National Bank Holdings Corp: Form 10-Q for the period ended Sep 30, 2025

The following management’s discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes as of and for the three and nine months ended September 30, 2025, and with our annual report on Form 10-K (file number 001-35654), which includes our audited consolidated financial statements and related notes as of and for the years ended December 31, 2024, 2023 and 2022. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions that may cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the section entitled “Cautionary Note Regarding Forward-Looking Statements,” in Item 1A “Risk Factors” located elsewhere in this quarterly report and in Item 1A“Risk Factors” in the annual report on Form 10-K, referenced above, and should be read herewith.

All amounts are in thousands, except share and per share data, or as otherwise noted.

Overview

Our focus is on building relationships by creating a win-win scenario for our clients and our Company. We believe in providing solutions and services to our clients that are based on fairness and simplicity. We have established a solid financial services franchise with a sizable presence for deposit gathering and building client relationships necessary for growth. We have executed on strategic acquisition opportunities to expand our presence in attractive markets and to diversify our revenue streams. Additionally, we are innovating and building strategic fintech partnerships with the goal of delivering a comprehensive digital financial ecosystem for our clients. We are focused on providing small- and medium-sized businesses with alternative digital access to address borrowing, depository and cash management needs, while also providing information management and access to digital payment tools, under the safety of a regulated bank. We believe that our established presence in our core markets of Colorado, the greater Kansas City region, Utah, Wyoming, Texas, New Mexico and Idaho, as well as our ongoing investment in digital solutions and strategic acquisitions, position us well for growth opportunities. As of September 30, 2025, we had $10.2 billion in assets, $7.4 billion in loans, $8.5 billion in deposits, $1.4 billion in equity and $1.1 billion in assets under management in our trust and wealth management business.

Operating Highlights

Strategic execution

47

Profitability and returns

Loan portfolio

Credit quality

Client deposit funded balance sheet

Liquidity

Revenues

Expenses

49

Strong capital position

Key Challenges

Macroeconomic pressures, including uncertainty in tariff policies, have resulted in volatility and uncertainty in the banking industry and many other industries. The sustained higher-interest rate environment and wait-and-see attitudes of clients are drawing increased scrutiny on financial institutions. Liquidity within the financial services sector has tightened, and we expect the intense competition for deposits throughout our markets to continue. While these are widespread challenges for the banking industry, the Company has not experienced a material impact to our financial condition, operations, client base, liquidity, capital position or risk profile.

Additionally, we face continual challenges implementing our business strategy. These include growing our assets, particularly loans, and deposits amidst intense competition, changing interest rates, adhering to changes in the regulatory environment and identifying and consummating disciplined acquisition and other expansionary opportunities in a very competitive and inflationary environment. In connection with our digital growth strategy and our digital financial ecosystem 2UniFi, we have made and will continue to make investments in and also partner with third-party fintech companies. The innovations these companies develop for utilization by 2UniFi may prove difficult to successfully integrate into our existing operations and may require additional operational and control systems to manage fraud, cybersecurity, operational, legal and compliance risks.

Future growth in our interest income will ultimately be dependent on our ability to originate high-quality loans and source other high-quality earning assets such as investment securities as well as our ability to access liquidity and manage our cost of funds. During the years ended December 31, 2023 and 2022, the Federal Reserve increased prevailing interest rates by a total of 100 and 425 basis points, respectively. In the second half of 2024, the Federal Reserve decreased the prevailing interest rates by a total of 100 basis points, and during the third quarter of 2025 the Federal Reserve decreased the prevailing interest rates by 25 basis points. While further cuts in 2025 remain unclear, our future earnings will be impacted by the Federal Reserve’s future interest rate policy decisions. Management employs risk management policies to monitor and limit exposure to changes in market rates, which is discussed in more detail in the Asset/Liability Management and Interest Rate Risk section of Management’s Discussion and Analysis.

Performance Overview

In evaluating our consolidated statements of financial condition and results of operations financial statement line items, we evaluate and manage our performance based on key earnings indicators, balance sheet ratios, asset quality metrics and regulatory capital ratios, among others. The table below presents some of the primary performance indicators that we use to analyze our business on a regular basis for the periods indicated:

Key Metrics(1)

About Non-GAAP Financial Measures

Certain financial measures and ratios presented in the tables within this About Non-GAAP Financial Measures section are supplemental measures that are not required by, or are not presented in accordance with, U.S. GAAP. We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on an FTE basis. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these differences by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance.

A reconciliation of our GAAP financial measures to the comparable non-GAAP financial measures is as follows:

Tangible Common Book Value Ratios

Return on Average Tangible Assets and Return on Average Tangible Equity

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

Efficiency Ratio and Pre-Provision Net Revenue

54

Adjusted Net Income and Earnings Per Share

Application of Critical Accounting Policies and Significant Estimates

We use accounting principles and methods that conform to GAAP and general banking practices. We are required to apply significant judgment and make material estimates in the preparation of our financial statements and with regard to various accounting, reporting and disclosure matters. Assumptions and estimates are required to apply these principles where actual measurement is not possible or practical. The most significant of these estimates relate to the determination of the ACL.

Allowance for credit losses

The determination of the ACL, which represents management’s estimate of lifetime credit losses inherent in our loan portfolio at the balance sheet date, involves a high degree of judgment and complexity. The Company estimates the ACL by first disaggregating the loan portfolio into segments based upon broad characteristics such as primary use and underlying collateral. Within these segments, the portfolio is further disaggregated into classes of loans with similar attributes and risk characteristics. The ACL is determined at the class level, analyzing loss history based upon specific loss drivers and risk factors affecting each loan class. The Company utilizes a DCF model developed within a third-party software tool that incorporates forecasts of certain national macroeconomic factors (reasonable and supportable forecasts) which drive the losses predicted in establishing the Company’s ACL. Management accounts for the inherent uncertainty of the underlying economic forecast by reviewing and weighting alternate forecast scenarios. For periods beyond the reasonable and supportable forecast period, the Company reverts to historical long-term average loss rates on a straight-line basis. Additionally, the ACL calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. Changes in these assumptions, estimates or the conditions surrounding them may have a material impact on our financial condition.

Future Accounting Pronouncements

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Topic 350): Targeted Improvements to the Accounting for Internal-Use Software. The update will eliminate the accounting consideration of software project development stages and enhance the guidance around the threshold for cost capitalization. The amendments in this update are effective for fiscal years and interim reporting periods beginning after December 15, 2027 and can be applied using a prospective transition approach, a modified transition approach or a retrospective transition approach. Early adoption is permitted. The Company is currently evaluating the impact from ASU 2025-06.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The update is related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC Topic 606. It allows all entities to elect a practical expedient that assumes current conditions as of the balance sheet date do not change for the remaining life of the asset. The update also allows for an accounting policy election, which is not applicable to public business entities. Entities are required to disclose whether they have elected to use the practical expedient and, if applicable, the accounting policy election. The amendments in this update are effective for fiscal years and interim reporting periods beginning after December 15, 2025 and are to be applied on a prospective basis. Early adoption is permitted. The Company has evaluated the impact from ASU 2025-05 and does not expect the adoption of this pronouncement to have a material impact on its financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses. The update requires public business entities to disclose specific components of certain expense categories. This includes expense categories such as employee compensation, depreciation, and intangible asset amortization. The amendments in this update are effective for fiscal years beginning after December 15, 2026 and are to be applied on a prospective basis with an option for retrospective application. Early adoption is permitted. The Company has evaluated the impact from ASU 2024-03 and does not expect the adoption of this pronouncement to have a material impact on its financial statements apart from the inclusion of additional disclosures.

Financial Condition

Total assets were $10.2 billion at September 30, 2025, increasing $345.0 million, or 3.5%, from December 31, 2024. Cash and cash equivalents increased $427.7 million from December 31, 2024, and investment securities increased $245.6 million. Loans totaled $7.4 billion and $7.8 billion at September 30, 2025 and December 31, 2024, respectively, and the allowance for credit losses totaled $88.3 million and $94.5 million at September 30, 2025 and December 31, 2024, respectively. Lower-cost transaction deposits totaled $7.3 billion and $7.2 billion at September 30, 2025 and December 31, 2024, respectively. Total deposits increased $233.8 million to $8.5 billion at September 30, 2025, compared to December 31, 2024.

Investment securities

Available-for-sale

Total investment securities available-for-sale were $612.7 million at September 30, 2025, compared to $527.5 million at December 31, 2024. Purchases of available-for-sale securities during the nine months ended September 30, 2025 and 2024 totaled $164.7 million and $199.1 million, respectively. Paydowns and maturities totaled $100.4 million and $137.6 million during the nine months ended September 30, 2025 and 2024, respectively.

Available-for-sale investment securities are summarized in the following table as of the dates indicated. The weighted average yield was calculated based on amortized cost. Yields on tax exempt securities have not been adjusted for tax exempt status.

As of September 30, 2025 and December 31, 2024, nearly all the available-for-sale investment portfolio was backed by mortgages. The residential mortgage pass-through securities portfolio is comprised of both fixed rate and adjustable rate FHLMC, FNMA and GNMA securities. The other mortgage-backed securities are comprised of securities backed by FHLMC, FNMA and GNMA securities.

Mortgage-backed securities may have actual maturities that differ from contractual maturities depending on the repayment characteristics and experience of the underlying financial instruments. The estimated weighted average life of the available-for-sale mortgage-backed securities portfolio was 4.6 years and 5.3 years at September 30, 2025 and December 31, 2024, respectively. This estimate is based on assumptions and actual results may differ. At September 30, 2025 and December 31, 2024, the duration of the total available-for-sale investment portfolio was 3.9 years and 4.3 years, respectively.

At September 30, 2025 and December 31, 2024, adjustable rate securities comprised 13.6% and 5.9%, respectively, of the available-for-sale MBS portfolio. The remainder of the portfolio was comprised of fixed rate amortizing securities with 10- to 30-year contractual maturities, with a weighted average coupon of 2.42% per annum and 2.31% per annum at September 30, 2025 and December 31, 2024, respectively.

The available-for-sale investment portfolio included $69.0 million of unrealized losses and $2.8 million of unrealized gains at September 30, 2025. At December 31, 2024, the available-for-sale investment portfolio included $90.9 million of unrealized losses and $0.5 million of unrealized gains. We believe any unrealized losses are a result of prevailing interest rates, and as such, we do not believe that any of the securities with unrealized losses were impaired. Management believes that default of the available-for-sale securities is highly unlikely. FHLMC, FNMA and GNMA guaranteed mortgage-backed securities and U.S. Treasury securities have a long history of zero credit losses, an explicit guarantee by the U.S. government (although limited for FNMA and FHLMC securities) and yields that generally trade based on market views of prepayment and liquidity risk rather than credit risk.

Our investment security portfolio consists of high-quality securities, which are largely backed by either U.S. government agencies or U.S. government sponsored entities. We regularly model liquidity stress scenarios to assess potential liquidity issues.

Held-to-maturity

Held-to-maturity investment securities totaled $689.5 million at September 30, 2025, compared to $533.1 million at December 31, 2024, an increase of $156.4 million, or 29.3%. Purchases during the nine months ended September 30, 2025 totaled $260.3 million. There were no purchases of held-to-maturity securities during the nine months ended September 30, 2024. Paydowns and maturities totaled $105.0 million and $47.4 million during the nine months ended September 30, 2025 and 2024, respectively.

Held-to-maturity investment securities are summarized as follows as of the dates indicated:

The residential mortgage pass-through and other residential MBS held-to-maturity investment portfolios are comprised of fixed rate FHLMC, FNMA and GNMA securities.

The fair value of the held-to-maturity investment portfolio included $61.2 million of unrealized losses and $2.5 million of unrealized gains at September 30, 2025. At December 31, 2024, the held-to-maturity investment portfolio included $81.8 million of unrealized losses and $51 thousand of unrealized gains.

The Company does not measure expected credit losses on a financial asset, or groups of financial assets, in which historical credit loss information adjusted for current conditions and reasonable and supportable forecasts results in an expectation that nonpayment of the amortized cost basis is zero. Management evaluated held-to-maturity securities noting they are backed by loans guaranteed by either U.S. government agencies or U.S. government sponsored entities, and management believes that default is highly unlikely given this governmental backing and long history without credit losses. Additionally, management notes that yields on which the portfolio generally trades are based upon market views of prepayment and liquidity risk and not credit risk. The Company has no intention to sell the securities and believes it will not be required to sell the securities before the recovery of their amortized cost.

Mortgage-backed securities may have actual maturities that differ from contractual maturities depending on the repayment characteristics and experience of the underlying financial instruments. The estimated weighted average expected life of the held-to-maturity mortgage-backed securities portfolio as of September 30, 2025 and December 31, 2024 was 4.6 years and 5.6 years, respectively. This estimate is based on assumptions and actual results may differ. The duration of the total held-to-maturity investment portfolio was 3.8 years and 4.4 years as of September 30, 2025 and December 31, 2024, respectively.

Other securities

The carrying balances of other securities are summarized as follows as of the dates indicated:

Other securities included FRB stock, FHLB stock, convertible preferred stock, equity method investments and equity securities with readily determinable fair values. During the nine months ended September 30, 2025, purchases of other securities totaled $50.0 million, and proceeds from redemptions and sales of other securities totaled $48.0 million. During the nine months ended September 30, 2024, purchases of other securities totaled $26.2 million, and proceeds from other securities totaled $42.6 million. Purchases consisted primarily of FHLB stock, and proceeds consisted primarily of redemptions of FHLB stock. Changes in the Company’s FHLB stock holdings directly correlated to FHLB line of credit advances and paydowns.

FRB and FHLB stock

At September 30, 2025 and December 31, 2024, the Company held FRB stock and FHLB stock for regulatory or debt facility purposes. These are restricted securities which, lacking a market, are carried at cost. There have been no identified events or changes in circumstances that may have an adverse effect on the FRB and FHLB stock carried at cost.

Convertible preferred stock

Other securities include convertible preferred stock without a readily determinable fair value. During the three and nine months ended September 30, 2025, there were no purchases of convertible preferred stock. One convertible preferred stock investment underwent an initial public offering and was reclassified as an equity security with a readily determinable fair value during the third quarter of 2025. The Company purchased zero and $0.4 million of convertible preferred stock during the three and nine months ended September 30, 2024, respectively. During the three and nine months ended September 30, 2024, the Company recorded $3.9 million of impairment on convertible preferred stock related to venture capital investments, included in other non-interest income in the Company’s consolidated statements of operations. The Company also sold convertible preferred stock totaling $1.0 million, during the three and nine months ended September 30, 2024, which generated realized gains of $0.1 million recorded in other non-interest income in the Company’s consolidated statements of operations.

Equity method investments

Other securities also include equity method investments totaling $33.3 million and $28.0 million at September 30, 2025 and December 31, 2024, respectively. The increase was primarily due to a $5.0 million investment in Nav, a credit and financial health platform for small business owners. The Company recorded net unrealized gains on equity method investments totaling $1.7 million during the three and nine months ended September 30, 2025. During the three and nine months ended September 30, 2024, the Company recorded net unrealized gains on equity method investments totaling $0.4 million and $0.7 million, respectively. These gains and losses were recorded in other non-interest income in the Company’s consolidated statements of operations. The Company recorded no impairment related to equity method investments for the nine months ended September 30, 2025 or the year ended December 31, 2024.

Equity securities with readily determinable fair values

During the three and nine months ended September 30, 2025, one convertible preferred stock investment underwent an initial public offering and was reclassified as an equity security with a readily determinable fair value totaling $4.1 million at September 30, 2025. Equity securities with readily determinable fair values are generally traded on an exchange and market prices are readily available. Unrealized gains or losses on equity securities with readily determinable fair values are recognized in other non-interest income in the Company’s consolidated statements of operations. During the three and nine months ended September 30, 2025, the Company recorded $2.1 million of unrealized gains from equity securities with readily determinable fair values.

Loans overview

At September 30, 2025, our loan portfolio was comprised of loans originated by the Company and loans that were acquired in connection with the Company’s acquisitions.

The table below shows the loan portfolio composition at the respective dates:

The Company maintains a granular and well-diversified loan portfolio with self-imposed concentration limits. At September 30, 2025, loans totaled $7.4 billion, compared to $7.8 billion at December 31, 2024.

Our commercial and industrial loan portfolio is highly diversified across industry sectors and geography. At September 30, 2025, there were no industry sectors representing more than 15.0% of our total loan portfolio. Key sectors included government/non-profit loans of $907.6 million, or 12.2% of total loans, and health care/hospital loans of $501.6 million, or 6.8% of total loans. The commercial and industrial portfolio also includes loans to companies that operate in the transportation industry. The transportation industry, trucking in particular, has experienced recent economic challenges. As a result of these industry challenges, some of the transportation loans may be subject to higher credit risk. The Company’s exposure to this industry is small, consisting of $151.4 million, or 2.0% of total loans, at September 30, 2025.

Non-owner occupied CRE loans were 132.3% of the Company’s risk based capital, or 22.1% of total loans, and no specific property type comprised more than 10.0% of total loans. The Company maintains little exposure to non-owner occupied CRE retail properties and office properties, comprising 2.1% and 1.1% of total loans, respectively. Multifamily loans totaled $301.2 million, or 4.1% of total loans, at September 30, 2025.

The agriculture industry continues to be impacted by volatile commodity prices and generally by higher input costs, combining to stress margins. Our food and agribusiness portfolio is 3.2% of total loans and is well-diversified across food production, crop and livestock types. Crop and livestock loans represent 1.2% of total loans. We have maintained relationships with food and agribusiness clients that generally possess low leverage and, correspondingly, low bank debt to assets, minimizing any potential credit losses in the future.

New loan origination is a direct result of our ability to recruit and retain top banking talent, connect with clients in our markets and provide needed services at competitive rates. Loan fundings totaled $1.5 billion over the trailing 12 months, led by commercial loan fundings of $997.3 million. Fundings are defined as closed-end funded loans and revolving lines of credit advances, net of any current period paydowns. Management utilizes this more conservative definition of fundings to better approximate the impact of fundings on loans outstanding and ultimately net interest income.

The following table represents new loan fundings for the periods presented:

Included in fundings are net (paydowns) fundings under revolving lines of credit totaling ($1,591), $15,490, $21,752, $64,375 and $16,302 for the dates noted in the table above, respectively.

The tables below show the contractual maturities of our total loans for the dates indicated:

The stated interest rate (which excludes the effects of non-refundable loan origination and commitment fees, net of costs and the accretion of fair value marks) of total loans with maturities over one year is as follows at the dates indicated:

61

Asset quality

Asset quality is fundamental to our success and remains a strong point, driven by our disciplined adherence to our self-imposed concentration limits across industry sector and real estate property type. Accordingly, for the origination of loans, we have established a credit policy that allows for responsive, yet controlled lending with credit approval requirements that are scaled to loan size. Within the scope of the credit policy, each prospective loan is reviewed in order to determine the appropriateness and the adequacy of the loan characteristics and the security or collateral prior to making a loan. We have established underwriting standards and loan origination procedures that require appropriate documentation, including financial data and credit reports. For loans secured by real property, we require property appraisals, title insurance or a title opinion, hazard insurance and flood insurance, in each case where appropriate.

Additionally, we have implemented procedures to timely identify loans that may become problematic in order to ensure the most beneficial resolution for the Company. Asset quality is monitored by our credit risk management department and evaluated based on quantitative and subjective factors such as the timeliness of contractual payments received. Additional factors that are considered, particularly with commercial loans over $500,000, include the financial condition and liquidity of individual borrowers and guarantors, if any, and the value of our collateral. To facilitate the oversight of asset quality, loans are categorized based on the number of days past due and on an internal risk rating system, and both are discussed in more detail below.

The Company’s policy is to review each prospective credit to determine the appropriateness and the adequacy of security or collateral prior to making a loan. In the event of borrower default, the Company seeks recovery in compliance with lending laws, the respective loan agreements, and credit monitoring and remediation procedures that may include modifying a loan to provide a concession by the Company to the borrower from their original terms due to borrower financial difficulties in order to facilitate repayment. Such modified loans are considered TDMs. TDMs may include principal forgiveness, interest rate reductions, other-than-insignificant-payment delays, term extensions or any combination thereof. TDMs are discussed further in note 5 of our consolidated financial statements. Assets that have been foreclosed on or acquired through deed-in-lieu of foreclosure are classified as OREO until sold, and are carried at the fair value of the collateral less estimated costs to sell, with any initial valuation adjustments charged to the ACL and any subsequent declines in carrying value charged to impairments on OREO.

Non-performing assets and past due loans

Non-performing assets consist of non-accrual loans and OREO. Interest income that would have been recorded had non-accrual loans performed in accordance with their original contract terms during the three and nine months ended September 30, 2025 was $0.5 million and $1.8 million, respectively, and $0.4 million and $1.4 million during the three and nine months ended September 30, 2024, respectively.

Past due status is monitored as an indicator of credit deterioration. Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement remains unpaid after the due date of the scheduled payment. Loans that are 90 days or more past due are put on non-accrual status unless the loan is well secured and in the process of collection.

The following table sets forth the non-performing assets and past due loans as of the dates presented:

During the nine months ended September 30, 2025, total non-performing loans decreased $9.3 million, or 25.8%, from December 31, 2024. Loans 30-89 days past due and still accruing interest improved 11 basis points to 0.19% of total loans at September 30, 2025, compared to December 31, 2024. Loans 90 days or more past due and still accruing interest improved three basis points to 0.16% of total loans at September 30, 2025, compared to December 31, 2024.

Allowance for credit losses

The ACL represents the amount that we believe is necessary to absorb estimated lifetime credit losses inherent in the loan portfolio at the balance sheet date and involves a high degree of judgment and complexity. The Company utilizes a DCF model developed within a third-party software tool to establish expected lifetime credit losses for the loan portfolio. The ACL is calculated as the difference between the amortized cost basis and the projections from the DCF analysis. The DCF model allows for individual lifetime loan cash flow modeling, excluding extensions and renewals, using loan-specific interest rates and repayment schedules including estimated prepayment rates and loss recovery timing delays. The model incorporates forecasts of certain national macro-economic factors, including unemployment rates, HPI, retail sales and GDP, which drive correlated loss rates. The determination and application of the ACL accounting policy involves judgments, estimates and uncertainties that are subject to change. For periods beyond the reasonable and supportable forecast period, the Company reverts to historical long-term average loss rates on a straight-line basis.

We measure expected credit losses for groups of loans included in segments with similar risk characteristics. We have identified four primary loan segments within the ACL model that are further stratified into 11 loan classes to provide more granularity in analyzing loss history and to allow for more definitive qualitative adjustments based upon specific risk factors affecting each loan class. Generally, the underlying risk of loss for each of these loan segments will follow certain norms/trends in various economic environments. Loans that do not share risk characteristics are evaluated on an individual basis and are not included in the collective evaluation. Following are the loan classes within each of the four primary loan segments:

Loans on non-accrual, in bankruptcy and TDMs with a balance greater than $250 thousand are excluded from the pooled analysis and are evaluated individually. If management determines that foreclosure is probable, expected credit losses are evaluated based on the criteria listed below, adjusted for selling costs as appropriate. Typically, these loans consist of commercial, commercial real estate and agriculture loans and exclude homogeneous loans such as residential real estate and consumer loans. Specific allowances are determined by collectively analyzing:

The resulting ACL for loans is calculated as the sum of the general reserves, specific reserves on individually evaluated loans, and qualitative factor adjustments. While these amounts are calculated by individual loan or by segment and class, the entire ACL is available for any loan that, in our judgment, should be charged off. The determination and application of the ACL accounting policy involves judgments, estimates, and uncertainties that are subject to change. Changes in these assumptions, estimates or the conditions surrounding them may have a material impact on our financial condition, liquidity or results of operations.

At September 30, 2025 and December 31, 2024, the allowance for credit losses totaled $88.3 million and $94.5 million, respectively. The decrease during the nine months ended September 30, 2025 was primarily driven by the resolution of non-performing loans and changes in the CECL model’s underlying macro-economic forecast. Specific reserves on loans totaled $4.8 million at September 30, 2025, compared to $6.4 million at December 31, 2024.

During the three and nine months ended September 30, 2025, net recoveries totaled $0.9 million and net charge-offs totaled $15.2 million, respectively. Charge-offs were elevated during the first quarter of 2025 due to an $8.9 million charge-off from one credit due to suspected fraud by the borrower, which the Company believes is an isolated circumstance within the loan portfolio. The ratio of annualized net recoveries to average total loans totaled 0.05% for the three months ended September 30, 2025, and the ratio of annualized net charge-offs to average total loans totaled 0.27% for the nine months ended September 30, 2025. Net charge-offs on loans during the three and nine months ended September 30, 2024 totaled $3.4 million and $7.6 million, respectively, and the ratio of annualized net charge-offs to average total loans totaled 0.18% and 0.13%, respectively.

The Company has elected to exclude AIR from the ACL calculation. As of September 30, 2025 and December 31, 2024, AIR from loans totaled $45.1 million and $41.5 million, respectively. When a loan is placed on non-accrual, any recorded AIR is reversed against interest income.

Total ACL

After considering the above-mentioned factors, we believe that the ACL of $88.3 million is adequate to cover estimated lifetime losses inherent in the loan portfolio at September 30, 2025. However, it is likely that future adjustments to the ACL will be necessary. Any changes to the underlying assumptions, circumstances or estimates, including but not limited to changes in the underlying macro-economic forecast, used in determining the ACL, could negatively or positively affect the Company’s results of operations, liquidity or financial condition.

The following schedules present, by class stratification, the changes in the ACL during the periods listed:

During the three months ended September 30, 2025, the Company recorded provision release for funded loans totaling $1.5 million, primarily driven by the recovery of one previously charged off credit. During the nine months ended September 30, 2025, the Company recorded provision expense for credit losses totaling $8.7 million, including $9.0 million provision expense for funded loans and $0.3 million of provision release for unfunded loan commitments. Provision expense for credit losses during the nine months ended September 30, 2025 was recorded primarily to cover a charge-off on one credit due to suspected fraudulent activity by the borrower. During the three months ended September 30, 2024, the Company recorded provision expense for credit losses on funded loans totaling $2.0 million. During the nine months ended September 30, 2024, the Company recorded provision expense for credit losses totaling $4.8 million, including $4.7 million of provision expense for funded loans and $0.1 million of provision expense for unfunded loan commitments.

The following tables present the allocation of the ACL and the percentage of the total amount of loans in each loan category listed as of the dates presented:

Deposits

Deposits from banking clients serve as a primary funding source for our banking operations, and our ability to gather and manage deposit levels is critical to our success. Deposits not only provide a lower-cost funding source for our loans, but also provide a foundation for the client relationships that are critical to future loan growth. We maintain a granular and well diversified deposit base with no exposure to venture capital or crypto deposits. The following table presents information regarding our deposit composition at September 30, 2025 and December 31, 2024:

The following table shows uninsured time deposits by scheduled maturity as of September 30, 2025:

At September 30, 2025 and December 31, 2024, time deposits that were scheduled to mature within 12 months totaled $950.6 million and $822.6 million, respectively. Of the time deposits scheduled to mature within 12 months at September 30, 2025, $282.5 million were in denominations of $250 thousand or more, and $668.1 million were in denominations less than $250 thousand. Approximately 77% of our total deposits were FDIC insured at September 30, 2025. Additionally, the Company participates in the IntraFi Cash

Service program, which allows depositors to receive reciprocal FDIC insurance coverage. The Company had $0.8 billion and $1.0 billion of deposits in the program at September 30, 2025 and December 31, 2024, respectively.

Long-term debt

The Company holds a subordinated note purchase agreement to issue and sell a fixed-to-floating rate note totaling $40.0 million. The balance on the note at September 30, 2025, net of long-term debt issuance costs of $0.1 million, totaled $39.9 million. At December 31, 2024, the balance on the note, net of long-term debt issuance costs of $0.2 million, totaled $39.8 million. During the three and nine months ended September 30, 2025 and 2024, interest expense totaling $0.3 million and $0.9 million, respectively, was recorded in the consolidated statements of operations.

The note is subordinated, unsecured and matures on November 15, 2031. Payments consist of interest only. Interest expense on the note is payable semi-annually in arrears and will bear interest at 3.00% per annum until November 15, 2026 (or any earlier redemption date). From November 15, 2026 until November 15, 2031 (or any earlier redemption date) payments will be made quarterly in arrears, and the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month term SOFR plus 203 basis points. The Company deployed the net proceeds from the sale of the note for general corporate purposes. Prior to November 5, 2026, the Company may redeem the note only under certain limited circumstances. Beginning on November 5, 2026 through maturity, the note may be redeemed, at the Company’s option, on any scheduled interest payment date. Any redemption by the Company would be at a redemption price equal to 100% of the principal amount of the note being redeemed, together with any accrued and unpaid interest on the note being redeemed up to but excluding the date of redemption. The note is not subject to redemption at the option of the holder.

As part of the acquisition of BOJH on October 1, 2022, the Company assumed three subordinated note purchase agreements to issue and sell fixed-to-floating rate notes totaling $15.0 million. The balance on the notes at September 30, 2025, net of a fair value adjustment related to the acquisition totaling $0.1 million, totaled $14.9 million. At December 31, 2024, the balance on the notes, net of a fair value adjustment related to the acquisition totaling $0.3 million, totaled $14.7 million. Interest expense related to the notes totaling $0.1 million and $0.4 million was recorded in the consolidated statements of operations during the three and nine months ended September 30, 2025 and 2024, respectively.

The three notes, containing similar terms, are subordinated, unsecured and mature on June 15, 2031. Payments consist of interest only. Interest expense on the notes is payable semi-annually in arrears and will bear interest at 3.75% per annum until June 15, 2026 (or any earlier redemption date). From June 15, 2026 until June 15, 2031 (or any earlier redemption date) payments will be made quarterly in arrears, and the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month term SOFR plus 306 basis points. Prior to June 15, 2026, the Company may redeem the notes only under certain limited circumstances. Beginning on June 15, 2026 through maturity, the notes may be redeemed, at the Company’s option, on any scheduled interest payment date. Any redemption by the Company would be at a redemption price equal to 100% of the principal amount of the notes being redeemed, together with any accrued and unpaid interest on the notes being redeemed up to but excluding the date of redemption. The notes are not subject to redemption at the option of the holder.

Other borrowings

At September 30, 2025 and December 31, 2024, the Company sold securities under agreements to repurchase totaling $21.3 million and $18.9 million, respectively. In addition, as a member of the FHLB, the Company has access to a line of credit and term financing from the FHLB with total available credit of $1.6 billion at September 30, 2025. The Company may utilize the FHLB line of credit as a funding mechanism for originated loans and loans held for sale. At September 30, 2025 and December 31, 2024, NBH Bank had zero and $50.0 million, respectively, of outstanding borrowings with the FHLB. The Company may pledge investment securities and loans as collateral for FHLB advances. There were no investment securities pledged at September 30, 2025 or December 31, 2024. Loans pledged were $2.5 billion and $2.6 billion at September 30, 2025 and December 31, 2024, respectively. The Company incurred $0.4 million and $2.7 million of interest expense related to FHLB advances or other short-term borrowings for the three and nine months ended September 30, 2025, respectively. During the three and nine months ended September 30, 2024, the Company incurred $0.5 million and $3.8 million, respectively, of interest expense related to FHLB advances or other short-term borrowings.

Regulatory Capital

Our subsidiary banks and the holding company are subject to the regulatory capital adequacy requirements of the Federal Reserve Board and the FDIC, as applicable. Failure to meet the minimum capital requirements can initiate certain mandatory and possibly further discretionary actions by regulators that could have a material adverse effect on us. At September 30, 2025 and December 31, 2024, our subsidiary banks and the consolidated holding company exceeded all capital ratio requirements under prompt corrective action and other regulatory requirements, as further detailed in note 9 of our consolidated financial statements.

Results of Operations

Our net income depends largely on net interest income, which is the difference between interest income from interest earning assets and interest expense on interest bearing liabilities. Our results of operations are also affected by provisions for credit losses and non-interest income, such as service charges, bank card income, swap fee income, and gain on sale of mortgages. Our primary operating expenses, aside from interest expense, consist of salaries and benefits, occupancy costs, telecommunications data processing expense, FDIC deposit insurance and intangible assets amortization. Any expenses related to the resolution of problem assets are also included in non-interest expense.

Overview of results of operations

Net income totaled $35.3 million and $93.5 million, or $0.92 and $2.43 per diluted share, during the three and nine months ended September 30, 2025, respectively. During the three and nine months ended September 30, 2024, net income totaled $33.1 million and $90.6 million, or $0.86 and $2.36 per diluted share, respectively. Pre-provision net revenue FTE increased $8.5 million, or 7.1%, to $129.0 million during the nine months ended September 30, 2025, compared to the same period in the prior year. The return on average tangible assets was 1.54% and 1.38% during the three and nine months ended September 30, 2025, respectively, and the return on average tangible common equity was 14.21% and 13.05%, respectively. During the three and nine months ended September 30, 2024, the return on average tangible assets was 1.43% and 1.33%, respectively, and the return on average tangible common equity was 14.84% and 14.14%, respectively.

Adjusting for pre-tax acquisition-related expenses totaling $1.7 million, net income totaled $36.6 million and $94.9 million, or $0.96 and $2.47 per diluted share, during the three and nine months ended September 30, 2025, respectively. The adjusted return on average tangible assets was 1.60% and 1.40% during the three and nine months ended September 30, 2025, respectively, and the adjusted return on average tangible common equity was 14.72% and 13.23%, respectively.

Net interest income

We regularly review net interest income metrics to provide us with indicators of how the various components of net interest income are performing. We regularly review: (i) our loan mix and the yield on loans; (ii) the investment portfolio and the related yields; (iii) our deposit mix and the cost of deposits; and (iv) net interest income simulations for various forecast periods.

The effects of trade-date accounting of investment securities for which the cash had not settled are not considered interest earning assets and are excluded from this presentation for timeframes prior to their cash settlement, as are the market value adjustments on the investment securities available-for-sale and loans.

The table below presents the components of net interest income on an FTE basis for the three months ended September 30, 2025 and 2024.

(1) Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.

(2) Presented on an FTE basis using the statutory tax rate of 21% for all periods presented. The taxable equivalent adjustments included above are $1,985 and $1,816 for the three months ended September 30, 2025 and 2024, respectively. Represents a non-GAAP financial measure. See “About Non-GAAP Financial Measures” and reconciliation of GAAP financial measures to non-GAAP financial measures starting on page 52.

(3) Loan fees included in interest income totaled $3,353 and $3,647 for the three months ended September 30, 2025 and 2024, respectively.

(4) ​ Other borrowings includes securities sold under agreements to repurchase and cash collateral received from counterparties in connection with derivative swap agreements.

Net interest income increased $0.5 million to $88.2 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024. Net interest income on an FTE basis increased $0.7 million to $90.2 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024. During the three months ended September 30, 2025, the FTE net interest margin widened 11 basis points to 3.98%, compared to the three months ended September 30, 2024. The yield on earning assets decreased 13 basis points, driven by a decrease in loan yields during the three months ended September 30, 2025, and the cost of funds decreased 26 basis points to 2.10%, compared to the three months ended September 30, 2024.

Average loans comprised $7.4 billion, or 82.2%, of total average interest earning assets during the three months ended September 30, 2025, compared to $7.7 billion, or 84.2%, during the three months ended September 30, 2024.

Average investment securities comprised 15.5% and 14.6% of total interest earning assets during the three months ended September 30, 2025 and 2024, respectively. Average interest bearing cash balances totaled $149.9 million during the three months ended September 30, 2025, compared to $70.9 million for the same period in the prior year, as a result of holding higher levels of on-balance sheet liquidity.

Average interest bearing liabilities decreased $114.1 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The decrease was driven by lower interest bearing demand, savings and money market deposits totaling $204.9 million. The decrease was partially offset by higher time deposits totaling $72.4 million, other borrowings totaling $17.3 million and FHLB advances totaling $1.0 million.

The table below presents the components of net interest income on an FTE basis for the nine months ended September 30, 2025 and 2024:

Net interest income increased $7.0 million to $262.3 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. Net interest income on an FTE basis increased $7.6 million to $268.1 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. During the nine months ended September 30, 2025, the FTE net interest margin widened 15 basis points to 3.95%, compared to the nine months ended September 30, 2024. The cost of funds improved 22 basis points to 2.09%, during the nine months ended September 30, 2025, partially offset by a seven basis point decrease in earning asset yields, compared to the nine months ended September 30, 2024.

Average loans comprised $7.5 billion, or 83.2%, of total average interest earning assets during the nine months ended September 30, 2025, compared to $7.7 billion, or 83.9%, during the nine months ended September 30, 2024.

Average investment securities comprised 15.3% and 14.7% of total interest earning assets during the nine months ended September 30, 2025 and 2024, respectively. Average interest bearing cash balances totaled $85.6 million during the nine months ended September 30, 2025, compared to $84.9 million for the same period in the prior year.

Average interest bearing liabilities decreased $16.1 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The decrease was primarily driven by lower interest bearing demand, savings and money market deposits totaling $83.8 million and FHLB advances totaling $12.0 million. The decrease was partially offset by higher time deposits totaling $55.3 million, and other borrowings totaling $24.1 million.

The following table summarizes the changes in net interest income on an FTE basis by major category of interest earning assets and interest bearing liabilities, identifying changes related to volume and changes related to rates for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024:

Below is a breakdown of average deposits and the average rates paid during the periods indicated:

Provision for credit losses

The provision for credit losses represents the amount of expense that is necessary to bring the ACL to a level that we deem appropriate to absorb estimated lifetime losses inherent in the loan portfolio and estimated losses inherent in unfunded loans as of the balance sheet date. The determination of the ACL, and the resultant provision for credit losses, is subjective and involves significant estimates and assumptions.

During the three months ended September 30, 2025, the Company recorded provision release for funded loans totaling $1.5 million, primarily driven by the recovery of one previously charged off credit. During the nine months ended September 30, 2025, the Company recorded provision expense for credit losses totaling $8.7 million, including $9.0 million provision expense for funded loans and $0.3 million of provision release for unfunded loan commitments. Provision expense for credit losses during the nine months ended September 30, 2025 was recorded primarily to cover a charge-off on one credit due to suspected fraudulent activity by the borrower. During the three months ended September 30, 2024, the Company recorded provision expense for credit losses on funded loans totaling $2.0 million. During the nine months ended September 30, 2024, the Company recorded provision expense for credit losses totaling $4.8 million, including $4.7 million of provision expense for funded loans and $0.1 million of provision expense for unfunded loan commitments. The allowance for credit losses totaled 1.19% and 1.23% of total loans at September 30, 2025 and 2024, respectively.

Non-interest income

The table below details the components of non-interest income for the periods presented:

Non-interest income totaled $20.7 million for the three months ended September 30, 2025, increasing 12.5% compared to the three months ended September 30, 2024. Other non-interest income increased $3.3 million due to unrealized gains on partnership investments. Partially offsetting the increase was a combined decrease from service charges and bank card fees totaling $0.9 million.

Non-interest income increased $3.0 million, or 6%, to $53.1 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. Other non-interest income increased $5.0 million, primarily driven by $3.3 million of unrealized gains on partnership investments, a $0.9 million increase in gains on sales of previously consolidated banking center properties, and a $0.7 million increase in trust income during the nine months ended September 30, 2025, compared to the same period in the prior year.

Non-interest expense

The table below details the components of non-interest expense for the periods presented:

During the three months ended September 30, 2025, non-interest expense increased $3.1 million, compared to the three months ended September 30, 2024. The third quarter of 2025 included $1.7 million of acquisition-related expenses included in professional fees and salaries and benefits. Occupancy and equipment expenses increased $2.7 million during the three months ended September 30, 2025, compared to the same period in the prior year, primarily driven by 2UniFi’s software asset depreciation as a result of the recent launch of 2UniFi in the third quarter of 2025.

During the nine months ended September 30, 2025, non-interest expense increased $2.1 million to $192.2 million, compared to the same period during the prior year due to acquisition-related expenses from the proposed merger totaling $1.7 million, primarily included in professional fees and salaries and benefits. Occupancy and equipment expense increased $2.9 million primarily driven by the depreciation of the 2UniFi software asset noted above. Data processing increased $1.0 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Income taxes

Income tax expense totaled $7.9 million and $21.0 million for the three and nine months ended September 30, 2025, respectively. Income tax expense for the three and nine months ended September 30, 2024 totaled $6.8 million and $19.9 million, respectively. Changes between periods were primarily driven by changes in pre-tax income. The effective tax rate for the three and nine months ended September 30, 2025 was 18.2% and 18.3%, respectively, compared to 17.0% and 18.0% for the same periods in the prior year.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law. Provisions of the bill allowed companies to take an immediate deduction of domestic research and experimentation expenditures effective for tax years beginning after December 31, 2024. For unamortized domestic research and experimentation expenses capitalized from 2022 to 2024, the bill also allows companies to elect to deduct the remaining costs either fully in 2025 or ratably over two years. The Company elected to fully deduct the remaining costs in 2025. The bill also permanently reinstated 100% bonus depreciation for assets placed in service after January 19, 2025. As a result of these provisions, the company recorded a deferred tax expense of $8.9 million during the third quarter of 2025 related to the remeasurement and decrease in its deferred tax balances.

Additional information regarding income taxes can be found in note 19 of our audited consolidated financial statements in our 2024 Annual Report on Form 10-K.

Liquidity and Capital Resources

Liquidity

Liquidity risk management is an important element in our asset/liability management. The Company maintains a robust liquidity profile at its holding company and the Banks, collectively as well as separately. The Company is prudently managing liquidity in the current environment and maintains a liquidity profile focused on core deposits and stable long-term funding sources. Liquidity is supplemented with a variety of secured and unsecured wholesale funding sources across the maturity spectrum, which allows for the effective management of concentration and rollover risk. The Company’s corporate treasury team measures liquidity needs through daily cash monitoring, weekly cash projections and monthly liquidity measures reviewed in conjunction with Board-approved liquidity policy limits. The Company also regularly conducts stress tests to its Board-approved contingency funding plan to assess potential liquidity outflows or funding concerns resulting from economic disruptions, volatility in the financial markets, unexpected credit events or other significant occurrences deemed problematic by management. These scenarios are incorporated into the contingency funding plan, which provides the basis for the identification of our liquidity needs and are monitored monthly by our Asset and Liability Committee.

The Company’s primary sources of funds include revenue from interest income and noninterest income, as well as cash flows from loan repayments, payments from securities related to maturities and amortization, the sale of loans, and funds generated by deposits, in addition to the use of funds from private debt offerings.

On-balance sheet liquidity is represented by our cash and cash equivalents, and unencumbered investment securities, and is detailed in the table below as of September 30, 2025 and December 31, 2024:

Total on-balance sheet liquidity increased $728.1 million at September 30, 2025 compared to December 31, 2024, due to higher cash and due from banks of $427.7 million and higher unencumbered investment securities of $300.4 million. As of September 30, 2025, approximately $622.4 million of investment securities were pledged to the FRB and to secure client deposits and repurchase agreements.

The Company’s investment portfolio remains positioned in liquid and readily marketable instruments and is a significant source of on-balance sheet collateral to secure borrowing capacity. Our investment securities portfolio is evaluated under established Asset and Liability Committee objectives and is structured as a liquidity portfolio, and only security fair values are used for the liquidity assessment. The fair value of total investment securities was $1.3 billion at September 30, 2025, compared to $1.0 billion at December 31, 2024. As of September 30, 2025, the fair value was inclusive of pre-tax net unrealized losses of $66.2 million on the available-for-sale securities portfolio. Additionally, our held-to-maturity securities portfolio had $58.7 million of pre-tax net unrealized losses. The gross unrealized gains and losses are detailed in note 3 of our consolidated financial statements. As of September 30, 2025, our investment securities portfolio consisted primarily of MBS, all of which were issued or guaranteed by U.S. government agencies or sponsored enterprises. The anticipated repayments and marketability of these securities offer substantial resources and flexibility to meet new loan demand, reinvest in the investment securities portfolio, or provide optionality for reductions in our deposit funding base. At September 30, 2025, the duration of the investment securities portfolio was 3.8 years and the weighted average life was 4.5 years.

As part of its liquidity management activities, the Company pledges collateral at its secured funding providers to ensure immediate availability of funding, which includes maintaining borrowing capacity at both the FHLB and the Federal Reserve. The Company does not consider borrowing capacity at the Federal Reserve a primary source of funding; however, it could be used as a potential source of funds in a stressed environment or during a market disruption. The amount of available contingent secured borrowing capacity may fluctuate based on the level of borrowings outstanding and level of assets pledged. The table below details those amounts as of the dates shown:

The Company had pledged $2.5 billion and $2.6 billion of loans as collateral to the FHLB at September 30, 2025 and December 31, 2024, respectively. FHLB borrowing capacity totaled $1.6 billion and $1.7 billion at September 30, 2025 and December 31, 2024, respectively. At September 30, 2025, there were no outstanding borrowings with the FHLB, leaving undrawn borrowing capacity of $1.6 billion. At December 31, 2024, the Company had $50.0 million of outstanding borrowings with the FHLB, leaving undrawn borrowing capacity of $1.7 billion. At September 30, 2025, the Company’s available secured and committed borrowing capacity at the FHLB and Federal Reserve totaled $3.2 billion, compared to $2.6 billion at December 31, 2024.

In addition to core deposit and secured funding, the Company also accesses a variety of other short-term and long-term unsecured funding sources, which includes access to Cambr platform deposits, multiple brokered deposit platform options and lines of credit. Management does not rely on any one source of liquidity and manages availability in response to changing balance sheet needs, as well as within prudently defined concentration and policy limits. The Company executes periodic test trades to assess the level of access and operational processes associated with its secured and unsecured funding sources.

We anticipate that the sources of funds discussed above will provide adequate funding and liquidity for at least a 12-month period and the foreseeable future, and we may utilize any combination of these funding sources for long-term liquidity needs if deemed prudent.

Our primary uses of funds are loan fundings, investment security purchases, withdrawals of deposits, capital expenditures, operating expenses, and share repurchases. Additionally, approximately $84.8 million will be paid as consideration in connection with the Vista merger.

At present, financing activities primarily consist of changes in deposits and repurchase agreements, and advances from the FHLB, in addition to the payment of dividends and the repurchase of our common stock. Maturing time deposits represent a potential use of funds. As of September 30, 2025, $950.6 million of time deposits were scheduled to mature within 12 months. Based on the current interest rate environment and market conditions, our consumer banking strategy is to focus on attracting and maintaining both lower-cost transaction accounts and time deposits.

During 2021, the Company entered into a subordinated note purchase agreement to issue and sell a fixed-to-floating note. The Company deployed the net proceeds from the sale of the note for general corporate purposes. The note is not subject to redemption at the option of the holder. Additionally, as part of the acquisition of BOJH on October 1, 2022, the Company assumed three subordinated note purchase agreements to issue and sell fixed-to-floating rate notes. The balance on all subordinated notes totaled $54.7 million and $54.5 million at September 30, 2025 and December 31, 2024, respectively.

Capital

Under the Basel III requirements, at September 30, 2025, the Company, NBH Bank and BOJHT met all capital adequacy requirements, and the Banks had regulatory capital ratios in excess of the levels established for well-capitalized institutions. For more information on regulatory capital, see note 9 in our consolidated financial statements.

Our shareholders’ equity is impacted by earnings, changes in unrealized gains and losses on securities, net of tax, stock-based compensation activity, share repurchases, shares issued in connection with acquisitions and the payment of dividends.

The Board of Directors has from time to time authorized multiple programs to repurchase shares of the Company’s common stock from time to time either in the open market or in privately negotiated transactions in accordance with applicable regulations of the SEC. On May 9, 2023, the Company announced a program to repurchase up to $50.0 million of the Company’s stock, as approved by the Board of Directors. During the three months ended September 30, 2025, the Company repurchased 240,000 shares of common stock for $8.8 million at a weighted average price per share of $36.66. During the nine months ended September 30, 2025, the Company repurchased 359,300 shares of common stock for $13.0 million at a weighted average price per share of $36.28. The remaining authorization under the current program as of September 30, 2025 was $37.0 million. No time limit has been set for completion of the program.

On October 29, 2025, our Board of Directors declared a quarterly dividend of $0.31 per common share, payable on December 15, 2025 to shareholders of record at the close of business on November 28, 2025.

Asset/Liability Management and Interest Rate Risk

The Board of Directors meets as often as necessary, but no less than quarterly, to review financial statements, public filings, significant accounting policy changes, liquidity, interest rate risk and asset and liability management. The Board also oversees the performance of our internal audit function as well as serves as an independent and objective body to monitor and assess our compliance with legal and regulatory requirements as well as internal control systems. Management and the Board of Directors are responsible for managing interest rate risk and employing risk management policies that monitor and limit this exposure. Interest rate risk is measured using net interest income simulations and market value of portfolio equity analyses. These analyses use various assumptions, including the nature and timing of interest rate changes, yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, and reinvestment/replacement of asset and liability cash flows.

Interest rate risk results from the following:

The Asset Liability Committee, a cross-functional committee comprised of executive management and senior leaders, meets monthly to review, among other things, the sensitivity of the Company’s assets and liabilities to interest rate changes, local and national market conditions and interest rates. The Asset Liability Committee also reviews the liquidity, capital, deposit mix, loan mix and investment positions of the Company. The Company’s principal objective regarding asset and liability management is to evaluate interest rate risk within the balance sheet and pursue a controlled assumption of interest rate risk while preserving adequate levels of liquidity and capital.

Instantaneous parallel rate shift scenarios are modeled and utilized to evaluate risk and establish exposure limits for acceptable changes in net interest margin. These scenarios, known as rate shocks, simulate an instantaneous change in interest rates and utilize various assumptions, including, but not limited to, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment and replacement of asset and liability cash flows.

We also analyze the economic value of equity as a secondary measure of interest rate risk. This is a complementary measure to net interest income where the calculated value is the result of the market value of assets less the market value of liabilities. The economic value of equity is a longer term view of interest rate risk because it measures the present value of the future cash flows. The impact of changes in interest rates on this calculation is analyzed for the risk to our future earnings and is used in conjunction with the analyses on net interest income.

Our interest rate risk model indicated that the Company was in an asset sensitive position in terms of interest rate sensitivity at September 30, 2025. The table below illustrates the impact of an immediate and sustained 200 and 100 basis point increase and a 100 and 200 basis point decrease in interest rates on net interest income based on the interest rate risk model at September 30, 2025 and December 31, 2024:

Many assumptions are used to calculate the impact of interest rate fluctuations. Actual results may be significantly different than our projections due to several factors, including the timing and frequency of rate changes, market conditions and the shape of the yield curve. The computations of interest rate risk shown above do not include actions that management may undertake to manage the risks in response to anticipated changes in interest rates and actual results may also differ due to any actions taken in response to the changing rates.

As part of the asset/liability management strategy to manage primary market risk exposures expected to be in effect in future reporting periods, management has executed interest rate derivatives primarily using floors and collars. For further discussion of the Company’s derivative contracts refer to note 14. The strategy with respect to liabilities has been to continue to emphasize transaction deposit growth, particularly non-interest or low interest bearing non-maturing deposit accounts while building long-term client relationships. Non-maturing deposit accounts totaled 86.3% of total deposits at September 30, 2025, compared to 87.6% at December 31, 2024.

Impact of Inflation and Changing Prices

An inflationary environment may impact our financial performance and may impact our clients, including but not limited to impacts on assets, earnings, capital levels and growth opportunities. While we plan to continue our disciplined approach to expense management, an inflationary environment may cause wage pressures and general increases in our cost of doing business, which may increase our non-interest expense.

Unlike most industrial companies, virtually all of our assets and liabilities are monetary in nature. As a result, changes in interest rates have a more significant impact on our performance than do changes in the general rate of inflation and changes in prices. Interest rate changes do not necessarily move in the same direction, nor have the same magnitude, as changes in the prices of goods and services.

Off-Balance Sheet Activities

In the normal course of business, we are a party to various contractual obligations, commitments and other off-balance sheet activities that contain credit, market, and operational risk that are not required to be reflected in our consolidated financial statements. The most significant of these are the loan commitments that we enter into to meet the financing needs of clients, including commitments to extend credit, commercial and consumer lines of credit and standby letters of credit. As of September 30, 2025 and December 31, 2024, we had loan commitments totaling $1.2 billion and $1.4 billion, respectively, and standby letters of credit totaling $9.5 million and $10.8 million, respectively. Unused commitments do not necessarily represent future credit exposure or cash requirements, as commitments often expire without being drawn upon.

The information called for by this item is 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 and is incorporated herein by reference.

Our management, with the participation of our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as of September 30, 2025. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2025.

During the most recently completed fiscal quarter, there were no changes made to our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Except as presented below, there have been no material changes to the risk factors disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024.

We are expecting to incur substantial costs related to our transaction with Vista and integration of Vista into NBHC. If the transaction is not completed, we will have incurred substantial expenses without realizing the expected benefits of the transaction.

On September 15, 2025, we announced our entry into a definitive agreement (the “merger agreement”) pursuant to which Vista will merge with and into the Company (the “merger”). NBHC expects to close the proposed transaction in the three months ended March 31, 2026, subject to regulatory approval, Vista shareholder approval and other customary closing conditions. An extended period of shutdown of portions of the U.S. federal government or other factors beyond NBHC’s or Vista’s control could negatively impact NBHC’s ability to timely complete the merger. We have incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement. These costs include legal, financial advisory, accounting, consulting and other advisory fees, severance/employee benefit-related costs, filing fees and other regulatory fees, printing costs and other related costs. Some of these costs are payable by us regardless of whether or not the merger is completed. If the merger is not completed, we would have to recognize these expenses without realizing the expected benefits of the merger.

Combining with Vista may be more difficult, costly or time consuming than expected, and we may fail to realize the anticipated benefits and cost savings of the merger.

The success of the merger will depend, in part, on the ability to realize the anticipated cost savings from combining our business with Vista’s. To realize the anticipated benefits and cost savings from the merger, we must successfully integrate and combine our businesses in a manner that permits those cost savings to be realized. If we are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings and anticipated benefits of the merger could be less than anticipated, and integration may result in additional unforeseen expenses.

We have operated and, until the completion of the merger, must continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of our ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger. Integration efforts between the two companies may also divert management attention and resources. These integration matters could have an adverse effect on us during this transition period and for an undetermined period after completion of the merger.

We will be subject to business uncertainties and contractual restrictions while the merger is pending.

Whether or not the merger is ultimately consummated, uncertainty about the effect of the merger on employees and customers may have an adverse effect on us. These uncertainties may impair our ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with us to seek to change existing business relationships with us. In addition, subject to certain exceptions, we have agreed to a limited set of restrictions on our business activities prior to the effective time of the merger. The restrictions on us could prevent us from pursuing certain business opportunities that arise or taking certain corporate actions prior to the effective time of the merger.

The continuation of the U.S. federal government shutdown could adversely affect the U.S. and global economy and our business, financial condition and results of operations.

Disagreement over the U.S. federal budget has caused the U.S. federal government to shut down in recent weeks, which may continue for an indeterminate period of time. We originate, sell and service loans under various programs sponsored by the U.S. federal government, including the FHA and SBA. Any inability to engage in our commercial FHA or SBA origination and servicing business would lead to a decrease in our net income. Additionally, an extended period of shutdown of portions of the U.S. federal government could negatively impact the financial performance of certain clients and could negatively impact our clients’ access to certain loan and guaranty programs. Prolonged adverse political and economic conditions could have a material adverse effect on our business, financial condition and results of operations.