBHC) is a Delaware-incorporated bank holding company, headquartered in Denver, Colorado, operating through its wholly-owned subsidiary, NBH Bank, with **100** banking centers as of **September 30, 2020**[26](index=26&type=chunk) - The unaudited consolidated financial statements are prepared in accordance with U.S. GAAP and banking industry guidelines, and reflect all normal recurring adjustments[27](index=27&type=chunk) - The **COVID-19 pandemic** has caused **substantial disruption** and is expected to continue to have a **significant impact on the company's financial condition and operations**[28](index=28&type=chunk) - The company adopted ASU **2016-13**, Measurement of Credit Losses on Financial Instruments (**CECL model**), effective **January 1, 2020**, replacing the incurred loss methodology with a **lifetime expected credit loss model**[30](index=30&type=chunk) [Note 2 Recent Accounting Pronouncements](index=14&type=section&id=Note%202%20Recent%20Accounting%20Pronouncements) This note details the adoption of ASU 2016-13 (CECL model) on **January 1, 2020**, which **significantly changed the methodology for recognizing credit losses**, resulting in a **$5.8 million increase in the allowance for credit losses** and a **$4.6 million reduction in retained earnings**, net of tax, with other pronouncements adopted having **no material impact** - ASU **2016-13** (**CECL model**) was adopted on **January 1, 2020**, using a **modified retrospective approach**, requiring measurement of **all expected credit losses** for financial assets based on **historical experience, current conditions, and forecasts**[39](index=39&type=chunk) Impact of CECL Adoption (January 1, 2020) | Metric | Amount (Millions) | | :--- | :--- | | Increase in allowance for credit losses | **$5.8** | | Reduction to retained earnings, net of tax | **$4.6** | - **No credit loss allowance was required** for investment securities upon CECL adoption, as the portfolio consisted of **mortgage-backed securities issued by government sponsored entities**[39](index=39&type=chunk) - ASU **2018-13** (Fair Value Measurement) and ASU **2017-04** (Goodwill Impairment) were adopted with **no material financial statement impact**[40](index=40&type=chunk) [Note 3 Investment Securities](index=14&type=section&id=Note%203%20Investment%20Securities) The company's investment securities portfolio, comprising available-for-sale and held-to-maturity securities, **increased to $0.9 billion** at **September 30, 2020**, from **$0.8 billion** at **December 31, 2019**, with the portfolio **predominantly composed of mortgage-backed securities guaranteed by U.S. government agencies or sponsored enterprises**, and management believing default is **highly unlikely** Investment Securities Portfolio (Thousands) | Category | Sep 30, 2020 (Thousands) | Dec 31, 2019 (Thousands) | | :--- | :--- | :--- | | Available-for-sale | $572,523 | $638,249 | | Held-to-maturity | $320,001 | $182,884 | | Total Investment Securities | $892,524 | $821,133 | - The available-for-sale portfolio **decreased by $65.7 million** (**10.3%**) from **December 31, 2019**, due to maturities/paydowns exceeding purchases. The held-to-maturity portfolio **increased by $137.1 million** (**75.0%**) due to **significant purchases**[198](index=198&type=chunk)[203](index=203&type=chunk) - At **September 30, 2020**, available-for-sale securities had **$13.0 million** in unrealized gains and **$0.1 million** in unrealized losses. Held-to-maturity securities had **$4.8 million** in unrealized gains and **$0.1 million** in unrealized losses[42](index=42&type=chunk)[48](index=48&type=chunk)[202](index=202&type=chunk)[205](index=205&type=chunk) - All mortgage-backed securities are backed by government sponsored enterprises (GSE) collateral, and management believes default is **highly unlikely** due to governmental backing and historical **zero credit losses**[42](index=42&type=chunk)[44](index=44&type=chunk)[49](index=49&type=chunk)[202](index=202&type=chunk)[206](index=206&type=chunk) [Note 4 Loans](index=19&type=section&id=Note%204%20Loans) This note details the loan portfolio composition, which **increased by 3.2% to $4.6 billion** at **September 30, 2020**, **primarily driven by SBA Paycheck Protection Program (PPP) loans**, and provides information on delinquent and non-accrual loans, internal risk ratings, and the impact of COVID-19 related loan modifications, which totaled **$165.2 million** (**3.6% of the portfolio**) and were classified as performing Loan Portfolio Composition (Thousands) | Segment | Sep 30, 2020 (Thousands) | % of Total | Dec 31, 2019 (Thousands) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Commercial | $3,217,406 | **70.6%** | $2,992,307 | **67.8%** | | Commercial real estate non-owner occupied | $617,087 | **13.5%** | $630,906 | **14.3%** | | Residential real estate | $700,927 | **15.4%** | $770,417 | **17.4%** | | Consumer | $20,701 | **0.5%** | $21,776 | **0.5%** | | Total Loans | $4,556,121 | **100.0%** | $4,415,406 | **100.0%** | - Total loans **increased by $140.7 million** (**3.2%**) since **December 31, 2019**, **primarily due to $348.3 million in PPP loans** outstanding at **September 30, 2020**[53](index=53&type=chunk)[210](index=210&type=chunk) Delinquent and Non-Accrual Loans (Thousands) | Category | Sep 30, 2020 (Thousands) | Dec 31, 2019 (Thousands) | | :--- | :--- | :--- | | 30-89 days past due and accruing | $6,587 | $6,350 | | >90 days past due and accruing | $161 | $1,662 | | Non-accrual loans | $18,882 | $21,748 | | Total past due and non-accrual | $25,630 | $29,760 | - COVID-related loan modifications not classified as troubled debt restructurings totaled **$499.5 million** for the nine months ended **September 30, 2020**. As of **September 30, 2020**, **$165.2 million** (**3.6% of total loans**) remained on a payment deferral plan, with **84.0%** being a second modification, all classified as performing[63](index=63&type=chunk)[228](index=228&type=chunk) [Note 5 Allowance for Credit Losses](index=25&type=section&id=Note%205%20Allowance%20for%20Credit%20Losses) The Allowance for Credit Losses (ACL) **increased significantly by 56.1% to $61.0 million** at **September 30, 2020**, from **$39.1 million** at **December 31, 2019**, **primarily due to the adoption of the CECL model** and provisions made to cover the impact of deteriorating economic conditions caused by COVID-19 Allowance for Credit Losses Activity (Thousands) | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Beginning balance | $60,465 | $40,082 | $39,064 | $35,692 | | Cumulative effect adjustment (CECL) | — | — | $5,836 | — | | Net charge-offs | $(486) | $(7,062) | $(1,454) | $(7,445) | | Provision for loan losses | $1,000 | $5,690 | $17,533 | $10,463 | | Ending balance | $60,979 | $38,710 | $60,979 | $38,710 | - The ACL **increased by $21.9 million** (**56.1%**) from **December 31, 2019**, to **September 30, 2020**, including a **$5.8 million increase from CECL adoption**[65](index=65&type=chunk)[196](index=196&type=chunk)[275](index=275&type=chunk) - Provision for loan losses for funded loans was **$1.0 million** for the three months and **$17.5 million** for the nine months ended **September 30, 2020**, **primarily due to COVID-19 economic impacts**[67](index=67&type=chunk)[68](index=68&type=chunk)[275](index=275&type=chunk) ACL Ratios | Ratio | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | ACL to total loans | **1.34%** | **0.88%** | | ACL to total loans (excluding PPP loans) | **1.45%** | **0.88%** | | ACL to non-performing loans | **322.95%** | **179.62%** | [Note 6 Other Real Estate Owned](index=26&type=section&id=Note%206%20Other%20Real%20Estate%20Owned) This note summarizes the activity in Other Real Estate Owned (OREO), showing a decrease in the ending balance to **$4.6 million** at **September 30, 2020**, from **$7.3 million** at the beginning of the year, with this reduction **primarily due to sales of OREO properties**, despite some transfers from the loan portfolio Other Real Estate Owned (OREO) Activity (Thousands) | Metric | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Beginning balance | $7,300 | $10,596 | | Transfers from loan portfolio, at fair value | $1,186 | $2,488 | | Impairments | $(423) | $(872) | | Sales | $(3,473) | $(4,308) | | Ending balance | $4,590 | $7,904 | - Net OREO gains were **$0.1 million** for the three months and **$25 thousand** for the nine months ended **September 30, 2020**, **significantly lower than $6.5 million** and **$7.2 million** for the respective periods in **2019**[70](index=70&type=chunk) [Note 7 Goodwill and Intangible Assets](index=26&type=section&id=Note%207%20Goodwill%20and%20Intangible%20Assets) This note details the company's goodwill and intangible assets, **primarily core deposit intangibles and mortgage servicing rights (MSRs)**, with goodwill remaining stable at **$115.0 million** with **no impairment**, while core deposit intangibles are amortized over **7-10 years**, and MSRs, which **significantly increased in originations**, are amortized in proportion to estimated net servicing income and are subject to impairment testing - Goodwill remained at **$115.0 million** with **no impairment recorded** during the three or nine months ended **September 30, 2020**[71](index=71&type=chunk) Core Deposit Intangibles (Thousands) | Metric | Sep 30, 2020 (Thousands) | Dec 31, 2019 (Thousands) | | :--- | :--- | :--- | | Gross carrying amount | $48,834 | $48,834 | | Accumulated amortization | $(40,990) | $(40,103) | | Net carrying amount | $7,844 | $8,731 | - Core deposit intangible amortization expense was **$0.3 million** for the three and **$0.9 million** for the nine months ended **September 30, 2020**[73](index=73&type=chunk) Mortgage Servicing Rights (MSRs) Activity (Thousands) | Metric | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Beginning balance | $2,630 | $3,556 | | Originations | $6,627 | $26 | | Impairment | $(847) | $(453) | | Amortization | $(1,237) | $(578) | | Ending balance | $7,173 | $2,551 | | Fair value of MSRs | $7,653 | $2,551 | [Note 8 Borrowings](index=27&type=section&id=Note%208%20Borrowings) This note details the company's borrowing activities, including securities sold under repurchase agreements and Federal Home Loan Bank (FHLB) advances, with securities sold under repurchase agreements decreasing, and FHLB advances being **fully paid down by September 30, 2020**, reflecting a reduction in interest expense on borrowings Borrowings (Thousands) | Category | Sep 30, 2020 (Thousands) | Dec 31, 2019 (Thousands) | | :--- | :--- | :--- | | Securities sold under agreements to repurchase | $23,904 | $56,935 | | Federal Home Loan Bank advances | $— | $207,675 | - The Bank had access to a **$1.0 billion** line of credit and term financing from the FHLB at **September 30, 2020**, but **no outstanding borrowings**[81](index=81&type=chunk) - Interest expense on borrowings **decreased significantly to $0.1 million** for the three months and **$1.3 million** for the nine months ended **September 30, 2020**, from **$1.6 million** and **$5.3 million** in the prior year periods, respectively[15](index=15&type=chunk)[82](index=82&type=chunk) - Loans pledged as collateral for FHLB advances were **$1.3 billion** at **September 30, 2020**, down from **$1.5 billion** at **December 31, 2019**[82](index=82&type=chunk) [Note 9 Regulatory Capital](index=29&type=section&id=Note%209%20Regulatory%20Capital) This note confirms that both the Company and NBH Bank **met all Basel III regulatory capital adequacy requirements**, including the capital conservation buffer, as of **September 30, 2020**, and **December 31, 2019**, with NBH Bank maintaining capital ratios in excess of the levels required for **well-capitalized** institutions - The Company and NBH Bank **met all Basel III capital requirements**, including the **2.5% capital conservation buffer**, at **September 30, 2020**, and **December 31, 2019**[84](index=84&type=chunk) - NBH Bank's regulatory capital ratios **exceeded the levels established for well-capitalized institutions**[84](index=84&type=chunk) Consolidated Regulatory Capital Ratios (Sep 30, 2020) | Ratio | Actual | Required for Well Capitalized | Required for Adequately Capitalized | | :--- | :--- | :--- | :--- | | Tier 1 leverage ratio | **10.6%** | N/A | **4.0%** | | Common equity tier 1 risk based capital | **14.3%** | N/A | **7.0%** | | Tier 1 risk based capital ratio | **14.3%** | N/A | **8.5%** | | Total risk based capital ratio | **15.4%** | N/A | **10.5%** | [Note 10 Revenue from Contracts with Clients](index=30&type=section&id=Note%2010%20Revenue%20from%20Contracts%20with%20Clients) This note details the company's revenue recognition policies for various non-interest income streams, distinguishing between in-scope and out-of-scope revenues under Topic 606, with service charges and bank card fees recognized as services are provided or completed, while gain on OREO sales is recognized upon title transfer, and non-interest income in-scope of Topic 606 decreased, while out-of-scope income **significantly increased**, **primarily driven by mortgage banking income** - Service charge fees and bank card fees are recognized over the period services are provided or upon completion of transactional services[87](index=87&type=chunk)[88](index=88&type=chunk) - Gain on OREO sales, net, is recognized when the company transfers title to the buyer[89](index=89&type=chunk) Non-Interest Income (Thousands) | Category | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | In-scope of Topic 606 | $8,285 | $8,864 | $23,659 | $25,768 | | Out-of-scope of Topic 606 | $36,247 | $15,895 | $83,242 | $36,702 | | Total non-interest income | $44,532 | $24,759 | $106,901 | $62,470 | - The company expenses contract acquisition costs immediately if the amortization period would be one year or less[92](index=92&type=chunk) [Note 11 Stock-based Compensation and Benefits](index=31&type=section&id=Note%2011%20Stock-based%20Compensation%20and%20Benefits) This note details the company's stock-based compensation plans, including stock options, restricted stock awards, and performance stock units, with stock option expense increasing for the nine-month period, while restricted stock and performance stock unit expenses also contributed to overall compensation costs, and the company also operates an Employee Stock Purchase Plan (ESPP) - Stock options are **primarily time-vesting over 1-3 years** with **10-year contractual terms**, valued using a Black-Scholes model[94](index=94&type=chunk) Stock Option Expense (Thousands) | Period | 2020 (Thousands) | 2019 (Thousands) | | :--- | :--- | :--- | | 3 Months Ended Sep 30 | $0.1 | $0.2 | | 9 Months Ended Sep 30 | $0.8 | $0.5 | - Restricted stock awards are **primarily time-based**, vesting over **1-3 years**, and performance stock units (PSUs) are granted with vesting based on cumulative EPS and TSR targets (or ROTA in **2020**)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) Unrecognized Compensation Cost (as of Sep 30, 2020, in millions) | Award Type | Unrecognized Cost (Millions) | Weighted Average Period | | :--- | :--- | :--- | | Non-vested stock options | $0.9 | **1.3 years** | | Non-vested restricted stock awards | $2.6 | **2.0 years** | | Non-vested performance stock units | $3.1 | **1.9 years** | - Under the ESPP, employees purchased **23,212** shares during the nine months ended **September 30, 2020**[104](index=104&type=chunk) [Note 12 Common Stock](index=33&type=section&id=Note%2012%20Common%20Stock) This note provides details on the company's common stock outstanding and share repurchase activities, with the number of Class A common shares outstanding decreasing, and the Board authorizing a new **$50.0 million share repurchase program** in **February 2020**, under which **$19.5 million** in shares were repurchased in Q1 **2020** Class A Common Stock Outstanding | Date | Shares Outstanding | | :--- | :--- | | Sep 30, 2020 | **30,594,412** | | Dec 31, 2019 | **31,176,627** | - As of **September 30, 2020**, **178,833** shares of restricted Class A common stock were issued but not yet vested[105](index=105&type=chunk) - A new **$50.0 million share repurchase program** was authorized on **February 26, 2020**. During Q1 **2020**, the company repurchased **734,117** shares for **$19.5 million**, completing a previous authorization. **$43.1 million** remained under the new program as of **September 30, 2020**[106](index=106&type=chunk)[290](index=290&type=chunk) [Note 13 Earnings Per Share](index=33&type=section&id=Note%2013%20Earnings%20Per%20Share) This note outlines the computation of basic and diluted earnings per share using the two-class method, as certain non-vested share awards participate in earnings, with diluted EPS increasing for both the three and nine months ended **September 30, 2020**, compared to the prior year - Earnings per share are calculated using the two-class method due to non-vested share awards having non-forfeitable dividend rights[107](index=107&type=chunk) Earnings Per Share (EPS) (Unaudited) | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Basic EPS | $0.91 | $0.69 | $1.99 | $1.95 | | Diluted EPS | $0.90 | $0.69 | $1.97 | $1.93 | - Certain stock options and unvested restricted shares were anti-dilutive and thus excluded from diluted EPS calculations for the periods presented[108](index=108&type=chunk)[109](index=109&type=chunk) [Note 14 Derivatives](index=34&type=section&id=Note%2014%20Derivatives) This note describes the company's use of derivative financial instruments, **primarily interest rate swaps**, for risk management, employing both fair value hedges and non-designated hedges, with a matched book strategy for the latter to minimize net risk exposure, and mortgage banking activities also involving interest rate lock commitments and forward contracts as derivatives - The company uses derivative financial instruments, **primarily interest rate swaps**, to manage risks arising from business operations and economic conditions, aiming to achieve a desired balance sheet repricing structure[110](index=110&type=chunk) Fair Value of Derivative Instruments (Thousands) | Category | Balance Sheet Location | Sep 30, 2020 (Asset) (Thousands) | Dec 31, 2019 (Asset) (Thousands) | Sep 30, 2020 (Liability) (Thousands) | Dec 31, 2019 (Liability) (Thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Derivatives designated as hedging instruments (Interest rate products) | Other assets / Other liabilities | $— | $1,171 | $45,279 | $13,537 | | Derivatives not designated as hedging instruments (Interest rate products) | Other assets / Other liabilities | $21,287 | $9,004 | $21,371 | $9,021 | | Derivatives not designated as hedging instruments (Interest rate lock commitments) | Other assets / Other liabilities | $11,769 | $1,499 | $440 | $141 | | Derivatives not designated as hedging instruments (Forward contracts) | Other assets / Other liabilities | $191 | $16 | $1,006 | $299 | - As of **September 30, 2020**, the company had **$395.3 million** notional amount in interest rate swaps designated as fair value hedges and **$492.3 million** notional amount in matched interest rate swap transactions not designated as hedges[115](index=115&type=chunk)[117](index=117&type=chunk) - Mortgage banking activities involve interest rate lock commitments (**$457.9 million** notional value) and forward contracts (**$516.4 million** notional value) as derivatives[122](index=122&type=chunk) - Agreements with derivative counterparties contain credit-risk-related contingent features, including default provisions and requirements to maintain **well/adequately capitalized** status[124](index=124&type=chunk)[125](index=125&type=chunk) [Note 15 Commitments and Contingencies](index=38&type=section&id=Note%2015%20Commitments%20and%20Contingencies) This note details the company's off-balance sheet commitments, including loan commitments and standby letters of credit, which represent **potential credit exposure**, and also addresses contingencies such as mortgage loan repurchase obligations, for which a reserve liability is maintained, and ongoing litigation Total Unfunded Commitments (Thousands) | Category | Sep 30, 2020 (Thousands) | Dec 31, 2019 (Thousands) | | :--- | :--- | :--- | | Commitments to fund loans | $280,496 | $249,914 | | Unfunded commitments under lines of credit | $557,464 | $600,407 | | Commercial and standby letters of credit | $8,862 | $11,929 | | Total unfunded commitments | $846,822 | $862,250 | - Mortgage loans sold to investors may be subject to repurchase or indemnification, with a reserve liability of **$2.8 million** at **September 30, 2020**, for expected losses[132](index=132&type=chunk) - The company is party to various litigation matters but **does not believe any will have a material adverse effect** on its financial condition or operations[134](index=134&type=chunk) [Note 16 Fair Value Measurements](index=40&type=section&id=Note%2016%20Fair%20Value%20Measurements) This note explains the company's fair value measurement methodologies, categorizing assets and liabilities into a three-level hierarchy based on the observability of inputs, detailing valuation techniques for recurring measurements like investment securities, loans held for sale, and derivatives, as well as non-recurring measurements for individually evaluated loans, OREO, MSRs, and premises and equipment - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable **significant assumptions**)[135](index=135&type=chunk)[139](index=139&type=chunk) - Investment securities available-for-sale and loans held for sale are **primarily classified as Level 2**, while mortgage banking derivatives are **classified as Level 3**[138](index=138&type=chunk)[139](index=139&type=chunk)[141](index=141&type=chunk) Fair Value of Financial Instruments Measured on a Recurring Basis (Thousands) | Category | Level | Sep 30, 2020 (Assets) (Thousands) | Sep 30, 2020 (Liabilities) (Thousands) | | :--- | :--- | :--- | :--- | | Investment securities available-for-sale | Level 2 | $572,149 | — | | Loans held for sale | Level 2 | $273,003 | — | | Interest rate swap derivatives | Level 2 | $21,287 | $66,650 | | Mortgage banking derivatives | Level 3 | $11,960 | $1,446 | - Individually evaluated loans, OREO, MSRs, and premises and equipment are measured at fair value on a non-recurring basis, typically using **Level 3 inputs** and resulting in impairments[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[149](index=149&type=chunk) Assets Recorded at Fair Value on a Non-Recurring Basis (9 Months Ended Sep 30, 2020, in thousands) | Asset | Total (Thousands) | Losses from Fair Value Changes (Thousands) | | :--- | :--- | :--- | | Individually evaluated loans | $33,603 | $1,969 | | Other real estate owned | $4,590 | $423 | | Premises and equipment | $8,024 | $1,631 | | Mortgage servicing rights | $7,173 | $847 | [Note 17 Fair Value of Financial Instruments](index=45&type=section&id=Note%2017%20Fair%20Value%20of%20Financial%20Instruments) This note provides a comprehensive overview of the estimated fair values for all financial instruments, categorized by the fair value measurement hierarchy, highlighting that while quoted market prices are used where available, many fair values are based on estimates using present value or other valuation techniques, which are sensitive to underlying assumptions - Fair value is defined as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants[151](index=151&type=chunk) - Fair values are estimated using quoted market prices or, when unavailable, present value or other valuation techniques, which are **significantly impacted by assumptions**[151](index=151&type=chunk) Fair Value of Financial Instruments (Thousands) | Instrument | Level | Sep 30, 2020 (Carrying Value) (Thousands) | Sep 30, 2020 (Estimated Fair Value) (Thousands) | Dec 31, 2019 (Carrying Value) (Thousands) | Dec 31, 2019 (Estimated Fair Value) (Thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | Level 1 | $445,103 | $445,103 | $110,190 | $110,190 | | Investment securities available-for-sale | Level 2/3 | $572,523 | $572,523 | $638,249 | $638,249 | | Investment securities held-to-maturity | Level 2 | $320,001 | $324,720 | $182,884 | $183,741 | | Loans receivable | Level 3 | $4,556,121 | $4,723,757 | $4,415,406 | $4,481,209 | | Loans held for sale | Level 2 | $273,003 | $273,003 | $117,444 | $117,444 | | Total deposits | Level 2 | $5,616,460 | $5,625,586 | $4,737,132 | $4,737,333 | | Federal Home Loan Bank advances | Level 2 | $— | $— | $207,675 | $207,890 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting key performance indicators, strategic priorities, and the **significant impact of the COVID-19 pandemic**, detailing changes in profitability, loan portfolio, credit quality, deposit base, revenues, expenses, and capital position, along with discussions on liquidity, capital resources, and interest rate risk management [Overview](index=48&type=section&id=Overview) The company focuses on building client relationships and providing fair and simple solutions, leveraging its presence in core markets, and as of **September 30, 2020**, reported **$6.6 billion in assets**, **$4.6 billion in loans**, **$5.6 billion in deposits**, and **$0.8 billion in equity** - The company's focus is on building relationships and providing fair, simple solutions to clients[155](index=155&type=chunk) - Core markets include Colorado, the greater Kansas City region, Texas, Utah, and New Mexico, which are outperforming national averages[155](index=155&type=chunk) Key Financial Figures (as of Sep 30, 2020, in billions) | Metric | Amount (Billions) | | :--- | :--- | | Total assets | **$6.6** | | Total loans | **$4.6** | | Total deposits | **$5.6** | | Total equity | **$0.8** | [Recent Events](index=48&type=section&id=Recent%20Events) The **COVID-19 pandemic** has **significantly disrupted** communities and business operations, leading the company to shift strategic priorities to protect associates and clients, ensure bank safety, and prudently support clients through programs like the SBA's Paycheck Protection Program (PPP) and loan modifications - The **COVID-19 pandemic** has caused **substantial disruption**, impacting the U.S. labor market, consumer spending, and business operations[156](index=156&type=chunk) - Strategic priorities shifted in **March 2020** to protect associates and clients, ensure bank safety and soundness, and support clients and communities[157](index=157&type=chunk) - The company actively supported clients through the SBA's Paycheck Protection Program (PPP) and loan modifications[156](index=156&type=chunk) [Operating Highlights and Key Challenges](index=48&type=section&id=Operating%20Highlights%20and%20Key%20Challenges) This section summarizes key operational achievements and **significant challenges** faced by the company, with highlights including increased net income, **strong capital ratios**, and **substantial deposit growth**, particularly in non-interest bearing accounts, while challenges revolve around the ongoing economic impact of the **COVID-19 pandemic**, low interest rates, intense competition, and regulatory changes, requiring a **cautious approach to credit extension** and a focus on operational efficiency [Profitability and returns](index=48&type=section&id=Profitability%20and%20returns) Net income increased for the nine months ended **September 30, 2020**, even with higher loan loss provisions due to COVID-19, however, return on average tangible assets and common equity saw slight declines compared to the prior year Profitability and Returns (Nine Months Ended Sep 30) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net income | **$61.4 million** | **$60.8 million** | | Diluted EPS | **$1.97** | **$1.93** | | Adjusted Net income (after tax, excl. consolidation expense) | **$63.1 million** | **$61.5 million** | | Adjusted Diluted EPS | **$2.03** | **$1.95** | | Provision for loan losses | **$17.6 million** | **$10.5 million** | | Return on average tangible assets | **1.36%** | **1.45%** | | Adjusted Return on average tangible assets | **1.39%** | **1.46%** | | Return on average tangible common equity | **12.47%** | **13.43%** | | Adjusted Return on average tangible common equity | **12.80%** | **13.58%** | [Strategic execution](index=50&type=section&id=Strategic%20execution) The company focused on addressing COVID-19 impacts, funded **significant PPP loans**, and continued efforts to improve operating efficiencies by consolidating **12** banking centers - Priorities include protecting associates and clients, ensuring bank safety, and prudently supporting clients and communities[165](index=165&type=chunk) - Funded **$358.9 million** in SBA Paycheck Protection Program (PPP) loans for **2,164** clients[165](index=165&type=chunk) - Approved plans to consolidate **12** banking centers in Q2 **2020**, incurring **$2.1 million** in consolidation-related expense for the nine months ended **September 30, 2020**[165](index=165&type=chunk) [Loan portfolio](index=50&type=section&id=Loan%20portfolio) The loan portfolio grew to **$4.6 billion**, **primarily driven by PPP loans**, with the company maintaining a **conservatively structured and diversified portfolio**, a **cautious approach to new credit**, and an **intense focus on managing credit risk and yield** - Total loans reached **$4.6 billion**, **increasing $140.7 million** (**3.2%**) since **December 31, 2019**, **primarily due to PPP loans**[165](index=165&type=chunk) - Total loan originations for the nine months ended **September 30, 2020**, were **$887.4 million**, including **$358.9 million** in PPP loans[165](index=165&type=chunk) - COVID-related loan modifications were **$165.2 million** (**3.6% of total loans**) as of **September 30, 2020**[165](index=165&type=chunk) [Credit quality](index=50&type=section&id=Credit%20quality) Credit quality remained **strong**, with improvements in non-performing loan and asset ratios, and the Allowance for Credit Losses (ACL) **significantly increased due to CECL adoption and provisions for COVID-19 impacts** Credit Quality Metrics | Metric | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Non-performing loans to total loans | **0.41%** | **0.49%** | | Non-performing assets to total loans and OREO | **0.51%** | **0.66%** | | Allowance for credit losses to total loans | **1.34%** | **0.88%** | | Allowance for credit losses to total loans (excl. PPP loans) | **1.45%** | **0.88%** | | Net charge-offs to average total loans (annualized, 9M) | **0.04%** | **0.19%** (FY2019) | - ACL **increased by 56.1%** from **December 31, 2019**, to **September 30, 2020**, due to CECL adoption and COVID-19 economic impacts[165](index=165&type=chunk) [Client deposit funded balance sheet](index=50&type=section&id=Client%20deposit%20funded%20balance%20sheet) The company experienced **strong deposit growth**, particularly in non-interest bearing demand deposits, driven by PPP funds and economic stimulus checks, which led to an **improved mix of transaction deposits** and a decrease in the cost of deposits and funds - Average non-interest bearing demand deposits **increased $210.8 million** (**18.3%**) for the nine months ended **September 30, 2020**[164](index=164&type=chunk) - Total deposits averaged **$5.1 billion** for the nine months ended **September 30, 2020**, an **increase of 10.3% YoY**[171](index=171&type=chunk) - The mix of transaction deposits to total deposits improved by **405 basis points** to **81.7%** at **September 30, 2020**[171](index=171&type=chunk) Cost of Deposits and Funds (Nine Months Ended Sep 30, 2020) | Metric | 2020 | Change from FY2019 | | :--- | :--- | :--- | | Cost of deposits | **0.49%** | **-15 bps** | | Cost of funds | **0.69%** | **-27 bps** | [Revenues](index=52&type=section&id=Revenues) Fully taxable equivalent (FTE) net interest income decreased due to lower short-term interest rates, narrowing the net interest margin, however, non-interest income **significantly increased**, **primarily driven by record mortgage banking income** Revenue Metrics (Nine Months Ended Sep 30) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | FTE net interest income | **$148.2 million** | **$159.2 million** | **-6.9%** | | FTE net interest margin | **3.48%** | **3.98%** | **-50 bps** | | Non-interest income | **$106.9 million** | **$62.5 million** | **71.1%** | | Mortgage banking income | **$79.2 million** | **$32.0 million** | **147.4%** | - Service charges and bank card fees **decreased a combined $2.3 million** due to changes in consumer behavior from COVID-19[171](index=171&type=chunk) [Expenses](index=52&type=section&id=Expenses) Non-interest expense increased, **mainly due to higher mortgage banking commissions and banking center consolidation-related expenses**, with income tax expense also rising, and an adjusted effective tax rate reflecting tax strategies and exempt income Expense Metrics (Nine Months Ended Sep 30) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Non-interest expense | **$157.8 million** | **$134.6 million** | **17.2%** | | Salaries and benefits (increase) | **$16.2 million** | N/A | N/A | | Banking center consolidation-related expense | **$2.1 million** | **$0.9 million** | **138.3%** | | Income tax expense | **$14.5 million** | **$12.0 million** | **20.8%** | | Adjusted effective tax rate | **18.9%** | **19.4%** | **-0.5%** | - The lower effective tax rate compared to the statutory rate reflects the success of tax strategies and tax-exempt income[171](index=171&type=chunk) [Strong capital position](index=52&type=section&id=Strong%20capital%20position) The company maintained **strong capital ratios**, exceeding regulatory '**well capitalized**' thresholds, and possessed **ample liquidity**, with tangible common book value per share increasing due to earnings and positive fair market value adjustments - Capital ratios remained **strong** and exceeded federal bank regulatory agency '**well capitalized**' thresholds[171](index=171&type=chunk) Capital Ratios (as of Sep 30, 2020) | Ratio | Value | | :--- | :--- | | Consolidated tier 1 leverage ratio | **10.60%** | | Common equity tier 1 risk based capital ratio | **14.25%** | | Consolidated tier 1 risk based capital ratio | **14.25%** | - **Ample liquidity** with **$400 million** in excess cash and access to **$2.3 billion** in readily available funds[171](index=171&type=chunk) - Tangible common book value per share **increased $1.51 to $22.40** at **September 30, 2020**, compared to **December 31, 2019**[171](index=171&type=chunk) [Key Challenges](index=53&type=section&id=Key%20Challenges) The company faces **significant challenges** including intense competition, low and sustained interest rates, evolving regulatory environments, and the ongoing economic strain from the **COVID-19 pandemic**, necessitating a **cautious approach to credit extension** and continuous monitoring of the loan portfolio, particularly for highly impacted industries - Challenges include intense competition, low interest rates (expected to remain near zero), changing regulatory environment, and disciplined acquisition opportunities[172](index=172&type=chunk) - The **COVID-19 pandemic** continues to cause economic strain, impacting the U.S. labor market, consumer spending, and business operations, with potential for renewed shelter-in-place orders[173](index=173&type=chunk) - The company maintains **low exposure to industries highly impacted by COVID-19**, with most industry sector concentrations at **5% or less of total loans**[175](index=175&type=chunk) - The food and agribusiness portfolio, at **4.8% of total loans**, is well-diversified and managed with clients generally possessing low leverage[176](index=176&type=chunk) - Continued regulation, new liquidity/capital constraints, and cybersecurity needs add costs and uncertainty, while non-traditional market participants increase competition[178](index=178&type=chunk) [Performance Overview](index=55&type=section&id=Performance%20Overview) This section provides a table of primary performance indicators used to analyze the business, including key ratios for profitability, balance sheet, asset quality, and regulatory capital, highlighting the company's financial health and operational efficiency across various periods Key Performance Indicators (as of and for the three and nine months ended Sep 30) | Metric | Sep 30, 2020 (3M) | Sep 30, 2019 (3M) | Sep 30, 2020 (9M) | Sep 30, 2019 (9M) | | :--- | :--- | :--- | :--- | :--- | | Return on average assets | **1.71%** | **1.46%** | **1.32%** | **1.40%** | | Return on average tangible assets (non-GAAP) | **1.76%** | **1.51%** | **1.36%** | **1.45%** | | Return on average tangible assets, adjusted (non-GAAP) | **1.78%** | **1.56%** | **1.39%** | **1.46%** | | Return on average tangible common equity (non-GAAP) | **16.49%** | **13.68%** | **12.47%** | **13.43%** | | Loan to deposit ratio (end of period) | **81.12%** | **92.99%** | **81.12%** | **92.99%** | | Net interest margin FTE (non-GAAP) | **3.21%** | **3.91%** | **3.48%** | **3.98%** | | Non-interest income to total revenue FTE (non-GAAP) | **48.13%** | **31.82%** | **41.90%** | **28.18%** | | Efficiency ratio FTE (non-GAAP) | **59.47%** | **55.90%** | **61.48%** | **60.33%** | | Non-performing loans to total loans | **0.41%** | **0.58%** | **0.41%** | **0.58%** | | Allowance for credit losses to total loans | **1.34%** | **0.88%** | **1.34%** | **0.88%** | [About Non-GAAP Financial Measures](index=57&type=section&id=About%20Non-GAAP%20Financial%20Measures) This section clarifies the use of non-GAAP financial measures, such as tangible assets and adjusted net income, which are presented to provide useful supplemental information for financial and operational decision-making, with the company emphasizing that these measures should not replace GAAP figures and providing reconciliations - Non-GAAP financial measures (e.g., tangible assets, adjusted net income, FTE metrics) are used to provide useful supplemental information for financial and operational decision-making and period-to-period comparisons[185](index=185&type=chunk) - These measures exclude certain expenses or assets not indicative of primary business operating results or present metrics on an FTE basis[185](index=185&type=chunk) - Non-GAAP measures should not be considered a substitute for GAAP financial information, and reconciliations to comparable GAAP measures are provided[186](index=186&type=chunk) [Tangible Common Book Value Ratios](index=57&type=section&id=Tangible%20Common%20Book%20Value%20Ratios) This section provides a reconciliation of GAAP shareholders' equity and total assets to non-GAAP tangible common equity and tangible assets, respectively, and also presents the tangible common equity to tangible assets ratio and tangible common book value per share, highlighting the impact of goodwill and intangible assets Tangible Common Book Value Ratios (Thousands, except per share data) | Metric | Sep 30, 2020 (Thousands) | Dec 31, 2019 (Thousands) | Sep 30, 2019 (Thousands) | | :--- | :--- | :--- | :--- | | Total shareholders' equity | $799,357 | $766,920 | $753,326 | | Tangible common equity (non-GAAP) | $685,413 | $651,403 | $637,284 | | Total assets | $6,600,676 | $5,895,512 | $5,990,050 | | Tangible assets (non-GAAP) | $6,486,732 | $5,779,995 | $5,874,008 | | Tangible common equity to tangible assets (non-GAAP) | **10.57%** | **11.27%** | **10.85%** | | Tangible common book value per share (non-GAAP) | **$22.40** | **$20.89** | **$20.45** | [Return on Average Tangible Assets and Return on Average Tangible Equity](index=59&type=section&id=Return%20on%20Average%20Tangible%20Assets%20and%20Return%20on%20Average%20Tangible%20Equity) This section reconciles GAAP net income to adjusted net income (excluding core deposit intangible amortization) and presents non-GAAP return on average tangible assets and return on average tangible common equity, with these adjusted metrics providing a clearer view of the company's core profitability by removing the impact of certain intangible assets Return on Average Tangible Assets and Equity (Thousands, except percentages) | Metric | Sep 30, 2020 (3M) | Sep 30, 2019 (3M) | Sep 30, 2020 (9M) | Sep 30, 2019 (9M) | | :--- | :--- | :--- | :--- | :--- | | Net income | $27,893 | $21,642 | $61,422 | $60,846 | | Net income adjusted for core deposit intangible amortization (non-GAAP) | $28,119 | $21,866 | $62,102 | $61,520 | | Average tangible assets (non-GAAP) | $6,368,894 | $5,749,597 | $6,108,036 | $5,691,208 | | Return on average tangible assets (non-GAAP) | **1.76%** | **1.51%** | **1.36%** | **1.45%** | | Average tangible common equity (non-GAAP) | $678,236 | $634,126 | $665,085 | $612,420 | | Return on average tangible common equity (non-GAAP) | **16.49%** | **13.68%** | **12.47%** | **13.43%** | [Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin](index=59&type=section&id=Fully%20Taxable%20Equivalent%20Yield%20on%20Earning%20Assets%20and%20Net%20Interest%20Margin) This section presents interest income and net interest income on a fully taxable equivalent (FTE) basis, along with the yield on earning assets and net interest margin, with the FTE adjustments allowing for a more comparable analysis of interest income from both taxable and tax-exempt sources FTE Yield and Net Interest Margin (Thousands, except percentages) | Metric | Sep 30, 2020 (3M) | Sep 30, 2019 (3M) | Sep 30, 2020 (9M) | Sep 30, 2019 (9M) | | :--- | :--- | :--- | :--- | :--- | | Interest income FTE (non-GAAP) | $53,577 | $62,636 | $168,557 | $186,760 | | Net interest income FTE (non-GAAP) | $47,990 | $53,049 | $148,233 | $159,217 | | Average earning assets | $5,944,790 | $5,385,407 | $5,690,884 | $5,344,494 | | Yield on earning assets FTE (non-GAAP) | **3.59%** | **4.61%** | **3.96%** | **4.67%** | | Net interest margin FTE (non-GAAP) | **3.21%** | **3.91%** | **3.48%** | **3.98%** | [Efficiency Ratio](index=60&type=section&id=Efficiency%20Ratio) This section provides the efficiency ratio, both on a GAAP and fully taxable equivalent (FTE) basis, and an adjusted FTE efficiency ratio that excludes banking center consolidation-related expenses, with these ratios measuring how effectively the company manages its expenses relative to its revenue Efficiency Ratios (Thousands, except percentages) | Metric | Sep 30, 2020 (3M) | Sep 30, 2019 (3M) | Sep 30, 2020 (9M) | Sep 30, 2019 (9M) | | :--- | :--- | :--- | :--- | :--- | | Net interest income, FTE (non-GAAP) | $47,990 | $53,049 | $148,233 | $159,217 | | Non-interest income | $44,532 | $24,759 | $106,901 | $62,470 | | Non-interest expense | $55,321 | $43,793 | $157,752 | $134,638 | | Adjusted non-interest expense (non-GAAP) | $54,594 | $42,600 | $154,725 | $132,853 | | Efficiency ratio | **60.30%** | **56.83%** | **62.42%** | **61.38%** | | Efficiency ratio FTE (non-GAAP) | **59.47%** | **55.90%** | **61.48%** | **60.33%** | | Adjusted efficiency ratio FTE (non-GAAP) | **59.01%** | **54.75%** | **60.64%** | **59.93%** | [Adjusted Financial Results](index=61&type=section&id=Adjusted%20Financial%20Results) This section presents adjusted net income, adjusted diluted earnings per share, adjusted return on average tangible assets, and adjusted return on average tangible common equity, with these adjustments **primarily excluding banking center consolidation-related expenses** to provide a clearer view of the company's underlying financial performance Adjusted Financial Results (Thousands, except per share data) | Metric | Sep 30, 2020 (3M) | Sep 30, 2019 (3M) | Sep 30, 2020 (9M) | Sep 30, 2019 (9M) | | :--- | :--- | :--- | :--- | :--- | | Net income | $27,893 | $21,642 | $61,422 | $60,846 | | Adjusted net income (non-GAAP) | $28,224 | $22,331 | $63,063 | $61,535 | | Earnings per share - diluted | $0.90 | $0.69 | $1.97 | $1.93 | | Adjusted earnings per share - diluted (non-GAAP) | $0.91 | $0.71 | $2.03 | $1.95 | | Adjusted return on average tangible assets (non-GAAP) | **1.78%** | **1.56%** | **1.39%** | **1.46%** | | Adjusted return on average tangible common equity (non-GAAP) | **16.69%** | **14.11%** | **12.80%** | **13.58%** | - Adjustments **primarily relate to banking center consolidation-related expenses** and their tax impact[193](index=193&type=chunk) [Application of Critical Accounting Policies](index=61&type=section&id=Application%20of%20Critical%20Accounting%20Policies) This section highlights that the preparation of financial statements requires **significant judgment and material estimates**, with the Allowance for Credit Losses (ACL) being the **most significant estimate** of these estimates - The **most significant estimate** in financial statement preparation relates to the determination of the Allowance for Credit Losses (ACL)[194](index=194&type=chunk) [Future Accounting Pronouncements](index=62&type=section&id=Future%20Accounting%20Pronouncements) The company is currently **evaluating the impact** of ASU 2020-04, Reference Rate Reform, and **does not expect** ASU 2019-12, Income Taxes, to have a **material impact** on its financial statements - The company is **evaluating the impact** of ASU **2020-04**, Reference Rate Reform (Topic **848**)[195](index=195&type=chunk) - ASU **2019-12**, Income Taxes (Topic **740**), is **not expected to have a material impact** on financial statements[195](index=195&type=chunk) [Financial Condition](index=62&type=section&id=Financial%20Condition) The company's financial condition improved with total assets **increasing to $6.6 billion**, driven by **significant growth in cash and cash equivalents and loans**, particularly PPP loans, supported by **strong deposit growth**, especially in lower-cost transaction deposits, and a strategic increase in held-to-maturity investment securities [Investment securities](index=62&type=section&id=Investment%20securities) The investment securities portfolio **increased to $0.9 billion**, with a shift towards held-to-maturity securities, and the portfolio remains **predominantly mortgage-backed**, guaranteed by U.S. government agencies, and is considered to have **low credit risk** [Available-for-sale](index=62&type=section&id=Available-for-sale) Available-for-sale investment securities **decreased by 10.3% to $572.5 million**, **primarily due to maturities and paydowns exceeding new purchases**, with the portfolio being **almost entirely mortgage-backed by GSEs**, and **low unrealized losses attributed to interest rate changes, not credit risk** Available-for-sale Investment Securities (Thousands) | Metric | Sep 30, 2020 (Thousands) | Dec 31, 2019 (Thousands) | % Change | | :--- | :--- | :--- | :--- | | Fair value | $572,523 | $638,249 | **-10.3%** | | Weighted average yield | **1.57%** | **2.20%** | **-63 bps** | - Maturities and paydowns totaled **$191.8 million**, partially offset by **$114.7 million** in purchases for the nine months ended **September 30, 2020**[198](index=198&type=chunk) - The portfolio is **primarily comprised of mortgage-backed securities** backed by government sponsored enterprises (GSE) collateral[199](index=199&type=chunk) - Unrealized gains were **$13.0 million** and unrealized losses were **$0.1 million** at **September 30, 2020**, with management believing default is **highly unlikely**[202](index=202&type=chunk) [Held-to-maturity](index=63&type=section&id=Held-to-maturity) Held-to-maturity investment securities **significantly increased by 75.0% to $320.0 million**, driven by **$196.7 million in purchases** during the nine months ended **September 30, 2020**, with this portfolio also consisting **entirely of GSE-backed mortgage-backed securities**, and management **assessing zero expected credit losses** Held-to-maturity Investment Securities (Thousands) | Metric | Sep 30, 2020 (Thousands) | Dec 31, 2019 (Thousands) | % Change | | :--- | :--- | :--- | :--- | | Amortized cost | $320,001 | $182,884 | **75.0%** | | Weighted average yield | **1.43%** | **2.80%** | **-137 bps** | - Purchases of held-to-maturity securities totaled **$196.7 million** for the nine months ended **September 30, 2020**[203](index=203&type=chunk) - The portfolio is **entirely comprised of fixed rate FHLMC, FNMA, and GNMA securities**[204](index=204&type=chunk) - Management **does not measure expected credit losses** as nonpayment of the amortized cost basis is zero due to governmental backing[206](index=206&type=chunk) [Loans overview](index=65&type=section&id=Loans%20overview) The loan portfolio **increased by 3.2% to $4.6 billion**, **primarily due to PPP loan originations**, which offset elevated paydowns, and the portfolio remains granular and well-diversified, with **low exposure to industries highly impacted by the COVID-19 pandemic**, and a **cautious approach to new credit extension** Loan Portfolio Composition (Thousands) | Category | Sep 30, 2020 (Thousands) | Dec 31, 2019 (Thousands) | % Change | | :--- | :--- | :--- | :--- | | Originated loans | $4,281,237 | $4,051,917 | **5.7%** | | Acquired loans | $274,884 | $363,489 | **-24.3%** | | Total loans | $4,556,121 | $4,415,406 | **3.2%** | - Loan originations totaled **$887.4 million** year-to-date through **September 30, 2020**, including **$358.9 million** of PPP loans[210](index=210&type=chunk) - The commercial and industrial loan portfolio is diverse, with finance/financial services (**$267.0 million**), hospital/medical (**$213.4 million**), and manufacturing-related loans (**$113.3 million**)[211](index=211&type=chunk) - **Low exposure to COVID-19 highly impacted industries**: restaurants (**4.6%**), retailers (**2.6%**), hospital/medical (**4.7%**), oil and gas (**0.7%**), hotel and lodging (**4.0%**), multifamily (**1.6%**), and retail CRE (**1.2%**) of total loans[213](index=213&type=chunk)[214](index=214&type=chunk) [Asset quality](index=70&type=section&id=Asset%20quality) Asset quality remains a **strong point**, driven by **disciplined adherence to concentration limits and robust underwriting standards**, with non-performing assets decreasing, and the company **actively monitoring credit deterioration**, including COVID-19 related loan modifications, which are performing - Asset quality is fundamental to success, driven by **disciplined adherence to self-imposed concentration limits and robust credit policies**[219](index=219&type=chunk) Non-Performing Assets and Past Due Loans (Thousands) | Metric | Sep 30, 2020 (Thousands) | Dec 31, 2019 (Thousands) | | :--- | :--- | :--- | | Non-performing loans | $18,882 | $21,748 | | OREO | $4,590 | $7,300 | | Total non-performing assets | $23,472 | $29,048 | | Loans 30-89 days past due and accruing | $6,587 | $6,350 | | Loans 90+ days past due and accruing | $161 | $1,662 | - Total non-performing loans **decreased by $2.9 million** (**13.2%**) from **December 31, 2019**, to **September 30, 2020**[226](index=226&type=chunk) - COVID-related loan modifications totaling **$165.2 million** (**3.6% of total loans**) were classified as performing as of **September 30, 2020**[228](index=228&type=chunk) [Allowance for credit losses](index=73&type=section&id=Allowance%20for%20credit%20losses) The Allowance for Credit Losses (ACL) **increased to $61.0 million**, reflecting the adoption of the CECL model and provisions for the economic impact of COVID-19, with the ACL determined using a discounted cash flow model, incorporating macroeconomic forecasts and qualitative adjustments, and is **deemed adequate to cover estimated lifetime losses** - The ACL **incr

National Bank Holdings Corporation (NYSE:NBHC) Q3 2020 Results Conference Call October 21, 2020 11:00 AM ET Company Participants Tim Laney - Chairman, President and CEO Aldis Birkans - CFO Rick Newfield - Chief Risk Management Officer Conference Call Participants Jeff Rulis - D.A. Davidson Andrew Liesch - Piper Sandler Kelly Motta - KBW Operator Good morning, everyone, and welcome to the National Bank Holdings Corporation 2020 Third Quarter Earnings Call. My name is Mariama, and I will be your conference op ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ACT OF 1934 For the transition period from to Commission File Number: 001-35654 NATIONAL BANK HOLDINGS CORPORATION (Exact name of registrant as specified in its charter) Delaware 27-0563799 (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE (State or ot ...

Q2 – 2020 INVESTOR PRESENTATION FORWARD-LOOKING STATEMENTS This presentation 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 intention ...

National Bank Holdings Corporation (NYSE:NBHC) Q2 2020 Earnings Conference Call July 22, 2020 11:00 AM ET Company Participants Tim Laney ??? Chairman, President and Chief Executive Officer Rick Newfield ??? Chief Risk Management Officer Aldis Birkans ??? Chief Financial Officer Conference Call Participants Jeff Rulis ??? D.A. Davidson Chris McGratty ??? KBW Gordon McGuire ??? Stephens Andrew Liesch ??? Piper Sandler Operator Good morning, everyone, and welcome to the National Bank Holdings Corporation 2020 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-35654 NATIONAL BANK HOLDINGS CORPORATION (Exact name of registrant as specified in its charter) (State or other jurisdiction of ...

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