Core Viewpoint - National Bank Holdings Corporation (NBHC) has signed a definitive merger agreement to acquire Vista Bancshares, Inc., expanding its footprint in the Dallas-Fort Worth metroplex and enhancing its service offerings [1][3][7]. Company Overview - Vista Bank, founded in 1912, is a full-service commercial bank with $2.4 billion in assets, $2.1 billion in deposits, and $1.9 billion in loans as of June 30, 2025 [2][10]. - The merger will result in a combined company with approximately $12.4 billion in pro forma assets and $10.4 billion in pro forma deposits [2][7]. Strategic Rationale - The acquisition is aimed at leveraging Vista's strong community ties and exceptional client service to enhance NBHC's banking services [3][7]. - NBHC plans to retain the Vista Bank brand in Texas and gradually incorporate it across the combined enterprise [2][3]. Financial Terms - Vista shareholders will receive approximately $84.8 million in cash and about 7.4 million shares of NBHC common stock, valuing the transaction at $369.1 million based on NBHC's closing price of $38.47 on September 12, 2025 [3][4]. - The transaction is expected to be 17% accretive to NBHC's earnings, with tangible book value earn-back projected in approximately three years [7]. Approval and Timeline - The merger has been unanimously approved by the boards of directors of both companies and is subject to Vista's shareholder approval and regulatory approvals [4][7]. - The expected closing date for the transaction is in Q1 2026 [4][7].

[Company Information](index=1&type=section&id=Company%20Information) This section provides fundamental details about the registrant, including corporate identity and stock listing information [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides basic registrant information, including the company name, jurisdiction of incorporation, principal executive offices, telephone number, and details on Class A common stock listed on the NYSE, with 38,045,622 shares outstanding as of August 1, 2025 - Company Name: NATIONAL BANK HOLDINGS CORPORATION[2](index=2&type=chunk) - Jurisdiction of Incorporation: Delaware[2](index=2&type=chunk) Registrant Information | Metric | Information | | :--- | :--- | | Ticker Symbol | NBHC | | Listed Exchange | NYSE | | Class A Common Stock Outstanding as of August 1, 2025 | 38,045,622 shares | [Glossary of Acronyms, Abbreviations and Terms](index=3&type=section&id=Glossary%20of%20Acronyms%2C%20Abbreviations%20and%20Terms) This section defines key acronyms, abbreviations, and terms used throughout the report for clarity and consistent understanding [Glossary](index=3&type=section&id=Glossary) This section provides definitions for key acronyms, abbreviations, and terms used in the report to ensure consistent understanding among readers - The glossary includes terms such as ACL (Allowance for Credit Losses), AFS (Available-for-Sale), CECL (Current Expected Credit Losses), CRE (Commercial Real Estate), EPS (Earnings Per Share), FASB (Financial Accounting Standards Board), FDIC (Federal Deposit Insurance Corporation), FHLB (Federal Home Loan Bank), FNMA (Federal National Mortgage Association), GAAP (Generally Accepted Accounting Principles), GSE (Government-Sponsored Enterprise), HTM (Held-to-Maturity), MBS (Mortgage-Backed Securities), MSR (Mortgage Servicing Rights), NCO (Net Charge-Offs), OCI (Other Comprehensive Income), OREO (Other Real Estate Owned), PSU (Performance Share Units), SBA (Small Business Administration), SEC (Securities and Exchange Commission), SOFR (Secured Overnight Financing Rate), and TDMs (Troubled Debt Modifications)[8](index=8&type=chunk) [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section provides a cautionary note regarding forward-looking statements, highlighting inherent risks and uncertainties that may affect actual results [Forward-Looking Statements and Risk Factors](index=4&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section warns investors that forward-looking statements in the report involve known and unknown risks, assumptions, and uncertainties that could cause actual results to differ materially from expectations, listing various factors that may impact the company's performance - Risk factors for forward-looking statements include, but are not limited to: business and economic conditions, credit risk, insufficient allowance for credit losses, ability to maintain liquidity, changes in market interest rates and inflation, changes in fair value of investment securities, loss of key personnel, disruptions to technology systems or cyber incidents, fraud or financial crimes, industry competition, changes in government loan programs, impairment of mortgage servicing rights, technological developments (such as artificial intelligence), ability to execute organic growth and acquisition strategies, regulatory compliance costs, increased FDIC assessment fees, and legal proceedings by third parties or government agencies[11](index=11&type=chunk)[12](index=12&type=chunk)[14](index=14&type=chunk) - The company does not undertake any obligation to update any forward-looking statements, except as required by applicable law[13](index=13&type=chunk) [PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements and management's discussion and analysis of financial condition and operating results [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section contains the company's unaudited consolidated financial statements, including statements of financial condition, operations, comprehensive income, changes in shareholders' equity, and cash flows, along with related notes, providing financial performance and condition as of June 30, 2025, and December 31, 2024 [Consolidated Statements of Financial Condition](index=7&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) This statement presents the company's financial position as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and shareholders' equity Consolidated Statements of Financial Condition (As of June 30, 2025, and December 31, 2024) | Metric | June 30, 2025 (Thousand USD) | December 31, 2024 (Thousand USD) | | :--- | :--- | :--- | | **Assets:** | | | | Cash and cash equivalents | 296,483 | 127,848 | | Investment securities available-for-sale (at fair value) | 631,947 | 527,547 | | Investment securities held-to-maturity | 717,232 | 533,108 | | Loans, net | 7,398,025 | 7,656,688 | | Total assets | 9,998,729 | 9,807,693 | | **Liabilities:** | | | | Total deposits | 8,269,484 | 8,237,893 | | Federal Home Loan Bank borrowings | 185,000 | 50,000 | | Total liabilities | 8,646,233 | 8,502,618 | | **Shareholders' Equity:** | | | | Total shareholders' equity | 1,352,496 | 1,305,075 | | Total liabilities and shareholders' equity | 9,998,729 | 9,807,693 | - As of June 30, 2025, total assets increased to **$9.999 billion**, a **1.9% increase** from December 31, 2024[16](index=16&type=chunk) - As of June 30, 2025, cash and cash equivalents significantly increased by **$169 million**, while net loans decreased by **$259 million**[16](index=16&type=chunk) [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) This statement reports the company's financial performance for the three and six months ended June 30, 2025, and 2024, including net income and earnings per share Consolidated Statements of Operations (For the three and six months ended June 30, 2025, and 2024) | Metric (Thousand USD) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total interest and dividend income | 131,220 | 132,447 | 261,183 | 264,179 | | Total interest expense | 43,811 | 48,873 | 87,083 | 96,575 | | Net interest income before provision for credit losses | 87,409 | 83,574 | 174,100 | 167,604 | | Provision for credit losses | — | 2,776 | 10,200 | 2,776 | | Net interest income after provision for credit losses | 87,409 | 80,798 | 163,900 | 164,828 | | Total non-interest income | 17,066 | 14,029 | 32,442 | 31,723 | | Total non-interest expense | 62,931 | 63,075 | 124,948 | 125,909 | | Income before income taxes | 41,544 | 31,752 | 71,394 | 70,642 | | Net income | 34,022 | 26,135 | 58,253 | 57,526 | | Earnings per share—Basic | 0.89 | 0.68 | 1.52 | 1.51 | | Earnings per share—Diluted | 0.88 | 0.68 | 1.51 | 1.50 | | Dividends per common share | 0.30 | 0.28 | 0.59 | 0.55 | - For the three months ended June 30, 2025, net income increased by **30.2%** year-over-year to **$34.022 million**, with diluted earnings per share of **$0.88**, a **29.4% increase**[18](index=18&type=chunk) - For the six months ended June 30, 2025, net interest income (before provision for credit losses) grew by **3.9%** to **$174.1 million**, and non-interest income increased by **2.3%** to **$32.442 million**[18](index=18&type=chunk) [Consolidated Statements of Comprehensive Income](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement details the company's comprehensive income, including net income and other comprehensive income (loss), for the three and six months ended June 30, 2025, and 2024 Consolidated Statements of Comprehensive Income (For the three and six months ended June 30, 2025, and 2024) | Metric (Thousand USD) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | 34,022 | 26,135 | 58,253 | 57,526 | | Other comprehensive income (loss), net of tax | 4,136 | (216) | 14,129 | (4,024) | | Comprehensive income | 38,158 | 25,919 | 72,382 | 53,502 | - For the three months ended June 30, 2025, other comprehensive income (loss) shifted from a negative **$0.216 million** in the prior year to a positive **$4.136 million**, primarily due to changes in unrealized gains and losses on available-for-sale securities[20](index=20&type=chunk) - For the six months ended June 30, 2025, comprehensive income significantly increased to **$72.382 million**, compared to **$53.502 million** in the same period of 2024[20](index=20&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This statement shows changes in shareholders' equity for the three and six months ended June 30, 2025, and 2024, reflecting net income, dividends, and other adjustments Consolidated Statements of Changes in Shareholders' Equity (For the three and six months ended June 30, 2025, and 2024) | Metric (Thousand USD) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Beginning balance | 1,329,308 | 1,231,830 | 1,305,075 | 1,212,807 | | Net income | 34,022 | 26,135 | 58,253 | 57,526 | | Stock-based compensation | 1,991 | 2,088 | 3,695 | 3,665 | | Share repurchases | (4,237) | — | (4,237) | — | | Cash dividends | (11,533) | (10,716) | (22,689) | (21,022) | | Other comprehensive income (loss) | 4,136 | (216) | 14,129 | (4,024) | | Ending balance | 1,352,496 | 1,247,644 | 1,352,496 | 1,247,644 | - As of June 30, 2025, total shareholders' equity increased to **$1.352 billion**, a **3.6% increase** from December 31, 2024[16](index=16&type=chunk)[23](index=23&type=chunk) - In the second quarter of 2025, the company repurchased **119,300 shares** of common stock totaling **$4.237 million**[23](index=23&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Consolidated Statements of Cash Flows (For the six months ended June 30, 2025, and 2024) | Cash Flow Activities (Thousand USD) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | 71,968 | 61,875 | | Net cash (used in) provided by investing activities | (40,744) | 32,078 | | Net cash provided by (used in) financing activities | 137,411 | (141,286) | | Increase (decrease) in cash and cash equivalents | 168,635 | (47,333) | | Cash and cash equivalents at end of period | 296,483 | 144,993 | - For the six months ended June 30, 2025, net cash provided by operating activities increased to **$71.968 million**, a **16.3% increase** from the same period in 2024[26](index=26&type=chunk) - Cash flow from financing activities shifted from a net outflow of **$141.286 million** in the prior year to a net inflow of **$137.411 million** in 2025, primarily due to a net increase in deposits and FHLB borrowings[26](index=26&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements [Note 1 Basis of Presentation](index=12&type=section&id=Note%201%20Basis%20of%20Presentation) This note explains the company's structure as a bank holding company, its primary operating subsidiaries and their banking products and services, and confirms that the financial statements are prepared in accordance with U.S. GAAP and include normal recurring adjustments deemed necessary by management - The company is a Delaware-chartered bank holding company operating primarily through NBH Bank and BOJHT, offering commercial and consumer banking products[27](index=27&type=chunk) - As of June 30, 2025, the company operates over **85 banking centers** primarily across Colorado, the greater Kansas City metropolitan area, Utah, Wyoming, Texas, New Mexico, and Idaho[27](index=27&type=chunk) - The financial statements are prepared in accordance with U.S. GAAP and include normal recurring adjustments deemed necessary by management, but may not contain all information and notes required for complete annual financial statements[28](index=28&type=chunk) [Note 2 Recent Accounting Pronouncements](index=12&type=section&id=Note%202%20Recent%20Accounting%20Pronouncements) This note discloses the company's recent adoption of accounting standard updates, including FASB ASU 2023-09 and ASU 2024-01, and assesses their impact on the financial statements - FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," in December 2023, requiring public business entities to disclose specific categories of tax rate reconciliation information and more detailed information for reconciliation items meeting quantitative thresholds; this update is effective for fiscal years beginning after December 15, 2024, and is not expected to have a material impact on the financial statements other than increased disclosures[31](index=31&type=chunk) - FASB issued ASU 2024-01, "Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards," in March 2024, which clarifies the application of scope guidance for profits interest awards under Topic 718; the company adopted ASU 2024-01 on January 1, 2025, with no material impact on its financial statements[32](index=32&type=chunk)[33](index=33&type=chunk) [Note 3 Investment Securities](index=14&type=section&id=Note%203%20Investment%20Securities) This note details the company's investment securities portfolio, including the composition, fair value, unrealized gains/losses, and purchase and repayment activities for available-for-sale (AFS) and held-to-maturity (HTM) securities Investment Securities Portfolio (As of June 30, 2025, and December 31, 2024) | Security Type (Thousand USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Available-for-sale securities | 631,947 | 527,547 | | Held-to-maturity securities | 717,232 | 533,108 | | **Total Investment Securities** | **1,349,179** | **1,060,655** | - As of June 30, 2025, available-for-sale securities had total unrealized losses of **$75.464 million** and total unrealized gains of **$2.946 million**, primarily driven by changes in interest rates[35](index=35&type=chunk) - As of June 30, 2025, held-to-maturity securities had total unrealized losses of **$67.022 million** and total unrealized gains of **$3.015 million**[42](index=42&type=chunk) - The company has no intent to sell these securities and believes a sale is not required before the recovery of amortized cost[37](index=37&type=chunk)[43](index=43&type=chunk) [Note 4 Non-marketable Securities](index=19&type=section&id=Note%204%20Non-marketable%20Securities) This note provides detailed information on non-marketable securities, including Federal Reserve Bank stock, Federal Home Loan Bank stock, convertible preferred stock, and equity method investments, along with their carrying values and changes Non-marketable Securities Carrying Balances (As of June 30, 2025, and December 31, 2024) | Security Type (Thousand USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Federal Reserve Bank stock | 24,062 | 24,062 | | Federal Home Loan Bank stock | 8,350 | 3,922 | | Convertible preferred stock | 20,508 | 20,508 | | Equity method investments | 28,204 | 27,970 | | **Total** | **81,124** | **76,462** | - For the six months ended June 30, 2025, total purchases of non-marketable securities were **$37.009 million**, and total proceeds from redemptions and sales were **$32.429 million**, primarily related to FHLB stock changes[47](index=47&type=chunk) - In the same period of 2024, the company recorded a **$3.9 million** impairment on venture capital-related convertible preferred stock and realized **$0.1 million** in gains from sales[49](index=49&type=chunk) [Note 5 Loans](index=21&type=section&id=Note%205%20Loans) This note details the composition of the company's loan portfolio, including information on delinquent and non-accrual loans, the internal risk rating system, and troubled debt modifications (TDMs) Loan Portfolio Composition (As of June 30, 2025, and December 31, 2024) | Loan Type | June 30, 2025 (Thousand USD) | % of Total Loans | December 31, 2024 (Thousand USD) | % of Total Loans | | :--- | :--- | :--- | :--- | :--- | | Commercial loans | 4,541,780 | 60.6% | 4,670,430 | 60.2% | | Non-owner occupied commercial real estate loans | 1,720,620 | 23.0% | 1,812,338 | 23.4% | | Residential real estate loans | 1,212,008 | 16.2% | 1,253,838 | 16.2% | | Consumer loans | 12,510 | 0.2% | 14,537 | 0.2% | | **Total** | **7,486,918** | **100.0%** | **7,751,143** | **100.0%** | Delinquent and Non-accrual Loans (As of June 30, 2025, and December 31, 2024) | Loan Status (Thousand USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 30-89 days past due and still accruing | 13,923 | 23,164 | | 90 days or more past due and still accruing | 7,315 | 14,940 | | Non-accrual loans | 33,336 | 35,994 | | **Total Delinquent and Non-accrual Loans** | **54,574** | **74,098** | - For the six months ended June 30, 2025, troubled debt modifications (TDMs) made by the company to borrowers primarily included extensions of commercial loans (**$1.488 million**) and payment deferrals (**$11.657 million**)[65](index=65&type=chunk)[66](index=66&type=chunk) [Note 6 Allowance for Credit Losses](index=31&type=section&id=Note%206%20Allowance%20for%20Credit%20Losses) This note provides detailed changes in the allowance for credit losses (ACL), including beginning balances, charge-offs, recoveries, and provision expenses, and explains the primary reasons for the ACL decrease Allowance for Credit Losses Activity (For the three and six months ended June 30, 2025) | Metric (Thousand USD) | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :--- | :--- | :--- | | Beginning balance | 90,192 | 94,455 | | Charge-offs | (1,158) | (16,409) | | Recoveries | 170 | 308 | | Provision for (release of) credit losses | (311) | 10,539 | | **Ending balance** | **88,893** | **88,893** | - As of June 30, 2025, the total allowance for credit losses was **$88.893 million**, a decrease from **$94.455 million** as of December 31, 2024, primarily due to the disposition of problem loans and changes in CECL model macroeconomic forecasts[70](index=70&type=chunk) - For the six months ended June 30, 2025, net charge-offs were **$16.101 million**, compared to **$4.196 million** in the same period of 2024, mainly due to an **$8.9 million** charge-off in Q1 2025 related to alleged fraudulent activity[70](index=70&type=chunk) [Note 7 Goodwill and Intangible Assets](index=33&type=section&id=Note%207%20Goodwill%20and%20Intangible%20Assets) This note provides information on goodwill, other intangible assets (core deposit, customer relationships, acquired technology), their amortization, and changes and fair value information for mortgage servicing rights (MSRs) and SBA servicing assets - As of June 30, 2025, the company's goodwill was **$306.043 million**, with no impairment recorded[72](index=72&type=chunk) Other Intangible Assets, Net (As of June 30, 2025, and December 31, 2024) | Intangible Asset Type (Thousand USD) | June 30, 2025 Net | December 31, 2024 Net | | :--- | :--- | :--- | | Core deposit intangible assets | 33,489 | 36,149 | | Customer relationship intangible assets | 11,942 | 12,976 | | Acquired technology intangible assets | 1,380 | 1,610 | | **Total** | **46,811** | **50,735** | - As of June 30, 2025, for the six months ended, the ending balance of mortgage servicing rights (MSRs) was **$2.893 million**, with a fair value of **$4.365 million**, a decrease from the same period in 2024[76](index=76&type=chunk) - As of June 30, 2025, for the six months ended, the ending balance of SBA servicing assets was **$2.792 million**, with a fair value of **$2.792 million**, and an impairment of **$0.068 million** was recorded[82](index=82&type=chunk) [Note 8 Borrowings](index=37&type=section&id=Note%208%20Borrowings) This note details the company's borrowing composition, including securities repurchase agreements, Federal Home Loan Bank (FHLB) borrowings, and long-term debt, providing information on balances, collateral, and interest expense Borrowing Balances (As of June 30, 2025, and December 31, 2024) | Borrowing Type (Thousand USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Securities repurchase agreements | 18,513 | 18,895 | | Federal Home Loan Bank borrowings | 185,000 | 50,000 | | Long-term debt, net | 54,385 | 54,511 | | **Total** | **257,898** | **123,406** | - As of June 30, 2025, FHLB borrowings increased to **$185 million** from **$50 million** as of December 31, 2024, with the company having a total FHLB credit line of **$1.5 billion** available[86](index=86&type=chunk) - The company holds a **$40 million** subordinated note purchase agreement with a net balance of **$39.9 million** as of June 30, 2025, bearing interest at **3.00%** until November 15, 2026, after which it resets to three-month SOFR plus **203 basis points**[87](index=87&type=chunk)[88](index=88&type=chunk) - The company also assumed three subordinated notes totaling **$15 million**, with a net balance of **$14.8 million** as of June 30, 2025, bearing interest at **3.75%** until June 15, 2026, after which it resets to three-month SOFR plus **306 basis points**[91](index=91&type=chunk)[92](index=92&type=chunk) [Note 9 Regulatory Capital](index=39&type=section&id=Note%209%20Regulatory%20Capital) This note discloses the regulatory capital adequacy ratios of the company and its bank subsidiaries under the Basel III framework, confirming their compliance with "well-capitalized" institution requirements - As of June 30, 2025, and December 31, 2024, the company and its banks met all capital requirements, including the **2.5%** capital conservation buffer[95](index=95&type=chunk) Regulatory Capital Ratios (As of June 30, 2025, and December 31, 2024) | Capital Ratio | Actual Ratio June 30, 2025 | Actual Ratio December 31, 2024 | Well-Capitalized Institution Requirement | | :--- | :--- | :--- | :--- | | Tier 1 Leverage Ratio (Consolidated) | 11.2% | 10.7% | 4.0% | | Common Equity Tier 1 Risk-Based Capital Ratio (Consolidated) | 14.2% | 13.2% | 7.0% | | Tier 1 Risk-Based Capital Ratio (Consolidated) | 14.2% | 13.2% | 8.5% | | Total Risk-Based Capital Ratio (Consolidated) | 16.1% | 15.1% | 10.5% | - The regulatory capital ratios for the company and its banks exceeded the levels set for "well-capitalized" institutions[95](index=95&type=chunk) [Note 10 Revenue from Contracts with Clients](index=41&type=section&id=Note%2010%20Revenue%20from%20Contracts%20with%20Clients) This note explains the company's policy for recognizing revenue from contracts with clients under FASB ASC Topic 606 and details the sources and recognition methods for non-interest income such as service charges, bank card fees, and Cambr platform fees - Revenue is recognized when obligations under contract terms are satisfied, primarily including service charges, bank card fees, and Cambr platform fees[96](index=96&type=chunk) - The Cambr platform earns a percentage-based fee on deposit balances by providing a deposit acquisition and processing platform to third-party embedded finance companies[101](index=101&type=chunk) Non-interest Income (For the three and six months ended June 30, 2025, and 2024) | Revenue Type (Thousand USD) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Service charges and other account-related fees | 4,949 | 5,178 | 10,181 | 10,461 | | Bank card fees | 4,732 | 4,882 | 8,926 | 9,460 | | Other non-interest income | 1,435 | 1,627 | 2,831 | 2,774 | | **Total (within Topic 606 scope)** | **11,116** | **11,687** | **21,938** | **22,695** | [Note 11 Stock-based Compensation and Benefits](index=42&type=section&id=Note%2011%20Stock-based%20Compensation%20and%20Benefits) This note details the company's stock-based compensation plans, including activities, expenses, and unrecognized compensation costs for stock options, restricted stock awards, performance share units (PSUs), and the employee stock purchase plan (ESPP) - As of June 30, 2025, the company had **555,656 unexercised stock options** with a weighted-average exercise price of **$32.95**[106](index=106&type=chunk) - As of June 30, 2025, unrecognized compensation costs for unvested restricted stock awards and performance share units were **$7.9 million** and **$4.8 million**, respectively, expected to be recognized over approximately **2.2 years**[112](index=112&type=chunk) Restricted Stock and Performance Share Unit Activity (For the six months ended June 30, 2025) | Metric | Restricted Stock Shares | Performance Share Units | | :--- | :--- | :--- | | Unvested as of December 31, 2024 | 292,014 | 198,264 | | Granted | 161,251 | 74,628 | | Vested | (103,216) | (51,658) | | Forfeited | (22,393) | (5,767) | | **Unvested as of June 30, 2025** | **327,656** | **219,190** | [Note 12 Common Stock](index=44&type=section&id=Note%2012%20Common%20Stock) This note provides information on the number of outstanding Class A common shares and details of the share repurchase program Class A Common Stock Outstanding (As of June 30, 2025, and December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Class A Common Stock Outstanding | 38,045,622 | 38,054,482 | | Restricted Class A Common Stock Issued but Unvested | 327,656 | 292,014 | - The company's Board of Directors authorized a share repurchase program for up to **$50 million** on May 9, 2023; as of June 30, 2025, **$45.8 million** remained authorized under this plan[116](index=116&type=chunk)[117](index=117&type=chunk) - In the second quarter of 2025, the company repurchased **119,300 shares** of common stock totaling **$4.2 million** at a weighted-average price of **$35.50 per share**[116](index=116&type=chunk) [Note 13 Earnings Per Share](index=46&type=section&id=Note%2013%20Earnings%20Per%20Share) This note explains the company's method for calculating basic and diluted earnings per share using the two-class method and provides relevant calculation data Earnings Per Share Calculation (For the three and six months ended June 30, 2025, and 2024) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Income attributable to common shareholders (Thousand USD) | 33,733 | 26,046 | 57,767 | 57,372 | | Basic earnings per share | 0.89 | 0.68 | 1.52 | 1.51 | | Diluted earnings per share | 0.88 | 0.68 | 1.51 | 1.50 | | Basic weighted-average common shares outstanding | 38,075,896 | 38,210,869 | 38,072,196 | 38,121,114 | | Diluted weighted-average common shares outstanding | 38,151,810 | 38,372,777 | 38,186,660 | 38,299,435 | - For the three months ended June 30, 2025, basic earnings per share was **$0.89** and diluted earnings per share was **$0.88**, both higher than **$0.68** in the same period of 2024[120](index=120&type=chunk) - Certain stock options and unvested restricted stock awards were excluded from diluted EPS calculations due to their anti-dilutive effect[119](index=119&type=chunk)[120](index=120&type=chunk) [Note 14 Derivatives](index=46&type=section&id=Note%2014%20Derivatives) This note explains the company's objectives for using derivative financial instruments for risk management, including fair value hedges, cash flow hedges, and non-designated hedges, and discloses the fair value of derivatives and their impact on financial statements - The company uses interest rate derivatives, primarily interest rate floors and caps, to stabilize interest income and manage interest rate volatility risk[124](index=124&type=chunk) Fair Value of Derivative Financial Instruments (As of June 30, 2025, and December 31, 2024) | Derivative Type (Thousand USD) | June 30, 2025 Asset Fair Value | December 31, 2024 Asset Fair Value | June 30, 2025 Liability Fair Value | December 31, 2024 Liability Fair Value | | :--- | :--- | :--- | :--- | :--- | | Interest rate products designated as hedging instruments | 23,341 | 31,864 | 2,264 | 1,296 | | Interest rate products not designated as hedging instruments | 8,710 | 7,773 | 8,718 | 7,780 | | Interest rate lock commitments | 572 | 282 | — | — | | Forward contracts | — | 104 | 248 | 10 | | **Total** | **32,623** | **39,923** | **11,230** | **9,086** | - As of June 30, 2025, the company had **$200 million** in notional amount of cash flow hedges, with **$0.7 million** expected to be reclassified from AOCI as a reduction in interest income over the next 12 months[125](index=125&type=chunk) - As of June 30, 2025, the company had **$801.8 million** in notional amount of non-designated interest rate swap transactions aimed at minimizing net risk exposure[128](index=128&type=chunk) [Note 15 Commitments and Contingencies](index=51&type=section&id=Note%2015%20Commitments%20and%20Contingencies) This note discloses off-balance sheet commitments undertaken by the company in the normal course of business, including loan commitments, lines of credit, and standby letters of credit, as well as contingent liabilities related to mortgage loan repurchases Total Unfunded Commitments (As of June 30, 2025, and December 31, 2024) | Commitment Type (Thousand USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Loan commitments | 570,397 | 663,859 | | Unfunded commitments for lines of credit | 714,931 | 752,861 | | Commercial and standby letters of credit | 12,319 | 10,760 | | **Total Unfunded Commitments** | **1,297,647** | **1,427,480** | - As of June 30, 2025, total unfunded commitments were **$1.298 billion**, a decrease from **$1.427 billion** as of December 31, 2024[140](index=140&type=chunk) Mortgage Loan Repurchase Reserve Activity (For the three and six months ended June 30, 2025) | Metric (Thousand USD) | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :--- | :--- | :--- | | Beginning balance | 865 | 1,000 | | Net provision (release) | (120) | (210) | | Charge-offs | (21) | (66) | | **Ending balance** | **724** | **724** | [Note 16 Fair Value Measurements](index=53&type=section&id=Note%2016%20Fair%20Value%20Measurements) This note defines fair value measurement and categorizes financial instruments into three levels (Level 1, Level 2, Level 3) based on the observability of inputs, detailing valuation methods for assets measured on a recurring and non-recurring basis - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date[147](index=147&type=chunk) - Level 1: Based on unadjusted quoted prices for identical assets or liabilities in active markets[150](index=150&type=chunk) - Level 2: Based on quoted prices for similar assets or liabilities in inactive markets, or observable inputs other than quoted prices (e.g., interest rates, yield curves)[150](index=150&type=chunk) - Level 3: Based on significant unobservable inputs, at least one of which is not observable in the market[150](index=150&type=chunk) Assets Measured at Fair Value on a Recurring Basis (As of June 30, 2025) | Asset Type (Thousand USD) | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Investment securities available-for-sale | 73,698 | 557,524 | — | 631,222 | | Loans held for sale | — | 20,784 | — | 20,784 | | Interest rate swap derivatives | — | 32,051 | — | 32,051 | | Mortgage banking derivatives | — | — | 572 | 572 | | **Total Assets** | **73,698** | **610,359** | **572** | **684,629** | - Non-recurring fair value measurements are primarily applied to individually evaluated loans (based on collateral fair value), mortgage servicing rights (MSRs), and SBA servicing assets for impairment testing[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) [Note 17 Fair Value of Financial Instruments](index=60&type=section&id=Note%2017%20Fair%20Value%20of%20Financial%20Instruments) This note provides the carrying values and estimated fair values of the company's financial instruments, categorized by fair value measurement hierarchy Carrying Value and Fair Value of Financial Instruments (As of June 30, 2025, and December 31, 2024) | Financial Instrument Type | Measurement Level | June 30, 2025 Carrying Value (Thousand USD) | June 30, 2025 Estimated Fair Value (Thousand USD) | December 31, 2024 Carrying Value (Thousand USD) | December 31, 2024 Estimated Fair Value (Thousand USD) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Assets:** | | | | | | | Cash and cash equivalents | Level 1 | 296,483 | 296,483 | 127,848 | 127,848 | | Loans receivable | Level 3 | 7,486,918 | 7,342,959 | 7,751,143 | 7,535,875 | | Interest rate swap derivatives | Level 2 | 32,051 | 32,051 | 39,637 | 39,637 | | **Liabilities:** | | | | | | | Deposit transaction accounts | Level 2 | 7,195,223 | 7,195,223 | 7,217,857 | 7,217,857 | | Time deposits | Level 2 | 1,074,261 | 1,074,402 | 1,020,036 | 1,021,763 | | Long-term debt | Level 2 | 54,719 | 51,640 | 55,000 | 49,168 | - As of June 30, 2025, loans receivable had a carrying value of **$7.487 billion** and an estimated fair value of **$7.343 billion**, indicating an unrealized loss[165](index=165&type=chunk) - The carrying value and estimated fair value of time deposits were very close in both reporting periods[165](index=165&type=chunk) [Note 18 Business Segment](index=61&type=section&id=Note%2018%20Business%20Segment) This note states that the company consolidates its operations into a single reportable segment and uses consolidated net income and its primary components as key metrics for evaluating this segment - The company consolidates its operations into a single reportable segment[166](index=166&type=chunk) - Key metrics for evaluating this segment include consolidated net income and its primary components[166](index=166&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's detailed discussion and analysis of the company's financial condition and operating performance, covering an overview, operating highlights, key challenges, critical accounting policies, financial condition, results of operations, liquidity and capital resources, and asset/liability management and interest rate risk [Overview](index=62&type=section&id=Overview) This section provides a high-level summary of the company's strategy, market position, and financial objectives, including digital solutions for SMEs - The company focuses on providing alternative digital financial services to small and medium-sized businesses through its 2UniFi financial ecosystem to reduce banking costs[169](index=169&type=chunk) - As of June 30, 2025, the company reported **$10 billion** in total assets, **$7.5 billion** in loans, **$8.3 billion** in deposits, **$1.4 billion** in equity, and **$1 billion** in assets under management for its trust and wealth management business[169](index=169&type=chunk) [Operating Highlights](index=62&type=section&id=Operating%20Highlights) This section summarizes key operational achievements in profitability, strategic execution, loan portfolio, credit quality, customer deposits, liquidity, and capital, demonstrating net income growth, efficiency improvements, and continued investment in digital solutions Profitability and Returns (For the six months ended June 30, 2025, and 2024) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change (Million USD) | | :--- | :--- | :--- | :--- | | Net income | $58.3 million | $57.5 million | +0.8 | | Diluted earnings per share | $1.51 | $1.50 | +0.01 | | Return on average tangible assets | 1.29% | 1.28% | +0.01% | | Return on average tangible common equity | 12.44% | 13.77% | -1.33% | - The company continues to invest in digital solutions through its 2UniFi financial ecosystem, aiming to increase financial services accessibility and reduce banking costs for small and medium-sized businesses, with related non-interest expenses of **$8 million** for the six months ended June 30, 2025[172](index=172&type=chunk) - As of June 30, 2025, total loans were **$7.5 billion**, a decrease from **$7.8 billion** as of December 31, 2024; new loan originations totaled **$578.4 million** with a weighted-average new loan origination rate of **7.4%**[174](index=174&type=chunk) - As of June 30, 2025, the allowance for credit losses was **1.19%** of total loans, non-performing loans were **0.45%** of total loans, and net charge-offs were **$16.1 million**[175](index=175&type=chunk) - For the six months ended June 30, 2025, the average cost of deposits was **2.04%**, a decrease from **2.23%** in the same period of 2024, primarily due to deposit pricing strategies following Federal Reserve rate cuts[176](index=176&type=chunk) - As of June 30, 2025, total on-balance sheet liquidity was **$895.8 million**, including **$296.5 million** in cash and **$599.3 million** in unpledged investments[178](index=178&type=chunk) - As of June 30, 2025, the consolidated Tier 1 leverage ratio was **11.18%**, and both Common Equity Tier 1 and Tier 1 risk-based capital ratios were **14.17%**, significantly exceeding federal bank regulatory "well-capitalized" thresholds[182](index=182&type=chunk) [Key Challenges](index=66&type=section&id=Key%20Challenges) This section discusses macroeconomic pressures and business strategy implementation challenges faced by the company, including the interest rate environment, deposit competition, regulatory changes, and potential risks in digital growth strategies - Macroeconomic pressures, including tariff policy uncertainties, a persistently high interest rate environment, and customer hesitancy, contribute to volatility and uncertainty in the banking industry[183](index=183&type=chunk) - The banking industry faces tightening liquidity and intense deposit competition[183](index=183&type=chunk) - Challenges in implementing business strategies include achieving asset and deposit growth in a competitive and inflationary environment, adapting to changes in the regulatory landscape, and identifying and completing acquisition opportunities[184](index=184&type=chunk) - The digital growth strategy (2UniFi) involves investments and partnerships with third-party fintech companies, which may introduce risks related to fraud, cybersecurity, operations, legal, and compliance[184](index=184&type=chunk) [Performance Overview](index=69&type=section&id=Performance%20Overview) This section outlines the company's financial performance through key performance indicators, including profitability, asset quality, and regulatory capital ratios, and provides explanations and reconciliations for non-GAAP financial measures Key Performance Indicators (For the three and six months ended June 30, 2025, and 2024) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Return on average assets | 1.38% | 1.06% | 1.19% | 1.17% | | Return on average tangible assets (Non-GAAP) | 1.49% | 1.17% | 1.29% | 1.28% | | Return on average equity | 10.15% | 8.46% | 8.80% | 9.37% | | Return on average tangible common equity (Non-GAAP) | 14.18% | 12.44% | 12.44% | 13.77% | | Loans to deposits ratio (period-end) | 90.54% | 92.18% | 90.54% | 92.18% | | Net interest margin (FTE, Non-GAAP) | 3.95% | 3.76% | 3.94% | 3.77% | | Cost of deposits | 2.05% | 2.31% | 2.04% | 2.23% | | Efficiency ratio (Non-GAAP) | 57.32% | 61.52% | 57.53% | 60.14% | | Non-performing loans to total loans | 0.45% | 0.34% | 0.45% | 0.34% | | Allowance for credit losses to total loans | 1.19% | 1.25% | 1.19% | 1.25% | | Net charge-offs to average loans | 0.05% | 0.22% | 0.43% | 0.11% | - The company uses non-GAAP financial measures (such as "tangible assets," "return on average tangible assets," "tangible common equity," etc.) to evaluate performance, believing these metrics provide meaningful supplemental information by excluding certain expenses or assets, or by presenting them on a fully tax-equivalent (FTE) basis[191](index=191&type=chunk) [About Non-GAAP Financial Measures](index=70&type=section&id=About%20Non-GAAP%20Financial%20Measures) This section explains the company's rationale for using non-GAAP financial measures, emphasizing their supplementary nature rather than as GAAP alternatives, and provides reconciliation tables for key non-GAAP metrics to their GAAP counterparts - The company uses non-GAAP financial measures for financial and operational decision-making and to evaluate period-over-period comparisons by excluding expenses or assets not representative of core business operations, or by presenting them on a fully tax-equivalent (FTE) basis[191](index=191&type=chunk) - Non-GAAP financial measures should not be considered a substitute for GAAP financial information, and the company mitigates differences by providing equivalent GAAP measures and reconciliation tables[192](index=192&type=chunk) Tangible Common Equity Reconciliation (As of June 30, 2025, and December 31, 2024) | Metric (Thousand USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total shareholders' equity | 1,352,496 | 1,305,075 | | Less: Goodwill and other intangible assets, net | (352,854) | (356,777) | | Add: Deferred tax liability related to goodwill | 13,741 | 13,535 | | **Tangible Common Equity (Non-GAAP)** | **1,013,383** | **961,833** | FTE Net Interest Income Reconciliation (For the six months ended June 30, 2025) | Metric (Thousand USD) | Six months ended June 30, 2025 | | :--- | :--- | | Net interest income | 174,100 | | Add: Tax-equivalent adjustment impact | 3,822 | | **Net Interest Income FTE (Non-GAAP)** | **177,922** | [Application of Critical Accounting Policies and Significant Estimates](index=74&type=section&id=Application%20of%20Critical%20Accounting%20Policies%20and%20Significant%20Estimates) This section discusses the critical accounting policies and significant estimates applied by the company in preparing its financial statements, particularly the determination of the allowance for credit losses (ACL), emphasizing its high degree of judgment and complexity - The determination of the allowance for credit losses (ACL) is management's estimate of inherent lifetime credit losses within the loan portfolio, involving a high degree of judgment and complexity[199](index=199&type=chunk)[200](index=200&type=chunk) - The company utilizes a DCF model developed with third-party software tools to establish expected lifetime credit losses, incorporating forecasts of national macroeconomic factors and considering weighted alternative forecast scenarios[200](index=200&type=chunk) - ACL calculations also include subjective adjustments based on qualitative risk factors such as asset quality, loss trends, loan administration, portfolio growth, and loan review results[200](index=200&type=chunk) [Future Accounting Pronouncements](index=74&type=section&id=Future%20Accounting%20Pronouncements) This section discloses recent future accounting standard updates issued by FASB, including ASU 2025-05 and ASU 2024-03, and assesses their potential impact on the company's financial statements - FASB issued ASU 2025-05, "Financial Instruments—Credit Losses (Topic 326)," in July 2025, allowing entities to elect a practical expedient to assume current conditions as of the balance sheet date remain unchanged over the asset's remaining life; this update is effective for fiscal years and interim periods beginning after December 15, 2025, and the company is currently evaluating its impact[201](index=201&type=chunk) - FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Topic 220)," in November 2024, requiring public business entities to disclose specific components of certain expense categories (e.g., employee compensation, depreciation, intangible asset amortization); this update is effective for fiscal years beginning after December 15, 2026, and is not expected to have a material impact on the financial statements other than increased disclosures[202](index=202&type=chunk) [Financial Condition](index=74&type=section&id=Financial%20Condition) This section provides a detailed analysis of the company's financial condition, including changes and composition of key components such as total assets, investment securities, non-marketable securities, loan portfolio, asset quality, deposits, long-term debt, other borrowings, and regulatory capital [Total Assets](index=74&type=section&id=Total%20Assets) As of June 30, 2025, the company's total assets increased to **$10 billion**, a **1.9% increase** from December 31, 2024, driven primarily by increases in cash and cash equivalents and investment securities - As of June 30, 2025, total assets were **$9.998729 billion**, an increase of **$191.036 million** from **$9.807693 billion** as of December 31, 2024[203](index=203&type=chunk) - Cash and cash equivalents increased by **$168.635 million**, and investment securities increased by **$288.5 million**[203](index=203&type=chunk) - Total loans decreased from **$7.751143 billion** to **$7.486918 billion**, and the allowance for credit losses decreased from **$94.455 million** to **$88.893 million**[203](index=203&type=chunk) [Investment Securities](index=76&type=section&id=Investment%20Securities) This section provides a detailed analysis of the company's available-for-sale (AFS) and held-to-maturity (HTM) investment securities portfolios, including their composition, purchases, repayments, unrealized gains/losses, and assessment of credit risk Available-for-Sale Investment Securities (As of June 30, 2025, and December 31, 2024) | Security Type | June 30, 2025 Fair Value (Thousand USD) | December 31, 2024 Fair Value (Thousand USD) | | :--- | :--- | :--- | | U.S. Treasury securities | 73,698 | 24,874 | | Mortgage-backed securities | 555,534 | 499,983 | | Corporate debt securities | 1,990 | 1,962 | | **Total** | **631,947** | **527,547** | - As of June 30, 2025, total available-for-sale investment securities were **$631.9 million**, an increase from **$527.5 million** as of December 31, 2024[204](index=204&type=chunk) - As of June 30, 2025, the available-for-sale investment portfolio included **$75.5 million** in unrealized losses and **$2.9 million** in unrealized gains, primarily driven by interest rate changes[209](index=209&type=chunk) Held-to-Maturity Investment Securities (As of June 30, 2025, and December 31, 2024) | Security Type | June 30, 2025 Amortized Cost (Thousand USD) | December 31, 2024 Amortized Cost (Thousand USD) | | :--- | :--- | :--- | | U.S. Treasury securities | 24,781 | 49,639 | | Mortgage-backed securities | 692,451 | 483,469 | | **Total** | **717,232** | **533,108** | - As of June 30, 2025, total held-to-maturity investment securities were **$717.2 million**, a **34.5% increase** from **$533.1 million** as of December 31, 2024[212](index=212&type=chunk) - As of June 30, 2025, the held-to-maturity investment portfolio included **$67.0 million** in unrealized losses and **$3.0 million** in unrealized gains; management believes the likelihood of default is extremely low and has no intent to sell these securities[215](index=215&type=chunk)[216](index=216&type=chunk) [Non-marketable Securities](index=78&type=section&id=Non-marketable%20Securities_MD%26A) This section provides detailed information on non-marketable securities, including Federal Reserve Bank stock, Federal Home Loan Bank stock, convertible preferred stock, and equity method investments, along with their carrying values and changes Non-marketable Securities Carrying Balances (As of June 30, 2025, and December 31, 2024) | Security Type (Thousand USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Federal Reserve Bank stock | 24,062 | 24,062 | | Federal Home Loan Bank stock | 8,350 | 3,922 | | Convertible preferred stock | 20,508 | 20,508 | | Equity method investments | 28,204 | 27,970 | | **Total** | **81,124** | **76,462** | - For the six months ended June 30, 2025, total purchases of non-marketable securities were **$37.0 million**, and total proceeds from redemptions and sales were **$32.4 million**, primarily related to FHLB stock changes[218](index=218&type=chunk) - In the same period of 2024, the company recorded a **$3.9 million** impairment on venture capital-related convertible preferred stock and realized **$0.1 million** in gains from sales[221](index=221&type=chunk) [Loans Overview](index=81&type=section&id=Loans%20Overview) This section provides a detailed overview of the company's loan portfolio composition, including classifications by loan type, source (originated or acquired), industry diversification, and contractual maturity, as well as new loan originations Loan Portfolio Composition (As of June 30, 2025, and December 31, 2024) | Loan Source/Type | June 30, 2025 (Thousand USD) | % of Total Loans | December 31, 2024 (Thousand USD) | % of Total Loans | | :--- | :--- | :--- | :--- | :--- | | **Originated Loans:** | | | | | | Commercial loans | 4,220,532 | 56.4% | 4,303,248 | 55.5% | | Non-owner occupied commercial real estate | 1,118,730 | 14.9% | 1,123,718 | 14.5% | | Residential real estate | 915,213 | 12.2% | 922,328 | 11.9% | | Consumer loans | 12,050 | 0.2% | 12,773 | 0.2% | | **Total Originated Loans** | **6,266,525** | **83.7%** | **6,362,067** | **82.1%** | | **Acquired Loans:** | | | | | | Commercial loans | 321,248 | 4.3% | 367,182 | 4.7% | | Non-owner occupied commercial real estate | 601,890 | 8.0% | 688,620 | 8.9% | | Residential real estate | 296,795 | 4.0% | 331,510 | 4.3% | | Consumer loans | 460 | 0.0% | 1,764 | 0.0% | | **Total Acquired Loans** | **1,220,393** | **16.3%** | **1,389,076** | **17.9%** | | **Total Loans** | **7,486,918** | **100.0%** | **7,751,143** | **100.0%** | - As of June 30, 2025, total loans were **$7.487 billion**, a **3.4% decrease** from **$7.751 billion** as of December 31, 2024[225](index=225&type=chunk) - The company's loan portfolio is highly diversified, with no single industry sector accounting for more than **15.0%** of total loans[226](index=226&type=chunk) New Loan Originations (As of Q2 2025) | Loan Type (Thousand USD) | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Commercial loans | 219,604 | 160,200 | 329,421 | 219,110 | 384,350 | | Non-owner occupied commercial real estate | 56,770 | 65,254 | 119,132 | 91,809 | 83,184 | | Residential real estate | 44,470 | 29,300 | 30,750 | 47,322 | 36,124 | | Consumer loans | 1,823 | 970 | 726 | 1,010 | 1,547 | | **Total** | **322,667** | **255,724** | **480,029** | **359,251** | **505,205** | [Asset Quality](index=85&type=section&id=Asset%20Quality) This section assesses the asset quality of the company's loan portfolio, including non-performing assets, delinquent loans, changes and allocation of the allowance for credit losses (ACL), and net charge-offs Non-performing Assets and Delinquent Loans (As of June 30, 2025, and December 31, 2024) | Metric (Thousand USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-accrual loans (excluding modified loans) | 27,336 | 32,556 | | Non-accrual modified loans | 6,000 | 3,438 | | **Non-performing Loans** | **33,336** | **35,994** | | Other real estate owned (OREO) | 291 | 662 | | **Total Non-performing Assets** | **33,627** | **36,656** | | 30-89 days past due and still accruing loans | 13,923 | 23,164 | | 90 days or more past due and still accruing loans | 7,315 | 14,940 | | **Total Delinquent and Non-accrual Loans** | **54,574** | **74,098** | | Non-performing loans to total loans | 0.45% | 0.46% | | ACL to non-performing loans | 266.66% | 262.42% | - For the six months ended June 30, 2025, total non-performing loans decreased by **$2.7 million (7.4%)**[240](index=240&type=chunk) - As of June 30, 2025, the total allowance for credit losses was **$88.9 million**, a decrease from **$94.5 million** as of December 31, 2024, primarily due to the disposition of problem loans and changes in CECL model macroeconomic forecasts[244](index=244&type=chunk) - For the six months ended June 30, 2025, net charge-offs were **$16.1 million**, with an annualized net charge-off to average total loans of **0.43%**, primarily impacted by an **$8.9 million** charge-off from a fraudulent loan[245](index=245&type=chunk) [Deposits](index=92&type=section&id=Deposits) This section analyzes the composition of the company's deposits, including non-interest-bearing demand, interest-bearing demand, savings and money market deposits, and time deposits, and provides information on deposit costs and FDIC insurance coverage Deposit Composition (As of June 30, 2025, and December 31, 2024) | Deposit Type (Thousand USD) | June 30, 2025 | % of Total Deposits | December 31, 2024 | % of Total Deposits | | :--- | :--- | :--- | :--- | :--- | | Non-interest-bearing demand deposits | 2,168,574 | 26.2% | 2,213,685 | 26.9% | | Interest-bearing demand deposits | 1,240,698 | 15.0% | 1,411,860 | 17.1% | | Savings and money market deposits | 3,785,951 | 45.8% | 3,592,312 | 43.6% | | **Total Transaction Deposits** | **7,195,223** | **87.0%** | **7,217,857** | **87.6%** | | Time deposits | 1,074,261 | 13.0% | 1,020,036 | 12.4% | | **Total Deposits** | **8,269,484** | **100.0%** | **8,237,893** | **100.0%** | - As of June 30, 2025, total deposits increased to **$8.269 billion**, an increase of **$31.591 million (0.4%)** from December 31, 2024[252](index=252&type=chunk) - As of June 30, 2025, approximately **78%** of deposits were covered by FDIC insurance; the company also participates in the IntraFi Cash Service program, providing reciprocal FDIC insurance coverage[253](index=253&type=chunk)[254](index=254&type=chunk) Uninsured Time Deposits by Maturity (As of June 30, 2025) | Maturity Date | Amount (Thousand USD) | | :--- | :--- | | Three months or less | 30,087 | | Over 3 months to 6 months | 82,141 | | Over 6 months to 12 months | 81,479 | | Thereafter | 47,729 | | **Total Uninsured Time Deposits** | **241,436** | [Long-term Debt](index=94&type=section&id=Long-term%20Debt) This section details the company's subordinated note purchase agreements, including balances, interest rates, maturity dates, and redemption terms - The company holds a **$40 million** subordinated note purchase agreement with a net balance of **$39.9 million** as of June 30, 2025, maturing on November 15, 2031[255](index=255&type=chunk)[256](index=256&type=chunk) - This note bears interest at **3.00%** annually until November 15, 2026, after which it resets to three-month SOFR plus **203 basis points**[256](index=256&type=chunk) - The company also assumed three subordinated notes totaling **$15 million**, with a net balance of **$14.8 million** as of June 30, 2025, maturing on June 15, 2031[257](index=257&type=chunk)[258](index=258&type=chunk) - These three notes bear interest at **3.75%** annually until June 15, 2026, after which they reset to three-month SOFR plus **306 basis points**[258](index=258&type=chunk) [Other Borrowings](index=94&type=section&id=Other%20Borrowings) This section describes the company's other borrowing sources, including securities repurchase agreements and Federal Home Loan Bank (FHLB) borrowings, and provides related balances and collateral information - As of June 30, 2025, the company had **$18.5 million** in securities repurchase agreements and **$185 million** in FHLB borrowings[259](index=259&type=chunk) - The company has pledged **$2.4 billion** in loans as collateral to the FHLB, with **$1.5 billion** in FHLB credit available as of June 30, 2025[259](index=259&type=chunk) - For the six months ended June 30, 2025, interest expense on FHLB borrowings and other short-term borrowings was **$2.3 million**[259](index=259&type=chunk) [Regulatory Capital](index=96&type=section&id=Regulatory%20Capital_MD%26A) This section confirms that the company and its bank subsidiaries met all federal reserve board and FDIC regulatory capital adequacy requirements during the reporting period, exceeding the "well-capitalized" institution thresholds - As of June 30, 2025, and December 31, 2024, the company and its bank subsidiaries exceeded all regulatory capital ratio requirements, including the "well-capitalized" institution thresholds[260](index=260&type=chunk) [Results of Operations](index=96&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's operating performance, including net income, net interest income, provision for credit losses, non-interest income, non-interest expense, and income taxes, with period-over-period comparisons for each metric [Overview of Results of Operations](index=96&type=section&id=Overview%20of%20Results%20of%20Operations) This section provides an overview of the company's overall financial performance during the reporting period, including net income, diluted earnings per share, and key profitability metrics Overview of Results of Operations (For the three and six months ended June 30, 2025, and 2024) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (Thousand USD) | 34,022 | 26,135 | 58,253 | 57,526 | | Diluted earnings per share | $0.88 | $0.68 | $1.51 | $1.50 | | Return on average tangible assets | 1.49% | 1.17% | 1.29% | 1.28% | | Return on average tangible common equity | 14.18% | 12.44% | 12.44% | 13.77% | - For the six months ended June 30, 2025, pre-provision net revenue (PPNR) on an FTE basis increased by **$8.6 million (11.2%)** to **$85.4 million**[262](index=262&type=chunk) [Net Interest Income](index=96&type=section&id=Net%20Interest%20Income) This section analyzes the components of the company's net interest income, including average balances of interest-earning assets and interest-bearing liabilities, average interest rates, and changes in net interest spread and net interest margin Net Interest Income (FTE Basis, For the three months ended June 30, 2025, and 2024) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--- | :--- | :--- | | Net interest income FTE (Thousand USD) | 89,321 | 85,285 | | Net interest spread FTE | 3.06% | 2.75% | | Net interest margin FTE | 3.95% | 3.76% | | Average yield on interest-earning assets FTE | 5.88% | 5.92% | | Average cost of interest-bearing liabilities | 2.82% | 3.17% | - For the three months ended June 30, 2025, net interest income (FTE basis) increased by **$4 million** to **$89.3 million**, and the net interest margin (FTE basis) expanded by **19 basis points** to **3.95%**[269](index=269&type=chunk) Net Interest Income (FTE Basis, For the six months ended June 30, 2025, and 2024) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | Net interest income FTE (Thousand USD) | 177,922 | 171,007 | | Net interest spread FTE | 3.06% | 2.78% | | Net interest margin FTE | 3.94% | 3.77% | | Average yield on interest-earning assets FTE | 5.87% | 5.90% | | Average cost of interest-bearing liabilities | 2.81% | 3.12% | - For the six months ended June 30, 2025, net interest income (FTE basis) increased by **$6.9 million** to **$177.9 million**, and the net interest margin (FTE basis) expanded by **17 basis points** to **3.94%**[275](index=275&type=chunk) [Provision for Credit Losses](index=102&type=section&id=Provision%20for%20Credit%20Losses) This section discusses the company's provision for credit losses during the reporting period and explains its primary drivers - For the six months ended June 30, 2025, the company recorded a **$10.2 million** provision for credit losses on funded loans and unfunded loan commitments, primarily to cover a charge-off resulting from alleged fraudulent activity by a borrower[285](index=285&type=chunk) - As of June 30, 2025, the allowance for credit losses was **1.19%** of total loans, compared to **1.25%** in the same period of 2024[287](index=287&type=chunk) [Non-interest Income](index=104&type=section&id=Non-interest%20Income) This section details the components of non-interest income and their changes during the reporting period, explaining the primary drivers Non-interest Income Components (For the three and six months ended June 30, 2025, and 2024) | Revenue Type (Thousand USD) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Service charges | 4,127 | 4,295 | 8,245 | 8,686 | | Bank card fees | 4,732 | 4,882 | 8,926 | 9,460 | | Mortgage banking income | 2,547 | 3,296 | 5,862 | 5,951 | | Bank-owned life insurance income | 776 | 736 | 1,540 | 1,469 | | Other non-interest income | 4,884 | 820 | 7,869 | 6,157 | | **Total Non-interest Income** | **17,066** | **14,029** | **32,442** | **31,723** | - For the three months ended June 30, 2025, total non-interest income was **$17.1 million**, a **21.6% increase** year-over-year, primarily driven by a **$4.1 million** increase in other non-interest income, which included gains from the sale of bank center properties and the impact of venture capital impairment in the prior year[288](index=288&type=chunk) - For the six months ended June 30, 2025, non-interest income increased by **$0.7 million** to **$32.4 million**, primarily driven by a **$0.7 million** increase in gains from the sale of bank center properties and a **$0.4 million** increase in trust income[289](index=289&type=chunk) [Non-interest Expense](index=104&type=section&id=Non-interest%20Expense) This section details the components of non-interest expense and their changes during the reporting period, explaining the primary drivers Non-interest Expense Components (For the three and six months ended June 30, 2025, and 2024) | Expense Type (Thousand USD) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Salaries and benefits | 37,746 | 36,933 | 72,108 | 73,453 | | Occupancy and equipment | 9,436 | 10,120 | 20,273 | 20,061 | | Data processing | 4,452 | 4,117 | 8,853 | 8,183 | | FDIC deposit insurance | 990 | 1,431 | 2,316 | 2,776 | | **Total Non-interest Expense** | **62,931** | **63,075** | **124,948** | **125,909** | - For the three months ended June 30, 2025, total non-interest expense was **$62.9 million**, a **0.2% decrease** year-over-year, primarily due to disciplined expense management[290](index=290&type=chunk) - For the six months ended June 30, 2025, total non-interest expense was **$124.9 million**, a **$1 million decrease** year-over-year, primarily due to disciplined expense management and a payroll tax credit realized in Q1 2025[291](index=291&type=chunk) [Income Taxes](index=106&type=section&id=Income%20Taxes) This section reports the company's income tax expense and effective tax rate for the reporting period and mentions the potential impact of new tax legislation, the "One Big Beautiful Bill Act" Income Tax Expense (For the three and six mon

Group 1 - The conference call is for National Bank Holdings Corporation's Q2 2025 earnings, scheduled for July 23, 2025 [1] - Participants include company executives and research analysts from various firms [1] - The call will include prepared remarks followed by a question and answer session [1] Group 2 - The call will contain forward-looking statements regarding the company's strategy, loans, deposits, capital, net interest income, and other financial metrics [2] - Actual results may differ from the forward-looking statements due to various risks and uncertainties [2] - The company will reference certain non-GAAP measures, which are believed to provide useful information for investors [3]

Financial Data and Key Metrics Changes - The company reported earnings of $0.88 per diluted share with a return on tangible equity of 14.2% and a return on assets of 1.5% [4][6] - The net interest margin was strong at 3.95%, reflecting disciplined deposit and loan pricing [4][8] - Net income for the second quarter was $34 million, representing a 19.9% increase in fully taxable equivalent pre-provision net revenue compared to the same quarter last year [6][7] Business Line Data and Key Metrics Changes - Loan fundings amounted to $323 million during the quarter, with a decline in loan balances due to elevated loan paydowns and strategic portfolio reductions in higher-risk industries [5][8] - Noninterest income totaled $17.1 million, which was 11% higher than the first quarter and 22% higher than the second quarter of the previous year [11] - Noninterest expense increased to $62.9 million, but decreased by $1 million on a linked quarter basis when excluding payroll tax credits from the first quarter [12][11] Market Data and Key Metrics Changes - Average deposit balances declined by $58.8 million due to seasonal tax outflows, with a cost of deposits at 2.05% [10] - Nonperforming loans decreased to $33.3 million, with a nonperforming loan ratio of 45 basis points, which is below peer averages [10][11] - The company maintained a strong liquidity position with a tangible common equity ratio of 10.5% and a Tier one leverage ratio of 11.2% [13] Company Strategy and Development Direction - The company is focused on reducing exposure in higher-risk industries, particularly in trucking, agriculture, and commercial real estate [17][19] - The launch of the UNIFY platform is seen as a significant step towards creating a comprehensive ecosystem for small and medium-sized businesses [39][40] - The company aims to maintain pricing discipline and is not focused on aggressive growth strategies that compromise credit quality [15][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan pipelines for the second half of the year, projecting mid-single-digit loan growth [14][26] - The company is taking proactive measures to manage expenses in light of economic uncertainty, with a projected reduction in annual core bank personnel expenses by approximately $15 million [12][56] - Management emphasized the importance of maintaining strong credit metrics and a cautious approach to growth [22][72] Other Important Information - The company successfully launched the first release of the UNIFY app, with positive user feedback and plans for further marketing campaigns [5][39] - The company is not focused on reaching the $10 billion asset mark as a growth constraint, as it has been operating under similar regulatory conditions for years [23][24] Q&A Session Summary Question: Concerns about higher-risk trucking and commercial real estate loans - Management confirmed that they have taken action to clean up higher-risk loans and are monitoring other relationships closely [22][24] Question: Margin expansion opportunities - Management indicated that deposit growth, particularly in zero-cost deposits, would be crucial for margin improvement [29][30] Question: Feedback on the UNIFY launch and partnership - Management described the launch as successful, with positive user feedback and plans for future enhancements and marketing [36][39] Question: M&A environment and partner characteristics - Management reiterated their focus on cultural fit and strong growth markets for potential M&A opportunities [47][48] Question: Deposit decline and its relation to loan portfolio derisking - Management confirmed that the decline in deposits was tied to the movement of entire relationships as part of their derisking strategy [51][52] Question: Expense reduction details - Management explained that the expense reduction was a bank-wide effort, focusing on streamlining processes and eliminating positions [57][58]

Financial Data and Key Metrics Changes - The company reported earnings of $0.88 per diluted share with a return on tangible equity of 14.2% and a return on assets of 1.5% [4][6] - Net interest margin was strong at 3.95%, reflecting disciplined deposit and loan pricing [4][7] - Net income for the second quarter was $34 million, representing a 19.9% increase in fully taxable equivalent pre-provision net revenue compared to the same quarter last year [6][8] Business Line Data and Key Metrics Changes - Loan fundings amounted to $323 million during the quarter, with a decline in loan balances due to elevated loan paydowns and strategic portfolio reductions in higher-risk industries [5][14] - Noninterest income totaled $17.1 million, which is 22% higher than the second quarter of last year [11] - Noninterest expense increased to $62.9 million, but decreased by $1 million on a linked quarter basis when excluding payroll tax credits [12][13] Market Data and Key Metrics Changes - Average deposit balances declined by $58.8 million due to seasonal tax outflows, with a cost of deposits at 2.05% [10] - Nonperforming loans decreased to $33.3 million, with a nonperforming loan ratio of 45 basis points, which is below peer averages [10][11] Company Strategy and Development Direction - The company is focused on reducing exposure in higher-risk industries, particularly in trucking, agriculture, and commercial real estate [16] - The launch of the UNIFY platform is seen as a significant step towards building a comprehensive ecosystem for small business owners [39] - The company aims to maintain a disciplined approach to loan and deposit pricing to support margin expansion [15][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan pipelines for the second half of the year, projecting mid-single-digit loan growth [14][25] - The company is taking proactive measures to manage expenses amid ongoing economic uncertainty, projecting a reduction in annual core bank personnel expenses by approximately $15 million [12][56] - Management emphasized the importance of maintaining credit quality and not compromising on credit standards despite competitive pressures [15][72] Other Important Information - The company ended the quarter with a strong tangible common equity ratio of 10.5% and a tangible book value growth of 10.7% annualized to $26.64 [13] - The company is not focused on aggressive growth to stay under the $10 billion asset mark, as it has been operating under that threshold for years [22] Q&A Session Summary Question: Concerns about higher-risk trucking and commercial real estate loans - Management confirmed that they have largely addressed the need to clean up higher-risk loans and are monitoring other relationships closely [21][23] Question: Margin expansion opportunities - Management indicated that deposit mix, particularly growth in demand deposits, would be crucial for margin improvement [28] Question: Feedback on the UNIFY launch - Management reported positive user feedback and highlighted the app's intuitive design, with plans for further marketing [38] Question: Deposit decline and its relation to loan portfolio derisking - Management acknowledged that the decline in deposits was related to moving entire relationships as part of their derisking strategy [50][51] Question: Expense reduction details - Management confirmed that the expense reduction was a bank-wide effort, focusing on streamlining processes and eliminating positions [56][66]

Exhibit 99.1 National Bank Holdings Corporation Announces Second Quarter 2025 Financial Results NYSE Ticker: NBHC Denver, Colorado - (Globe Newswire) – National Bank Holdings Corporation (the "Company") reported: | | | | For the quarter | (1) | | | | For the six months ended(1) | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2Q25 | | | 1Q25 | 2Q24 | | 2025 | | 2024 | | | Net income ($000's) | $ | 34,022 | $ | 24,231 | $ | 26,135 | $ | 58,253 | $ | 57,526 | | Earnings per share ...

Core Viewpoint - National Bank Holdings Corporation reported strong financial results for the second quarter of 2025, with significant increases in net income, earnings per share, and returns on equity, driven by a robust net interest margin and disciplined credit management [3][4]. Financial Performance - Net income for Q2 2025 was $34.0 million, a 40.4% increase from $24.2 million in Q1 2025 [4]. - Earnings per diluted share rose to $0.88 from $0.63 in the previous quarter [4]. - Fully taxable equivalent pre-provision net revenue increased by 14.3% annualized to $43.5 million [4]. - Year-over-year, fully taxable equivalent pre-provision net revenue grew by 19.9% [4]. Return Ratios - Return on average tangible common equity reached 14.18%, up from 10.64% in Q1 2025 [4]. - Return on average tangible assets increased to 1.49% from 1.09% in the previous quarter [4]. - Return on average equity improved to 10.15% from 7.42% in Q1 2025 [4]. Net Interest Income - Fully taxable equivalent net interest income rose to $89.3 million, attributed to one additional day in the quarter [5]. - The net interest margin widened to 3.95%, driven by a three basis point increase in earning asset yields [5]. Loan Portfolio - Total loans amounted to $7.5 billion as of June 30, 2025, with quarterly loan fundings of $322.7 million [6]. - The weighted average rate on new loans was 7.4%, compared to a 6.5% yield on the overall loan portfolio [6]. Asset Quality - The company recorded no provision expense for credit losses, a significant improvement from $10.2 million in the previous quarter [7]. - Annualized net charge-offs were 0.05% of average total loans, down from 0.80% [7]. - Non-performing loans remained stable at 0.45% of total loans [7]. Deposits - Average total deposits decreased by $58.8 million to $8.2 billion during Q2 2025 [8]. - The loan to deposit ratio was 90.5%, slightly down from 90.8% [8]. Non-Interest Income and Expenses - Non-interest income increased by 11.0% to $17.1 million, driven by gains from partnership investments and bank card fees [9]. - Non-interest expenses totaled $62.9 million, reflecting disciplined expense management [10]. Capital Position - The Common Equity Tier 1 capital ratio stood at 14.2%, indicating strong capital growth [3]. - Shareholders' equity increased by $23.2 million to $1.4 billion, primarily due to retained earnings growth [12]. Year-Over-Year Comparison - For the first six months of 2025, net income was $58.3 million, a slight increase from $57.5 million in the same period of 2024 [14]. - Fully taxable equivalent net interest income rose to $177.9 million, with a net interest margin of 3.94% [15].

Core Insights - National Bank Holdings Corporation (NBHC) has announced a strategic partnership with 2UniFi to enhance financial solutions for small and medium-sized businesses in the U.S. [1][2] - The partnership will integrate 2UniFi within Nav's marketplace, which serves over 1 million users, providing access to deposit and lending solutions [1][2] - NBHC has made a $5 million strategic investment in Nav, aiming to empower small business owners with financial health tools [3] Company Overview - National Bank Holdings Corporation operates a network of over 85 banking centers across several states, including Colorado, Kansas, Utah, Wyoming, Texas, New Mexico, and Idaho [4] - The bank focuses on delivering high-quality client service and is committed to stakeholder results through its various banking subsidiaries [4] Nav Technologies Overview - Nav is recognized as the leading credit and financial health platform for small businesses, offering insights into cash flow and credit alongside financing options [6] - The platform allows small business owners to build and manage their business credit and see potential financing qualifications before applying [6] - Nav has raised over $100 million in capital from notable investors, including Goldman Sachs and Kleiner Perkins [6]

Core Points - National Bank Holdings Corporation (NBHC) is set to report its second quarter financial results on July 22, 2025, after market close [1] - A conference call to discuss the results will be held on July 23, 2025, at 11:00 a.m. Eastern Time [1] Company Overview - National Bank Holdings Corporation is a bank holding company focused on building a community bank franchise that emphasizes high-quality client service and stakeholder results [2] - The company operates over 85 banking centers across several states, including Colorado, Kansas, Utah, Wyoming, Texas, New Mexico, and Idaho, serving a diverse clientele [2] - Its banking subsidiaries include NBH Bank and Bank of Jackson Hole Trust, with various brand names operating under a single state charter [2]

[Part I. Financial Information](index=7&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) These unaudited statements show total assets grew to $10.1 billion while net income decreased to $24.2 million due to a significant credit loss provision [Consolidated Statements of Financial Condition](index=7&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$10,098,870** | **$9,807,693** | | Cash and cash equivalents | $246,298 | $127,848 | | Investment securities (AFS & HTM) | $1,341,288 | $1,060,655 | | Loans, net | $7,556,104 | $7,656,688 | | Goodwill | $306,043 | $306,043 | | **Total Liabilities** | **$8,769,562** | **$8,502,618** | | Total deposits | $8,424,207 | $8,237,893 | | **Total Shareholders' Equity** | **$1,329,308** | **$1,305,075** | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Income Statement Highlights (in thousands, except per share data) | Account | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net interest income | $86,691 | $84,030 | | Provision for credit loss expense | $10,200 | $0 | | Non-interest income | $15,376 | $17,694 | | Non-interest expense | $62,017 | $62,834 | | **Net income** | **$24,231** | **$31,391** | | **Earnings per share—diluted** | **$0.63** | **$0.82** | | Common stock dividend | $0.29 | $0.27 | [Consolidated Statements of Comprehensive Income](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) - Comprehensive income for Q1 2025 was **$34.2 million**, an increase from **$27.6 million** in Q1 2024, driven by a positive change in other comprehensive income of **$10.0 million** from net unrealized gains on available-for-sale securities[21](index=21&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) - Shareholders' equity increased to **$1,329.3 million** at March 31, 2025, driven by **$24.2 million** in net income and **$10.0 million** in other comprehensive income, partially offset by **$11.2 million** in cash dividends[23](index=23&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in thousands) | Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $39,625 | $29,957 | | Net cash (used in) provided by investing activities | ($127,484) | $93,619 | | Net cash provided by (used in) financing activities | $206,309 | ($22,971) | | **Increase in cash and cash equivalents** | **$118,450** | **$100,605** | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The investment securities portfolio totaled **$1.3 billion** at March 31, 2025, comprised of **$0.6 billion** in available-for-sale (AFS) and **$0.7 billion** in held-to-maturity (HTM) securities[35](index=35&type=chunk) - Total loans were **$7.65 billion** as of March 31, 2025, with commercial loans making up the largest portion of the portfolio at **60.2%**[54](index=54&type=chunk) - The Allowance for Credit Losses (ACL) decreased to **$90.2 million**, with a provision expense of **$10.9 million** recorded for the quarter to cover a charge-off on a single credit suspected of fraudulent activity[69](index=69&type=chunk)[71](index=71&type=chunk) - The company and its subsidiary banks met all regulatory capital requirements and were considered **'well-capitalized'** as of March 31, 2025, with a consolidated Tier 1 leverage ratio of **10.9%**[92](index=92&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the net income decrease to a $10.2 million credit loss provision, while noting growth in pre-provision net revenue and a strong capital position [Overview](index=56&type=section&id=MD%26A_Overview) Q1 2025 Key Performance Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $24.2M | $31.4M | | Diluted EPS | $0.63 | $0.82 | | Return on Average Tangible Assets | 1.09% | 1.39% | | FTE Net Interest Margin | 3.93% | 3.78% | | Provision for Credit Losses | $10.2M | $0M | - The decrease in net income was largely driven by a **$10.2 million** provision for credit losses recorded primarily to cover a charge-off on one credit due to suspected fraudulent activity[167](index=167&type=chunk) - The company continues to invest in its digital financial ecosystem, 2UniFi, incurring **$3.4 million** in related expenses during Q1 2025[167](index=167&type=chunk) [Financial Condition](index=68&type=section&id=MD%26A_Financial_Condition) - Total assets increased by **$291.2 million (3.0%)** to **$10.1 billion** at March 31, 2025, driven by increases in cash and investment securities[193](index=193&type=chunk) - The loan portfolio is well-diversified with low exposure to non-owner occupied CRE retail (**2.0%** of total loans) and office properties (**1.3%** of total loans)[214](index=214&type=chunk) - Total deposits increased by **$186.3 million** to **$8.4 billion** in Q1 2025, with approximately **78%** of total deposits FDIC insured[193](index=193&type=chunk)[242](index=242&type=chunk) [Results of Operations](index=87&type=section&id=MD%26A_Results_of_Operations) Net Interest Income Analysis (FTE Basis) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income (FTE) | $88.6M | $85.7M | | Net Interest Margin (FTE) | 3.93% | 3.78% | | Yield on Earning Assets (FTE) | 5.85% | 5.88% | | Cost of Funds | 2.07% | 2.25% | - A provision for credit losses of **$10.2 million** was recorded in Q1 2025, primarily to cover a charge-off on one credit driven by suspected fraudulent activity[268](index=268&type=chunk) - Non-interest income decreased by **$2.3 million** YoY to **$15.4 million**, mainly due to the timing of SBA loan sales and swap fees[269](index=269&type=chunk) - Non-interest expense decreased by **$0.8 million** YoY to **$62.0 million**, as a **$2.2 million** reduction in salaries and benefits was partially offset by a **$1.2 million** increase in technology costs[270](index=270&type=chunk) [Liquidity and Capital Resources](index=95&type=section&id=MD%26A_Liquidity_and_Capital_Resources) Liquidity Position (in thousands) | Source | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **On-Balance Sheet Liquidity** | | | | Cash and due from banks | $246,298 | $127,848 | | Unencumbered investment securities | $556,176 | $319,949 | | **Total On-Balance Sheet** | **$802,474** | **$447,797** | | **Off-Balance Sheet Availability** | | | | Available FHLB borrowing capacity | $1,652,991 | $1,697,259 | | Federal Reserve Bank discount window | $808,616 | $880,892 | | **Total Off-Balance Sheet** | **$2,461,607** | **$2,578,151** | - The company and its subsidiary banks exceeded all **'well-capitalized'** regulatory thresholds as of March 31, 2025[281](index=281&type=chunk) - The Board of Directors declared a quarterly dividend of **$0.30 per share**, payable on June 13, 2025[285](index=285&type=chunk) [Asset/Liability Management and Interest Rate Risk](index=99&type=section&id=MD%26A_Asset%2FLiability%20Management%20and%20Interest%20Rate%20Risk) Interest Rate Sensitivity Analysis (% change in projected NII) | Hypothetical Rate Shift (bps) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | +200 | 2.27% | 1.72% | | +100 | 1.17% | 0.87% | | -100 | (1.48)% | (1.05)% | | -200 | (2.93)% | (2.11)% | - The company's interest rate risk model indicated a **fairly neutral position** in terms of interest rate sensitivity at March 31, 2025[290](index=290&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=101&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section incorporates the MD&A's discussion on market risk exposure and management strategies - Information regarding market risk is provided under the caption 'Asset/Liability Management and Interest Rate Risk' in Item 2 of this report and is incorporated herein by reference[298](index=298&type=chunk) [Controls and Procedures](index=101&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Based on an evaluation as of March 31, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **effective**[299](index=299&type=chunk) - There were **no changes** in the company's internal control over financial reporting during the first quarter of 2025 that have materially affected, or are reasonably likely to materially affect, these controls[300](index=300&type=chunk) [Part II. Other Information](index=102&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=102&type=section&id=Item%201.%20Legal%20Proceedings) The company is not party to any litigation expected to have a material adverse effect on its financial condition - The company is not presently party to any legal proceedings that are expected to have a **material adverse effect** on its business, financial condition, or results of operations[302](index=302&type=chunk) [Risk Factors](index=102&type=section&id=Item%201A.%20Risk%20Factors) No material changes were made to the risk factors disclosed in the 2024 Annual Report on Form 10-K - There have been **no material changes** to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[303](index=303&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=102&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase shares under its public plan, leaving the full $50 million authorization available - As of March 31, 2025, the company had **$50.0 million remaining** under its stock repurchase program authorized on May 9, 2023[305](index=305&type=chunk) - During February and March 2025, the company purchased a total of **21,791 shares** at a weighted average price of **$41.90 per share** to satisfy employee tax withholdings[304](index=304&type=chunk) [Other Information](index=102&type=section&id=Item%205.%20Other%20Information) No information was required to be disclosed under this item for the quarter - None[306](index=306&type=chunk) [Exhibits](index=103&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including certifications and XBRL data files - The exhibits filed with the report include CEO and CFO certifications (31.1, 31.2, 32) and the XBRL Interactive Data File (101 and 104)[309](index=309&type=chunk)