10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-35654

NATIONAL BANK HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	27-0563799
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7800 East Orchard Road, Suite 300, Greenwood Village, Colorado 80111

(Address of principal executive offices) (Zip Code)

Registrant’s telephone, including area code:

(303) 892-8715

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, Par Value $0.01	NBHC	New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No  ☒

As of June 30, 2019, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $1,094,000,000 based on the closing sale price as reported on the New York Stock Exchange.

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of February 24, 2020, NBHC had outstanding 31,177,476 shares of Class A voting common stock with $0.01 par value per share, excluding 120,623 shares of restricted Class A common stock issued but not yet vested.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement for its 2020 Annual Meeting of Shareholders to be filed within 120 days of December 31, 2019 will be incorporated by reference into Part III of this Form 10-K.

INDEX

			Page
Cautionary Notes Regarding Forward Looking Statements			3
PART I	Item 1.	Business	5
	Item 1A.	Risk Factors	18
	Item 1B.	Unresolved Staff Comments	30
	Item 2.	Properties	30
	Item 3.	Legal Proceedings	30
	Item 4.	Mine Safety Disclosures	30
PART II	Item 5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	31
	Item 6.	Selected Financial Data	34
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	68
	Item 8.	Financial Statements and Supplementary Data	69
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	122
	Item 9A.	Controls and Procedures	122
	Item 9B.	Other Information	125
PART III	Item 10.	Directors, Executive Officers and Corporate Governance	125
	Item 11.	Executive Compensation	125
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	125
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	125
	Item 14.	Principal Accountant Fees and Services	125
PART IV	Item 15.	Exhibits and Financial Statement Schedules	126
Signatures			129

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, notwithstanding that such statements are not specifically identified. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believe,” “can,” “would,” “should,” “could,” “may,” “predict,” “seek,” “potential,” “will,” “estimate,” “target,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “intend” and similar words or phrases. These statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties. We have based these statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, liquidity, results of operations, business strategy and growth prospects.

Forward-looking statements involve certain important risks, uncertainties and other factors, any of which could cause actual results to differ materially from those in such statements and, therefore, you are cautioned not to place undue reliance on such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

●       our ability to execute our business strategy, as well as changes in our business strategy or development plans;

●       business and economic conditions generally and in the financial services industry;

●       effects of a government shutdown, if any;

●       economic, market, operational, liquidity, credit and interest rate risks associated with our business;

●       effects of any changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board;

●       changes imposed by regulatory agencies to increase our capital to a level greater than the current level required for well-capitalized financial institutions;

●       effects of inflation, as well as, interest rate, securities market and monetary supply fluctuations;

●       changes in the economy or supply-demand imbalances affecting local real estate values;

●       changes in consumer spending, borrowings and savings habits;

●       with respect to our mortgage business, our inability to negotiate our fees with Fannie Mae, Freddie Mac, Ginnie Mae or other investors for the purchase of our loans, our obligation to indemnify purchasers or to repurchase the related loans if the loans fail to meet certain criteria, or higher rate of delinquencies and defaults as a result of the geographic concentration of our servicing portfolio;

●       our ability to identify potential candidates for, obtain regulatory approval for, and consummate, acquisitions, consolidations or other expansion opportunities on attractive terms, or at all;

●       our ability to integrate acquisitions or consolidations and to achieve synergies, operating efficiencies and/or other expected benefits within expected time-frames, or at all, or within expected cost projections, and to preserve the goodwill of acquired financial institutions;

●       our ability to realize the anticipated benefits from enhancements or updates to our core operating systems from time to time without significant change in our client service or risk to our control environment;

●       our dependence on information technology and telecommunications systems of third party service providers and the risk of system failures, interruptions or breaches of security, including those that could result in disclosure or misuse of confidential or proprietary client or other information;

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●       our ability to achieve organic loan and deposit growth and the composition of such growth;

●       changes in sources and uses of funds, including loans, deposits and borrowings;

●       increased competition in the financial services industry, including nationally, regionally or locally, resulting in, among other things, lower returns;

●       continued consolidation in the financial services industry;

●       our ability to maintain or increase market share and control expenses;

●       the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters;

●       the trading price of shares of the Company's stock;

●       the effects of tax legislation, including the potential of future increases to prevailing tax rates, or challenges to our

tax position;

●       our ability to realize deferred tax assets or the need for a valuation allowance, or the effects of changes in tax laws on our deferred tax assets;

●       costs and effects of changes in laws and regulations and of other legal and regulatory developments, including, but not limited to, changes in regulation that affect the fees that we charge, the resolution of legal proceedings or regulatory or other governmental inquiries, and the results of regulatory examinations, reviews or other inquiries; and changes in regulations that apply to us as a Colorado state-chartered bank;

●       technological changes;

●       the timely development and acceptance of new products and services and perceived overall value of these products and services by our clients;

●       changes in our management personnel and our continued ability to attract, hire and retain qualified personnel;

●       ability to implement and/or improve operational management and other internal risk controls and processes and our reporting system and procedures;

●       regulatory limitations on dividends from our bank subsidiary;

●       changes in estimates of future loan reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements;

●       widespread natural and other disasters, dislocations, political instability, pandemics, acts of war or terrorist activities, cyberattacks or international hostilities through impacts on the economy and financial markets generally or on us or our counterparties specifically;

●       a cyber-security incident, data breach or a failure of a key information technology system;

●       impact of reputational risk on such matters as business generation and retention;

●       other risks and uncertainties listed from time to time in the Company’s reports and documents filed with the Securities and Exchange Commission; and

●       our success at managing the risks involved in the foregoing items.

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Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

PART I: FINANCIAL INFORMATION

Item 1.       BUSINESS.

Summary

National Bank Holdings Corporation ("NBHC" or the "Company") is a bank holding company that was incorporated in the State of Delaware in 2009. The Company is headquartered in Denver, Colorado, and its primary operations are conducted through its wholly owned subsidiary, NBH Bank (the "Bank"), a Colorado state-chartered bank and a member of the Federal Reserve System. The Company provides a variety of banking products to both commercial and consumer clients through a network of 101 banking centers, as of December 31, 2019, located primarily in Colorado and the greater Kansas City region, and through online and mobile banking products and services. As of December 31, 2019, we had $5.9 billion in assets, $4.4 billion in loans, $4.7 billion in deposits and $0.8 billion in shareholders’ equity.

NBH Bank is a Colorado state-chartered bank and a member of the Federal Reserve Bank of Kansas City. Through NBH Bank, we operate under the following brand names: Community Banks of Colorado in Colorado; Bank Midwest in Kansas and Missouri; and Hillcrest Bank in New Mexico, Texas and Utah. We believe that conducting our banking operations under a single state charter streamlines our operations and enables us to more effectively and efficiently execute our growth strategy.

Our Acquisitions

We began banking operations in October 2010 and, as of December 31, 2019, we have completed six bank acquisitions. We have transformed these banks into one collective banking operation with strong organic growth, prudent underwriting, and meaningful market share with continued opportunity for expansion.

All of our acquisitions were accounted for under the acquisition method of accounting, and accordingly, all assets acquired and liabilities assumed were recorded at their respective acquisition date fair values and the fair value discounts/premiums on loans are being accreted over the lives of the loans.

The following table summarizes certain highlights of our six historic acquisitions, including deposits and assets at fair value as of each acquisition date:

				Community Banks
	Peoples	Pine River		of Colorado		Bank of Choice		Bank Midwest		Hillcrest Bank
Date acquired	January 1, 2018		August 1, 2015		October 21, 2011		July 22, 2011		December 10, 2010		October 22, 2010
Banking centers(1)	19		4		40		16		39		9
Deposits (millions)	$ 730		$ 130		$ 1,195		$ 760		$ 2,386		$ 1,234
Assets (millions)	$ 875		$ 142		$ 1,228		$ 950		$ 2,426		$ 1,377
Primary Market	Colorado		Colorado		Colorado		Colorado		Greater Kansas City Region		Greater Kansas City Region

(1) Consolidated or sold 29 banking centers, or 22%, since inception.

Our Market Area

Our core markets are broadly defined as Colorado, the greater Kansas City region, New Mexico, Texas and Utah. In January 2019, the Company announced its expansion into Utah with a focus on serving commercial and business banking clients in Salt Lake City’s Wasatch Front. We are the third largest banking center network among Colorado-based banks and the seventh largest banking center network in the greater Kansas City MSA among Missouri- and Kansas-based banks ranked by deposits as of June 30, 2019 (the last date as of which data are available), according to S&P Global. Other major MSAs in which we operate include Dallas-Fort Worth-Arlington, Texas; Austin-Round Rock, Texas; and Salt Lake City, Utah.

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We believe that our established presence in our markets positions us well for growth opportunities. An integral component of our foundation and growth strategy has been to capitalize on market opportunities and acquire financial services franchises. Our primary focus has been on markets that we believe are characterized by some or all of the following: (i) attractive demographics with household income and population growth above the national average; (ii) concentration of business activity; (iii) high quality deposit bases; (iv) an advantageous competitive landscape that provides opportunity to achieve meaningful market presence; (v) consolidation opportunities as well as potential for add-on transactions; and (vi) markets sizeable enough to support our long-term organic growth objectives.

The table below describes certain key demographic statistics regarding our markets:

									Top 3
									competitor
			# of				Median		combined
	Deposits		businesses	Population	Unemployment	Population	household		deposit
	(billions)		(thousands)	(millions)	rate(1)	growth(2)	income		market share
Denver, CO	$	87.2	114.9	3.0	2.5%	18.0%	$	83,768	53%
Front Range, CO(3)		118.5	182.7	4.8	2.5%	18.4%		80,902	51%
Kansas City, MO-KS MSA		61.3	76.0	2.2	3.2%	8.0%		69,742	44%
Austin, TX		42.9	68.1	2.2	2.6%	30.3%		82,650	54%
Dallas, TX		292.8	240.9	7.7	3.1%	20.3%		73,009	59%
Salt Lake City, UT		38.2	43.2	1.2	2.3%	14.4%		78,785	77%
U.S.(4)					3.5%	7.0%		66,010	57%

(1)	Unemployment data is as of December 31, 2019.
(2)	For the period 2010 through 2019.
(3)	CO Front Range is a population weighted average of the following Colorado MSAs: Denver, Boulder, Colorado Springs, Fort Collins and Greeley.
(4)	Based on U.S. Top 20 MSAs (determined by population).

Source: S&P Global as of December 31, 2019, except Deposits and Top 3 Competitor Combined Deposit Market Shares, which reflects data as of September 30, 2019.

Our Business Strategy

As part of our goal of becoming a leading regional community bank holding company, we seek to continue to generate strong organic growth, as well as pursue selective acquisitions of financial institutions and other complementary businesses. Our focus is on building organic growth through strong banking relationships with small- and medium-sized businesses and consumers in our primary markets, while maintaining a low-risk profile designed to generate reliable income streams and attractive returns. The key components of our strategic plan are:

● Focus on client-centered, relationship-driven banking strategy. Our business and commercial bankers focus on small- and medium-sized businesses with an advisory approach that emphasizes understanding the client’s business and offering a complete array of loan, deposit and treasury management products and services. Our business and commercial bankers are supported by treasury management teams in each of their markets, which allows us to more effectively deliver a comprehensive suite of products and services to our business clients and further deepen our banking relationships. Our consumer bankers focus on knowing their clients in order to best meet their financial needs, offering a full complement of loan, deposit, online and mobile banking solutions.

● Expansion of commercial banking, business banking and specialty businesses. We have made significant investments in our commercial relationship managers, as well as developed significant capabilities across our business banking and several specialty commercial banking offerings. Our strategy is to originate a high-quality loan portfolio that is diversified across industries and granular in loan size. We have preferred lender status with the Small Business Administration (“SBA”) providing a leveraged platform for growth in the business lending segment. We believe we are well-positioned to leverage our operating and risk management infrastructure through organic

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growth, and we intend to continue to add or repurpose our commercial relationship managers to higher growth opportunities and markets in order to drive increased profitability.

● Expansion through organic growth and competitive product offerings. We believe that our focus on serving consumers and small- to medium-sized businesses, coupled with our competitive product offerings, will provide an expanded revenue base and new sources of fee income. We conduct regular market and competitive analysis to determine which products and services are best suited for our clients. Our teams also continue to pursue opportunities to deepen client relationships, which we believe will further increase our organic loan origination volumes and attract new transaction accounts that offer lower cost of funds and higher fee generating activity.

● Continue to strengthen profitability through organic growth and operating efficiencies. We continue to utilize our comprehensive underwriting and risk management processes under one operating platform while maintaining local branding, leadership and decision making, which allows us to support growth and realize operating efficiencies throughout our enterprise. We believe that we have the infrastructure in place to support our future revenue growth without causing non-interest expenses to increase by a corresponding amount. Our growth strategy is focused on organic initiatives in order to accelerate our growth in profitability. Key priorities to strengthen profitability include the continued ramp-up of loan production, growing low-cost core deposits, implementing additional fee-based business initiatives and further enhancing operational efficiencies.

● Maintain conservative risk profile and sound risk management practices. Strong risk management is an important element of our operating philosophy. We maintain a conservative risk culture with adherence to comprehensive and seasoned policies across all areas of the organization. We implement self-imposed concentration limits on our loan portfolio to ensure a granular and diverse loan portfolio and protect against downside risk to any particular industry or real estate sector. Our risk management approach seeks to identify, assess and mitigate risk and minimize any resulting losses. We have implemented processes to identify, measure, monitor, report and analyze the types of risk to which we are subject. We believe our risk management policies establish appropriate limitations that allow for the prudent oversight of such risks that include, but are not limited to the following: credit, liquidity, market, operational, legal and compliance, reputational, and strategic and business risk.

● Pursue disciplined acquisitions or other expansionary opportunities. We expect that acquisitions or other expansionary opportunities will continue to be a component of our growth strategy. We intend to carefully select opportunities that we believe have stable core franchises, have significant local market share or will add asset generation capabilities or fee income streams while structuring the opportunities to limit risk. Further, we seek transactions that offer opportunities for clear financial benefits with valuations that have acceptable levels of earnings accretion, tangible book value dilution/earn-back, and internal rates of return. We seek to acquire or expand into financial services franchises in markets that exhibit attractive demographic attributes and business growth trends, and we believe that our focus on attractive markets will provide long-term opportunities for organic growth. Our focus is on our primary markets of Colorado, the greater Kansas City region, New Mexico, Texas and Utah, including teams, asset portfolios, specialty commercial finance businesses, and whole banks.

We believe our strategy of strong organic growth through the retention, expansion and development of client-centered relationships and growth through selective acquisitions or other expansionary opportunities in attractive markets provides flexibility regardless of economic conditions. Our established platform for assessing, executing and integrating acquisitions creates opportunities in an economic downturn, and our attractive market factors, franchise scale in our targeted markets and our relationship-centered banking focus create opportunities in an improving economic environment.

Products and Services

Through the Bank, our primary business is to offer a full range of traditional banking products and financial services to our commercial, business and consumer clients, who are predominantly located in Colorado, the greater Kansas City region, New Mexico, Texas and Utah. We conduct our banking business through 101 banking centers, with 48 of those located in Colorado, 44 in Kansas and Missouri, six in New Mexico, two in Texas and one in Utah as of December 31, 2019. Our distribution network also includes 127 ATMs as well as fully integrated online banking and mobile banking services. We offer a high level of personalized service to our clients through our relationship managers and banking center associates. We

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believe that a banking relationship that includes multiple services, such as loan and deposit services, online and mobile banking solutions and treasury management products and services, is the key to profitable and long-lasting client relationships and that our local focus and decision making provide us with a competitive advantage over banks that do not have these attributes.

Our primary strategic objective is to serve small- to medium-sized businesses in our markets with a variety of unique and useful services, including a full array of banking products, while maintaining a strong and disciplined credit culture and delivering excellent client service. We offer a variety of products and services that are focused on the following areas:

Commercial and Specialty Banking

Our commercial bankers focus on small- and medium-sized businesses with an advisory approach that emphasizes understanding the client’s business and offering a complete suite of loan, deposit and treasury management products and services. We have invested significantly in our commercial banking capabilities, attracting experienced commercial bankers from competing institutions in our markets, which have resulted in significant growth in our originated loan portfolio. Our commercial relationship managers offer a wide range of commercial loan products, including:

Commercial and Industrial Loans—We originate commercial and industrial loans and leases, including working capital loans, equipment loans, lender finance loans, food and agriculture loans, government and non-profit loans, owner occupied commercial real estate loans and other commercial loans and leases. The terms of these loans vary by purpose and by type of underlying collateral, if any.

Working capital loans generally have terms of up to one year, are usually secured by accounts receivable and inventory and carry the personal guarantees of the principals of the business. Equipment loans are generally secured by the financed equipment at advance rates that we believe are appropriate for the equipment type. In the case of owner-occupied commercial real estate loans, we are usually the primary provider of financial services for the company and/or the principals and the primary source of repayment is through the cash flows generated by the borrowers’ business operations. Owner-occupied commercial real estate loans are typically secured by a first lien mortgage on real property plus assignments of all leases related to the properties. Underwriting guidelines generally require borrowers to contribute cash equity that results in an 80% or less loan-to-value ratio on owner-occupied properties. As of December 31, 2019, substantially all of our commercial and industrial loans were secured.

Non-Owner Occupied Commercial Real Estate Loans—Non-owner occupied commercial real estate loans (“CRE”) consist of loans to finance the purchase of commercial real estate and development loans. Our non-owner occupied CRE loans include commercial properties such as office buildings, warehouse/distribution buildings, multi-family, hospitality and retail buildings. These loans are typically secured by a first lien mortgage or deed of trust, as well as assignments of all related leases. Underwriting guidelines generally require borrowers to contribute cash equity that results in a 75% or less loan to value ratio.

We seek to reduce the risks associated with commercial mortgage lending by focusing our lending in our primary markets. Although non-owner occupied CRE is not a primary focus of our lending strategy, we have developed teams of dedicated CRE bankers in each of our markets who possess the depth and breadth of both market knowledge and industry expertise, which serves to further mitigate risk of this product type.

Small Business Administration Loans—We offer a range of U.S. Small Business Administration, or SBA loans, to support manufacturers, distributors and service providers targeted to small businesses and entrepreneurs seeking growth capital, working capital, or other capital investments. As a Preferred Lender Provider of the SBA, we are able to expedite SBA loan approval, closing, and servicing functions through delegated authority to underwrite and approve loans on behalf of the SBA. We utilize the SBA 7(a) loan, SBA 504 loan, SBA Express loan, and CAP Line loan programs.

Commercial Deposit Products (including business online and mobile banking)—Our commercial bankers are focused on providing value-added deposit products to our clients that optimize their cash management program. We are focused on full-relationship banking, including banking core operating accounts and ancillary accounts. We also provide our commercial clients with money market accounts and short-term repurchase reserve accounts depending on their individual needs. In

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addition, we provide a wide array of treasury management solutions to our clients, including: business online and mobile banking, commercial credit card services, wire transfers, automated clearing house services, electronic bill payment, lock box services, remote deposit capture services, merchant processing services, cash vault, controlled disbursements, fraud prevention services through positive pay and other auxiliary services (including account reconciliation, collections, repurchase accounts, zero balance accounts and sweep accounts).

Business, Residential and Consumer Banking

Our business and consumer bankers focus on knowing their clients in order to best meet their financial needs, offering a full complement of loan, deposit and online and mobile banking solutions. We strive to do business in the areas served by our banking centers, which is also where our marketing is focused, and the vast majority of our new loan and deposit clients are located in existing market areas.

All of our newly originated consumer loans are on a direct to consumer basis. We offer a variety of business and consumer loans, including:

Business Loans—Business loans consist of term loans, line of credit, and real estate secured loans. The terms of these loans vary by purpose and by type of underlying collateral, if any. Business loans generally require LTV ratios of not more than 75 percent. Business loans also assist in the growth of our deposits because many business loan borrowers establish noninterest-bearing and interest-bearing demand deposit accounts and treasury management relationships with us. Those deposit accounts help us to reduce our overall cost of funds, and those treasury management relationships provide us with a source of non-interest income.

Residential Real Estate Loans—Residential real estate loans consist of loans secured by the primary or secondary residence of the borrower. These loans consist of closed loans, which are typically amortizing over a 10 to 30-year term. Our loan-to-value (LTV) benchmark for these loans will generally be below 80% at inception unless related to certain internal or government programs where higher LTV’s may be warranted, along with satisfactory debt-to-income ratios. We do not originate or purchase negatively amortizing or sub-prime residential loans. These residential real estate loans are generally originated under terms and conditions consistent with secondary market guidelines. Some of these loans will be placed in the Bank’s loan portfolio; however, a majority are sold in the secondary market and provide a significant source of fee income. The mortgage operation acquired from Peoples added significant residential banking products, servicing capabilities and residential loan origination channels. In addition to the referral business through our existing consumer client base, we have a dedicated team of mortgage bankers who focus origination efforts primarily on new purchase activity and secondarily on refinance activity. We also offer open- and closed-ended home equity loans, which are loans generally secured by second lien positions on residential real estate, and residential construction loans to consumers and builders for the construction of residential real estate.

Consumer Loans—Consumer loans are structured as small personal lines of credit and term loans, with the latter generally bearing interest at a higher rate and having a shorter term than residential mortgage loans. Consumer loans are both secured (for example by deposit accounts, brokerage accounts or automobiles) and unsecured and carry either a fixed rate or variable rate. Examples of our consumer loans include home improvement loans not secured by real estate, new and used automobile loans and personal lines of credit.

Deposit Products (including online and mobile banking)—We offer a variety of deposit products to our clients, including checking accounts, savings accounts, money market accounts, health savings accounts and other deposit accounts, including fixed-rate, fixed maturity time deposits ranging in terms from 30 days to five years, and individual retirement accounts. We view deposits as an important part of the overall client relationship and believe they provide opportunities to cross-sell other products and services. We intend to continue our efforts to attract low-cost transaction deposits from our client relationships. Consumer deposit flows are significantly influenced by general and local economic conditions, changes in prevailing interest rates, internal pricing decisions and competition. Our deposits are primarily obtained from areas surrounding our banking centers. In order to attract and retain deposits, we rely on providing competitively priced high-quality service and introducing new products and services that meet our clients' needs.

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We also offer comprehensive, user-friendly mobile and online banking platforms allowing our clients to pay bills, check statements, deposit checks and transfer funds, amongst other features, online or on-the-go.

Lending Activities

Our loan portfolio includes commercial and industrial loans, commercial real estate loans, residential real estate loans, business loans and consumer loans. The principal risk associated with each category of loans we make is the creditworthiness of the borrower. Borrower creditworthiness is affected by general economic conditions and the attributes of the borrower’s market or industry segment. Attributes of the relevant business market or industry segment include the economic and competitive environment, changes to supply or demand, threat of substitutes and barriers to entry and exit. In our credit underwriting process, we carefully evaluate the borrower’s industry, operating performance, liquidity and financial condition. We underwrite credits based on multiple repayment sources, including operating cash flow, liquidation of collateral and guarantor support, where appropriate. We closely monitor the operating performance, liquidity and financial condition of borrowers through analysis of periodic financial statements and meetings with the borrower’s management. As part of our credit underwriting process, we also review the borrower’s total debt obligations on a global basis. Our credit policy requires that key risks be identified and measured, documented and mitigated, to the extent possible, to seek to ensure the soundness of our loan portfolio.

Our credit policy also provides detailed procedures for making loans to individual and business clients along with the regulatory requirements to ensure that all loan applications are evaluated subject to our fair lending policy. Our credit policy addresses the common credit standards for making loans to clients, the credit analysis and financial statement requirements, the collateral requirements, including insurance coverage where appropriate, as well as the documentation required. Our ability to analyze a borrower’s current financial health and credit history, as well as the value of collateral as a secondary source of repayment, when applicable, are significant factors in determining the creditworthiness of loans to clients. We require various levels of internal approvals based on the characteristics of such loans, including the size, nature of the exposure and type of collateral, if any. We believe that the procedures required by our credit policies enhance internal responsibility and accountability for underwriting decisions and permit us to monitor the performance of credit decision-making. An integral element of our credit risk management strategy is the establishment and adherence to concentration limits for our portfolio. We have established concentration limits that apply to our portfolio based on product types such as commercial real estate, consumer lending, and various categories of commercial and industrial lending. For more detail on our credit policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Financial Condition-Asset Quality.”

Competition

The banking landscape in our primary markets of Colorado, Kansas, Missouri, New Mexico, Texas and Utah is highly competitive and quite fragmented, with many small banks having limited market share while the large out-of-state national and super-regional banks control the majority of deposits and profitable banking relationships. We compete actively with national, regional and local financial services providers, including: banks, thrifts, credit unions, mortgage companies, finance companies and financial technology (“FinTech”) companies.

Competition among providers of financial products and services continues to increase, with consumers having the opportunity to select from a variety of traditional brick and mortar banks and nontraditional alternatives, such as online banks and FinTech companies. Competition among providers is based on many factors. The primary factors driving commercial and consumer competition for loans and deposits are interest rates, the fees charged, client service levels and the range of products and services offered. In addition, other competitive factors include the location and hours of our banking centers, the client service orientation of our associates and the availability of digital banking products and services. We believe the most important of these competitive factors that determine our success are our consumer bankers’ focus on knowing their individual clients in order to best meet their financial needs and our business and commercial bankers’ focus on small- and medium-sized businesses with an advisory approach that emphasizes understanding the client’s business and offering a complete array of loan, deposit and treasury management products and services through our banking centers and our digital banking platform.

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We recognize that there are banks and other financial services companies with which we compete that have greater financial resources, access to more capital and higher lending capacity and offer a wider range of deposit and lending instruments. However, given our existing capital base, we expect to be able to meet the majority of small- to medium-sized business and consumer credit and depository service needs.

Associates

At December 31, 2019, we had 1,229 full-time associates and 69 part-time associates.

SUPERVISION AND REGULATION

The U.S. banking industry is highly regulated under federal and state law. Banking laws, regulations, and policies affect the operations of the Company and its subsidiary. Investors should understand that the primary objective of the U.S. bank regulatory regime is the protection of depositors, the Depositors Insurance Fund (“DIF”), and the banking system as a whole, not the protection of the Company’s shareholders.

As a bank holding company, we are subject to inspection, examination, supervision and regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Our bank subsidiary, NBH Bank, is a Colorado state-chartered bank and a member of the Federal Reserve Bank of Kansas City. As such, NBH Bank is subject to examination, supervision and regulation by both the Colorado Division of Banking and the Federal Reserve. In addition, we expect that any additional businesses that we may invest in or acquire will be regulated by various state and/or federal banking regulators.

Banking statutes and regulations are subject to continual review and revision by Congress, state legislatures and federal and state regulatory agencies. A change in such statutes or regulations, including changes in how they are interpreted or implemented, could have a material effect on our business. In addition to laws and regulations, state and federal bank regulatory agencies may issue policy statements, interpretive letters and similar written guidance pursuant to such laws and regulations, which are binding on us and our subsidiaries.

Banking statutes, regulations and policies could restrict our ability to diversify into other areas of financial services, acquire depository institutions and make distributions or pay dividends on our equity securities. They may also require us to provide financial support to any bank that we control, maintain capital balances in excess of those desired by management and pay higher deposit insurance premiums as a result of a general deterioration in the financial condition of NBH Bank or other depository institutions we control.

The description below summarizes certain elements of the applicable bank regulatory framework. This description is not intended to describe all laws and regulations applicable to us and our subsidiaries. The description is qualified in its entirety by reference to the full text of the statutes, regulations, policies, interpretive letters and other written guidance that are described.

National Bank Holdings Corporation as a Bank Holding Company

As a bank holding company, we are subject to regulation under the Bank Holding Company Act (“BHCA”) and to supervision, examination, and enforcement by the Federal Reserve. Federal Reserve jurisdiction also extends to any company that we may directly or indirectly control, such as non-bank subsidiaries and other companies in which we have a controlling interest. While subjecting us to supervision and regulation, we believe that our status as a bank holding company (as opposed to being a non-controlling investor) broadens the investment opportunities available to us among public and private financial institutions.

The BHCA generally prohibits a bank holding company from engaging, directly or indirectly, in activities other than banking or managing or controlling banks, except for activities determined by the Federal Reserve to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Provisions of the Gramm-Leach-Bliley Financial Modernization Act of 1999 (the “GLB Act”) expanded the permissible activities of a bank holding company that qualifies as a financial holding company. Under the regulations implementing the GLB Act, a financial holding company may engage in additional activities that are financial in nature or incidental or complementary to financial activity. Those activities include,

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among other activities, certain insurance and securities activities. We have not yet determined whether it would be appropriate or advisable in the future to become a financial holding company.

NBH Bank as a Colorado State-Chartered Bank

Our bank subsidiary, NBH Bank, is a Colorado state-chartered bank and also a member of the Federal Reserve Bank of Kansas City. As such, NBH Bank is subject to examination, supervision and regulation by both the Colorado Division of Banking and the Federal Reserve. NBH Bank’s deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”) through the DIF, in the manner and to the extent provided by law. As an insured bank, NBH Bank is subject to the provisions of the Federal Deposit Insurance Act, as amended (the “FDI Act”), and the FDIC’s implementing regulations thereunder, and may also be subject to supervision and examination by the FDIC under certain circumstances.

Under the FDIC Improvement Act of 1991 (“FDICIA”), NBH Bank must submit financial statements prepared in accordance with GAAP and management reports signed by the Company’s and NBH Bank’s chief executive officer and chief accounting or financial officer concerning management’s responsibility for the financial statements, an assessment of internal controls, and an assessment of NBH Bank’s compliance with various banking laws and FDIC and other banking regulations. In addition, we must submit annual audit reports to federal regulators prepared by independent auditors. As allowed by regulations, we may use our audit report prepared for the Company to satisfy this requirement. We must provide our auditors with examination reports, supervisory agreements and reports of enforcement actions. The auditors must also attest to and report on the statements of management relating to the internal controls. FDICIA also requires that NBH Bank form an independent audit committee consisting of outside directors only, or that the Company’s audit committee be entirely independent.

Broad Supervision, Examination and Enforcement Powers

The Federal Reserve, the FDIC and state bank regulators have broad regulatory, examination and enforcement authority over bank holding companies and banks, as applicable. Bank regulators regularly examine the operations of banks and bank holding companies. In addition, banks and bank holding companies are subject to periodic reporting and filing requirements.

Bank regulators have various remedies available if they determine that a banking organization has violated any law or regulation, that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of a banking organization’s operations are unsatisfactory, or that the banking organization is operating in an unsafe or unsound manner. The bank regulators have the power to, among other things: enjoin “unsafe or unsound” practices, require affirmative actions to correct any violation or practice, issue administrative orders that can be judicially enforced, direct increases in capital, direct the sale of subsidiaries or other assets, limit dividends and distributions, restrict growth, assess civil monetary penalties, remove officers and directors, terminate deposit insurance, and appoint a conservator or receiver.

Engaging in unsafe or unsound practices or failing to comply with applicable laws, regulations and supervisory agreements could subject the Company, its subsidiaries and their respective officers, directors and institution-affiliated parties to the remedies described above and other sanctions. In addition, the FDIC could terminate NBH Bank’s deposit insurance if it determined that the Bank’s financial condition was unsafe or unsound or that the bank engaged in unsafe or unsound practices or violated an applicable rule, regulation, order or condition enacted or imposed by the bank’s regulators.

Regulatory Capital Requirements

In General

As a bank holding company, we are subject to regulatory capital adequacy requirements implemented by the Federal Reserve. The federal banking agencies have risk-based capital adequacy guidelines intended to provide a measure of capital adequacy that reflects the degree of risk associated with a banking organization’s operations. NBH Bank also is, and other depository institution subsidiaries that we may acquire or control in the future will be, subject to capital adequacy guidelines as implemented by the relevant federal banking agency. In the case of the Company and NBH Bank, applicable capital guidelines can be found in the Federal Reserve’s Regulations H and Q.

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The capital rules require banks and bank holding companies to maintain a minimum common equity tier 1 capital ratio of 4.5%, a total tier 1 capital ratio of 6%, a total capital ratio of 8%, and a leverage ratio of 4%. Effective as of January 1, 2019, bank holding companies are required to hold a capital conservation buffer of common equity tier 1 capital of 2.5% to avoid limitations on capital distributions and executive compensation payments.

Further, the federal bank regulatory agencies may set higher capital requirements for an individual bank or when a bank’s particular circumstances warrant. At this time, the bank regulatory agencies are more inclined to impose higher capital requirements in order to be considered well-capitalized, and future regulatory change could impose higher capital standards as a routine matter.

The Federal Reserve may also set higher capital requirements for holding companies whose circumstances warrant it. For example, holding companies experiencing internal growth or making acquisitions are expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets.

Prompt Corrective Action

The FDI Act requires federal bank regulatory agencies to take “prompt corrective action” with respect to FDIC-insured depository institutions that do not meet minimum capital requirements. A depository institution’s treatment for purposes of the prompt corrective action provisions will depend upon how its capital levels compare to various capital measures and certain other factors, as established by regulation. Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories. The severity of the action depends upon the capital category in which the institution is placed. Generally, subject to a narrow exception, the banking regulator must appoint a receiver or conservator for an institution that is critically undercapitalized. Our regulatory capital ratios and those of NBH Bank are in excess of the levels established for “well-capitalized” institutions.

Bank Holding Companies as a Source of Strength

The Federal Reserve requires that a bank holding company serve as a source of financial and managerial strength to each bank that it controls and, under appropriate circumstances, commit resources to support each such controlled bank. This support may be required at times when the bank holding company may not have the resources to provide the support. Because we are a bank holding company, the Federal Reserve views the Company (and its consolidated assets) as a source of financial and managerial strength for any controlled depository institutions.

Under the prompt corrective action provisions, if a controlled bank is undercapitalized, then the regulators could require its bank holding company to guarantee a capital restoration plan. In addition, if the Federal Reserve believes that a bank holding company’s activities, assets or affiliates represent a significant risk to the financial safety, soundness or stability of a controlled bank, then the Federal Reserve could require the bank holding company to terminate the activities, liquidate the assets or divest the affiliates. The regulators may require these and other actions in support of controlled banks even if such action is not in the best interests of the bank holding company or its shareholders.

The Dodd-Frank Act codified the requirement that holding companies, like the Company, serve as a source of financial strength for their subsidiary depository institutions, by providing financial assistance to its insured depository institution subsidiaries in the event of financial distress. Under the source of strength doctrine, the Company could be required to provide financial assistance to NBH Bank should it experience financial distress.

In addition, capital loans by us to NBH Bank will be subordinate in right of payment to deposits and certain other indebtedness of NBH Bank. In the event of our bankruptcy, any commitment by us to a federal bank regulatory agency to maintain the capital of NBH Bank will be assumed by the bankruptcy trustee and entitled to a priority of payment.

Dividend Restrictions

The Company is a legal entity separate and distinct from its subsidiaries. Because the Company’s consolidated net income consists largely of the net income of NBH Bank, the Company’s ability to pay dividends depends upon its receipt of

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dividends from its subsidiary. The ability of a bank to pay dividends and make other distributions is limited by federal and state law. The specific limits depend on a number of factors, including the bank’s type of charter, recent earnings, recent dividends, level of capital and regulatory status. As a member of the Federal Reserve System and a Colorado state-chartered bank, NBH Bank is subject to Regulation H and limitations under Colorado law with respect to the payment of dividends. Non-bank subsidiaries are also limited by certain federal and state statutory provisions and regulations covering the amount of dividends that may be paid in any given year.

The ability of a bank holding company to pay dividends and make other distributions can also be limited. The Federal Reserve has authority to prohibit a bank holding company from paying dividends or making other distributions. A bank holding company should not pay cash dividends that exceed its net income or that can only be funded in ways that weaken the bank holding company’s financial health, such as by borrowing. In addition, as a Delaware corporation, the Company is subject to certain limitations and restrictions under Delaware corporate law with respect to the payment of dividends and other distributions.

Depositor Preference

The FDI Act provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver will have priority over other general unsecured claims against the institution. If our insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, nondeposit creditors, including us, with respect to any extensions of credit they have made to such insured depository institution.

Limits on Transactions with Affiliates

Federal law restricts the amount and the terms of both credit and non-credit transactions (generally referred to as “Covered Transactions”) between a bank and its non-bank affiliates. Covered Transactions with any single affiliate may not exceed 10% of the capital stock and surplus of the bank, and Covered Transactions with all affiliates may not exceed, in the aggregate, 20% of the bank’s capital and surplus. For a bank, capital stock and surplus refers to the bank’s tier 1 and tier 2 capital, as calculated under the risk-based capital guidelines, plus the balance of the allowance for credit losses excluded from tier 2 capital. The bank’s transactions with all of its affiliates in the aggregate are limited to 20% of the foregoing capital. In addition, in connection with Covered Transactions that are extensions of credit, the bank may be required to hold collateral to provide added security to the bank, and the types of permissible collateral may be limited. The Dodd-Frank Act generally enhances the restrictions on transactions with affiliates, including an expansion of what types of transactions are Covered Transactions to include credit exposures related to derivatives, repurchase agreements and securities lending arrangements and an increase in the amount of time for which collateral requirements regarding Covered Transactions must be satisfied. As of December 31, 2019, the Company did not have any outstanding Covered Transactions.

Regulatory Notice and Approval Requirements for Acquisitions of Control

We must generally receive federal bank regulatory approval before we can acquire a financial institution. Specifically, as a bank holding company, we must obtain prior approval of the Federal Reserve in connection with any acquisition that would result in the Company owning or controlling 5% or more of any class of voting securities of a bank or another bank holding company. Our ability to make investments in depository institutions will depend on our ability to obtain approval for such investments from the Federal Reserve. The Federal Reserve could deny our application based on the above criteria or other considerations. For example, we could be required to sell banking centers as a condition to receiving regulatory approval, which condition may not be acceptable to us or, if acceptable to us, may reduce the benefit of any acquisition.

In addition, federal and state laws, including the BHCA and the Change in Bank Control Act, impose additional prior notice or approval requirements and ongoing regulatory requirements on any investor that seeks to acquire direct or indirect “control” of an FDIC-insured depository institution or bank holding company. Whether an investor “controls” a depository institution is based on all of the facts and circumstances surrounding the investment. As a general matter, an investor is deemed to control a depository institution or other company if the investor owns or controls 25% or more of any class of voting securities or is entitled to appoint or elect a majority of the board of directors. For investments under those thresholds,

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regulators will examine whether the investor has the ability to exercise a controlling influence over the depository institution’s voting shares an investor acquires as well as the number of directors the investor is able to appoint or elect. Similarly, if an investor’s ownership of our voting securities or ability to appoint or elect directors were to exceed certain thresholds, the investor could be deemed to “control” us for regulatory purposes. This could subject the investor to regulatory filings or other regulatory consequences.

Anti-Money Laundering Requirements

Under federal law, including the Bank Secrecy Act and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”), certain types of financial institutions, including insured depository institutions, must maintain anti-money laundering programs that include established internal policies, procedures and controls; a designated compliance officer; an ongoing associate training program; and testing of the program by an independent audit function. Financial institutions are prohibited from entering into specified financial transactions and account relationships and must meet enhanced standards for due diligence, client identification, and recordkeeping, including in their dealings with non-U.S. financial institutions and non-U.S. clients. Financial institutions must take reasonable steps to conduct enhanced scrutiny of account relationships to guard against money laundering and to report any suspicious information maintained by financial institutions. Bank regulators routinely examine institutions for compliance with these obligations, and they must consider an institution’s anti-money laundering compliance when considering regulatory applications filed by the institution, including applications for banking mergers and acquisitions. The regulatory authorities have imposed “cease and desist” orders and civil money penalty sanctions against institutions found to be violating these obligations.

Consumer Laws and Regulations

Banks and other financial institutions are subject to numerous laws and regulations intended to protect consumers in their transactions with banks. These laws include, among others, laws regarding unfair and deceptive acts and practices and usury laws, as well as the following consumer protection statutes: Truth in Lending Act, Truth in Savings Act, Electronic Funds Transfer Act, Flood Disaster Protection Act, Expedited Funds Availability Act, Equal Credit Opportunity Act, Fair and Accurate Credit Transactions Act, Fair Housing Act, Fair Credit Reporting Act, Fair Debt Collection Act, GLB Act, Home Mortgage Disclosure Act, Right to Financial Privacy Act and Real Estate Settlement Procedures Act.

Many states and local jurisdictions have consumer protection laws analogous, and in addition, to those listed above. These state and local laws regulate the manner in which financial institutions deal with clients when taking deposits, making loans or conducting other types of transactions.

The Consumer Financial Protection Bureau (the “CFPB”) has broad rulemaking authority for a wide range of consumer financial laws that apply to all banks. The CFPB is authorized to issue rules for both bank and nonbank companies that offer consumer financial products and services, subject to consultation with the prudential banking regulators. In general, however, banks with assets of $10 billion or less, such as NBH Bank, will continue to be examined for consumer compliance by their primary bank regulator.

Much of the CFPB’s rulemaking has focused on mortgage lending and servicing, including an important rule requiring lenders to ensure that prospective buyers have the ability to repay their mortgages. Other areas of current CFPB focus include consumer protections for prepaid cards, payday lending, debt collection, overdraft services and privacy notices. The CFPB has been particularly active in issuing rules and guidelines concerning residential mortgage lending and servicing, issuing numerous rules and guidance related to residential mortgages. Perhaps the most significant of these guidelines are the “Ability-to-Repay and Qualified Mortgage Standards under the Truth in Lending Act” portions of Regulation Z and the Know Before You Owe guidelines. Under the Dodd-Frank Act, creditors must make a reasonable and good faith determination, based on verified and documented information, that the consumer has a reasonable “ability to repay” a residential mortgage according to its terms as well as clearly and concisely disclose the terms and costs associated with these loans.

The CFPB has actively issued enforcement actions against both large and small entities and to entities across the entire financial services industry. The CFPB has relied upon “unfair, deceptive, or abusive acts” prohibitions as its primary

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enforcement tool. However, the CFPB and DOJ continue to be focused on fair lending in taking enforcement actions against banks with renewed emphasis on alleged redlining practices. Failure to comply with these laws and regulations could give rise to regulatory sanctions, client rescission rights, actions by state and local attorneys general and civil or criminal liability.

The Community Reinvestment Act

The Community Reinvestment Act (“CRA”) is intended to encourage banks to help meet the credit needs of their entire communities, including low- and moderate-income neighborhoods, consistent with safe and sound operations. The regulators examine banks and assign each bank a public CRA rating. The CRA then requires bank regulators to take into account the bank’s record in meeting the needs of its community when considering certain applications by a bank, including applications to establish a banking center or to conduct certain mergers or acquisitions. The Federal Reserve is required to consider the CRA records of a bank holding company’s controlled banks when considering an application by the bank holding company to acquire a bank or to merge with another bank holding company.

When we apply for regulatory approval to make certain investments, the regulators will consider the CRA record of the target institution and our depository institution subsidiary. An unsatisfactory CRA record could substantially delay approval or result in denial of an application.

Reserve Requirements

Pursuant to regulations of the Federal Reserve, all banks are required to maintain average daily reserves at mandated ratios against their transaction accounts. In addition, reserves must be maintained on certain non-personal time deposits. These reserves must be maintained in the form of vault cash or in an account at a Federal Reserve Bank (“FRB”).

Deposit Insurance Assessments

All of a depositor’s accounts at an insured bank, including all non-interest bearing transaction accounts, are insured by the FDIC up to $250,000. FDIC-insured banks are required to pay deposit insurance premiums to the FDIC. The FDIC has adopted a risk-based assessment system whereby FDIC-insured depository institutions pay insurance premiums at rates based on their risk classification. An institution’s risk classification is assigned based on its capital levels and the level of supervisory concern the institution poses to the regulators.

Assessments are based on an institution’s average total consolidated assets less average tangible equity (subject to risk-based adjustments that would further reduce the assessment base for custodial banks). NBH Bank may be able to pass part or all of this cost on to its clients, including in the form of lower interest rates on deposits, or fees to some depositors, depending on market conditions.

The FDIC may terminate a depository institution’s deposit insurance upon a finding that the institution’s financial condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices or has violated any applicable rule, regulation, order or condition enacted or imposed by the institution’s regulatory agency. If deposit insurance for a banking business we invest in or acquire were to be terminated, that would have a material adverse effect on that banking business and potentially on the Company as a whole.

Interstate Banking

Under the Riegle-Neal Interstate Banking and Branching Efficiency Act (the “Riegle-Neal Act”), a bank holding company may acquire banks in states other than its home state, subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the bank holding company not control, prior to or following the proposed acquisition, more than 10% of the total amount of deposits of insured depository institutions nationwide or, unless the acquisition is the bank holding company’s initial entry into the state, more than 30% of such deposits in the state (or such lesser or greater amount set by the state). Bank holding companies must be well capitalized and well managed, not merely adequately capitalized and adequately managed, in order to acquire a bank located outside of the bank holding company’s home state.

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The Riegle-Neal Act also authorizes banks to merge across state lines, thereby creating interstate banking centers. A national or state bank, with the approval of its regulator, may open a de novo banking center in any state if the law of the state in which the banking center is proposed would permit the establishment of the banking center if the bank were a bank chartered in that state.

The Federal Reserve, the Office of the Comptroller of the Currency (“OCC”), and FDIC jointly issued a final rule, effective October 10, 1977, that adopted uniform regulations implementing Section 109 of the Riegle-Neal Act. Section 109 prohibits any bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production. Congress enacted Section 109 to ensure that interstate branches would not take deposits from a community without the bank reasonably helping to meet the credit needs of that community.

Changes in Laws, Regulations or Policies

Congress and state legislatures may introduce from time to time measures or take actions that would modify the regulation of banks or bank holding companies. In addition, federal and state regulatory agencies also periodically propose and adopt changes to their regulations or change the manner in which existing regulations are applied. Such changes could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks and other financial institutions, all of which could affect our investment opportunities and our assessment of how attractive such opportunities may be. We cannot predict whether potential legislation will be enacted and, if enacted, the effect that it or any implementing regulations would have on our business, results of operations, liquidity or financial condition.

Recent Regulatory Reform

In May 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act (“EGRRCPA”), was enacted to modify or remove certain financial reform rules and regulations, including some of those implemented under the Dodd-Frank Act. While EGRRCPA maintains most of the regulatory structure established by the Dodd-Frank Act, it amends certain aspects of the regulatory framework for small depository institutions with assets of less than $10 billion and for large banks with assets of more than $50 billion. Many of these changes could result in meaningful regulatory changes for community banks such as NBH Bank, and their holding companies.

EGRRCPA, among other matters, expands the definition of qualified mortgages which may be held by a financial institution and simplifies the regulatory capital rules for financial institutions and their holding companies with total consolidated assets of less than $10 billion by establishing a single “Community Bank Leverage Ratio” of 9 percent. Any qualifying depository institution or its holding company that exceeds the “community bank leverage ratio” will be considered to have met generally applicable leverage and risk-based regulatory capital requirements and any qualifying depository institution that exceeds the new ratio will be considered to be “well capitalized” under the prompt corrective action rules. A major effect of this change is to exclude such holding companies from the minimum capital requirements of the Dodd-Frank Act. In addition, EGRRCPA includes regulatory relief for community banks regarding the Volcker Rule (proprietary trading prohibitions), mortgage disclosures and risk weights for certain high-risk commercial real estate loans.

More Information

Our website is www.nationalbankholdings.com. We make available free of charge, through our website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the U.S. Securities and Exchange Commission (“SEC”). The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

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Item 1A.    RISK FACTORS

Risks Relating to Our Banking Operations

Changes in general business and economic conditions could materially and adversely affect us.

Our business and operations are sensitive to general business and economic conditions in the United States and in our core markets of Colorado, the greater Kansas City region, New Mexico, Texas and Utah. If the economies in our core markets, or the U.S. economy more generally, experience worsening economic conditions, including industry-specific conditions, we could be materially and adversely affected. Weak economic conditions may be characterized by deflation, fluctuations in debt and equity capital markets, including a lack of liquidity and/or depressed prices in the secondary market for mortgage loans, increased delinquencies on loans, residential and commercial real estate price declines, lower home sales and commercial activity, further or prolonged pressure on energy prices, high unemployment, and the economic effects of natural disasters, severe weather conditions, health emergencies or pandemics, cyberattacks, outbreaks of hostilities, terrorism or other geopolitical instabilities. All of these factors would be detrimental to our business. Our business is significantly affected by monetary and related policies of the U.S. federal government, its agencies and government-sponsored entities. Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control and could have a material adverse effect on us.

Changes in the assumptions underlying our acquisition method of accounting, or other significant accounting estimates could affect our financial information and have a material adverse effect on us.

A material portion of our financial results is based on, and subject to, significant assumptions and subjective judgments. As a result of our acquisitions, our financial information is influenced by the application of the acquisition method of accounting, which requires us to make complex assumptions, and these assumptions materially affect our financial results. As such, any financial information generated through the use of the acquisition method of accounting is subject to modification or change. If our assumptions are incorrect and we change or modify our assumptions, it could have a material adverse effect on us or our previously reported results. Additionally, a change in our accounting estimates, such as our ability to realize deferred tax assets, the need for a valuation allowance or the recoverability of the goodwill recorded at the time of our acquisitions, could have a material adverse effect on our financial results.

Our business is highly susceptible to credit risk and fluctuations in the value of real estate and other collateral securing such credit.

As a lender, we are exposed to the risk that our clients will be unable to repay their loans according to their terms and that the collateral securing the payment of their loans (if any) may not be sufficient to assure repayment. The risks inherent in making any loan include risks with respect to the ability of borrowers to repay their loans and, if applicable, the period of time over which the loan is repaid, risks relating to proper loan underwriting and guidelines, risks resulting from changes in economic and industry conditions, risks inherent in dealing with individual borrowers and risks resulting from uncertainties as to the future value of collateral. Similarly, we have credit risk embedded in our securities portfolio. Our credit standards, procedures and policies may not prevent us from incurring substantial credit losses. A decline in residential real estate market prices and reduced levels of home sales, could adversely affect the value of collateral securing mortgage loans resulting in greater charge-offs in future periods, as well as adversely impact mortgage loan originations and gains on sale of mortgage loans. A decline in commercial real estate values would likewise adversely affect the value of collateral securing certain commercial loans and result in greater charge-offs in future periods. Declines in real estate values and home sales volumes, and financial stress on borrowers as a result of job losses or other factors, could have further adverse effects on borrowers that result in higher delinquencies and greater charge-offs in future periods, which could materially and adversely affect us.

We depend on our executive officers and key personnel to implement our strategy and could be harmed by the loss of their services.

The execution of our strategy depends in large part on the skills of our executive management team and our ability to motivate and retain these and other key personnel, including key personnel added through mergers and acquisitions. Accordingly, the loss of service of one or more of our executive officers or key personnel could reduce our ability to

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successfully implement our growth strategy and materially and adversely affect us. Our success also depends on the experience of our banking center managers and relationship managers and on their relationships with the clients and communities they serve. The loss of these key personnel could negatively impact our banking operations.

Our allowance for loan losses and fair value adjustments may prove to be insufficient to absorb losses inherent in our loan or OREO portfolio.

We maintain an allowance for loan losses (“ALL”), which is a reserve established through a provision for loan losses charged to expense, which we believe is appropriate to provide for probable losses inherent in our loan portfolio. The amount of this allowance is determined by our management through periodic reviews.

The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks and future trends, all of which may undergo material changes. Changes in economic conditions affecting borrowers, new information regarding our loans, identification of additional problem loans by us and other factors, both within and outside of our control, may require an increase in the allowance for loan losses. If the real estate markets deteriorate, we expect that we will experience increased delinquencies and credit losses, particularly with respect to construction, land development and land loans. In addition, our regulators periodically review our allowance for loan losses and may require an increase in the allowance for loan losses or the recognition of further loan charge-offs, based on judgments different than those of management. In addition, if charge-offs in future periods exceed the allowance for loan losses, we will need additional provisions to increase the allowance for loan losses. Any increases in the allowance for loan losses will result in a decrease in net income and capital and may have a material adverse effect on us.

On January 1, 2020, the Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments, the new accounting standard promulgated by the Financial Accounting Standards Board (“FASB”), regarding the recognition of credit losses. This standard makes significant changes to the accounting and disclosures for credit losses on financial instruments recorded on an amortized cost basis, including our loans held for investment. The new current expected credit loss (“CECL”) impairment model requires an estimate of expected credit losses for financial assets measured over the contractual life of an instrument based on historical experience, current conditions and reasonable and supportable forecasts. The standard provides significant flexibility and requires a high degree of judgment in order to develop an estimate of expected lifetime losses. Providing for lifetime losses for our loan portfolio is a change to the previous method of providing allowances for loan losses that are probable and incurred. It may also result in even small changes to future forecasts having a significant impact on the allowance, which could make the allowance more volatile, and regulators may impose additional capital buffers to absorb this volatility.

We hold and acquire an amount of OREO from time to time, which may lead to volatility in operating expenses and vulnerability to declines in real property values.

When necessary, we foreclose on and take title to the real estate serving as collateral for our loans as part of our business. Real estate that we own but do not use in the ordinary course of our operations is referred to as OREO property. Higher OREO balances as a result of our acquisitions have led to greater expenses as we incur costs to manage and dispose of the properties. While the carrying value of OREO from acquisitions has decreased substantially in recent years, our earnings may continue to be negatively affected by various expenses associated with OREO, including personnel costs, insurance and taxes, completion and repair costs, valuation adjustments and other expenses associated with property ownership, as well as by the funding costs associated with OREO assets. We evaluate OREO properties periodically and write down the carrying value of the properties if the results of our evaluation require it. The expenses associated with OREO and any further OREO write-downs could have a material adverse effect on us.

We are subject to environmental liability risk associated with lending activities.

A significant portion of our loan portfolio is secured by real property, and we could become subject to environmental liabilities with respect to one or more of these properties. During the ordinary course of business, we may foreclose on and take title to properties securing defaulted loans. There is a risk that hazardous or toxic substances could be found on these properties, and we may be liable for remediation costs, as well as for personal injury and property damage, civil fines and

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criminal penalties regardless of when the hazardous conditions or toxic substances first affected any particular property. Environmental laws may require us to incur substantial expenses to address unknown liabilities and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Although we have policies and procedures to perform an environmental review before initiating any foreclosure action on nonresidential real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on us.

The expanding body of federal, state and local regulation of loan servicing, collections or other aspects of our business may increase the cost of compliance and the risks of noncompliance.

We service the loans held on our balance sheet, and loan servicing is subject to extensive regulation by federal, state and local governmental authorities as well as to various laws and judicial and administrative decisions imposing requirements and restrictions on those activities. The volume of new or modified laws and regulations has increased in recent years and, in addition, some individual municipalities have begun to enact laws that restrict loan servicing activities including delaying or temporarily preventing foreclosures or forcing the modification of certain mortgages. If regulators impose new or more restrictive requirements, we may incur additional significant costs to comply with such requirements which may further adversely affect us. In addition, our failure to comply with these laws and regulations could possibly lead to: civil and criminal liability; damage to our reputation in the industry; fines and penalties and litigation, including class action lawsuits; and administrative enforcement actions. Any of these outcomes could materially and adversely affect us.

Small Business Administration lending is an important and growing part of our business. Our SBA lending program is dependent upon the U.S. federal government, and we face specific risks associated with originating SBA loans.

As an approved participant in the SBA Preferred Lender’s Program (an “SBA Preferred Lender”), we enable our clients to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders. The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the lender exhibits prudent risk management. When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions, including revocation of the lender’s SBA Preferred Lender status.

If we were to lose our status as an SBA Preferred Lender, we may lose new opportunities, and a limited number of existing SBA loans, to lenders who are SBA Preferred Lenders. In addition, any changes to the SBA program, including changes to the level of guarantee provided by the federal government on SBA loans, changes to program-specific rules impacting volume eligibility under the guaranty program, as well as changes to the program amounts authorized by Congress, may have a material adverse effect on our SBA lending program. In addition, any default by the U.S. government on its obligations or any prolonged government shutdown could, among other things, impede our ability to originate SBA loans or collect on guarantees in the event a borrower defaults on its obligations, and could materially adversely affect our SBA lending business.

If we violate U.S. Department of Housing and Urban Development (“HUD”) lending requirements or if the federal government shuts down or otherwise fails to fully fund the federal budget, our commercial FHA origination business could be adversely affected.

We originate, sell and service loans under FHA insurance programs, and make certifications regarding compliance with applicable requirements and guidelines. If we were to violate these requirements and guidelines, or other applicable laws, or if the FHA loans we originate show a high frequency of loan defaults, we could be subject to monetary penalties and indemnification claims, and could be declared ineligible for FHA programs. Any inability to engage in our commercial FHA origination and servicing business would lead to a decrease in our net income.

In addition, disagreement over the federal budget has caused the U.S. federal government to shut down for periods of time in recent years. Federal governmental entities, such as HUD, that rely on funding from the federal budget, could be adversely affected in the event of a government shutdown, which could have a material adverse effect on our commercial FHA origination business and our results of operations.

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The fair value of our investment securities can fluctuate due to market conditions outside of our control.

We have historically taken a conservative investment strategy with our securities portfolio, with concentrations of securities that are primarily backed by government sponsored enterprises. In the future, we may seek to increase yields through different strategies, which may include a greater percentage of corporate securities and structured credit products. Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities. These factors include, but are not limited to, rating agency actions in respect of the securities, defaults by the issuer or with respect to the underlying securities, and changes in market interest rates and instability in the capital markets. These factors, among others, could cause other-than-temporary impairments and realized and/or unrealized losses in future periods and declines in other comprehensive income, which could have a material adverse effect on us. The process for determining whether impairment of a security is other-than-temporary usually requires complex, subjective judgments about the future financial performance and liquidity of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security.

We face significant competition from other financial institutions and financial services providers, which may materially and adversely affect us.

Consumer and commercial banking is highly competitive. Our markets contain a large number of community and regional banks as well as a significant presence of the country’s largest commercial banks. We compete with other state and national financial institutions, including savings and loan associations, savings banks and credit unions, for deposits and loans. In addition, we compete with financial intermediaries, such as consumer finance companies, mortgage banking companies, insurance companies, securities firms, mutual funds and several government agencies, as well as major retailers, in providing various types of loans and other financial services. Some of these competitors have a long history of successful operations in our markets, greater ties to local businesses and more expansive banking relationships, as well as better established depositor bases. Some of our competitors also have greater resources and access to capital and possess an advantage by being capable of maintaining numerous banking locations in more convenient sites, operating more ATMs and conducting extensive promotional and advertising campaigns or operating a more developed internet platform. Competitors may also exhibit a greater tolerance for risk and behave more aggressively with respect to pricing in order to increase their market share. In addition, the effects of disintermediation can also impact the banking business because of the fast growing body of FinTech companies that use software to deliver mortgage lending, payment services and other financial services.

Our ability to compete successfully depends on a number of factors, including, among others:

● the ability to develop, maintain and build upon long-term client relationships based on quality service, effective and efficient products and services, high ethical standards and safe and sound assets;

● the scope, relevance and pricing of products and services offered to meet client needs and demands;

● the rate at which we introduce new products and services, including internet-based or other digital services, relative to our competitors;

● the ability to attract and retain highly qualified associates to operate our business;

● the ability to expand our market position;

● client satisfaction with our level of service;

● the ability to invest in new technologies;

● the ability to operate our business effectively and efficiently; and

● industry and general economic trends.

Failure to perform in any of these areas could significantly weaken our competitive position, which could materially and adversely affect us.

We may not be able to meet the cash flow requirements of deposit withdrawals and other business needs unless we maintain sufficient liquidity.

We require liquidity to make loans and to repay deposit and other liabilities as they become due or are demanded by clients. We principally depend on checking, savings and money market deposit account balances and other forms of client deposits as

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our primary source of funding for our lending activities. As a result of a decline in overall depositor confidence, an increase in interest rates paid by competitors, general interest rate levels, higher returns being available to clients on alternative investments and general economic conditions, a substantial number of our clients could withdraw their bank deposits with us from time to time, resulting in our deposit levels decreasing substantially, and our cash on hand may not be able to cover such withdrawals and our other business needs, including amounts necessary to operate and grow our business. This would require us to seek third party funding or other sources of liquidity, such as asset sales. Our access to third party funding sources, including our ability to raise funds through the issuance of additional shares of our common stock or other equity or equity-related securities, incurrence of debt, or federal funds purchased, may be impacted by our financial strength, performance and prospects and may also be impaired by factors that are not specific to us, such as a disruption in the financial markets or negative views and expectations about the prospects for the financial services industry, all of which may make potential funding sources more difficult to access, less reliable and more expensive. We may not have access to third party funding in sufficient amounts on favorable terms, or the ability to undertake asset sales or access other sources of liquidity, when needed, or at all, which could materially and adversely affect us.

Like other financial services institutions, our asset and liability structures are monetary in nature. Such structures are affected by a variety of factors, including changes in interest rates, which can impact the value of financial instruments held by us.

Like other financial services institutions, we have asset and liability structures that are essentially monetary in nature and are directly affected by many factors, including domestic and international economic and political conditions, broad trends in business and finance, legislation and regulation affecting the national and international business and financial communities, monetary and fiscal policies, inflation, currency values, market conditions, the availability and terms (including cost) of short-term or long-term funding and capital, the credit capacity or perceived creditworthiness of clients and counterparties and the level and volatility of trading markets. Such factors can impact clients and counterparties of a financial services institution and may impact the value of financial instruments held by a financial services institution.

Our earnings and cash flows largely depend upon the level of our net interest income, which is the difference between the interest income we earn on loans, investments and other interest earning assets, and the interest we pay on interest bearing liabilities, such as deposits and borrowings. Because different types of assets and liabilities may react differently and at different times to market interest rate changes, changes in interest rates can increase or decrease our net interest income. When interest-bearing liabilities mature or reprice more quickly than interest earning assets in a period, an increase in interest rates would reduce net interest income. Similarly, when interest earning assets mature or reprice more quickly, and because the magnitude of repricing of interest earning assets is often greater than interest bearing liabilities, falling interest rates would reduce net interest income.

Accordingly, changes in the level of market interest rates affect our net yield on interest earning assets and liabilities, loan and investment securities portfolios and our overall results. Changes in interest rates may also have a significant impact on any future loan origination revenues. Historically, there has been an inverse correlation between the demand for loans and interest rates. Loan origination volume and revenues usually decline during periods of rising or high interest rates and increase during periods of declining or low interest rates. Changes in interest rates also have a significant impact on the carrying value of a significant percentage of the assets, both loans and investment securities, on our balance sheet. We may incur debt in the future and that debt may also be sensitive to interest rates and any increase in interest rates could materially and adversely affect us. Interest rates are highly sensitive to many factors beyond our control, including general economic conditions and policies of various governmental and regulatory agencies, particularly the Federal Reserve. Changes in the Federal Reserve’s interest rate policies or other changes in monetary policies and economic conditions could materially and adversely affect us.

Reforms to and uncertainty regarding LIBOR and certain other indices may adversely affect our business.

The U.K. Financial Conduct Authority announced in July 2017 that it will no longer persuade or require banks to submit rates for LIBOR after 2021. This announcement, in conjunction with financial benchmark reforms more generally and changes in the interbank lending markets, have resulted in uncertainty about the future of LIBOR and certain other rates or indices that are used as interest rate “benchmarks.” In addition, regulators, industry groups and certain committees (e.g. the Alternative Reference Rates Committee) have, among other things, published recommended fallback language for LIBOR-linked

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financial instruments, identified recommended alternatives for certain LIBOR rates (e.g. the Secured Overnight Financing Rate as the recommended alternative to U.S. Dollar LIBOR), and proposed implementations of the recommended alternatives in floating rate instruments. At this time, it is not possible to predict whether these specific recommendations and proposals will be broadly accepted, whether they will continue to evolve and what the effect of their implementation may be on the market for floating-rate financial instruments. Uncertainty as to the nature and effect of such reforms and actions, and the potential or actual discontinuance of benchmark quotes, may adversely affect our financial condition or results of operations, including the value of, return on and trading market for our financial assets and liabilities that are based on or are linked to benchmarks, including any LIBOR-based securities, loans and derivatives. Furthermore, there can be no assurances that we and other market participants will be adequately prepared for an actual discontinuation of benchmarks, including LIBOR, that may have an unpredictable impact on contractual mechanics (including, but not limited to, interest rates to be paid to or by us), which may also result in adversely affecting our financial condition or results of operations.

We are dependent on our information technology and telecommunications systems and third-party providers, and systems failures or interruptions could have a material adverse effect on us.

Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party providers. We outsource many of our major systems, such as data processing, loan servicing and deposit processing systems. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. If significant, sustained or repeated, a system failure or service denial could compromise our ability to operate effectively, damage our reputation, result in a loss of client business, and/or subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on us.

A failure in or breach of our security systems or infrastructure, or those of our third-party providers, could result in financial losses to us or in the disclosure or misuse of confidential or proprietary information, including client information, and could have a material adverse effect on us, or noncompliance with evolving privacy and data protection laws could have a material adverse effect on us.

As a financial institution, we may be the target of fraudulent activity that may result in financial losses to us or our clients, privacy breaches against our clients or damage to our reputation and regulatory relationships. Such fraudulent activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, unauthorized intrusion into or use of our systems, ATM skimming or jackpotting, and other dishonest acts. We provide our clients with the ability to bank remotely, including via online, mobile and phone. The secure transmission of confidential information over the internet and other remote channels is a critical element of remote banking.

Our network could be vulnerable to unauthorized access, computer viruses, phishing schemes, ransomware and other security breaches. We may be required to spend significant capital and other resources to protect against the threat of security breaches and computer viruses, or to alleviate problems caused by security breaches or viruses. Given the increasingly high volume of our transactions, certain errors may be repeated or compounded before they can be discovered and rectified. To the extent that our activities or the activities of our clients involve the storage and transmission of confidential information, security breaches and viruses could expose us to reputational damage, claims, regulatory scrutiny, litigation and other possible liabilities. Any inability to prevent security breaches or computer viruses could also cause existing clients to lose confidence in our systems and could materially and adversely affect us. Our risk and exposure to these matters remains heightened because of the evolving nature and complexity of the threats from organized cybercriminals and hackers, and our plans to continue to provide digital banking products and services to our clients.

Information security risks for financial institutions like us have increased recently in part because of new technologies, the use of the internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others. In addition to cyber-attacks or other security breaches involving the theft of sensitive and confidential information, hackers have engaged in attacks against large financial institutions, particularly denial of service attacks, that are designed to disrupt key business services, such as client-facing web sites. We are not able to anticipate or implement effective preventive

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measures against all security breaches of these types, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources. We employ detection and response mechanisms designed to contain and mitigate security incidents, but early detection may be thwarted by sophisticated attacks and malware designed to avoid detection.

We also face risks related to cyber-attacks and other security breaches in connection with credit or debit card, including ATM-related, transactions that typically involve the transmission of sensitive information regarding our clients through various third parties, including merchant acquiring banks, payment processors, payment card networks (e.g., Visa, MasterCard) and our processors. Some of these parties have in the past been the target of security breaches and cyber-attacks, and because the transactions involve third parties and environments such as the point of sale that we do not control or secure, future security breaches or cyber-attacks affecting any of these third parties could impact us through no fault of our own, and in some cases we may have exposure and suffer losses for breaches or attacks relating to them. We also rely on numerous other third party service providers to conduct other aspects of our business operations and face similar risks relating to them. While we regularly conduct security assessments on these third parties, we cannot be sure that their information security protocols are sufficient to withstand a cyber-attack or other security breach.

Our growth and expansion may also subject us to evolving laws and regulations regarding privacy and data protections, including the EU General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act of 2018. It is possible that these laws may be interpreted and applied by various jurisdictions in a manner inconsistent with our current or future practices, or that is inconsistent with one another. If personal, confidential or proprietary information of customers or clients in our possession is mishandled or misused, we may face regulatory, reputational and operational risks which could have an adverse effect on our financial condition and results of operations.

The value of our mortgage servicing rights can decline during periods of falling interest rates, and we may be required to take a charge against earnings for the decreased value.

A mortgage servicing right (“MSR”) is the right to service a mortgage loan for a fee. The majority of our MSRs were assets assumed as part of acquisitions. We can also capitalize MSRs when we originate mortgage loans and retain the servicing rights after we sell the loans. We carry MSRs at the lower of amortized cost or estimated fair value. Fair value is the present value of estimated future net servicing income, calculated based on a number of variables, including assumptions about the likelihood of prepayment by borrowers. Changes in interest rates can affect prepayment assumptions. When interest rates fall, borrowers are more likely to prepay their mortgage loans by refinancing them at a lower rate. As the likelihood of prepayment increases, the fair value of our MSRs can decrease. Each quarter we evaluate our MSRs for impairment based on the difference between the carrying amount and fair value, and, if a temporary impairment exists, we establish a valuation allowance through a charge that negatively affects our earnings.

We may be required to repurchase mortgage loans or reimburse investors and others as a result of breaches in contractual representations and warranties.

We sell residential mortgage loans to various parties, including GSEs and other financial institutions that purchase mortgage loans for investment or private label securitization. The agreements under which we sell mortgage loans and the insurance or guaranty agreements with the FHA and VA contain various representations and warranties regarding the origination and characteristics of the mortgage loans, including ownership of the loan, compliance with loan criteria set forth in the applicable agreement, validity of the lien securing the loan, absence of delinquent taxes or liens against the property securing the loan, and compliance with applicable origination laws. We may be required to repurchase mortgage loans, indemnify the investor or insurer, or reimburse the investor or insurer for credit losses incurred on loans in the event of a breach of contractual representations or warranties that is not remedied within a period (usually 90 days or less) after we receive notice of the breach. Contracts for mortgage loan sales to the GSEs include various types of specific remedies and penalties that could be applied to inadequate responses to repurchase requests. Similarly, the agreements under which we sell mortgage loans require us to deliver various documents to the investor, and we may be obligated to repurchase any mortgage loan as to which the required documents are not delivered or are defective. We establish a mortgage repurchase liability related to the various representations and warranties that reflect management's estimate of losses for loans which we have a repurchase obligation. Our mortgage repurchase liability represents management's best estimate of the probable loss that we may expect to incur for the representations and warranties in the contractual provisions of our sales of mortgage loans. Because the level of mortgage loan

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repurchase losses depends upon economic factors, investor demand strategies and other external conditions that may change over the life of the underlying loans, the level of the liability for mortgage loan repurchase losses is difficult to estimate and requires considerable management judgment. If economic conditions and the housing market deteriorate or future investor repurchase demand and our success at appealing repurchase requests differ from past experience, we could experience increased repurchase obligations and increased loss severity on repurchases, requiring additions to the repurchase liability.

The required accounting treatment of loans we acquire through acquisitions could result in higher net interest margins and interest income in current periods and lower net interest margins and interest income in future periods.

Under U.S. GAAP, we are required to record loans acquired through acquisitions at fair value. Estimating the fair value of such loans requires management to make estimates based on available information, facts, and circumstances on the acquisition date. Any discount on acquired loans is accreted into interest income over the weighted average remaining contractual life of the loans. Therefore, our net interest margins may initially increase due to the discount accretion. We expect the yields on the total loan portfolio will decline as our acquired loan portfolios pay down or mature and the corresponding accretion of the discount decreases. We expect downward pressure on our interest income to the extent that the runoff of our acquired loan portfolios is not replaced with comparable high-yielding loans. This could result in higher net interest margins and interest income in current periods and lower net interest margins and interest income in future periods.

We have recorded goodwill as a result of acquisitions that can significantly affect our earnings if it becomes impaired.

Under current accounting standards, goodwill is not amortized but, instead, is subject to impairment tests on at least an annual basis or more frequently if an event occurs or circumstances change that reduce the fair value of a reporting unit below its carrying value.

Risks Relating to our Growth Strategy

We may not be able to effectively manage our growth or other expansionary activity.

Our expansionary activity, whether through de novo branching, acquisitions or organic growth has placed, and it may continue to place, significant demands on our operations and management. The success of our expansionary activity is dependent upon our ability to:

● continue to implement and improve our operational, credit, financial, legal, management and other internal risk controls and processes and our reporting systems and procedures in order to manage a growing number of client relationships;

● scale our technology platform;

● integrate our acquisitions and develop consistent policies throughout the various lines of businesses;

● attract and retain the client base; and

● attract and retain management talent.

We may not successfully implement improvements to, or integrate, our management information and control systems, procedures and processes in an efficient or timely manner and may discover deficiencies in existing systems and controls. In particular, our controls and procedures must be able to accommodate an increase in loan volume in various markets and the infrastructure that comes with new banking centers and banks. Thus, our growth strategy may divert management from our existing franchises and may require us to incur additional expenditures to expand our administrative and operational infrastructure and, if we are unable to effectively manage and grow our financial services franchise, we could be materially and adversely affected. In addition, if we are unable to manage future expansion in our operations, we may experience compliance and operational problems, have to slow the pace of growth, or have to incur additional expenditures beyond current projections to support such growth, any one of which could materially and adversely affect us.

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Our acquisitions generally will require regulatory approvals, and failure to obtain them would restrict our growth.

We intend to complement and expand our business by pursuing strategic acquisitions of financial services franchises. Generally, any acquisition of target financial institutions, banking centers or other banking assets by us will require approval by, and cooperation from, a number of governmental regulatory agencies, including the Federal Reserve and Colorado Division of Banking. In acting on applications, our banking regulators consider, among other factors:

● the effect of the acquisition on competition;

● the financial condition, liquidity, results of operations, capital levels and future prospects of the applicant and the bank(s) involved;

● the quantity and complexity of previously consummated acquisitions;

● the managerial resources of the applicant and the bank(s) involved;

● the convenience and needs of the community, including the record of performance under the Community Reinvestment Act; and

● the effectiveness of the applicant in combating money laundering activities.

Such regulators could deny our application based on the above criteria or other considerations, which would restrict our growth, or the regulatory approvals may not be granted on terms that are acceptable to us. For example, we could be required to sell banking centers as a condition to receiving regulatory approvals, and such a condition may not be acceptable to us or may reduce the benefit of any acquisition. In addition, prior to the submission of an application our regulators could discourage us from pursuing strategic acquisitions or indicate that regulatory approvals may not be granted on terms that would be acceptable to us, which could have the same effect of restricting our growth or reducing the benefit of any acquisitions.

The success of future transactions will depend on our ability to successfully identify and consummate acquisitions of financial services franchises that meet our investment objectives. Because of the intense competition for acquisition opportunities and the limited number of potential targets, we may not be able to successfully consummate acquisitions on attractive terms.

There are significant risks associated with our strategy to identify and successfully consummate acquisitions. There are a limited number of acquisition opportunities, and we expect to encounter intense competition from other banking organizations competing for acquisitions and also from other investment funds and entities looking to acquire financial institutions and financial services franchises. Many of these entities are well established and have extensive experience in identifying and consummating acquisitions directly or through affiliates. Many of these competitors possess ongoing banking operations with greater financial, technical, human and other resources and access to capital than we do, which could limit the acquisition opportunities we pursue. Our competitors may be able to achieve greater cost savings, through consolidating operations or otherwise, than we could. These competitive limitations give others an advantage in pursuing certain acquisitions. In addition, increased competition may drive up the prices for the acquisitions we pursue and make the other acquisition terms more onerous, which would make the identification and successful consummation of those acquisitions less attractive to us. Competitors may be willing to pay more for acquisitions than we believe are justified, which could result in us having to pay more for them than we prefer or to forego the opportunity. The trading price of our common stock and of the stock of other potential acquirers may affect our ability to offer a competitive price for acquisitions where stock is proposed as acquisition consideration. As a result of the foregoing, we may be unable to successfully identify and consummate acquisitions on attractive terms, or at all, that are necessary to grow our business.

To the extent that we are unable to identify and consummate attractive acquisitions, or continue to increase loans through organic loan growth, we may be unable to successfully implement our growth strategy, which could materially and adversely affect us.

We intend to continue to grow our business through organic loan growth and strategic acquisitions of financial services franchises. Previous availability of attractive acquisition targets may not be indicative of future acquisition opportunities, and we may be unable to identify any acquisition targets that meet our investment objectives. As our acquired loan portfolio, which generally produces higher yields than our originated loans due to loan discounts and accretable yield, is paid down, we expect downward pressure on our income to the extent that the runoff is not replaced with other high-yielding loans. As a result of the foregoing, if we are unable to replace loans in our existing portfolio with comparable high-yielding loans, we

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could be materially and adversely affected. We could also be materially and adversely affected if we choose to pursue riskier higher-yielding loans that fail to perform.

Projected operating results for businesses acquired by us may be inaccurate and may vary significantly from actual results. To the extent that we make acquisitions that involve distressed assets, we may not be able to realize the value we predict from these assets or make sufficient provision for future losses in the value of, or accurately estimate the future writedowns to be taken in respect of, these assets.

We will generally establish the pricing of transactions and the capital structure of financial services franchises to be acquired by us on the basis of financial projections for such financial services franchises. In general, projected operating results will be based on the judgment of our management team. In all cases, projections are only estimates of future results that are based upon assumptions made at the time that the projections are developed and the projected results may vary significantly from actual results. General economic, political and market conditions can have a material adverse impact on the reliability of such projections. In the event that the projections made in connection with our acquisitions, or future projections with respect to new acquisitions, are not accurate, such inaccuracies could materially and adversely affect us.

Delinquencies and losses in the loan portfolios and other assets we acquire may exceed our initial forecasts developed during our due diligence investigation prior to acquisition and, thus, produce lower returns than we believed our purchase price supported. Furthermore, our due diligence investigation may not reveal all material issues. If, during the diligence process, we fail to identify all relevant issues related to an acquisition, we may be forced to later write down or write off assets, restructure our operations, or incur impairment or other charges that could result in significant losses. Any of these events could materially and adversely affect us. Economic conditions may create an uncertain environment with respect to asset valuations and there is no certainty that we will be able to sell assets or institutions after we acquire them if we determine it would be in our best interests to do so. In addition, there may be limited liquidity for certain asset classes we hold, including commercial real estate and construction and development loans. Any of the foregoing matters could materially and adversely affect us.

We face additional risks due to our increased mortgage banking activities that could negatively impact net income and profitability.

We sell a majority of the mortgage loans that we originate. The sale of these loans generates non-interest income and can be a source of liquidity for the Bank. Disruption in the secondary market for residential mortgage loans as well as declines in real estate values could result in one or more of the following:

● our inability to sell mortgage loans on the secondary market, which could negatively impact our liquidity position;

● declines in real estate values could decrease the potential of mortgage originations, which could negatively impact our earnings;

● if it is determined that loans were made in breach of our representations and warranties to the secondary market, we could incur losses associated with the loans;

● increased compliance requirements could result in higher compliance costs, higher foreclosure proceedings or lower loan origination volume, all which could negatively impact future earnings; and

● a rise in interest rates could cause a decline in mortgage originations, which could negatively impact our earnings.

Our use of appraisals in deciding whether to make loans secured by real property does not ensure that the value of the real property collateral will be sufficient to repay our loans.

In considering whether to make a loan secured by real property, we require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made and requires the exercise of a considerable degree of judgment. If the appraisal does not accurately reflect the amount that may be obtained upon sale or foreclosure of the property, whether due to a decline in property value after the date of the original appraisal or defective preparation of the appraisal, we may not realize an amount equal to the indebtedness secured by the property and as a result, we may suffer losses.

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Risks Relating to the Regulation of Our Industry

We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could materially and adversely affect us.

We are subject to extensive regulation, supervision, and legislation by federal and state regulators and bodies that govern almost all aspects of our operations. Intended to protect clients, depositors and the DIF, these laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the business activities in which we can engage (including foreclosure and collection practices), limit the dividends or distributions that we can pay, restrict the ability of institutions to guarantee our debt, and impose certain specific accounting requirements on us that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than GAAP. Compliance with laws and regulations, including the effects of the Dodd Frank Act Wall Street Reform and Consumer Protection Act of 2010, can be difficult and costly, and changes to laws and regulations often impose additional compliance costs. Our failure to comply with these laws and regulations, even if the failure follows good faith effort or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines and other penalties, any of which could materially and adversely affect us. Further, any new laws, rules and regulations could make compliance more difficult or expensive and also materially and adversely affect us.

The FDIC’s restoration plan for the DIF and any related increased assessment rates could materially and adversely affect us.

The FDIC insures deposits at FDIC-insured depository institutions, such as our subsidiary bank, up to applicable limits. The amount of a particular institution’s deposit insurance assessment is based on that institution’s risk classification under an FDIC risk-based assessment system. An institution’s risk classification is assigned based on its capital levels and the level of supervisory concern the institution poses to its regulators. If current assessments imposed by the FDIC are insufficient for the DIF to meet its funding requirements, there may need to be further special assessments or increases in deposit insurance premiums. We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. Any future additional assessments, increases or required prepayments in FDIC insurance premiums may materially and adversely affect us, including by reducing our profitability or limiting our ability to pursue certain business opportunities.

Federal and state banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any supervisory actions to which we become subject as a result of such examinations could materially and adversely affect us.

Federal and state banking agencies periodically conduct examinations of our business, including compliance with laws and regulations. If, as a result of an examination, a federal or state banking agency were to determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we or our management was in violation of any law or regulation, it may take a number of different remedial actions as it deems appropriate. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil monetary penalties against our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance. If we become subject to such regulatory actions, we could be materially and adversely affected.

We are subject to the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.

The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The Department of Justice and other federal agencies are responsible for enforcing these laws and regulations. A successful challenge to an institution’s performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, and restrictions on expansion activity. Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation.

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The Federal Reserve may require us to commit capital resources to support our subsidiary bank.

As a matter of policy, the Federal Reserve, which examines us and our subsidiaries, expects a bank holding company to act as a source of financial and managerial strength to a subsidiary bank and to commit resources to support such subsidiary bank. Under the “source of strength” doctrine, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank. In addition, the Dodd-Frank Act directs the federal bank regulators to require that all companies that directly or indirectly control an insured depository institution serve as a source of strength for the institution. Under this requirement, we could be required to provide financial assistance to our subsidiary bank should our subsidiary bank experience financial distress.

A capital injection may be required at times when we do not have the resources to provide it and therefore we may be required to borrow the funds or raise additional equity capital from third parties. Any loans by a holding company to its subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of the subsidiary bank. In the event of a bank holding company’s bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company’s general unsecured creditors, including the holders of its indebtedness. Any financing that must be done by the holding company in order to make the required capital injection may be difficult and expensive and may not be available on attractive terms, or at all, which likely would have a material adverse effect on us.

We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.

The federal Bank Secrecy Act, the USA PATRIOT Act and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. The federal Financial Crimes Enforcement Network, established by the U.S. Treasury Department to administer the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of those requirements, and engages in coordinated enforcement efforts with the individual federal banking regulators, as well as the Department of Justice, Drug Enforcement Administration, and Internal Revenue Service. There is also increased scrutiny of compliance with the rules enforced by the Office of Foreign Assets Control. If our policies, procedures and systems are deemed deficient or the policies, procedures and systems of the financial institutions that we may acquire in the future are deficient, we would be subject to liability, including fines and regulatory actions (such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans), which could materially and adversely affect us. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.

Federal, state and local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans and could increase our cost of doing business.

Federal, state and local laws have been adopted that are intended to eliminate certain lending practices considered “predatory.” These laws prohibit practices such as steering borrowers away from more affordable products, selling unnecessary insurance to borrowers, repeatedly refinancing loans and making loans without a reasonable expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property. It is our policy not to make predatory loans, but these laws create the potential for liability with respect to our lending and loan investment activities. They increase our cost of doing business and, ultimately, may prevent us from making certain loans or cause us to reduce the average percentage rate or the points and fees on loans that we do make.

Our ability to pay dividends is subject to regulatory limitations and our bank subsidiary’s ability to pay dividends to us is also subject to regulatory limitations.

Our ability to declare and pay dividends depends both on the ability of our bank subsidiary to pay dividends to us and on certain federal regulatory considerations, including the guidelines of the Federal Reserve regarding capital adequacy and

29

dividends. Because we are a separate legal entity from our bank subsidiary and we do not have significant operations of our own, any dividends paid by us to our shareholders would have to be paid from funds at the holding company level that are legally available therefor. However, as a bank holding company, we are subject to general regulatory restrictions on the payment of cash dividends. Federal bank regulatory agencies have the authority to prohibit bank holding companies from engaging in unsafe or unsound practices in conducting their business, which depending on the financial condition and liquidity of the holding company at the time, could include the payment of dividends. Additionally, various federal and state statutory provisions limit the amount of dividends that our bank subsidiary can pay to us as its holding company without regulatory approval. Finally, holders of our common stock are only entitled to receive such dividends as our board of directors may declare in its unilateral discretion. Dividends are paid out of funds legally available for such purpose based on a variety of considerations, including, without limitation, our historical and projected financial condition, liquidity and results of operations, capital levels, tax considerations, statutory and regulatory prohibitions and other limitations, general economic conditions and other factors deemed relevant by our board of directors. Accordingly, we may not pay the amount of dividends referenced in our current intention above, or any dividends at all, to our shareholders in the future.

Tax legislation initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition.

We operate in multiple jurisdictions, and we are subject to tax laws and regulations of the U.S. federal, state and local governments. From time to time, legislative initiatives may be adopted, which may impact our effective tax rate and could adversely affect our deferred tax assets, tax positions and/or our tax liabilities. In addition, U.S. federal, state and local tax laws and regulations are extremely complex and subject to varying interpretations. There can be no assurance that our historical tax positions will not be challenged by relevant tax authorities or that we would be successful in defending our positions in connection with any such challenge.

Item 1B.    UNRESOLVED STAFF COMMENTS.

None

Item 2.       PROPERTIES.

Our principal executive offices are located in the Denver Tech Center area immediately south of Denver, Colorado. We also have approximately 70,000 square feet of office and operations space in Kansas City, Missouri. At December 31, 2019, we operated 48 banking centers in Colorado, 44 in Kansas and Missouri, six in New Mexico, two in Texas and one in Utah. Of these banking centers, 31 locations were leased and 70 were owned.

Item 3.       LEGAL PROCEEDINGS.

From time to time, we are a party to various litigation matters incidental to the conduct of our business. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, prospects, financial condition, results of operations or liquidity.

Item 4.       MINE SAFETY DISCLOSURES.

None.

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PART II

Item 5.       MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Registrant’s Common Equity

Shares of the Company’s common stock are traded on the New York Stock Exchange (“NYSE”) under the symbol “NBHC”. The following table presents the cash dividends paid for the periods indicated:

Quarter	2019		2018
Fourth	$	0.20	$	0.17
Third		0.19		0.14
Second		0.19		0.14
First		0.17		0.09
Total	$	0.75	$	0.54

In October 2012, upon the initial public offering, the Company commenced the payment of a $0.05 per share quarterly cash dividend to holders of its common stock. As of December 31, 2019, the quarterly cash dividend was $0.20 per share, representing a cumulative increase of 300% since the initial public offering.

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Performance Graph

The following graph presents a comparison of the Company’s performance to the indices named below. It assumes $100 invested on December 31, 2014, with dividends invested on a total return basis.

	Period Ending
Index	12/31/14	12/31/15	12/31/16	12/31/17	12/31/18	12/31/19
NBHC	100.00	111.21	167.55	172.19	166.28	193.81
KBW Regional Banking Index	100.00	106.00	147.46	150.13	123.87	153.44
Russell 2000 Index	100.00	95.59	115.93	132.88	118.23	148.36

The following table sets forth information about our repurchases of our common stock during the fourth quarter of 2019:

					Maximum
				Total number of	approximate dollar
				shares purchased	value of shares
				as part of publicly	that may yet be
	Total number	Average price		announced plans	purchased under the
Period	of shares purchased	paid per share		or programs	plans or programs (2)
October 1 - October 31, 2019(1)	740	$	34.29	—	$	12,562,825
November 1 - November 30, 2019(1)	3,445		35.89	—		12,562,825
Total	4,185	$	35.61	—	$	12,562,825

(1)	These shares represent shares purchased other than through publicly announced plans and were purchased pursuant to the Company’s stock incentive plans. Pursuant to the plans, shares were purchased from plan participants at the then current market value in satisfaction of stock option exercise prices, settlements of restricted stock and tax withholdings.
(2)	On August 5, 2016, the Company’s Board of Directors authorized the repurchase of up to an additional $50.0 million of common stock. Under this authorization, $12.6 million remained available for purchase at December 31, 2019.

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Securities Authorized for Issuance under Equity Compensation Plans

During the second quarter of 2014, shareholders approved the 2014 Omnibus Incentive Plan (the “2014 Plan”). Under the 2014 Plan, the Compensation Committee of the Board of Directors has the authority to grant, from time to time, awards of options, stock appreciation rights, restricted stock, restricted stock units, performance units, other stock-based awards, or any combination thereof to eligible persons. As of December 31, 2019, the aggregate number of Company common stock available for issuance under the 2014 Plan was 4,996,156 shares.

During the second quarter of 2015, shareholders approved the Company’s 2014 Employee Stock Purchase Plan (“ESPP”). The ESPP allows employees to purchase shares of common stock through payroll deductions up to a limit of $25,000 per calendar year or 2,000 shares per offering period. The price an employee pays for shares is 90% of the fair market value of Company common stock on the last day of the offering period. As of December 31, 2019, the aggregate number of Company common stock available for issuance under the ESPP was 326,088 shares.

See note 16 to the consolidated financial statements for further detail related to these equity compensation plans.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans
Equity plans approved by security holders	657,114	$	26.69	5,322,244
Equity plans not approved by security holders	—		—	—
Total	657,114	$	26.69	5,322,244

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Item 6.       SELECTED FINANCIAL DATA.

The following table sets forth a summary of selected historical financial information derived from our audited consolidated financial statements as of and for the five years ended December 31, 2019. This information should be read together with the related notes thereto as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this annual report. Such information is not necessarily indicative of anticipated future results. All amounts are presented in thousands, except share and per share data, or as otherwise noted.

Summary of Selected Historical Consolidated Financial Data

Consolidated Statements of Financial Condition Data:

	December 31,		December 31,		December 31,		December 31,		December 31,
	2019		2018		2017		2016		2015
Cash and cash equivalents	$	110,190	$	109,556	$	257,364	$	152,736	$	166,092
Investment securities available-for-sale (at fair value)		638,249		791,102		855,345		884,232		1,157,246
Investment securities held-to-maturity		182,884		235,398		258,730		332,505		427,503
Non-marketable securities		29,751		27,555		15,030		14,949		22,529
Loans (1)		4,415,406		4,092,308		3,178,947		2,860,921		2,587,673
Allowance for loan losses		(39,064)		(35,692)		(31,264)		(29,174)		(27,119)
Loans, net		4,376,342		4,056,616		3,147,683		2,831,747		2,560,554
Loans held for sale		117,444		48,120		4,629		24,187		13,292
Other real estate owned		7,300		10,596		10,491		15,662		20,814
Premises and equipment, net		112,151		109,986		93,708		95,671		103,103
Goodwill and other intangible assets, net		126,388		128,497		61,237		66,579		72,059
Other assets		194,813		159,240		139,248		154,778		140,716
Total assets	$	5,895,512	$	5,676,666	$	4,843,465	$	4,573,046	$	4,683,908
Deposits	$	4,737,132	$	4,535,621	$	3,979,559	$	3,868,649	$	3,840,677
Other liabilities		391,460		446,039		331,499		168,208		225,687
Total liabilities		5,128,592		4,981,660		4,311,058		4,036,857		4,066,364
Total shareholders’ equity		766,920		695,006		532,407		536,189		617,544
Total liabilities and shareholders’ equity	$	5,895,512	$	5,676,666	$	4,843,465	$	4,573,046	$	4,683,908

(1) Total loans are net of unearned discounts and deferred fees and costs.

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Consolidated Statements of Operations Data:

	As of and for the years ended
	December 31,		December 31,		December 31,		December 31,		December 31,
	2019		2018		2017		2016		2015
Interest income	$	242,601	$	221,391	$	164,421	$	160,448	$	171,407
Interest expense		36,771		23,954		18,115		14,808		14,462
Net interest income		205,830		197,437		146,306		145,640		156,945
Provision for loan losses		11,643		5,197		12,972		23,651		12,444
Net interest income after provision for loan losses		194,187		192,240		133,334		121,989		144,501
Non-interest income		82,752		70,775		39,205		40,027		21,448
Non-interest expense		180,745		189,334		136,677		136,009		158,024
Income before income taxes		96,194		73,681		35,862		26,007		7,925
Income tax expense		15,829		12,230		21,283		2,947		3,044
Net income	$	80,365	$	61,451	$	14,579	$	23,060	$	4,881
Share Information:
Earnings per share, basic	$	2.57	$	2.00	$	0.54	$	0.81	$	0.14
Earnings per share, diluted		2.55		1.95		0.53		0.79		0.14
Dividends paid		0.75		0.54		0.34		0.22		0.20
Book value per share		24.60		22.59		19.81		20.32		20.34
Tangible common book value per share(1)		20.89		18.77		17.94		18.15		18.22
Total shareholders' equity to total assets		13.01%		12.24%		10.99%		11.72%		13.18%
Tangible common equity to tangible assets(1)		11.27%		10.39%		10.06%		10.61%		11.98%
Weighted average common shares outstanding, basic		31,175,825		30,748,234		26,928,763		28,313,061		34,349,996
Weighted average common shares outstanding, diluted		31,530,817		31,430,074		27,709,659		29,091,343		34,363,487
Common shares outstanding		31,176,627		30,769,063		26,875,585		26,386,583		30,358,509

(1) Tangible book value per share and tangible common equity to tangible assets are non-GAAP financial measures. We believe that the most directly comparable GAAP financial measures are book value per share and total shareholders’ equity to total assets. See the reconciliation under “About Non-GAAP Financial Measures.”

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	As of and for the years ended
	December 31,	December 31,	December 31,	December 31,	December 31,
	2019	2018	2017	2016	2015
Key Ratios
Return on average assets	1.38%	1.10%	0.31%	0.50%	0.10%
Return on average tangible assets(1)	1.42%	1.15%	0.38%	0.57%	0.17%
Return on average tangible assets, adjusted(1)	1.42%	1.26%	0.82%	0.57%	0.17%
Return on average equity	10.89%	9.28%	2.67%	3.95%	0.70%
Return on average tangible common equity(1)	13.07%	11.60%	3.61%	5.04%	1.29%
Return on average tangible common equity, adjusted(1)	13.07%	12.76%	7.75%	5.04%	1.29%
Loan to deposit ratio (end of period)	93.21%	90.23%	80.00%	74.58%	67.72%
Non-interest bearing deposits to total deposits (end of period)	25.01%	23.64%	22.68%	21.89%	21.22%
Net interest margin(3)	3.83%	3.85%	3.36%	3.39%	3.54%
Net interest margin FTE(1)(3)(8)	3.93%	3.93%	3.50%	3.49%	3.60%
Interest rate spread FTE(4)(8)	3.65%	3.77%	3.35%	3.38%	3.48%
Yield on earning assets(2)	4.52%	4.31%	3.78%	3.74%	3.86%
Yield on earning assets FTE(1)(2)(8)	4.61%	4.40%	3.91%	3.84%	3.92%
Cost of interest bearing liabilities	0.96%	0.63%	0.56%	0.46%	0.44%
Cost of deposits	0.64%	0.45%	0.41%	0.36%	0.36%
Non-interest income to total revenue FTE(8)	28.18%	25.95%	20.49%	21.09%	11.84%
Non-interest expense to average assets	3.10%	3.38%	2.90%	2.92%	3.27%
Non-interest expense to average assets, adjusted(1)	3.10%	3.23%	2.84%	2.92%	3.27%
Efficiency ratio	62.22%	69.78%	70.80%	70.30%	85.55%
Efficiency ratio FTE(1)(8)	61.15%	68.64%	68.63%	68.79%	84.28%
Total Loans Asset Quality Data(5)(6)(7)
Non-performing loans to total loans	0.49%	0.60%	0.66%	1.07%	0.99%
Non-performing assets to total loans and OREO	0.66%	0.85%	0.99%	1.61%	1.81%
Allowance for loan losses to total loans	0.88%	0.87%	0.98%	1.02%	1.05%
Allowance for loan losses to non-performing loans	179.62%	145.94%	148.88%	94.98%	105.74%
Net charge-offs to average loans	0.19%	0.02%	0.36%	0.80%	0.12%

(1)	Ratio represents non-GAAP financial measure. See non-GAAP reconciliation below.
(2)	Interest earning assets include assets that earn interest/accretion or dividends. Any market value adjustments on investment securities or loans are excluded from interest-earning assets.
(3)	Net interest margin represents net interest income, including accretion income on interest earning assets, as a percentage of average interest earning assets.
(4)	Interest rate spread represents the difference between the weighted average yield on interest earning assets and the weighted average cost of interest bearing liabilities.
(5)	Non-performing loans consist of non-accruing loans and restructured loans on non-accrual, but exclude any loans accounted for under ASC 310-30 in which the pool is still performing. These ratios may, therefore, not be comparable to similar ratios of our peers.
(6)	Non-performing assets include non-performing loans, other real estate owned and other repossessed assets.
(7)	Total loans are net of unearned discounts and fees.
(8)	Presented on a fully taxable equivalent basis using the statutory rate of 21% for 2019 and 2018 and 35% for prior years. The taxable equivalent adjustments included above are $5,065, $4,482, $5,852, $4,081 and $2,695 for the years ended 2019, 2018, 2017, 2016 and 2015, respectively.

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About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including “tangible assets,” “return on average tangible assets,” “return on average tangible common equity,” “tangible common book value,” “tangible common book value per share,” “tangible common equity,” “tangible common equity to tangible assets,” “adjusted non-interest expense,” “adjusted non-interest expense to average assets,” “adjusted net income,” “adjusted earnings per share - diluted,” “adjusted return on average tangible assets,” “adjusted return on average tangible common equity,” and “fully taxable equivalent (FTE)” metrics, are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses 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 limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance.

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

Tangible Common Book Value Ratios

	December 31,		December 31,		December 31,		December 31,		December 31,
	2019		2018		2017		2016		2015
Total shareholders’ equity	$	766,920	$	695,006	$	532,407	$	536,189	$	617,544
Less: goodwill and core deposit intangible assets, net		(123,758)		(124,941)		(61,237)		(66,580)		(72,060)
Add: deferred tax liability related to goodwill		8,241		7,327		10,873		9,323		7,772
Tangible common equity (non-GAAP)	$	651,403	$	577,392	$	482,043	$	478,932	$	553,256
Total assets	$	5,895,512	$	5,676,666	$	4,843,465	$	4,573,046	$	4,683,908
Less: goodwill and core deposit intangible assets, net		(123,758)		(124,941)		(61,237)		(66,580)		(72,060)
Add: deferred tax liability related to goodwill		8,241		7,327		10,873		9,323		7,772
Tangible assets (non-GAAP)	$	5,779,995	$	5,559,052	$	4,793,101	$	4,515,789	$	4,619,620
Tangible common equity to tangible assets calculations:
Total shareholders' equity to total assets		13.01%		12.24%		10.99%		11.72%		13.18%
Less: impact of goodwill and core deposit intangible assets, net		(1.74)%		(1.85)%		(0.93)%		(1.11)%		(1.20)%
Tangible common equity to tangible assets (non-GAAP)		11.27%		10.39%		10.06%		10.61%		11.98%
Tangible common book value per share calculations:
Tangible common equity (non-GAAP)	$	651,403	$	577,392	$	482,043	$	478,932	$	553,256
Divided by: ending shares outstanding		31,176,627		30,769,063		26,875,585		26,386,583		30,358,509
Tangible common book value per share (non-GAAP)	$	20.89	$	18.77	$	17.94	$	18.15	$	18.22
Tangible common book value per share, excluding accumulated other comprehensive (income) loss calculations:
Tangible common equity (non-GAAP)	$	651,403	$	577,392	$	482,043	$	478,932	$	553,256
Accumulated other comprehensive (income) loss, net of tax		(2,062)		11,275		6,242		1,762		(95)
Tangible common book value, excluding accumulated other comprehensive (income) loss, net of tax (non-GAAP)		649,341		588,667		488,285		480,694		553,161
Divided by: ending shares outstanding		31,176,627		30,769,063		26,875,585		26,386,583		30,358,509
Tangible common book value per share, excluding accumulated other comprehensive (income) loss, net of tax (non-GAAP)	$	20.83	$	19.13	$	18.17	$	18.22	$	18.22

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Return on Average Tangible Assets and Return on Average Tangible Equity

	As of and for the years ended
	December 31,		December 31,		December 31,		December 31,		December 31,
	2019		2018		2017		2016		2015
Net income	$	80,365	$	61,451	$	14,579	$	23,060	$	4,881
Add: impact of core deposit intangible amortization expense, after tax		899		1,649		3,259		3,343		3,295
Net income adjusted for impact of core deposit intangible amortization expense, after tax	$	81,264	$	63,100	$	17,838	$	26,403	$	8,176
Average assets	$	5,837,121	$	5,607,532	$	4,705,241	$	4,651,953	$	4,831,070
Less: average goodwill and core deposit intangible asset, net of deferred tax liability related to goodwill		(116,104)		(118,546)		(52,958)		(59,977)		(66,549)
Average tangible assets (non-GAAP)	$	5,721,017	$	5,488,986	$	4,652,283	$	4,591,976	$	4,764,521
Average shareholders' equity	$	737,923	$	662,420	$	546,716	$	583,686	$	701,476
Less: average goodwill and core deposit intangible asset, net of deferred tax liability related to goodwill		(116,104)		(118,546)		(52,958)		(59,977)		(66,549)
Average tangible common equity (non-GAAP)	$	621,819	$	543,874	$	493,758	$	523,709	$	634,927
Return on average assets		1.38%		1.10%		0.31%		0.50%		0.10%
Return on average tangible assets (non-GAAP)		1.42%		1.15%		0.38%		0.57%		0.17%
Return on average equity		10.89%		9.28%		2.67%		3.95%		0.70%
Return on average tangible common equity (non-GAAP)		13.07%		11.60%		3.61%		5.04%		1.29%

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

	As of and for the years ended
	December 31,		December 31,		December 31,		December 31,		December 31,
	2019		2018		2017		2016		2015
Interest income	$	242,601	$	221,391	$	164,421	$	160,448	$	171,407
Add: impact of taxable equivalent adjustment		5,065		4,482		5,852		4,081		2,695
Interest income FTE (non-GAAP)	$	247,666	$	225,873	$	170,273	$	164,529	$	174,102
Net interest income	$	205,830	$	197,437	$	146,306	$	145,640	$	156,945
Add: impact of taxable equivalent adjustment		5,065		4,482		5,852		4,081		2,695
Net interest income FTE (non-GAAP)	$	210,895	$	201,919	$	152,158	$	149,721	$	159,640
Average earning assets	$	5,368,073	$	5,131,694	$	4,353,320	$	4,290,171	$	4,439,139
Yield on earning assets		4.52%		4.31%		3.78%		3.75%		3.86%
Yield on earning assets FTE (non-GAAP)		4.61%		4.40%		3.91%		3.84%		3.92%
Net interest margin		3.83%		3.85%		3.36%		3.39%		3.54%
Net interest margin FTE (non-GAAP)		3.93%		3.93%		3.50%		3.49%		3.60%

Efficiency Ratio

	As of and for the years ended
	December 31,		December 31,		December 31,		December 31,		December 31,
	2019		2018		2017		2016		2015
Net interest income	$	205,830	$	197,437	$	146,306	$	145,640	$	156,945
Add: impact of taxable equivalent adjustment		5,065		4,482		5,852		4,081		2,695
Net interest income, FTE (non-GAAP)	$	210,895	$	201,919	$	152,158	$	149,721	$	159,640
Non-interest income	$	82,752	$	70,775	$	39,205	$	40,027	$	21,448
Non-interest expense	$	180,745	$	189,334	$	136,677	$	136,009	$	158,024
Less: core deposit intangible asset amortization		(1,183)		(2,170)		(5,342)		(5,480)		(5,401)
Non-interest expense, adjusted for core deposit intangible asset amortization	$	179,562	$	187,164	$	131,335	$	130,529	$	152,623
Efficiency ratio		62.22%		69.78%		70.80%		70.30%		85.55%
Efficiency ratio FTE (non-GAAP)		61.15%		68.64%		68.63%		68.79%		84.28%

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Adjusted Financial Results

	As of and for the years ended
	December 31,		December 31,		December 31,		December 31,		December 31,
	2019		2018		2017		2016		2015
Adjustments to net income:
Net income	$	80,365	$	61,451	$	14,579	$	23,060	$	4,881
Adjustments(1)		—		6,321		20,430		—		—
Adjusted net income (non-GAAP)	$	80,365	$	67,772	$	35,009	$	23,060	$	4,881
Adjustments to earnings per share:
Earnings per share	$	2.55	$	1.95	$	0.53	$	0.79	$	0.14
Adjustments(1)		—		0.21		0.73		—		—
Adjusted earnings per share - diluted (non-GAAP)	$	2.55	$	2.16	$	1.26	$	0.79	$	0.14
Adjustments to return on average tangible assets:
Adjusted net income (non-GAAP)	$	80,365	$	67,772	$	35,009	$	23,060	$	4,881
Add: impact of core deposit intangible amortization expense, after tax		899		1,649		3,259		3,343		3,295
Net income adjusted for impact of core deposit intangible amortization expense, after tax		81,264		69,421		38,268		26,403		8,176
Average tangible assets (non-GAAP)		5,721,017		5,488,986		4,652,283		4,591,976		4,764,521
Adjusted return on average tangible assets (non-GAAP)		1.42%		1.26%		0.82%		0.57%		0.17%
Adjustments to return on average tangible common equity:
Net income adjusted for impact of core deposit intangible amortization expense, after tax	$	81,264	$	69,421	$	38,268	$	26,403	$	8,176
Average tangible common equity (non-GAAP)		621,819		543,874		493,758		523,709		634,927
Adjusted return on average tangible common equity (non-GAAP)		13.07%		12.76%		7.75%		5.04%		1.29%
Adjustments to non-interest expense:
Non-interest expense	$	180,745	$	189,334	$	136,677	$	136,009	$	158,024
Adjustments(1)		—		7,957		3,182		—		—
Adjusted non-interest expense (non-GAAP)		180,745		181,377		133,495		136,009		158,024
Non-interest expense to average assets, adjusted (non-GAAP)		3.10%		3.23%		2.84%		2.92%		3.27%
(1) Adjustments:
Non-interest expense adjustments:
Non-recurring Peoples acquisition-related expenses	$	—	$	7,957	$	2,691	$	—	$	—
Tax reform bonus(2)		—		—		491		—		—
Total non-interest expense adjustments (non-GAAP)	$	—	$	7,957	$	3,182	$	—	$	—
Total pre-tax adjustments (non-GAAP)	$	—	$	7,957	$	3,182	$	—	$	—
Collective tax expense impact		—		(1,636)		(1,209)		—		—
Deferred tax asset remeasurement		—		—		18,457		—		—
Adjustments (non-GAAP)	$	—	$	6,321	$	20,430	$	—	$	—

(2) Represents a special $1,000 bonus payment to 491 associates made in connection with the Tax Cuts and Jobs Act enacted in 2017.

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Item 7.       MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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 years ended December 31, 2019, 2018, and 2017, and with the other financial and statistical data presented in this annual report. 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” and “Risk Factors” and should be read herewith.

Management’s discussion focuses on 2019 results compared to 2018. For a discussion of 2018 results compared to 2017, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

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 also believe that our established presence in core markets that are outperforming national averages positions us well for growth opportunities. As of December 31, 2019, we had $5.9 billion in assets, $4.4 billion in loans, $4.7 billion in deposits and $0.8 billion in equity.

Completing 2019 marks the 10th year in our Company’s history. During our first decade, we completed six acquisitions and built a bank with a balance sheet and capital position that we believe will withstand any economic environment. We are proud of our industry-leading credit quality metrics and our high-quality client relationships. We have positioned ourselves in strong markets and created meaningful value for our clients, associates, communities and shareholders. We begin the next decade with a solid foundation, strong capital and momentum for future growth.

Operating Highlights and Key Challenges

Increased profitability and returns

● Net income was a record $80.4 million, or $2.55 per diluted share, for 2019, compared to net income of $61.5 million, or $1.95 per diluted share, for 2018. Net income during 2018 included $6.3 million, after tax, of expenses related to the acquisition of Peoples. Adjusting for these expenses, net income would have been $67.8 million, or $2.16 per diluted share for 2018.

● The return on average tangible assets was 1.42% for 2019, compared to 1.15% for 2018. Adjusting for the non-recurring Peoples acquisition expenses, the return on average tangible assets was 1.26% for 2018.

● The return on average tangible common equity was 13.07% for 2019, compared to 11.60% for 2018. Adjusting for the non-recurring Peoples acquisition expenses, the return on average tangible common equity was 12.76% for 2018.

Strategic execution

● As part of our continued focus on improving operating efficiencies and investing in digital solutions for our clients, we consolidated four banking centers in our Colorado and Kansas City markets during the fourth quarter of 2019. A fair value impairment charge of $0.9 million was recorded to other non-interest expense during the third quarter of 2019 related to the consolidations, with an expected earn back of less than one year.

● Announced expansion into Utah in January 2019, with a focus on serving commercial and business banking clients in Salt Lake City’s Wasatch Front.

● Delivered full year originated and acquired loan growth of 8.5% fueled by a second consecutive year of $1.2 billion of new loan originations.

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● Maintained a conservatively structured loan portfolio represented by diverse industries and concentrations with most industry sector concentrations at 5% or less of total loans and all concentration levels remain well below our self-imposed limits.

● Continued to build and deepen relationships with our clients, resulting in transaction deposit growth of $223.9 million, or 6.5%, since December 31, 2018.

Loan portfolio

● Total loans ended the year at $4.4 billion and increased $323.1 million, or 7.9%, since December 31, 2018.

● Grew originated and acquired loans outstanding to $4.4 billion, an increase of $339.9 million, or 8.5%, since December 31, 2018, led by originated and acquired commercial loan growth of $352.8 million, or 13.4%.

● Loan originations during the year totaled $1.2 billion, led by commercial loan originations of $781.7 million.

Credit quality

● Provision for loan losses totaled $11.6 million and $5.2 million during 2019 and 2018, respectively. The current provision was recorded to support originated loan growth and net charge-offs including a $6.6 million charge-off of one previously acquired commercial loan.

● Net charge-offs of $8.3 million and $0.8 million were recorded during 2019 and 2018, respectively, and included $6.6 million during 2019 related to the one acquired loan described above. Net charge-offs to average total loans totaled 0.19% and 0.02% for 2019 and 2018, respectively.

● Credit quality remained strong, as non-performing loans (comprised of non-accrual loans and non-accrual TDRs) decreased to 0.49% of total loans at December 31, 2019, compared to 0.60% at December 31, 2018. Non-performing assets to total loans and OREO totaled 0.66% at December 31, 2019 compared to 0.85% at December 31, 2018.

Client deposit funded balance sheet

● Average non-interest bearing demand deposits during the fourth quarter of 2019 increased $73.5 million, or 26.4% annualized, compared to the same period in the prior year.

● Time deposits averaged $1.1 billion during the fourth quarter of 2019, decreasing $36.7 million, or 13.2% annualized, compared to the same period in 2018.

● Non-interest bearing demand deposits were 25.0% of total deposits at December 31, 2019, increasing from 23.6% at December 31, 2018. The mix of transaction deposits to total deposits improved to 77.7% at December 31, 2019 from 76.2% at December 31, 2018 due to our continued focus on developing long-term banking relationships.

● Cost of deposits totaled 0.64% for the year ended December 31, 2019, increasing from 0.45% for the prior year.

Revenues

● Fully taxable equivalent net interest income totaled $210.9 million for the year ended December 31, 2019 and increased $9.0 million, or 4.4%, compared to prior year.

● Average earning assets increased $236.4 million, or 4.6%, during 2019 compared to the prior year, primarily driven by average originated and acquired loan growth of $492.2 million, partially offset by a decrease in average investment securities of $221.1 million.

● The FTE net interest margin remained consistent at 3.93% for the year ended December 31, 2019 and 2018 as the increase in average earning assets and earning asset yields were offset by an increase in the cost of funds. The yield on earning assets increased 21 basis points, led by a 28 basis point increase in the originated loan portfolio yields due to higher new loan yields. The cost of funds increased 33 basis points from 0.63% to 0.96% for the year ended December 31, 2019.

● Non-interest income totaled a record $82.8 million during 2019, increasing $12.0 million from the prior year. Mortgage banking income increased $12.2 million, or 40.7%, other non-interest income increased $0.5 million and service charges and bank card fees remained consistent with last year. Income from OREO properties decreased $0.6 million during the year ended December 31, 2019.

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Expenses

● Non-interest expense totaled $180.7 million during 2019, representing a decrease of $8.6 million, or 4.5%, primarily driven by a $6.7 million increase in net gains on the sale of OREO properties and efficiencies gained from the integration of the Peoples acquisition. Salaries and benefits increased $7.8 million primarily due to higher mortgage banking commissions. Other non-interest expense included banking center consolidation expenses of $0.9 million recorded during 2019. Additionally, included in the prior year were $8.0 million of non-recurring acquisition costs.

● Income tax expense totaled $15.8 million during 2019 compared to $12.2 million during 2018. Tax expense was lowered by $2.2 million and $1.3 million of tax benefit from stock compensation activity during 2019 and 2018, respectively. Adjusting for the stock compensation activity, the 2019 and 2018 effective tax rate was 18.7% and 18.3%, respectively.

Strong capital management

● Capital ratios are strong as our capital position remains in excess of federal bank regulatory well-capitalized thresholds. As of December 31, 2019, our consolidated tier 1 leverage ratio was 11.0% and our consolidated tier 1 risk-based capital and common equity tier 1 risk-based capital ratios were both 13.2%.

● At December 31, 2019, common book value per share was $24.60, while tangible common book value per share was $20.89.

● The Company increased its annual dividend rate 38.9% over 2018 to $0.75 per share for 2019.

● From early 2013 through October 2016, we repurchased 26.6 million shares, or 51.7% of our shares, at an attractive weighted average price of $20.03 per share.

Key Challenges

There are a number of significant challenges confronting us and our industry. We face continual challenges implementing our business strategy, including growing the assets, particularly loans, and deposits of our business 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 environment. While at the beginning of 2019 we anticipated a generally rising rate environment throughout the year, prevailing interest rates began decreasing during the third quarter and generally have continued to decrease since that time, as a result of three Federal Reserve rate cuts from August 2019 through October 2019.

General economic conditions remained stable in 2019. Amidst national economic concerns surrounding trade tensions and indicators of decreasing consumer confidence, residential real estate values remain strong in our markets and nationally, with many markets, including Denver, hitting new post-crisis highs. We continue to see our markets outperforming national averages on many key indicators. Commercial real estate property fundamentals also remain strong, with stable occupancy and increasing lease rates, along with cyclically low capitalization rates leading to increasing valuations. A significant portion of our loan portfolio is secured by real estate and any deterioration in real estate values or credit quality or elevated levels of non-performing assets would ultimately have a negative impact on the quality of our loan portfolio.

The agriculture industry is in the fifth year of depressed commodity prices. Our food and agriculture portfolio is only 5.6% of total loans and is well-diversified across food production, crop and livestock types. Crop and livestock loans represent 1.4% of total loans. We have maintained relationships with food and agriculture clients that generally possess low leverage and, correspondingly, low bank debt to assets, minimizing any potential credit losses in the future.

Our originated and acquired loans outstanding portfolio at December 31, 2019 totaled $4.4 billion, representing an increase of $339.9 million, or 8.5%, compared to December 31, 2018. Our 310-30 loans have produced higher yields than our originated and acquired loans, due to accretion of fair value adjustments. During 2019, our weighted average rate on new loans funded at the time of origination was 4.96% (fully taxable equivalent), compared to the weighted average yield of our originated loan portfolio of 4.78% (fully taxable equivalent). Fully taxable equivalent net interest income reached an inflection point in the second quarter of 2017 and continued through the fourth quarter of 2019 as the yields and volumes of originated and acquired loans outpaced the decrease in higher yielding 310-30 loan balances. The inflection point was driven

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by strong new loan originations. Future growth in our interest income will ultimately be dependent on our ability to continue to generate sufficient volumes of high-quality originated loans as well as Federal Reserve interest rate policy decisions.

Continued regulation, impending new liquidity and capital constraints, and a continual need to bolster cybersecurity are adding costs and uncertainty to all U.S. banks and could affect profitability. Also, nontraditional participants in the market may offer increased competition as non-bank payment businesses, including fintechs, are expanding into traditional banking products. While certain external factors are out of our control and may provide obstacles to our business strategy, we are prepared to deal with these challenges. We seek to remain flexible, yet methodical and proactive, in our strategic decision making so that we can quickly respond to market changes and the inherent challenges and opportunities that accompany such changes.

Application of Critical Accounting Policies

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 allowance for loan losses. See additional discussion of our ALLL policy in note 2 – Summary of Significant Accounting Policies in the notes to our consolidated financial statements for the year ended December 31, 2019.

The determination of the ALL, which represents management’s estimate of probable losses inherent in our loan portfolio at the balance sheet date, including acquired loans to the extent necessary, involves a high degree of judgment and complexity. The determination of the ALL takes into consideration, among other matters, the estimated fair value of the underlying collateral, economic conditions, particularly as such conditions relate to the market areas in which we operate, historical net loan losses and other factors that warrant recognition. Any change in these factors, or the rise of any other factors that we, or our regulators, may deem necessary to consider when estimating the ALL, may materially affect the ALL and provisions for loan losses. For further discussion of the ALL, see “—Financial Condition—Asset Quality” and “—Financial Condition—Allowance for Loan Losses” and notes 2 and 7 to our consolidated financial statements.

Future Accounting Pronouncements

The expected impact of accounting pronouncements recently issued but not yet required to be adopted is discussed below.

Financial Instruments - Credit Losses— In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This update replaces the current incurred loss methodology for recognizing credit losses with a current expected credit loss model, which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This amendment broadens the information that an entity must consider in developing its expected credit loss estimates. Additionally, the update amends the accounting for credit losses for available-for-sale debt securities and purchased financial assets with a more-than-insignificant amount of credit deterioration since origination. This update requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of a company’s loan portfolio. We will adopt ASU 2016-13 effective January 1, 2020 using a modified retrospective approach. Using a third-party vendor solution, we have developed a discounted cash flow model that estimates an allowance for expected lifetime credit losses of the loan and securities portfolios. As of the implementation date, the Company expects to recognize an increase of up to $6.0 million in its allowance for credit losses with a corresponding maximum reduction to its common equity tier 1 capital ratio of 12 basis points. The overall estimate for the current expected credit loss (“CECL”) methodology is significantly influenced by the composition, characteristics and quality of our loan and securities portfolios as well as the prevailing economic conditions and forecasts.

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Other Pronouncements—The Company reviewed ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, and ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement and ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment and does not expect the adoption of these pronouncements to have a material impact on its financial statements.

Financial Condition

Total assets increased to $5.9 billion at December 31, 2019 from $5.7 billion at December 31, 2018, primarily driven by increases in total loans of $323.1 million, or 7.9%, and loans held for sale of $69.3 million, or 144.1%, which were partially offset by a decrease in total investment securities of $203.2 million, or 19.3%.

During 2019, lower cost demand, savings and money market deposits (“transaction deposits”) increased $223.9 million, or 6.5%, as we continue to develop full banking relationships with our clients. The increase in transaction deposits provided low cost funding utilized to fund loan growth.

Investment securities

Available-for-sale

Total investment securities available-for-sale were $638.2 million at December 31, 2019, compared to $791.1 million at December 31, 2018, a decrease of $152.9 million. During 2019 and 2018, maturities and paydowns of available-for-sale securities totaled $195.5 million and $216.1 million, respectively. Purchases of available-for-sale securities during 2019 and 2018 totaled $45.7 million and $72.6 million, respectively. Proceeds from sales of available-for-sale securities during 2019 and 2018 totaled $20.4 million and $33.6 million, respectively.

Available-for-sale investment securities are summarized as follows as of the dates indicated:

	December 31, 2019						December 31, 2018
						Weighted						Weighted
	Amortized		Fair		Percent of	average	Amortized		Fair		Percent of	average
	cost		value		portfolio	yield	cost		value		portfolio	yield
Mortgage-backed securities ("MBS"):
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	93,770	$	95,256	14.9%	2.59%	$	147,283	$	146,642	18.5%	2.53%
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		543,275		542,037	84.9%	2.13%		661,354		643,381	81.3%	2.15%
Municipal securities		495		487	0.1%	3.60%		619		610	0.1%	3.67%
Other securities		469		469	0.1%	0.00%		469		469	0.1%	0.00%
Total investment securities available-for-sale	$	638,009	$	638,249	100.0%	2.20%	$	809,725	$	791,102	100.0%	2.22%

As of December 31, 2019 and 2018, 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 Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Government National Mortgage Association (“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 2.9 years and 3.2 years at December 31, 2019 and December 31, 2018, respectively. This estimate is based on assumptions and actual results may differ. At December 31, 2019 and December 31, 2018, the duration of the total available-for-sale investment portfolio was 2.7 years and 3.0 years, respectively.

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At December 31, 2019 and 2018, adjustable rate securities comprised 2.8% and 3.7%, 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 2.40% per annum and 2.39% per annum at December 31, 2019 and 2018, respectively.

The available-for-sale investment portfolio included $0.2 million of net unrealized gains and $18.6 million of net unrealized losses at December 31, 2019 and 2018, respectively. We believe any unrecognized losses during 2018 were a result of prevailing interest rates, and as such, we do not believe that any of the securities with unrealized losses were other-than-temporarily-impaired.

 Held-to-maturity

At December 31, 2019, we held $182.9 million of held-to-maturity investment securities, compared to $235.4 million at December 31, 2018, a decrease of $52.5 million, or 22.3%. During 2019 and 2018, maturities and paydowns of held-to-maturity securities totaled $60.9 million and $61.9 million, respectively. Purchases of held-to-maturity securities totaled $10.2 million and $40.7 million during 2019 and 2018, respectively.

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

	December 31, 2019						December 31, 2018
						Weighted						Weighted
	Amortized		Fair		Percent of	average	Amortized		Fair		Percent of	average
	cost		value		portfolio	yield	cost		value		portfolio	yield
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	127,560	$	128,770	69.7%	3.19%	$	157,115	$	154,412	66.7%	3.24%
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		55,324		54,971	30.3%	1.90%		78,283		76,514	33.3%	2.25%
Total investment securities held-to-maturity	$	182,884	$	183,741	100.0%	2.80%	$	235,398	$	230,926	100.0%	2.91%

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 was $183.7 million and $230.9 million, at December 31, 2019 and 2018, respectively, and included $0.9 million of net unrealized gains and $4.5 million of net unrealized losses for the respective periods.

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 total held-to-maturity portfolio as of December 31, 2019 and December 31, 2018 was 2.4 years and 2.8 years, respectively. This estimate is based on assumptions and actual results may differ. The duration of the total held-to-maturity portfolio was 2.3 years and 2.5 years as of December 30, 2019 and December 31, 2018, respectively.

Loans overview

At December 31, 2019, our loan portfolio was comprised of new loans that we have originated and loans that were acquired in connection with our six acquisitions to date. Loans that exhibit signs of credit deterioration at the date of acquisition are accounted for in accordance with the provisions of ASC 310-30.

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

					December 31, 2019 vs.
					December 31, 2018
	December 31, 2019		December 31, 2018		% Change
Originated:
Commercial:
Commercial and industrial	$	2,171,436	$	1,877,221	15.7%
Owner-occupied commercial real estate		414,477		337,258	22.9%
Food and agriculture		245,320		217,294	12.9%
Energy		42,519		49,204	(13.6)%
Total commercial		2,873,752		2,480,977	15.8%
Commercial real estate non-owner occupied		505,479		407,431	24.1%
Residential real estate		651,656		657,633	(0.9)%
Consumer		21,030		22,895	(8.1)%
Total originated		4,051,917		3,568,936	13.5%
Acquired:
Commercial:
Commercial and industrial		34,561		53,926	(35.9)%
Owner-occupied commercial real estate		65,429		84,408	(22.5)%
Food and agriculture		3,265		4,862	(32.8)%
Total commercial		103,255		143,196	(27.9)%
Commercial real estate non-owner occupied		92,639		144,388	(35.8)%
Residential real estate		112,755		163,187	(30.9)%
Consumer		746		1,722	(56.7)%
Total acquired		309,395		452,493	(31.6)%
ASC 310-30 loans		54,094		70,879	(23.7)%
Total loans	$	4,415,406	$	4,092,308	7.9%

The table below shows the originated and acquired loans by loan segment at the respective dates:

					December 31, 2019 vs.
					December 31, 2018
	December 31, 2019		December 31, 2018		% Change
Commercial	$	2,977,007	$	2,624,173	13.4%
Commercial real estate non-owner occupied		598,118		551,819	8.4%
Residential real estate		764,411		820,820	(6.9)%
Consumer		21,776		24,617	(11.5)%
Total originated and acquired loans	$	4,361,312	$	4,021,429	8.5%

Our loan portfolio totaled $4.4 billion at December 31, 2019, increasing $323.1 million, or 7.9%, since December 31, 2018, driven by new loan originations. The strong originations were the result of continued market penetration benefiting from our focus on building client relationships. Originated and acquired loans grew $339.9 million, or 8.5%, led by originated and acquired commercial loan growth of $352.8 million, or 13.4%. The acquired 310-30 loan portfolio declined $16.8 million, or 23.7%, from December 31, 2018.

Our commercial and industrial loan portfolio is comprised of diverse industry segments, and our ability to generate new relationships with small- to medium-sized businesses has driven strong loan growth within these segments. At December 31, 2019, these segments included government and municipal loans of $531.3 million, finance and financial services, primarily lender finance loans, of $361.5 million, healthcare-related loans of $199.6 million, manufacturing-related loans of $156.3 million, and a variety of smaller subcategories of commercial and industrial loans. Food and agriculture loans, which are well-diversified across food production, crop and livestock types, totaled $253.1 million and were 37.1% of the Company’s risk-based capital. Crop and livestock loans represent 1.4% of total loans.

Originated and acquired non-owner occupied CRE loans were 87.6% of the Company’s risk based capital, or 13.5% of total loans, and no specific property type comprised more than 4.0% of total loans. The Company maintains very little exposure to

47

retail properties, comprising less than 1.7% of total loans. Multi-family loans totaled $55.8 million, or 1.3% of total loans as of December 31, 2019.

When considering the loan portfolio in its entirety, 76.7% of loans were located within our footprint of Colorado, the greater Kansas City region, New Mexico, Texas and Utah as of December 31, 2019, based on the domicile of the borrower or, in the case of collateral-dependent loans, the geographical location of the collateral.

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 originations totaled $1.2 billion during 2019, led by commercial loan originations of $781.7 million. Originations 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 originations to better approximate the impact of originations on loans outstanding and ultimately net interest income.

The following tables represent new loan originations during 2019 and 2018:

	Fourth quarter		Third quarter		Second quarter		First quarter		Total
	2019		2019		2019		2019		2019
Commercial:
Commercial and industrial	$	118,969	$	172,969	$	163,138	$	153,547	$	608,623
Owner occupied commercial real estate		46,965		16,149		41,380		26,405		130,899
Food and agriculture		20,348		(4,894)		18,217		15,213		48,884
Energy		(3,807)		3,067		(12,098)		6,138		(6,700)
Total commercial		182,475		187,291		210,637		201,303		781,706
Commercial real estate non-owner occupied		41,256		79,929		36,632		69,125		226,942
Residential real estate		43,493		49,022		40,012		38,627		171,154
Consumer		2,315		2,986		3,264		1,958		10,523
Total	$	269,539	$	319,228	$	290,545	$	311,013	$	1,190,325

Included in originations are net fundings under revolving lines of credit of $1,756, $37,062, $48,955 and $105,235 as of the fourth quarter 2019, third quarter 2019, second quarter 2019 and first quarter 2019, respectively.

	Fourth quarter		Third quarter		Second quarter		First quarter		Total
	2018		2018		2018		2018		2018
Commercial:
Commercial and industrial	$	213,335	$	123,440	$	232,643	$	123,984	$	693,402
Owner occupied commercial real estate		34,727		35,549		19,009		23,576		112,861
Food and agriculture		14,046		23,833		38,220		25,873		101,972
Energy		7,640		5,412		(929)		(10,778)		1,345
Total Commercial		269,748		188,234		288,943		162,655		909,580
Commercial real estate non-owner occupied		41,031		42,300		28,316		20,694		132,341
Residential real estate		51,017		40,293		30,259		21,698		143,267
Consumer		2,592		3,797		3,588		3,238		13,215
Total	$	364,388	$	274,624	$	351,106	$	208,285	$	1,198,403

Included in originations are net fundings under revolving lines of credit of $6,263, $34,070, $151,888 and $59,236 as of the fourth quarter 2018, third quarter 2018, second quarter 2018 and first quarter 2018, respectively.

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

	December 31, 2019
	Due within		Due after 1 but		Due after
	1 year		within 5 years		5 years		Total
Commercial:
Commercial and industrial	$	158,769	$	1,102,774	$	944,995	$	2,206,538
Owner occupied commercial real estate		18,663		170,092		301,367		490,122
Food and agriculture		57,159		168,827		27,142		253,128
Energy		4,636		37,613		270		42,519
Total commercial		239,227		1,479,306		1,273,774		2,992,307
Commercial real estate non-owner occupied		85,188		377,850		167,868		630,906
Residential real estate		27,251		49,818		693,348		770,417
Consumer		6,600		11,978		3,198		21,776
Total loans	$	358,266	$	1,918,952	$	2,138,188	$	4,415,406

	December 31, 2018
	Due within		Due after 1 but		Due after
	1 year		within 5 years		5 years		Total
Commercial:
Commercial and industrial	$	191,088	$	844,015	$	896,910	$	1,932,013
Owner occupied commercial real estate		37,284		124,289		273,737		435,310
Food and agriculture		53,845		143,909		30,290		228,044
Energy		9,397		39,807		—		49,204
Total commercial		291,614		1,152,020		1,200,937		2,644,571
Commercial real estate non-owner occupied		87,581		330,282		174,349		592,212
Residential real estate		30,376		56,914		743,525		830,815
Consumer		7,748		12,997		3,965		24,710
Total loans	$	417,319	$	1,552,213	$	2,122,776	$	4,092,308

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 originated and acquired loans with maturities over one year is as follows at the dates indicated:

	December 31, 2019
	Fixed			Variable			Total
			Weighted			Weighted			Weighted
	Balance		average rate	Balance		average rate	Balance		average rate
Commercial
Commercial and industrial(1)	$	1,073,181	3.97%	$	974,133	4.36%	$	2,047,314	4.16%
Owner occupied commercial real estate		229,757	4.87%		232,968	4.79%		462,725	4.99%
Food and agriculture		49,147	5.19%		143,270	4.61%		192,417	4.76%
Energy		270	4.99%		37,613	4.38%		37,883	4.39%
Total commercial		1,352,355	4.22%		1,387,984	4.46%		2,740,339	4.34%
Commercial real estate non-owner occupied		230,368	4.75%		288,016	4.46%		518,384	4.59%
Residential real estate		323,792	3.66%		413,370	4.54%		737,162	4.15%
Consumer		12,156	5.52%		3,020	4.94%		15,176	5.40%
Total loans with > 1 year maturity	$	1,918,671	4.20%	$	2,092,390	4.48%	$	4,011,061	4.34%

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	December 31, 2018
	Fixed			Variable			Total
			Weighted			Weighted			Weighted
	Balance		average rate	Balance		average rate	Balance		average rate
Commercial
Commercial and industrial(1)	$	933,202	3.92%	$	807,139	4.98%	$	1,740,341	4.41%
Owner occupied commercial real estate		195,354	4.61%		192,133	5.09%		387,487	5.04%
Food and agriculture		44,351	5.00%		124,234	5.21%		168,585	5.15%
Energy		21	4.50%		39,786	4.81%		39,807	4.81%
Total commercial		1,172,928	4.14%		1,163,292	5.02%		2,336,220	4.58%
Commercial real estate non-owner occupied		209,759	4.70%		273,115	5.11%		482,874	4.93%
Residential real estate		361,147	3.56%		429,909	4.61%		791,056	4.13%
Consumer		13,672	5.27%		3,196	5.57%		16,868	5.33%
Total loans with > 1 year maturity	$	1,757,506	4.10%	$	1,869,512	4.94%	$	3,627,018	4.53%

(1) Included in commercial fixed rate loans are loans totaling $403,700 and $473,440 as of December 31, 2019 and 2018, respectively, that have been swapped to variable rates at current market pricing. Included in the commercial segment are tax exempt loans totaling $701,825 and $685,644 with a weighted average rate of 3.41% and 3.27% at December 31, 2019 and 2018, respectively.

Accretable yield

At December 31, 2019, the accretable yield balance on loans accounted for under ASC 310-30 was $28.1 million compared to $35.9 million at December 31, 2018. We have remeasured the expected cash flows during 2019 for all 22 remaining loan pools accounted for under ASC 310-30 utilizing the same cash flow methodology used at the time of acquisition. This remeasurement resulted in a net $5.3 million and $8.5 million reclassification from non-accretable difference to accretable yield during 2019 and 2018, respectively.

In addition to the accretable yield on loans accounted for under ASC 310-30, the fair value adjustments on loans outside the scope of ASC 310-30 are also accreted to interest income over the life of the loans. Total remaining accretable yield and fair value mark were as follows for the dates indicated:

	December 31, 2019		December 31, 2018
Remaining accretable yield on loans accounted for under ASC 310-30	$	28,134	$	35,901
Remaining accretable fair value mark on acquired loans		6,727		8,659
Total remaining accretable yield and fair value mark	$	34,861	$	44,560

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 to 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

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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.

Our internal risk rating system uses a series of grades which reflect our assessment of the credit quality of loans based on an analysis of the borrower's financial condition, liquidity and ability to meet contractual debt service requirements. Loans that are perceived to have acceptable risk are categorized as “Pass” loans. “Special mention” loans represent loans that have potential credit weaknesses that deserve close attention. Special mention loans include borrowers that have potential weaknesses or unwarranted risks that, unless corrected, may threaten the borrower's ability to meet debt service requirements. However, these borrowers are still believed to have the ability to respond to and resolve the financial issues that threaten their financial situation. Loans classified as “Substandard” have a well-defined credit weakness and are inadequately protected by the current paying capacity of the obligor or of the collateral pledged, if any. Although these loans are identified as potential problem loans, they may never become non-performing. Substandard loans have a distinct possibility of loss if the deficiencies are not corrected. “Doubtful” loans are loans that management believes that collection of payments in accordance with the terms of the loan agreement are highly questionable and improbable. Doubtful loans are deemed impaired and put on non-accrual status.

In the event of borrower default, we may seek recovery in compliance with state lending laws, the respective loan agreements, and credit monitoring and remediation procedures that may include modifying or restructuring a loan from its original terms, for economic or legal reasons, to provide a concession to the borrower from their original terms due to borrower financial difficulties in order to facilitate repayment. Such restructured loans are considered “troubled debt restructurings” or "TDRs" in accordance with ASC 310-40. Under this guidance, modifications to loans that fall within the scope of ASC 310-30 are not considered troubled debt restructurings, regardless of otherwise meeting the definition of a troubled debt restructuring. 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 ALL 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, TDRs on non-accrual and OREO. Non-accrual loans and TDRs on non-accrual accounted for under ASC 310-30, as described below, may be excluded from our non-performing assets to the extent that the cash flows of the loan pools are still estimable. Interest income that would have been recorded had non-accrual loans performed in accordance with their original contract terms during 2019 and 2018 was $1.7 million and $1.4 million, respectively.

All loans accounted for under ASC 310-30 were classified as performing assets at December 31, 2019 and 2018, as the future cash flows on the loan pools were considered estimable. While individual loans making up the pools may be accounted for on a cost recovery basis, the cash flows on the loan pools are considered estimable and, therefore, interest income, through accretion of the difference between the carrying value of the loans in the pool and the pool's expected future cash flows, is being recognized on all acquired loan pools accounted for under ASC 310-30.

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. Originated and acquired 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.

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

	December 31, 2019		December 31, 2018		December 31, 2017		December 31, 2016		December 31, 2015
Non-accrual loans:
Non-accrual loans, excluding restructured loans	$	16,894	$	21,017	$	13,745	$	14,009	$	7,854
Restructured loans on non-accrual		4,854		3,439		7,255		16,708		17,793
Non-performing loans		21,748		24,456		21,000		30,717		25,647
OREO		7,300		10,596		10,491		15,662		20,814
Other repossessed assets		—		—		—		—		894
Total non-performing assets	$	29,048	$	35,052	$	31,491	$	46,379	$	47,355
Loans 30-89 days past due and still accruing interest	$	5,772	$	4,610	$	3,681	$	2,296	$	6,716
Loans 90 days or more past due and still accruing interest		958		895		150		—		166
Non-accrual loans		21,748		24,456		21,000		30,717		25,647
Total past due and non-accrual loans	$	28,478	$	29,961	$	24,831	$	33,013	$	32,529
Accruing restructured loans	$	6,885	$	5,944	$	8,461	$	5,766	$	8,403
ALL		39,064		35,692		31,264		29,174		27,119
Non-performing loans to total loans		0.49%		0.60%		0.66%		1.07%		0.99%
Total 90 days past due and still accruing interest and non-accrual loans to total originated and acquired loans		0.52%		0.63%		0.69%		1.13%		1.08%
Total non-performing assets to total loans and OREO		0.66%		0.85%		0.99%		1.61%		1.81%
ALL to non-performing loans		179.62%		145.94%		148.88%		94.98%		105.74%

During 2019, total non-performing loans decreased $2.7 million, or 11.1%, from December 31, 2018. During 2019, accruing restructured loans increased $0.9 million. Total non-performing assets to total loans and OREO decreased to 0.66% at December 31, 2019 from 0.85% at December 31, 2018.

Loans 30-89 days past due and still accruing interest increased $1.2 million from December 31, 2018 to December 31, 2019 and loans 90 days or more past due and still accruing interest increased $0.1 million from December 31, 2018 to December 31, 2019. During 2018, total non-performing loans increased $3.5 million, or 16.5%, from December 31, 2017 due to acquired Peoples loans, partially offset by paydowns during the period.

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The following table represents the carrying value of our accruing and non-accrual loans compared to the unpaid principal balance (“UPB”) as of December 31, 2019:

	Accruing					Non-accrual					Total
	Unpaid				Carrying	Unpaid				Carrying	Unpaid				Carrying
	principal		Carrying		value/	principal		Carrying		value/	principal		Carrying		value/
	balance		value		UPB	balance		value		UPB	balance		value		UPB
Originated:
Commercial:
Commercial and industrial	$	2,165,361	$	2,165,853	100.0%	$	8,229	$	5,583	67.8%	$	2,173,590	$	2,171,436	99.9%
Owner occupied commercial real estate		413,733		413,041	99.8%		2,188		1,436	65.6%		415,921		414,477	99.7%
Food and agriculture		245,459		245,003	99.8%		320		317	99.1%		245,779		245,320	99.8%
Energy		41,836		41,585	99.4%		5,559		934	16.8%		47,395		42,519	89.7%
Total commercial		2,866,389		2,865,482	100.0%		16,296		8,270	50.7%		2,882,685		2,873,752	99.7%
Commercial real estate non-owner occupied		507,180		505,479	99.7%		—		—	0.0%		507,180		505,479	99.7%
Residential real estate		648,313		648,741	100.1%		3,047		2,915	95.7%		651,360		651,656	100.1%
Consumer		20,990		20,990	100.0%		46		40	87.0%		21,036		21,030	99.9%
Total originated loans		4,042,872		4,040,692	99.9%		19,389		11,225	57.9%		4,062,261		4,051,917	99.7%
Acquired:
Commercial:
Commercial and industrial		32,800		30,749	93.7%		9,245		3,812	41.2%		42,045		34,561	82.2%
Owner occupied commercial real estate		65,901		64,601	98.0%		1,048		828	79.0%		66,949		65,429	97.7%
Food and agriculture		3,354		3,265	97.3%		—		—	—		3,354		3,265	97.3%
Total commercial		102,055		98,615	96.6%		10,293		4,640	45.1%		112,348		103,255	91.9%
Commercial real estate		93,817		92,180	98.3%		576		459	79.7%		94,393		92,639	98.1%
Residential real estate		109,183		107,341	98.3%		6,483		5,414	83.5%		115,666		112,755	97.5%
Consumer		722		736	101.9%		10		10	100.0%		732		746	101.9%
Total acquired loans		305,777		298,872	97.7%		17,362		10,523	60.6%		323,139		309,395	95.7%
ASC 310-30 loans:
Commercial		19,179		15,300	79.8%		—		—	0.0%		19,179		15,300	79.8%
Commercial real estate non-owner occupied		42,780		32,788	76.6%		—		—	0.0%		42,780		32,788	76.6%
Residential real estate		10,370		6,006	57.9%		—		—	0.0%		10,370		6,006	57.9%
Consumer		—		—	0.0%		—		—	0.0%		—		—	0.0%
Total loans accounted for under ASC 310-30		72,329		54,094	74.8%		—		—	0.0%		72,329		54,094	74.8%
Total loans	$	4,420,978	$	4,393,658	99.4%	$	36,751	$	21,748	59.2%	$	4,457,729	$	4,415,406	99.1%

Allowance for loan losses

The ALL represents the amount that we believe is necessary to absorb probable losses inherent in the loan portfolio at the balance sheet date and involves a high degree of judgment and complexity. Determination of the ALL is based on an evaluation of the collectability of loans, the realizable value of underlying collateral, economic conditions, historical net loan losses, the estimated loss emergence period, estimated default rates, any declines in cash flow assumptions from acquisition, loan structures, growth factors and other elements that warrant recognition and, to the extent applicable, prior loss experience. The ALL is critical to the portrayal and understanding of our financial condition, liquidity and results of operations. The determination and application of the ALL 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.

In accordance with the applicable guidance for business combinations, acquired loans were recorded at their acquisition date fair values, which were based on expected future cash flows and included an estimate for future loan losses; therefore, no ALL was recorded as of the acquisition date. Any estimated losses on acquired loans that arise after the acquisition date are reflected in a charge to the provision for loan losses on the consolidated statements of operations.

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Originated and acquired ALL

For all originated and acquired loans, the determination of the ALL follows a process to determine the appropriate level of ALL that is designed to account for changes in credit quality and other risk factors. This process provides an ALL consisting of a specific allowance component based on certain individually evaluated loans and a general allowance component based on estimates of reserves needed for all other loans, segmented based on similar risk characteristics.

 Impaired loans less than $250,000 are included in the general allowance population. Impaired loans over $250,000 are subject to individual evaluation on a regular basis to determine the need, if any, to allocate a specific reserve to the impaired loan. Typically, these loans consist of commercial and commercial real estate loans and exclude homogeneous loans such as residential real estate and consumer loans. Specific allowances are determined by collectively analyzing:

● the borrower’s resources, ability, and willingness to repay in accordance with the terms of the loan agreement;

● the likelihood of receiving financial support from any guarantors;

● the adequacy and present value of future cash flows, less disposal costs, of any collateral; and

● the impact current economic conditions may have on the borrower's financial condition and liquidity or the value of the collateral.

In evaluating the loan portfolio for an appropriate ALL level, unimpaired loans are grouped into segments based on broad characteristics such as primary use and underlying collateral. We have identified four primary loan segments 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 factors affecting each loan class. Following are the loan classes within each of the four primary loan segments:

	Non-owner occupied
Commercial	commercial real estate	Residential real estate	Consumer
Commercial and industrial	Construction	Senior lien	Total Consumer
Owner occupied commercial real estate	Acquisition and development	Junior lien
Food and agriculture	Multifamily
Energy	Non-owner occupied

Appropriate ALL levels are determined by segment and class utilizing risk ratings, loss history, peer loss history and qualitative adjustments. The qualitative adjustments consider the following risk factors:

● economic/external conditions;

● loan administration, loan structure and procedures;

● risk tolerance/experience;

● loan growth;

● trends;

● concentrations; and

● other.

Management derives an estimated annual loss rate adjusted for an estimated loss emergence period based on historical loss data categorized by segment and class. The loss rates are applied at the loan segment and class level. In order to address our lack of historical loss data encompassing a full economic cycle, we incorporate not only our own historical loss rates since the beginning of 2012, but we also utilize peer historical loss data, including a historical average net charge-off ratio on each loan type, relying on the Uniform Bank Performance Reports compiled by the Federal Financial Institutions Examinations Council (“FFIEC”). For originated and acquired loans, we assign a slightly higher portion of our loss history, but still rely on the peer loss history to account for our limited historical data.

The collective resulting ALL for originated and acquired loans is calculated as the sum of the specific reserves and the general reserves. While these amounts are calculated by individual loan or segment and class, the entire ALL is available for any loan that, in our judgment, should be charged-off.

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During 2019, the Company recorded $11.7 million of provision for originated and acquired loan losses to support originated loan growth and net charge-offs. Included in provision expense was $6.6 million related to one previously acquired commercial loan that was charged-off during 2019. For originated and acquired loans, the Company recorded charge-offs of $8.6 million and recoveries of $0.3 million during the year ended December 31, 2019. Specific reserves on impaired loans totaled $1.8 million at December 31, 2019.

During 2018, the Company recorded $5.0 million of provision for originated and acquired loan losses to support originated loan growth and net charge-offs. For originated and acquired loans, the Company recorded charge-offs of $2.1 million, which were mostly offset by recoveries of $1.4 million during the year ended December 31, 2018. Specific reserves on impaired loans totaled $1.2 million at December 31, 2018.

310-30 ALL

Loans accounted for under the accounting guidance provided in ASC 310-30 have been grouped into pools based on the predominant risk characteristics of purpose and/or type of loan. The timing and receipt of expected principal, interest and any other cash flows of these loans are periodically remeasured and the expected future cash flows of the collective pools are compared to the carrying value of the pools. To the extent that the expected future cash flows of each pool is less than the book value of the pool, an allowance for loan losses will be established through a charge to the provision for loan losses. If the remeasured expected future cash flows are greater than the book value of the pools, then the improvement in the expected future cash flows is accreted into interest income over the remaining expected life of the loan pool. During 2019 and 2018, these remeasurements resulted in overall increases in expected cash flows in certain loan pools, which, absent previous valuation allowances within the same pool, are reflected in increased accretion as well as an increased amount of accretable yield and are recognized over the expected remaining lives of the underlying loans as an adjustment to yield.

During 2019, loans accounted for under ASC 310-30 had recoupment of $51 thousand. During 2018, loans accounted for under ASC 310-30 had provision of $222 thousand.

Total ALL

After considering the above-mentioned factors, we believe that the ALL of $39.1 million is adequate to cover probable losses inherent in the loan portfolio at December 31, 2019. However, it is likely that future adjustments to the ALL will be necessary and any changes to the assumptions, circumstances or estimates used in determining the ALL could adversely affect the Company's results of operations, liquidity or financial condition.

55

The following table presents, by class stratification, the changes in the ALL during the years listed:

	As of and for the years ended
	December 31, 2019						December 31, 2018						December 31, 2017
	Originated		ASC				Originated		ASC				Originated		ASC
	and acquired		310-30				and acquired		310-30				and acquired		310-30
	loans		loans		Total		loans		loans		Total		loans		loans		Total
Beginning allowance for loan losses	$	35,461	$	231	$	35,692	$	31,193	$	71	$	31,264	$	28,949	$	225	$	29,174
Charge-offs:
Commercial		(7,422)		—		(7,422)		(833)		(62)		(895)		(10,342)		—		(10,342)
Commercial real estate non-owner occupied		(116)		—		(116)		(11)		—		(11)		—		—		—
Residential real estate		(124)		—		(124)		(118)		—		(118)		(236)		—		(236)
Consumer		(937)		—		(937)		(1,134)		—		(1,134)		(737)		—		(737)
Total charge-offs		(8,599)		—		(8,599)		(2,096)		(62)		(2,158)		(11,315)		—		(11,315)
Recoveries		328		—		328		1,389		—		1,389		433		—		433
Net charge-offs		(8,271)		—		(8,271)		(707)		(62)		(769)		(10,882)		—		(10,882)
Provision (recoupment) for loan loss		11,694		(51)		11,643		4,975		222		5,197		13,126		(154)		12,972
Ending allowance for loan losses	$	38,884	$	180	$	39,064	$	35,461	$	231	$	35,692	$	31,193	$	71	$	31,264
Ratio of net charge-offs to average total loans during the period, respectively		0.20%		0.00%		0.19%		0.02%		0.07%		0.02%		0.38%		0.00%		0.36%
Ratio of ALL to total loans outstanding at period end, respectively		0.89%		0.33%		0.88%		0.88%		0.33%		0.87%		1.02%		0.06%		0.98%
Ratio of ALL to total non-performing loans at period end, respectively		178.79%		0.00%		179.62%		145.00%		0.00%		145.94%		148.54%		0.00%		148.88%
Total loans	$	4,361,312	$	54,094	$	4,415,406	$	4,021,429	$	70,879	$	4,092,308	$	3,058,324	$	120,623	$	3,178,947
Average total loans outstanding during the period		4,228,007		60,219		4,288,226		3,728,817		90,786		3,819,603		2,897,316		132,130		3,029,446
Non-performing loans		21,748		—		21,748		24,456		—		24,456		21,000		—		21,000

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	As of and for the years ended
	December 31, 2016						December 31, 2015
	Originated		ASC				Originated		ASC
	and acquired		310-30				and acquired		310-30
	loans		loans		Total		loans		loans		Total
Beginning allowance for loan losses	$	26,042	$	1,077	$	27,119	$	16,892	$	721	$	17,613
Charge-offs:
Commercial		(20,684)		—		(20,684)		(1,911)		—		(1,911)
Commercial real estate non-owner occupied		(280)		(41)		(321)		(222)		—		(222)
Residential real estate		(408)		—		(408)		(208)		—		(208)
Consumer		(771)		(6)		(777)		(1,196)		(10)		(1,206)
Total charge-offs		(22,143)		(47)		(22,190)		(3,537)		(10)		(3,547)
Recoveries		594		—		594		609		—		609
Net charge-offs		(21,549)		(47)		(21,596)		(2,928)		(10)		(2,938)
Provision (recoupment) for loan loss		24,456		(805)		23,651		12,078		366		12,444
Ending allowance for loan losses	$	28,949	$	225	$	29,174	$	26,042	$	1,077	$	27,119
Ratio of net charge-offs to average total loans during the period, respectively		0.85%		0.03%		0.80%		0.36%		0.01%		0.12%
Ratio of ALL to total loans outstanding at period end, respectively		1.07%		0.15%		1.02%		1.09%		0.53%		1.05%
Ratio of ALL to total non-performing loans at period end, respectively		94.24%		0.00%		94.98%		101.54%		0.00%		105.74%
Total loans	$	2,715,069	$	145,852	$	2,860,921	$	2,384,843	$	202,830	$	2,587,673
Average total loans outstanding during the period		2,530,464		170,330		2,700,794		2,323,527		209,268		2,532,795
Non-performing loans		30,717		—		30,717		25,647		—		25,647

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

	December 31, 2019
						ALL as a %
	Total loans		% of total loans	Related ALL		of total ALL
Commercial	$	2,992,307	67.8%	$	30,442	77.9%
Commercial real estate non-owner occupied		630,906	14.3%		4,850	12.4%
Residential real estate		770,417	17.4%		3,468	8.9%
Consumer		21,776	0.5%		304	0.8%
Total	$	4,415,406	100.0%	$	39,064	100.0%

	December 31, 2018
						ALL as a %
	Total loans		% of total loans	Related ALL		of total ALL
Commercial	$	2,644,571	64.6%	$	27,137	76.1%
Commercial real estate non-owner occupied		592,212	14.5%		4,406	12.3%
Residential real estate		830,815	20.3%		3,800	10.6%
Consumer		24,710	0.6%		349	1.0%
Total	$	4,092,308	100.0%	$	35,692	100.0%

	December 31, 2017
						ALL as a %
	Total loans		% of total loans	Related ALL		of total ALL
Commercial	$	1,874,605	59.0%	$	21,385	68.4%
Commercial real estate non-owner occupied		563,049	17.7%		5,609	17.9%
Residential real estate		716,237	22.5%		3,965	12.7%
Consumer		25,056	0.8%		305	1.0%
Total	$	3,178,947	100.0%	$	31,264	100.0%

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	December 31, 2016
						ALL as a %
	Total loans		% of total loans	Related ALL		of total ALL
Commercial	$	1,560,430	54.6%	$	18,821	64.6%
Commercial real estate non-owner occupied		526,792	18.4%		5,642	19.3%
Residential real estate		744,885	26.0%		4,387	15.0%
Consumer		28,814	1.0%		324	1.1%
Total	$	2,860,921	100.0%	$	29,174	100.0%

	December 31, 2015
						ALL as a %
	Total loans		% of total loans	Related ALL		of total ALL
Commercial	$	1,427,420	55.2%	$	17,261	63.6%
Commercial real estate non-owner occupied		442,885	17.1%		4,166	15.4%
Residential real estate		684,002	26.4%		5,281	19.5%
Consumer		33,366	1.3%		411	1.5%
Total	$	2,587,673	100.0%	$	27,119	100.0%

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 low-cost funding source for our loans, but also provide a foundation for the client relationships that are critical to future loan growth.

The following table presents information regarding our deposit composition at December 31, 2019 and 2018:

							Increase (decrease)
	December 31, 2019			December 31, 2018			Amount		% Change
Non-interest bearing demand deposits	$	1,184,945	25.0%	$	1,072,029	23.6%	$	112,916	10.5%
Interest bearing demand deposits		738,496	15.6%		688,255	15.2%		50,241	7.3%
Savings accounts		542,531	11.5%		540,481	11.9%		2,050	0.4%
Money market accounts		1,213,007	25.6%		1,154,327	25.5%		58,680	5.1%
Total transaction deposits		3,678,979	77.7%		3,455,092	76.2%		223,887	6.5%
Time deposits < $250,000		894,459	18.9%		928,702	20.5%		(34,243)	(3.7)%
Time deposits > $250,000		163,694	3.4%		151,827	3.3%		11,867	7.8%
Total time deposits		1,058,153	22.3%		1,080,529	23.8%		(22,376)	(2.1)%
Total deposits	$	4,737,132	100.0%	$	4,535,621	100.0%	$	201,511	4.4%

The following table shows scheduled maturities of certificates of deposit with denominations greater than or equal to $250,000 as of December 31, 2019:

	December 31, 2019
Three months or less	$	21,142
Over 3 months through 6 months		30,773
Over 6 months through 12 months		54,079
Thereafter		57,700
Total time deposits > $250,000	$	163,694

Total deposits increased $201.5 million, or 4.4% from the prior year, driven by transaction deposit growth. The mix of transaction deposits to total deposits improved to 77.7% at December 31, 2019, from 76.2% at December 31, 2018, due to our continued focus on developing long-term banking relationships.

At December 31, 2019 and 2018, time deposits that were scheduled to mature within 12 months totaled $726.9 million and $685.4 million, respectively. Of the $726.9 million in time deposits scheduled to mature within 12 months at December 31,

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2019, $106.0 million were in denominations of $250,000 or more, and $620.9 million were in denominations less than $250,000. The aggregate amount of certificates of deposit in denominations that meet or exceed the FDIC insurance limit was $163.7 million and $151.8 million at December 31, 2019 and 2018, respectively. Note 12 to the consolidated financial statements provides a maturity schedule of time deposits outstanding at December 31, 2019.

Other borrowings

As of December 31, 2019 and 2018, the Bank sold securities under agreements to repurchase totaling $56.9 million and $66.0 million, respectively. In addition, as a member of the FHLB, the Bank has access to a line of credit and term financing from the FHLB with total available credit of $1.1 billion at December 31, 2019. The Bank utilizes its FHLB line of credit as a funding mechanism for originated loans and loans held for sale. At December 31, 2019 and 2018, the Bank had $192.7 million and $234.3 million in line of credit advances from the FHLB, respectively, that mature within a day. At December 31, 2019, the Bank had one term advance totaling $15.0 million, which had a fixed interest rate of 2.33% and a maturity date in October 2020. At December 31, 2018, the Bank had $67.3 million in term advances from the FHLB with fixed interest rates between 1.55% - 2.33% and maturity dates of 2019 - 2020. The Bank pledged investment securities and loans as collateral for FHLB advances. Investment securities pledged were $17.6 million at December 31, 2019 and $16.0 million at December 31, 2018. Loans pledged were $1.5 billion at December 31, 2019 and $1.6 billion at December 31, 2018. Interest expense related to FHLB advances totaled $6.2 million and $2.6 million for the years ended December 31, 2019 and 2018, respectively.

Regulatory Capital

Our subsidiary bank 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 December 31, 2019 and 2018, our subsidiary bank and the consolidated holding company exceeded all capital ratio requirements under prompt corrective action and other regulatory requirements, as further detailed in note 14 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 loan losses and non-interest income, such as service charges, bank card income, swap fee income, and gain on sale of mortgages, net. Our primary operating expenses, aside from interest expense, consist of salaries and benefits, occupancy costs, telecommunications data processing expense, and intangible asset amortization. Any expenses related to the resolution of problem assets are also included in non-interest expense.

Overview of results of operations

We recorded net income of $80.4 million, or $2.55 per diluted share, during 2019, compared to net income of $61.5 million, or $1.95 per diluted share, during 2018. Net income during 2018 included $6.3 million, after tax, in non-recurring expenses related to the acquisition of Peoples. Adjusting for this item, net income was $67.8 million, or $2.16 per diluted share.

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.

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The table below presents the components of net interest income on a fully taxable equivalent basis for the years ended December 31, 2019, 2018 and 2017. 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 time frames prior to their cash settlement, as are the market value adjustments on the investment securities available-for-sale and loans.

	For the year ended December 31, 2019					For the year ended December 31, 2018					For the year ended December 31, 2017
	Average balance		Interest		Average rate	Average balance		Interest		Average rate	Average balance		Interest		Average rate
Interest earning assets:
Originated loans FTE(1)(2)(3)	$	3,838,229	$	183,502	4.78%	$	3,166,374	$	142,461	4.50%	$	2,779,344	$	112,817	4.06%
Acquired loans		382,806		22,951	6.00%		562,443		32,610	5.80%		117,972		7,256	6.15%
ASC 310-30 loans		60,219		13,041	21.66%		90,786		19,155	21.10%		132,130		22,505	17.03%
Loans held for sale		113,183		4,407	3.89%		73,644		3,380	4.59%		8,231		523	6.35%
Investment securities available-for-sale		713,686		15,472	2.17%		883,737		18,493	2.09%		875,430		16,615	1.90%
Investment securities held-to-maturity		207,784		5,825	2.80%		258,809		7,252	2.80%		296,093		8,226	2.78%
Other securities		28,060		1,770	6.31%		18,093		1,096	6.06%		15,249		839	5.50%
Interest earning deposits and securities purchased under agreements to resell		24,106		698	2.90%		77,808		1,426	1.83%		128,871		1,492	1.16%
Total interest earning assets FTE(2)	$	5,368,073	$	247,666	4.61%	$	5,131,694	$	225,873	4.40%	$	4,353,320	$	170,273	3.91%
Cash and due from banks		76,788					88,847					67,993
Other assets		430,402					419,607					315,660
Allowance for loan losses		(38,142)					(32,616)					(31,732)
Total assets	$	5,837,121				$	5,607,532				$	4,705,241
Interest bearing liabilities:
Interest bearing demand, savings and money market deposits	$	2,426,963	$	13,277	0.55%	$	2,418,326	$	8,758	0.36%	$	1,895,852	$	6,003	0.32%
Time deposits		1,074,506		16,526	1.54%		1,132,748		12,283	1.08%		1,146,380		10,169	0.89%
Securities sold under agreements to repurchase		60,445		668	1.11%		87,691		295	0.34%		88,390		164	0.19%
Federal Home Loan Bank advances		269,207		6,300	2.34%		133,932		2,618	1.95%		113,433		1,779	1.57%
Total interest bearing liabilities	$	3,831,121	$	36,771	0.96%	$	3,772,697	$	23,954	0.63%	$	3,244,055	$	18,115	0.56%
Demand deposits		1,159,080					1,082,158					873,265
Other liabilities		108,997					90,257					41,205
Total liabilities		5,099,198					4,945,112					4,158,525
Shareholders' equity		737,923					662,420					546,716
Total liabilities and shareholders' equity	$	5,837,121				$	5,607,532				$	4,705,241
Net interest income FTE(2)			$	210,895				$	201,919				$	152,158
Interest rate spread FTE(2)					3.65%					3.77%					3.35%
Net interest earning assets	$	1,536,952				$	1,358,997				$	1,109,265
Net interest margin FTE(2)					3.93%					3.93%					3.50%
Average transaction deposits	$	3,586,043				$	3,500,484				$	2,769,117
Average total deposits		4,660,549					4,633,232					3,915,497
Ratio of average interest earning assets to average interest bearing liabilities		140.12%					136.02%					134.19%

(1)	Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.
(2)	Presented on a fully taxable equivalent basis using the statutory tax rate of 21% for 2019 and 2018 and 35% for 2017. The taxable equivalent adjustments included above are $5,065, $4,482 and $5,852 for the years ended 2019, 2018 and 2017, respectively.
(3)	Loan fees included in interest income totaled $6,328, $6,027 and $5,208 during 2019, 2018 and 2017, respectively.

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Net interest income totaled $205.8 million, $197.4 million and $146.3 million during the years ended 2019, 2018 and 2017, respectively. Fully taxable equivalent net interest income totaled $210.9 million, $201.9 million and $152.2 million during 2019, 2018 and 2017, respectively. The fully taxable equivalent net interest margin remained consistent at 3.93% during 2019 and 2018 as the increase in average earning assets and earning asset yields were offset by an increase in the cost of funds. The yield on earning assets increased 21 basis points, led by a 28 basis point increase in the originated loan portfolio yields due to higher new loan yields. The cost of funds increased 33 basis points to 0.96% for the year ended December 31, 2019. The yield on the ASC 310-30 loan portfolio was 21.66% and 21.10% during 2019 and 2018, respectively.

Average loans and loans held for sale comprised $4.4 billion, or 81.9%, of total average interest earning assets during 2019, compared to $3.9 billion, or 75.9%, during 2018. The increase in average loan balances was driven by a $671.9 million increase in originated loans. Originated loan yields were 4.78% and 4.50% during 2019 and 2018, respectively, benefiting from higher new loan yields. The yield on the ASC 310-30 loan portfolio was 21.66% and 21.10% during 2019 and 2018, respectively.

Average investment securities comprised 17.2% and 22.3% of total interest earning assets during 2019 and 2018, respectively. The decrease in the investment portfolio was a result of scheduled paydowns and increased pre-payments of MBS and reflects the re-mixing of the interest-earning assets as we have utilized the paydowns of the investment portfolio to fund loan originations.

Average balances of interest bearing liabilities increased $58.4 million during 2019 compared to 2018. The increase was driven by FHLB advances of $135.3 million and interest bearing demand, savings and money market deposits of $8.6 million, partially offset by decreases in time deposits and securities sold under agreements to repurchase of $58.2 million and $27.2 million, respectively. Average balances of interest bearing liabilities increased $528.6 million during 2018 compared to 2017. The increase in average balances of interest bearing liabilities during 2018 was driven by interest bearing demand, savings and money market deposits of $522.5 million and FHLB advances of $20.5 million, partially offset by decreases in time deposits and securities sold under agreements to repurchase of $14.3 million. The Peoples acquisition added $730 million in total deposits on January 1, 2018. Total interest expense related to interest bearing liabilities was $36.8 million and $24.0 million during 2019 and 2018, respectively, at an average cost of 0.96% and 0.63% during 2019 and 2018, respectively. Additionally, the cost of deposits increased 19 basis points to 0.64% during 2019, compared to 0.45% during 2018, due to higher savings, money market and time deposits rates.

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The following table summarizes the changes in net interest income on a fully taxable equivalent basis by major category of interest earning assets and interest bearing liabilities, identifying changes related to volume and changes related to rate for 2019, 2018 and 2017:

	The year ended December 31, 2019						The year ended December 31, 2018
	compared to						compared to
	the year ended December 31, 2018						the year ended December 31, 2017
	Increase (decrease) due to						Increase (decrease) due to
	Volume		Rate		Net		Volume		Rate		Net
Interest income:
Originated loans FTE(1)(2)(3)	$	32,120	$	8,921	$	41,041	$	17,413	$	12,231	$	29,644
Acquired loans		(10,770)		1,111		(9,659)		25,771		(417)		25,354
ASC 310-30 loans		(6,620)		506		(6,114)		(8,723)		5,373		(3,350)
Loans held for sale		1,540		(513)		1,027		3,002		(145)		2,857
Investment securities available-for-sale		(3,687)		666		(3,021)		174		1,704		1,878
Investment securities held-to-maturity		(1,430)		3		(1,427)		(1,045)		71		(974)
Other securities		629		45		674		172		85		257
Interest earning deposits and securities purchased under agreements to resell		(1,555)		827		(728)		(936)		870		(66)
Total interest income	$	10,227	$	11,566	$	21,793	$	35,828	$	19,772	$	55,600
Interest expense:
Interest bearing demand, savings and money market deposits	$	47	$	4,472	$	4,519	$	1,892	$	863	$	2,755
Time deposits		(896)		5,139		4,243		(148)		2,262		2,114
Securities sold under agreements to repurchase		(301)		674		373		(2)		133		131
Federal Home Loan Bank advances		3,166		516		3,682		401		438		839
Total interest expense		2,016		10,801		12,817		2,143		3,696		5,839
Net change in net interest income	$	8,211	$	765	$	8,976	$	33,685	$	16,076	$	49,761

(1)	Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.
(2)	Presented on a fully taxable equivalent basis using the statutory tax rate of 21% for 2019 and 2018 and 35% for 2017. The taxable equivalent adjustments included above are $5,065, $4,482 and $5,852 for the years ended 2019, 2018 and 2017, respectively.
(3)	Loan fees included in interest income totaled $6,328, $6,027 and $5,208 for the years ended December 31, 2019, 2018 and 2017, respectively.

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

	For the three months ended						For the years ended
	December 31, 2019			December 31, 2018			December 31, 2019			December 31, 2018
			Average			Average			Average			Average
	Average		rate	Average		rate	Average		rate	Average		rate
	balance		paid	balance		paid	balance		paid	balance		paid
Non-interest bearing demand	$	1,177,958	0.00%	$	1,104,411	0.00%	$	1,159,080	0.00%	$	1,082,158	0.00%
Interest bearing demand		679,884	0.23%		671,362	0.13%		686,862	0.22%		677,252	0.13%
Money market accounts		1,221,719	0.69%		1,204,351	0.61%		1,201,377	0.75%		1,178,768	0.48%
Savings accounts		527,814	0.43%		539,914	0.46%		538,724	0.50%		562,306	0.40%
Time deposits		1,062,511	1.67%		1,099,205	1.22%		1,074,506	1.54%		1,132,748	1.08%
Total average deposits	$	4,669,886	0.64%	$	4,619,243	0.52%	$	4,660,549	0.64%	$	4,633,232	0.45%

Provision for loan losses

The provision for loan losses represents the amount of expense that is necessary to bring the ALL to a level that we deem appropriate to absorb probable losses inherent in the loan portfolio as of the balance sheet date. The ALL is in addition to the remaining purchase accounting marks of $6.7 million on originated and acquired loans that were established at the time of

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acquisition. The determination of the ALL, and the resultant provision for loan losses, is subjective and involves significant estimates and assumptions.

Below is a summary of the provision for loan losses recorded in the consolidated statements of operations for the years indicated:

	2019		2018		2017
Provision for loan losses on originated and acquired loans	$	11,694	$	4,975	$	13,126
(Recoupment) provision for loans accounted for under ASC 310-30		(51)		222		(154)
Total provision for loan losses	$	11,643	$	5,197	$	12,972

Provision for loan loss expense of $11.6 million and $5.2 million was recorded during 2019 and 2018, respectively. To support loan growth and net charge-offs, the Company recorded $11.7 million of provision for loan losses on originated and acquired loans during 2019, including $6.6 million related to one previously acquired commercial loan. Net charge-offs on originated and acquired loans during 2019 and 2018 totaled $8.3 million and $0.7 million, respectively. The originated and acquired allowance for loan losses was 0.89% of total originated and acquired loans at December 31, 2019 compared to 0.88% at December 31, 2018.

During 2019 and 2018 we recorded recoupment of $51 thousand and provision of $222 thousand, respectively, for loans accounted for under ASC 310-30 in connection with our remeasurements of expected cash flows. The decreases in expected future cash flows are reflected immediately in our financial statements through increased provisions for loan losses. Increases in expected future cash flows are reflected through an increase in accretable yield that is accreted to income in future periods once any previously recorded provision expense has been reversed.

Non-interest income

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

	For the years ended December 31,						2019 vs 2018			2018 vs 2017
							Increase (decrease)			Increase (decrease)
	2019		2018		2017		Amount		% Change	Amount		% Change
Service charges	$	17,895	$	18,092	$	14,634	$	(197)	(1.1)%	$	3,458	23.6 %
Bank card fees		14,595		14,489		12,026		106	0.7 %		2,463	20.5 %
Mortgage banking income		42,346		30,107		2,154		12,239	40.7 %		27,953	>100%
Bank-owned life insurance income		1,713		1,791		1,871		(78)	(4.4)%		(80)	(4.3)%
Other non-interest income		5,888		5,379		8,082		509	9.5 %		(2,703)	(33.4)%
OREO-related income		315		917		438		(602)	(65.6)%		479	>100%
Total non-interest income	$	82,752	$	70,775	$	39,205	$	11,977	16.9 %	$	31,570	80.5 %

Non-interest income totaled $82.8 million and $70.8 million during 2019 and 2018, respectively. Mortgage banking income increased $12.2 million, when compared to the prior year, primarily due to higher levels of 1-4 family mortgage loans sold in the secondary market during 2019. Other non-interest income increased $0.5 million for the year ended December 31, 2019, compared to the prior year, primarily due to increases in swap fee income. OREO-related income decreased $0.6 million during the year ended December 31, 2019. Service charges represent various fees charged to clients for banking services, including fees such as non-sufficient (“NSF”) charges and service charges on deposit accounts. Services charges and bank card fees decreased $0.1 million during the year ended December 31, 2019 compared to 2018.

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Non-interest expense

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

	For the years ended December 31,						2019 vs 2018			2018 vs 2017
							Increase (decrease)			Increase (decrease)
	2019		2018		2017		Amount		% Change	Amount		% Change
Salaries and benefits	$	122,732	$	114,939	$	80,188	$	7,793	6.8 %	$	34,751	43.3 %
Occupancy and equipment		27,336		28,493		20,994		(1,157)	(4.1)%		7,499	35.7 %
Telecommunications and data processing		8,754		10,098		7,188		(1,344)	(13.3)%		2,910	40.5 %
Marketing and business development		3,897		4,513		2,683		(616)	(13.6)%		1,830	68.2 %
FDIC deposit insurance		1,049		2,475		2,762		(1,426)	(57.6)%		(287)	(10.4)%
Bank card expenses		4,780		5,453		3,986		(673)	(12.3)%		1,467	36.8 %
Professional fees		3,256		6,059		3,330		(2,803)	(46.3)%		2,729	82.0 %
Other non-interest expense		11,765		13,073		10,360		(1,308)	(10.0)%		2,713	26.2 %
Problem asset workout		3,186		2,549		3,994		637	25.0 %		(1,445)	(36.2)%
Gain on OREO sales, net		(7,193)		(488)		(4,150)		(6,705)	>100%		3,662	(88.2)%
Core deposit intangible asset amortization		1,183		2,170		5,342		(987)	(45.5)%		(3,172)	(59.4)%
Total non-interest expense	$	180,745	$	189,334	$	136,677	$	(8,589)	(4.5)%	$	52,657	38.5 %

Non-interest expense totaled $180.7 million and $189.3 million during 2019 and 2018, respectively. The decrease during 2019 was primarily driven by an increase of net gains on the sale of OREO properties of $6.7 million and efficiencies gained from the integration of the Peoples acquisition. FDIC deposit insurance decreased during 2019 due to assessment credits and improved ratings. Salaries and benefits increased $7.8 million primarily due to higher mortgage banking commissions. The increases in 2018 were primarily driven by the Peoples acquisition. Included in non-interest expense for the year ended December 31, 2018 were non-recurring acquisition costs totaling $8.0 million, or $6.3 million after tax.

As part of our continued focus on improving operating efficiencies and investing in digital solutions for our clients, the Company consolidated four banking centers in the Colorado and Kansas City markets during 2019. A fair value impairment charge of $0.9 million was recorded to other non-interest expense related to the consolidations, with an expected earn back of less than one year.

Income taxes

Income taxes are accounted for in accordance with ASC Topic 740. Under this guidance, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. ASC Topic 740 requires the establishment of a valuation allowance against the net deferred tax asset unless it is more-likely-than-not that the tax benefit of the deferred tax asset will be realized. For purposes of projecting whether the deferred tax asset will be realized, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results, or the ability to implement tax planning strategies varies, adjustments to the carrying value of the deferred tax assets may be required. We believe that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets.

Income tax expense totaled $15.8 million during 2019 compared to $12.2 million during 2018, an increase of $3.6 million. Included in income tax expense was $2.2 million and $1.3 million of tax benefits from stock compensation activity during 2019 and 2018, respectively. Adjusting for the above mentioned stock compensation activity, the effective tax rate for 2019 was 18.7% compared to an adjusted rate of 18.3% for 2018. As of December 31, 2019, our marginal tax rate (the rate we pay on each incremental dollar of earnings) was approximately 23%. However, our effective tax rate (income tax expense divided by income before income taxes) for a given period is driven largely by income and expense items that are non-taxable or non-deductible in the calculation of income tax expense. The lower effective tax rates compared to the federal statutory tax rate was primarily due to interest income from tax-exempt lending, bank-owned life insurance income, and the relationship of these items to pre-tax income.

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Liquidity and Capital Resources

Liquidity is monitored and managed to ensure that sufficient funds are available to operate our business and pay our obligations to depositors and other creditors, while providing ample available funds for opportunistic and strategic investments. 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 December 31, 2019 and 2018:

	December 31, 2019		December 31, 2018
Cash and due from banks	$	109,690	$	109,056
Interest bearing bank deposits		500		500
Unencumbered investment securities, at fair value		324,918		573,637
Total	$	435,108	$	683,193

Total on-balance sheet liquidity decreased $248.1 million from December 31, 2018 to December 31, 2019. The decrease was due to lower unencumbered available-for-sale and held-to-maturity securities balances of $248.7 million.

Through our relationship with the FHLB, we have pledged qualifying loans and investment securities allowing us to obtain additional liquidity through FHLB advances and lines of credit. The Bank pledged investment securities and loans as collateral for FHLB advances. Investment securities pledged were $17.6 million at December 31, 2019 and $16.0 million at December 31, 2018. The Bank also had loans pledged as collateral for FHLB advances of $1.5 billion at December 31, 2019 and $1.6 billion at December 31, 2018. FHLB advances, lines of credit and other short-term borrowing availability totaled $1.1 billion, of which $207.7 million was used at December 31, 2019. The Bank can obtain additional liquidity through FHLB advances if required, and also has access to federal funds lines of credit with correspondent banks.

Our primary sources of funds are deposits, securities sold under agreements to repurchase, prepayments and maturities of loans and investment securities, the sale of investment securities, and funds provided from operations. We anticipate having access to other third party funding sources, including the ability to raise funds through the issuance of shares of our common stock or other equity or equity-related securities, incurrence of debt, and federal funds purchased, that may also be a source of liquidity. We anticipate that these sources of liquidity will provide adequate funding and liquidity for at least a 12-month period.

Our primary uses of funds are loan originations, investment security purchases, withdrawals of deposits, settlement of repurchase agreements, capital expenditures, operating expenses, and share repurchases. For additional information regarding our operating, investing and financing cash flows, see our consolidated statements of cash flows in the accompanying consolidated financial statements.

Exclusive from the investing activities related to acquisitions, our primary investing activities are originations, pay-offs and pay downs of loans and purchases and sales of investment securities. At December 31, 2019, pledgeable investment securities represented a significant source of liquidity. Our available-for-sale investment securities are carried at fair value and our held-to-maturity securities are carried at amortized cost. Our collective investment securities portfolio totaled $0.8 billion at December 31, 2019, inclusive of pre-tax net unrealized gains of $0.2 million on the available-for-sale securities portfolio. Additionally, our held-to-maturity securities portfolio had $0.9 million of pre-tax net unrealized gains at December 31, 2019. The gross unrealized gains and losses are detailed in note 4 of our consolidated financial statements. As of December 31, 2019, 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 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 December 31, 2019, $726.9 million of time deposits were scheduled to mature within 12 months. Based on the current interest rate environment, market conditions, and our consumer banking strategy focusing on both lower cost transaction accounts and term deposits, our strategy is to replace a portion of those maturing time deposits with transaction deposits and market-rate time deposits.

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Under the Basel III Capital requirements, at December 31, 2019, the Company and the Bank met all capital adequacy requirements, and the Bank had regulatory capital ratios in excess of the levels established for well-capitalized institutions. For more information on regulatory capital, see note 14 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 and the payment of dividends.

The Board of Directors has authorized multiple programs to repurchase shares of the Company’s common stock from time to time either in open market or in privately negotiated transactions in accordance with applicable regulations of the SEC. On August 5, 2016, the Company announced that its Board of Directors authorized a program to repurchase up to an additional $50.0 million of the Company’s common stock. The remaining authorization under this program as of December 31, 2019 was $12.6 million. During the year ended December 31, 2019, we did not repurchase any shares of our common stock.

On January 21, 2020, our Board of Directors declared a quarterly dividend of $0.20 per common share, payable on March 13, 2020 to shareholders of record at the close of business on February 28, 2020.

Asset/Liability Management and Interest Rate Risk

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.

The principal objective of the Company's asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled assumption of interest rate risk while maximizing earnings and preserving adequate levels of liquidity and capital. The asset and liability management function is under the guidance of the Asset Liability Committee from direction of the Board of Directors. The Asset Liability Committee 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 rates. The Asset Liability Committee also reviews the liquidity, capital, deposit mix, loan mix and investment positions of the Company.

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 utilizing 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.

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Our interest rate risk model indicated that the Company was asset sensitive in terms of interest rate sensitivity at December 31, 2019 and 2018. During the year ended December 31, 2019, we decreased our asset sensitivity for a declining rate environment as a result of the balance sheet mix toward more fixed rate assets. The table below illustrates the impact of an immediate and sustained 200 and 100 basis point increase and a 100 basis point decrease in interest rates on net interest income based on the interest rate risk model at December 31, 2019 and 2018:

Hypothetical
shift in interest	% change in projected net interest income
rates (in bps)	December 31, 2019	December 31, 2018
200	6.16%	5.86%
100	3.13%	2.98%
(100)	(3.82)%	(4.84)%

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 emphasized the origination of longer duration loans. The strategy with respect to liabilities has been to continue to emphasize transaction account growth, particularly non-interest or low interest bearing non-maturing deposit accounts while building long-term client relationships. Non-maturing deposit accounts totaled 77.7% of total deposits at December 31, 2019, compared to 76.2% at December 31, 2018. We currently have no brokered time deposits.

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 December 31, 2019 and 2018, we had loan commitments totaling $850.3 million and $773.5 million, respectively, and standby letters of credit that totaled $11.9 million and $10.6 million, respectively. Unused commitments do not necessarily represent future credit exposure or cash requirements, as commitments often expire without being drawn upon. We do not anticipate any material losses arising from commitments or contingent liabilities, and we do not believe that there are any material commitments to extend credit that represent risks of an unusual nature.

Contractual Obligations

In addition to the financing commitments detailed above under “Off-Balance Sheet Activities,” in the normal course of business, we enter into contractual obligations that require future cash settlement. The following table summarizes the contractual cash obligations as of December 31, 2019 and the expected timing of those payments:

			After one but		After three but
	Within		within three		within five		After five
	one year		years		years		years		Total
Federal Home Loan Bank advances	$	207,675	$	—	$	—	$	—	$	207,675
Operating lease obligations		5,267		9,651		8,228		15,624		38,770
Purchase obligations		12,430		10,075		887		—		23,392
Time deposits		726,903		306,251		23,959		1,040		1,058,153
Total	$	952,275	$	325,977	$	33,074	$	16,664	$	1,327,990

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Impact of Inflation and Changing Prices

The primary impact of inflation on our operations is reflected in increasing operating costs and 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. Although not as critical to the banking industry as many other industries, inflationary factors may have some impact on our ability to grow, total assets, earnings and capital levels. We do not expect inflation to be a significant factor in our financial results in the near future.

Item 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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.

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Item 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

National Bank Holdings Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial condition of National Bank Holdings Corporation and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the allowance for loan losses related to loans collectively evaluated for impairment

As discussed in Notes 2 and 7 to the consolidated financial statements, the Company’s allowance for loan losses related to loans collectively evaluated for impairment (general allowance) was $37.1 million of a total allowance for loan losses of $39.1 million as December 31, 2019, or 0.88% of total loans. The Company estimated the general allowance by first disaggregating the loan portfolio into segments based upon broad characteristics such as primary use and underlying collateral. Within these segments, the portfolio was further disaggregated into classes of loans with similar attributes

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and risk characteristics. The general allowance is determined at the class level, utilizing risk ratings, as well as internal and peer loss ratios based upon historical losses to these classes. The general allowance is then adjusted by the estimated loss emergence period for each loan class. Qualitative adjustments based upon specific factors, at the loan class level, may then be determined and applied to the general allowance.

We identified the assessment of the general allowance as a critical audit matter because it involved significant measurement uncertainty requiring complex auditor judgment, and knowledge and specialized skills in the industry. This assessment encompassed the evaluation of the process used to estimate the quantitative reserve and qualitative adjustments of the general allowance taking into consideration: (1) the historical loss rates and their key factors and assumptions, including, (i) the disaggregation of the loan portfolio (both at the segment and class levels); (ii) the Company’s own historical losses, including adjustments to those historical losses using industry peer loss data when the Company’s own historical losses were insufficient or not representative of incurred losses; (iii) the evaluation of credit risk through the loans’ assigned risk ratings; (iv) the determination of the length of time between a specific loss event and when the first loss was identified (known as the estimated loss emergence period) and (2) qualitative adjustments that were likely to cause the general allowance to differ from historical experience.

The primary procedures we performed to address the critical audit matter included the following. We tested certain internal controls over the: (1) development and approval of the general allowance methodology; (2) historical loss rates and their key factors and assumptions; (3) development of qualitative framework and the related adjustments; and (4) analysis of the general allowance results, trends, and ratios. We evaluated the Company’s process to develop the general allowance estimate by testing certain sources of data, factors, and assumptions that the Company used and considered their relevance, including an evaluation of whether additional factors and alternative assumptions should be used. In addition, we involved professionals with specialized skills, industry knowledge and experience in credit risk who assisted in:

● evaluating individual loan risk ratings for a selection of loans,

● evaluating the Company’s general allowance methodology for compliance with U.S. generally accepted accounting principles,

● testing the development and determination of the Company’s historical loss rates and their key factors and assumptions, and

● evaluating the key assumptions in developing the qualitative factors and related framework, including the effect of those factors on the general allowance.

We have served as the Company’s auditor since 2010.

Kansas City, Missouri

February 26, 2020

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NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Condition

December 31, 2019 and 2018

(In thousands, except share and per share data)

	December 31, 2019		December 31, 2018
ASSETS
Cash and due from banks	$	109,690	$	109,056
Interest bearing bank deposits		500		500
Cash and cash equivalents		110,190		109,556
Investment securities available-for-sale (at fair value)		638,249		791,102
Investment securities held-to-maturity (fair value of $183,741 and $230,926 at December 31, 2019 and December 31, 2018, respectively)		182,884		235,398
Non-marketable securities		29,751		27,555
Loans		4,415,406		4,092,308
Allowance for loan losses		(39,064)		(35,692)
Loans, net		4,376,342		4,056,616
Loans held for sale		117,444		48,120
Other real estate owned		7,300		10,596
Premises and equipment, net		112,151		109,986
Goodwill		115,027		115,027
Intangible assets, net		11,361		13,470
Other assets		194,813		159,240
Total assets	$	5,895,512	$	5,676,666
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing demand deposits	$	1,184,945	$	1,072,029
Interest bearing demand deposits		738,496		688,255
Savings and money market		1,755,538		1,694,808
Time deposits		1,058,153		1,080,529
Total deposits		4,737,132		4,535,621
Securities sold under agreements to repurchase		56,935		66,047
Federal Home Loan Bank advances		207,675		301,660
Other liabilities		126,850		78,332
Total liabilities		5,128,592		4,981,660
Shareholders’ equity:
Common stock, par value $0.01 per share: 400,000,000 shares authorized; 51,487,907 and 51,498,016 shares issued; 31,176,627 and 30,769,063 shares outstanding at December 31, 2019 and December 31, 2018, respectively		515		515
Additional paid-in capital		1,009,223		1,014,399
Retained earnings		164,082		106,990
Treasury stock of 20,189,082 and 20,582,459 shares at December 31, 2019 and December 31, 2018, respectively, at cost		(408,962)		(415,623)
Accumulated other comprehensive income (loss), net of tax		2,062		(11,275)
Total shareholders’ equity		766,920		695,006
Total liabilities and shareholders’ equity	$	5,895,512	$	5,676,666

See accompanying notes to the consolidated financial statements.

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NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

For the Years Ended December 31, 2019, 2018 and 2017

(In thousands, except share and per share data)

	2019		2018		2017
Interest and dividend income:
Interest and fees on loans	$	218,836	$	193,124	$	137,249
Interest and dividends on investment securities		21,297		25,746		24,841
Dividends on non-marketable securities		1,770		1,096		839
Interest on interest-bearing bank deposits		698		1,425		1,492
Total interest and dividend income		242,601		221,391		164,421
Interest expense:
Interest on deposits		29,803		21,041		16,172
Interest on borrowings		6,968		2,913		1,943
Total interest expense		36,771		23,954		18,115
Net interest income before provision for loan losses		205,830		197,437		146,306
Provision for loan losses		11,643		5,197		12,972
Net interest income after provision for loan losses		194,187		192,240		133,334
Non-interest income:
Service charges		17,895		18,092		14,634
Bank card fees		14,595		14,489		12,026
Mortgage banking income		42,346		30,107		2,154
Bank-owned life insurance income		1,713		1,791		1,871
Other non-interest income		5,888		5,379		8,082
OREO-related income		315		917		438
Total non-interest income		82,752		70,775		39,205
Non-interest expense:
Salaries and benefits		122,732		114,939		80,188
Occupancy and equipment		27,336		28,493		20,994
Telecommunications and data processing		8,754		10,098		7,188
Marketing and business development		3,897		4,513		2,683
FDIC deposit insurance		1,049		2,475		2,762
Bank card expenses		4,780		5,453		3,986
Professional fees		3,256		6,059		3,330
Other non-interest expense		11,765		13,073		10,360
Problem asset workout		3,186		2,549		3,994
Gain on OREO sales, net		(7,193)		(488)		(4,150)
Core deposit intangible asset amortization		1,183		2,170		5,342
Total non-interest expense		180,745		189,334		136,677
Income before income taxes		96,194		73,681		35,862
Income tax expense		15,829		12,230		21,283
Net income	$	80,365	$	61,451	$	14,579
Earnings per share—basic	$	2.57	$	2.00	$	0.54
Earnings per share—diluted		2.55		1.95		0.53
Weighted average number of common shares outstanding:
Basic		31,175,825		30,748,234		26,928,763
Diluted		31,530,817		31,430,074		27,709,659

See accompanying notes to the consolidated financial statements.

72

NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the Years Ended December 31, 2019, 2018 and 2017

(In thousands)

	2019		2018		2017
Net income	$	80,365	$	61,451	$	14,579
Other comprehensive income (loss), net of tax:
Securities available-for-sale:
Net unrealized gains (losses) arising during the period, net of tax (expense) benefit of ($4,510), $876 and $1,871 for the years ended December 31, 2019, 2018 and 2017, respectively.		14,352		(2,243)		(3,128)
Less: amortization of net unrealized holding gains to income, net of tax benefit of $320, $361 and $828 for the years ended December 31, 2019, 2018 and 2017, respectively.		(1,015)		(1,311)		(1,352)
Other comprehensive income (loss)		13,337		(3,554)		(4,480)
Comprehensive income	$	93,702	$	57,897	$	10,099

See accompanying notes to the consolidated financial statements.

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NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders’ Equity

For the Years Ended 2019, 2018 and 2017

(In thousands, except share and per share data)

									Accumulated
			Additional						other
	Common		paid-in		Retained		Treasury		comprehensive
	stock		capital		earnings		stock		(loss) income, net		Total
Balance, December 31, 2016	$	514	$	984,087	$	55,454	$	(502,104)	$	(1,762)	$	536,189
Net income		—		—		14,579		—		—		14,579
Stock-based compensation		—		3,648		—		—		—		3,648
Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock of $6,118, net		1		(15,134)		—		6,842		—		(8,291)
Cash dividends declared ($0.34 per share)		—		—		(9,238)		—		—		(9,238)
Warrant exercise(1)		—		(1,933)		—		1,933		—		—
Other comprehensive loss		—		—		—		—		(4,480)		(4,480)
Balance, December 31, 2017	$	515	$	970,668	$	60,795	$	(493,329)	$	(6,242)	$	532,407
Net income		—		—		61,451		—		—		61,451
Stock-based compensation		—		4,420		—		—		—		4,420
Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock of $7,998, net		—		(2,932)		—		9,736		—		6,804
Reissuance of treasury stock of 3,398,477 shares for acquisition of Peoples, Inc.		—		42,243		—		67,970		—		110,213
Cash dividends declared ($0.54 per share)		—		—		(16,761)		—		—		(16,761)
Reclassification of certain tax effects from accumulated other comprehensive income(2)		—		—		1,479		—		(1,479)		—
Cumulative effect adjustment(3)		—		—		26		—		—		26
Other comprehensive loss		—		—		—		—		(3,554)		(3,554)
Balance, December 31, 2018	$	515	$	1,014,399	$	106,990	$	(415,623)	$	(11,275)	$	695,006
Net income		—		—		80,365		—		—		80,365
Stock-based compensation		—		4,869		—		—		—		4,869
Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock of $6,010, net		—		(10,045)		—		6,661		—		(3,384)
Cash dividends declared ($0.75 per share)		—		—		(23,529)		—		—		(23,529)
Cumulative effect adjustment(4)		—		—		256		—		—		256
Other comprehensive income		—		—		—		—		13,337		13,337
Balance, December 31, 2019	$	515	$	1,009,223	$	164,082	$	(408,962)	$	2,062	$	766,920

(1)	The Company issued warrants to certain lead investors in 2009 and 2010. The remaining warrants were exercised during the first quarter of 2017.
(2)	Related to the adoption of Accounting Standards Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.
(3)	Related to the adoption of Accounting Standards Update No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities.
(4)	Related to the adoption of Accounting Standards Update No. 2016-02, Leases. Refer to note 3 – Recent Accounting Pronouncements of our consolidated financial statements for further details.

See accompanying notes to the consolidated financial statements.

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NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2019, 2018 and 2017

(In thousands)

	2019		2018		2017
Cash flows from operating activities:
Net income	$	80,365	$	61,451	$	14,579
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		11,643		5,197		12,972
Depreciation and amortization		15,038		11,522		12,889
Current income tax receivable		1,955		4,246		1,260
Deferred income taxes		8,793		9,092		17,180
Net excess tax benefit on stock-based compensation		(2,160)		(1,286)		(4,225)
Discount accretion, net of premium amortization on securities		2,047		2,911		2,581
Loan accretion		(15,590)		(23,115)		(23,933)
Gain on sale of mortgages, net		(39,922)		(27,009)		(2,154)
Origination of loans held for sale, net of repayments		(1,317,547)		(1,005,850)		(85,959)
Proceeds from sales of loans held for sale		1,289,877		1,030,906		101,935
Bank-owned life insurance income		(1,713)		(1,791)		(1,871)
Gain on the sale of other real estate owned, net		(7,193)		(488)		(4,150)
Impairment on other real estate owned		1,082		230		766
Impairment on fixed assets related to banking center consolidations		898		—		—
Stock-based compensation		4,869		4,420		3,648
Operating lease payments		(5,294)		—		—
Acquisition-related costs		—		(7,957)		(2,691)
Change in other assets		(697)		(3,654)		3,187
Change in other liabilities		16,025		14,749		12,125
Net cash provided by operating activities		42,476		73,574		58,139
Cash flows from investing activities:
Purchase of FHLB stock		(16,761)		(16,463)		(7,448)
Proceeds from redemption of FHLB stock		14,565		12,062		6,877
Purchase of FRB stock		—		(4,716)		—
Proceeds from redemption of FRB stock		—		1,371		—
Proceeds from maturities of investment securities held-to-maturity		60,948		61,913		71,105
Proceeds from maturities of investment securities available-for-sale		195,467		216,077		224,336
Proceeds from sales of investment securities available-for-sale		20,378		33,637		—
Proceeds from maturities of non-marketable securities		—		67		490
Purchase of investment securities held-to-maturity		(10,201)		(40,735)		—
Purchase of investment securities available-for-sale		(45,745)		(72,555)		(202,694)
Net increase in loans		(312,844)		(382,441)		(314,008)
Purchases of premises and equipment, net		(11,204)		(6,277)		(5,617)
Purchase of bank-owned life insurance		(20,000)		—		—
Proceeds from sales of loans		—		713		38,087
Proceeds from sales of other real estate owned		12,112		26,346		10,355
Net cash activity from acquisition		—		68,984		—
Net cash used in investing activities		(113,285)		(102,017)		(178,517)
Cash flows from financing activities:
Net increase (decrease) in deposits		201,511		(173,849)		113,796
Net (decrease) increase in repurchase agreements and other short-term borrowings		(9,112)		(64,416)		38,452
Advances from FHLB		1,477,447		889,416		263,129
FHLB repayments		(1,571,432)		(750,696)		(172,679)
Issuance of stock under purchase and equity compensation plans		(6,229)		(772)		(8,395)
Proceeds from exercise of stock options		2,788		7,576		104
Payment of dividends		(23,530)		(16,624)		(9,401)
Net cash provided by (used in) financing activities		71,443		(109,365)		225,006
Increase (decrease) in cash, cash equivalents and restricted cash		634		(137,808)		104,628
Cash, cash equivalents and restricted cash at beginning of the year		119,556		257,364		152,736
Cash, cash equivalents and restricted cash at end of period	$	120,190	$	119,556	$	257,364
Supplemental disclosure of cash flow information during the period:
Cash paid for interest	$	34,458	$	22,714	$	17,312
Net tax payments (refunds)		9,271		(2,345)		(127)
Supplemental schedule of non-cash activities:
Loans transferred to other real estate owned at fair value	$	2,705	$	24,940	$	1,800
Increase (decrease) in loans purchased but not settled		7,372		(21,202)		25,118
Loans transferred from loans held for sale to loans		1,732		1,038		5,736
Lease right-of-use assets obtained		(30,474)		—		—
Treasury stock reissued for acquisition		—		110,213		—

See accompanying notes to the consolidated financial statements.

75

NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2019, 2018 and 2017

Note 1 Basis of Presentation

National Bank Holdings Corporation (“NBHC” or the “Company”) is a bank holding company that was incorporated in the State of Delaware in 2009. The Company is headquartered in Denver, Colorado, and its primary operations are conducted through its wholly owned subsidiary, NBH Bank (the "Bank"), a Colorado state-chartered bank and a member of the Federal Reserve System. The Company provides a variety of banking products to both commercial and consumer clients through a network of 101 banking centers as of December 31, 2019, located primarily in Colorado and the greater Kansas City region, and through online and mobile banking products and services.

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, NBH Bank. The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and where applicable, with general practices in the banking industry or guidelines prescribed by bank regulatory agencies. The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results presented. All such adjustments are of a normal recurring nature. All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications of prior years' amounts are made whenever necessary to conform to current period presentation. All amounts are in thousands, except share data, or as otherwise noted.

The Company's significant accounting policies followed in the preparation of the consolidated financial statements are disclosed in note 2. GAAP requires management to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosures of contingent assets and liabilities. By their nature, estimates are based on judgment and available information. Management has made significant estimates in certain areas, such as the amount and timing of expected cash flows from assets, the valuation of other real estate owned, the fair value adjustments on assets acquired and liabilities assumed, the valuation of core deposit intangible assets, the valuation of investment securities for other-than-temporary impairment (“OTTI”), the valuation of stock-based compensation, the valuation of mortgage servicing rights, the fair values of financial instruments, the allowance for loan losses, and contingent liabilities. Because of the inherent uncertainties associated with any estimation process and future changes in market and economic conditions, it is possible that actual results could differ significantly from those estimates.

Note 2 Summary of Significant Accounting Policies

a) Cash and cash equivalents—Cash and cash equivalents include cash, cash items, amounts due from other banks, amounts due from the Federal Reserve Bank of Kansas City, federal funds sold, and interest-bearing bank deposits.

b) Investment securities—Investment securities may be classified in three categories: trading, available-for-sale or held-to-maturity. Management determines the appropriate classification at the time of purchase and reevaluates the classification at each reporting period. Any sales of available-for-sale securities are for the purpose of executing the Company’s asset/liability management strategy, reducing borrowings, funding loan growth, providing liquidity, or eliminating a perceived credit risk in a specific security. Held-to-maturity securities are carried at amortized cost, and the available-for-sale securities are carried at estimated fair value. Unrealized gains or losses on securities available-for-sale are reported as accumulated other comprehensive income (loss) (“AOCI”), a component of shareholders’ equity, net of income tax. Gains and losses realized upon sales of securities are calculated using the specific identification method. Premiums and discounts are amortized to interest income over the estimated lives of the securities. Prepayment experience is periodically evaluated and a determination made regarding the appropriate estimate of the future rates of prepayment. When a change in a bond’s estimated remaining life is necessary, a corresponding adjustment is made in the related premium amortization or discount accretion. Purchases and sales of securities, including any corresponding gains or losses, are recognized on a trade-date basis and a receivable or payable is recognized for pending transaction settlements.

Management evaluates all investments for OTTI on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Impairment is considered to be other-than-temporary if it is likely that all amounts

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contractually due will not be received for debt securities and when there is no positive evidence indicating that an investment’s carrying amount is recoverable in the near term for equity securities. When impairment is considered other-than-temporary, the cost basis of the security is written down to fair value, with the impairment charge related to credit included in earnings, while the impairment charge related to all other factors is recognized in AOCI. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the entire amount of the OTTI is recorded in earnings. In evaluating whether the impairment is temporary or other than temporary, the Company considers, among other things, the severity and duration of the unrealized loss position; adverse conditions specifically related to the security; changes in expected future cash flows; downgrades in the rating of the security by a rating agency; the failure of the issuer to make scheduled interest or principal payments; whether the Company has the intent to sell the security; and whether it is more likely than not that the Company will be required to sell the security.

c) Non-marketable securities—Non-marketable securities include FRB stock and FHLB stock. These securities have been acquired for debt facility or regulatory purposes and are carried at cost.

d) Loans receivable—Loans receivable include loans originated by the Company and loans that are acquired through acquisitions. Loans originated by the Company are carried at the principal amount outstanding, net of premiums, discounts, unearned income, and deferred loan fees and costs. Loan fees and certain costs of originating loans are deferred and the net amount is amortized over the contractual life of the related loans. Acquired loans are initially recorded at fair value and are accounted for under either ASC Topic 310 or ASC 310-30 (see additional information below). Non-refundable loan origination and commitment fees, net of direct costs of originating or acquiring loans, and fair value adjustments for acquired loans, are deferred and recognized over the remaining lives of the related loans in accordance with ASC 310-20.

Acquired loans are recorded at their estimated fair value at the time of acquisition and accounted for under either ASC 310-30 or ASC Topic 310. Estimated fair values of acquired loans are based on a discounted cash flow methodology that considers various factors including the type of loan and related collateral, the expected timing of cash flows, classification status, fixed or variable interest rate, term of loan and whether or not the loan is amortizing, and a discount rate reflecting the Company’s assessment of risk inherent in the cash flow estimates. Acquired 310-30 loans are grouped together according to similar characteristics such as type of loan, loan purpose, geography, risk rating and underlying collateral and are treated as distinct pools when applying various valuation techniques and, in certain circumstances, for the ongoing monitoring of the credit quality and performance of the pools. Each pool is accounted for as a single loan for which the integrity is maintained throughout the life of the asset. Discounts created when the loans are recorded at their estimated fair values at acquisition are accreted over the remaining term of the loan as an adjustment to the related loan’s yield. Similar to originated loans described below, the accrual of interest income on acquired loans that are not accounted for under ASC 310-30 is discontinued when the collection of principal or interest, in whole or in part, is doubtful.

Interest income on acquired loans that are accounted for under ASC Topic 310 and interest income on loans originated by the Company is accrued and credited to income as it is earned using the interest method based on daily balances of the principal amount outstanding. However, interest is generally not accrued on loans 90 days or more past due, unless they are well secured and in the process of collection. Additionally, in certain situations, loans that are not contractually past due may be placed on non-accrual status due to the continued failure to adhere to contractual payment terms by the borrower coupled with other pertinent factors, such as insufficient collateral value or deficient primary and secondary sources of repayment. Accrued interest receivable is reversed when a loan is placed on non-accrual status and payments received generally reduce the carrying value of the loan. Interest is not accrued while a loan is on non-accrual status and interest income is generally recognized on a cash basis only after payment in full of the past due principal and collection of principal outstanding is reasonably assured. A loan may be placed back on accrual status if all contractual payments have been received, or sooner under certain conditions and collection of future principal and interest payments is no longer doubtful.

In the event of borrower default, the Company may seek recovery in compliance with state lending laws, the respective loan agreements, and credit monitoring and remediation procedures that may include modifying or restructuring a loan from its original terms, for economic or legal reasons, to provide a concession to the borrower from their original terms due to borrower financial difficulties in order to facilitate repayment. Such restructured loans are considered “troubled debt restructurings” and are identified in accordance with ASC 310-40. Under this guidance, modifications to loans that fall within the scope of ASC 310-30 are not considered troubled debt restructurings, regardless of otherwise meeting the definition of a troubled debt restructuring.

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Loans receivable accounted for under ASC 310-30

The Company accounts for and evaluates acquired loans in accordance with the provisions of ASC 310-30. When loans exhibit evidence of credit deterioration since origination and it is probable at the date of acquisition that the Company will not collect all principal and interest payments in accordance with the terms of the loan agreement, the expected shortfall in future cash flows, as compared to the contractual amount due, is recognized as a non-accretable difference. Any excess of expected cash flows over the acquisition date fair value is known as the accretable yield, and is recognized as accretion income over the life of each pool. Contractual fees not expected to be collected are not included in ASC 310-30 contractual cash flows. Should fees be subsequently collected, the cash flows are accounted for as originated and acquired fee income in the period they are received. Loans that are accounted for under ASC 310-30 that meet the criteria for non-accrual of interest or are accounted for on the cost recovery method at the time of acquisition or subsequent to acquisition, may be considered performing, regardless of whether the client is contractually delinquent, if the timing and expected cash flows on the loan pool in which the loan is included can be otherwise reasonably estimated and if collection of the new carrying value of such pool is expected.

The expected cash flows of individual loans accounted for under ASC 310-30 are periodically remeasured utilizing the same cash flow methodology used at the time of acquisition and subsequent decreases to the expected cash flows will generally result in a provision for loan losses charge in the Company’s consolidated statements of operations. Any increases to the loan cash flow projections are recognized within the loan’s respective loan pools on a prospective basis through an increase to the pool’s accretion income over its remaining life once any previously recorded provision expense has been reversed. These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

e) Loans held for sale—The Company has elected to record loans originated and intended for sale in the secondary market at estimated fair value. The Company estimates fair value based on quoted market prices for similar loans in the secondary market. Gains or losses are recognized upon sale and are included as a component of mortgage banking income in the consolidated statements of operations. Loans held for sale have primarily been fixed rate single-family residential mortgage loans under contract to be sold in the secondary market. In most cases, loans in this category are sold within 45 days. These loans are generally sold with the mortgage servicing rights released. Under limited circumstances, buyers may have recourse to return a purchased loan to the Company. Recourse conditions may include early payoff, early payment default, breach of representations or warranties, or documentation deficiencies.

The Company enters into commitments to originate residential mortgage loans whereby the interest rate on the loan is determined prior to funding (i.e. interest rate lock commitments). Such interest rate lock commitments on mortgage loans to be sold in the secondary market are considered to be derivatives. To protect against the price risk inherent in residential mortgage loan commitments, the Company utilizes both "best efforts" and "mandatory delivery" forward loan sale commitments to mitigate the risk of potential increases or decreases in the values of loans that would result from the change in market rates for such loans. The Company manages the interest rate risk on interest rate lock commitments by entering into forward sale contracts of mortgage backed securities. Such contracts are accounted for as derivatives and are recorded at fair value as derivative assets or liabilities. They are carried on the consolidated statements of financial condition within other assets or other liabilities, and changes in fair value are recorded net as a component of mortgage banking income in the consolidated statements of operations. The gross gains on loan sales are recognized based on new loan commitments with adjustment for price and pair-off activity. Commission expenses on loans held for sale are recognized based on loans closed.

f) Allowance for loan losses—The allowance for loan losses represents management’s estimate of probable credit losses inherent in loans, including acquired loans to the extent necessary, as of the balance sheet date. The determination of the ALL takes into consideration, among other matters, the estimated fair value of the underlying collateral, economic conditions, historical net loan losses, the estimated loss emergence period, estimated default rates, any declines in cash flow assumptions from acquisition, loan structures, growth factors and other elements that warrant recognition. In addition, various regulatory agencies, as an integral part of the examination process, periodically review the ALL. Such agencies may require the Company to recognize additions to the ALL or increases to adversely graded classified loans based on their judgments about information available to them at the time of their examinations.

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The Company uses an internal risk rating system to indicate credit quality in the loan portfolio. The risk rating system is applied to all loans and uses a series of grades, which reflect management’s assessment of the risk attributable to loans based on an analysis of the borrower’s financial condition and ability to meet contractual debt service requirements. Loans that management perceives to have acceptable risk are categorized as “Pass” loans. The “Special Mention” loans represent loans that have potential credit weaknesses that deserve management’s close attention. Special mention loans include borrowers that have potential weaknesses or unwarranted risks that, unless corrected, may threaten the borrower’s ability to meet debt requirements. However, these borrowers are still believed to have the ability to respond to and resolve the financial issues that threaten their financial situation. Loans classified as “Substandard” are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans have a distinct possibility of loss if the deficiencies are not corrected. “Doubtful” loans are loans that management believes the collection of payments in accordance with the terms of the loan agreement is highly questionable and improbable. Loans accounted for under ASC 310-30, despite being 90 days or more past due or internally adversely classified, may be classified as performing upon and subsequent to acquisition, regardless of whether the client is contractually delinquent, if the timing and expected cash flows on the loan pool can be reasonably estimated and if collection of the carrying value of the loan pool loans is reasonably expected. Interest accrual is discontinued on doubtful loans and certain substandard loans that are excluded from ASC 310-30, as is more fully discussed in note 6.

The Company routinely evaluates adversely risk-rated credits for impairment. Impairment, if any, is typically measured for each loan based on a thorough analysis of the most probable source of repayment, including the present value of the loan’s expected future cash flows, the loan’s estimated fair value, or the estimated fair value of the underlying collateral less costs of disposition for collateral dependent loans. General allowances are established for loans with similar characteristics. In this process, general allowance factors are based on an analysis of historical loss and recovery experience, if any, related to originated and acquired loans, as well as certain industry experience, with adjustments made for qualitative or environmental factors that are likely to cause estimated credit losses to differ from historical experience. To the extent that the data supporting such factors has limitations, management’s judgment and experience play a key role in determining the allowance estimates.

Additions to the ALL are made by provisions for loan losses that are charged to operations. The allowance is decreased by charge-offs due to losses and is increased by provisions for loan losses and recoveries. When it is determined that specific loans, or portions thereof, are uncollectible, these amounts are charged off against the ALL. If repayment of the loan is collateral dependent, the fair value of the collateral, less cost to sell, is used to determine charge-off amounts.

The Company maintains an ALL for loans accounted for under ASC 310-30 as a result of impairment to loan pools arising from the periodic remeasurement of these loans. Any impairment in the individual pool is generally recognized in the current period as provision for loan losses. Any improvement in the estimated cash flows, is generally not recognized immediately, but is instead reflected as an adjustment to the related loan pools yield on a prospective basis once any previously recorded impairment has been recaptured.

The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments, effective January 1, 2020. This update replaces the current incurred loss methodology for recognizing credit losses with a current expected credit loss model, which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts.

g) Premises and equipment—With the exception of premises and equipment acquired through business combinations, which are initially measured and recorded at fair value, purchased land, buildings and equipment are carried at cost, including capitalized interest when appropriate, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the asset. The Company generally assigns depreciable lives of 39 years for buildings, 7 to 15 years for building improvements, and 3 to 7 years for equipment. Leasehold improvements are amortized over the shorter of their estimated useful lives or remaining lease terms. Maintenance and repairs are charged to non-interest expense as incurred. The Company reviews premises and equipment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recognized when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposal is less than its carrying amount. Property and equipment that meet the held-for-sale criteria is recorded at the lower of its carrying amount or fair value less cost to sell and depreciation is ceased.

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h) Goodwill and intangible assets—Goodwill is established and recorded if the consideration given during an acquisition transaction exceeds the fair value of the net assets received. Goodwill has an indefinite useful life and is not amortized, but is evaluated annually for potential impairment, or when events or circumstances indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Such events or circumstances may include deterioration in general economic conditions, deterioration in industry or market conditions, an increased competitive environment, a decline in market-dependent multiples or metrics, declining financial performance, entity-specific events or circumstances or a sustained decrease in share price (either in absolute terms or relative to peers). If the Company determines, based upon the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is greater than the carrying amount no additional procedures are performed; however, if the Company determines that it is more likely than not that the fair value of the reporting unit is less than the carrying amount the Company will compare the fair value of the reporting unit to its carrying amount. Any excess of the carrying amount over fair value would indicate a potential impairment and the Company would proceed to perform an additional test to determine whether goodwill has been impaired and calculate the amount of that impairment.

Intangible assets that have finite useful lives, such as core deposit intangibles, are amortized over their estimated useful lives. The Company’s core deposit intangible assets represent the value of the anticipated future cost savings that will result from the acquired core deposit relationships versus an alternative source of funding.

Judgment may be used in assessing goodwill and intangible assets for impairment. Estimates of fair value are based on projections of revenues, operating costs and cash flows of the reporting unit considering historical and anticipated future results, general economic and market conditions, as well as the impact of planned business or operational strategies. The valuations use a combination of present value techniques to measure fair value considering market factors. Additionally, judgment is used in determining the useful lives of finite-lived intangible assets. Adverse changes in the economic environment, operations of the reporting unit, or changes in judgments and projections could result in a significantly different estimate of the fair value of the reporting unit and could result in an impairment of goodwill and/or intangible assets.

i) Mortgage Servicing– Mortgage servicing rights (“MSRs”) associated with loans originated and sold, where servicing is retained, are initially capitalized at fair value and included in intangible assets, net on the consolidated statements of financial condition. For subsequent measurement purposes, the Company measures servicing assets based on the lower of cost or market using the amortization method. The values of these capitalized servicing rights are amortized as an offset to the loan servicing income earned in relation to the servicing revenue expected to be earned. The carrying values of these rights are reviewed quarterly for impairment based on the fair value of those assets. For purposes of impairment evaluation and measurement, management stratifies MSRs based on the predominant risk characteristics of the underlying loans, including loan type and loan term. If, by individual stratum, the carrying amount of these MSRs exceeds fair value, a valuation allowance is established and the impairment is recognized in mortgage banking income. If the fair value of impaired MSRs subsequently increases, management recognizes the increase in fair value in current period mortgage banking income and, through a reduction in the valuation allowance, adjusts the carrying value of the MSRs to a level not in excess of amortized cost.

j) Reserve for Mortgage Loan Repurchase Losses–The Company sells mortgage loans to various third parties, including government-sponsored entities, under contractual provisions that include various representations and warranties that typically cover ownership of the loan, compliance with loan criteria set forth in the applicable agreement, validity of the lien securing the loan, absence of delinquent taxes or liens against the property securing the loan, and similar matters. The Company may be required to repurchase the mortgage loans with identified defects, indemnify the investor or insurer, or reimburse the investor for credit loss incurred on the loan (collectively “repurchase”) in the event of a material breach of such contractual representations or warranties. Risk associated with potential repurchases or other forms of settlement is managed through underwriting and quality assurance practices.

The Company establishes mortgage repurchase reserves related to various representations and warranties that reflect management’s estimate of losses based on a combination of factors. Such factors incorporate actual and historic loss history, delinquency trends in the portfolio and economic conditions. The Company establishes a reserve at the time loans are sold and updates the reserve estimate quarterly during the estimated loan life. The repurchase reserve is included in other liabilities on the consolidated statements of financial condition.

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k) Other real estate owned—OREO consists of property that has been foreclosed on or repossessed by deed in lieu of foreclosure. The assets are initially recorded at the fair value of the collateral less estimated costs to sell, with any initial valuation adjustments charged to the ALL. Subsequent downward valuation adjustments, if any, in addition to gains and losses realized on sales and net operating expenses, are recorded in non-interest expense. Costs associated with maintaining property, such as utilities and maintenance, are charged to expense in the period in which they occur, while costs relating to the development and improvement of property are capitalized to the extent the balance does not exceed fair value. All OREO acquired through acquisition is recorded at fair value, less cost to sell, at the date of acquisition.

l) Bank-owned life insurance—The Company is the owner and beneficiary of bank-owned life insurance ("BOLI”) policies that it purchased on certain associates of the Company. The BOLI is carried at net realizable value with changes in net realizable value recorded in non-interest income on the consolidated statements of operations.

m) Securities purchased under agreements to resell and securities sold under agreements to repurchase—The Company periodically enters into purchases or sales of securities under agreements to resell or repurchase as of a specified future date. The securities purchased under agreements to resell are accounted for as collateralized financing transactions and are reflected as an asset in the consolidated statements of financial condition. The securities pledged by the counterparties are held by a third party custodian and valued daily. The Company may require additional collateral to ensure full collateralization for these transactions. The repurchase agreements are considered financing agreements and the obligation to repurchase assets sold is reflected as a liability in the consolidated statements of financial condition of the Company. The repurchase agreements are collateralized by debt securities that are under the control of the Company.

n) Stock-based compensation—The Company accounts for stock-based compensation in accordance with ASC Topic 718. The Company grants stock-based awards including stock options, restricted stock and performance stock units. Stock option grants are for a fixed number of common shares and are issued at exercise prices which are not less than the fair value of a share of stock at the date of grant. The options vest over a time period stated in each option agreement and may be subject to other performance vesting conditions, which require the related compensation expense to be recorded ratably over the requisite service period starting when such conditions become probable. Restricted stock is granted for a fixed number of shares, the transferability of which is restricted until such shares become vested according to the terms in the award agreement. Restricted shares may have multiple vesting qualifications, which can include time vesting of a set portion of the restricted shares and performance criterion, such as market criteria that are tied to specified market conditions of the Company’s common stock price and performance targets tied to the Company’s earnings per share.

The fair value of stock options is measured using a Black-Scholes model. The fair value of time-based restricted stock awards and performance stock units with performance based vesting criteria is based on the Company’s stock price on the date of grant. The fair value of performance stock units with market-based vesting criteria is measured using a Monte Carlo simulation model. Compensation expense for the portion of the awards that contain performance and service vesting conditions is recognized over the requisite service period based on the fair value of the awards on the grant date. Compensation expense for the portion of the awards that contain a market vesting condition is recognized over the derived service period based on the fair value of the awards on the grant date. The amortization of stock-based compensation reflects any estimated forfeitures, and the expense realized in subsequent periods may be adjusted to reflect the actual forfeitures realized. The outstanding stock options primarily carry a maximum contractual term of ten years. To the extent that any award is forfeited, surrendered, terminated, expires, or lapses without being vested or exercised, the shares of stock subject to such award not delivered are again made available for awards under the Plan.

All excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) are recognized in the consolidated statements of operations as a component of income tax expense or benefit and are classified as an operating activity within the Company’s consolidated statements of cash flows. The tax effects of exercised, expired or vested awards are treated as discrete items in the reporting period in which they occur and may result in increased volatility in our effective tax rate. Cash paid by the Company when directly withholding shares for tax withholding purposes is classified as a financing activity in the consolidated statements of cash flows.

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o) Income taxes—The Company and its subsidiaries file U.S. federal and certain state income tax returns on a consolidated basis. Additionally, the Company and its subsidiaries file separate state income tax returns with various state jurisdictions. The provision for income taxes includes the income tax balances of the Company and all of its subsidiaries.

Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. Deferred tax assets and liabilities are adjusted for the effects of changes in tax rates in the period of change. The Company establishes a valuation allowance when management believes, based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized.

The Company recognizes and measures income tax benefits based upon a two-step model: 1) a tax position must be more likely than not to be sustained based solely on its technical merits in order to be recognized; and 2) the benefit is measured as the largest dollar amount of that position that is more likely than not to be sustained upon settlement. The difference between the benefit recognized for a position in this model and the tax benefit claimed on a tax return is treated as an unrecognized tax benefit. The Company recognizes income tax related interest and penalties in other non-interest expense.

p) Earnings per share—The Company applies the two-class method of computing earnings per share as certain of the Company's restricted shares are entitled to non-forfeitable dividends and are therefore considered to be a class of participating securities. The two-class method allocates income according to dividends declared and participation rights in undistributed income. Basic earnings per share is computed by dividing income allocated to common shareholders by the weighted average number of common shares outstanding during each period. Diluted income per common share is computed by dividing income allocated to common shareholders by the weighted average common shares outstanding during the period, plus amounts representing the dilutive effect of stock options outstanding, certain unvested restricted shares, or other contracts to issue common shares (“common stock equivalents”) using the treasury stock method. Common stock equivalents are excluded from the computation of diluted earnings per common share in periods in which they have an anti-dilutive effect.

q) Interest Rate Swap Derivatives—The Company carries all derivatives on the statement of financial condition at fair value. All derivative instruments are recognized as either assets or liabilities depending on the rights or obligations under the contracts. All gains and losses on the derivatives due to changes in fair value are recognized in earnings each period.

The Company offers interest rate swap products to certain of its clients to manage potential changes in interest rates. Each contract between the Company and a client is offset with a contract between the Company and an institutional counterparty, thus minimizing the Company's exposure to rate changes. The Company's portfolio consists of a “matched book,” and as such, changes in fair value of the swap pairs will largely offset in earnings. In accordance with applicable accounting guidance, if certain conditions are met, a derivative may be designated as (1) a hedge of the exposure to changes in the fair value of a recognized asset or liability, or of an unrecognized firm commitment, that are attributable to a particular risk (referred to as a fair value hedge) or (2) a hedge of the exposure to variability in the cash flows of a recognized asset or liability, or of a forecasted transaction, that is attributable to a particular risk (referred to as a cash flow hedge). The Company documents all hedging relationships at the inception of each hedging relationship and uses industry accepted methodologies and ranges to determine the effectiveness of each hedge. The fair value of the hedged item is calculated using the estimated future cash flows of the hedged item and applying discount rates equal to the market interest rate for the hedged item at the inception of the hedging relationship (inception benchmark interest rate plus an inception credit spread), adjusted for changes in the designated benchmark interest rate thereafter.

r) Treasury stock —When the Company acquires treasury stock, the sum of the consideration paid and direct transaction costs after tax is recognized as a deduction from equity. The cost basis for the reissuance of treasury stock is determined using a first-in, first-out basis. To the extent that the reissuance price is more than the cost basis (gain), the excess is recorded as an increase to additional paid-in capital in the consolidated statements of financial condition. If the reissuance price is less than the cost basis (loss), the difference is recorded to additional paid-in capital to the extent there is a cumulative treasury stock paid-in capital balance. Any loss in excess of the cumulative treasury stock paid-in capital balance is charged to retained earnings.

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s) Acquisition activities—The Company accounts for business combinations under the acquisition method of accounting. Assets acquired and liabilities assumed are measured and recorded at fair value at the date of acquisition, including identifiable intangible assets. If the fair value of net assets acquired exceeds the fair value of consideration paid, a bargain purchase gain is recognized at the date of acquisition. Conversely, if the consideration paid exceeds the fair value of the net assets acquired, goodwill is recognized at the acquisition date. Fair values are subject to refinement for up to a maximum of one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Adjustments recorded to the acquired assets and liabilities assumed are applied prospectively in accordance with Accounting Standards Codification (“ASC”) Topic 805. The determination of the fair value of loans acquired takes into account credit quality deterioration and probability of loss; therefore, the related ALL is not carried forward at the time of acquisition.

Identifiable intangible assets are recognized separately if they arise from contractual or other legal rights or if they are separable (i.e., capable of being sold, transferred, licensed, rented, or exchanged separately from the entity). Deposit liabilities and the related depositor relationship intangible assets, known as the core deposit intangible assets, may be exchanged in observable exchange transactions. As a result, the core deposit intangible asset is considered identifiable, because the separability criterion has been met.

Note 3 Recent Accounting Pronouncements

Revenue from Contracts with Customers—In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. This update supersedes revenue recognition requirements in ASC Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance in the FASB Accounting Standards Codification. The new guidance stipulates that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides specific steps that entities should apply in order to achieve this principle.

The new guidance does not apply to revenue associated with financial assets and liabilities, including loans, leases, securities, and derivatives that are accounted for under other GAAP. Accordingly, the majority of the Company’s revenues are not affected. The Company adopted ASU 2014-09 on January 1, 2018 utilizing the modified retrospective approach. Additionally, the Company has determined certain service charges, bank card fees and real estate sales are within the scope of the ASU, but has not identified changes to the timing or amount of revenue recognition. Accounting policies and procedures did not change materially as the principles of revenue recognition from the ASU are largely consistent with existing guidance and current practices applied by the Company. Refer to note 15 of our consolidated financial statements for required disclosures under the new standard.

Leases—In February 2016, the FASB issued ASU 2016-02, Leases. The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases. The new standard established a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statements. ASU 2016-02 became effective for the Company on January 1, 2019 and initially required transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. In July 2018, the Financial Accounting Standards Board issued ASU 2018-11 which, among other things, provided an additional transition method that allows entities to not apply the guidance in ASU 2016-02 in the comparative periods presented in the financial statements and instead recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We elected to apply certain practical expedients provided under ASU 2016-02 whereby we will not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases. We also did not apply the recognition requirements of ASU 2016-02 to any short-term leases (as defined by related accounting guidance). The updates did not significantly change lease accounting requirements applicable to lessors and did not significantly impact our financial statements in relation to contracts whereby we act as a lessor. We applied the modified-retrospective transition approach prescribed by ASU 2018-11. Upon adoption of ASU 2016-02 and ASU 2018-11 on January 1, 2019, we recognized right-of-use assets and related lease liabilities totaling $30.5 million with a cumulative-effect adjustment to beginning retained earnings of $0.3 million, after tax. Refer to note 8 – Leases of our consolidated financial statements for further detail.

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Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities—In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2018. The Company early adopted ASU 2017-12 during the first quarter of 2018 and recorded a cumulative effect adjustment of $26 thousand within equity in the consolidated statements of financial condition.

Reclassification of Certain Tax Effects—In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This update allows a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The amendments eliminate the stranded tax effects that were created as a result of the reduction of historical U.S. federal corporate income tax rate to the newly enacted U.S. federal corporate income tax rate. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company early adopted ASU 2018-02 in the first quarter of 2018, resulting in a $1.5 million reclassification from accumulated other comprehensive loss to retained earnings on the consolidated statements of financial condition and the consolidated statements of changes in shareholders’ equity.

Other Pronouncements—The Company early adopted ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (Subtopic 350-40) on a prospective basis with no material impact on its financial statements. The Company also adopted ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting; ASU 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825); ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments and ASU 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20) with no material impact on its financial statements.

Note 4 Investment Securities

The Company’s investment securities portfolio is comprised of available-for-sale and held-to-maturity investment securities. These investment securities totaled $0.8 billion at December 31, 2019 and included $0.6 billion of available-for-sale securities and $0.2 billion of held-to-maturity securities. At December 31, 2018, investment securities totaled $1.0 billion and included $0.8 billion of available-for-sale securities and $0.2 billion of held-to-maturity securities.

Available-for-sale

At December 31, 2019 and 2018, the Company held $638.2 million and $791.1 million of available-for-sale investment securities, respectively. Available-for-sale securities are summarized as follows as of the dates indicated:

	December 31, 2019
	Amortized		Gross		Gross
	cost		unrealized gains		unrealized losses		Fair value
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	93,770	$	1,497	$	(11)	$	95,256
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		543,275		3,818		(5,056)		542,037
Municipal securities		495		—		(8)		487
Other securities		469		—		—		469
Total investment securities available-for-sale	$	638,009	$	5,315	$	(5,075)	$	638,249

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	December 31, 2018
	Amortized		Gross		Gross
	cost		unrealized gains		unrealized losses		Fair value
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	147,283	$	1,232	$	(1,873)	$	146,642
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		661,354		1,056		(19,029)		643,381
Municipal securities		619		—		(9)		610
Other securities		469		—		—		469
Total investment securities available-for-sale	$	809,725	$	2,288	$	(20,911)	$	791,102

At December 31, 2019 and 2018, mortgage-backed securities represented primarily all of the Company’s available-for-sale investment portfolio, and all mortgage-backed securities were backed by government sponsored enterprises (“GSE”) collateral such as FHLMC, FNMA and GNMA.

The tables below summarize the available-for-sale securities with unrealized losses as of the dates shown, along with the length of the impairment period:

	December 31, 2019
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	10,413	$	(7)	$	1,421	$	(4)	$	11,834	$	(11)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		41,983		(281)		254,380		(4,775)		296,363		(5,056)
Municipal securities		—		—		372		(8)		372		(8)
Total	$	52,396	$	(288)	$	256,173	$	(4,787)	$	308,569	$	(5,075)

	December 31, 2018
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	30,853	$	(392)	$	69,169	$	(1,481)	$	100,022	$	(1,873)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		127,767		(1,150)		454,662		(17,879)		582,429		(19,029)
Municipal securities		441		(9)		—		—		441		(9)
Total	$	159,061	$	(1,551)	$	523,831	$	(19,360)	$	682,892	$	(20,911)

The unrealized losses in the Company’s investment portfolio at December 31, 2019 were caused by changes in interest rates. The portfolio included 67 securities, having an aggregate fair value of $308.6 million, which were in an unrealized loss position at December 31, 2019, compared to 211 securities, with an aggregate fair value of $682.9 million at December 31, 2018.

Management evaluated all of the available for sale securities in an unrealized loss position at December 31, 2019 and December 31, 2018 and concluded no OTTI existed. During the year ended December 31, 2018, the Company recorded a

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$0.2 million recovery included in other non-interest expense related to one security with an aggregate fair value of $0.3 million, which had previously incurred OTTI of $0.2 million during the year ended December 31, 2017. The Company has no intention to sell these securities before recovery of their amortized cost and believes it will not be required to sell the securities before the recovery of their amortized cost.

Certain securities are pledged as collateral for public deposits, securities sold under agreements to repurchase and to secure borrowing capacity at the FRB and FHLB, if needed. The fair value of available-for-sale investment securities pledged as collateral totaled $352.3 million and $318.1 million at December 31, 2019 and 2018, respectively. The Bank also had investment securities pledged as collateral for FHLB advances totaling $17.6 million and $16.0 million at December 31, 2019 and 2018, respectively.

Mortgage-backed securities may have actual maturities that differ from contractual maturities depending on the repayment characteristics and experience of the underlying financial instruments.

As of December 31, 2019, the entire municipal securities portfolio with an amortized cost and fair value of $0.5 million was due between one to five years. Other securities of $0.5 million as of December 31, 2019 have no stated contractual maturity date.

Held-to-maturity

At December 31, 2019 and 2018, the Company held $182.9 million and $235.4 million of held-to-maturity investment securities, respectively. Held-to-maturity investment securities are summarized as follows as of the dates indicated:

	December 31, 2019
			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	127,560	$	1,239	$	(29)	$	128,770
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		55,324		82		(435)		54,971
Total investment securities held-to-maturity	$	182,884	$	1,321	$	(464)	$	183,741

	December 31, 2018
			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	157,115	$	2	$	(2,705)	$	154,412
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		78,283		—		(1,769)		76,514
Total investment securities held-to-maturity	$	235,398	$	2	$	(4,474)	$	230,926

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The tables below summarize the held-to-maturity securities with unrealized losses as of the dates shown, along with the length of the impairment period:

	December 31, 2019
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	10,478	$	(26)	$	338	$	(3)	$	10,816	$	(29)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		3,925		(9)		28,554		(426)		32,479		(435)
Total	$	14,403	$	(35)	$	28,892	$	(429)	$	43,295	$	(464)

	December 31, 2018
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	26,660	$	(381)	$	126,475	$	(2,324)	$	153,135	$	(2,705)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		35,235		(79)		41,279		(1,690)		76,514		(1,769)
Total	$	61,895	$	(460)	$	167,754	$	(4,014)	$	229,649	$	(4,474)

The held-to-maturity portfolio included 13 securities, having an aggregate fair value of $43.3 million, which were in an unrealized loss position at December 31, 2019, compared to 49 securities, with a fair value of $229.6 million, at December 31, 2018.

The unrealized losses in the Company’s investments at December 31, 2019 and December 31, 2018 were caused by changes in interest rates. Management evaluated all of the held-to-maturity securities in an unrealized loss position and concluded that no OTTI existed at December 31, 2019 or December 31, 2018. The Company has no intention to sell these securities before recovery of their amortized cost and believes it will not be required to sell the securities before the recovery of their amortized cost.

The carrying value of held-to-maturity investment securities pledged as collateral totaled $144.2 million and $133.1 million at December 31, 2019 and 2018, respectively.

Actual maturities of mortgage-backed securities may differ from scheduled maturities depending on the repayment characteristics and experience of the underlying financial instruments.

Note 5 Non-marketable Securities

Non-marketable securities include FRB stock and FHLB stock. At December 31, 2019, the Company held $13.9 million of FRB stock and $15.8 million of FHLB stock for regulatory or debt facility purposes. At December 31, 2018, the Company held $13.9 million of FRB stock and $13.6 million of FHLB stock.

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 investments carried at cost. Management evaluated all of the non-marketable securities and concluded that no OTTI existed at December 31, 2019 or December 31, 2018.

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Note 6 Loans

The loan portfolio is comprised of loans originated by the Company and loans that were acquired in connection with the Company’s acquisitions.

The tables below show the loan portfolio composition including carrying value by segment of originated and acquired loans and loans accounted for under ASC 310-30, as of the dates shown. The carrying value of originated and acquired loans is net of discounts, fees, costs and fair value marks of $8.4 million and $10.2 million at December 31, 2019 and 2018, respectively.

	December 31, 2019
	Originated and		ASC
	acquired loans		310-30 loans		Total loans		% of total
Commercial	$	2,977,007	$	15,300	$	2,992,307	67.8%
Commercial real estate non-owner occupied		598,118		32,788		630,906	14.3%
Residential real estate		764,411		6,006		770,417	17.4%
Consumer		21,776		—		21,776	0.5%
Total	$	4,361,312	$	54,094	$	4,415,406	100.0%

	December 31, 2018
	Originated and		ASC
	acquired loans		310-30 loans		Total loans		% of total
Commercial	$	2,624,173	$	20,398	$	2,644,571	64.6%
Commercial real estate non-owner occupied		551,819		40,393		592,212	14.5%
Residential real estate		820,820		9,995		830,815	20.3%
Consumer		24,617		93		24,710	0.6%
Total	$	4,021,429	$	70,879	$	4,092,308	100.0%

Delinquency for originated and acquired loans is shown in the following tables at December 31, 2019 and 2018:

	December 31, 2019
			Greater
	30-89 days		than 90 days				Total past				Total
	past due and		past due and		Non-accrual		due and				originated and
	accruing		accruing		loans		non-accrual		Current		acquired loans
Originated and acquired loans:
Commercial:
Commercial and industrial	$	2,478	$	879	$	9,396	$	12,753	$	2,193,244	$	2,205,997
Owner occupied commercial real estate		569		—		2,264		2,833		477,073		479,906
Food and agriculture		179		—		317		496		248,089		248,585
Energy		—		—		934		934		41,585		42,519
Total commercial		3,226		879		12,911		17,016		2,959,991		2,977,007
Commercial real estate non-owner occupied:
Construction		—		—		—		—		77,733		77,733
Acquisition/development		—		—		416		416		14,623		15,039
Multifamily		—		—		—		—		54,693		54,693
Non-owner occupied		438		—		43		481		450,172		450,653
Total commercial real estate		438		—		459		897		597,221		598,118
Residential real estate:
Senior lien		1,747		—		7,597		9,344		663,353		672,697
Junior lien		245		79		731		1,055		90,659		91,714
Total residential real estate		1,992		79		8,328		10,399		754,012		764,411
Consumer		116		—		50		166		21,610		21,776
Total originated and acquired loans	$	5,772	$	958	$	21,748	$	28,478	$	4,332,834	$	4,361,312

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	December 31, 2018
			Greater
	30-89 days		than 90 days				Total past				Total
	past due and		past due and		Non-accrual		due and				originated and
	accruing		accruing		loans		non-accrual		Current		acquired loans
Originated and acquired loans:
Commercial:
Commercial and industrial	$	495	$	74	$	5,510	$	6,079	$	1,925,068	$	1,931,147
Owner occupied commercial real estate		893		—		6,931		7,824		413,842		421,666
Food and agriculture		141		125		768		1,034		221,122		222,156
Energy		—		—		742		742		48,462		49,204
Total commercial		1,529		199		13,951		15,679		2,608,494		2,624,173
Commercial real estate non-owner occupied:
Construction		—		—		1,208		1,208		93,646		94,854
Acquisition/development		—		—		121		121		19,529		19,650
Multifamily		—		—		—		—		56,685		56,685
Non-owner occupied		328		132		572		1,032		379,598		380,630
Total commercial real estate		328		132		1,901		2,361		549,458		551,819
Residential real estate:
Senior lien		2,106		548		7,790		10,444		712,592		723,036
Junior lien		556		—		772		1,328		96,456		97,784
Total residential real estate		2,662		548		8,562		11,772		809,048		820,820
Consumer		91		16		42		149		24,468		24,617
Total originated and acquired loans	$	4,610	$	895	$	24,456	$	29,961	$	3,991,468	$	4,021,429

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. Pooled loans accounted for under ASC 310-30 that are 90 days or more past due and still accreting are generally considered to be performing and therefore are not included in the tables above. Non-accrual loans include non-accrual loans and troubled debt restructurings (“TDRs”) on non-accrual status. Non-accrual originated and acquired loans totaled $21.7 million at December 31, 2019, decreasing $2.7 million, or 11.1% from December 31, 2018.

The Company’s internal risk rating system uses a series of grades which reflect our assessment of the credit quality of loans based on an analysis of the borrower's financial condition, liquidity and ability to meet contractual debt service requirements and are categorized as “Pass”, “Special mention”, “Substandard” and “Doubtful”.

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Credit exposure for all loans as determined by the Company’s internal risk rating system was as follows at December 31, 2019 and 2018, respectively:

	December 31, 2019
			Special
	Pass		mention		Substandard		Doubtful		Total
Originated and acquired loans:
Commercial:
Commercial and industrial	$	2,162,045	$	28,144	$	14,287	$	1,521	$	2,205,997
Owner occupied commercial real estate		430,793		39,597		9,516		—		479,906
Food and agriculture		246,282		1,219		1,052		32		248,585
Energy		41,585		—		739		195		42,519
Total commercial		2,880,705		68,960		25,594		1,748		2,977,007
Commercial real estate non-owner occupied:
Construction		77,733		—		—		—		77,733
Acquisition/development		14,585		—		454		—		15,039
Multifamily		54,210		—		483		—		54,693
Non-owner occupied		434,694		15,238		721		—		450,653
Total commercial real estate		581,222		15,238		1,658		—		598,118
Residential real estate:
Senior lien		664,387		80		8,230		—		672,697
Junior lien		90,517		365		832		—		91,714
Total residential real estate		754,904		445		9,062		—		764,411
Consumer		21,725		1		50		—		21,776
Total originated and acquired loans	$	4,238,556	$	84,644	$	36,364	$	1,748	$	4,361,312
Loans accounted for under ASC 310-30:
Commercial	$	12,523	$	659	$	2,118	$	—	$	15,300
Commercial real estate non-owner occupied		32,109		71		608		—		32,788
Residential real estate		4,089		360		1,557		—		6,006
Consumer		—		—		—		—		—
Total loans accounted for under ASC 310-30	$	48,721	$	1,090	$	4,283	$	—	$	54,094
Total loans	$	4,287,277	$	85,734	$	40,647	$	1,748	$	4,415,406

	December 31, 2018
			Special
	Pass		mention		Substandard		Doubtful		Total
Originated and acquired loans:
Commercial:
Commercial and industrial	$	1,890,710	$	16,531	$	22,919	$	987	$	1,931,147
Owner occupied commercial real estate		393,404		16,349		11,828		85		421,666
Food and agriculture		220,004		1,260		847		45		222,156
Energy		48,462		—		742		—		49,204
Total commercial		2,552,580		34,140		36,336		1,117		2,624,173
Commercial real estate non-owner occupied:
Construction		92,731		915		1,208		—		94,854
Acquisition/development		19,529		—		121		—		19,650
Multifamily		56,685		—		—		—		56,685
Non-owner occupied		355,776		23,243		1,611		—		380,630
Total commercial real estate		524,721		24,158		2,940		—		551,819
Residential real estate:
Senior lien		710,972		3,571		8,493		—		723,036
Junior lien		96,456		415		913		—		97,784
Total residential real estate		807,428		3,986		9,406		—		820,820
Consumer		24,575		—		42		—		24,617
Total originated and acquired loans	$	3,909,304	$	62,284	$	48,724	$	1,117	$	4,021,429
Loans accounted for under ASC 310-30:
Commercial	$	17,579	$	537	$	2,282	$	—	$	20,398
Commercial real estate non-owner occupied		39,322		246		825		—		40,393
Residential real estate		7,484		908		1,603		—		9,995
Consumer		—		—		93		—		93
Total loans accounted for under ASC 310-30	$	64,385	$	1,691	$	4,803	$	—	$	70,879
Total loans	$	3,973,689	$	63,975	$	53,527	$	1,117	$	4,092,308

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Impaired Loans

Loans are considered to be impaired when it is probable that the Company will not be able to collect all amounts due in accordance with the contractual terms of the loan agreement. Impaired loans are comprised of originated and acquired loans on non-accrual status, loans in bankruptcy, and TDRs described below. If a specific allowance is warranted based on the borrower’s overall financial condition, the specific allowance is calculated based on discounted cash flows using the loan’s initial contractual effective interest rate or the fair value of the collateral less selling costs for collateral dependent loans.

At December 31, 2019 and 2018, the Company’s recorded investment in impaired loans were $32.8 million and $31.1 million, respectively, of which $6.9 million and $4.1 million, respectively, were accruing TDRs. Impaired loans had a collective related allowance for loan losses allocated to them of $1.8 million and $1.2 million at December 31, 2019 and 2018, respectively.

Additional information regarding impaired loans at December 31, 2019 and 2018 is set forth in the table below:

	December 31, 2019						December 31, 2018
					Allowance						Allowance
	Unpaid				for loan		Unpaid				for loan
	principal		Recorded		losses		principal		Recorded		losses
	balance		investment		allocated		balance		investment		allocated
With no related allowance recorded:
Commercial:
Commercial and industrial	$	16,001	$	10,548	$	—	$	4,374	$	3,029	$	—
Owner occupied commercial real estate		3,265		2,385		—		7,130		6,609		—
Food and agriculture		1,468		1,220		—		1,468		1,260		—
Energy		—		—		—		5,366		742		—
Total commercial		20,734		14,153		—		18,338		11,640		—
Commercial real estate non-owner occupied:
Construction		—		—		—		1,435		1,208		—
Acquisition/development		458		415		—		378		121		—
Multifamily		—		—		—		—		—		—
Non-owner occupied		90		26		—		641		547		—
Total commercial real estate		548		441		—		2,454		1,876		—
Residential real estate:
Senior lien		4,355		3,967		—		4,229		3,814		—
Junior lien		311		269		—		409		341		—
Total residential real estate		4,666		4,236		—		4,638		4,155		—
Consumer		57		50		—		46		42		—
Total impaired loans with no related allowance recorded	$	26,005	$	18,880	$	—	$	25,476	$	17,713	$	—
With a related allowance recorded:
Commercial:
Commercial and industrial	$	8,209	$	5,501	$	1,530	$	7,252	$	4,627	$	996
Owner occupied commercial real estate		711		505		3		1,362		1,169		90
Food and agriculture		757		751		35		883		845		46
Energy		5,559		934		195		—		—		—
Total commercial		15,236		7,691		1,763		9,497		6,641		1,132
Commercial real estate non-owner occupied:
Construction		—		—		—		—		—		—
Acquisition/development		—		—		—		—		—		—
Multifamily		—		—		—		—		—		—
Non-owner occupied		232		171		1		313		254		2
Total commercial real estate		232		171		1		313		254		2
Residential real estate:
Senior lien		5,808		5,034		25		6,032		5,178		27
Junior lien		1,074		987		6		1,408		1,293		8
Total residential real estate		6,882		6,021		31		7,440		6,471		35
Consumer		—		—		—		—		—		—
Total impaired loans with a related allowance recorded	$	22,350	$	13,883	$	1,795	$	17,250	$	13,366	$	1,169
Total impaired loans	$	48,355	$	32,763	$	1,795	$	42,726	$	31,079	$	1,169

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The table below shows additional information regarding the average recorded investment and interest income recognized on impaired loans for the years presented:

	For the years ended
	December 31, 2019				December 31, 2018				December 31, 2017
	Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	13,062	$	248	$	3,248	$	168	$	5,609	$	152
Owner occupied commercial real estate		2,849		27		6,799		38		4,155		80
Food and agriculture		1,316		—		1,259		98		1,422		244
Energy		—		—		884		—		8,004		156
Total Commercial		17,227		275		12,190		304		19,190		632
Commercial real estate non-owner occupied:
Construction		—		—		1,208		—		—		—
Acquisition/development		575		—		606		—		—		—
Multifamily		—		—		—		—		—		—
Non-owner occupied		28		—		573		—		878		22
Total commercial real estate		603		—		2,387		—		878		22
Residential real estate:
Senior lien		4,081		1		3,904		—		326		—
Junior lien		287		2		355		2		—		—
Total residential real estate		4,368		3		4,259		2		326		—
Consumer		11		—		12		—		—		—
Total impaired loans with no related allowance recorded	$	22,209	$	278	$	18,848	$	306	$	20,394	$	654
With a related allowance recorded:
Commercial:
Commercial and industrial	$	5,788	$	—	$	4,677	$	—	$	7,331	$	—
Owner occupied commercial real estate		554		17		1,220		19		747		20
Food and agriculture		796		12		862		5		2,092		5
Energy		865		—		—		—		—		—
Total Commercial		8,003		29		6,759		24		10,170		25
Commercial real estate non-owner occupied:
Construction		—		—		—		—		188		—
Acquisition/development		—		—		—		—		—		—
Multifamily		—		—		—		—		30		1
Non-owner occupied		207		14		288		16		213		9
Total commercial real estate		207		14		288		16		431		10
Residential real estate:
Senior lien		5,241		66		5,412		57		5,986		67
Junior lien		1,034		34		1,331		43		1,225		42
Total residential real estate		6,275		100		6,743		100		7,211		109
Consumer		49		—		36		—		163		—
Total impaired loans with a related allowance recorded	$	14,534	$	143	$	13,826	$	140	$	17,975	$	144
Total impaired loans	$	36,743	$	421	$	32,674	$	446	$	38,369	$	798

Interest income recognized on impaired loans noted in the tables above, primarily represents interest earned on accruing TDRs. Interest income recognized on impaired loans during the years ended December 31, 2019, 2018 and 2017 was $0.4 million, $0.4 million and $0.8 million, respectively.

Troubled debt restructurings

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 restructuring a loan

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to provide a concession by the Company to the borrower from their original terms due to borrower financial difficulties in order to facilitate repayment. Additionally, if a borrower’s repayment obligation has been discharged by a court, and that debt has not been reaffirmed by the borrower, regardless of past due status, the loan is considered to be a TDR.

During 2019, the Company restructured 15 loans with a recorded investment of $7.1 million at December 31, 2019 to facilitate repayment. Loan modifications were a reduction of the principal payment, a reduction in interest rate, or an extension of term. Loan modifications to loans accounted for under ASC 310-30 are not considered TDRs. The tables below provide additional information related to accruing TDRs at December 31, 2019 and 2018:

	December 31, 2019
	Recorded		Average year-to-date		Unpaid		Unfunded commitments
	investment		recorded investment		principal balance		to fund TDRs
Commercial	$	5,615	$	5,788	$	5,714	$	—
Commercial real estate non-owner occupied		141		172		192		—
Residential real estate		1,129		1,178		1,206		12
Consumer		—		—		—		—
Total	$	6,885	$	7,138	$	7,112	$	12

	December 31, 2018
	Recorded		Average year-to-date		Unpaid		Unfunded commitments
	investment		recorded investment		principal balance		to fund TDRs
Commercial	$	2,730	$	2,827	$	3,155	$	—
Commercial real estate non-owner occupied		229		260		280		—
Residential real estate		1,114		1,163		1,121		12
Consumer		—		—		—		—
Total	$	4,073	$	4,250	$	4,556	$	12

The following table summarizes the Company’s carrying value of non-accrual TDRs as of December 31, 2019 and 2018:

	December 31, 2019		December 31, 2018
Commercial	$	1,891	$	1,854
Commercial real estate non-owner occupied		410		—
Residential real estate		2,553		1,584
Consumer		—		—
Total non-accruing TDRs	$	4,854	$	3,438

Accrual of interest is resumed on loans that were previously on non-accrual only after the loan has performed sufficiently for a period of time. The Company had two TDRs totaling $0.7 million that were modified within the past 12 months that had defaulted on their restructured terms during the year ended December 31, 2019. For purposes of this disclosure, the Company considers “default” to mean 90 days or more past due on principal or interest. The allowance for loan losses related to troubled debt restructurings on non-accrual status is determined by individual evaluation, including collateral adequacy, using the same process as loans on non-accrual status which are not classified as TDRs.

During 2018, the Company had one TDR totaling $0.1 million that had been modified within the prior twelve months that defaulted on its restructured terms.

Loans accounted for under ASC 310-30

Loan pools accounted for under ASC 310-30 are periodically remeasured to determine expected future cash flows. In determining the expected cash flows, the timing of cash flows and prepayment assumptions for smaller homogeneous loans are based on statistical models that take into account factors such as the loan interest rate, credit profile of the borrowers, the years in which the loans were originated, and whether the loans are fixed or variable rate loans. Prepayments may be assumed

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on loans if circumstances specific to that loan warrant a prepayment assumption. The remeasurement of loans accounted for under ASC 310-30 resulted in the following changes in the carrying amount of accretable yield during 2019 and 2018:

	December 31, 2019		December 31, 2018
Accretable yield beginning balance	$	35,901	$	46,568
Reclassification from non-accretable difference		6,195		10,751
Reclassification to non-accretable difference		(921)		(2,263)
Accretion		(13,041)		(19,155)
Accretable yield ending balance	$	28,134	$	35,901

Below is the composition of the net book value for loans accounted for under ASC 310-30 at December 31, 2019 and 2018:

	December 31, 2019		December 31, 2018
Contractual cash flows	$	391,167	$	420,994
Non-accretable difference		(308,939)		(314,214)
Accretable yield		(28,134)		(35,901)
Loans accounted for under ASC 310-30	$	54,094	$	70,879

Note 7 Allowance for Loan Losses

The tables below detail the Company’s allowance for loan losses and recorded investment in loans as of and for the years ended December 31, 2019 and 2018:

	Year ended December 31, 2019
			Non-owner
			occupied
			commercial		Residential
	Commercial		real estate		real estate		Consumer		Total
Beginning balance	$	27,137	$	4,406	$	3,800	$	349	$	35,692
Originated and acquired beginning balance		26,946		4,406		3,760		349		35,461
Charge-offs		(7,422)		(116)		(124)		(937)		(8,599)
Recoveries		102		12		34		180		328
Provision		10,636		548		(202)		712		11,694
Originated and acquired ending balance		30,262		4,850		3,468		304		38,884
ASC 310-30 beginning balance		191		—		40		—		231
Charge-offs		—		—		—		—		—
Recoveries		—		—		—		—		—
Recoupment		(11)		—		(40)		—		(51)
ASC 310-30 ending balance		180		—		—		—		180
Ending balance	$	30,442	$	4,850	$	3,468	$	304	$	39,064
Ending allowance balance attributable to:
Originated and acquired loans individually evaluated for impairment	$	1,763	$	1	$	31	$	—	$	1,795
Originated and acquired loans collectively evaluated for impairment		28,499		4,849		3,437		304		37,089
ASC 310-30 loans		180		—		—		—		180
Total ending allowance balance	$	30,442	$	4,850	$	3,468	$	304	$	39,064
Loans:
Originated and acquired loans individually evaluated for impairment	$	21,844	$	612	$	10,257	$	50	$	32,763
Originated and acquired loans collectively evaluated for impairment		2,955,163		597,506		754,154		21,726		4,328,549
ASC 310-30 loans		15,300		32,788		6,006		—		54,094
Total loans	$	2,992,307	$	630,906	$	770,417	$	21,776	$	4,415,406

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	Year ended December 31, 2018
			Non-owner
			occupied
			commercial		Residential
	Commercial		real estate		real estate		Consumer		Total
Beginning balance	$	21,385	$	5,609	$	3,965	$	305	$	31,264
Originated and acquired beginning balance		21,340		5,583		3,965		305		31,193
Charge-offs		(833)		(11)		(118)		(1,134)		(2,096)
Recoveries		1,171		—		14		204		1,389
Provision		5,268		(1,166)		(101)		974		4,975
Originated and acquired ending balance		26,946		4,406		3,760		349		35,461
ASC 310-30 beginning balance		45		26		—		—		71
Charge-offs		(62)		—		—		—		(62)
Recoveries		—		—		—		—		—
Provision (recoupment)		208		(26)		40		—		222
ASC 310-30 ending balance		191		—		40		—		231
Ending balance	$	27,137	$	4,406	$	3,800	$	349	$	35,692
Ending allowance balance attributable to:
Originated and acquired loans individually evaluated for impairment	$	1,132	$	2	$	35	$	—	$	1,169
Originated and acquired loans collectively evaluated for impairment		25,814		4,404		3,725		349		34,292
ASC 310-30 loans		191		—		40		—		231
Total ending allowance balance	$	27,137	$	4,406	$	3,800	$	349	$	35,692
Loans:
Originated and acquired loans individually evaluated for impairment	$	18,282	$	2,129	$	5,169	$	5,499	$	31,079
Originated and acquired loans collectively evaluated for impairment		2,605,891		549,690		815,651		19,118		3,990,350
ASC 310-30 loans		20,398		40,393		9,995		93		70,879
Total loans	$	2,644,571	$	592,212	$	830,815	$	24,710	$	4,092,308

In evaluating the loan portfolio for an appropriate ALL level, non-impaired originated and acquired loans were grouped into segments based on broad characteristics such as primary use and underlying collateral. Within the segments, the portfolio was further disaggregated into classes of loans with similar attributes and risk characteristics for purposes of applying loss ratios and determining applicable subjective adjustments to the ALL. The application of subjective adjustments was based upon qualitative risk factors, including economic trends and conditions, industry conditions, asset quality, loss trends, lending management, portfolio growth and loan review/internal audit results.

Net charge-offs on originated and acquired loans during 2019 were $8.3 million and included $6.6 million for one previously identified acquired commercial loan that was charged-off during 2019. Management’s evaluation of credit quality resulted in provision for originated and acquired loan losses of $11.7 million during 2019 and included $6.6 million related to the loan described above. Provision for originated and acquired loans during the year ended December 31, 2018 was $5.0 million and was lowered by a recovery of $1.1 million.

During 2019 and 2018, the Company re-estimated the expected cash flows of the loan pools accounted for under ASC 310-30. The remeasurement in 2019 resulted in recoupment of $51 thousand. The remeasurement in 2018 resulted in provision of $222 thousand, primarily driven by the commercial segment.

Note 8 Leases

The Company adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019. As a result of the adoption, the Company recorded right-of-use (“ROU”) lease assets and lease liabilities of $30.5 million with a cumulative effect adjustment to beginning retained earnings of $0.3 million. As of December 31, 2019, ROU assets totaled $29.2 million included in other

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assets and the related lease liabilities totaled $29.5 million included in other liabilities on the consolidated statements of financial condition.

The ROU assets represent the Company’s right to use, or control the use of, an underlying asset for the lease term and the lease liabilities represent the Company’s obligation to make lease payments arising from the lease terms. The updates did not significantly change lease accounting requirements applicable to lessors and did not significantly impact our financial statements in relation to contracts whereby we act as a lessor.

The Company has operating leases for banking centers, corporate offices and ATM locations, with remaining lease terms ranging from one year to ten years. The Company only included reasonably certain renewal options in the lease terms. The weighted-average remaining lease term for our operating leases was 5.1 years at December 31, 2019. As of December 31, 2019, the weighted-average discount rate was 3.36%, utilizing the Company’s incremental FHLB borrowing rate for borrowings of a similar term at the date of lease commencement.

Rent expense totaled $5.7 million for the year ended December 31, 2019, and was recorded within occupancy and equipment on the consolidated statements of operations. Lease payments do not include non-lease components such as real estate taxes, insurance and common area maintenance.

The tables below represent undiscounted future cash flows under the current and prior lease guidance. Current guidance per ASC Topic 842 requires that optional renewal periods be included when it is reasonably certain they will be exercised.

Below is a summary of undiscounted future minimum lease payments as of December 31, 2019 per ASC Topic 842:

Years ending December 31,	Amount
2020	$	5,267
2021		5,046
2022		4,605
2023		4,308
2024		3,920
Thereafter		15,624
Total lease payments		38,770
Less: Imputed interest		(9,254)
Present value of operating lease liabilities	$	29,516

Below is a summary of undiscounted future minimum lease payments as of December 31, 2018 per ASC Topic 840:

Years ending December 31,	Amount
2019	$	3,092
2020		2,981
2021		3,091
2022		3,052
2023		2,047
Thereafter		10,163
Total	$	24,426

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Note 9 Premises and Equipment

Premises and equipment consisted of the following at December 31, 2019 and 2018:

	December 31, 2019		December 31, 2018
Land	$	32,911	$	32,058
Buildings and improvements		94,260		88,955
Equipment		56,523		52,354
Total premises and equipment, at cost		183,694		173,367
Less: accumulated depreciation and amortization		(71,543)		(63,381)
Premises and equipment, net	$	112,151	$	109,986

The Company recorded $8.2 million, $8.6 million and $7.6 million of depreciation expense during 2019, 2018 and 2017, respectively, as a component of occupancy and equipment expense in the consolidated statements of operations. The Company disposed of $0.0 million, $1.7 million and $2.3 million of premises and equipment, net, during 2019, 2018 and 2017, respectively. During 2019, the Company recognized $0.9 million of impairments in its consolidated statements of operations from the consolidation of four banking centers classified as held-for-sale totaling $3.4 million.

During 2018, the Company consolidated one banking center acquired in the Peoples acquisition that was valued at fair value less cost to sell at the date of acquisition. The banking center totaled $4.6 million and was classified as held-for-sale at December 31, 2018.

Note 10 Other Real Estate Owned

A summary of the activity in OREO during 2019 and 2018 is as follows:

	For the years ended December 31,
	2019		2018
Beginning balance	$	10,596	$	10,491
Acquired through acquisition		—		1,253
Transfers from loan portfolio, at fair value		2,705		24,940
Impairments		(1,082)		(230)
Sales		(4,919)		(25,858)
Ending balance	$	7,300	$	10,596

OREO totaled $7.3 million at December 31, 2019 and decreased $3.3 million from December 31, 2018. During 2019, the Company sold OREO properties with net book balances of $4.9 million compared to $25.9 million during 2018. The sales resulted in net OREO gains of $7.2 million and $0.5 million which were included within other non-interest expense in the consolidated statements of operations for the years ended December 31, 2019 and 2018, respectively.

Note 11 Goodwill and Intangible Assets

Goodwill and core deposit intangible

In connection with our acquisitions, the Company recorded goodwill of $115.0 million and core deposit intangible assets of $48.8 million. Goodwill is measured as the excess of the fair value of consideration paid over the fair value of net assets acquired. No goodwill impairment was recorded during the years ended December 31, 2019 or December 31, 2018.

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The gross carrying amount of the core deposit intangibles and the associated accumulated amortization at December 31, 2019 and December 31, 2018, are presented as follows:

December 31, 2019

December 31, 2018

Gross

Net

Gross

Net

carrying

Accumulated

carrying

carrying

Accumulated

carrying

amount

amortization

amount

amount

amortization

amount

Core deposit intangible

$

48,834

$

(40,103)

$

8,731

$

48,834

$

(38,920)

$

9,914

The accumulated amortization of the core deposit intangible assets was $40.1 million and $38.9 million at December 31, 2019 and 2018, respectively.

The Company is amortizing the core deposit intangibles from acquisitions on a straight line basis over 7-10 years from the date of the respective acquisition, which represents the expected useful life of the assets. The Company recognized core deposit intangible amortization expense of $1.2 million, $2.2 million and $5.3 million during 2019, 2018 and 2017, respectively.

The following table shows the estimated future amortization expense for the core deposit intangibles as of December 31, 2019:

Years ending December 31,		Amount
2020	$	1,183
2021		1,183
2022		1,127
2023		1,048
2024		1,048

Mortgage servicing rights

Mortgage servicing rights represent rights to service loans originated by the Company and sold to government sponsored enterprises including FHLMC, FNMA, GNMA and FHLB. Mortgage loans serviced for others were $308.4 million at December 31, 2019 and $389.0 million at December 31, 2018 and are included in other assets in the consolidated statements of financial condition.

Below are the changes in the MSRs for the years presented:

	For the years ended December 31,
	2019		2018
Beginning balance	$	3,556	$	—
Acquired through acquisition		—		4,301
Originations		27		30
Impairment		(129)		(21)
Amortization		(824)		(754)
Ending balance	$	2,630	$	3,556
Fair value of mortgage servicing rights	$	2,630	$	3,884

The fair value of MSRs was determined based upon a discounted cash flow analysis. The cash flow analysis included assumptions for discount rates and prepayment speeds. Discount rates ranged from 9.5% to 10.5% and the constant prepayment speed ranged from 14.8% to 22.0% for the December 31, 2019 valuation. Discount rates ranged from 9.5% to 10.5% and the constant prepayment speed ranged from 12.2% to 17.2% for the December 31, 2018 valuation. Included in mortgage banking income in the consolidated statements of operations were service fees of $1.0 million and $1.1 million for the years ended December 31, 2019 and 2018.

MSRs are evaluated and impairment is recognized to the extent fair value is less than the carrying amount. The Company evaluates impairment by stratifying MSRs based on the predominant risk characteristics of the underlying loans, including

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loan type and loan term. The Company is amortizing the MSRs in proportion to and over the period of the estimated net servicing income of the underlying loans. The Company recognized MSRs amortization expense of $0.8 million and $0.8 million during the years ended December 31, 2019 and 2018, respectively.

The following table shows the estimated future amortization expense for the MSRs as of December 31, 2019:

Years ending December 31,		Amount
2020	$	512
2021		412
2022		332
2023		267
2024		215

Note 12 Deposits

Total deposits were $4.7 billion and $4.5 billion at December 31, 2019 and 2018, respectively. Time deposits were $1.1 billion and $1.1 billion at December 31, 2019 and 2018, respectively. The following table summarizes the Company’s time deposits by remaining contractual maturity:

Years ending December 31,	Amount
2020	$	726,903
2021		211,787
2022		94,464
2023		19,696
2024		4,263
Thereafter		1,040
Total time deposits	$	1,058,153

The Company incurred interest expense on deposits as follows during the years indicated:

	For the years ended December 31,
	2019		2018		2017
Interest bearing demand deposits	$	1,514	$	887	$	445
Money market accounts		9,046		5,622		4,077
Savings accounts		2,717		2,249		1,481
Time deposits		16,526		12,283		10,169
Total	$	29,803	$	21,041	$	16,172

The Federal Reserve System requires cash balances to be maintained at the FRB based on certain deposit levels. There was no minimum reserve requirement for the Bank at December 31, 2019.

Note 13 Borrowings

The following table sets forth selected information regarding repurchase agreements during 2019, 2018 and 2017:

	As of and for the years ended December 31,
	2019		2018		2017
Maximum amount of outstanding agreements at any month end during the period	$	68,600	$	142,292	$	130,463
Average amount outstanding during the period		60,445		87,691		88,390
Weighted average interest rate for the period		1.11%		0.34%		0.19%

The Company enters into repurchase agreements to facilitate the needs of its clients. As of December 31, 2019, 2018 and 2017, the Company sold securities under agreements to repurchase totaling $56.9 million, $66.0 million and $130.5 million, respectively. The Company had pledged mortgage-backed securities with a fair value of approximately $65.6 million, $73.9

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million and $136.1 million, as of December 31, 2019, 2018 and 2017, respectively, for these agreements. The Company monitors collateral levels on a continuous basis and may be required to provide additional collateral based on the fair value of the underlying securities. There was $7.0 million, $5.9 million and $5.7 million of excess collateral pledged for repurchase agreements at December 31, 2019, 2018 and 2017, respectively.

The vast majority of the Company’s repurchase agreements are overnight transactions with clients that mature the day after the transaction. At December 31, 2019, 2018 and 2017, none of the Company’s repurchase agreements were for periods longer than one day. The repurchase agreements are subject to a master netting arrangement; however, the Company has not offset any of the amounts shown in the consolidated financial statements.

As a member of the FHLB, the Bank has access to a line of credit and term financing from the FHLB with total available credit of $1.1 billion at December 31, 2019. At December 31, 2019, 2018 and 2017, the Bank had $192.7 million, $234.3 million and $0.0 million in line of credit advances from the FHLB, respectively, that mature within a day. At December 31, 2019, 2018 and 2017, the Bank had $15.0 million, $67.3 million and $129.1 million in term advances from the FHLB, respectively, with fixed interest rates between 1.55% - 2.33% and maturity dates of 2019 - 2020. The Bank had investment securities and loans pledged as collateral for FHLB advances. Investment securities pledged were $17.6 million, $16.0 million and $28.1 million at December 31, 2019, 2018 and 2017, respectively. Loans pledged were $1.5 billion, $1.6 billion and $1.2 billion at December 31, 2019, 2018 and 2017, respectively. Interest expense related to FHLB advances and other short-term borrowings totaled $6.3 million, $2.6 million and $1.8 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Note 14 Regulatory Capital

As a bank holding company, the Company is subject to regulatory capital adequacy requirements implemented by the Federal Reserve. The federal banking agencies have risk-based capital adequacy regulations intended to provide a measure of capital adequacy that reflects the degree of risk associated with a banking organization’s operations. Under these regulations, assets are assigned to one of several risk categories, and nominal dollar amounts of assets and credit equivalent amounts of off-balance-sheet items are multiplied by a risk-adjustment percentage for the category.

Under the Basel III requirements, at December 31, 2019 and 2018, the Company and the Bank met all capital requirements including the capital conservation buffer of 2.5%, which was fully phased in on January 1, 2019. The Bank had regulatory capital ratios in excess of the levels established for well-capitalized institutions, as detailed in the tables below.

	December 31, 2019
				Required to be			Required to be
				well capitalized under			considered
				prompt corrective			adequately
	Actual			action provisions			capitalized(1)
	Ratio	Amount		Ratio	Amount		Ratio	Amount
Tier 1 leverage ratio:
Consolidated	11.0%	$	640,440	N/A		N/A	4.0%	$	231,950
NBH Bank	9.1%		528,028	5.0%	$	289,926	4.0%		231,940
Common equity tier 1 risk-based capital:
Consolidated	13.2%	$	640,440	N/A		N/A	7.0%	$	405,912
NBH Bank	10.9%		528,028	6.5%	$	376,903	7.0%		405,896
Tier 1 risk-based capital ratio:
Consolidated	13.2%	$	640,440	N/A		N/A	8.5%	$	412,620
NBH Bank	10.9%		528,028	8.0%	$	387,701	8.5%		411,932
Total risk-based capital ratio:
Consolidated	14.1%	$	682,645	N/A		N/A	10.5%	$	509,707
NBH Bank	11.8%		570,233	10.0%	$	484,626	10.5%		508,857

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	December 31, 2018
				Required to be			Required to be
				well capitalized under			considered
				prompt corrective			adequately
	Actual			action provisions			capitalized(1)
	Ratio	Amount		Ratio	Amount		Ratio	Amount
Tier 1 leverage ratio:
Consolidated	10.5%	$	580,504	N/A		N/A	4.0%	$	220,988
NBH Bank	9.0%		498,283	5.0%	$	275,703	4.0%		220,563
Common equity tier 1 risk-based capital:
Consolidated	12.9%	$	580,504	N/A		N/A	7.0%	$	386,728
NBH Bank	11.1%		498,283	6.5%	$	358,414	7.0%		385,984
Tier 1 risk-based capital ratio:
Consolidated	12.9%	$	580,504	N/A		N/A	8.5%	$	382,306
NBH Bank	11.1%		498,283	8.0%	$	358,938	8.5%		381,372
Total risk-based capital ratio:
Consolidated	13.8%	$	620,275	N/A		N/A	10.5%	$	472,261
NBH Bank	12.0%		538,054	10.0%	$	448,672	10.5%		471,106

(1) As of the fully phased-in date of January 1, 2019, including the capital conservation buffer.

Note 15 Revenue from Contracts with Clients

Revenue is recognized when obligations under the terms of a contract with clients are satisfied. Below is the detail of the Company’s revenue from contracts with clients.

Service charges and other fees

Service charge fees are primarily comprised of monthly service fees, check orders, and other deposit account related fees. Other fees include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to clients’ accounts.

Bank card fees

Bank card fees are primarily comprised of debit card income, ATM fees, merchant services income, and other fees. Debit card income is primarily comprised of interchange fees earned whenever the Bank’s debit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a Bank cardholder uses a non-Bank ATM or a non-Bank cardholder uses a Bank ATM. Merchant services income mainly represents fees charged to merchants to process their debit card transactions. The Company’s performance obligation for bank card fees are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Gain on OREO sales, net

Gain on OREO Sales, net is recognized when the Company meets its performance obligation to transfer title to the buyer. The gain or loss is measured as the excess of the proceeds received compared to the OREO carrying value. Sales proceeds are received in cash at the time of transfer.

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The following table presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, and non-interest expense in-scope of Topic 606 for the years ended December 31, 2019, 2018 and 2017.

	For the years ended December 31,
	2019		2018		2017
Non-interest income
In-scope of Topic 606:
Service charges and other fees	$	19,720	$	20,408	$	19,070
Bank card fees		14,595		14,489		12,026
Gain on banking center divestiture		—		—		2,942
Non-interest income (in-scope of Topic 606)		34,315		34,897		34,038
Non-interest income (out-of-scope of Topic 606)		48,437		35,878		5,167
Total non-interest income	$	82,752	$	70,775	$	39,205
Non-interest expense
In-scope of Topic 606:
Gain on OREO sales, net		7,193		488		4,150
Total revenue in-scope of Topic 606	$	41,508	$	35,385	$	38,188

Contract acquisition costs

In connection with the adoption of Topic 606, an entity is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a client if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a client that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less. The Company has not capitalized any contract acquisition costs.

Note 16 Stock-based Compensation and Benefits

The Company provides stock-based compensation in accordance with shareholder-approved plans. In 2014, shareholders approved the 2014 Omnibus Incentive Plan (the "2014 Plan"). The 2014 Plan replaces the NBH Holdings Corp. 2009 Equity Incentive Plan (the "Prior Plan"), pursuant to which the Company granted equity awards prior to the approval of the 2014 Plan. Pursuant to the 2014 Plan, the Compensation Committee of the Board of Directors has the authority to grant, from time to time, awards of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, other stock-based awards, or any combination thereof to eligible persons.

As of December 31, 2019, the aggregate number of Class A common stock available for issuance under the 2014 Plan is 4,996,156 shares. Any shares that are subject to stock options or stock appreciation rights under the 2014 Plan will be counted against the amount available for issuance as one share for every one share granted, and any shares that are subject to awards under the 2014 Plan other than stock options or stock appreciation rights will be counted against the amount available for issuance as 3.25 shares for every one share granted. The 2014 Plan provides for recycling of shares from both the Prior Plan and the 2014 Plan, the terms of which are further described in the Company's Proxy Statement for its 2014 Annual Meeting of Shareholders. Upon an option exercise, it is the Company’s policy to issue shares from treasury stock.

To date, the Company has issued stock options, restricted stock and performance stock units under the plans. The Compensation Committee sets the option exercise price at the time of grant, but in no case is the exercise price less than the fair market value of a share of stock at the date of grant.

Stock options

The Company issues stock options, which are primarily time-vesting with 1/3 vesting on each of the first, second and third anniversary of the date of grant or date of hire. The expense associated with the awarded stock options was measured at fair value using a Black-Scholes option-pricing model. The outstanding option awards vest or have vested over 1-4 years of continuous service and have 10-year contractual terms.

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Below are the weighted average assumptions used in the Black-Scholes option pricing model to determine fair value of the Company’s stock options granted in 2019, 2018 and 2017:

	2019		2018		2017
Weighted average fair value	$	6.31	$	7.43	$	7.84
Weighted average risk-free interest rate (1)		2.35%		2.69%		2.14%
Expected volatility (2)		20.56%		20.75%		21.61%
Expected term (years) (3)		6.05		6.10		6.09
Dividend yield (4)		2.00%		1.13%		0.83%

(1)	The risk-free rate for the expected term of the options was based on the U.S. Treasury yield curve at the date of grant and based on the expected term.
(2)	Expected volatility was calculated using historical volatility of the Company’s stock price for a period commensurate with the expected term of the options. For periods prior to the third quarter of 2018, expected volatility was calculated using a historical volatility of the Company’s stock price coupled with those of a peer group of eight comparable publicly traded companies for a period commensurate with the expected term of the options.
(3)	The expected term was estimated to be the average of the contractual vesting term and time to expiration.
(4)	The dividend yield was calculated in accordance with the Company’s dividend policy at the time of grant. For historical dividend rates, refer to the table under Item 5 on page 31.

The Company issued stock options in accordance with the 2014 Plan during 2019. The following table summarizes stock option activity for 2019:

				Weighted
				average
		Weighted		remaining
		average		contractual	Aggregate
		exercise		term in	intrinsic
	Options	price		years	value
Outstanding at December 31, 2018	1,264,876	$	22.33	3.92	$	11,387
Granted	149,290		34.21
Exercised	(705,474)		20.12
Forfeited	(51,578)		31.47
Outstanding at December 31, 2019	657,114	$	26.69	6.41	$	5,626
Options exercisable at December 31, 2019	405,225		22.30	4.98		5,240
Options vested and expected to vest	631,916		26.40	6.31		5,590

Stock option expense is a component of salaries and benefits in the consolidated statements of operations and totaled $0.7 million, $0.8 million and $0.7 million for 2019, 2018 and 2017, respectively. At December 31, 2019, there was $0.8 million of total unrecognized compensation cost related to non-vested stock options granted under the plans. The cost is expected to be recognized over a weighted average period of 2.0 years.

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The following table summarizes the Company’s outstanding stock options:

				Options outstanding				Options exercisable
					Weighted average
				Number	remaining contractual	Weighted average		Number	Weighted average
Range of exercise price				outstanding	life (years)	exercise price		exercisable	exercise price
$	18.00	-	18.99	73,868	3.83	$	18.60	73,868	$	18.60
	19.00	-	19.99	168,189	5.77		19.38	168,189		19.38
	20.00	-	20.99	78,041	1.48		20.05	78,041		20.05
	21.00	and above		337,016	8.43		33.64	85,127		33.32

Restricted stock awards

The Company issues primarily time-based restricted stock awards that vest over a range of a 1 – 3 year period. Restricted stock with time-based vesting was valued at the fair value of the shares on the date of grant as they are assumed to be held beyond the vesting period.

Performance stock units

During the years ended December 2019, 2018 and 2017, the Company granted 60,781, 77,125, and 49,758 performance stock units in accordance with the 2014 Plan, respectively. The Company grants performance stock units which represent initial target awards and do not reflect potential increases or decreases resulting from the final performance results, which are to be determined at the end of the three-year performance period (vesting date). The actual number of shares to be awarded at the end of the performance period will range from 0% - 150% of the initial target awards. 60% of the award is based on the Company’s cumulative earnings per share (EPS target) during the performance period, and 40% of the award is based on the Company’s cumulative total shareholder return (TSR target), or TSR, during the performance period. On the vesting date, the Company’s TSR will be compared to the respective TSRs of the companies comprising the KBW Regional Index at the grant date to determine the shares awarded. The fair value of the EPS target portion of the award was determined based on the closing stock price of the Company’s common stock on the grant date. The fair value of the TSR target portion of the award was determined using a Monte Carlo Simulation at the grant date. The weighted-average grant date fair value per unit for awards granted during 2019 of the EPS target portion and the TSR target portion was $34.08 and $27.01, respectively. During 2019, the Company awarded an additional 22,246 units due to final performance results related to performance stock units granted in 2016.

The following table summarizes restricted stock and performance stock unit activity during 2019 and 2018:

		Weighted				Weighted
	Restricted	average grant-		Performance		average grant-
	stock shares	date fair value		stock units		date fair value
Unvested at December 31, 2017	163,557	$	22.60	125,082	$	23.90
Granted	92,133		33.69	77,125		30.38
Vested	(94,775)		23.71	—		—
Forfeited	(14,421)		29.37	(10,158)		25.90
Unvested at December 31, 2018	146,494		28.19	192,049		26.40
Granted	86,689		35.05	60,781		30.85
Adjustment due to performance	—		—	22,246		17.36
Vested	(85,266)		25.21	(95,308)		18.02
Forfeited	(25,719)		32.68	(20,894)		31.48
Unvested at December 31, 2019	122,198	$	34.19	158,874	$	31.19

As of December 31, 2019, the total unrecognized compensation cost related to the non-vested restricted stock awards and performance stock units totaled $2.0 million and $2.7 million, respectively, and is expected to be recognized over a weighted average period of approximately 1.9 years and 1.7 years, respectively. Expense related to non-vested restricted stock awards

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totaled $2.2 million, $2.1 million and $2.2 million during 2019, 2018 and 2017, respectively. Expense related to non-vested performance stock units totaled $2.0 million, $1.5 million and $0.8 million during 2019, 2018 and 2017, respectively. Expense related to non-vested restricted stock awards and units is a component of salaries and benefits in the Company’s consolidated statements of operations.

Employee stock purchase plan

The 2014 Employee Stock Purchase Plan (“ESPP”) is intended to be a qualified plan within the meaning of Section 423 of the Internal Revenue Code of 1986 and allows eligible employees to purchase shares of common stock through payroll deductions up to a limit of $25,000 per calendar year and 2,000 shares per offering period. The price an employee pays for shares is 90.0% of the fair market value of Company common stock on the last day of the offering period. The offering periods are the six-month periods commencing on March 1 and September 1 of each year and ending on August 31 and February 28 (or February 29 in the case of a leap year) of each year. There are no vesting or other restrictions on the stock purchased by employees under the ESPP. Employees purchased 16,556 shares and 12,515 shares during 2019 and 2018, respectively. The total number of shares of common stock reserved for issuance under the ESPP totaled 400,000 shares, of which 326,088 were available for issuance at December 31, 2019.

Note 17 Common Stock

The Company had 31,176,627 and 30,769,063 shares of Class A common stock outstanding at December 31, 2019 and 2018, respectively. Additionally, the Company had 122,198 and 146,494 shares outstanding at December 31, 2019 and 2018, respectively, of restricted Class A common stock issued but not yet vested under the 2014 Plan that are not included in shares outstanding until such time that they are vested; however, these shares do have voting and certain dividend rights during the vesting period.

On August 5, 2016, the Board of Directors authorized a new share repurchase program for up to $50.0 million from time to time in either the open market or through privately negotiated transactions. The remaining authorization under this program at December 31, 2019 was $12.6 million.

Note 18 Earnings Per Share

The Company calculates earnings per share under the two-class method, as certain non-vested share awards contain non-forfeitable rights to dividends. As such, these awards are considered securities that participate in the earnings of the Company. Non-vested shares are discussed further in note 16.

The Company had 31,176,627 and 30,769,063 shares of Class A common stock outstanding as of December 31, 2019 and 2018, respectively, exclusive of issued non-vested restricted shares. Certain stock options and non-vested restricted shares are potentially dilutive securities, but are not included in the calculation of diluted earnings per share because to do so would have been anti-dilutive for 2019, 2018 and 2017.

The following table illustrates the computation of basic and diluted earnings per share for 2019, 2018 and 2017:

	For the years ended December 31,
	2019		2018		2017
Net income	$	80,365	$	61,451	$	14,579
Less: income allocated to participating securities		(94)		(70)		(56)
Income allocated to common shareholders	$	80,271	$	61,381	$	14,523
Weighted average shares outstanding for basic earnings per common share		31,175,825		30,748,234		26,928,763
Dilutive effect of equity awards		354,992		681,840		772,392
Dilutive effect of warrants		—		—		8,504
Weighted average shares outstanding for diluted earnings per common share		31,530,817		31,430,074		27,709,659
Basic earnings per share	$	2.57	$	2.00	$	0.54
Diluted earnings per share		2.55		1.95		0.53

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The Company had 657,114, 1,264,876 and 1,598,318 outstanding stock options to purchase common stock at weighted average exercise prices of $26.69, $22.33 and $20.62 per share at December 31, 2019, 2018 and 2017, respectively, which have time-vesting criteria, and as such, any dilution is derived only for the time frame in which the vesting criteria had been met and where the inclusion of those stock options is dilutive. The Company had 281,072, 338,543 and 288,639 unvested restricted shares and units issued as of December 31, 2019, 2018 and 2017, respectively, which have performance, market and/or time-vesting criteria, and as such, any dilution is derived only for the time frame in which the vesting criteria had been met and where the inclusion of those restricted shares and units is dilutive.

Note 19 Income Taxes

Income tax expense attributable to income before taxes was $15.8 million, $12.2 million and $21.3 million for 2019, 2018 and 2017, respectively. Included in income tax expense was $2.2 million, $1.3 million and $4.2 million of tax benefits from stock compensation activity during 2019, 2018 and 2017, respectively. During the fourth quarter of 2017, the Company remeasured its deferred tax asset as a result of the enactment of the “Tax Cuts and Jobs Act”, which among other items reduced the federal corporate tax rate to 21% effective January 1, 2018. Income tax expense recorded in 2017 included an $18.5 million non-cash one-time charge primarily related to this remeasurement.

(a) Income taxes

Total income taxes for 2019, 2018 and 2017 were allocated as follows:

	For the years ended December 31,
	2019		2018		2017
Current expense:
U.S. federal	$	8,947	$	427	$	1,230
State and local		2,280		1,530		169
Total current income tax expense		11,227		1,957		1,399
Deferred expense:
U.S. federal		4,115		10,110		17,639
State and local		487		163		2,245
Total deferred income tax expense		4,602		10,273		19,884
Income tax expense	$	15,829	$	12,230	$	21,283

(b) Tax Rate Reconciliation

The reconciliation between the income tax expenses and the amounts computed by applying the U.S. federal income tax rate to pretax income is as follows:

	For the years ended December 31,
	2019		2018		2017
Income tax at federal statutory rates (21%, 21% and 35%, respectively)	$	20,201	$	15,473	$	12,550
State income taxes, net of federal benefits		2,186		1,337		265
Tax-exempt loan interest income		(4,354)		(4,089)		(5,380)
Bank-owned life insurance income		(475)		136		(813)
Stock-based compensation		(1,925)		(1,207)		(3,998)
Deferred tax rate change		—		—		18,457
Other		196		580		202
Income tax expense	$	15,829	$	12,230	$	21,283

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(c) Significant Components of Deferred Taxes

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2019 and 2018 are presented below:

	December 31, 2019		December 31, 2018
Deferred tax assets:
Excess tax basis of acquired loans over carrying value	$	2,053	$	3,076
Allowance for loan losses		9,414		8,521
Intangible assets		—		1,937
Other real estate owned		810		439
Accrued stock-based compensation		1,945		2,889
Accrued compensation		3,425		3,046
Capitalized start-up costs		1,885		2,199
Accrued expenses		1,051		1,357
Net deferred loan fees		63		—
Net operating loss		707		807
Lease liability		7,113		—
Net unrealized losses on investment securities		—		3,543
Other		1,910		1,960
Total deferred tax assets		30,376		29,774
Deferred tax liabilities:
Intangible assets		(327)		—
Net unrealized gains on investment securities		(647)		—
Premises and equipment		(1,852)		(114)
Right of use assets		(7,033)		—
Prepaid expenses		(209)		(210)
Net deferred loan fees		—		(174)
Mortgage servicing rights		(634)		(854)
Other		(196)		(71)
Total deferred tax liabilities		(10,898)		(1,423)
Net deferred tax asset	$	19,478	$	28,351

At December 31, 2019, the Company had federal and state net operating loss carryovers (NOLs) of $2.7 million and $3.7 million, respectively, which are available to offset future taxable income. The federal NOLs expire in varying amounts through 2034, and the state NOLs expire in varying amounts between 2026 and 2034. The Company does not expect any tax attribute carryovers to expire before they are utilized.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, if any (including the impact of available carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. For the years ended December 31, 2019 and 2018, management believes a valuation allowance on the deferred tax asset is not necessary based on the current and future projected earnings of the Company. The Company has no ASC 740-10 unrecognized tax benefits recorded as of December 31, 2019 and 2018 and does not expect the total amount of unrecognized tax benefits to significantly increase within the next 12 months. The Company and its subsidiary bank are subject to income tax by federal, state and local government taxing authorities. The Company’s tax returns for the years ended December 31, 2016 through 2019 remain subject to examination for U.S. federal income tax authorities. The years open to examination by state and local government authorities vary by jurisdiction.

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Note 20 Derivatives

Risk management objective of using derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company has established policies that neither carrying value nor fair value at risk should exceed established guidelines. The Company has designed strategies to confine these risks within the established limits and identify appropriate trade-offs in the financial structure of its balance sheet. These strategies include the use of derivative financial instruments to help achieve the desired balance sheet repricing structure while meeting the desired objectives of its clients. Currently the Company employs certain interest rate swaps that are designated as fair value hedges as well as economic hedges. The Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions.

Fair values of derivative instruments on the balance sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated statements of financial condition as of December 31, 2019 and 2018.

Information about the valuation methods used to measure fair value is provided in note 22.

		Asset derivatives fair value					Liability derivatives fair value
	Balance Sheet	December 31,		December 31,		Balance Sheet	December 31,		December 31,
	location	2019		2018		Location	2019		2018
Derivatives designated as hedging instruments:
Interest rate products	Other assets	$	1,171	$	17,436	Other liabilities	$	13,537	$	228
Total derivatives designated as hedging instruments		$	1,171	$	17,436		$	13,537	$	228
Derivatives not designated as hedging instruments:
Interest rate products	Other assets	$	9,004	$	3,191	Other liabilities	$	9,021	$	3,349
Interest rate lock commitments	Other assets		1,499		871	Other liabilities		141		72
Forward contracts	Other assets		16		—	Other liabilities		299		472
Total derivatives not designated as hedging instruments		$	10,519	$	4,062		$	9,461	$	3,893

Fair value hedges

Interest rate swaps designated as fair value hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount. As of December 31, 2019, the Company had interest rate swaps with a notional amount of $403.7 million that were designated as fair value hedges of interest rate risk. These interest rate swaps were associated with $405.9 million of the Company’s fixed-rate loans, excluding a gain of $13.9 million from the fair value hedge adjustment in the carrying amount. The Company’s fixed rate loans are included in loans receivable on the statements of financial condition.

As of December 31, 2018, the Company had interest rate swaps with a notional amount of $473.4 million that were designated as fair value hedges. These interest rate swaps were associated with $522.7 million of the Company’s fixed-rate loans as of December 31, 2018, excluding a loss of $13.2 million from the fair value hedge adjustment in the carrying amount as of December 31, 2018.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in earnings. The Company includes the gain or loss on the hedged items in the same line item as the offsetting loss or gain on the related derivatives.

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Non-designated hedges

Derivatives not designated as hedges are not speculative and consist of interest rate swaps with commercial banking clients that facilitate their respective risk management strategies. Interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the client swaps and the offsetting swaps are recognized directly in earnings. As of December 31, 2019, the Company had matched interest rate swap transactions with an aggregate notional amount of $478.9 million related to this program. As of December 31, 2018, the Company had matched interest rate swap transactions with an aggregate notional amount of $206.8 million related to this program.

As part of its mortgage banking activities, the Company enters into interest rate lock commitments, which are commitments to originate loans where the interest rate on the loan is determined prior to funding and the clients have locked into that interest rate. The Company then locks in the loan and interest rate with an investor and commits to deliver the loan if settlement occurs ("best efforts") or commits to deliver the locked loan in a binding ("mandatory") delivery program with an investor. Fair value changes of certain loans under interest rate lock commitments are hedged with forward sales contracts of MBS. Forward sales contracts of MBS are recorded at fair value with changes in fair value recorded in non-interest income. Interest rate lock commitments and commitments to deliver loans to investors are considered derivatives. The market value of interest rate lock commitments and best efforts contracts are not readily ascertainable with precision because they are not actively traded in stand-alone markets. The Company determines the fair value of interest rate lock commitments and delivery contracts by measuring the fair value of the underlying assets. The fair value of the underlying assets is impacted by current interest rates, remaining origination fees, costs of production to be incurred, and the probability that the interest rate lock commitments will close or will be funded.

Certain additional risks arise from these forward delivery contracts in that the counterparties to the contracts may not be able to meet the terms of the contracts. The Company does not expect any counterparty to any MBS contract to fail to meet its obligation. Additional risks inherent in mandatory delivery programs include the risk that, if the Company fails to deliver the loans subject to interest rate risk lock commitments, it will still be obligated to “pair off” MBS to the counterparty. Should this be required, the Company could incur significant costs in acquiring replacement loans and such costs could have an adverse effect on the consolidated financial statements.

The fair value of the mortgage banking derivative is recorded as a freestanding asset or liability with the change in value being recognized in current earnings during the period of change.

The Company had interest rate lock commitments with a notional value of $99.8 million and forward contracts with a notional value of $181.5 million at December 31, 2019. The Company had interest rate lock commitments with a notional value of $50.1 million and forward contracts with a notional value of $77.6 million at December 31, 2018.

Effect of derivative instruments on the consolidated statements of operations

The tables below present the effect of the Company’s derivative financial instruments on the consolidated statements of operations for 2019 and 2018:

	Location of gain (loss)	Amount of gain (loss) recognized in income on derivatives
Derivatives in fair value	recognized in income on	For the years ended December 31,
hedging relationships	derivatives	2019		2018
Interest rate products	Interest and fees on loans	$	10,397	$	13,513
Total		$	10,397	$	13,513

	Location of gain (loss)	Amount of gain (loss) recognized in income on hedged items
	recognized in income on	For the years ended December 31,
Hedged items	hedged items	2019		2018
Interest rate products	Interest and fees on loans	$	(9,603)	$	(13,972)
Total		$	(9,603)	$	(13,972)

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	Location of gain (loss)	Amount of gain (loss) recognized in income on derivatives
Derivatives not designated	recognized in income on	For the years ended December 31,
as hedging instruments	derivatives	2019		2018
Interest rate products	Other non-interest expense	$	133	$	55
Interest rate lock commitments	Mortgage banking income		1,138		(1,329)
Forward contracts	Mortgage banking income		189		1,324
Total		$	1,460	$	50

Credit-risk-related contingent features

The Company has agreements with its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness for reasons other than an error or omission of an administrative or operational nature, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

The Company also has agreements with certain of its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well/adequately capitalized institution, then the counterparty has the right to terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

As of December 31, 2019, the termination value of derivatives in a net liability position related to these agreements was $22.6 million, which includes accrued interest but excludes any adjustment for nonperformance risk. The Company has minimum collateral posting thresholds with certain of its derivative counterparties and, as of December 31, 2019, the Company had posted $26.2 million in eligible collateral. If the Company had breached any of these provisions at December 31, 2019, it could have been required to settle its obligations under the agreements at the termination value.

Note 21 Commitments and Contingencies

In the normal course of business, the Company enters into various off-balance sheet commitments to help meet the financing needs of clients. These financial instruments include commitments to extend credit, commercial and consumer lines of credit and standby letters of credit. The same credit policies are applied to these commitments as the loans on the consolidated statements of financial condition; however, these commitments involve varying degrees of credit risk in excess of the amount recognized in the consolidated statements of financial condition. At December 31, 2019 and 2018, the Company had loan commitments totaling $850.3 million and $773.5 million, respectively, and standby letters of credit that totaled $11.9 million and $10.6 million, respectively. The total amounts of unused commitments do not necessarily represent future credit exposure or cash requirements, as commitments often expire without being drawn upon. However, the contractual amount of these commitments, offset by any additional collateral pledged, represents the Company’s potential credit loss exposure.

Total unfunded commitments at December 31, 2019 and 2018 were as follows:

	December 31, 2019		December 31, 2018
Commitments to fund loans	$	249,914	$	183,946
Unfunded commitments under lines of credit		600,407		589,573
Commercial and standby letters of credit		11,929		10,558
Total unfunded commitments	$	862,250	$	784,077

Commitments to fund loans—Commitments to fund loans are legally binding agreements to lend to clients in accordance with predetermined contractual provisions providing there have been no violations of any conditions specified in the contract. These commitments are generally at variable interest rates and are for specific periods or contain termination clauses and may require the payment of a fee. The total amounts of unused commitments are not necessarily representative of future credit exposure or cash requirements, as commitments often expire without being drawn upon.

Unfunded commitments under lines of credit—In the ordinary course of business, the Company extends revolving credit to its clients. These arrangements may require the payment of a fee.

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Commercial and standby letters of credit—As a provider of financial services, the Company routinely issues commercial and standby letters of credit, which may be financial standby letters of credit or performance standby letters of credit. These are various forms of “back-up” commitments to guarantee the performance of a client to a third party. While these arrangements represent a potential cash outlay for the Company, the majority of these letters of credit will expire without being drawn upon. Letters of credit are subject to the same underwriting and credit approval process as traditional loans, and as such, many of them have various forms of collateral securing the commitment, which may include real estate, personal property, receivables or marketable securities.

Contingencies

Mortgage loans sold to investors may be subject to repurchase or indemnification in the event of specific default by the borrower or subsequent discovery that underwriting standards were not met. The Company established a reserve liability for expected losses related to these representations and warranties based upon management’s evaluation of actual and historic loss history, delinquency trends in the portfolio and economic conditions. The Company recorded a repurchase reserve of $2.6 million and $3.4 million at December 31, 2019 and 2018, respectively, which is included in other liabilities on the consolidated statements of financial condition.

In the ordinary course of business, the Company and the Bank may be subject to litigation. Based upon the available information and advice from the Company’s legal counsel, management does not believe that any potential, threatened or pending litigation to which it is a party will have a material adverse effect on the Company’s liquidity, financial condition or results of operations.

Note 22 Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to disclose the fair value of its financial instruments. 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. For disclosure purposes, the Company groups its financial and non-financial assets and liabilities into three different levels based on the nature of the instrument and the availability and reliability of the information that is used to determine fair value. The three levels are defined as follows:

● Level 1—Includes assets or liabilities in which the valuation methodologies are based on unadjusted quoted prices in active markets for identical assets or liabilities.

● Level 2—Includes assets or liabilities in which the inputs to the valuation methodologies are based on similar assets or liabilities in inactive markets, quoted prices for identical or similar assets or liabilities in inactive markets, and inputs other than quoted prices that are observable, such as interest rates, yield curves, volatilities, prepayment speeds, and other inputs obtained from observable market input.

● Level 3—Includes assets or liabilities in which the inputs to the valuation methodology are based on at least one significant assumption that is not observable in the marketplace. These valuations may rely on management’s judgment and may include internally-developed model-based valuation techniques.

Level 1 inputs are considered to be the most transparent and reliable and level 3 inputs are considered to be the least transparent and reliable. The Company assumes the use of the principal market to conduct a transaction of each particular asset or liability being measured and then considers the assumptions that market participants would use when pricing the asset or liability. Whenever possible, the Company first looks for quoted prices for identical assets or liabilities in active markets (level 1 inputs) to value each asset or liability. However, when inputs from identical assets or liabilities on active markets are not available, the Company utilizes market observable data for similar assets and liabilities. The Company maximizes the use of observable inputs and limits the use of unobservable inputs to occasions when observable inputs are not available. The need to use unobservable inputs generally results from the lack of market liquidity of the actual financial instrument or of the underlying collateral. While third party price indications may be available in those cases, limited trading activity can challenge the observability of those inputs.

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Changes in the valuation inputs used for measuring the fair value of financial instruments may occur due to changes in current market conditions or other factors. Such changes may necessitate a transfer of the financial instruments to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfer occurs. During 2019 and 2018, there were no transfers of financial instruments between the hierarchy levels.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of each instrument under the valuation hierarchy:

Fair Value of Financial Instruments Measured on a Recurring Basis

Investment securities available-for-sale—Investment securities available-for-sale are carried at fair value on a recurring basis. To the extent possible, observable quoted prices in an active market are used to determine fair value and, as such, these securities are classified as level 1. At December 31, 2019 and 2018, the Company did not hold any level 1 securities. When quoted market prices in active markets for identical assets or liabilities are not available, quoted prices of securities with similar characteristics, discounted cash flows or other pricing characteristics are used to estimate fair values and the securities are then classified as level 2.

Loans held for sale—The Company has elected to record loans originated and intended for sale in the secondary market at estimated fair value. The portfolio consists primarily of fixed rate residential mortgage loans that are sold within 45 days. The Company estimates fair value based on quoted market prices for similar loans in the secondary market and is classified as level 2.

Interest rate swap derivatives—The Company's derivative instruments are limited to interest rate swaps that may be accounted for as fair value hedges or non-designated hedges. The fair values of the swaps incorporate credit valuation adjustments in order to appropriately reflect nonperformance risk in the fair value measurements. The credit valuation adjustment is the dollar amount of the fair value adjustment related to credit risk and utilizes a probability weighted calculation to quantify the potential loss over the life of the trade. The credit valuation adjustments are calculated by determining the total expected exposure of the derivatives (which incorporates both the current and potential future exposure) and then applying the respective counterparties’ credit spreads to the exposure offset by marketable collateral posted, if any. Certain derivative transactions are executed with counterparties who are large financial institutions ("dealers"). International Swaps and Derivative Association Master Agreements and Credit Support Annexes are employed for all contracts with dealers. These contracts contain bilateral collateral arrangements. The fair value inputs of these financial instruments are determined using discounted cash flow analysis through the use of third-party models whose significant inputs are readily observable market parameters, primarily yield curves, with appropriate adjustments for liquidity and credit risk, and are classified as level 2.

Mortgage banking derivatives—The Company relies on a third-party pricing service to value its mortgage banking derivative financial assets and liabilities, which the Company classifies as a level 3 valuation. The external valuation model to estimate the fair value of its interest rate lock commitments to originate residential mortgage loans held for sale includes grouping the interest rate lock commitments by interest rate and terms, applying an estimated pull-through rate based on historical experience, and then multiplying by quoted investor prices determined to be reasonably applicable to the loan commitment groups based on interest rate, terms, and rate lock expiration dates of the loan commitment groups. The Company also relies on an external valuation model to estimate the fair value of its forward commitments to sell residential mortgage loans (i.e., an estimate of what the Company would receive or pay to terminate the forward delivery contract based on market prices for similar financial instruments), which includes matching specific terms and maturities of the forward commitments against applicable investor pricing.

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The tables below present the financial instruments measured at fair value on a recurring basis as of December 31, 2019 and 2018, on the consolidated statements of financial condition utilizing the hierarchy structure described above:

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities available-for-sale:
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	—	$	95,256	$	—	$	95,256
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		—		542,037		—		542,037
Municipal securities		—		372		—		372
Loans held for sale		—		117,444		—		117,444
Interest rate swap derivatives		—		10,175		—		10,175
Mortgage banking derivatives		—		—		1,515		1,515
Total assets at fair value	$	—	$	765,284	$	1,515	$	766,799
Liabilities:
Interest rate swap derivatives	$	—	$	22,558	$	—	$	22,558
Mortgage banking derivatives		—		—		440		440
Total liabilities at fair value	$	—	$	22,558	$	440	$	22,998

	December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities available-for-sale:
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	—	$	146,642	$	—	$	146,642
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		—		643,381		—		643,381
Municipal securities		—		441		—		441
Loans held for sale		—		48,120		—		48,120
Interest rate swap derivatives		—		20,627		—		20,627
Mortgage banking derivatives		—		—		871		871
Total assets at fair value	$	—	$	859,211	$	871	$	860,082
Liabilities:
Interest rate swap derivatives	$	—	$	3,577	$	—	$	3,577
Mortgage banking derivatives		—		—		544		544
Total liabilities at fair value	$	—	$	3,577	$	544	$	4,121

The table below details the changes in level 3 financial instruments during 2019:

		Mortgage banking
		derivatives, net
Balance at December 31, 2018	$	327
Gain included in earnings, net		1,327
Fees and costs included in earnings, net		(579)
Balance at December 31, 2019	$	1,075

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Fair Value of Financial Instruments Measured on a Non-recurring Basis

Certain assets may be recorded at fair value on a non-recurring basis as conditions warrant. These non-recurring fair value measurements typically result from the application of lower of cost or fair value accounting or a write-down occurring during the period.

Impaired loans—The Company records collateral dependent loans that are considered to be impaired at their estimated fair value. A loan is considered impaired when it is probable that the Company will be unable to collect all contractual amounts due in accordance with the terms of the loan agreement. Collateral dependent impaired loans are measured based on the fair value of the collateral. The Company relies on third-party appraisals and internal assessments, utilizing a discount rate in the range of 0% - 25%, in determining the estimated fair values of these loans. The inputs used to determine the fair values of loans are considered level 3 inputs in the fair value hierarchy. At December 31, 2019, the Company recorded a specific reserve of $1.8 million related to seven originated and acquired loans with a carrying balance of $5.9 million. At December 31, 2018, the Company recorded a specific reserve balance of $1.1 million related to four originated and acquired loans at fair value on a non-recurring basis with a carrying balance of $4.9 million.

OREO—OREO is recorded at the fair value of the collateral less estimated selling costs. The estimated fair values of OREO are updated periodically and further write-downs may be taken to reflect a new basis. The Company recognized $1.1 million and $0.2 million of OREO impairments in its consolidated statements of operations during 2019 and 2018, respectively. The fair values of OREO are derived from third party price opinions or appraisals that generally use an income approach or a market value approach. If reasonable comparable appraisals are not available, then the Company may use internally developed models to determine fair values. The inputs used to determine the fair value of OREO properties are considered level 3 inputs in the fair value hierarchy.

Mortgage servicing rights—Mortgage servicing rights represent the value associated with servicing residential real estate loans that have been sold to outside investors with servicing retained. The fair value for servicing assets is determined through discounted cash flow analysis and utilizes discount rates ranging from 9.5% to 10.5% at December 31, 2019 and prepayment speed assumption ranges of 14.8% to 22.0% at December 31, 2019 as inputs. Discount rates ranged from 9.5% to 10.5% and the prepayment speed ranged from 12.2% to 17.2% for the December 31, 2018 valuation. Mortgage servicing rights are subject to impairment testing. The carrying values of these rights are reviewed quarterly for impairment based upon the calculation of fair value. For purposes of measuring impairment, the rights are stratified into certain risk characteristics including note type and note term. If the valuation model reflects a value less than the carrying value, mortgage servicing rights are adjusted to fair value through a valuation allowance. The Company recognized $129 thousand and $21 thousand of mortgage servicing rights impairment during the years ended December 31, 2019 and 2018, which is included in mortgage banking income on the consolidated statements of operations. The inputs used to determine the fair values of mortgage servicing rights are considered level 3 inputs in the fair value hierarchy.

Premises and equipment—During the fourth quarter of 2019, the Company consolidated four banking centers in the Colorado and Kansas City markets. Premise and equipment held-for-sale are written down to estimated fair value less costs to sell in the period in which the held-for-sale criteria are met. Fair value is estimated in a process which considers current local commercial real estate market conditions and the judgment of the sales agent and often involves obtaining third party appraisals from certified real estate appraisers. These fair value measurements are classified as Level 3. Unobservable inputs to these measurements, which include estimates and judgments often used in conjunction with appraisals, are not readily quantifiable. The Company recognized $0.9 million of impairment in its consolidated statements of operations related to banking centers classified as held-for-sale totaling $3.4 million during the year ended December 31, 2019.

The Company may be required to record fair value adjustments on other available-for-sale and municipal securities valued at par on a non-recurring basis.

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The tables below provide information regarding the assets recorded at fair value on a non-recurring basis at December 31, 2019 and 2018. The premises and equipment loss was measured as of the third quarter of 2019.

	December 31, 2019
	Total		Losses from fair value changes
Impaired loans	$	32,763	$	8,271
Other real estate owned		7,300		1,082
Premises and equipment		3,385		898
Mortgage servicing rights		2,630		129
Total	$	46,078	$	10,380

	December 31, 2018
	Total		Losses from fair value changes
Impaired loans	$	31,079	$	2,120
Other real estate owned		10,596		230
Mortgage servicing rights		3,556		21
Total	$	45,231	$	2,371

The Company did not record any liabilities measured at fair value on a non-recurring basis during 2019 and 2018.

Note 23 Fair Value of Financial Instruments

The fair value of a financial instrument is the amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is determined based upon quoted market prices to the extent possible; however, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques that may be significantly impacted by the assumptions used, including the discount rate and estimates of future cash flows. Changes in any of these assumptions could significantly affect the fair value estimates. The fair value of the financial instruments listed below does not reflect a premium or discount that could result from offering all of the Company’s holdings of financial instruments at one time, nor does it reflect the underlying value of the Company, as ASC Topic 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies and are based on the exit price concept within ASC Topic 825 and applied to this disclosure on a prospective basis. Considerable judgment is required to interpret market data in order to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange.

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The fair value of financial instruments at December 31, 2019 and 2018 are set forth below:

	Level in fair value	December 31, 2019				December 31, 2018
	measurement	Carrying		Estimated		Carrying		Estimated
	hierarchy	amount		fair value		amount		fair value
ASSETS
Cash and cash equivalents	Level 1	$	110,190	$	110,190	$	109,556	$	109,556
Mortgage-backed securities—residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises available-for-sale	Level 2		95,256		95,256		146,642		146,642
Mortgage-backed securities—other residential mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored enterprises available-for-sale	Level 2		542,037		542,037		643,381		643,381
Municipal securities available-for-sale	Level 2		372		372		441		441
Municipal securities available-for-sale	Level 3		115		115		169		169
Other available-for-sale securities	Level 3		469		469		469		469
Mortgage-backed securities—residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	Level 2		127,560		128,770		157,115		154,412
Mortgage-backed securities—other residential mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	Level 2		55,324		54,971		78,283		76,514
Non-marketable securities	Level 2		29,751		29,751		27,555		27,555
Loans receivable	Level 3		4,415,406		4,481,209		4,092,308		4,082,146
Loans held for sale	Level 2		117,444		117,444		48,120		48,120
Accrued interest receivable	Level 2		19,157		19,157		17,852		17,852
Interest rate swap derivatives	Level 2		10,175		10,175		20,627		20,627
Mortgage banking derivatives	Level 3		1,515		1,515		871		871
LIABILITIES
Deposit transaction accounts	Level 2		3,678,979		3,678,979		3,445,092		3,445,092
Time deposits	Level 2		1,058,153		1,058,354		1,080,529		1,068,233
Securities sold under agreements to repurchase	Level 2		56,935		56,935		66,047		66,047
Federal Home Loan Bank advances	Level 2		207,675		207,890		301,660		301,933
Accrued interest payable	Level 2		9,328		9,328		6,889		6,889
Interest rate swap derivatives	Level 2		22,558		22,558		3,577		3,577
Mortgage banking derivatives	Level 3		440		440		544		544

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Note 24 Parent Company Only Financial Statements

Parent company only financial information for National Bank Holdings Corporation is summarized as follows:

Condensed Statements of Financial Condition

	December 31, 2019		December 31, 2018
ASSETS
Cash and cash equivalents	$	105,012	$	71,997
Investment in subsidiaries		654,508		612,784
Other assets		18,095		21,002
Total assets	$	777,615	$	705,783
LIABILITIES AND STOCKHOLDERS’ EQUITY
Other liabilities	$	10,695	$	10,777
Total liabilities		10,695		10,777
Shareholders’ equity		766,920		695,006
Total liabilities and shareholders’ equity	$	777,615	$	705,783

Condensed Statements of Operations

	For the years ended December 31,
	2019		2018		2017
Income
Interest income	$	—	$	112	$	45
Equity in undistributed earnings (losses) of subsidiaries		28,133		19,682		(11,192)
Distributions from subsidiaries		55,725		47,338		28,903
Total income		83,858		67,132		17,756
Expenses
Salaries and benefits		4,925		4,455		3,680
Other expenses		2,463		4,467		3,587
Total expenses		7,388		8,922		7,267
Income before income taxes		76,470		58,210		10,489
Income tax benefit		(3,895)		(3,241)		(4,090)
Net income	$	80,365	$	61,451	$	14,579

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Condensed Statements of Cash Flows

	For the years ended December 31,
	2019		2018		2017
Cash flows from operating activities:
Net income	$	80,365	$	61,451	$	14,579
Equity in undistributed (earnings) losses of subsidiaries		(28,133)		(19,682)		11,192
Stock-based compensation expense		4,869		4,420		3,648
Net excess tax benefit on stock-based compensation		(2,160)		(1,286)		(4,225)
Other		5,045		9,230		6,680
Net cash provided by operating activities		59,986		54,133		31,874
Cash flows from investing activities:
Outlay for business combinations		—		(36,189)		—
Net cash used in investing activities		—		(36,189)		—
Cash flows from financing activities:
Capital contribution		—		—		(5,000)
Issuance of stock under purchase and equity compensation plans		(6,229)		(772)		(8,395)
Proceeds from exercise of stock options		2,788		7,576		104
Payment of dividends		(23,530)		(16,624)		(9,401)
Net cash used in financing activities		(26,971)		(9,820)		(22,692)
Net increase in cash, cash equivalents and restricted cash		33,015		8,124		9,182
Cash, cash equivalents and restricted cash at beginning of the year		81,997		73,873		64,691
Cash, cash equivalents and restricted cash at end of the year	$	115,012	$	81,997	$	73,873

Note 25 Quarterly Results of Operations (unaudited)

The following is a summary of quarterly results:

	December 31, 2019
	Fourth		Third		Second		First
	quarter		quarter		quarter		quarter		Total
Interest and dividend income	$	59,616	$	61,372	$	62,193	$	59,420	$	242,601
Interest expense		9,228		9,587		9,702		8,254		36,771
Net interest income before provision for loan losses		50,388		51,785		52,491		51,166		205,830
Provision for loan losses		1,180		5,690		3,239		1,534		11,643
Net interest income after provision for loan losses		49,208		46,095		49,252		49,632		194,187
Non-interest income		20,282		24,759		20,660		17,051		82,752
Non-interest expense		46,107		43,793		46,451		44,394		180,745
Income before income taxes		23,383		27,061		23,461		22,289		96,194
Income tax expense		3,864		5,419		3,179		3,367		15,829
Net income	$	19,519	$	21,642	$	20,282	$	18,922	$	80,365
Earnings per share-basic	$	0.62	$	0.69	$	0.65	$	0.61	$	2.57
Earnings per share-diluted		0.62		0.69		0.64		0.60		2.55

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	December 31, 2018
	Fourth		Third		Second		First
	quarter		quarter		quarter		quarter		Total
Interest and dividend income	$	57,780	$	55,909	$	54,911	$	52,791	$	221,391
Interest expense		7,148		6,137		5,525		5,144		23,954
Net interest income before provision for loan losses		50,632		49,772		49,386		47,647		197,437
Provision for loan losses		2,476		807		1,873		41		5,197
Net interest income after provision for loan losses		48,156		48,965		47,513		47,606		192,240
Non-interest income		15,317		18,061		19,562		17,835		70,775
Non-interest expense		42,857		44,432		46,763		55,282		189,334
Income before income taxes		20,616		22,594		20,312		10,159		73,681
Income tax expense		3,381		4,354		2,800		1,695		12,230
Net income	$	17,235	$	18,240	$	17,512	$	8,464	$	61,451
Earnings per share-basic	$	0.56	$	0.59	$	0.57	$	0.28	$	2.00
Earnings per share-diluted		0.55		0.58		0.56		0.27		1.95

	December 31, 2017
	Fourth		Third		Second		First
	quarter		quarter		quarter		quarter		Total
Interest and dividend income	$	41,889	$	42,579	$	41,213	$	38,740	$	164,421
Interest expense		4,976		4,681		4,440		4,018		18,115
Net interest income before provision for loan losses		36,913		37,898		36,773		34,722		146,306
Provision for loan losses		3,272		3,880		4,025		1,795		12,972
Net interest income after provision for loan losses		33,641		34,018		32,748		32,927		133,334
Non-interest income		8,883		9,551		12,075		8,696		39,205
Non-interest expense		34,028		34,605		33,439		34,605		136,677
Income before income taxes		8,496		8,964		11,384		7,018		35,862
Income tax expense (benefit)		18,615		1,733		2,175		(1,240)		21,283
Net (loss) income	$	(10,119)	$	7,231	$	9,209	$	8,258	$	14,579
(Loss) earnings per share-basic	$	(0.37)	$	0.27	$	0.34	$	0.31	$	0.54
(Loss) earnings per share-diluted		(0.37)		0.26		0.33		0.30		0.53

Note 26 Acquisition Activities

On January 1, 2018, the Company completed its acquisition of Peoples, Inc. (“Peoples”), the bank holding company of Colorado-based Peoples National Bank and Kansas-based Peoples Bank. Immediately following the completion of the acquisition, Peoples National Bank and Peoples Bank merged into NBH Bank. Pursuant to the merger agreement executed in June 2017, the Company paid $36.2 million of cash consideration and 3,398,477 shares of the Company’s Class A common stock in exchange for all of the outstanding common stock of Peoples. Included in the cash consideration is $10.0 million of restricted cash placed in escrow for certain potential liabilities for which the Company is indemnified pursuant to the merger agreement. The restricted cash is included in other assets in the Company’s consolidated statements of financial condition at December 31, 2019. The transaction was valued at $146.4 million in the aggregate, based on the Company’s closing price of $32.43 on the acquisition date. Acquisition-related costs of $8.0 million on a pre-tax basis were included in the Company’s consolidated statements of operations for the year ended December 31, 2018. The results of Peoples are included in the results of the Company subsequent to the acquisition date.

The Company determined that this acquisition constitutes a business combination as defined in ASC Topic 805. Accordingly, as of the date of the acquisition, the Company recorded the assets acquired and liabilities assumed at fair value. The Company determined fair values in accordance with the guidance provided in ASC Topic 820. Fair value is established by discounting the expected future cash flows with a market discount rate for like maturities and risk instruments. The estimation of expected future cash flows, market conditions and other future events and actual results could differ materially. The determination of the fair values of fixed assets, loans, OREO, core deposit intangible, mortgage servicing rights and mortgage repurchase reserve involves a high degree of judgment and complexity.

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The table below summarizes the net assets acquired (at fair value) and consideration transferred in connection with the Peoples acquisition:

Assets:
Cash and due from banks	$	105,173
Investment securities available-for-sale		118,512
Non-marketable securities		4,796
Loans		542,707
Loans held for sale		54,260
Other real estate owned		1,253
Premises and equipment		18,584
Core deposit intangible asset		10,477
Mortgage servicing rights		4,301
Other assets		15,361
Total assets acquired		875,424
Liabilities:
Total deposits		729,911
FHLB borrowings		33,825
Other liabilities		20,683
Total liabilities assumed		784,419
Identifiable net assets acquired	$	91,005
Consideration:
NBHC common stock paid at January 1, 2018, closing price of $32.43	$	110,213
Cash		36,189
Total		146,402
Goodwill	$	55,397

In connection with the Peoples acquisition, the Company recorded $55.4 million of goodwill, a $10.5 million core deposit intangible asset, a $4.3 million mortgage servicing rights intangible asset and a $4.0 million mortgage repurchase reserve, included in other liabilities. The core deposit intangible is being amortized straight-line over ten years and the mortgage servicing rights intangible is amortized in proportion to and over the period of the estimated net servicing income. The FHLB borrowings of $33.8 million were paid off during the first quarter of 2018. The goodwill associated with this transaction is not tax deductible.

At the date of acquisition, the gross contractual amounts receivable, inclusive of all principal and interest, was $713.6 million. The Company’s best estimate of the contractual principal cash flows for loans not expected to be collected was $2.1 million.

The following unaudited pro forma information combines the historical results of Peoples and the Company. In accordance with the merger agreement, the Peoples national mortgage business was wound down prior to acquisition. Accordingly, the pro forma information excludes the results of the Peoples national mortgage business for prior periods presented. The pro forma financial information does not include the potential impacts of possible business model changes, current market conditions, revenue enhancements, expense efficiencies, or other factors.

If the Peoples acquisition had been completed on January 1, 2017, pro forma total revenue for the Company would have been approximately $268.2 million and $266.5 million for the years ended December 31, 2018 and 2017, respectively. Pro forma net income for the Company would have been approximately $67.8 million and $16.6 million for the years ended December 31, 2018 and 2017, respectively. Pro forma basic and dilutive earnings per share for the Company would have been $2.20 and $2.16 for the year ended December 31, 2018, respectively, and $0.55 and $0.53 for the year ended December 31, 2017, respectively.

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For the year ended December 31, 2018, the pro forma information reflects adjustments made to exclude acquisition-related expenses of the Company of $8.0 million. For the year ended December 31, 2017, the pro-forma information reflects adjustments made to exclude acquisition-related expenses of the Company of $2.7 million and include estimated amortization and accretion of purchase discounts and premiums of $0.7 million in addition to estimated amortization of acquired identifiable intangibles of $1.0 million. The pro forma information is theoretical in nature and not necessarily indicative of future consolidated results of operations of the Company or the consolidated results of operations which would have resulted had the Company acquired Peoples during the periods presented.

The Company has determined that it is impractical to report the amounts of revenue and earnings of legacy Peoples since the acquisition date. Peoples operations were completely integrated shortly after the acquisition date. Accordingly, reliable and separate complete revenue and earnings information is no longer available. In addition, such amounts would require significant estimates related to the proper allocation of merger cost savings that cannot be objectively made.

Note 27 Subsequent Event

On February 26, 2020, the Company’s Board of Directors authorized a new program to repurchase up to $50.0 million 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 Securities and Exchange Commission. Total authorization under the Company’s repurchase programs is $62.6 million, including $12.6 million remaining from the previously authorized stock repurchase program announced in August 2016.

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Item 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.

There were no changes in or disagreements with accountants on accounting and financial disclosures.

Item 9A.   CONTROLS AND PROCEDURES.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

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 December 31, 2019. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2019.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our management, with the participation of our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2019 based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2019. KPMG LLP, the independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, has issued a report on our internal control over financial reporting as of December 31, 2019, which report is included in this Item 9A below.

Changes in Internal Control Over Financial Reporting

There were no changes made in the Company's 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, the Company's internal control over financial reporting.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

National Bank Holdings Corporation:

Opinion on Internal Control Over Financial Reporting

We have audited National Bank Holdings Corporation and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial condition of the Company as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019 and the related notes (collectively, the consolidated financial statements), and our report dated February 26, 2020 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Kansas City, Missouri

February 26, 2020

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Item 9B.     OTHER INFORMATION.

None.

PART III

Item 10.       DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The Information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2020 Annual Meeting of Shareholders to be filed with the SEC within 120 days of our fiscal year-end.

The Company's Supplemental Code of Ethics for CEO and Senior Financial Officers, which applies to the CEO, Chief Financial Officer and Principal Accounting Officer, is available at www.nationalbankholdings.com. Amendments to, and waivers of, the code of ethics are publicly disclosed as required by applicable law, regulation or rule.

Item 11.       EXECUTIVE COMPENSATION.

The Information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2020 Annual Meeting of Shareholders to be filed with the SEC within 120 days of our fiscal year-end.

Item 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS.

The Information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2020 Annual Meeting of Shareholders to be filed with the SEC within 120 days of our fiscal year-end.

Item 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The Information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2020 Annual Meeting of Shareholders to be filed with the SEC within 120 days of our fiscal year-end.

Item 14.       PRINCIPAL ACCOUNTING FEES AND SERVICES.

The Information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2020 Annual Meeting of Shareholders to be filed with the SEC within 120 days of our fiscal year-end.

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PART IV

Item 15.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) The following documents are filed as a part of this report:

(1) Financial Statements:

	Page
Consolidated Statements of Financial Condition	71
Consolidated Statements of Operations	72
Consolidated Statements of Comprehensive Income	73
Consolidated Statements of Changes in Shareholders’ Equity	74
Consolidated Statements of Cash Flows	75
Notes to Consolidated Financial Statements	76

(2) Financial Statement Schedules:

All schedules are omitted as such information is inapplicable or is included in the financial statements.

(b) The exhibits filed as part of this report and exhibits incorporated herein by reference to other documents are listed below:

Exhibit No	Description
2.1*	Agreement and Plan Merger, dated as of June 23, 2017, by and among Peoples, Inc., National Bank Holdings Corporation, the Significant Stockholders (as defined herein) and Winton A. Winter, Jr., solely in his capacity as the Holders’ Representative (incorporated herein by reference to Exhibit 2.1 to our Form 8-K dated June 23, 2017 and filed on June 27, 2017)
3.1	Second Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to our Form S-1 Registration Statement (Registration No. 333-177971), filed on August 22, 2012)
3.2	Second Amended and Restated By-Laws (incorporated herein by reference to Exhibit 3.2 to our Form 10-Q, filed on November 7, 2014)
4.1	Specimen common stock certificate (incorporated herein by reference to Exhibit 4.1 to our Form S-1 Registration Statement (Registration No. 333-177971), filed on August 22, 2012)
4.2	Description of Capital Stock (filed herewith)
10.1	Form of Indemnification Agreement by and between NBH Holdings Corp. and each of its directors and executive officers (incorporated herein by reference to Exhibit 10.6 to our Form S-1 Registration Statement (Registration Statement No. 333-177971), filed on September 10, 2012)˄
10.2	Employment Agreement, dated May 22, 2010, by and between G. Timothy Laney and NBH Holdings Corp. (incorporated herein by reference to Exhibit 10.1 to our Form S-1 Registration Statement (Registration Statement No. 333-177971), filed on September 10, 2012)˄
10.3	First Amendment to Employment Agreement, dated November 17, 2015, by and between G. Timothy Laney and National Bank Holdings Corporation (incorporated herein by reference to Exhibit 10.2 to our Form 8-K, filed on November 20, 2015)˄

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10.4	Amended and Restated Employment Agreement, dated November 17, 2015, by and between Richard U. Newfield, Jr. and National Bank Holdings Corporation (incorporated herein by reference to Exhibit 10.4 to our Form 8-K, filed on November 20, 2015)˄
10.5	Employment Agreement, dated November 17, 2015, by and between Brian F. Lilly and National Bank Holdings Corporation (incorporated herein by reference to Exhibit 10.3 to our Form 8-K, filed on November 20, 2015)˄
10.6	Transition Agreement, dated May 2, 2018, by and between Brian F. Lilly and National Bank Holdings Corporation (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on May 2, 2018)˄
10.7	Employment Agreement, dated November 17, 2015, by and between Zsolt K. Besskó and National Bank Holdings Corporation (incorporated herein by reference to Exhibit 10.5 to our Form 8-K, filed on November 20, 2015)˄
10.8	Employment Agreement, dated May 2, 2018, by and between Aldis Birkans and National Bank Holdings Corporation (incorporated herein by reference to Exhibit 10.2 to our Form 8-K, filed on May 2, 2018)˄
10.9	National Bank Holdings Corporation Employee Stock Purchase Plan (incorporated herein by reference to Annex A to the Company’s Definitive Proxy Statement on Schedule 14A, filed on March 30, 2015)˄
10.10	NBH Holdings Corp. 2009 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.2 to our Form S-1 Registration Statement (Registration No. 333-177971), filed on November 14, 2011)˄
10.11	Amendment to the NBH Holdings Corp. 2009 Equity Incentive Plan dated February 22, 2017 (incorporated herein by reference to Exhibit 10.10 to our form 10-K, filed on February 24, 2017)˄
10.12	National Bank Holdings Corporation 2014 Omnibus Incentive Plan (incorporated herein by reference to Annex A to the Company’s Definitive Proxy Statement on Schedule 14A, filed on March 31, 2014)˄
10.13	Form of National Bank Holdings Corporation 2014 Omnibus Incentive Plan Performance Stock Unit Award Agreement (For Management) (filed herewith)˄
10.14	Form of National Bank Holdings Corporation 2014 Omnibus Incentive Plan Restricted Stock Award Agreement (For Management) (filed herewith)˄
10.15	Form of National Bank Holdings Corporation 2014 Omnibus Incentive Plan Nonqualified Stock Option Agreement (For Management) (filed herewith)˄
10.16	Form of National Bank Holdings Corporation 2014 Omnibus Incentive Plan Restricted Stock Award Agreement (For Non-Employee Directors) (incorporated herein by reference to Exhibit 10.4 to our Form 10-Q, filed on May 9, 2014)˄
10.17	Support Agreement, dated as of June 23, 2017, by and among Peoples, Inc., National Bank Holdings Corporation and the undersigned stockholders of Peoples, Inc. (incorporated herein by reference to Exhibit 10.1 to our Form 8-K dated June 23, 2017 and filed on June 27, 2017)
10.18	Change of Control Agreement applicable to executive officers not party to an employee agreement (incorporated herein by reference to Exhibit 10.17 to our form 10-K, filed on February 28, 2018)˄

127

21.1	Subsidiaries of National Bank Holdings Corporation
23.1	Consent of KPMG LLP
31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certifications of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation
101.DEF	XBRL Taxonomy Extension Definition
101.LAB	XBRL Taxonomy Extension Labels
101.PRE	XBRL Taxonomy Extension Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request.

^˄ Indicates a management contract or compensatory plan.

128

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on February 26, 2020, on its behalf by the undersigned, thereunto duly authorized.

National Bank Holdings Corporation

By	/s/ G. Timothy Laney
	G. Timothy Laney
	Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 26, 2020, by the following persons on behalf of the registrant and in the capacities indicated.

129

/s/ G. TIMOTHY LANEY

G. Timothy Laney

Chairman, President and Chief Executive Officer

(principal executive officer)

/s/ ALDIS BIRKANS

Aldis Birkans

Chief Financial Officer

(principal financial officer)

/s/ NICOLE VAN DENABEELE

Nicole Van Denabeele

Chief Accounting Officer

(principal accounting officer)

/s/ RALPH W. CLERMONT

Ralph W. Clermont, Lead Director

/s/ ROBERT E. DEAN

Robert E. Dean, Director

/s/ FRED J. JOSEPH

Fred J. Joseph, Director

/s/ MICHO F. SPRING

Micho F. Spring, Director

/s/ BURNEY S. WARREN, III

Burney S. Warren, III, Director

/s/ ART ZEILE

Art Zeile, Director

130

EX-4.2

Exhibit 4.2

DESCRIPTION OF CAPITAL STOCK

General

The following is a summary of information concerning capital stock of National Bank Holdings Corporation. The summaries and descriptions below do not purport to be complete.  It is subject to and qualified in its entirety by reference to our Second Amended and Restated Certificate of Incorporation (our “certificate of incorporation”) and our Second Amended and Restated Bylaws (our “bylaws”), each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.2 is a part.  We encourage you to read our certificate of incorporation, our bylaws, and applicable Delaware law.

Our certificate of incorporation authorizes us to issue 200,000,000 shares of Class A common stock, $0.01 par value per share, or our “Class A common stock,” 200,000,000 shares of Class B non-voting common stock, $0.01 par value per share, or “Class B non-voting common stock,” and 50,000,000 shares of preferred stock, $0.01 par value per share, or “preferred stock.”   There are currently no shares of Class B non-voting common stock outstanding.

Common Stock

Class A Common Stock and Class B Non-Voting Common Stock

Our certificate of incorporation provides that, except with respect to voting rights and conversion rights, the Class A common stock and Class B non-voting common stock will be treated equally and identically.

Voting Power.  Except as otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock, the holders of Class A common stock possess all voting power for the election of our directors and all other matters requiring stockholder action, except with respect to amendments to our certificate of incorporation that alter or change the powers, preferences, rights or other terms of any outstanding preferred stock if the holders of such affected series of preferred stock are entitled to vote on such an amendment.  Holders of Class A common stock are entitled to one vote per share on matters to be voted on by stockholders.  Holders of Class B non-voting common stock have no voting power, and have no right to participate in any meeting of stockholders or to have notice thereof, except as required by applicable law and except that any action that would significantly and adversely affect the rights of the Class B non-voting common stock with respect to the modification of the terms of the securities or dissolution will require the approval of the Class B non-voting common stock voting separately as a class.  Except as otherwise provided by law, our certificate of incorporation or our bylaws, or in respect of the election of directors, all matters to be voted on by our stockholders must be approved by a majority of the shares present in person or by proxy at the meeting and entitled to vote on the subject matter.  In the case of an election of directors, where a quorum is present a plurality of the votes cast shall be sufficient to elect each director.

Conversion of Class B Non-Voting Common Stock.  Each share of Class B non-voting common stock is convertible into a share of Class A common stock at the option of the holder.  However, each share of Class B non-voting common stock is not convertible in the hands of the initial holder and is only convertible at the time it is transferred to a third party unaffiliated with such initial holder, subject to the transfer restrictions described in the next sentence, if and only to the extent such conversion would not, after giving effect to such conversion, cause the transferee (together with such transferee’s related persons and any persons with which such transferee is acting in concert) to own, control or have the power to vote shares in excess of the ownership limit described below.  Shares of Class B non-voting common stock may only be transferred through one or more of the following alternatives:  (1) to an affiliate of a holder or to the Company, (2) in a widely dispersed public offering, (3) in a private sale in which no purchaser would acquire Class A common stock and/or Class B non-voting common stock in an amount that, after the conversion of such Class B non-voting common stock into Class A common stock, is (or represents) 2% or more of a class of our voting securities or (4) to a purchaser acquiring majority control of the Company notwithstanding such transfer.

Dividends.  Holders of Class A common stock and Class B non-voting common stock are equally entitled to receive such dividends, if any, as may be declared from time to time by our board of directors in its discretion out of

funds legally available therefor.  In no event will any stock dividends or stock splits or combinations of stock be declared or made on Class A common stock or Class B non-voting common stock unless shares of Class A common stock and Class B non-voting common stock at the time outstanding are treated equally and identically, provided that, in the event of a dividend of common stock, shares of Class B non-voting common stock shall only be entitled to receive shares of Class B non-voting common stock and shares of Class A common stock shall only be entitled to receive shares of Class A common stock.

Liquidation Distribution.  In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Company, the holders of our Class A common stock and Class B non-voting common stock are entitled to receive an equal amount per share of all the assets of the Company of whatever kind available for distribution to holders of Class A common stock and Class B non-voting common stock, after the rights of the holders of the preferred stock have been satisfied.

Board of Directors.  Each member of our board of directors is elected annually and serves for a one-year term.  There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares eligible to vote for the election of directors can elect all of the directors.

Preemptive or Other Rights.  Our stockholders have no conversion, preemptive or other subscription rights (other than the right of holders of shares of Class B non-voting common stock to convert such shares into shares of Class A common stock as described in “—Conversion of Class B Non-Voting Common Stock” above) and there are no sinking fund or redemption provisions applicable to the Common Stock.

No Action by Written Consent.  Our certificate of incorporation provides that, subject to the rights of the holders of any series of preferred stock with respect to such series of preferred stock, any action required or permitted to be taken by the stockholders of the Company must be effected at a duly called annual or special meeting of stockholders of the Company and may not be effected by any consent in writing by such stockholders.

Preferred Stock

No shares of preferred stock are currently outstanding.  Our certificate of incorporation authorizes our board of directors to issue and to designate the terms of one or more new classes or series of preferred stock.  The rights with respect to a class or series of preferred stock may be greater than the rights attached to our common stock.  It is not possible to state the actual effect of the issuance of any shares of our preferred stock on the rights of holders of our common stock until our board of directors determines the specific rights attached to that class or series of preferred stock.

Certain Anti-Takeover Provisions of Delaware Law and our Certificate of Incorporation and Bylaws

Special Meeting of Stockholders

Our bylaws provide that special meetings of our stockholders may be called only by the Chairman of the Board, by our Chief Executive Officer or by a majority vote of our entire board of directors.

Advance Notice Requirements for Stockholder Proposals and Director Nominations

Our bylaws provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders, must provide timely notice of their intent in writing.  To be timely, a stockholder’s notice must be delivered to our principal executive offices not less than 90 days nor more than 120 days prior to the meeting.  Our bylaws also specify certain requirements as to the form and content of a stockholder’s notice.  These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders.

Stockholder-Initiated Bylaw Amendments

Our bylaws may be adopted, amended, altered or repealed by stockholders only upon approval of at least two-thirds of the voting power of all the then-outstanding shares.  Additionally, our certificate of incorporation will provide that our bylaws may be amended, altered or repealed by the board of directors by a majority vote.

Authorized but Unissued Shares

Our authorized but unissued shares of Class A common stock, Class B non-voting common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans.  The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

Delaware Anti-Takeover Statute

We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person becomes an interested stockholder, unless:

before that date, the board of directors of the corporation approves either the business combination or the transaction that resulted in the stockholder’s becoming an interested stockholder;

upon consummation of the transaction that resulted in the stockholder’s becoming an interested stockholder, the interested stockholder owns at least 85% of the outstanding voting stock, excluding shares of common stock held by directors, officers and employee stock plans; or

on or after the consummation date, the business combination is approved by the board of directors and by the affirmative vote at an annual or special meeting of stockholders of at least 66-2/3% of the outstanding voting stock that is not owned by the interested stockholder.

For purposes of Section 203, a business combination includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder.  An interested stockholder is generally a person who, together with affiliates and associates of that person, (a) owns 15% or more of the corporation’s voting stock or (b) is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within the three-year period immediately prior to the date on which it is to be determined whether such person is an interested stockholder.

Transfer Agent and Registrar

Equiniti Trust Company is the transfer agent and registrar for the common stock.

NYSE Listing

Our Class A Common Stock is currently listed on the New York Stock Exchange under the ticker symbol “NBHC”.

EX-10.13

Exhibit 10.13

2014 OMNIBUS INCENTIVE PLAN
PERFORMANCE STOCK UNIT AWARD AGREEMENT

THIS PERFORMANCE STOCK UNIT AWARD AGREEMENT (this “Agreement”), dated as of [___________] (the “Date of Grant”), is made by and between National Bank Holdings Corporation, a Delaware corporation (“NBHC”), and [__________] (“Participant”).  Capitalized terms used herein without definition have the meanings ascribed to such terms in the National Bank Holdings Corporation 2014 Omnibus Incentive Plan (the “Plan”).

WHEREAS, NBHC has adopted the Plan to provide NBHC officers, employees, directors, and consultants an opportunity to participate in NBHC’s future performance and align the interests of such officers, employees, directors, and consultants with those of the shareholders of NBHC; and

WHEREAS, the Committee has determined that it would be in the best interests of NBHC and its shareholders to grant Participant a number of performance vesting Restricted Stock Units on the terms and subject to the conditions set forth in this Agreement and the Plan.

NOW THEREFORE, in consideration of the premises and the covenants of the parties contained in this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree as follows:

1. Grant of Performance Stock Unit Award.

(a) Grant.  NBHC hereby grants to Participant an award of performance-vesting Restricted Stock Units (the “PSUs”) in respect of that number of Shares related to the attainment of the EPS Factor  (the “EPS Target Number”) and that number of Shares related to the attainment of the TSR Factor (the “TSR Target Number” and, together with the EPS Target Number, the “Target Numbers”), in each case such Target Numbers shall be set forth on Exhibit A and shall be further subject to the terms and conditions set forth in this Agreement and as otherwise provided in the Plan.

(b) Incorporation by Reference, Etc.  The provisions of the Plan are hereby incorporated herein by reference.  Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan.

2. Vesting and Settlement.

(a) General.  Except as may otherwise be provided herein, a number of PSUs, if any, equal to the sum of (i) the EPS Earned PSUs (as defined in Annex A hereto) plus (ii) the TSR Earned PSUs (as defined in Annex A hereto) shall vest on the third anniversary of the Date of Grant (such date, the “Vesting Date”) (collectively, the “Earned PSUs”), subject to Participant having not incurred a Termination of Employment prior to the Vesting Date.  NBHC shall issue one Share to Participant for each Earned PSU within 10 days following the Vesting Date (and in no event later than the March 15 following the Vesting Date).

(b) Determination of Earned PSUs and Vesting and Settlement in Connection with a Change in Control. 

(i) Determination of Earned PSUs.  Notwithstanding anything in the Plan, effective as of immediately prior to a Change in Control, subject to the occurrence of such Change in Control, the number of Earned PSUs shall be established by the Committee based on the greater of the applicable Target Number and the level of achievement of actual performance as determined through the latest practicable date prior to such Change in Control (as determined by the Committee in its sole discretion).

(ii) Vesting and Settlement of Earned PSUs.  The Earned PSUs shall be settled within five days following the occurrence of such Change in Control, unless a replacement or substitute award meeting the requirements of this Section ‎2(b)(ii) is provided to Participant in respect of the Earned PSUs (an award meeting the requirements of this Section ‎2(b)(ii), a “Replacement Award”).  An award shall qualify as a Replacement Award if: (A) it is a restricted stock unit with respect to a publicly traded equity security of NBHC or the surviving corporation or the ultimate parent of the applicable entity following the Change in Control, (B) it has a fair market value at least equal to the value of the Earned PSUs established pursuant to Section ‎2(b)(i) as of the date of the Change in Control, (C) it contains terms relating to service-based vesting (including with respect to Termination of Employment) that are substantially identical to the terms set forth in this Agreement and does not contain any terms related to performance-based vesting, and (D) its other terms and conditions are not less favorable to Participant than the terms and conditions set forth in this Agreement or in the Plan (including provisions that apply in the event of a subsequent Change in Control) as of the date in the Change in Control.  The determination of whether the conditions of this Section ‎2(b)(ii) are satisfied shall be made by the Committee, as constituted immediately prior to the Change in Control, in its sole discretion, prior to a Change in Control.  If a Replacement Award is provided, the Earned PSUs shall not be settled upon a Change in Control in accordance with the first sentence of this Section ‎2(b)(ii).

(iii) Replacement Award.  If, in connection with a Change in Control, Participant is provided with a Replacement Award, such Replacement Award shall vest on the Vesting Date and be settled at the time provided in Section ‎2(a),  subject to Participant having not incurred a Termination of Employment prior to the Vesting Date; provided that, if, within two years following such Change in Control, Participant incurs a Termination of Employment without Cause, due to Participant’s resignation with Good Reason (as defined in Section ‎7(b)), or due to Participant’s death or Disability, then the Replacement Award shall become fully vested effective as of the date Termination of Employment, and NBHC shall issue one Share to Participant for each Replacement Award as soon as reasonably practicable, and in no event more than 10 days, following the date of Termination of Employment.

(c) Other Terminations of Employment.  If Participant incurs a Termination of Employment prior to a Change in Control or under circumstances other than those set forth in Section ‎2(b)(ii) as applicable to a Replacement Award, any unvested PSUs shall be forfeited by Participant without consideration effective as of the date of Termination of Employment.

3. Tax Withholding; Independent Tax Advice.  NBHC shall reasonably determine the amount of any federal, state, local, or other income, employment, or other taxes that NBHC or any of its Subsidiaries may reasonably be obligated to withhold with respect to the grant, vesting, settlement, or other event with respect to the PSUs.  NBHC’s obligation to deliver any certificates evidencing the Shares provided upon settlement of the PSUs (or to make a book-entry or other electronic notation indicating ownership of such Shares) is subject to the condition precedent that Participant either pay or provide for the amount of any such withholding obligations in such manner as may be authorized by the Committee or as may otherwise be permitted under Section 14(d) of the Plan.  Participant acknowledges that the tax laws and regulations applicable to the PSUs and the disposition of the Shares provided upon settlement of the PSUs are complex and subject to change, and it is the sole responsibility of Participant to obtain Participant’s own advice as to the tax treatment of the terms of this Agreement.

4. No Rights as Stockholder; Dividend Equivalent Credits.  Until such time as the PSUs have been settled pursuant to Section ‎2 and the underlying Shares have been delivered to Participant, and Participant has become the

holder of such Shares, Participant shall have no rights as a stockholder, including, without limitation, the right to dividends or other distributions and the right to vote.  Notwithstanding the foregoing or Section 7(c) of the Plan, each PSU shall entitle Participant to dividend equivalents with respect to ordinary cash dividends that would otherwise be paid on the Share underlying such PSU during the period from the Date of Grant to the date such Share is delivered in accordance with Section ‎2.  Any such dividend equivalents shall be subject to the same vesting conditions applicable to the underlying PSU with respect to which they accrue, and shall, if the underlying PSU vests, be paid at the time as the underlying PSU is settled.

5. Non-Transferability.  The PSUs may not, at any time prior to becoming vested, be assigned, alienated, pledged, attached, sold, or otherwise transferred or encumbered by Participant other than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer, or encumbrance shall be void and unenforceable against NBHC, its Subsidiaries, and its Affiliates; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer, or encumbrance.  The PSUs shall be subject to the restrictions set forth in the Plan and this Agreement.

6. Adjustment.  In the event of any event described in Section 3(h) of the Plan occurring after the Date of Grant, the adjustment provisions as provided for under Section 3(h) of the Plan shall apply to the PSUs.

7. Certain Definitions and Administration.

(a) Termination with Cause.  Unless otherwise provided under the termination with “cause” provisions of an Individual Agreement, to invoke a termination with Cause, NBHC must provide written notice to Participant of the existence of such grounds within 30 days following NBHC’s knowledge of the existence of such grounds, specifying in reasonable detail the grounds constituting Cause, and, with respect to the grounds enumerated in clauses (A), (C), (D), and (E) in the definition of Cause in the Plan, Participant shall have 30 days following receipt of such written notice during which he or she may remedy the ground if such ground is reasonably subject to cure as determined by NBHC. 

(b) “Good Reason” shall have the meaning given to such term in an Individual Agreement, or if there is no such Individual Agreement or if it does not define Good Reason, then, Good Reason shall mean the occurrence of the following, in the absence of Participant’s written consent:

(i) a material diminution in Participant’s annual base salary from that in effect immediately prior to a Change in Control; or

(ii) the assignment to Participant of any duties materially inconsistent with Participant’s positions (including status, offices, titles, and reporting requirements), authority, duties, or responsibilities, or any other action by NBHC that results in a material diminution in such positions, authority, duties, or responsibilities, in each case, from those in effect immediately prior to a Change in Control;

provided that, in each case, (A) Participant provides written notice to NBHC of the existence of one or more of the conditions described in clauses (i) through (ii) within 30 days following Participant’s knowledge of the initial existence of such condition or conditions, specifying in reasonable detail the conditions constituting Good Reason; (B) NBHC and its Affiliates fail to cure such event or condition within 30 days following the receipt of such notice; and (C) Participant incurs a Termination of Employment within 30 days following the expiration of such cure period.

8. Forfeiture.  Participant agrees that, notwithstanding any other provision of any agreement to which he or she is subject with NBHC or NBH Bank (collectively, the “Company”), and in addition to and not in contravention of any clawback provision or policy applicable to Participant as in effect from time to time (including any clawback policies or provisions implemented pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law):

(a) If the Company is required to prepare an accounting restatement due to material noncompliance of the Company as a result of Participant’s misconduct in connection with any financial reporting

requirement under the federal securities laws, the Committee may require Participant to forfeit unvested the PSUs, and/or to reimburse the Company for all amounts received under this Agreement from the Company during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission (whichever first occurs) of the financial document embodying such financial reporting requirement, and any amounts received with respect to, or amounts realized upon the settlement of the PSUs or the subsequent sale of the Shares that were issued upon settlement of the PSUs or the cancellation of the PSUs during that 12-month period;

(b) If the Committee shall determine that Participant has engaged in a serious breach of conduct, the Committee may require Participant to forfeit unvested PSUs, may terminate this Agreement and/or require Participant to repay any amounts realized upon the settlement of the PSUs or on the subsequent sale of the Shares that were issued upon settlement of the PSUs or the cancellation of the PSUs; and

(c) If Participant is found guilty of misconduct by any judicial or administrative authority in connection with any (i) formal investigation by the Securities and Exchange Commission or (ii) other federal or state regulatory investigation, then the Committee may require Participant to forfeit unvested PSUs and/or may require the repayment of any amounts realized upon the settlement of the PSUs or on the subsequent sale of the Shares that were issued upon settlement of the PSUs or the cancellation of the PSUs without regard to the timing of the determination of misconduct in relation to the timing of the settlement or sale of the award.

The foregoing provisions of this Section ‎8 shall cease to apply following a Change in Control, except as otherwise required by applicable law.

9. Compliance with Legal Requirements.  The grant of the PSUs and any other obligations of NBHC under this Agreement shall be subject to all applicable federal and state laws, rules, and regulations and to such approvals by any regulatory or governmental agency as may be required.  The Committee, in its sole discretion, may postpone the issuance or delivery of Shares as the Committee may consider appropriate and may require Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Shares in compliance with applicable laws, rules, and regulations.

10. Miscellaneous.

(a) Confidentiality of this Agreement.  Participant agrees to keep confidential the terms of this Agreement, unless and until such terms have been disclosed publicly other than through a breach by Participant of this covenant.  This provision does not prohibit Participant from providing this information on a confidential and privileged basis to Participant’s attorneys or accountants for purposes of obtaining legal or tax advice or as otherwise required by law.

(b) Restrictive Covenants.  The grant, vesting, and settlement of the PSUs pursuant to this Agreement shall be in partial consideration for, and subject to Participant’s continued compliance with, (i) any restrictive covenants set forth in an Individual Agreement or (ii) if there are no confidentiality and/or non-solicitation provisions in an Individual Agreement, the restrictive covenants as set forth in Annex B hereto.  For the avoidance of doubt, if there are confidentiality and/or non-solicitation provisions in an Individual Agreement, the restrictive covenants in the Individual Agreement shall govern.

(c) Section 409A of the Code.  It is intended that the Awards granted pursuant to this Agreement and the provisions of this Agreement be exempt from or comply with Section 409A of the Code, and all provisions of this Agreement shall be construed and interpreted in a manner consistent with Section 11(e) of the Plan and the requirements for avoiding taxes or penalties under Section 409A of the Code.

(d) Waiver and Amendment.  The Committee may waive any conditions or rights under, or amend any terms of, this Agreement and the PSUs granted hereunder; provided that any such waiver or amendment that would impair the rights of any Participant or any holder or beneficiary of any PSUs heretofore granted shall not to that extent be effective without the consent of Participant.  No waiver of

any right hereunder by any party shall operate as a waiver of any other right, or as a waiver of the same right with respect to any subsequent occasion for its exercise, or as a waiver of any right to damages.  No waiver by any party of any breach of this Agreement shall be held to constitute a waiver of any other breach or a waiver of the continuation of the same breach.

(e) Notices.  All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, facsimile, courier service or personal delivery:

if to NBHC to:
National Bank Holdings Corporation
7800 East Orchard Road, Suite 300
Greenwood Village, CO 80111
Facsimile:  (855)576-3479
Attention:  General Counsel

if to Participant:  at the address last on the records of NBHC.

All such notices, demands and other communications shall be deemed to have been duly given (i) when delivered by hand, if personally delivered; (ii) when delivered by courier, if delivered by commercial courier service; (iii) five business days after being deposited in the mail, postage prepaid, if mailed; and (iv) when receipt is mechanically acknowledged, if by facsimile.

(f) Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

(g) No Rights to Service.  Nothing contained in this Agreement shall be construed as giving Participant any right to be retained, in any position, as an employee, consultant, or director of NBHC or its Affiliates or shall interfere with or restrict in any way the right of NBHC or its Affiliates, which is hereby expressly reserved, to remove, terminate, or discharge Participant at any time for any reason whatsoever.

(h) Beneficiary.  Participant may file with NBHC a written designation of a beneficiary on such form as may be prescribed by the Committee and may, from time to time, change or revoke such designation by filing a new designation with NBHC.  The last such designation received by NBHC shall be controlling; provided,  however, that no designation, or change or revocation thereof, shall be effective unless received by NBHC prior to Participant’s death, and in no event shall it be effective as of a date prior to such receipt.  If no beneficiary designation is filed by Participant, the beneficiary shall be deemed to be his or her spouse or, if Participant is unmarried at the time of death, his or her estate.

(i) Successors.  The terms of this Agreement shall be binding upon and inure to the benefit of NBHC, its successors and assigns, and of Participant and the beneficiaries, executors, administrators, heirs and successors of Participant.

(j) Entire Agreement.  This Agreement and the Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations with respect thereto.

(k) Bound by the Plan.  By signing this Agreement, Participant acknowledges that he or she has received a copy of the Plan and has had an opportunity to review the Plan and agrees to be bound by all the terms and provisions of the Plan.

(l) Governing Law.  This Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware without regard to principles of conflicts of law thereof, or principles of conflicts of laws of any other jurisdiction that could cause the application of the laws of any jurisdiction other than the State of Delaware.

(m) Headings.  The headings of the Sections of this Agreement are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part, of this Agreement.

(n) Counterparts.  This Agreement may be signed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

NATIONAL BANK HOLDINGS CORPORATION

By: _____________________________________
      Name:

      Title:

PARTICIPANT

_________________________________________
[Participant Name]

Annex A
Performance Metrics

For purposes of this Agreement, the following terms have the meanings ascribed thereto below:

“Adjusted Relative TSR Factor” shall mean (a) if NBHC’s TSR for the Measurement Period is less than zero, then the lesser of (i) the Relative TSR Factor and (ii) 1.000; and (b) if NBHC’s TSR for the Measurement Period is equal to or greater than zero, then the Relative TSR Factor.

“Cumulative EPS” shall mean NBHC’s cumulative earnings per share for each of the fiscal years during the Performance Period, as reported in NBHC’s audited financial statements in NBHC’s Annual Report on Form 10-K (the “Annual Report”), as adjusted to eliminate the effects of the following: (a) changes in law or accounting principles, (b) one-time effects of mergers and acquisitions, (c) gains or losses on the extinguishment of debt or the sale of investment securities, (d) restructuring charges, and (e) other extraordinary items that the Committee deems appropriate.

“EPS Earned PSUs” shall mean the product of (a) the EPS Target Number multiplied by (b) the EPS Factor (such product shall be rounded to the nearest whole number).

“EPS Factor” shall mean the factor determined and certified by the Committee based on Cumulative EPS for the Measurement Period as follows:

Cumulative EPS for the Measurement Period	EPS Factor
Less than [$___].....................................................................................	0.000
Equal to [$___].......................................................................................	0.500
Equal to [$___].......................................................................................	1.000
Equal to or greater than [$___]...............................................................	1.500

Linear interpolation shall be used between the applicable Cumulative EPS targets set forth above.  In no event will the EPS Factor exceed 1.500.

“GAAP” shall mean the generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis.

“Measurement Period” shall mean the period commencing on January 1, 20[___] and ending on December 31, 20[end of 3rd fiscal year from commencement date].

“Relative TSR” shall mean the percentile ranking of NBHC’s TSR among the TSRs for the companies included in the KBW Regional Banking Index as of the first day of the Measurement Period; provided that any company that is not continuously included in the KBW Regional Banking Index during the Measurement Period shall be excluded from the determination of Relative TSR.  The only exception shall be if a company included in the KBW Regional Banking Index as of the first day of the Measurement Period files for bankruptcy or is placed into receivership, they shall remain included in the determination of Relative TSR, with a TSR of -100%.

“Relative TSR Factor” shall mean the factor determined and certified by the Committee based on Relative TSR for the Measurement Period as follows:

Relative TSR for the Measurement Period (%ile)	Relative TSR Payment Factor
Less than [___] percentile.......................................................................	0.000
Equal to [___] percentile.........................................................................	0.500
Equal to [___] percentile.........................................................................	1.000
Greater than [___] percentile...................................................................	1.500

Linear interpolation shall be used between the applicable Relative TSR targets set forth above.  In no event will the Relative TSR Factor exceed 1.500.

“TSR” shall mean, with respect to a particular company, total shareholder return for such company over the Measurement Period, calculated using the average closing stock price for the 20 trading days prior to and including December 31, 20[___] and the average closing stock price for the 20 trading days prior to and including December 31, 20[+   3 years], assuming dividends are reinvested in such company’s common stock on the ex-dividend date.

“TSR Earned PSUs” shall mean the product of (a) the TSR Target Number multiplied by (b) the Adjusted Relative TSR Factor (such product shall be rounded to the nearest whole number).

Annex B
Restrictive Covenants

1. Confidential Information.  Participant agrees that, during his or her employment with NBHC and at all times thereafter, he or she shall hold for the benefit of NBHC all secret or confidential information, knowledge, or data relating to NBHC or any of its Affiliates, and their respective businesses, which shall have been obtained by Participant during Participant’s employment by NBHC or during his or her consultation with NBHC after his or her termination of employment, and which shall not be or become public knowledge (other than by acts by Participant or representatives of Participant in violation of this Agreement).  Except in the good faith performance of his or her duties for NBHC, Participant shall not, without the prior written consent of NBHC or as may otherwise be required or permitted by law or legal process, communicate or divulge any such information, knowledge, or data to anyone other than NBHC and those designated by it.

Notwithstanding the above confidentiality provisions, nothing in this Agreement, in any other agreement, or in the Company’s policies should be interpreted as prohibiting Participant from: (1) reporting possible violations of federal law or regulations, including any securities laws violations, to any governmental agency or entity, including but not limited to the Department of Justice, the U.S. Securities & Exchange Commission, the U.S. Congress, or any agency Inspector General; (2) making any other disclosures that are protected under the whistleblower provisions of federal law or regulations; or (3) otherwise fully participating in any federal whistleblower programs.

Please refer to the NBHC Associate Handbook, a copy of which is available upon request, regarding Participant’s rights related to the disclosure of the Company’s trade secrets.

2. Nonsolicitation.  Participant agrees that, while he or she is employed by NBHC and during the one-year period following his or her termination of employment with NBHC (the “Restricted Period”), Participant shall not, directly or indirectly, (a) solicit any individual who is, on the date on which Participant incurs a Termination of Employment (the “Date of Termination”) (or was, during the six-month period prior to the Date of Termination), employed by NBHC or any of its Affiliates to terminate or refrain from renewing or extending such employment or to become employed by or become a consultant to any other individual or entity other than NBHC or such Affiliate, (b)  initiate discussions with any such individual for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other individual or entity on behalf of Participant’s employer, (c) solicit any client or customer of NBHC or any of its Affiliates to transact business with a Competitive Enterprise (as defined below), or (d) induce or attempt to induce any client, customer, or investor (in each case, whether former, current, or prospective), vendor, supplier, licensee, or other business relation of NBHC or any of its Affiliates to reduce or cease doing business with NBHC or any such Affiliate, or in any way interfere with the relationship between any such client, customer, investor, vendor, supplier, licensee, or business relation, on the one hand, and NBHC or any such Affiliate, on the other hand.  For purposes hereof, “Competitive Enterprise” means any business enterprise that either (i) engages in any activity closely associated with commercial banking or any other financial services business, including the operations of an institution, the deposits of which are insured by the Federal Deposit Insurance Corporation, that is competitive with any portion of the business conducted by NBHC or any of its Affiliates.

3. Equitable Remedies.  Participant acknowledges that NBHC would be irreparably injured by a violation of Section ‎1 or Section ‎2 of this Annex B and he or she agrees that NBHC, in addition to any other remedies available to it for such breach or threatened breach, on meeting the standards required by law, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining Participant from any actual or threatened breach of Section ‎1 or Section ‎2 of this Annex B.  If a bond is required to be posted in order for NBHC to secure an injunction or other equitable remedy, the parties agree that said bond need not be more than a nominal sum.

4. Severability; Blue Pencil.  Participant acknowledges and agrees that he or she has had the opportunity to seek advice of counsel in connection with this Agreement and the restrictive covenants contained herein are reasonable in geographical scope, temporal duration, and in all other respects.  If it is determined that any provision of this Annex B is invalid or unenforceable, the remainder of the provisions of this Annex B shall not thereby be affected and shall be given full effect, without regard to the invalid portions.  If any court or other decision-maker of

competent jurisdiction determines that any of the covenants in this Annex B is unenforceable because of the duration or geographic scope of such provision, then after such determination becomes final and unappealable, the duration or scope of such provision, as the case may be, shall be reduced so that such provision becomes enforceable, and in its reduced form, such provision shall be enforced.

EXHIBIT A

THREE-YEAR PERFORMANCE AWARD
PSUs SUBJECT TO EPS AND TSR METRIC

The three-year performance award is an award of performance-stock units (PSUs), a portion of which vests upon the attainment of a three-year cumulative earnings per share (EPS) factor, and a portion of which vests upon the attainment of a three-year relative total shareholder return (TSR) factor, as further detailed in the Performance Stock Unit Master Award Agreement dated [___________] (the “Agreement”).  The PSUs for the EPS Factor and the PSUs for the TSR Factor are recognized as two separate grant amounts that are subject to the same Agreement.  By signing and accepting both the Agreement and this Exhibit A, you are acknowledging your acceptance of the terms of the Agreement and the PSUs associated with the EPS and TSR Factor.

Target Number of PSUs (EPS Factor) received:[______]

Target Number of PSUs (TSR Factor) received:[______]

Accepted and Acknowledged:

PARTICIPANT

_________________________________________
[Participant Name]

EX-10.14

Exhibit 10.14

2014 Omnibus Incentive Plan
Restricted Stock Award Agreement

THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”), dated as of the date indicated in the attached Schedule (the “Date of Grant”), is made by and between National Bank Holdings Corporation, a Delaware corporation (“NBHC”), and the participant indicated in the attached Schedule (“Participant”).  Capitalized terms used herein without definition have the meanings ascribed to such terms in the National Bank Holdings Corporation 2014 Omnibus Incentive Plan (the “Plan”).

WHEREAS, NBHC has adopted the Plan to provide NBHC officers, employees, directors and consultants an opportunity to participate in NBHC’s future performance and align the interests of such officers, employees, directors and consultants with those of the shareholders of NBHC; and

WHEREAS, the Committee has determined that it would be in the best interests of NBHC and its shareholders to grant Participant a number of restricted shares of Common Stock on the terms and subject to the conditions set forth in this Agreement and the Plan.

NOW THEREFORE, in consideration of the premises and the covenants of the parties contained in this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree as follows:

1. Grant of Restricted Stock Award.

(a) Grant.  NBHC hereby grants to Participant an award of Restricted Stock with respect to an aggregate of the number of restricted shares of Common Stock indicated in the attached Schedule (the “Restricted Stock”), on the terms and subject to the conditions set forth in this Agreement and as otherwise provided in the Plan.

(b) Incorporation by Reference, Etc.  The provisions of the Plan are hereby incorporated herein by reference.  Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan.

2. Vesting.

(a) General.  Except as may otherwise be provided herein, the Restricted Stock shall vest according to vesting schedule indicated in the attached Schedule, subject to Participant not having incurred a Termination of Employment as of the applicable vesting date.

(b) Vesting upon Death or Disability.  If Participant incurs a Termination of Employment due to Participant’s death or Disability, the restrictions on any unvested Restricted Stock shall immediately lapse and the Restricted Stock shall be fully vested as of the date of Termination of Employment.

(c) Vesting Following a Change in Control.  If, in connection with a Change in Control, Participant is provided with a Replacement Award (as defined in Section ‎9) and within two years following such Change in Control, Participant incurs a Termination of Employment without Cause or due to Participant’s resignation with Good Reason (as defined in Section ‎13), all the unvested Restricted Stock (or other form of Replacement Award) shall become fully vested.  If Participant is not provided with a Replacement Award in connection with a Change in Control, the Restricted Stock will vest in accordance with Section ‎9.

(d) Other Termination of Employment.  If Participant incurs a Termination of Employment (i) that is not within two years following a Change in Control or (ii) for any reason other than death or Disability, any unvested Restricted Stock shall be forfeited by Participant without consideration.

3. Tax Withholding.  NBHC shall reasonably determine the amount of any federal, state, local or other income, employment or other taxes that NBHC or any of its subsidiaries may reasonably be obligated to withhold with respect to the grant, vesting or other event with respect to the Restricted Stock.  NBHC’s obligation to deliver the Restricted Stock or any certificates evidencing the Restricted Stock (or to make a book entry or other electronic notation indicating ownership of the Shares), or otherwise remove the restrictive notations or legends on such Shares or certificates that refer to nontransferability as set forth in Section ‎5, is subject to the condition precedent that Participant either pay or provide for the amount of any such withholding obligations in such manner as may be authorized by the Committee or as may otherwise be permitted under Section 14(d) of the Plan.

4. Independent Tax Advice.  Participant acknowledges that the tax laws and regulations applicable to the Restricted Stock and the disposition of the Restricted Stock following vesting are complex and subject to change, and it is the sole responsibility of Participant to obtain Participant’s own advice as to the tax treatment of the terms of this Agreement.

5. Issuance of Restricted Stock.  The Restricted Stock shall be issued by NBHC and shall be registered in Participant’s name on the stock transfer books of NBHC promptly after the Date of Grant.  Any certificates representing Restricted Stock shall remain in the physical custody of NBHC or its designee at all times prior to, in the case of any particular Share of the Restricted Stock, the date on which such Share vests.  Any certificates representing Restricted Stock shall have affixed thereto a legend in substantially the following form, in addition to any other legends that may be required under federal or state securities laws:

Transfer of this certificate and the shares represented hereby is restricted pursuant to the terms of the National Bank Holdings Corporation 2014 Omnibus Incentive Plan and a Restricted Stock Award Agreement, dated as of [___________] between National Bank Holdings Corporation and [___________].  A copy of such Agreement is on file at the offices of National Bank Holdings Corporation.

As soon as practicable following the vesting of any Restricted Stock, NBHC shall ensure that its stock transfer books reflect the vesting.  If certificates for the Restricted Stock exist, such certificates for such vested Restricted Stock shall be delivered to Participant or to Participant’s legal representative along with the stock powers relating thereto.

6. Dividend and Voting Rights.  After the Date of Grant, Participant shall be the record owner of the Restricted Stock, unless and until such Restricted Stock is forfeited pursuant to Participant’s Termination of Employment or sold or otherwise disposed of, and as record owner shall be entitled to all rights of a common stockholder of NBHC, including, without limitation, voting rights and rights to payment of cash or in-kind dividends, if any, with respect to the Restricted Stock; provided that the Restricted Stock shall be subject to the limitations on transfer and encumbrance set forth in this Agreement and the Plan.

7. Non-Transferability.  The Restricted Stock may not, at any time prior to becoming vested, be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by Participant other than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against NBHC, its Subsidiaries and its Affiliates; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.  The Restricted Stock shall be subject to the restrictions set forth in the Plan and this Agreement.

8. Adjustment.  In the event of any event described in Section 3(h) of the Plan occurring after the Date of Grant, the adjustment provisions as provided for under Section 3(h) of the Plan shall apply to the Restricted Stock.

9. Change in Control.  Notwithstanding anything in the Plan or otherwise set forth in this Agreement to the contrary, upon the occurrence of a Change in Control, all restrictions on the Restricted Stock shall immediately lapse and the Restricted Stock shall be fully vested, except to the extent that another award meeting the requirements of this Section ‎9 is provided to Participant to replace the Restricted Stock award (an award meeting the requirements of this Section ‎9, a “Replacement Award”).  An award shall meet the conditions of this Section ‎9 (and hence, qualify as a Replacement Award) if: (i) it is a restricted publicly traded equity security of NBHC or the surviving corporation or the ultimate parent of the applicable entity following the Change in Control, (ii) it has a fair market value at least

equal to the value of the Restricted Stock granted pursuant to this Agreement as of the date of the Change in Control, (iii) it contains terms relating to vesting (including with respect to Termination of Employment) that are substantially identical to the terms set forth in this Agreement, and (iv) its other terms and conditions are not less favorable to Participant than the terms and conditions set forth in this Agreement or in the Plan (including provisions that apply in the event of a subsequent Change in Control) as of the date in the Change in Control.  Without limiting the generality of the foregoing, a Replacement Award may take the form of a continuation of this award if the requirements of the preceding sentence are satisfied.  If a Replacement Award is granted, the Restricted Stock shall not vest upon a Change in Control.  The determination of whether the conditions of this Section ‎9 are satisfied shall be made by the Committee, as constituted immediately prior to the Change in Control, in its sole discretion.

10. Forfeiture.  Participant agrees that, notwithstanding any other provision of any agreement to which he or she is subject with NBHC or NBH Bank (collectively, the “Company”), and in addition to and not in contravention of any clawback provision or policy applicable to Participant as in effect from time to time (including any clawback policies or provisions implemented pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable laws):

(a) If the Company is required to prepare an accounting restatement due to material noncompliance of the Company as a result of Participant’s misconduct in connection with any financial reporting requirement under the federal securities laws, the Committee may require Participant to forfeit unvested Restricted Stock, and/or to reimburse the Company for all amounts received under this Agreement from the Company during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission (whichever first occurs) of the financial document embodying such financial reporting requirement, and any amounts received with respect to, or amounts realized from, the vesting of Restricted Stock or the subsequent sale of Shares or the cancellation of Restricted Stock during that 12 month period;

(b) If the Committee shall determine that Participant has engaged in a serious breach of conduct, the Committee may require Participant to forfeit unvested Restricted Stock, may terminate this Agreement and/or require Participant to repay any amounts realized upon the vesting of Restricted Stock or on the subsequent sale of the shares of common stock that were granted as Restricted Stock or the cancellation of shares relating to Restricted Stock; and

(c) If Participant is found guilty of misconduct by any judicial or administrative authority in connection with any (i) formal investigation by the Securities and Exchange Commission or (ii) other federal or state regulatory investigation, the Committee may require Participant to forfeit unvested Restricted Stock and/or may require the repayment of any amounts realized upon the vesting of Restricted Stock or on the subsequent sale of the shares of common stock that were granted as Restricted Stock or the cancellation of shares relating to Restricted Stock without regard to the timing of the determination of misconduct in relation to the timing of the vesting or sale of the award.

The foregoing provisions of this Section 10 shall cease to apply following a Change in Control, except as otherwise required by applicable law.

11. Miscellaneous.

(a) Confidentiality of this Agreement.  Participant agrees to keep confidential the terms of this Agreement, unless and until such terms have been disclosed publicly other than through a breach by Participant of this covenant.  This provision does not prohibit Participant from providing this information on a confidential and privileged basis to Participant’s attorneys or accountants for purposes of obtaining legal or tax advice or as otherwise required by law.

(b) Restrictive Covenants.  The grant and vesting of the Restricted Stock pursuant to this Agreement shall be in partial consideration and subject to Participant’s continued compliance with (i) any restrictive covenants set forth in an Individual Agreement or (ii) if there are no confidentiality and/or non-solicitation provisions in an Individual Agreement, the restrictive covenants as set forth in Annex A

hereto.  For the avoidance of doubt, if there are confidentiality and/or non-solicitation provisions in an Individual Agreement, the restrictive covenants in the Individual Agreement shall govern.

(c) Waiver and Amendment.  The Committee may waive any conditions or rights under, or amend any terms of, this Agreement and the Restricted Stock granted hereunder; provided that any such waiver or amendment that would impair the rights of any Participant or any holder or beneficiary of any Restricted Stock heretofore granted shall not to that extent be effective without the consent of Participant.  No waiver of any right hereunder by any party shall operate as a waiver of any other right, or as a waiver of the same right with respect to any subsequent occasion for its exercise, or as a waiver of any right to damages.  No waiver by any party of any breach of this Agreement shall be held to constitute a waiver of any other breach or a waiver of the continuation of the same breach.

(d) Notices.  All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, facsimile, courier service or personal delivery:

if to NBHC to:
National Bank Holdings Corporation
7800 East Orchard Road, Suite 300
Greenwood Village, CO 80111
Facsimile:  (855) 576-3479
Attention:  Legal Department

if to Participant:  at the address last on the records of NBHC.

All such notices, demands and other communications shall be deemed to have been duly given (i) when delivered by hand, if personally delivered; (ii) when delivered by courier, if delivered by commercial courier service; (iii) five business days after being deposited in the mail, postage prepaid, if mailed; and (iv) when receipt is mechanically acknowledged, if by facsimile.

(e) Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

(f) No Rights to Service.  Nothing contained in this Agreement shall be construed as giving Participant any right to be retained, in any position, as an employee, consultant or director of NBHC or its Affiliates or shall interfere with or restrict in any way the right of NBHC or its Affiliates, which is hereby expressly reserved, to remove, terminate or discharge Participant at any time for any reason whatsoever.

(g) Beneficiary.  Participant may file with NBHC a written designation of a beneficiary on such form as may be prescribed by the Committee and may, from time to time, change or revoke such designation by filing a new designation with NBHC.  The last such designation received by NBHC shall be controlling; provided,  however, that no designation, or change or revocation thereof, shall be effective unless received by NBHC prior to Participant’s death, and in no event shall it be effective as of a date prior to such receipt.  If no beneficiary designation is filed by Participant, the beneficiary shall be deemed to be his or her spouse or, if Participant is unmarried at the time of death, his or her estate.

(h) Successors.  The terms of this Agreement shall be binding upon and inure to the benefit of NBHC, its successors and assigns, and of Participant and the beneficiaries, executors, administrators, heirs and successors of Participant.

(i) Entire Agreement.  This Agreement and the Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations with respect thereto.

(j) Bound by the Plan.  By signing this Agreement, Participant acknowledges that he or she has received a copy of the Plan and has had an opportunity to review the Plan and agrees to be bound by all the terms and provisions of the Plan.

(k) Governing Law.  This Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware without regard to principles of conflicts of law thereof, or principles of conflicts of laws of any other jurisdiction that could cause the application of the laws of any jurisdiction other than the State of Delaware.

(l) Headings.  The headings of the Sections of this Agreement are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part, of this Agreement.

(m) Counterparts.  This Agreement may be signed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

12. Compliance with Legal Requirements.  The grant of the Restricted Stock and any other obligations of NBHC under this Agreement shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any regulatory or governmental agency as may be required.  The Committee, in its sole discretion, may postpone the issuance or delivery of Shares as the Committee may consider appropriate and may require Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the Shares in compliance with applicable laws, rules and regulations.

13. Definitions and Administration.

(a) Termination for Cause.  Unless otherwise provided under the termination with “cause” provisions of an Individual Agreement, to invoke a termination for Cause, NBHC must provide written notice to Participant of the existence of such grounds within 30 days following NBHC’s knowledge of the existence of such grounds, specifying in reasonable detail the grounds constituting Cause, and, with respect to the grounds enumerated in clauses (A), (C), (D) and (E) of the definition of Cause in the Plan, Participant shall have 30 days following receipt of such written notice during which he or she may remedy the ground if such ground is reasonably subject to cure as determined by NBHC. 

(b) “Good Reason” shall have the meaning given to such term in an Individual Agreement, or if there is no such Individual Agreement or if it does not define Good Reason, then, Good Reason shall mean the occurrence of the following, in the absence of Participant’s written consent:

(i) a material diminution in Participant’s annual base salary from that in effect immediately prior to a Change in Control; or

(ii) the assignment to Participant of any duties materially inconsistent with Participant’s positions (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by NBHC that results in a material diminution in such positions, authority, duties or responsibilities, in each case, from those in effect immediately prior to a Change in Control; or

provided that, in each case, (A) Participant provides written notice to NBHC of the existence of one or more of the conditions described in clauses (i) through (ii) above within 30 days following Participant’s knowledge of the initial existence of such condition or conditions, specifying in reasonable detail the conditions constituting Good Reason; (B) NBHC and its Affiliates fail to cure such event or condition within 30 days following the receipt of such notice; and (C) Participant incurs a Termination of Employment within 30 days following the expiration of such cure period.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

NATIONAL BANK HOLDINGS CORPORATION

By: ____________________________________
Name:  
Title:    

By: ____________________________________
Name:  
Title:

PARTICIPANT

_______________________________________
[Participant]

Annex A
Restrictive Covenants

14. Confidential Information.  Participant agrees that, during his or her employment with NBHC and at all times thereafter, he or she shall hold for the benefit of NBHC all secret or confidential information, knowledge, or data relating to NBHC or any of its Affiliates, and their respective businesses, which shall have been obtained by Participant during Participant’s employment by NBHC or during his or her consultation with NBHC after his or her termination of employment, and which shall not be or become public knowledge (other than by acts by Participant or representatives of Participant in violation of this Agreement).  Except in the good faith performance of his or her duties for NBHC, Participant shall not, without the prior written consent of NBHC or as may otherwise be required or permitted by law or legal process, communicate or divulge any such information, knowledge, or data to anyone other than NBHC and those designated by it.

Notwithstanding the above confidentiality provisions, nothing in this Agreement, in any other agreement, or in the Company’s policies should be interpreted as prohibiting Participant from: (1) reporting possible violations of federal law or regulations, including any securities laws violations, to any governmental agency or entity, including but not limited to the Department of Justice, the U.S. Securities & Exchange Commission, the U.S. Congress, or any agency Inspector General; (2) making any other disclosures that are protected under the whistleblower provisions of federal law or regulations; or (3) otherwise fully participating in any federal whistleblower programs.

Please refer to the NBHC Associate Handbook, a copy of which is available upon request, regarding Participant’s rights related to the disclosure of the Company’s trade secrets.

15. Nonsolicitation.  Participant agrees that, while he or she is employed by NBHC and during the one-year period following his or her termination of employment with NBHC (the “Restricted Period”), Participant shall not, directly or indirectly, (a) solicit any individual who is, on the date on which Participant incurs a Termination of Employment (the “Date of Termination”) (or was, during the six-month period prior to the Date of Termination), employed by NBHC or any of its Affiliates to terminate or refrain from renewing or extending such employment or to become employed by or become a consultant to any other individual or entity other than NBHC or such Affiliate, (b)  initiate discussions with any such individual for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other individual or entity on behalf of Participant’s employer, (c) solicit any client or customer of NBHC or any of its Affiliates to transact business with a Competitive Enterprise (as defined below), or (d) induce or attempt to induce any client, customer, or investor (in each case, whether former, current, or prospective), vendor, supplier, licensee, or other business relation of NBHC or any of its Affiliates to reduce or cease doing business with NBHC or any such Affiliate, or in any way interfere with the relationship between any such client, customer, investor, vendor, supplier, licensee, or business relation, on the one hand, and NBHC or any such Affiliate, on the other hand.  For purposes hereof, “Competitive Enterprise” means any business enterprise that either (i) engages in any activity closely associated with commercial banking or any other financial services business, including the operations of an institution, the deposits of which are insured by the Federal Deposit Insurance Corporation, that is competitive with any portion of the business conducted by NBHC or any of its Affiliates.

16. Equitable Remedies.  Participant acknowledges that NBHC would be irreparably injured by a violation of Section ‎14 or Section ‎15 of this Annex A and he or she agrees that NBHC, in addition to any other remedies available to it for such breach or threatened breach, on meeting the standards required by law, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining Participant from any actual or threatened breach of Section ‎14 or Section ‎15 of this Annex A.  If a bond is required to be posted in order for NBHC to secure an injunction or other equitable remedy, the parties agree that said bond need not be more than a nominal sum.

17. Severability; Blue Pencil.  Participant acknowledges and agrees that he or she has had the opportunity to seek advice of counsel in connection with this Agreement and the restrictive covenants contained herein are reasonable in geographical scope, temporal duration, and in all other respects.  If it is determined that any provision of this Annex A is invalid or unenforceable, the remainder of the provisions of this Annex A shall not thereby be affected and shall be given full effect, without regard to the invalid portions.  If any court or other decision-maker of competent jurisdiction determines that any of the covenants in this Annex A is unenforceable because of the duration or geographic scope of

such provision, then after such determination becomes final and unappealable, the duration or scope of such provision, as the case may be, shall be reduced so that such provision becomes enforceable, and in its reduced form, such provision shall be enforced.

SCHEDULE

Date of Grant:

Participant:

Shares Granted:

Vesting Schedule:

Date Shares Vested

EX-10.15

Exhibit 10.15

2014 Omnibus Incentive Plan
Nonqualified Stock Option Agreement

THIS OPTION AGREEMENT (this “Agreement”), dated as of the date indicated in the attached Schedule (the “Date of Grant”), is made by and between National Bank Holdings Corporation, a Delaware corporation (“NBHC”), and the participant indicated in the attached Schedule (“Participant”).  Capitalized terms used herein without definition have the meanings ascribed to such terms in the National Bank Holdings Corporation 2014 Omnibus Incentive Plan (the “Plan”).

WHEREAS, NBHC has adopted the Plan pursuant to which Nonqualified Stock Options may be granted to purchase shares of Common Stock; and

WHEREAS, the Committee has determined that it would be in the best interests of NBHC and its shareholders to grant Participant Nonqualified Stock Options on the terms and subject to the conditions set forth in this Agreement and the Plan.

NOW, THEREFORE, in consideration of the premises and the covenants of the parties contained in this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree as follows:

1. Grant of Option.

(a) Grant.  NBHC hereby grants to Participant a Nonqualified Stock Option (the “Option” and any portion thereof, the “Options”) to purchase the number of shares of Common Stock indicated in the attached Schedule (such shares of Common Stock, the “Shares”), on the terms and subject to the conditions set forth in this Agreement and as otherwise provided in the Plan.  The Option is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(b) Incorporation by Reference, Etc.  The provisions of the Plan are hereby incorporated herein by reference.  Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan.

2. Option; Option Price.

(a) Option Price.  The option price, being the price at which Participant shall be entitled to purchase the Shares upon the exercise of all or any of the Options, shall be the share price indicated in the attached Schedule per Share (the “Option Price”).

(b) Payment of the Option Price.  The Option may be exercised only by written notice, substantially in the form provided by NBHC, delivered in accordance with Section ‎11(d) and accompanied by payment of the Option Price.  The aggregate Option Price shall be payable in cash, or, to the extent permitted by the Committee, by any of the other methods permitted under Section 5(g) of the Plan.

3. Vesting.  Except as may otherwise be provided herein, the Option shall become nonforfeitable (any Options that shall have become nonforfeitable pursuant to this Section ‎3, the “Vested Options”) and shall become exercisable according to the following provisions:

(a) General Vesting.  The Options shall become Vested Options and shall become exercisable according to the vesting schedule indicated in the attached Schedule, subject to Participant not having incurred a Termination of Employment as of the applicable vesting date.

(b) Vesting upon Retirement.  If Participant incurs a Termination of Employment due to Retirement (as defined below), the Options shall continue to vest and be exercisable according to the terms of this Agreement as though no Termination of Employment had occurred.  For the purposes of this Agreement, “Retirement” shall mean Participant’s voluntary resignation at a time when (i) Participant is at least 60 years of age and (ii) Participant has been employed by NBHC for no less than 10 years.  For the purposes of determining Participant’s eligibility for Retirement under this Agreement, if Participant was employed by a company or entity that NBHC acquired or that merged with NBHC, Participant’s employment with NBHC shall be deemed to have begun on the closing date of the transaction in which NBHC acquired or merged with such company or entity.

(c) Vesting upon Death or Disability.  If Participant incurs a Termination of Employment due to death or Disability, or dies following Participant’s Termination of Employment due to Retirement, all Options that have not theretofore become Vested Options shall become Vested Options and be exercisable in accordance with Section ‎4.

(d) Vesting Following a Change in Control.  If, in connection with a Change in Control, Participant is provided with a Replacement Award (as defined in Section 8) and within two years following such a Change in Control, Participant incurs a Termination of Employment without Cause or due to Participant’s resignation with Good Reason (as defined in Section ‎12), all of the Options (or other form of Replacement Award) that were not theretofore Vested Options shall become Vested Options (or otherwise vest as applicable to the Replacement Award) and shall be exercisable as of the date of such Termination of Employment.  The Option (or other form of Replacement Award) shall remain exercisable, if applicable, as provided in Section ‎4(b).  If no Replacement Award is provided in connection with a Change in Control, the outstanding Option shall vest and become exercisable in full in accordance with Section 8.

(e) Other Termination of Employment.  If Participant incurs a Termination of Employment (i) that is not within two years following a Change in Control or (ii) for any reason other than Retirement, death or Disability, any Options that have not theretofore become Vested Options shall be forfeited by Participant without consideration.

4. Termination.

(a) The Options (to the extent not otherwise forfeited) shall automatically terminate and shall become null and void, be unexercisable and be of no further force and effect upon the earliest of:

(i) the tenth anniversary of the Date of Grant;

(ii) the first anniversary of Participant’s Termination of Employment in the case of a Termination of Employment due to death or Disability;

(iii) the 90th day following Participant’s Termination of Employment in the case of a Termination of Employment by NBHC without Cause or a Termination of Employment due to Participant’s resignation for any reason; and

(iv) the day of Participant’s Termination of Employment in the case of a Termination of Employment for Cause.

(b) Notwithstanding the provisions of Section ‎4(a) to the contrary, in the event of Participant’s Termination of Employment for any reason (other than due to a Termination of Employment for Cause) during the two-year period following a Change in Control, the Option (or other form of Replacement Award, if applicable) shall remain outstanding and exercisable until the earlier of (i) the tenth anniversary of the Date of Grant and (ii) the fifth anniversary of such Termination of Employment.

5. Compliance with Legal Requirements.  The grant and exercise of the Option and any other obligations of NBHC under this Agreement shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any regulatory or governmental agency as may be required.  The Committee, in its sole discretion, may postpone the issuance or delivery of the Shares as the Committee may consider appropriate, and may require Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the Shares in compliance with applicable laws, rules and regulations.

6. Non-Transferability.  The Option may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by Participant other than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against NBHC, its Subsidiaries or Affiliates; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.  The Option and any Shares received upon exercise thereof shall be subject to the restrictions set forth in the Plan and this Agreement.

7. Adjustment.  In the event of any event described in Section 3(h) of the Plan occurring after the Date of Grant, the adjustment provisions as provided for under Section 3(h) of the Plan shall apply to the Option.

8. Change in Control.  Notwithstanding anything in the Plan or otherwise set forth in this Agreement to the contrary, upon the occurrence of a Change in Control, the Option, if outstanding, shall vest and become exercisable in full, except to the extent that another award meeting the requirements of this Section ‎8 is provided to Participant to replace the Option (any award meeting the requirements of this Section ‎8, a “Replacement Award”).  An award shall meet the conditions of this Section ‎8 (and hence qualify as a Replacement Award) if: (a) it is a stock option or stock appreciation right in respect of publicly traded equity securities of NBHC or the surviving corporation or the ultimate parent of the applicable entity following the Change in Control, (b) it has a value at least equal to the value of the Option as of the date of the Change in Control (other than in respect of customary fractional rounding of share amounts and exercise price), (c) it contains terms relating to vesting and exercisability (including with respect to Termination of Employment) that are substantially identical to those of the Option, and (d) its other terms and conditions are not less favorable to Participant than the terms and conditions of the Option (including provisions that apply in the event of a subsequent Change in Control) as of the date of the Change in Control.  Without limiting the generality of the foregoing, a Replacement Award may take the form of a continuation of the Option if the requirements of the preceding sentence are satisfied.  The determination of whether the conditions of this Section ‎8 are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion. 

9. Tax Withholding.  As a condition to exercising the Option, in whole or in part, Participant will pay to NBHC, or, to the extent permitted by the Committee, make provisions satisfactory to NBHC for payment of, any federal, state or local tax in respect of the exercise or the transfer of the Shares pursuant to Section 14(d) of the Plan.

10. Forfeiture.  Participant agrees that, notwithstanding any other provision of any agreement to which he or she is subject with NBHC or NBH Bank (collectively, the “Company”), and in addition to and not in contravention of any clawback provision or policy applicable to Participant as in effect from time to time (including any clawback policies or provisions implemented pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable laws):

(a) If the Company is required to prepare an accounting restatement due to material noncompliance of the Company as a result of Participant’s misconduct in connection with any financial reporting requirement under the federal securities laws, Participant shall reimburse the Company for all amounts received under this Agreement from the Company during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission (whichever first occurs) of the financial document embodying such financial reporting requirement, and any amounts received with respect to, or amounts realized upon, the exercise of Options or the subsequent sale of the underlying Shares that were issued upon the exercise of the Options or the cancellation of the Options during that 12-month period;

(b) If the Committee shall determine that Participant has engaged in a serious breach of conduct, the Committee may terminate this Agreement, cancel all Options and/or require Participant to repay gain realized on the exercise of Options; and

(c) If Participant is found guilty of misconduct by any judicial or administrative authority in connection with any (i) formal investigation by the Securities and Exchange Commission or (ii) other federal or state regulatory investigation, then the Committee may terminate this Agreement, require Participant to forfeit Options and/or may require the repayment of any gain realized on the exercise of any Options without regard to the timing of the determination of misconduct in relation to the timing of the exercise of the Option.

The foregoing provisions of this Section 10 shall cease to apply following a Change in Control, except as otherwise required by applicable law.

11. Miscellaneous.

(a) Confidentiality of this Agreement.  Participant agrees to keep confidential the terms of this Agreement, unless and until such terms have been disclosed publicly other than through a breach by Participant of this covenant.  This provision does not prohibit Participant from providing this information on a confidential and privileged basis to Participant’s attorneys or accountants for purposes of obtaining legal or tax advice or as otherwise required by law.

(b) Restrictive Covenants.  The grant and vesting of the Options pursuant to this Agreement shall be in partial consideration and subject to Participant’s continued compliance with (i) any restrictive covenants set forth in an Individual Agreement or (ii) if there are no confidentiality and/or non-solicitation provisions in an Individual Agreement, the restrictive covenants as set forth in Annex A hereto.  For the avoidance of doubt, if there are confidentiality and/or non-solicitation provisions in an Individual Agreement, the restrictive covenants in the Individual Agreement shall govern.

(c) Waiver and Amendment.  The Committee may waive any conditions or rights under, or amend any terms of, this Agreement and the Option granted hereunder; provided that any such waiver or amendment that would impair the rights of any Participant or any holder or beneficiary of any Option heretofore granted shall not to that extent be effective without the consent of Participant.  No waiver of any right hereunder by any party shall operate as a waiver of any other right, or as a waiver of the same right with respect to any subsequent occasion for its exercise, or as a waiver of any right to damages.  No waiver by any party of any breach of this Agreement shall be held to constitute a waiver of any other breach or a waiver of the continuation of the same breach.

(d) Notices.  All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, facsimile, courier service or personal delivery:

if to NBHC to:
National Bank Holdings Corporation
7800 East Orchard Road, Suite 300
Greenwood Village, CO 80111
Facsimile:  (855) 576-3479
Attention:  Legal Department

if to Participant:  at the address last on the records of NBHC.

All such notices, demands and other communications shall be deemed to have been duly given (i) when delivered by hand, if personally delivered; (ii) when delivered by courier, if delivered by commercial courier service; (iii) five business days after being deposited in the mail, postage prepaid, if mailed; and (iv) when receipt is mechanically acknowledged, if by facsimile.

(e) Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

(f) No Rights to Service.  Nothing contained in this Agreement shall be construed as giving Participant any right to be retained, in any position, as an employee, consultant or director of NBHC or its Affiliates or shall interfere with or restrict in any way the right of NBHC or its Affiliates, which is hereby expressly reserved, to remove, terminate or discharge Participant at any time for any reason whatsoever.

(g) Beneficiary.  Participant may file with NBHC a written designation of a beneficiary on such form as may be prescribed by the Committee and may, from time to time, change or revoke such designation by filing a new designation with NBHC.  The last such designation received by NBHC shall be controlling; provided,  however, that no designation, or change or revocation thereof, shall be effective unless received by NBHC prior to Participant’s death, and in no event shall it be effective as of a date prior to such receipt.  If no beneficiary designation is filed by Participant, the beneficiary shall be deemed to be his or her spouse or, if Participant is unmarried at the time of death, his or her estate.

(h) Successors.  The terms of this Agreement shall be binding upon and inure to the benefit of NBHC, its successors and assigns, and of Participant and the beneficiaries, executors, administrators, heirs and successors of Participant.

(i) Entire Agreement.  This Agreement and the Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations with respect thereto.

(j) Bound by the Plan.  By signing this Agreement, Participant acknowledges that he or she has received a copy of the Plan and has had an opportunity to review the Plan and agrees to be bound by all the terms and provisions of the Plan.

(k) Governing Law.  This Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware without regard to principles of conflicts of law thereof, or principles of conflicts of laws of any other jurisdiction that could cause the application of the laws of any jurisdiction other than the State of Delaware.

(l) Headings.  The headings of the Sections of this Agreement are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part, of this Agreement.

(m) Counterparts.  This Agreement may be signed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

12. Certain Definitions and Administration.

(a) Termination for Cause.  Unless otherwise provided under the termination with “cause” provisions of an Individual Agreement, to invoke a termination for Cause, NBHC must provide written notice to Participant of the existence of such grounds within 30 days following NBHC’s knowledge of the existence of such grounds, specifying in reasonable detail the grounds constituting Cause, and, with respect to the grounds enumerated in clauses (A), (C), (D) and (E) of the definition of Cause in the Plan, Participant shall have 30 days following receipt of such written notice during which he or she may remedy the ground if such ground is reasonably subject to cure as determined by NBHC. 

(b) “Good Reason” shall have the meaning given to such term in an Individual Agreement, or if there is no such Individual Agreement or if it does not define Good Reason then Good Reason shall mean the occurrence of the following, in the absence of Participant’s written consent:

(i) a material diminution in Participant’s annual base salary from that in effect immediately prior to a Change in Control; or

(ii) the assignment to Participant of any duties materially inconsistent with Participant’s positions (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by NBHC that results in a material diminution in such positions, authority, duties or responsibilities, in each case, from those in effect immediately prior to a Change in Control; or

provided that, in each case, (A) Participant provides written notice to NBHC of the existence of one or more of the conditions described in clauses (i) through (ii) above within 30 days following Participant’s knowledge of the initial existence of such condition or conditions, specifying in reasonable detail the conditions constituting Good Reason; (B) NBHC and its Affiliates fail to cure such event or condition within 30 days following the receipt of such notice; and (C) Participant incurs a Termination of Employment within 30 days following the expiration of such cure period.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

NATIONAL BANK HOLDINGS CORPORATION

By: ____________________________________
Name:  
Title:    

By:  ____________________________________
Name:  
Title:    

PARTICIPANT

_______________________________________

[Participant]

Annex A
Restrictive Covenants

1. Confidential Information.  Participant agrees that, during his or her employment with NBHC and at all times thereafter, he or she shall hold for the benefit of NBHC all secret or confidential information, knowledge, or data relating to NBHC or any of its Affiliates, and their respective businesses, which shall have been obtained by Participant during Participant’s employment by NBHC or during his or her consultation with NBHC after his or her termination of employment, and which shall not be or become public knowledge (other than by acts by Participant or representatives of Participant in violation of this Agreement).  Except in the good faith performance of his or her duties for NBHC, Participant shall not, without the prior written consent of NBHC or as may otherwise be required or permitted by law or legal process, communicate or divulge any such information, knowledge, or data to anyone other than NBHC and those designated by it.

Notwithstanding the above confidentiality provisions, nothing in this Agreement, in any other agreement, or in the Company’s policies should be interpreted as prohibiting Participant from: (1) reporting possible violations of federal law or regulations, including any securities laws violations, to any governmental agency or entity, including but not limited to the Department of Justice, the U.S. Securities & Exchange Commission, the U.S. Congress, or any agency Inspector General; (2) making any other disclosures that are protected under the whistleblower provisions of federal law or regulations; or (3) otherwise fully participating in any federal whistleblower programs.

Please refer to the NBHC Associate Handbook, a copy of which is available upon request, regarding Participant’s rights related to the disclosure of the Company’s trade secrets.

2. Nonsolicitation.  Participant agrees that, while he or she is employed by NBHC and during the one-year period following his or her termination of employment with NBHC (the “Restricted Period”), Participant shall not, directly or indirectly, (a) solicit any individual who is, on the date on which Participant incurs a Termination of Employment (the “Date of Termination”) (or was, during the six-month period prior to the Date of Termination), employed by NBHC or any of its Affiliates to terminate or refrain from renewing or extending such employment or to become employed by or become a consultant to any other individual or entity other than NBHC or such Affiliate, (b)  initiate discussions with any such individual for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other individual or entity on behalf of Participant’s employer, (c) solicit any client or customer of NBHC or any of its Affiliates to transact business with a Competitive Enterprise (as defined below), or (d) induce or attempt to induce any client, customer, or investor (in each case, whether former, current, or prospective), vendor, supplier, licensee, or other business relation of NBHC or any of its Affiliates to reduce or cease doing business with NBHC or any such Affiliate, or in any way interfere with the relationship between any such client, customer, investor, vendor, supplier, licensee, or business relation, on the one hand, and NBHC or any such Affiliate, on the other hand.  For purposes hereof, “Competitive Enterprise” means any business enterprise that either (i) engages in any activity closely associated with commercial banking or any other financial services business, including the operations of an institution, the deposits of which are insured by the Federal Deposit Insurance Corporation, that is competitive with any portion of the business conducted by NBHC or any of its Affiliates.

3. Equitable Remedies.  Participant acknowledges that NBHC would be irreparably injured by a violation of Section ‎1 or Section ‎2 of this Annex A and he or she agrees that NBHC, in addition to any other remedies available to it for such breach or threatened breach, on meeting the standards required by law, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining Participant from any actual or threatened breach of Section ‎1 or Section ‎2 of this Annex A.  If a bond is required to be posted in order for NBHC to secure an injunction or other equitable remedy, the parties agree that said bond need not be more than a nominal sum.

4. Severability; Blue Pencil.  Participant acknowledges and agrees that he or she has had the opportunity to seek advice of counsel in connection with this Agreement and the restrictive covenants contained herein are reasonable in geographical scope, temporal duration, and in all other respects.  If it is determined that any provision of this Annex A is invalid or unenforceable, the remainder of the provisions of this Annex A shall not thereby be affected and shall be given full effect, without regard to the invalid portions.  If any court or other decision-maker of competent jurisdiction determines that any of the covenants in this Annex A is unenforceable because of the duration or geographic scope of such provision, then after such determination becomes final and unappealable, the duration or scope of such provision, as

the case may be, shall be reduced so that such provision becomes enforceable, and in its reduced form, such provision shall be enforced.

SCHEDULE

Date of Grant:

Participant:

Shares:

Option Price (per share):

Vesting Schedule:

Date Shares Vested

EX-21.1

Exhibit 21.1

Subsidiary	Jurisdiction of Organization	Trade Names
NBH Bank	Colorado	Bank Midwest; Community Banks of Colorado; Hillcrest Bank; NBH Capital Finance; Bank Midwest Mortgage; Community Banks Mortgage, a Division of NBH Bank; and Hillcrest Bank Mortgage
NBH Realty I, LLC	Missouri
NBH Realty II, LLC	Missouri

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

National Bank Holdings Corporation:

We consent to the incorporation by reference in the registration statement No. 333-184054 and No. 333-222792 on Form S-3 and No. 333-204071 and No. 333-195785 on Form S-8 of National Bank Holdings Corporation and subsidiaries (the Company) of our reports dated February 26, 2020, with respect to the consolidated statements of financial condition of the Company as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes, and the effectiveness of internal control over financial reporting as of December 31, 2019, which reports appear in the December 31, 2019 annual report on Form 10-K of National Bank Holdings Corporation.

Kansas City,  Missouri

February 26, 2020

EX-31.1

Exhibit 31.1

Certifications of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, G. Timothy Laney, Chief Executive Officer, certify that:

1. I have reviewed this annual report on Form 10-K of National Bank Holdings Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 26, 2020	/s/ G. Timothy Laney
		G. Timothy Laney
		Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certifications of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Aldis Birkans, Chief Financial Officer, certify that:

1. I have reviewed this annual report on Form 10-K of National Bank Holdings Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

9
Date:	February 26, 2020	/s/ Aldis Birkans
		Aldis Birkans
		Chief Financial Officer

EX-32

Exhibit 32

Certifications of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the annual report of National Bank Holdings Corporation (the “Company”) on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), each of the undersigned officers certifies pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: (1) this Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date:	February 26, 2020	/s/ G. Timothy Laney
		G. Timothy Laney
		Chairman, President and Chief Executive Officer
Date:	February 26, 2020	/s/ Aldis Birkans
		Aldis Birkans
		Chief Financial Officer

XML

Loans - Re-Measurement of Loans Accounted for Under ASC Topic 310-30 Resulting in Changes in Carrying Amount of Accretable Yield (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Accretable yield beginning balance	$ 35,901	$ 46,568
Reclassification from non-accretable difference	6,195	10,751
Reclassification to non-accretable difference	(921)	(2,263)
Accretion	(13,041)	(19,155)
Accretable yield ending balance	$ 28,134	$ 35,901

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2019	Feb. 24, 2020	Jun. 30, 2019
Document Document And Entity Information
Document Type	10-K
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2019
Entity File Number	001-35654
Entity Registrant Name	NATIONAL BANK HOLDINGS CORP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-0563799
Entity Address, Address Line One	7800 East Orchard Road, Suite 300
Entity Address, City or Town	Greenwood Village
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80111
City Area Code	303
Local Phone Number	892-8715
Title of 12(b) Security	Class A Common Stock, Par Value $0.01
Trading Symbol	NBHC
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		31,177,476
Entity Public Float			$ 1,094,000,000
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Entity Central Index Key	0001475841
Amendment Flag	false

XML

Goodwill and Intangible Assets - Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jan. 01, 2018 USD ($)
Goodwill and Intangible Assets
Goodwill acquired	$ 115,027	$ 115,027
Goodwill Impairment	0	0
Amortization of acquired identifiable intangibles	1,183	2,170	$ 5,342
Mortgage loans serviced	308,400	389,000
Mortgage service fees	1,000	1,100
Accumulated amortization	40,100	38,900
Peoples Inc
Goodwill and Intangible Assets
Goodwill acquired				$ 55,397
Amortization of acquired identifiable intangibles			1,000
Core Deposits
Goodwill and Intangible Assets
Intangible assets acquired	48,800
Amortization of acquired identifiable intangibles	1,200	(2,200)	$ 5,300
Accumulated amortization	$ 40,103	38,920
Core Deposits | Minimum
Goodwill and Intangible Assets
Amortization period	7 years
Core Deposits | Maximum
Goodwill and Intangible Assets
Amortization period	10 years
Core Deposits | Peoples Inc
Goodwill and Intangible Assets
Intangible assets acquired				10,477
Mortgage servicing rights
Goodwill and Intangible Assets
Amortization of acquired identifiable intangibles	$ 824	$ 754
Mortgage servicing rights | Measurement Input, Discount Rate [Member] | Minimum
Goodwill and Intangible Assets
Servicing assets measurement input (as a percent)	0.095	0.095
Mortgage servicing rights | Measurement Input, Discount Rate [Member] | Maximum
Goodwill and Intangible Assets
Servicing assets measurement input (as a percent)	0.105	0.105
Mortgage servicing rights | Measurement Input, Constant Prepayment Rate [Member] | Minimum
Goodwill and Intangible Assets
Servicing assets measurement input (as a percent)	0.148	0.122
Mortgage servicing rights | Measurement Input, Constant Prepayment Rate [Member] | Maximum
Goodwill and Intangible Assets
Servicing assets measurement input (as a percent)	0.220	0.172
Mortgage servicing rights | Peoples Inc
Goodwill and Intangible Assets
Intangible assets acquired				$ 4,301

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 80,365	$ 61,451	$ 14,579
Securities available-for-sale:
Net unrealized gains (losses) arising during the period, net of tax (expense) benefit of ($4,510), $876 and $1,871 for the years ended December 31, 2019, 2018 and 2017, respectively.	14,352	(2,243)	(3,128)
Less: amortization of net unrealized holding gains to income, net of tax benefit of $320, $361 and $828 for the years ended December 31, 2019, 2018 and 2017, respectively.	(1,015)	(1,311)	(1,352)
Other comprehensive income (loss)	13,337	(3,554)	(4,480)
Comprehensive income	$ 93,702	$ 57,897	$ 10,099

XML

Premises and Equipment - Schedule of Premises and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Total premises and equipment, at cost	$ 183,694	$ 173,367
Less: accumulated depreciation and amortization	(71,543)	(63,381)
Property, Plant and Equipment, Net, Total	112,151	109,986
Land [Member]
Property, Plant and Equipment [Line Items]
Total premises and equipment, at cost	32,911	32,058
Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Total premises and equipment, at cost	94,260	88,955
Equipment [Member]
Property, Plant and Equipment [Line Items]
Total premises and equipment, at cost	$ 56,523	$ 52,354

XML

Loans - Impaired Loans - Average Recorded Investment and Interest Income Recognized (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Loans [Line Items]
Impaired Financing Receivable, Average Recorded Investment	$ 36,743	$ 32,674	$ 38,369
Impaired Financing Receivable, Interest Income, Cash Basis Method	421	446	798
Commercial and Industrial [Member]
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	13,062	3,248	5,609
Impaired Financing Receivable, with No Related Allowance, Interest Income, Cash Basis Method	248	168	152
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	5,788	4,677	7,331
Owner-Occupied [Member]
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	2,849	6,799	4,155
Impaired Financing Receivable, with No Related Allowance, Interest Income, Cash Basis Method	27	38	80
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	554	1,220	747
Impaired Financing Receivable, with Related Allowance, Interest Income, Cash Basis Method	17	19	20
Food and Agriculture [Member]
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	1,316	1,259	1,422
Impaired Financing Receivable, with No Related Allowance, Interest Income, Cash Basis Method		98	244
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	796	862	2,092
Impaired Financing Receivable, with Related Allowance, Interest Income, Cash Basis Method	12	5	5
Energy Loans [Member]
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment		884	8,004
Impaired Financing Receivable, with No Related Allowance, Interest Income, Cash Basis Method			156
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	865
Commercial Loan [Member]
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	17,227	12,190	19,190
Impaired Financing Receivable, with No Related Allowance, Interest Income, Cash Basis Method	275	304	632
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	8,003	6,759	10,170
Impaired Financing Receivable, with Related Allowance, Interest Income, Cash Basis Method	29	24	25
Commercial Construction [Member]
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment		1,208
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment			188
Commercial Acquisition/Development [Member]
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	575	606
Multifamily [Member]
Loans [Line Items]
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment			30
Impaired Financing Receivable, with Related Allowance, Interest Income, Cash Basis Method			1
Non Owner-Occupied [Member]
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	28	573	878
Impaired Financing Receivable, with No Related Allowance, Interest Income, Cash Basis Method			22
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	207	288	213
Impaired Financing Receivable, with Related Allowance, Interest Income, Cash Basis Method	14	16	9
Total Commercial Real Estate [Member]
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	603	2,387	878
Impaired Financing Receivable, with No Related Allowance, Interest Income, Cash Basis Method			22
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	207	288	431
Impaired Financing Receivable, with Related Allowance, Interest Income, Cash Basis Method	14	16	10
Senior lien
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	4,081	3,904	326
Impaired Financing Receivable, with No Related Allowance, Interest Income, Cash Basis Method	1
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	5,241	5,412	5,986
Impaired Financing Receivable, with Related Allowance, Interest Income, Cash Basis Method	66	57	67
Junior lien
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	287	355
Impaired Financing Receivable, with No Related Allowance, Interest Income, Cash Basis Method	2	2
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	1,034	1,331	1,225
Impaired Financing Receivable, with Related Allowance, Interest Income, Cash Basis Method	34	43	42
Residential Real Estate Segment [Member]
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	4,368	4,259	326
Impaired Financing Receivable, with No Related Allowance, Interest Income, Cash Basis Method	3	2
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	6,275	6,743	7,211
Impaired Financing Receivable, with Related Allowance, Interest Income, Cash Basis Method	100	100	109
Consumer [Member]
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	11	12
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	49	36	163
Impaired Loans With No Related Allowance Recorded [Member] [Member]
Loans [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	22,209	18,848	20,394
Impaired Financing Receivable, with No Related Allowance, Interest Income, Cash Basis Method	278	306	654
Impaired Loans With Related Allowance Recorded [Member]
Loans [Line Items]
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	14,534	13,826	17,975
Impaired Financing Receivable, with Related Allowance, Interest Income, Cash Basis Method	$ 143	$ 140	$ 144

XML

Loans - Loan Portfolio Composition Including Carrying Value by Segment of Loans Accounted for under ASC Topic 310-30 (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Loans [Line Items]
Total Loans	$ 4,415,406	$ 4,092,308
% of Total1	100.00%	100.00%
Commercial Loan [Member]
Loans [Line Items]
Total Loans	$ 2,992,307	$ 2,644,571
% of Total1	67.80%	64.60%
Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	$ 630,906	$ 592,212
% of Total1	14.30%	14.50%
Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	$ 770,417	$ 830,815
% of Total1	17.40%	20.30%
Consumer [Member]
Loans [Line Items]
Total Loans	$ 21,776	$ 24,710
% of Total1	0.50%	0.60%
ASC 310-30 [Member]
Loans [Line Items]
Total Loans	$ 54,094	$ 70,879
ASC 310-30 [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	15,300	20,398
ASC 310-30 [Member] | Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	32,788	40,393
ASC 310-30 [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	6,006	9,995
ASC 310-30 [Member] | Consumer [Member]
Loans [Line Items]
Total Loans		93
Originated and acquired loans [Member]
Loans [Line Items]
Total Loans	4,361,312	4,021,429
Originated and acquired loans [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	2,977,007	2,624,173
Originated and acquired loans [Member] | Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	598,118	551,819
Originated and acquired loans [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	764,411	820,820
Originated and acquired loans [Member] | Consumer [Member]
Loans [Line Items]
Total Loans	$ 21,776	$ 24,617

XML

Allowance for Loan Losses - Summary of Company's Allowance for Loan Losses ("All") and Recorded Investment in Loans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	$ 35,692	$ 31,264
Recoveries		1,100
Provision (recoupment) for loan losses	11,643	5,197	$ 12,972
Ending balance	39,064	35,692	31,264
Carrying amount of loan investments				$ 4,415,406	$ 4,092,308
Loans	35,692	31,264	31,264	39,064	35,692
Total Loans				4,415,406	4,092,308
Originated and acquired loans [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	35,461	31,193
Charge-offs	(8,599)	(2,096)
Recoveries	328	1,389
Provision (recoupment) for loan losses	11,694	4,975
Ending balance	38,884	35,461	31,193
Carrying amount of loan investments				4,361,312	4,021,429
Loans	38,884	31,193	31,193	38,884	35,461
Total Loans				4,361,312	4,021,429
Originated and acquired loans [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Ending allowance balance individually evaluated for impairment				1,795	1,169
Ending allowance balance collectively evaluated for impairment				37,089	34,292
Loans individually evaluated for impairment				32,763	31,079
Loans collectively evaluated for impairment				4,328,549	3,990,350
ASC 310-30 [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	231	71
Charge-offs		(62)
Provision (recoupment) for loan losses	(51)	222
Ending balance	180	231	71
Carrying amount of loan investments				54,094	70,879
Loans	180	71	71	180	231
Total Loans				54,094	70,879
Commercial Portfolio Segment [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	27,137	21,385
Ending balance	30,442	27,137	21,385
Carrying amount of loan investments				2,992,307	2,644,571
Loans	30,442	21,385	21,385	30,442	27,137
Total Loans				2,992,307	2,644,571
Commercial Portfolio Segment [Member] | Originated and acquired loans [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	26,946	21,340
Charge-offs	(7,422)	(833)
Recoveries	102	1,171
Provision (recoupment) for loan losses	10,636	5,268
Ending balance	30,262	26,946	21,340
Loans	30,262	21,340	21,340	30,262	26,946
Commercial Portfolio Segment [Member] | Originated and acquired loans [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Ending allowance balance individually evaluated for impairment				1,763	1,132
Ending allowance balance collectively evaluated for impairment				28,499	25,814
Loans individually evaluated for impairment				21,844	18,282
Loans collectively evaluated for impairment				2,955,163	2,605,891
Commercial Portfolio Segment [Member] | ASC 310-30 [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	191	45
Charge-offs		(62)
Provision (recoupment) for loan losses	(11)	208
Ending balance	180	191	45
Carrying amount of loan investments				15,300	20,398
Loans	180	45	45	180	191
Total Loans				15,300	20,398
Non Owner-Occupied [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	4,406	5,609
Ending balance	4,850	4,406	5,609
Carrying amount of loan investments				630,906	592,212
Loans	4,850	5,609	5,609	4,850	4,406
Total Loans				630,906	592,212
Non Owner-Occupied [Member] | Originated and acquired loans [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	4,406	5,583
Charge-offs	(116)	(11)
Recoveries	12
Provision (recoupment) for loan losses	548	(1,166)
Ending balance	4,850	4,406	5,583
Loans	4,850	5,583	5,583	4,850	4,406
Non Owner-Occupied [Member] | Originated and acquired loans [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Ending allowance balance individually evaluated for impairment				1	2
Ending allowance balance collectively evaluated for impairment				4,849	4,404
Loans individually evaluated for impairment				612	2,129
Loans collectively evaluated for impairment				597,506	549,690
Non Owner-Occupied [Member] | ASC 310-30 [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance		26
Provision (recoupment) for loan losses		(26)
Ending balance			26
Carrying amount of loan investments				32,788	40,393
Loans		26	26
Total Loans				32,788	40,393
Residential Portfolio Segment [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	3,800	3,965
Ending balance	3,468	3,800	3,965
Carrying amount of loan investments				770,417	830,815
Loans	3,468	3,965	3,965	3,468	3,800
Total Loans				770,417	830,815
Residential Portfolio Segment [Member] | Originated and acquired loans [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	3,760	3,965
Charge-offs	(124)	(118)
Recoveries	34	14
Provision (recoupment) for loan losses	(202)	(101)
Ending balance	3,468	3,760	3,965
Loans	3,468	3,965	3,965	3,468	3,760
Residential Portfolio Segment [Member] | Originated and acquired loans [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Ending allowance balance individually evaluated for impairment				31	35
Ending allowance balance collectively evaluated for impairment				3,437	3,725
Loans individually evaluated for impairment				10,257	5,169
Loans collectively evaluated for impairment				754,154	815,651
Residential Portfolio Segment [Member] | ASC 310-30 [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	40
Provision (recoupment) for loan losses	(40)	40
Ending balance		40
Carrying amount of loan investments				6,006	9,995
Loans	40	40			40
Total Loans				6,006	9,995
Consumer Loan [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	349	305
Ending balance	304	349	305
Carrying amount of loan investments				21,776	24,710
Loans	304	305	305	304	349
Total Loans				21,776	24,710
Consumer Loan [Member] | Originated and acquired loans [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	349	305
Charge-offs	(937)	(1,134)
Recoveries	180	204
Provision (recoupment) for loan losses	712	974
Ending balance	304	349	305
Loans	$ 304	$ 305	$ 305	304	349
Consumer Loan [Member] | Originated and acquired loans [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Ending allowance balance collectively evaluated for impairment				304	349
Loans individually evaluated for impairment				50	5,499
Loans collectively evaluated for impairment				$ 21,726	19,118
Consumer Loan [Member] | ASC 310-30 [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Carrying amount of loan investments					93
Total Loans					$ 93

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net income	$ 80,365	$ 61,451	$ 14,579
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	11,643	5,197	12,972
Depreciation and amortization	15,038	11,522	12,889
Current income tax receivable	1,955	4,246	1,260
Deferred income taxes	8,793	9,092	17,180
Net excess tax benefit on stock-based compensation	(2,160)	(1,286)	(4,225)
Discount accretion, net of premium amortization on securities	(2,047)	(2,911)	(2,581)
Loan accretion	(15,590)	(23,115)	(23,933)
Gain on sale of mortgages, net	(39,922)	(27,009)	(2,154)
Origination of loans held for sale, net of repayments	(1,317,547)	(1,005,850)	(85,959)
Proceeds from sales of loans held for sale	1,289,877	1,030,906	101,935
Bank-owned life insurance income	(1,713)	(1,791)	(1,871)
Gain on the sale of other real estate owned, net	(7,193)	(488)	(4,150)
Impairment on other real estate owned	1,082	230	766
Impairment on fixed assets related to banking center consolidations	898
Stock-based compensation	4,869	4,420	3,648
Operating lease payments	(5,294)
Acquisition-related costs		(7,957)	(2,691)
Change in other assets	(697)	(3,654)	3,187
Change in other liabilities	16,025	14,749	12,125
Net cash provided by operating activities	42,476	73,574	58,139
Cash flows from investing activities:
Purchase of FHLB stock	(16,761)	(16,463)	(7,448)
Proceeds from redemption of FHLB stock	14,565	12,062	6,877
Purchase of FRB stock		(4,716)
Proceeds from redemption of FRB stock		1,371
Proceeds from maturities of investment securities held-to-maturity	60,948	61,913	71,105
Proceeds from maturities of investment securities available-for-sale	195,467	216,077	224,336
Proceeds from sales of investment securities available-for-sale	20,378	33,637
Proceeds from maturities of non-marketable securities		67	490
Purchase of investment securities held-to-maturity	(10,201)	(40,735)
Purchase of investment securities available-for-sale	(45,745)	(72,555)	(202,694)
Net increase in loans	(312,844)	(382,441)	(314,008)
Purchases of premises and equipment, net	(11,204)	(6,277)	(5,617)
Purchase of bank-owned life insurance	(20,000)
Proceeds from sales of loans		713	38,087
Proceeds from sales of other real estate owned	12,112	26,346	10,355
Net cash activity from acquisition		68,984
Net cash used in investing activities	(113,285)	(102,017)	(178,517)
Cash flows from financing activities:
Net increase (decrease) in deposits	201,511	(173,849)	113,796
Net (decrease) increase in repurchase agreements and other short-term borrowings	(9,112)	(64,416)	38,452
Advances from FHLB	1,477,447	889,416	263,129
FHLB repayments	(1,571,432)	(750,696)	(172,679)
Issuance of stock under purchase and equity compensation plans	(6,229)	(772)	(8,395)
Proceeds from exercise of stock options	2,788	7,576	104
Payment of dividends	(23,530)	(16,624)	(9,401)
Net cash provided by (used in) financing activities	71,443	(109,365)	225,006
Increase (decrease) in cash, cash equivalents and restricted cash	634	(137,808)	104,628
Cash, cash equivalents and restricted cash at beginning of the year	119,556	257,364	152,736
Cash, cash equivalents and restricted cash at end of period	120,190	119,556	257,364
Supplemental disclosure of cash flow information during the period:
Cash paid for interest	34,458	22,714	17,312
Net tax payments (refunds)	9,271	(2,345)	(127)
Supplemental schedule of non-cash activities:
Loans transferred to other real estate owned at fair value	2,705	24,940	1,800
Increase (decrease) in loans purchased but not settled	7,372	(21,202)	25,118
Loans transferred from loans held for sale to loans	1,732	1,038	$ 5,736
Lease right-of-use assets obtained	$ (30,474)
Treasury stock reissued for acquisition		$ 110,213

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies

Schedule of Total Unfunded Commitments

Total unfunded commitments at December 31, 2019 and 2018 were as follows:

	December 31, 2019		December 31, 2018
Commitments to fund loans	$	249,914	$	183,946
Unfunded commitments under lines of credit		600,407		589,573
Commercial and standby letters of credit		11,929		10,558
Total unfunded commitments	$	862,250	$	784,077

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Quarterly Results of Operations (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Summary of Quarterly Results

The following is a summary of quarterly results:

	December 31, 2019
	Fourth		Third		Second		First
	quarter		quarter		quarter		quarter		Total
Interest and dividend income	$	59,616	$	61,372	$	62,193	$	59,420	$	242,601
Interest expense		9,228		9,587		9,702		8,254		36,771
Net interest income before provision for loan losses		50,388		51,785		52,491		51,166		205,830
Provision for loan losses		1,180		5,690		3,239		1,534		11,643
Net interest income after provision for loan losses		49,208		46,095		49,252		49,632		194,187
Non-interest income		20,282		24,759		20,660		17,051		82,752
Non-interest expense		46,107		43,793		46,451		44,394		180,745
Income before income taxes		23,383		27,061		23,461		22,289		96,194
Income tax expense		3,864		5,419		3,179		3,367		15,829
Net income	$	19,519	$	21,642	$	20,282	$	18,922	$	80,365
Earnings per share-basic	$	0.62	$	0.69	$	0.65	$	0.61	$	2.57
Earnings per share-diluted		0.62		0.69		0.64		0.60		2.55

	December 31, 2018
	Fourth		Third		Second		First
	quarter		quarter		quarter		quarter		Total
Interest and dividend income	$	57,780	$	55,909	$	54,911	$	52,791	$	221,391
Interest expense		7,148		6,137		5,525		5,144		23,954
Net interest income before provision for loan losses		50,632		49,772		49,386		47,647		197,437
Provision for loan losses		2,476		807		1,873		41		5,197
Net interest income after provision for loan losses		48,156		48,965		47,513		47,606		192,240
Non-interest income		15,317		18,061		19,562		17,835		70,775
Non-interest expense		42,857		44,432		46,763		55,282		189,334
Income before income taxes		20,616		22,594		20,312		10,159		73,681
Income tax expense		3,381		4,354		2,800		1,695		12,230
Net income	$	17,235	$	18,240	$	17,512	$	8,464	$	61,451
Earnings per share-basic	$	0.56	$	0.59	$	0.57	$	0.28	$	2.00
Earnings per share-diluted		0.55		0.58		0.56		0.27		1.95

	December 31, 2017
	Fourth		Third		Second		First
	quarter		quarter		quarter		quarter		Total
Interest and dividend income	$	41,889	$	42,579	$	41,213	$	38,740	$	164,421
Interest expense		4,976		4,681		4,440		4,018		18,115
Net interest income before provision for loan losses		36,913		37,898		36,773		34,722		146,306
Provision for loan losses		3,272		3,880		4,025		1,795		12,972
Net interest income after provision for loan losses		33,641		34,018		32,748		32,927		133,334
Non-interest income		8,883		9,551		12,075		8,696		39,205
Non-interest expense		34,028		34,605		33,439		34,605		136,677
Income before income taxes		8,496		8,964		11,384		7,018		35,862
Income tax expense (benefit)		18,615		1,733		2,175		(1,240)		21,283
Net (loss) income	$	(10,119)	$	7,231	$	9,209	$	8,258	$	14,579
(Loss) earnings per share-basic	$	(0.37)	$	0.27	$	0.34	$	0.31	$	0.54
(Loss) earnings per share-diluted		(0.37)		0.26		0.33		0.30		0.53

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Subsequent Event

12 Months Ended

Dec. 31, 2019

Subsequent Event

Subsequent Event

Note 27 Subsequent Event

On February 26, 2020, the Company’s Board of Directors authorized a new program to repurchase up to $50.0 million 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 Securities and Exchange Commission. Total authorization under the Company’s repurchase programs is $62.6 million, including $12.6 million remaining from the previously authorized stock repurchase program announced in August 2016.

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Acquisition Activities - Summary of Net Assets Acquired (Details) - USD ($) $ / shares in Units, $ in Thousands	Jan. 01, 2018	Dec. 31, 2019	Dec. 31, 2018
Consideration:
Goodwill		$ 115,027	$ 115,027
Closing price	$ 32.43
Core Deposits
Assets:
Intangible asset		$ 48,800
Peoples Inc
Assets:
Cash and due from banks	$ 105,173
Investment securities available-for-sale	118,512
Non-marketable securities	4,796
Loans	542,707
Loans held for sale	54,260
Other real estate owned	1,253
Premises and equipment	18,584
Other assets	15,361
Total assets acquired	875,424
Liabilities:
Total deposits	729,911
FHLB borrowings	33,825
Other liabilities	20,683
Total liabilities assumed	784,419
Identifiable net assets acquired	91,005
Consideration:
NBHC common stock paid at January 1, 2018, closing price of $32.43	110,213
Common stock paid	110,213
Cash	36,189
Total Consideration	146,402
Goodwill	55,397
Peoples Inc | Core Deposits
Assets:
Intangible asset	$ 10,477
Amortization period for intangible assets	10 years
Peoples Inc | Mortgage servicing rights
Assets:
Intangible asset	$ 4,301

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Parent Company Only Financial Statements - Condensed Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Interest expense:
Salaries and benefits													$ 122,732	$ 114,939	$ 80,188
Income tax expense (benefit)	$ 3,864	$ 5,419	$ 3,179	$ 3,367	$ 3,381	$ 4,354	$ 2,800	$ 1,695	$ 18,615	$ 1,733	$ 2,175	$ (1,240)	15,829	12,230	21,283
Net income	$ 19,519	$ 21,642	$ 20,282	$ 18,922	$ 17,235	$ 18,240	$ 17,512	$ 8,464	$ (10,119)	$ 7,231	$ 9,209	$ 8,258	80,365	61,451	14,579
Parent Company [Member] | Reportable Legal Entities [Member]
Interest income														112	45
Equity in undistributed (earnings) losses of subsidiaries													28,133	19,682	(11,192)
Distributions from subsidiaries													55,725	47,338	28,903
Total income													83,858	67,132	17,756
Interest expense:
Salaries and benefits													4,925	4,455	3,680
Other expenses													2,463	4,467	3,587
Total expenses													7,388	8,922	7,267
Operating income													76,470	58,210	10,489
Income tax expense (benefit)													(3,895)	(3,241)	(4,090)
Net income													$ 80,365	$ 61,451	$ 14,579

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Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 23 Fair Value of Financial Instruments

The fair value of a financial instrument is the amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is determined based upon quoted market prices to the extent possible; however, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques that may be significantly impacted by the assumptions used, including the discount rate and estimates of future cash flows. Changes in any of these assumptions could significantly affect the fair value estimates. The fair value of the financial instruments listed below does not reflect a premium or discount that could result from offering all of the Company’s holdings of financial instruments at one time, nor does it reflect the underlying value of the Company, as ASC Topic 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies and are based on the exit price concept within ASC Topic 825 and applied to this disclosure on a prospective basis. Considerable judgment is required to interpret market data in order to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange.

The fair value of financial instruments at December 31, 2019 and 2018 are set forth below:

	Level in fair value	December 31, 2019				December 31, 2018
	measurement	Carrying		Estimated		Carrying		Estimated
	hierarchy	amount		fair value		amount		fair value
ASSETS
Cash and cash equivalents	Level 1	$	110,190	$	110,190	$	109,556	$	109,556
Mortgage-backed securities—residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises available-for-sale	Level 2		95,256		95,256		146,642		146,642
Mortgage-backed securities—other residential mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored enterprises available-for-sale	Level 2		542,037		542,037		643,381		643,381
Municipal securities available-for-sale	Level 2		372		372		441		441
Municipal securities available-for-sale	Level 3		115		115		169		169
Other available-for-sale securities	Level 3		469		469		469		469
Mortgage-backed securities—residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	Level 2		127,560		128,770		157,115		154,412
Mortgage-backed securities—other residential mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	Level 2		55,324		54,971		78,283		76,514
Non-marketable securities	Level 2		29,751		29,751		27,555		27,555
Loans receivable	Level 3		4,415,406		4,481,209		4,092,308		4,082,146
Loans held for sale	Level 2		117,444		117,444		48,120		48,120
Accrued interest receivable	Level 2		19,157		19,157		17,852		17,852
Interest rate swap derivatives	Level 2		10,175		10,175		20,627		20,627
Mortgage banking derivatives	Level 3		1,515		1,515		871		871
LIABILITIES
Deposit transaction accounts	Level 2		3,678,979		3,678,979		3,445,092		3,445,092
Time deposits	Level 2		1,058,153		1,058,354		1,080,529		1,068,233
Securities sold under agreements to repurchase	Level 2		56,935		56,935		66,047		66,047
Federal Home Loan Bank advances	Level 2		207,675		207,890		301,660		301,933
Accrued interest payable	Level 2		9,328		9,328		6,889		6,889
Interest rate swap derivatives	Level 2		22,558		22,558		3,577		3,577
Mortgage banking derivatives	Level 3		440		440		544		544

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2 Summary of Significant Accounting Policies

a) Cash and cash equivalents—Cash and cash equivalents include cash, cash items, amounts due from other banks, amounts due from the Federal Reserve Bank of Kansas City, federal funds sold, and interest-bearing bank deposits.

b) Investment securities—Investment securities may be classified in three categories: trading, available-for-sale or held-to-maturity. Management determines the appropriate classification at the time of purchase and reevaluates the classification at each reporting period. Any sales of available-for-sale securities are for the purpose of executing the Company’s asset/liability management strategy, reducing borrowings, funding loan growth, providing liquidity, or eliminating a perceived credit risk in a specific security. Held-to-maturity securities are carried at amortized cost, and the available-for-sale securities are carried at estimated fair value. Unrealized gains or losses on securities available-for-sale are reported as accumulated other comprehensive income (loss) (“AOCI”), a component of shareholders’ equity, net of income tax. Gains and losses realized upon sales of securities are calculated using the specific identification method. Premiums and discounts are amortized to interest income over the estimated lives of the securities. Prepayment experience is periodically evaluated and a determination made regarding the appropriate estimate of the future rates of prepayment. When a change in a bond’s estimated remaining life is necessary, a corresponding adjustment is made in the related premium amortization or discount accretion. Purchases and sales of securities, including any corresponding gains or losses, are recognized on a trade-date basis and a receivable or payable is recognized for pending transaction settlements.

Management evaluates all investments for OTTI on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Impairment is considered to be other-than-temporary if it is likely that all amounts

contractually due will not be received for debt securities and when there is no positive evidence indicating that an investment’s carrying amount is recoverable in the near term for equity securities. When impairment is considered other-than-temporary, the cost basis of the security is written down to fair value, with the impairment charge related to credit included in earnings, while the impairment charge related to all other factors is recognized in AOCI. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the entire amount of the OTTI is recorded in earnings. In evaluating whether the impairment is temporary or other than temporary, the Company considers, among other things, the severity and duration of the unrealized loss position; adverse conditions specifically related to the security; changes in expected future cash flows; downgrades in the rating of the security by a rating agency; the failure of the issuer to make scheduled interest or principal payments; whether the Company has the intent to sell the security; and whether it is more likely than not that the Company will be required to sell the security.

c) Non-marketable securities—Non-marketable securities include FRB stock and FHLB stock. These securities have been acquired for debt facility or regulatory purposes and are carried at cost.

d) Loans receivable—Loans receivable include loans originated by the Company and loans that are acquired through acquisitions. Loans originated by the Company are carried at the principal amount outstanding, net of premiums, discounts, unearned income, and deferred loan fees and costs. Loan fees and certain costs of originating loans are deferred and the net amount is amortized over the contractual life of the related loans. Acquired loans are initially recorded at fair value and are accounted for under either ASC Topic 310 or ASC 310-30 (see additional information below). Non-refundable loan origination and commitment fees, net of direct costs of originating or acquiring loans, and fair value adjustments for acquired loans, are deferred and recognized over the remaining lives of the related loans in accordance with ASC 310-20.

Acquired loans are recorded at their estimated fair value at the time of acquisition and accounted for under either ASC 310-30 or ASC Topic 310. Estimated fair values of acquired loans are based on a discounted cash flow methodology that considers various factors including the type of loan and related collateral, the expected timing of cash flows, classification status, fixed or variable interest rate, term of loan and whether or not the loan is amortizing, and a discount rate reflecting the Company’s assessment of risk inherent in the cash flow estimates. Acquired 310-30 loans are grouped together according to similar characteristics such as type of loan, loan purpose, geography, risk rating and underlying collateral and are treated as distinct pools when applying various valuation techniques and, in certain circumstances, for the ongoing monitoring of the credit quality and performance of the pools. Each pool is accounted for as a single loan for which the integrity is maintained throughout the life of the asset. Discounts created when the loans are recorded at their estimated fair values at acquisition are accreted over the remaining term of the loan as an adjustment to the related loan’s yield. Similar to originated loans described below, the accrual of interest income on acquired loans that are not accounted for under ASC 310-30 is discontinued when the collection of principal or interest, in whole or in part, is doubtful.

Interest income on acquired loans that are accounted for under ASC Topic 310 and interest income on loans originated by the Company is accrued and credited to income as it is earned using the interest method based on daily balances of the principal amount outstanding. However, interest is generally not accrued on loans 90 days or more past due, unless they are well secured and in the process of collection. Additionally, in certain situations, loans that are not contractually past due may be placed on non-accrual status due to the continued failure to adhere to contractual payment terms by the borrower coupled with other pertinent factors, such as insufficient collateral value or deficient primary and secondary sources of repayment. Accrued interest receivable is reversed when a loan is placed on non-accrual status and payments received generally reduce the carrying value of the loan. Interest is not accrued while a loan is on non-accrual status and interest income is generally recognized on a cash basis only after payment in full of the past due principal and collection of principal outstanding is reasonably assured. A loan may be placed back on accrual status if all contractual payments have been received, or sooner under certain conditions and collection of future principal and interest payments is no longer doubtful.

In the event of borrower default, the Company may seek recovery in compliance with state lending laws, the respective loan agreements, and credit monitoring and remediation procedures that may include modifying or restructuring a loan from its original terms, for economic or legal reasons, to provide a concession to the borrower from their original terms due to borrower financial difficulties in order to facilitate repayment. Such restructured loans are considered “troubled debt restructurings” and are identified in accordance with ASC 310-40. Under this guidance, modifications to loans that fall within the scope of ASC 310-30 are not considered troubled debt restructurings, regardless of otherwise meeting the definition of a troubled debt restructuring.

Loans receivable accounted for under ASC 310-30

The Company accounts for and evaluates acquired loans in accordance with the provisions of ASC 310-30. When loans exhibit evidence of credit deterioration since origination and it is probable at the date of acquisition that the Company will not collect all principal and interest payments in accordance with the terms of the loan agreement, the expected shortfall in future cash flows, as compared to the contractual amount due, is recognized as a non-accretable difference. Any excess of expected cash flows over the acquisition date fair value is known as the accretable yield, and is recognized as accretion income over the life of each pool. Contractual fees not expected to be collected are not included in ASC 310-30 contractual cash flows. Should fees be subsequently collected, the cash flows are accounted for as originated and acquired fee income in the period they are received. Loans that are accounted for under ASC 310-30 that meet the criteria for non-accrual of interest or are accounted for on the cost recovery method at the time of acquisition or subsequent to acquisition, may be considered performing, regardless of whether the client is contractually delinquent, if the timing and expected cash flows on the loan pool in which the loan is included can be otherwise reasonably estimated and if collection of the new carrying value of such pool is expected.

The expected cash flows of individual loans accounted for under ASC 310-30 are periodically remeasured utilizing the same cash flow methodology used at the time of acquisition and subsequent decreases to the expected cash flows will generally result in a provision for loan losses charge in the Company’s consolidated statements of operations. Any increases to the loan cash flow projections are recognized within the loan’s respective loan pools on a prospective basis through an increase to the pool’s accretion income over its remaining life once any previously recorded provision expense has been reversed. These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

e) Loans held for sale—The Company has elected to record loans originated and intended for sale in the secondary market at estimated fair value. The Company estimates fair value based on quoted market prices for similar loans in the secondary market. Gains or losses are recognized upon sale and are included as a component of mortgage banking income in the consolidated statements of operations. Loans held for sale have primarily been fixed rate single-family residential mortgage loans under contract to be sold in the secondary market. In most cases, loans in this category are sold within 45 days. These loans are generally sold with the mortgage servicing rights released. Under limited circumstances, buyers may have recourse to return a purchased loan to the Company. Recourse conditions may include early payoff, early payment default, breach of representations or warranties, or documentation deficiencies.

The Company enters into commitments to originate residential mortgage loans whereby the interest rate on the loan is determined prior to funding (i.e. interest rate lock commitments). Such interest rate lock commitments on mortgage loans to be sold in the secondary market are considered to be derivatives. To protect against the price risk inherent in residential mortgage loan commitments, the Company utilizes both "best efforts" and "mandatory delivery" forward loan sale commitments to mitigate the risk of potential increases or decreases in the values of loans that would result from the change in market rates for such loans. The Company manages the interest rate risk on interest rate lock commitments by entering into forward sale contracts of mortgage backed securities. Such contracts are accounted for as derivatives and are recorded at fair value as derivative assets or liabilities. They are carried on the consolidated statements of financial condition within other assets or other liabilities, and changes in fair value are recorded net as a component of mortgage banking income in the consolidated statements of operations. The gross gains on loan sales are recognized based on new loan commitments with adjustment for price and pair-off activity. Commission expenses on loans held for sale are recognized based on loans closed.

f) Allowance for loan losses—The allowance for loan losses represents management’s estimate of probable credit losses inherent in loans, including acquired loans to the extent necessary, as of the balance sheet date. The determination of the ALL takes into consideration, among other matters, the estimated fair value of the underlying collateral, economic conditions, historical net loan losses, the estimated loss emergence period, estimated default rates, any declines in cash flow assumptions from acquisition, loan structures, growth factors and other elements that warrant recognition. In addition, various regulatory agencies, as an integral part of the examination process, periodically review the ALL. Such agencies may require the Company to recognize additions to the ALL or increases to adversely graded classified loans based on their judgments about information available to them at the time of their examinations.

The Company uses an internal risk rating system to indicate credit quality in the loan portfolio. The risk rating system is applied to all loans and uses a series of grades, which reflect management’s assessment of the risk attributable to loans based on an analysis of the borrower’s financial condition and ability to meet contractual debt service requirements. Loans that management perceives to have acceptable risk are categorized as “Pass” loans. The “Special Mention” loans represent loans that have potential credit weaknesses that deserve management’s close attention. Special mention loans include borrowers that have potential weaknesses or unwarranted risks that, unless corrected, may threaten the borrower’s ability to meet debt requirements. However, these borrowers are still believed to have the ability to respond to and resolve the financial issues that threaten their financial situation. Loans classified as “Substandard” are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans have a distinct possibility of loss if the deficiencies are not corrected. “Doubtful” loans are loans that management believes the collection of payments in accordance with the terms of the loan agreement is highly questionable and improbable. Loans accounted for under ASC 310-30, despite being 90 days or more past due or internally adversely classified, may be classified as performing upon and subsequent to acquisition, regardless of whether the client is contractually delinquent, if the timing and expected cash flows on the loan pool can be reasonably estimated and if collection of the carrying value of the loan pool loans is reasonably expected. Interest accrual is discontinued on doubtful loans and certain substandard loans that are excluded from ASC 310-30, as is more fully discussed in note 6.

The Company routinely evaluates adversely risk-rated credits for impairment. Impairment, if any, is typically measured for each loan based on a thorough analysis of the most probable source of repayment, including the present value of the loan’s expected future cash flows, the loan’s estimated fair value, or the estimated fair value of the underlying collateral less costs of disposition for collateral dependent loans. General allowances are established for loans with similar characteristics. In this process, general allowance factors are based on an analysis of historical loss and recovery experience, if any, related to originated and acquired loans, as well as certain industry experience, with adjustments made for qualitative or environmental factors that are likely to cause estimated credit losses to differ from historical experience. To the extent that the data supporting such factors has limitations, management’s judgment and experience play a key role in determining the allowance estimates.

Additions to the ALL are made by provisions for loan losses that are charged to operations. The allowance is decreased by charge-offs due to losses and is increased by provisions for loan losses and recoveries. When it is determined that specific loans, or portions thereof, are uncollectible, these amounts are charged off against the ALL. If repayment of the loan is collateral dependent, the fair value of the collateral, less cost to sell, is used to determine charge-off amounts.

The Company maintains an ALL for loans accounted for under ASC 310-30 as a result of impairment to loan pools arising from the periodic remeasurement of these loans. Any impairment in the individual pool is generally recognized in the current period as provision for loan losses. Any improvement in the estimated cash flows, is generally not recognized immediately, but is instead reflected as an adjustment to the related loan pools yield on a prospective basis once any previously recorded impairment has been recaptured.

The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments, effective January 1, 2020. This update replaces the current incurred loss methodology for recognizing credit losses with a current expected credit loss model, which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts.

g) Premises and equipment—With the exception of premises and equipment acquired through business combinations, which are initially measured and recorded at fair value, purchased land, buildings and equipment are carried at cost, including capitalized interest when appropriate, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the asset. The Company generally assigns depreciable lives of 39 years for buildings, 7 to 15 years for building improvements, and 3 to 7 years for equipment. Leasehold improvements are amortized over the shorter of their estimated useful lives or remaining lease terms. Maintenance and repairs are charged to non-interest expense as incurred. The Company reviews premises and equipment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recognized when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposal is less than its carrying amount. Property and equipment that meet the held-for-sale criteria is recorded at the lower of its carrying amount or fair value less cost to sell and depreciation is ceased.

h) Goodwill and intangible assets—Goodwill is established and recorded if the consideration given during an acquisition transaction exceeds the fair value of the net assets received. Goodwill has an indefinite useful life and is not amortized, but is evaluated annually for potential impairment, or when events or circumstances indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Such events or circumstances may include deterioration in general economic conditions, deterioration in industry or market conditions, an increased competitive environment, a decline in market-dependent multiples or metrics, declining financial performance, entity-specific events or circumstances or a sustained decrease in share price (either in absolute terms or relative to peers). If the Company determines, based upon the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is greater than the carrying amount no additional procedures are performed; however, if the Company determines that it is more likely than not that the fair value of the reporting unit is less than the carrying amount the Company will compare the fair value of the reporting unit to its carrying amount. Any excess of the carrying amount over fair value would indicate a potential impairment and the Company would proceed to perform an additional test to determine whether goodwill has been impaired and calculate the amount of that impairment.

Intangible assets that have finite useful lives, such as core deposit intangibles, are amortized over their estimated useful lives. The Company’s core deposit intangible assets represent the value of the anticipated future cost savings that will result from the acquired core deposit relationships versus an alternative source of funding.

Judgment may be used in assessing goodwill and intangible assets for impairment. Estimates of fair value are based on projections of revenues, operating costs and cash flows of the reporting unit considering historical and anticipated future results, general economic and market conditions, as well as the impact of planned business or operational strategies. The valuations use a combination of present value techniques to measure fair value considering market factors. Additionally, judgment is used in determining the useful lives of finite-lived intangible assets. Adverse changes in the economic environment, operations of the reporting unit, or changes in judgments and projections could result in a significantly different estimate of the fair value of the reporting unit and could result in an impairment of goodwill and/or intangible assets.

i) Mortgage Servicing– Mortgage servicing rights (“MSRs”) associated with loans originated and sold, where servicing is retained, are initially capitalized at fair value and included in intangible assets, net on the consolidated statements of financial condition. For subsequent measurement purposes, the Company measures servicing assets based on the lower of cost or market using the amortization method. The values of these capitalized servicing rights are amortized as an offset to the loan servicing income earned in relation to the servicing revenue expected to be earned. The carrying values of these rights are reviewed quarterly for impairment based on the fair value of those assets. For purposes of impairment evaluation and measurement, management stratifies MSRs based on the predominant risk characteristics of the underlying loans, including loan type and loan term. If, by individual stratum, the carrying amount of these MSRs exceeds fair value, a valuation allowance is established and the impairment is recognized in mortgage banking income. If the fair value of impaired MSRs subsequently increases, management recognizes the increase in fair value in current period mortgage banking income and, through a reduction in the valuation allowance, adjusts the carrying value of the MSRs to a level not in excess of amortized cost.

j) Reserve for Mortgage Loan Repurchase Losses–The Company sells mortgage loans to various third parties, including government-sponsored entities, under contractual provisions that include various representations and warranties that typically cover ownership of the loan, compliance with loan criteria set forth in the applicable agreement, validity of the lien securing the loan, absence of delinquent taxes or liens against the property securing the loan, and similar matters. The Company may be required to repurchase the mortgage loans with identified defects, indemnify the investor or insurer, or reimburse the investor for credit loss incurred on the loan (collectively “repurchase”) in the event of a material breach of such contractual representations or warranties. Risk associated with potential repurchases or other forms of settlement is managed through underwriting and quality assurance practices.

The Company establishes mortgage repurchase reserves related to various representations and warranties that reflect management’s estimate of losses based on a combination of factors. Such factors incorporate actual and historic loss history, delinquency trends in the portfolio and economic conditions. The Company establishes a reserve at the time loans are sold and updates the reserve estimate quarterly during the estimated loan life. The repurchase reserve is included in other liabilities on the consolidated statements of financial condition.

k) Other real estate owned—OREO consists of property that has been foreclosed on or repossessed by deed in lieu of foreclosure. The assets are initially recorded at the fair value of the collateral less estimated costs to sell, with any initial valuation adjustments charged to the ALL. Subsequent downward valuation adjustments, if any, in addition to gains and losses realized on sales and net operating expenses, are recorded in non-interest expense. Costs associated with maintaining property, such as utilities and maintenance, are charged to expense in the period in which they occur, while costs relating to the development and improvement of property are capitalized to the extent the balance does not exceed fair value. All OREO acquired through acquisition is recorded at fair value, less cost to sell, at the date of acquisition.

l) Bank-owned life insurance—The Company is the owner and beneficiary of bank-owned life insurance ("BOLI”) policies that it purchased on certain associates of the Company. The BOLI is carried at net realizable value with changes in net realizable value recorded in non-interest income on the consolidated statements of operations.

m) Securities purchased under agreements to resell and securities sold under agreements to repurchase—The Company periodically enters into purchases or sales of securities under agreements to resell or repurchase as of a specified future date. The securities purchased under agreements to resell are accounted for as collateralized financing transactions and are reflected as an asset in the consolidated statements of financial condition. The securities pledged by the counterparties are held by a third party custodian and valued daily. The Company may require additional collateral to ensure full collateralization for these transactions. The repurchase agreements are considered financing agreements and the obligation to repurchase assets sold is reflected as a liability in the consolidated statements of financial condition of the Company. The repurchase agreements are collateralized by debt securities that are under the control of the Company.

n) Stock-based compensation—The Company accounts for stock-based compensation in accordance with ASC Topic 718. The Company grants stock-based awards including stock options, restricted stock and performance stock units. Stock option grants are for a fixed number of common shares and are issued at exercise prices which are not less than the fair value of a share of stock at the date of grant. The options vest over a time period stated in each option agreement and may be subject to other performance vesting conditions, which require the related compensation expense to be recorded ratably over the requisite service period starting when such conditions become probable. Restricted stock is granted for a fixed number of shares, the transferability of which is restricted until such shares become vested according to the terms in the award agreement. Restricted shares may have multiple vesting qualifications, which can include time vesting of a set portion of the restricted shares and performance criterion, such as market criteria that are tied to specified market conditions of the Company’s common stock price and performance targets tied to the Company’s earnings per share.

The fair value of stock options is measured using a Black-Scholes model. The fair value of time-based restricted stock awards and performance stock units with performance based vesting criteria is based on the Company’s stock price on the date of grant. The fair value of performance stock units with market-based vesting criteria is measured using a Monte Carlo simulation model. Compensation expense for the portion of the awards that contain performance and service vesting conditions is recognized over the requisite service period based on the fair value of the awards on the grant date. Compensation expense for the portion of the awards that contain a market vesting condition is recognized over the derived service period based on the fair value of the awards on the grant date. The amortization of stock-based compensation reflects any estimated forfeitures, and the expense realized in subsequent periods may be adjusted to reflect the actual forfeitures realized. The outstanding stock options primarily carry a maximum contractual term of ten years. To the extent that any award is forfeited, surrendered, terminated, expires, or lapses without being vested or exercised, the shares of stock subject to such award not delivered are again made available for awards under the Plan.

All excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) are recognized in the consolidated statements of operations as a component of income tax expense or benefit and are classified as an operating activity within the Company’s consolidated statements of cash flows. The tax effects of exercised, expired or vested awards are treated as discrete items in the reporting period in which they occur and may result in increased volatility in our effective tax rate. Cash paid by the Company when directly withholding shares for tax withholding purposes is classified as a financing activity in the consolidated statements of cash flows.

o) Income taxes—The Company and its subsidiaries file U.S. federal and certain state income tax returns on a consolidated basis. Additionally, the Company and its subsidiaries file separate state income tax returns with various state jurisdictions. The provision for income taxes includes the income tax balances of the Company and all of its subsidiaries.

Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. Deferred tax assets and liabilities are adjusted for the effects of changes in tax rates in the period of change. The Company establishes a valuation allowance when management believes, based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized.

The Company recognizes and measures income tax benefits based upon a two-step model: 1) a tax position must be more likely than not to be sustained based solely on its technical merits in order to be recognized; and 2) the benefit is measured as the largest dollar amount of that position that is more likely than not to be sustained upon settlement. The difference between the benefit recognized for a position in this model and the tax benefit claimed on a tax return is treated as an unrecognized tax benefit. The Company recognizes income tax related interest and penalties in other non-interest expense.

p) Earnings per share—The Company applies the two-class method of computing earnings per share as certain of the Company's restricted shares are entitled to non-forfeitable dividends and are therefore considered to be a class of participating securities. The two-class method allocates income according to dividends declared and participation rights in undistributed income. Basic earnings per share is computed by dividing income allocated to common shareholders by the weighted average number of common shares outstanding during each period. Diluted income per common share is computed by dividing income allocated to common shareholders by the weighted average common shares outstanding during the period, plus amounts representing the dilutive effect of stock options outstanding, certain unvested restricted shares, or other contracts to issue common shares (“common stock equivalents”) using the treasury stock method. Common stock equivalents are excluded from the computation of diluted earnings per common share in periods in which they have an anti-dilutive effect.

q) Interest Rate Swap Derivatives—The Company carries all derivatives on the statement of financial condition at fair value. All derivative instruments are recognized as either assets or liabilities depending on the rights or obligations under the contracts. All gains and losses on the derivatives due to changes in fair value are recognized in earnings each period.

The Company offers interest rate swap products to certain of its clients to manage potential changes in interest rates. Each contract between the Company and a client is offset with a contract between the Company and an institutional counterparty, thus minimizing the Company's exposure to rate changes. The Company's portfolio consists of a “matched book,” and as such, changes in fair value of the swap pairs will largely offset in earnings. In accordance with applicable accounting guidance, if certain conditions are met, a derivative may be designated as (1) a hedge of the exposure to changes in the fair value of a recognized asset or liability, or of an unrecognized firm commitment, that are attributable to a particular risk (referred to as a fair value hedge) or (2) a hedge of the exposure to variability in the cash flows of a recognized asset or liability, or of a forecasted transaction, that is attributable to a particular risk (referred to as a cash flow hedge). The Company documents all hedging relationships at the inception of each hedging relationship and uses industry accepted methodologies and ranges to determine the effectiveness of each hedge. The fair value of the hedged item is calculated using the estimated future cash flows of the hedged item and applying discount rates equal to the market interest rate for the hedged item at the inception of the hedging relationship (inception benchmark interest rate plus an inception credit spread), adjusted for changes in the designated benchmark interest rate thereafter.

r) Treasury stock —When the Company acquires treasury stock, the sum of the consideration paid and direct transaction costs after tax is recognized as a deduction from equity. The cost basis for the reissuance of treasury stock is determined using a first-in, first-out basis. To the extent that the reissuance price is more than the cost basis (gain), the excess is recorded as an increase to additional paid-in capital in the consolidated statements of financial condition. If the reissuance price is less than the cost basis (loss), the difference is recorded to additional paid-in capital to the extent there is a cumulative treasury stock paid-in capital balance. Any loss in excess of the cumulative treasury stock paid-in capital balance is charged to retained earnings.

s) Acquisition activities—The Company accounts for business combinations under the acquisition method of accounting. Assets acquired and liabilities assumed are measured and recorded at fair value at the date of acquisition, including identifiable intangible assets. If the fair value of net assets acquired exceeds the fair value of consideration paid, a bargain purchase gain is recognized at the date of acquisition. Conversely, if the consideration paid exceeds the fair value of the net assets acquired, goodwill is recognized at the acquisition date. Fair values are subject to refinement for up to a maximum of one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Adjustments recorded to the acquired assets and liabilities assumed are applied prospectively in accordance with Accounting Standards Codification (“ASC”) Topic 805. The determination of the fair value of loans acquired takes into account credit quality deterioration and probability of loss; therefore, the related ALL is not carried forward at the time of acquisition.

Identifiable intangible assets are recognized separately if they arise from contractual or other legal rights or if they are separable (i.e., capable of being sold, transferred, licensed, rented, or exchanged separately from the entity). Deposit liabilities and the related depositor relationship intangible assets, known as the core deposit intangible assets, may be exchanged in observable exchange transactions. As a result, the core deposit intangible asset is considered identifiable, because the separability criterion has been met.

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Stock-based Compensation and Benefits - Summary of Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding Options, beginning	1,264,876	1,598,318
Granted, Options	149,290
Exercised, Options	(705,474)
Forfeited, Options	(51,578)
Outstanding Options, ending	657,114	1,264,876
Options fully vested and exercisable at end of period, Options	405,225
Options expected to vest, Options	631,916
Outstanding, Weighted average exercise price, beginning	$ 22.33	$ 20.62
Granted, Weighted average exercise price	34.21
Exercised, Weighted average exercise price	20.12
Forfeited, Weighted average exercise price	31.47
Outstanding, Weighted average exercised price, ending	26.69	$ 22.33
Options fully vested and exercisable at end of period, Weighted average exercise price	22.30
Options expected to vest, Weighted average exercise price	$ 26.40
Outstanding, Weighted average remaining contractual term in years	6 years 4 months 28 days	3 years 11 months 1 day
Options fully vested and exercisable at end of period, weighted average remaining contractual term in years	4 years 11 months 23 days
Options expected to vest, Weighted average remaining contractual term in years	6 years 3 months 21 days
Outstanding, Aggregate intrinsic value, beginning	$ 11,387
Outstanding, Outstanding, Aggregate intrinsic value, beginning	5,626	$ 11,387
Aggregate intrinsic Value of Options fully vested and exercisable at end of period	5,240
Options expected to vest, Aggregate Intrinsic Value	$ 5,590

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Common Stock - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Aug. 31, 2016	Aug. 05, 2016
Schedule Of Common Stock [Line Items]
Shares outstanding	31,176,627	30,769,063
Remaining authorized amount			$ 12.6
Common Class A [Member]
Schedule Of Common Stock [Line Items]
Shares outstanding	31,176,627	30,769,063
Restricted issued but not yet vested, shares	122,198	146,494
New Board Authorized Share Repurchase Program
Schedule Of Common Stock [Line Items]
Remaining authorized amount	$ 12.6
Maximum | New Board Authorized Share Repurchase Program
Schedule Of Common Stock [Line Items]
Stock repurchase program, authorized amount				$ 50.0

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Loans

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Loans

Note 6 Loans

The loan portfolio is comprised of loans originated by the Company and loans that were acquired in connection with the Company’s acquisitions.

The tables below show the loan portfolio composition including carrying value by segment of originated and acquired loans and loans accounted for under ASC 310-30, as of the dates shown. The carrying value of originated and acquired loans is net of discounts, fees, costs and fair value marks of $8.4 million and $10.2 million at December 31, 2019 and 2018, respectively.

	December 31, 2019
	Originated and		ASC
	acquired loans		310-30 loans		Total loans		% of total
Commercial	$	2,977,007	$	15,300	$	2,992,307	67.8%
Commercial real estate non-owner occupied		598,118		32,788		630,906	14.3%
Residential real estate		764,411		6,006		770,417	17.4%
Consumer		21,776		—		21,776	0.5%
Total	$	4,361,312	$	54,094	$	4,415,406	100.0%

	December 31, 2018
	Originated and		ASC
	acquired loans		310-30 loans		Total loans		% of total
Commercial	$	2,624,173	$	20,398	$	2,644,571	64.6%
Commercial real estate non-owner occupied		551,819		40,393		592,212	14.5%
Residential real estate		820,820		9,995		830,815	20.3%
Consumer		24,617		93		24,710	0.6%
Total	$	4,021,429	$	70,879	$	4,092,308	100.0%

Delinquency for originated and acquired loans is shown in the following tables at December 31, 2019 and 2018:

	December 31, 2019
			Greater
	30-89 days		than 90 days				Total past				Total
	past due and		past due and		Non-accrual		due and				originated and
	accruing		accruing		loans		non-accrual		Current		acquired loans
Originated and acquired loans:
Commercial:
Commercial and industrial	$	2,478	$	879	$	9,396	$	12,753	$	2,193,244	$	2,205,997
Owner occupied commercial real estate		569		—		2,264		2,833		477,073		479,906
Food and agriculture		179		—		317		496		248,089		248,585
Energy		—		—		934		934		41,585		42,519
Total commercial		3,226		879		12,911		17,016		2,959,991		2,977,007
Commercial real estate non-owner occupied:
Construction		—		—		—		—		77,733		77,733
Acquisition/development		—		—		416		416		14,623		15,039
Multifamily		—		—		—		—		54,693		54,693
Non-owner occupied		438		—		43		481		450,172		450,653
Total commercial real estate		438		—		459		897		597,221		598,118
Residential real estate:
Senior lien		1,747		—		7,597		9,344		663,353		672,697
Junior lien		245		79		731		1,055		90,659		91,714
Total residential real estate		1,992		79		8,328		10,399		754,012		764,411
Consumer		116		—		50		166		21,610		21,776
Total originated and acquired loans	$	5,772	$	958	$	21,748	$	28,478	$	4,332,834	$	4,361,312

	December 31, 2018
			Greater
	30-89 days		than 90 days				Total past				Total
	past due and		past due and		Non-accrual		due and				originated and
	accruing		accruing		loans		non-accrual		Current		acquired loans
Originated and acquired loans:
Commercial:
Commercial and industrial	$	495	$	74	$	5,510	$	6,079	$	1,925,068	$	1,931,147
Owner occupied commercial real estate		893		—		6,931		7,824		413,842		421,666
Food and agriculture		141		125		768		1,034		221,122		222,156
Energy		—		—		742		742		48,462		49,204
Total commercial		1,529		199		13,951		15,679		2,608,494		2,624,173
Commercial real estate non-owner occupied:
Construction		—		—		1,208		1,208		93,646		94,854
Acquisition/development		—		—		121		121		19,529		19,650
Multifamily		—		—		—		—		56,685		56,685
Non-owner occupied		328		132		572		1,032		379,598		380,630
Total commercial real estate		328		132		1,901		2,361		549,458		551,819
Residential real estate:
Senior lien		2,106		548		7,790		10,444		712,592		723,036
Junior lien		556		—		772		1,328		96,456		97,784
Total residential real estate		2,662		548		8,562		11,772		809,048		820,820
Consumer		91		16		42		149		24,468		24,617
Total originated and acquired loans	$	4,610	$	895	$	24,456	$	29,961	$	3,991,468	$	4,021,429

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. Pooled loans accounted for under ASC 310-30 that are 90 days or more past due and still accreting are generally considered to be performing and therefore are not included in the tables above. Non-accrual loans include non-accrual loans and troubled debt restructurings (“TDRs”) on non-accrual status. Non-accrual originated and acquired loans totaled $21.7 million at December 31, 2019, decreasing $2.7 million, or 11.1% from December 31, 2018.

The Company’s internal risk rating system uses a series of grades which reflect our assessment of the credit quality of loans based on an analysis of the borrower's financial condition, liquidity and ability to meet contractual debt service requirements and are categorized as “Pass”, “Special mention”, “Substandard” and “Doubtful”.

Credit exposure for all loans as determined by the Company’s internal risk rating system was as follows at December 31, 2019 and 2018, respectively:

	December 31, 2019
			Special
	Pass		mention		Substandard		Doubtful		Total
Originated and acquired loans:
Commercial:
Commercial and industrial	$	2,162,045	$	28,144	$	14,287	$	1,521	$	2,205,997
Owner occupied commercial real estate		430,793		39,597		9,516		—		479,906
Food and agriculture		246,282		1,219		1,052		32		248,585
Energy		41,585		—		739		195		42,519
Total commercial		2,880,705		68,960		25,594		1,748		2,977,007
Commercial real estate non-owner occupied:
Construction		77,733		—		—		—		77,733
Acquisition/development		14,585		—		454		—		15,039
Multifamily		54,210		—		483		—		54,693
Non-owner occupied		434,694		15,238		721		—		450,653
Total commercial real estate		581,222		15,238		1,658		—		598,118
Residential real estate:
Senior lien		664,387		80		8,230		—		672,697
Junior lien		90,517		365		832		—		91,714
Total residential real estate		754,904		445		9,062		—		764,411
Consumer		21,725		1		50		—		21,776
Total originated and acquired loans	$	4,238,556	$	84,644	$	36,364	$	1,748	$	4,361,312
Loans accounted for under ASC 310-30:
Commercial	$	12,523	$	659	$	2,118	$	—	$	15,300
Commercial real estate non-owner occupied		32,109		71		608		—		32,788
Residential real estate		4,089		360		1,557		—		6,006
Consumer		—		—		—		—		—
Total loans accounted for under ASC 310-30	$	48,721	$	1,090	$	4,283	$	—	$	54,094
Total loans	$	4,287,277	$	85,734	$	40,647	$	1,748	$	4,415,406

	December 31, 2018
			Special
	Pass		mention		Substandard		Doubtful		Total
Originated and acquired loans:
Commercial:
Commercial and industrial	$	1,890,710	$	16,531	$	22,919	$	987	$	1,931,147
Owner occupied commercial real estate		393,404		16,349		11,828		85		421,666
Food and agriculture		220,004		1,260		847		45		222,156
Energy		48,462		—		742		—		49,204
Total commercial		2,552,580		34,140		36,336		1,117		2,624,173
Commercial real estate non-owner occupied:
Construction		92,731		915		1,208		—		94,854
Acquisition/development		19,529		—		121		—		19,650
Multifamily		56,685		—		—		—		56,685
Non-owner occupied		355,776		23,243		1,611		—		380,630
Total commercial real estate		524,721		24,158		2,940		—		551,819
Residential real estate:
Senior lien		710,972		3,571		8,493		—		723,036
Junior lien		96,456		415		913		—		97,784
Total residential real estate		807,428		3,986		9,406		—		820,820
Consumer		24,575		—		42		—		24,617
Total originated and acquired loans	$	3,909,304	$	62,284	$	48,724	$	1,117	$	4,021,429
Loans accounted for under ASC 310-30:
Commercial	$	17,579	$	537	$	2,282	$	—	$	20,398
Commercial real estate non-owner occupied		39,322		246		825		—		40,393
Residential real estate		7,484		908		1,603		—		9,995
Consumer		—		—		93		—		93
Total loans accounted for under ASC 310-30	$	64,385	$	1,691	$	4,803	$	—	$	70,879
Total loans	$	3,973,689	$	63,975	$	53,527	$	1,117	$	4,092,308

Impaired Loans

Loans are considered to be impaired when it is probable that the Company will not be able to collect all amounts due in accordance with the contractual terms of the loan agreement. Impaired loans are comprised of originated and acquired loans on non-accrual status, loans in bankruptcy, and TDRs described below. If a specific allowance is warranted based on the borrower’s overall financial condition, the specific allowance is calculated based on discounted cash flows using the loan’s initial contractual effective interest rate or the fair value of the collateral less selling costs for collateral dependent loans.

At December 31, 2019 and 2018, the Company’s recorded investment in impaired loans were $32.8 million and $31.1 million, respectively, of which $6.9 million and $4.1 million, respectively, were accruing TDRs. Impaired loans had a collective related allowance for loan losses allocated to them of $1.8 million and $1.2 million at December 31, 2019 and 2018, respectively.

Additional information regarding impaired loans at December 31, 2019 and 2018 is set forth in the table below:

	December 31, 2019						December 31, 2018
					Allowance						Allowance
	Unpaid				for loan		Unpaid				for loan
	principal		Recorded		losses		principal		Recorded		losses
	balance		investment		allocated		balance		investment		allocated
With no related allowance recorded:
Commercial:
Commercial and industrial	$	16,001	$	10,548	$	—	$	4,374	$	3,029	$	—
Owner occupied commercial real estate		3,265		2,385		—		7,130		6,609		—
Food and agriculture		1,468		1,220		—		1,468		1,260		—
Energy		—		—		—		5,366		742		—
Total commercial		20,734		14,153		—		18,338		11,640		—
Commercial real estate non-owner occupied:
Construction		—		—		—		1,435		1,208		—
Acquisition/development		458		415		—		378		121		—
Multifamily		—		—		—		—		—		—
Non-owner occupied		90		26		—		641		547		—
Total commercial real estate		548		441		—		2,454		1,876		—
Residential real estate:
Senior lien		4,355		3,967		—		4,229		3,814		—
Junior lien		311		269		—		409		341		—
Total residential real estate		4,666		4,236		—		4,638		4,155		—
Consumer		57		50		—		46		42		—
Total impaired loans with no related allowance recorded	$	26,005	$	18,880	$	—	$	25,476	$	17,713	$	—
With a related allowance recorded:
Commercial:
Commercial and industrial	$	8,209	$	5,501	$	1,530	$	7,252	$	4,627	$	996
Owner occupied commercial real estate		711		505		3		1,362		1,169		90
Food and agriculture		757		751		35		883		845		46
Energy		5,559		934		195		—		—		—
Total commercial		15,236		7,691		1,763		9,497		6,641		1,132
Commercial real estate non-owner occupied:
Construction		—		—		—		—		—		—
Acquisition/development		—		—		—		—		—		—
Multifamily		—		—		—		—		—		—
Non-owner occupied		232		171		1		313		254		2
Total commercial real estate		232		171		1		313		254		2
Residential real estate:
Senior lien		5,808		5,034		25		6,032		5,178		27
Junior lien		1,074		987		6		1,408		1,293		8
Total residential real estate		6,882		6,021		31		7,440		6,471		35
Consumer		—		—		—		—		—		—
Total impaired loans with a related allowance recorded	$	22,350	$	13,883	$	1,795	$	17,250	$	13,366	$	1,169
Total impaired loans	$	48,355	$	32,763	$	1,795	$	42,726	$	31,079	$	1,169

The table below shows additional information regarding the average recorded investment and interest income recognized on impaired loans for the years presented:

	For the years ended
	December 31, 2019				December 31, 2018				December 31, 2017
	Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	13,062	$	248	$	3,248	$	168	$	5,609	$	152
Owner occupied commercial real estate		2,849		27		6,799		38		4,155		80
Food and agriculture		1,316		—		1,259		98		1,422		244
Energy		—		—		884		—		8,004		156
Total Commercial		17,227		275		12,190		304		19,190		632
Commercial real estate non-owner occupied:
Construction		—		—		1,208		—		—		—
Acquisition/development		575		—		606		—		—		—
Multifamily		—		—		—		—		—		—
Non-owner occupied		28		—		573		—		878		22
Total commercial real estate		603		—		2,387		—		878		22
Residential real estate:
Senior lien		4,081		1		3,904		—		326		—
Junior lien		287		2		355		2		—		—
Total residential real estate		4,368		3		4,259		2		326		—
Consumer		11		—		12		—		—		—
Total impaired loans with no related allowance recorded	$	22,209	$	278	$	18,848	$	306	$	20,394	$	654
With a related allowance recorded:
Commercial:
Commercial and industrial	$	5,788	$	—	$	4,677	$	—	$	7,331	$	—
Owner occupied commercial real estate		554		17		1,220		19		747		20
Food and agriculture		796		12		862		5		2,092		5
Energy		865		—		—		—		—		—
Total Commercial		8,003		29		6,759		24		10,170		25
Commercial real estate non-owner occupied:
Construction		—		—		—		—		188		—
Acquisition/development		—		—		—		—		—		—
Multifamily		—		—		—		—		30		1
Non-owner occupied		207		14		288		16		213		9
Total commercial real estate		207		14		288		16		431		10
Residential real estate:
Senior lien		5,241		66		5,412		57		5,986		67
Junior lien		1,034		34		1,331		43		1,225		42
Total residential real estate		6,275		100		6,743		100		7,211		109
Consumer		49		—		36		—		163		—
Total impaired loans with a related allowance recorded	$	14,534	$	143	$	13,826	$	140	$	17,975	$	144
Total impaired loans	$	36,743	$	421	$	32,674	$	446	$	38,369	$	798

Interest income recognized on impaired loans noted in the tables above, primarily represents interest earned on accruing TDRs. Interest income recognized on impaired loans during the years ended December 31, 2019, 2018 and 2017 was $0.4 million, $0.4 million and $0.8 million, respectively.

Troubled debt restructurings

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 restructuring 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. Additionally, if a borrower’s repayment obligation has been discharged by a court, and that debt has not been reaffirmed by the borrower, regardless of past due status, the loan is considered to be a TDR.

During 2019, the Company restructured 15 loans with a recorded investment of $7.1 million at December 31, 2019 to facilitate repayment. Loan modifications were a reduction of the principal payment, a reduction in interest rate, or an extension of term. Loan modifications to loans accounted for under ASC 310-30 are not considered TDRs. The tables below provide additional information related to accruing TDRs at December 31, 2019 and 2018:

	December 31, 2019
	Recorded		Average year-to-date		Unpaid		Unfunded commitments
	investment		recorded investment		principal balance		to fund TDRs
Commercial	$	5,615	$	5,788	$	5,714	$	—
Commercial real estate non-owner occupied		141		172		192		—
Residential real estate		1,129		1,178		1,206		12
Consumer		—		—		—		—
Total	$	6,885	$	7,138	$	7,112	$	12

	December 31, 2018
	Recorded		Average year-to-date		Unpaid		Unfunded commitments
	investment		recorded investment		principal balance		to fund TDRs
Commercial	$	2,730	$	2,827	$	3,155	$	—
Commercial real estate non-owner occupied		229		260		280		—
Residential real estate		1,114		1,163		1,121		12
Consumer		—		—		—		—
Total	$	4,073	$	4,250	$	4,556	$	12

The following table summarizes the Company’s carrying value of non-accrual TDRs as of December 31, 2019 and 2018:

	December 31, 2019		December 31, 2018
Commercial	$	1,891	$	1,854
Commercial real estate non-owner occupied		410		—
Residential real estate		2,553		1,584
Consumer		—		—
Total non-accruing TDRs	$	4,854	$	3,438

Accrual of interest is resumed on loans that were previously on non-accrual only after the loan has performed sufficiently for a period of time. The Company had two TDRs totaling $0.7 million that were modified within the past 12 months that had defaulted on their restructured terms during the year ended December 31, 2019. For purposes of this disclosure, the Company considers “default” to mean 90 days or more past due on principal or interest. The allowance for loan losses related to troubled debt restructurings on non-accrual status is determined by individual evaluation, including collateral adequacy, using the same process as loans on non-accrual status which are not classified as TDRs.

During 2018, the Company had one TDR totaling $0.1 million that had been modified within the prior twelve months that defaulted on its restructured terms.

Loans accounted for under ASC 310-30

Loan pools accounted for under ASC 310-30 are periodically remeasured to determine expected future cash flows. In determining the expected cash flows, the timing of cash flows and prepayment assumptions for smaller homogeneous loans are based on statistical models that take into account factors such as the loan interest rate, credit profile of the borrowers, the years in which the loans were originated, and whether the loans are fixed or variable rate loans. Prepayments may be assumed

on loans if circumstances specific to that loan warrant a prepayment assumption. The remeasurement of loans accounted for under ASC 310-30 resulted in the following changes in the carrying amount of accretable yield during 2019 and 2018:

	December 31, 2019		December 31, 2018
Accretable yield beginning balance	$	35,901	$	46,568
Reclassification from non-accretable difference		6,195		10,751
Reclassification to non-accretable difference		(921)		(2,263)
Accretion		(13,041)		(19,155)
Accretable yield ending balance	$	28,134	$	35,901

Below is the composition of the net book value for loans accounted for under ASC 310-30 at December 31, 2019 and 2018:

	December 31, 2019		December 31, 2018
Contractual cash flows	$	391,167	$	420,994
Non-accretable difference		(308,939)		(314,214)
Accretable yield		(28,134)		(35,901)
Loans accounted for under ASC 310-30	$	54,094	$	70,879

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Other Real Estate Owned

12 Months Ended

Dec. 31, 2019

Other Real Estate Owned

Other Real Estate Owned

Note 10 Other Real Estate Owned

A summary of the activity in OREO during 2019 and 2018 is as follows:

	For the years ended December 31,
	2019		2018
Beginning balance	$	10,596	$	10,491
Acquired through acquisition		—		1,253
Transfers from loan portfolio, at fair value		2,705		24,940
Impairments		(1,082)		(230)
Sales		(4,919)		(25,858)
Ending balance	$	7,300	$	10,596

OREO totaled $7.3 million at December 31, 2019 and decreased $3.3 million from December 31, 2018. During 2019, the Company sold OREO properties with net book balances of $4.9 million compared to $25.9 million during 2018. The sales resulted in net OREO gains of $7.2 million and $0.5 million which were included within other non-interest expense in the consolidated statements of operations for the years ended December 31, 2019 and 2018, respectively.

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Income Taxes - Components of Tax Rate Reconciliation (Details) - USD ($) $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Taxes
Statutory rate													21.00%	21.00%	35.00%
Income tax at federal statutory rates (21%, 21% and 35%, respectively)													$ 20,201	$ 15,473	$ 12,550
State income taxes, net of federal benefits													2,186	1,337	265
Tax-exempt loan interest income													(4,354)	(4,089)	(5,380)
Bank-owned life insurance income													(475)	136	(813)
Stock-based compensation													(1,925)	(1,207)	(3,998)
Deferred tax rate change															18,457
Other													196	580	202
Income tax expense	$ 3,864	$ 5,419	$ 3,179	$ 3,367	$ 3,381	$ 4,354	$ 2,800	$ 1,695	$ 18,615	$ 1,733	$ 2,175	$ (1,240)	$ 15,829	$ 12,230	$ 21,283

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Regulatory Capital

12 Months Ended

Dec. 31, 2019

Regulatory Capital

Regulatory Capital

Note 14 Regulatory Capital

As a bank holding company, the Company is subject to regulatory capital adequacy requirements implemented by the Federal Reserve. The federal banking agencies have risk-based capital adequacy regulations intended to provide a measure of capital adequacy that reflects the degree of risk associated with a banking organization’s operations. Under these regulations, assets are assigned to one of several risk categories, and nominal dollar amounts of assets and credit equivalent amounts of off-balance-sheet items are multiplied by a risk-adjustment percentage for the category.

Under the Basel III requirements, at December 31, 2019 and 2018, the Company and the Bank met all capital requirements including the capital conservation buffer of 2.5%, which was fully phased in on January 1, 2019. The Bank had regulatory capital ratios in excess of the levels established for well-capitalized institutions, as detailed in the tables below.

	December 31, 2019
				Required to be			Required to be
				well capitalized under			considered
				prompt corrective			adequately
	Actual			action provisions			capitalized(1)
	Ratio	Amount		Ratio	Amount		Ratio	Amount
Tier 1 leverage ratio:
Consolidated	11.0%	$	640,440	N/A		N/A	4.0%	$	231,950
NBH Bank	9.1%		528,028	5.0%	$	289,926	4.0%		231,940
Common equity tier 1 risk-based capital:
Consolidated	13.2%	$	640,440	N/A		N/A	7.0%	$	405,912
NBH Bank	10.9%		528,028	6.5%	$	376,903	7.0%		405,896
Tier 1 risk-based capital ratio:
Consolidated	13.2%	$	640,440	N/A		N/A	8.5%	$	412,620
NBH Bank	10.9%		528,028	8.0%	$	387,701	8.5%		411,932
Total risk-based capital ratio:
Consolidated	14.1%	$	682,645	N/A		N/A	10.5%	$	509,707
NBH Bank	11.8%		570,233	10.0%	$	484,626	10.5%		508,857

	December 31, 2018
				Required to be			Required to be
				well capitalized under			considered
				prompt corrective			adequately
	Actual			action provisions			capitalized(1)
	Ratio	Amount		Ratio	Amount		Ratio	Amount
Tier 1 leverage ratio:
Consolidated	10.5%	$	580,504	N/A		N/A	4.0%	$	220,988
NBH Bank	9.0%		498,283	5.0%	$	275,703	4.0%		220,563
Common equity tier 1 risk-based capital:
Consolidated	12.9%	$	580,504	N/A		N/A	7.0%	$	386,728
NBH Bank	11.1%		498,283	6.5%	$	358,414	7.0%		385,984
Tier 1 risk-based capital ratio:
Consolidated	12.9%	$	580,504	N/A		N/A	8.5%	$	382,306
NBH Bank	11.1%		498,283	8.0%	$	358,938	8.5%		381,372
Total risk-based capital ratio:
Consolidated	13.8%	$	620,275	N/A		N/A	10.5%	$	472,261
NBH Bank	12.0%		538,054	10.0%	$	448,672	10.5%		471,106

(1) As of the fully phased-in date of January 1, 2019, including the capital conservation buffer.

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Earnings Per Share

12 Months Ended

Dec. 31, 2019

Earnings Per Share

Earnings Per Share

Note 18 Earnings Per Share

The Company calculates earnings per share under the two-class method, as certain non-vested share awards contain non-forfeitable rights to dividends. As such, these awards are considered securities that participate in the earnings of the Company. Non-vested shares are discussed further in note 16.

The Company had 31,176,627 and 30,769,063 shares of Class A common stock outstanding as of December 31, 2019 and 2018, respectively, exclusive of issued non-vested restricted shares. Certain stock options and non-vested restricted shares are potentially dilutive securities, but are not included in the calculation of diluted earnings per share because to do so would have been anti-dilutive for 2019, 2018 and 2017.

The following table illustrates the computation of basic and diluted earnings per share for 2019, 2018 and 2017:

	For the years ended December 31,
	2019		2018		2017
Net income	$	80,365	$	61,451	$	14,579
Less: income allocated to participating securities		(94)		(70)		(56)
Income allocated to common shareholders	$	80,271	$	61,381	$	14,523
Weighted average shares outstanding for basic earnings per common share		31,175,825		30,748,234		26,928,763
Dilutive effect of equity awards		354,992		681,840		772,392
Dilutive effect of warrants		—		—		8,504
Weighted average shares outstanding for diluted earnings per common share		31,530,817		31,430,074		27,709,659
Basic earnings per share	$	2.57	$	2.00	$	0.54
Diluted earnings per share		2.55		1.95		0.53

The Company had 657,114, 1,264,876 and 1,598,318 outstanding stock options to purchase common stock at weighted average exercise prices of $26.69, $22.33 and $20.62 per share at December 31, 2019, 2018 and 2017, respectively, which have time-vesting criteria, and as such, any dilution is derived only for the time frame in which the vesting criteria had been met and where the inclusion of those stock options is dilutive. The Company had 281,072, 338,543 and 288,639 unvested restricted shares and units issued as of December 31, 2019, 2018 and 2017, respectively, which have performance, market and/or time-vesting criteria, and as such, any dilution is derived only for the time frame in which the vesting criteria had been met and where the inclusion of those restricted shares and units is dilutive.

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Fair Value Measurements - Inputs Used to Determine Fair Values of Oreo are Considered Level 3 Inputs in Fair Value Hierarchy (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	$ 766,799	$ 860,082
Fair Value, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	46,078	45,231
Losses From Fair Value Changes	10,380	2,371
Impaired loans [Member] | Fair Value, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	32,763	31,079
Losses From Fair Value Changes	8,271	2,120
Other Real Estate Owned [Member] | Fair Value, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	7,300	10,596
Losses From Fair Value Changes	1,082	230
Mortgage servicing rights member | Fair Value, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	2,630	3,556
Losses From Fair Value Changes	129	$ 21
Premises and Equipment [Member] | Fair Value, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	3,385
Losses From Fair Value Changes	$ 898

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Commitments and Contingencies - Schedule of Total Unfunded Commitments (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Commitment And Contingencies [Line Items]
Total unfunded commitments	$ 862,250	$ 784,077
Commitments to fund loans [Member]
Commitment And Contingencies [Line Items]
Total unfunded commitments	249,914	183,946
Unfunded Commitment Line Of Credit [Member]
Commitment And Contingencies [Line Items]
Total unfunded commitments	600,407	589,573
Commercial And Standby Letters Of Credit [Member]
Commitment And Contingencies [Line Items]
Total unfunded commitments	$ 11,929	$ 10,558

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Derivatives - FV of Derivatives on the Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Designated as Hedging Instrument [Member]
Derivative [Line Items]
Asset derivatives fair value	$ 1,171	$ 17,436
Liability derivatives fair value	13,537	228
Not Designated as Hedging Instrument, Economic Hedge [Member]
Derivative [Line Items]
Asset derivatives fair value	10,519	4,062
Liability derivatives fair value	9,461	3,893
Other assets [Member] | Interest rate products [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Asset derivatives fair value	1,171	17,436
Other assets [Member] | Interest rate products [Member] | Not Designated as Hedging Instrument, Economic Hedge [Member]
Derivative [Line Items]
Asset derivatives fair value	9,004	3,191
Other assets [Member] | Interest Rate Lock Commitments [Member] | Not Designated as Hedging Instrument, Economic Hedge [Member]
Derivative [Line Items]
Asset derivatives fair value	1,499	871
Other assets [Member] | Forward Contracts [Member] | Not Designated as Hedging Instrument, Economic Hedge [Member]
Derivative [Line Items]
Asset derivatives fair value	16
Other liabilities [Member] | Interest rate products [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Liability derivatives fair value	13,537	228
Other liabilities [Member] | Interest rate products [Member] | Not Designated as Hedging Instrument, Economic Hedge [Member]
Derivative [Line Items]
Liability derivatives fair value	9,021	3,349
Other liabilities [Member] | Interest Rate Lock Commitments [Member] | Not Designated as Hedging Instrument, Economic Hedge [Member]
Derivative [Line Items]
Liability derivatives fair value	141	72
Other liabilities [Member] | Forward Contracts [Member] | Not Designated as Hedging Instrument, Economic Hedge [Member]
Derivative [Line Items]
Liability derivatives fair value	$ 299	$ 472

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Goodwill and Intangible Assets - Changes in Servicing Rights (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Changes in the mortgage servicing rights
Amortization	$ (1,183)	$ (2,170)	$ (5,342)
Mortgage servicing rights
Changes in the mortgage servicing rights
Beginning balance	3,556
Acquired through acquisition		4,301
Originations	27	30
Impairment	(129)	(21)
Amortization	(824)	(754)
Ending balance	2,630	3,556
Fair value of mortgage servicing rights	$ 2,630	$ 3,884

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Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
	Jan. 01, 2019	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect adjustment	$ 300		$ 256	$ 26
ASU 2018-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reclassification of certain tax effects from accumulated other comprehensive income		$ 1,500
Adjustments for New Accounting Principle, Early Adoption [Member] | ASU 2017-12
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect adjustment				$ 26
Adjustments for New Accounting Principle, Early Adoption [Member] | ASU 2016-02 and ASU 2018-11 | Restatement Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Lease right-of-use assets	30,500
Lease liabilities	30,500
Cumulative effect adjustment	$ 300

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Investment Securities - Summary of Held-to-maturity Investment Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity Securities	$ 182,884	$ 235,398
Held-to-maturity Securities, Accumulated Unrecognized Holding Gain	1,321	2
Held-to-maturity Securities, Accumulated Unrecognized Holding Loss	(464)	(4,474)
Fair value	183,741	230,926
Residential Mortgage Pass-Through Securities Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity Securities	127,560	157,115
Held-to-maturity Securities, Accumulated Unrecognized Holding Gain	1,239	2
Held-to-maturity Securities, Accumulated Unrecognized Holding Loss	(29)	(2,705)
Fair value	128,770	154,412
Other Residential MBS Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity Securities	55,324	78,283
Held-to-maturity Securities, Accumulated Unrecognized Holding Gain	82
Held-to-maturity Securities, Accumulated Unrecognized Holding Loss	(435)	(1,769)
Fair value	$ 54,971	$ 76,514

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Borrowings - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Assets Sold under Agreements to Repurchase [Line Items]
Amount of repurchase agreements	$ 56.9	$ 66.0	$ 130.5
Fair value of collateral	17.6	16.0
Fair value of Collateral pledged for repurchase agreement	$ 7.0	5.9	5.7
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Due Date, Earliest	2019
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Due Date, Last	2020
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available	$ 1,100.0
FHLB advances	15.0	67.3	129.1
FHLB line of credit advances	192.7	234.3	0.0
Loans pledged	1,500.0	1,600.0	1,200.0
Interest expense related to FHLB advances	$ 6.3	2.6	1.8
Minimum
Assets Sold under Agreements to Repurchase [Line Items]
Interest rate range of FHLB advances	1.55%
Maximum
Assets Sold under Agreements to Repurchase [Line Items]
Interest rate range of FHLB advances	2.33%
Federal Home Loan Bank of Des Moines [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Fair value of collateral	$ 17.6	16.0	28.1
Maturity on Demand [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Amount of repurchase agreements	0.0	0.0	0.0
U.S. Treasury Securities [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Fair value of collateral	$ 65.6	$ 73.9	$ 136.1

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Stock-based Compensation and Benefits - Narrative (Details)	12 Months Ended			60 Months Ended
	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) shares	Dec. 31, 2019 USD ($) shares
NBH Holdings Corp. 2014 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	4,996,156			4,996,156
Share-based Compensation Arrangement by Share-based Payment Award, Reduction in Number of Shares for Every One Option or Stock Appreciation Right Granted	1
Share-based Compensation Arrangement by Share-based Payment Award, Reduction in Number of Shares for Every One Award Other Than An Option or Stock Appreciation Right Granted	3.25
Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense | $	$ 700,000	$ 800,000	$ 700,000
Unrecognized compensation expense | $	$ 800,000			$ 800,000
Unrecognized compensation cost, weighted-average period, years	2 years
Stock options [Member] | NBH Holdings Corp. 2014 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award Vesting Rights, Percentage				33.33%
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)	86,689	92,133
Weighted average grant-date fair value, Granted (in dollars per share) | $ / shares	$ 35.05	$ 33.69
Stock based compensation expense | $	$ 2,200,000	$ 2,100,000	2,200,000
Restricted Stock [Member] | NBH Holdings Corp. 2014 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense | $	$ 2,000,000.0			$ 2,000,000.0
Unrecognized compensation cost, weighted-average period, years	1 year 10 months 24 days
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)	60,781	77,125
Weighted average grant-date fair value, Granted (in dollars per share) | $ / shares	$ 30.85	$ 30.38
Stock based compensation expense | $	$ 2,000,000.0	$ 1,500,000	$ 800,000
Performance stock units | NBH Holdings Corp. 2014 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)	60,781	77,125	49,758
Share-based Compensation Arrangement by Share-based Payment Award, Award Performance Period	3 years
Unrecognized compensation expense | $	$ 2,700,000			$ 2,700,000
Unrecognized compensation cost, weighted-average period, years	1 year 8 months 12 days
Performance stock units | NBH Holdings Corp. 2014 Omnibus Incentive Plan [Member] | EPS target
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of awards based on performance type	60.00%
Weighted average grant-date fair value, Granted (in dollars per share) | $ / shares		$ 34.08
Performance stock units | NBH Holdings Corp. 2014 Omnibus Incentive Plan [Member] | TSR target
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of awards based on performance type	40.00%
Weighted average grant-date fair value, Granted (in dollars per share) | $ / shares		$ 27.01
Employee Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	400,000			400,000
Maximum stock purchases by employees, value | $	$ 25,000
Maximum stock purchases by employees (in shares)	2,000
Discount on purchase of common stock (as a percent)	90.00%
Offering period for employee stock purchases	6 months
Employees purchased shares (in shares)	16,556	12,515
Shares available for issuance	326,088			326,088
Minimum | Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Minimum | Restricted Stock [Member] | NBH Holdings Corp. 2014 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Minimum | Performance stock units | NBH Holdings Corp. 2014 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of initial target awards	0
Maximum | Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Contractual term (in years)	10 years
Maximum | Restricted Stock [Member] | NBH Holdings Corp. 2014 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Maximum | Performance stock units | NBH Holdings Corp. 2014 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of initial target awards	150

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Loans - Impaired Loans Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Carrying amount of loan investments	$ 4,415,406	$ 4,092,308
Recorded investment of impaired loans	32,763	31,079
Recorded investment of accruing TDRs	6,900	4,100
Collective related allowance for loan losses for impaired loans	$ 1,795	$ 1,169

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Borrowings (Tables)

12 Months Ended

Dec. 31, 2019

Borrowings

Schedule of Selected Information Regarding Repurchase Agreements

The following table sets forth selected information regarding repurchase agreements during 2019, 2018 and 2017:

	As of and for the years ended December 31,
	2019		2018		2017
Maximum amount of outstanding agreements at any month end during the period	$	68,600	$	142,292	$	130,463
Average amount outstanding during the period		60,445		87,691		88,390
Weighted average interest rate for the period		1.11%		0.34%		0.19%

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Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Schedule of Premises and Equipment

Premises and equipment consisted of the following at December 31, 2019 and 2018:

	December 31, 2019		December 31, 2018
Land	$	32,911	$	32,058
Buildings and improvements		94,260		88,955
Equipment		56,523		52,354
Total premises and equipment, at cost		183,694		173,367
Less: accumulated depreciation and amortization		(71,543)		(63,381)
Premises and equipment, net	$	112,151	$	109,986

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Borrowings

12 Months Ended

Dec. 31, 2019

Borrowings

Borrowings

Note 13 Borrowings

The following table sets forth selected information regarding repurchase agreements during 2019, 2018 and 2017:

	As of and for the years ended December 31,
	2019		2018		2017
Maximum amount of outstanding agreements at any month end during the period	$	68,600	$	142,292	$	130,463
Average amount outstanding during the period		60,445		87,691		88,390
Weighted average interest rate for the period		1.11%		0.34%		0.19%

The Company enters into repurchase agreements to facilitate the needs of its clients. As of December 31, 2019, 2018 and 2017, the Company sold securities under agreements to repurchase totaling $56.9 million, $66.0 million and $130.5 million, respectively. The Company had pledged mortgage-backed securities with a fair value of approximately $65.6 million, $73.9

million and $136.1 million, as of December 31, 2019, 2018 and 2017, respectively, for these agreements. The Company monitors collateral levels on a continuous basis and may be required to provide additional collateral based on the fair value of the underlying securities. There was $7.0 million, $5.9 million and $5.7 million of excess collateral pledged for repurchase agreements at December 31, 2019, 2018 and 2017, respectively.

The vast majority of the Company’s repurchase agreements are overnight transactions with clients that mature the day after the transaction. At December 31, 2019, 2018 and 2017, none of the Company’s repurchase agreements were for periods longer than one day. The repurchase agreements are subject to a master netting arrangement; however, the Company has not offset any of the amounts shown in the consolidated financial statements.

As a member of the FHLB, the Bank has access to a line of credit and term financing from the FHLB with total available credit of $1.1 billion at December 31, 2019. At December 31, 2019, 2018 and 2017, the Bank had $192.7 million, $234.3 million and $0.0 million in line of credit advances from the FHLB, respectively, that mature within a day. At December 31, 2019, 2018 and 2017, the Bank had $15.0 million, $67.3 million and $129.1 million in term advances from the FHLB, respectively, with fixed interest rates between 1.55% - 2.33% and maturity dates of 2019 - 2020. The Bank had investment securities and loans pledged as collateral for FHLB advances. Investment securities pledged were $17.6 million, $16.0 million and $28.1 million at December 31, 2019, 2018 and 2017, respectively. Loans pledged were $1.5 billion, $1.6 billion and $1.2 billion at December 31, 2019, 2018 and 2017, respectively. Interest expense related to FHLB advances and other short-term borrowings totaled $6.3 million, $2.6 million and $1.8 million for the years ended December 31, 2019, 2018 and 2017, respectively.

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Common Stock

12 Months Ended

Dec. 31, 2019

Common Stock

Common Stock

Note 17 Common Stock

The Company had 31,176,627 and 30,769,063 shares of Class A common stock outstanding at December 31, 2019 and 2018, respectively. Additionally, the Company had 122,198 and 146,494 shares outstanding at December 31, 2019 and 2018, respectively, of restricted Class A common stock issued but not yet vested under the 2014 Plan that are not included in shares outstanding until such time that they are vested; however, these shares do have voting and certain dividend rights during the vesting period.

On August 5, 2016, the Board of Directors authorized a new share repurchase program for up to $50.0 million from time to time in either the open market or through privately negotiated transactions. The remaining authorization under this program at December 31, 2019 was $12.6 million.

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Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Commitment And Contingencies [Line Items]
Loan commitments	$ 850.3	$ 773.5
Mortgage Repurchase Reserve	2.6	3.4
Standby Letters of Credit [Member]
Commitment And Contingencies [Line Items]
Standby letters of credit	$ 11.9	$ 10.6

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Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Operating Loss Carryforwards [Line Items]
Income tax expense	$ 3,864	$ 5,419	$ 3,179	$ 3,367	$ 3,381	$ 4,354	$ 2,800	$ 1,695	$ 18,615	$ 1,733	$ 2,175	$ (1,240)	$ 15,829	$ 12,230	$ 21,283
Income tax benefit from stock compensation activity													$ 2,200	$ 1,300	$ 4,200
Statutory rate													21.00%	21.00%	35.00%
Income tax expense related to re-measurement															$ 18,457
Deferred tax asset related to stock-based compensation	3,425				3,046								$ 3,425	$ 3,046
Accrued stock-based compensation	1,945				$ 2,889								$ 1,945	$ 2,889
Minimum | Stock options [Member]
Operating Loss Carryforwards [Line Items]
Vesting period													1 year
Maximum | Stock options [Member]
Operating Loss Carryforwards [Line Items]
Vesting period													4 years
Domestic Country [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryovers (NOLs)	2,700												$ 2,700
State and Local Jurisdiction [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryovers (NOLs)	$ 3,700												$ 3,700

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Fair Value Measurements - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	$ 4,415,406	$ 4,092,308
Impairment on other real estate owned	1,082	230	$ 766
Impairment on fixed assets related to banking center consolidations	900
Fair Value, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	5,900	4,900
Nonrecurring Loans Reserves	1,800	1,100
Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment on other real estate owned	1,100	200
Mortgage servicing rights member
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment of Mortgage Servicing Rights	$ 129	$ 21

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Revenue from Contracts with Clients - Non-interest income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue from Contracts with Clients
Gain on OREO sales, net	$ (7,193)	$ (488)	$ (4,150)
Service charges and other fees
Revenue from Contracts with Clients
Non-interest income	17,895	18,092	14,634
Bank card fees
Revenue from Contracts with Clients
Non-interest income	14,595	14,489	12,026
In-scope of Topic 606
Revenue from Contracts with Clients
Gain on OREO sales, net	7,193	488	4,150
Total Revenue	41,508	35,385	38,188
ASU 2014-09
Revenue from Contracts with Clients
Non-interest income	82,752	70,775	39,205
ASU 2014-09 | In-scope of Topic 606
Revenue from Contracts with Clients
Non-interest income	34,315	34,897	34,038
Gain on banking center divestiture			2,942
ASU 2014-09 | In-scope of Topic 606 | Service charges and other fees
Revenue from Contracts with Clients
Non-interest income	19,720	20,408	19,070
ASU 2014-09 | In-scope of Topic 606 | Bank card fees
Revenue from Contracts with Clients
Non-interest income	14,595	14,489	12,026
ASU 2014-09 | Out-of-scope of Topic 606
Revenue from Contracts with Clients
Non-interest income	$ 48,437	$ 35,878	$ 5,167

XML

Loans - Composition including Carrying value by Segment of Originated and acquired loans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Fees and cost related to loans	$ 8,400	$ 10,200
Carrying amount of loan investments	4,415,406	4,092,308
Loans Pledged as Collateral	1,500,000	1,600,000	$ 1,200,000
Commercial Loan [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	2,992,307	2,644,571
Non Accrual [Member]
Debt Instrument [Line Items]
Recorded investment, non-accrual status	21,700
Increase (decrease) in non-accrual loans	$ 2,700
Percentage increase (decrease) in past due loans	11.10%
Originated and acquired loans [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	$ 4,361,312	4,021,429
Originated and acquired loans [Member] | Commercial Loan [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	2,977,007	2,624,173
ASC 310-30 [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	54,094	70,879
ASC 310-30 [Member] | Commercial Loan [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	15,300	20,398
Total Loans [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	4,415,406	4,092,308
Total Loans [Member] | Originated and acquired loans [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	4,361,312	4,021,429
Recorded investment, non-accrual status	21,748	24,456
Total Loans [Member] | Originated and acquired loans [Member] | Commercial and Industrial [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	2,205,997	1,931,147
Recorded investment, non-accrual status	9,396	5,510
Total Loans [Member] | Originated and acquired loans [Member] | Energy Loans [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	42,519	49,204
Recorded investment, non-accrual status	934	742
Total Loans [Member] | Originated and acquired loans [Member] | Commercial Loan [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	2,977,007	2,624,173
Recorded investment, non-accrual status	12,911	13,951
Total Loans [Member] | Originated and acquired loans [Member] | Owner-Occupied [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	479,906	421,666
Recorded investment, non-accrual status	2,264	6,931
Total Loans [Member] | Originated and acquired loans [Member] | Non Owner-Occupied [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	450,653	380,630
Recorded investment, non-accrual status	43	572
Total Loans [Member] | ASC 310-30 [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	54,094	70,879
Total Loans [Member] | ASC 310-30 [Member] | Commercial Loan [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	15,300	20,398
Total Loans [Member] | Substandard [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	40,647	53,527
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	36,364	48,724
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Commercial and Industrial [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	14,287	22,919
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Energy Loans [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	739	742
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Commercial Loan [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	25,594	36,336
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Owner-Occupied [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	9,516	11,828
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Non Owner-Occupied [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	721	1,611
Total Loans [Member] | Substandard [Member] | ASC 310-30 [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	4,283	4,803
Total Loans [Member] | Substandard [Member] | ASC 310-30 [Member] | Commercial Loan [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	2,118	2,282
Total Loans [Member] | Special Mention [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	85,734	63,975
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	84,644	62,284
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Commercial and Industrial [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	28,144	16,531
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Commercial Loan [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	68,960	34,140
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Owner-Occupied [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	39,597	16,349
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Non Owner-Occupied [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	15,238	23,243
Total Loans [Member] | Special Mention [Member] | ASC 310-30 [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	1,090	1,691
Total Loans [Member] | Special Mention [Member] | ASC 310-30 [Member] | Commercial Loan [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	659	537
Total Loans [Member] | Doubtful [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	1,748	1,117
Total Loans [Member] | Doubtful [Member] | Originated and acquired loans [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	1,748	1,117
Total Loans [Member] | Doubtful [Member] | Originated and acquired loans [Member] | Commercial and Industrial [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	1,521	987
Total Loans [Member] | Doubtful [Member] | Originated and acquired loans [Member] | Energy Loans [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	195
Total Loans [Member] | Doubtful [Member] | Originated and acquired loans [Member] | Commercial Loan [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments	$ 1,748	1,117
Total Loans [Member] | Doubtful [Member] | Originated and acquired loans [Member] | Owner-Occupied [Member]
Debt Instrument [Line Items]
Carrying amount of loan investments		$ 85

XML

Goodwill and Intangible Assets - Summary of Estimated Future Amortization Expense (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Core Deposits
Estimated future amortization expense
For the years ending December 31, 2020	$ 1,183
For the years ending December 31, 2021	1,183
For the years ending December 31, 2022	1,127
For the years ending December 31, 2023	1,048
For the years ending December 31, 2024	1,048
Mortgage servicing rights
Estimated future amortization expense
For the years ending December 31, 2020	512
For the years ending December 31, 2021	412
For the years ending December 31, 2022	332
For the years ending December 31, 2023	267
For the years ending December 31, 2024	$ 215

XML

Summary of Significant Accounting Policies - Narrative (Details)	12 Months Ended
	Dec. 31, 2019
Significant Accounting Policies [Line Items]
Residential mortgage loans held for sale period	45 days
Buildings [Member]
Significant Accounting Policies [Line Items]
Estimated useful life of the asset	39 years
Maximum
Significant Accounting Policies [Line Items]
Fair values are subject to refinement maximum year	1 year
Maximum | Stock options [Member]
Significant Accounting Policies [Line Items]
Contractual term	10 years
Maximum | Building Improvements [Member]
Significant Accounting Policies [Line Items]
Estimated useful life of the asset	15 years
Maximum | Equipment [Member]
Significant Accounting Policies [Line Items]
Estimated useful life of the asset	7 years
Minimum | Building Improvements [Member]
Significant Accounting Policies [Line Items]
Estimated useful life of the asset	7 years
Minimum | Equipment [Member]
Significant Accounting Policies [Line Items]
Estimated useful life of the asset	3 years

XML

Investment Securities - Summary of Unrealized Losses (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		$ 159,061
Less than 12 months Fair Value	$ 52,396
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(288)	(1,551)
12 months or more, Fair Value	256,173	523,831
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(4,787)	(19,360)
Total, Fair Value	308,569	682,892
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(5,075)	(20,911)
Residential Mortgage Pass-Through Securities Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		30,853
Less than 12 months Fair Value	10,413
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(7)	(392)
12 months or more, Fair Value	1,421	69,169
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(4)	(1,481)
Total, Fair Value	11,834	100,022
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(11)	(1,873)
Other Residential MBS Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		127,767
Less than 12 months Fair Value	41,983
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(281)	(1,150)
12 months or more, Fair Value	254,380	454,662
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(4,775)	(17,879)
Total, Fair Value	296,363	582,429
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(5,056)	(19,029)
Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		441
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		(9)
12 months or more, Fair Value	372
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(8)
Total, Fair Value	372	441
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ (8)	$ (9)

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Deposits - Schedule of Interest Expense on Deposits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Deposits [Abstract]
Interest bearing demand deposits	$ 1,514	$ 887	$ 445
Money market accounts	9,046	5,622	4,077
Savings accounts	2,717	2,249	1,481
Time deposits	16,526	12,283	10,169
Interest Expense, Deposits, Total	$ 29,803	$ 21,041	$ 16,172

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Regulatory Capital (Tables)

12 Months Ended

Dec. 31, 2019

Regulatory Capital

Capital Ratio Requirements under Prompt Corrective Action or Other Regulatory Requirements

	December 31, 2019
				Required to be			Required to be
				well capitalized under			considered
				prompt corrective			adequately
	Actual			action provisions			capitalized(1)
	Ratio	Amount		Ratio	Amount		Ratio	Amount
Tier 1 leverage ratio:
Consolidated	11.0%	$	640,440	N/A		N/A	4.0%	$	231,950
NBH Bank	9.1%		528,028	5.0%	$	289,926	4.0%		231,940
Common equity tier 1 risk-based capital:
Consolidated	13.2%	$	640,440	N/A		N/A	7.0%	$	405,912
NBH Bank	10.9%		528,028	6.5%	$	376,903	7.0%		405,896
Tier 1 risk-based capital ratio:
Consolidated	13.2%	$	640,440	N/A		N/A	8.5%	$	412,620
NBH Bank	10.9%		528,028	8.0%	$	387,701	8.5%		411,932
Total risk-based capital ratio:
Consolidated	14.1%	$	682,645	N/A		N/A	10.5%	$	509,707
NBH Bank	11.8%		570,233	10.0%	$	484,626	10.5%		508,857

	December 31, 2018
				Required to be			Required to be
				well capitalized under			considered
				prompt corrective			adequately
	Actual			action provisions			capitalized(1)
	Ratio	Amount		Ratio	Amount		Ratio	Amount
Tier 1 leverage ratio:
Consolidated	10.5%	$	580,504	N/A		N/A	4.0%	$	220,988
NBH Bank	9.0%		498,283	5.0%	$	275,703	4.0%		220,563
Common equity tier 1 risk-based capital:
Consolidated	12.9%	$	580,504	N/A		N/A	7.0%	$	386,728
NBH Bank	11.1%		498,283	6.5%	$	358,414	7.0%		385,984
Tier 1 risk-based capital ratio:
Consolidated	12.9%	$	580,504	N/A		N/A	8.5%	$	382,306
NBH Bank	11.1%		498,283	8.0%	$	358,938	8.5%		381,372
Total risk-based capital ratio:
Consolidated	13.8%	$	620,275	N/A		N/A	10.5%	$	472,261
NBH Bank	12.0%		538,054	10.0%	$	448,672	10.5%		471,106

(1) As of the fully phased-in date of January 1, 2019, including the capital conservation buffer.

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Other Real Estate Owned (Tables)

12 Months Ended

Dec. 31, 2019

Other Real Estate Owned

Summary of Activity in OREO Balances

A summary of the activity in OREO during 2019 and 2018 is as follows:

	For the years ended December 31,
	2019		2018
Beginning balance	$	10,596	$	10,491
Acquired through acquisition		—		1,253
Transfers from loan portfolio, at fair value		2,705		24,940
Impairments		(1,082)		(230)
Sales		(4,919)		(25,858)
Ending balance	$	7,300	$	10,596

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Premises and Equipment - Narrative (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($) item	Dec. 31, 2017 USD ($)
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 8.2	$ 8.6	$ 7.6
Property, Plant and Equipment, Disposals	0.0	$ 1.7	$ 2.3
Impairment on fixed assets related to banking center consolidations	0.9
Number of banking centers classified as held-for-sale | item		1
Banking center classified as held-for-sale	$ 3.4	$ 4.6
Number of Banking Centers Consolidated | item	4

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Loans - Troubled Debt Restructuring and Loans Accounted for Under ASC Topic 310-30 Narratives (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) loan	Dec. 31, 2018 USD ($) loan
Debt Instrument [Line Items]
Number of restructured loans | loan	15
Troubled Debt Restructurings [Member]
Debt Instrument [Line Items]
TDR's modified within the past year that defaulted on their restructured terms | loan	2	1
Financing Receivable, Modifications, Subsequent Default, Recorded Investment | $	$ 0.7	$ 0.1
Recorded investment | $	$ 7.1

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Loans - Loan Delinquency (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Loans [Line Items]
Total loans	$ 4,415,406	$ 4,092,308
Commercial Loan [Member]
Loans [Line Items]
Total loans	2,992,307	2,644,571
Commercial Real Estate [Member]
Loans [Line Items]
Total loans	630,906	592,212
Residential Real Estate Segment [Member]
Loans [Line Items]
Total loans	770,417	830,815
Consumer [Member]
Loans [Line Items]
Total loans	21,776	24,710
Originated and acquired loans [Member]
Loans [Line Items]
Total loans	4,361,312	4,021,429
Originated and acquired loans [Member] | Commercial Loan [Member]
Loans [Line Items]
Total loans	2,977,007	2,624,173
Originated and acquired loans [Member] | Commercial Real Estate [Member]
Loans [Line Items]
Total loans	598,118	551,819
Originated and acquired loans [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total loans	764,411	820,820
Originated and acquired loans [Member] | Consumer [Member]
Loans [Line Items]
Total loans	21,776	24,617
ASC 310-30 [Member]
Loans [Line Items]
Total loans	54,094	70,879
ASC 310-30 [Member] | Commercial Loan [Member]
Loans [Line Items]
Total loans	15,300	20,398
ASC 310-30 [Member] | Commercial Real Estate [Member]
Loans [Line Items]
Total loans	32,788	40,393
ASC 310-30 [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total loans	6,006	9,995
ASC 310-30 [Member] | Consumer [Member]
Loans [Line Items]
Total loans		93
Total Loans [Member]
Loans [Line Items]
Total loans	4,415,406	4,092,308
Total Loans [Member] | Originated and acquired loans [Member]
Loans [Line Items]
Non- accrual	21,748	24,456
Total past due and non-accrual	28,478	29,961
Current	4,332,834	3,991,468
Total loans	4,361,312	4,021,429
Total Loans [Member] | Originated and acquired loans [Member] | Commercial Construction [Member]
Loans [Line Items]
Non- accrual		1,208
Total past due and non-accrual		1,208
Current	77,733	93,646
Total loans	77,733	94,854
Total Loans [Member] | Originated and acquired loans [Member] | Commercial Acquisition/Development [Member]
Loans [Line Items]
Non- accrual	416	121
Total past due and non-accrual	416	121
Current	14,623	19,529
Total loans	15,039	19,650
Total Loans [Member] | Originated and acquired loans [Member] | Multifamily [Member]
Loans [Line Items]
Current	54,693	56,685
Total loans	54,693	56,685
Total Loans [Member] | Originated and acquired loans [Member] | Commercial and Industrial [Member]
Loans [Line Items]
Non- accrual	9,396	5,510
Total past due and non-accrual	12,753	6,079
Current	2,193,244	1,925,068
Total loans	2,205,997	1,931,147
Total Loans [Member] | Originated and acquired loans [Member] | Owner-Occupied [Member]
Loans [Line Items]
Non- accrual	2,264	6,931
Total past due and non-accrual	2,833	7,824
Current	477,073	413,842
Total loans	479,906	421,666
Total Loans [Member] | Originated and acquired loans [Member] | Non Owner-Occupied [Member]
Loans [Line Items]
Non- accrual	43	572
Total past due and non-accrual	481	1,032
Current	450,172	379,598
Total loans	450,653	380,630
Total Loans [Member] | Originated and acquired loans [Member] | Total Commercial Real Estate [Member]
Loans [Line Items]
Non- accrual	459	1,901
Total past due and non-accrual	897	2,361
Current	597,221	549,458
Total loans	598,118	551,819
Total Loans [Member] | Originated and acquired loans [Member] | Senior lien
Loans [Line Items]
Non- accrual	7,597	7,790
Total past due and non-accrual	9,344	10,444
Current	663,353	712,592
Total loans	672,697	723,036
Total Loans [Member] | Originated and acquired loans [Member] | Junior lien
Loans [Line Items]
Non- accrual	731	772
Total past due and non-accrual	1,055	1,328
Current	90,659	96,456
Total loans	91,714	97,784
Total Loans [Member] | Originated and acquired loans [Member] | Commercial Loan [Member]
Loans [Line Items]
Non- accrual	12,911	13,951
Total past due and non-accrual	17,016	15,679
Current	2,959,991	2,608,494
Total loans	2,977,007	2,624,173
Total Loans [Member] | Originated and acquired loans [Member] | Food and Agriculture [Member]
Loans [Line Items]
Non- accrual	317	768
Total past due and non-accrual	496	1,034
Current	248,089	221,122
Total loans	248,585	222,156
Total Loans [Member] | Originated and acquired loans [Member] | Energy Loans [Member]
Loans [Line Items]
Non- accrual	934	742
Total past due and non-accrual	934	742
Current	41,585	48,462
Total loans	42,519	49,204
Total Loans [Member] | Originated and acquired loans [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Non- accrual	8,328	8,562
Total past due and non-accrual	10,399	11,772
Current	754,012	809,048
Total loans	764,411	820,820
Total Loans [Member] | Originated and acquired loans [Member] | Consumer [Member]
Loans [Line Items]
Non- accrual	50	42
Total past due and non-accrual	166	149
Current	21,610	24,468
Total loans	21,776	24,617
Total Loans [Member] | ASC 310-30 [Member]
Loans [Line Items]
Total loans	54,094	70,879
Total Loans [Member] | ASC 310-30 [Member] | Commercial Loan [Member]
Loans [Line Items]
Total loans	15,300	20,398
Total Loans [Member] | ASC 310-30 [Member] | Commercial Real Estate [Member]
Loans [Line Items]
Total loans	32,788	40,393
Total Loans [Member] | ASC 310-30 [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total loans	6,006	9,995
Total Loans [Member] | ASC 310-30 [Member] | Consumer [Member]
Loans [Line Items]
Total loans		93
Total Loans [Member] | 30-89 Days Past Due | Originated and acquired loans [Member]
Loans [Line Items]
Past due loans	5,772	4,610
Total Loans [Member] | 30-89 Days Past Due | Originated and acquired loans [Member] | Commercial and Industrial [Member]
Loans [Line Items]
Past due loans	2,478	495
Total Loans [Member] | 30-89 Days Past Due | Originated and acquired loans [Member] | Owner-Occupied [Member]
Loans [Line Items]
Past due loans	569	893
Total Loans [Member] | 30-89 Days Past Due | Originated and acquired loans [Member] | Non Owner-Occupied [Member]
Loans [Line Items]
Past due loans	438	328
Total Loans [Member] | 30-89 Days Past Due | Originated and acquired loans [Member] | Total Commercial Real Estate [Member]
Loans [Line Items]
Past due loans	438	328
Total Loans [Member] | 30-89 Days Past Due | Originated and acquired loans [Member] | Senior lien
Loans [Line Items]
Past due loans	1,747	2,106
Total Loans [Member] | 30-89 Days Past Due | Originated and acquired loans [Member] | Junior lien
Loans [Line Items]
Past due loans	245	556
Total Loans [Member] | 30-89 Days Past Due | Originated and acquired loans [Member] | Commercial Loan [Member]
Loans [Line Items]
Past due loans	3,226	1,529
Total Loans [Member] | 30-89 Days Past Due | Originated and acquired loans [Member] | Food and Agriculture [Member]
Loans [Line Items]
Past due loans	179	141
Total Loans [Member] | 30-89 Days Past Due | Originated and acquired loans [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Past due loans	1,992	2,662
Total Loans [Member] | 30-89 Days Past Due | Originated and acquired loans [Member] | Consumer [Member]
Loans [Line Items]
Past due loans	116	91
Total Loans [Member] | Greater than 90 Days Past Due | Originated and acquired loans [Member]
Loans [Line Items]
Past due loans	958	895
Total Loans [Member] | Greater than 90 Days Past Due | Originated and acquired loans [Member] | Commercial and Industrial [Member]
Loans [Line Items]
Past due loans	879	74
Total Loans [Member] | Greater than 90 Days Past Due | Originated and acquired loans [Member] | Non Owner-Occupied [Member]
Loans [Line Items]
Past due loans		132
Total Loans [Member] | Greater than 90 Days Past Due | Originated and acquired loans [Member] | Total Commercial Real Estate [Member]
Loans [Line Items]
Past due loans		132
Total Loans [Member] | Greater than 90 Days Past Due | Originated and acquired loans [Member] | Senior lien
Loans [Line Items]
Past due loans		548
Total Loans [Member] | Greater than 90 Days Past Due | Originated and acquired loans [Member] | Junior lien
Loans [Line Items]
Past due loans	79
Total Loans [Member] | Greater than 90 Days Past Due | Originated and acquired loans [Member] | Commercial Loan [Member]
Loans [Line Items]
Past due loans	879	199
Total Loans [Member] | Greater than 90 Days Past Due | Originated and acquired loans [Member] | Food and Agriculture [Member]
Loans [Line Items]
Past due loans		125
Total Loans [Member] | Greater than 90 Days Past Due | Originated and acquired loans [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Past due loans	79	548
Total Loans [Member] | Greater than 90 Days Past Due | Originated and acquired loans [Member] | Consumer [Member]
Loans [Line Items]
Past due loans		$ 16
Non Accrual [Member]
Loans [Line Items]
Non- accrual	$ 21,700

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Allowance for Loan Losses - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Allowance For Loan And Lease Losses [Line Items]
Provision (recoupment) for loan losses	$ 11,643	$ 5,197	$ 12,972
Identified Acquired Commercial Loan Charge Off	6,600
Originated and acquired loans [Member]
Allowance For Loan And Lease Losses [Line Items]
Charge-offs, net	8,300
Provision (recoupment) for loan losses	11,694	4,975
ASC 310-30 [Member]
Allowance For Loan And Lease Losses [Line Items]
Provision (recoupment) for loan losses	$ (51)	$ 222

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Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Stockholders' Equity [Abstract]
Gain on reissuance of treasury stock	$ 6,010	$ 7,998	$ 6,118
Reissuance of treasury stock, shares		3,398,477
Cash dividends declared per share	$ 0.75	$ 0.54	$ 0.34

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Loans - Composition of Net Book Value for Loans Accounted for under ASC Topic 310-30 (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Receivables [Abstract]
Contractual cash flows	$ 391,167	$ 420,994
Non-accretable difference	(308,939)	(314,214)
Accretable yield	(28,134)	(35,901)
Loans accounted for under ASC 310-30	$ 54,094	$ 70,879

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Goodwill and Intangible Assets - Carrying Amounts (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Carrying amount of intangible assets
Accumulated amortization	$ (40,100)	$ (38,900)
Core Deposits
Carrying amount of intangible assets
Gross carrying amount	48,834	48,834
Accumulated amortization	(40,103)	(38,920)
Net carrying amount	8,731	9,914
Mortgage servicing rights
Carrying amount of intangible assets
Net carrying amount	$ 2,630	$ 3,556

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Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Interest and dividend income:
Interest and fees on loans	$ 218,836	$ 193,124	$ 137,249
Interest and dividends on investment securities	21,297	25,746	24,841
Dividends on non-marketable securities	1,770	1,096	839
Interest on interest-bearing bank deposits	698	1,425	1,492
Total interest and dividend income	242,601	221,391	164,421
Interest expense:
Interest on deposits	29,803	21,041	16,172
Interest on borrowings	6,968	2,913	1,943
Total interest expense	36,771	23,954	18,115
Net interest income before provision for loan losses	205,830	197,437	146,306
Provision for loan losses	11,643	5,197	12,972
Net interest income after provision for loan losses	194,187	192,240	133,334
Non-interest income:
Mortgage banking income	42,346	30,107	2,154
Bank-owned life insurance income	1,713	1,791	1,871
Other non-interest income	5,888	5,379	8,082
OREO-related income	315	917	438
Total non-interest income	82,752	70,775	39,205
Non-interest expense:
Salaries and benefits	122,732	114,939	80,188
Occupancy and equipment	27,336	28,493	20,994
Telecommunications and data processing	8,754	10,098	7,188
Marketing and business development	3,897	4,513	2,683
FDIC deposit insurance	1,049	2,475	2,762
Bank card expenses	4,780	5,453	3,986
Professional fees	3,256	6,059	3,330
Other non-interest expense	11,765	13,073	10,360
Problem asset workout	3,186	2,549	3,994
Gain on OREO sales, net	(7,193)	(488)	(4,150)
Core deposit intangible asset amortization	1,183	2,170	5,342
Total non-interest expense	180,745	189,334	136,677
Income before income taxes	96,194	73,681	35,862
Income tax expense	15,829	12,230	21,283
Net income	$ 80,365	$ 61,451	$ 14,579
Earnings per share-basic (in dollars per share)	$ 2.57	$ 2.00	$ 0.54
Earnings per share-diluted (in dollars per share)	$ 2.55	$ 1.95	$ 0.53
Weighted average number of common shares outstanding:
Basic (Shares)	31,175,825	30,748,234	26,928,763
Diluted (Shares)	31,530,817	31,430,074	27,709,659
Service charges and other fees
Non-interest income:
Non-interest income	$ 17,895	$ 18,092	$ 14,634
Bank card fees
Non-interest income:
Non-interest income	$ 14,595	$ 14,489	$ 12,026

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Derivatives (Tables)

12 Months Ended

Dec. 31, 2019

Derivatives

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

Information about the valuation methods used to measure fair value is provided in note 22.

		Asset derivatives fair value					Liability derivatives fair value
	Balance Sheet	December 31,		December 31,		Balance Sheet	December 31,		December 31,
	location	2019		2018		Location	2019		2018
Derivatives designated as hedging instruments:
Interest rate products	Other assets	$	1,171	$	17,436	Other liabilities	$	13,537	$	228
Total derivatives designated as hedging instruments		$	1,171	$	17,436		$	13,537	$	228
Derivatives not designated as hedging instruments:
Interest rate products	Other assets	$	9,004	$	3,191	Other liabilities	$	9,021	$	3,349
Interest rate lock commitments	Other assets		1,499		871	Other liabilities		141		72
Forward contracts	Other assets		16		—	Other liabilities		299		472
Total derivatives not designated as hedging instruments		$	10,519	$	4,062		$	9,461	$	3,893

Derivative Instruments, Gain (Loss)

The tables below present the effect of the Company’s derivative financial instruments on the consolidated statements of operations for 2019 and 2018:

	Location of gain (loss)	Amount of gain (loss) recognized in income on derivatives
Derivatives in fair value	recognized in income on	For the years ended December 31,
hedging relationships	derivatives	2019		2018
Interest rate products	Interest and fees on loans	$	10,397	$	13,513
Total		$	10,397	$	13,513

	Location of gain (loss)	Amount of gain (loss) recognized in income on hedged items
	recognized in income on	For the years ended December 31,
Hedged items	hedged items	2019		2018
Interest rate products	Interest and fees on loans	$	(9,603)	$	(13,972)
Total		$	(9,603)	$	(13,972)

	Location of gain (loss)	Amount of gain (loss) recognized in income on derivatives
Derivatives not designated	recognized in income on	For the years ended December 31,
as hedging instruments	derivatives	2019		2018
Interest rate products	Other non-interest expense	$	133	$	55
Interest rate lock commitments	Mortgage banking income		1,138		(1,329)
Forward contracts	Mortgage banking income		189		1,324
Total		$	1,460	$	50

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Parent Company Only Financial Statements (Tables)

12 Months Ended

Dec. 31, 2019

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Statements

Parent company only financial information for National Bank Holdings Corporation is summarized as follows:

Condensed Statements of Financial Condition

	December 31, 2019		December 31, 2018
ASSETS
Cash and cash equivalents	$	105,012	$	71,997
Investment in subsidiaries		654,508		612,784
Other assets		18,095		21,002
Total assets	$	777,615	$	705,783
LIABILITIES AND STOCKHOLDERS’ EQUITY
Other liabilities	$	10,695	$	10,777
Total liabilities		10,695		10,777
Shareholders’ equity		766,920		695,006
Total liabilities and shareholders’ equity	$	777,615	$	705,783

Condensed Statements of Operations

	For the years ended December 31,
	2019		2018		2017
Income
Interest income	$	—	$	112	$	45
Equity in undistributed earnings (losses) of subsidiaries		28,133		19,682		(11,192)
Distributions from subsidiaries		55,725		47,338		28,903
Total income		83,858		67,132		17,756
Expenses
Salaries and benefits		4,925		4,455		3,680
Other expenses		2,463		4,467		3,587
Total expenses		7,388		8,922		7,267
Income before income taxes		76,470		58,210		10,489
Income tax benefit		(3,895)		(3,241)		(4,090)
Net income	$	80,365	$	61,451	$	14,579

Condensed Statements of Cash Flows

	For the years ended December 31,
	2019		2018		2017
Cash flows from operating activities:
Net income	$	80,365	$	61,451	$	14,579
Equity in undistributed (earnings) losses of subsidiaries		(28,133)		(19,682)		11,192
Stock-based compensation expense		4,869		4,420		3,648
Net excess tax benefit on stock-based compensation		(2,160)		(1,286)		(4,225)
Other		5,045		9,230		6,680
Net cash provided by operating activities		59,986		54,133		31,874
Cash flows from investing activities:
Outlay for business combinations		—		(36,189)		—
Net cash used in investing activities		—		(36,189)		—
Cash flows from financing activities:
Capital contribution		—		—		(5,000)
Issuance of stock under purchase and equity compensation plans		(6,229)		(772)		(8,395)
Proceeds from exercise of stock options		2,788		7,576		104
Payment of dividends		(23,530)		(16,624)		(9,401)
Net cash used in financing activities		(26,971)		(9,820)		(22,692)
Net increase in cash, cash equivalents and restricted cash		33,015		8,124		9,182
Cash, cash equivalents and restricted cash at beginning of the year		81,997		73,873		64,691
Cash, cash equivalents and restricted cash at end of the year	$	115,012	$	81,997	$	73,873

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies

Cash and cash equivalents

a) Cash and cash equivalents—Cash and cash equivalents include cash, cash items, amounts due from other banks, amounts due from the Federal Reserve Bank of Kansas City, federal funds sold, and interest-bearing bank deposits.

Investment securities

b) Investment securities—Investment securities may be classified in three categories: trading, available-for-sale or held-to-maturity. Management determines the appropriate classification at the time of purchase and reevaluates the classification at each reporting period. Any sales of available-for-sale securities are for the purpose of executing the Company’s asset/liability management strategy, reducing borrowings, funding loan growth, providing liquidity, or eliminating a perceived credit risk in a specific security. Held-to-maturity securities are carried at amortized cost, and the available-for-sale securities are carried at estimated fair value. Unrealized gains or losses on securities available-for-sale are reported as accumulated other comprehensive income (loss) (“AOCI”), a component of shareholders’ equity, net of income tax. Gains and losses realized upon sales of securities are calculated using the specific identification method. Premiums and discounts are amortized to interest income over the estimated lives of the securities. Prepayment experience is periodically evaluated and a determination made regarding the appropriate estimate of the future rates of prepayment. When a change in a bond’s estimated remaining life is necessary, a corresponding adjustment is made in the related premium amortization or discount accretion. Purchases and sales of securities, including any corresponding gains or losses, are recognized on a trade-date basis and a receivable or payable is recognized for pending transaction settlements.

Management evaluates all investments for OTTI on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Impairment is considered to be other-than-temporary if it is likely that all amounts

contractually due will not be received for debt securities and when there is no positive evidence indicating that an investment’s carrying amount is recoverable in the near term for equity securities. When impairment is considered other-than-temporary, the cost basis of the security is written down to fair value, with the impairment charge related to credit included in earnings, while the impairment charge related to all other factors is recognized in AOCI. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the entire amount of the OTTI is recorded in earnings. In evaluating whether the impairment is temporary or other than temporary, the Company considers, among other things, the severity and duration of the unrealized loss position; adverse conditions specifically related to the security; changes in expected future cash flows; downgrades in the rating of the security by a rating agency; the failure of the issuer to make scheduled interest or principal payments; whether the Company has the intent to sell the security; and whether it is more likely than not that the Company will be required to sell the security.

Non-marketable securities

c) Non-marketable securities—Non-marketable securities include FRB stock and FHLB stock. These securities have been acquired for debt facility or regulatory purposes and are carried at cost.

Loans receivable

d) Loans receivable—Loans receivable include loans originated by the Company and loans that are acquired through acquisitions. Loans originated by the Company are carried at the principal amount outstanding, net of premiums, discounts, unearned income, and deferred loan fees and costs. Loan fees and certain costs of originating loans are deferred and the net amount is amortized over the contractual life of the related loans. Acquired loans are initially recorded at fair value and are accounted for under either ASC Topic 310 or ASC 310-30 (see additional information below). Non-refundable loan origination and commitment fees, net of direct costs of originating or acquiring loans, and fair value adjustments for acquired loans, are deferred and recognized over the remaining lives of the related loans in accordance with ASC 310-20.

Acquired loans are recorded at their estimated fair value at the time of acquisition and accounted for under either ASC 310-30 or ASC Topic 310. Estimated fair values of acquired loans are based on a discounted cash flow methodology that considers various factors including the type of loan and related collateral, the expected timing of cash flows, classification status, fixed or variable interest rate, term of loan and whether or not the loan is amortizing, and a discount rate reflecting the Company’s assessment of risk inherent in the cash flow estimates. Acquired 310-30 loans are grouped together according to similar characteristics such as type of loan, loan purpose, geography, risk rating and underlying collateral and are treated as distinct pools when applying various valuation techniques and, in certain circumstances, for the ongoing monitoring of the credit quality and performance of the pools. Each pool is accounted for as a single loan for which the integrity is maintained throughout the life of the asset. Discounts created when the loans are recorded at their estimated fair values at acquisition are accreted over the remaining term of the loan as an adjustment to the related loan’s yield. Similar to originated loans described below, the accrual of interest income on acquired loans that are not accounted for under ASC 310-30 is discontinued when the collection of principal or interest, in whole or in part, is doubtful.

Interest income on acquired loans that are accounted for under ASC Topic 310 and interest income on loans originated by the Company is accrued and credited to income as it is earned using the interest method based on daily balances of the principal amount outstanding. However, interest is generally not accrued on loans 90 days or more past due, unless they are well secured and in the process of collection. Additionally, in certain situations, loans that are not contractually past due may be placed on non-accrual status due to the continued failure to adhere to contractual payment terms by the borrower coupled with other pertinent factors, such as insufficient collateral value or deficient primary and secondary sources of repayment. Accrued interest receivable is reversed when a loan is placed on non-accrual status and payments received generally reduce the carrying value of the loan. Interest is not accrued while a loan is on non-accrual status and interest income is generally recognized on a cash basis only after payment in full of the past due principal and collection of principal outstanding is reasonably assured. A loan may be placed back on accrual status if all contractual payments have been received, or sooner under certain conditions and collection of future principal and interest payments is no longer doubtful.

In the event of borrower default, the Company may seek recovery in compliance with state lending laws, the respective loan agreements, and credit monitoring and remediation procedures that may include modifying or restructuring a loan from its original terms, for economic or legal reasons, to provide a concession to the borrower from their original terms due to borrower financial difficulties in order to facilitate repayment. Such restructured loans are considered “troubled debt restructurings” and are identified in accordance with ASC 310-40. Under this guidance, modifications to loans that fall within the scope of ASC 310-30 are not considered troubled debt restructurings, regardless of otherwise meeting the definition of a troubled debt restructuring.

Loans receivable accounted for under ASC 310-30

The Company accounts for and evaluates acquired loans in accordance with the provisions of ASC 310-30. When loans exhibit evidence of credit deterioration since origination and it is probable at the date of acquisition that the Company will not collect all principal and interest payments in accordance with the terms of the loan agreement, the expected shortfall in future cash flows, as compared to the contractual amount due, is recognized as a non-accretable difference. Any excess of expected cash flows over the acquisition date fair value is known as the accretable yield, and is recognized as accretion income over the life of each pool. Contractual fees not expected to be collected are not included in ASC 310-30 contractual cash flows. Should fees be subsequently collected, the cash flows are accounted for as originated and acquired fee income in the period they are received. Loans that are accounted for under ASC 310-30 that meet the criteria for non-accrual of interest or are accounted for on the cost recovery method at the time of acquisition or subsequent to acquisition, may be considered performing, regardless of whether the client is contractually delinquent, if the timing and expected cash flows on the loan pool in which the loan is included can be otherwise reasonably estimated and if collection of the new carrying value of such pool is expected.

The expected cash flows of individual loans accounted for under ASC 310-30 are periodically remeasured utilizing the same cash flow methodology used at the time of acquisition and subsequent decreases to the expected cash flows will generally result in a provision for loan losses charge in the Company’s consolidated statements of operations. Any increases to the loan cash flow projections are recognized within the loan’s respective loan pools on a prospective basis through an increase to the pool’s accretion income over its remaining life once any previously recorded provision expense has been reversed. These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

Loans held for sale

e) Loans held for sale—The Company has elected to record loans originated and intended for sale in the secondary market at estimated fair value. The Company estimates fair value based on quoted market prices for similar loans in the secondary market. Gains or losses are recognized upon sale and are included as a component of mortgage banking income in the consolidated statements of operations. Loans held for sale have primarily been fixed rate single-family residential mortgage loans under contract to be sold in the secondary market. In most cases, loans in this category are sold within 45 days. These loans are generally sold with the mortgage servicing rights released. Under limited circumstances, buyers may have recourse to return a purchased loan to the Company. Recourse conditions may include early payoff, early payment default, breach of representations or warranties, or documentation deficiencies.

The Company enters into commitments to originate residential mortgage loans whereby the interest rate on the loan is determined prior to funding (i.e. interest rate lock commitments). Such interest rate lock commitments on mortgage loans to be sold in the secondary market are considered to be derivatives. To protect against the price risk inherent in residential mortgage loan commitments, the Company utilizes both "best efforts" and "mandatory delivery" forward loan sale commitments to mitigate the risk of potential increases or decreases in the values of loans that would result from the change in market rates for such loans. The Company manages the interest rate risk on interest rate lock commitments by entering into forward sale contracts of mortgage backed securities. Such contracts are accounted for as derivatives and are recorded at fair value as derivative assets or liabilities. They are carried on the consolidated statements of financial condition within other assets or other liabilities, and changes in fair value are recorded net as a component of mortgage banking income in the consolidated statements of operations. The gross gains on loan sales are recognized based on new loan commitments with adjustment for price and pair-off activity. Commission expenses on loans held for sale are recognized based on loans closed.

Allowance for loan losses

f) Allowance for loan losses—The allowance for loan losses represents management’s estimate of probable credit losses inherent in loans, including acquired loans to the extent necessary, as of the balance sheet date. The determination of the ALL takes into consideration, among other matters, the estimated fair value of the underlying collateral, economic conditions, historical net loan losses, the estimated loss emergence period, estimated default rates, any declines in cash flow assumptions from acquisition, loan structures, growth factors and other elements that warrant recognition. In addition, various regulatory agencies, as an integral part of the examination process, periodically review the ALL. Such agencies may require the Company to recognize additions to the ALL or increases to adversely graded classified loans based on their judgments about information available to them at the time of their examinations.

The Company uses an internal risk rating system to indicate credit quality in the loan portfolio. The risk rating system is applied to all loans and uses a series of grades, which reflect management’s assessment of the risk attributable to loans based on an analysis of the borrower’s financial condition and ability to meet contractual debt service requirements. Loans that management perceives to have acceptable risk are categorized as “Pass” loans. The “Special Mention” loans represent loans that have potential credit weaknesses that deserve management’s close attention. Special mention loans include borrowers that have potential weaknesses or unwarranted risks that, unless corrected, may threaten the borrower’s ability to meet debt requirements. However, these borrowers are still believed to have the ability to respond to and resolve the financial issues that threaten their financial situation. Loans classified as “Substandard” are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans have a distinct possibility of loss if the deficiencies are not corrected. “Doubtful” loans are loans that management believes the collection of payments in accordance with the terms of the loan agreement is highly questionable and improbable. Loans accounted for under ASC 310-30, despite being 90 days or more past due or internally adversely classified, may be classified as performing upon and subsequent to acquisition, regardless of whether the client is contractually delinquent, if the timing and expected cash flows on the loan pool can be reasonably estimated and if collection of the carrying value of the loan pool loans is reasonably expected. Interest accrual is discontinued on doubtful loans and certain substandard loans that are excluded from ASC 310-30, as is more fully discussed in note 6.

The Company routinely evaluates adversely risk-rated credits for impairment. Impairment, if any, is typically measured for each loan based on a thorough analysis of the most probable source of repayment, including the present value of the loan’s expected future cash flows, the loan’s estimated fair value, or the estimated fair value of the underlying collateral less costs of disposition for collateral dependent loans. General allowances are established for loans with similar characteristics. In this process, general allowance factors are based on an analysis of historical loss and recovery experience, if any, related to originated and acquired loans, as well as certain industry experience, with adjustments made for qualitative or environmental factors that are likely to cause estimated credit losses to differ from historical experience. To the extent that the data supporting such factors has limitations, management’s judgment and experience play a key role in determining the allowance estimates.

Additions to the ALL are made by provisions for loan losses that are charged to operations. The allowance is decreased by charge-offs due to losses and is increased by provisions for loan losses and recoveries. When it is determined that specific loans, or portions thereof, are uncollectible, these amounts are charged off against the ALL. If repayment of the loan is collateral dependent, the fair value of the collateral, less cost to sell, is used to determine charge-off amounts.

The Company maintains an ALL for loans accounted for under ASC 310-30 as a result of impairment to loan pools arising from the periodic remeasurement of these loans. Any impairment in the individual pool is generally recognized in the current period as provision for loan losses. Any improvement in the estimated cash flows, is generally not recognized immediately, but is instead reflected as an adjustment to the related loan pools yield on a prospective basis once any previously recorded impairment has been recaptured.

The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments, effective January 1, 2020. This update replaces the current incurred loss methodology for recognizing credit losses with a current expected credit loss model, which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts.

Premises and equipment

g) Premises and equipment—With the exception of premises and equipment acquired through business combinations, which are initially measured and recorded at fair value, purchased land, buildings and equipment are carried at cost, including capitalized interest when appropriate, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the asset. The Company generally assigns depreciable lives of 39 years for buildings, 7 to 15 years for building improvements, and 3 to 7 years for equipment. Leasehold improvements are amortized over the shorter of their estimated useful lives or remaining lease terms. Maintenance and repairs are charged to non-interest expense as incurred. The Company reviews premises and equipment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recognized when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposal is less than its carrying amount. Property and equipment that meet the held-for-sale criteria is recorded at the lower of its carrying amount or fair value less cost to sell and depreciation is ceased.

Goodwill and intangible assets

h) Goodwill and intangible assets—Goodwill is established and recorded if the consideration given during an acquisition transaction exceeds the fair value of the net assets received. Goodwill has an indefinite useful life and is not amortized, but is evaluated annually for potential impairment, or when events or circumstances indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Such events or circumstances may include deterioration in general economic conditions, deterioration in industry or market conditions, an increased competitive environment, a decline in market-dependent multiples or metrics, declining financial performance, entity-specific events or circumstances or a sustained decrease in share price (either in absolute terms or relative to peers). If the Company determines, based upon the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is greater than the carrying amount no additional procedures are performed; however, if the Company determines that it is more likely than not that the fair value of the reporting unit is less than the carrying amount the Company will compare the fair value of the reporting unit to its carrying amount. Any excess of the carrying amount over fair value would indicate a potential impairment and the Company would proceed to perform an additional test to determine whether goodwill has been impaired and calculate the amount of that impairment.

Intangible assets that have finite useful lives, such as core deposit intangibles, are amortized over their estimated useful lives. The Company’s core deposit intangible assets represent the value of the anticipated future cost savings that will result from the acquired core deposit relationships versus an alternative source of funding.

Judgment may be used in assessing goodwill and intangible assets for impairment. Estimates of fair value are based on projections of revenues, operating costs and cash flows of the reporting unit considering historical and anticipated future results, general economic and market conditions, as well as the impact of planned business or operational strategies. The valuations use a combination of present value techniques to measure fair value considering market factors. Additionally, judgment is used in determining the useful lives of finite-lived intangible assets. Adverse changes in the economic environment, operations of the reporting unit, or changes in judgments and projections could result in a significantly different estimate of the fair value of the reporting unit and could result in an impairment of goodwill and/or intangible assets.

Mortgage Servicing

i) Mortgage Servicing– Mortgage servicing rights (“MSRs”) associated with loans originated and sold, where servicing is retained, are initially capitalized at fair value and included in intangible assets, net on the consolidated statements of financial condition. For subsequent measurement purposes, the Company measures servicing assets based on the lower of cost or market using the amortization method. The values of these capitalized servicing rights are amortized as an offset to the loan servicing income earned in relation to the servicing revenue expected to be earned. The carrying values of these rights are reviewed quarterly for impairment based on the fair value of those assets. For purposes of impairment evaluation and measurement, management stratifies MSRs based on the predominant risk characteristics of the underlying loans, including loan type and loan term. If, by individual stratum, the carrying amount of these MSRs exceeds fair value, a valuation allowance is established and the impairment is recognized in mortgage banking income. If the fair value of impaired MSRs subsequently increases, management recognizes the increase in fair value in current period mortgage banking income and, through a reduction in the valuation allowance, adjusts the carrying value of the MSRs to a level not in excess of amortized cost.

Reserve for Mortgage Loan Repurchase Losses

j) Reserve for Mortgage Loan Repurchase Losses–The Company sells mortgage loans to various third parties, including government-sponsored entities, under contractual provisions that include various representations and warranties that typically cover ownership of the loan, compliance with loan criteria set forth in the applicable agreement, validity of the lien securing the loan, absence of delinquent taxes or liens against the property securing the loan, and similar matters. The Company may be required to repurchase the mortgage loans with identified defects, indemnify the investor or insurer, or reimburse the investor for credit loss incurred on the loan (collectively “repurchase”) in the event of a material breach of such contractual representations or warranties. Risk associated with potential repurchases or other forms of settlement is managed through underwriting and quality assurance practices.

The Company establishes mortgage repurchase reserves related to various representations and warranties that reflect management’s estimate of losses based on a combination of factors. Such factors incorporate actual and historic loss history, delinquency trends in the portfolio and economic conditions. The Company establishes a reserve at the time loans are sold and updates the reserve estimate quarterly during the estimated loan life. The repurchase reserve is included in other liabilities on the consolidated statements of financial condition.

Other real estate owned

k) Other real estate owned—OREO consists of property that has been foreclosed on or repossessed by deed in lieu of foreclosure. The assets are initially recorded at the fair value of the collateral less estimated costs to sell, with any initial valuation adjustments charged to the ALL. Subsequent downward valuation adjustments, if any, in addition to gains and losses realized on sales and net operating expenses, are recorded in non-interest expense. Costs associated with maintaining property, such as utilities and maintenance, are charged to expense in the period in which they occur, while costs relating to the development and improvement of property are capitalized to the extent the balance does not exceed fair value. All OREO acquired through acquisition is recorded at fair value, less cost to sell, at the date of acquisition.

Bank-owned life insurance

l) Bank-owned life insurance—The Company is the owner and beneficiary of bank-owned life insurance ("BOLI”) policies that it purchased on certain associates of the Company. The BOLI is carried at net realizable value with changes in net realizable value recorded in non-interest income on the consolidated statements of operations.

Securities purchased under agreements to resell and securities sold under agreements to repurchase

m) Securities purchased under agreements to resell and securities sold under agreements to repurchase—The Company periodically enters into purchases or sales of securities under agreements to resell or repurchase as of a specified future date. The securities purchased under agreements to resell are accounted for as collateralized financing transactions and are reflected as an asset in the consolidated statements of financial condition. The securities pledged by the counterparties are held by a third party custodian and valued daily. The Company may require additional collateral to ensure full collateralization for these transactions. The repurchase agreements are considered financing agreements and the obligation to repurchase assets sold is reflected as a liability in the consolidated statements of financial condition of the Company. The repurchase agreements are collateralized by debt securities that are under the control of the Company.

Stock-based compensation

n) Stock-based compensation—The Company accounts for stock-based compensation in accordance with ASC Topic 718. The Company grants stock-based awards including stock options, restricted stock and performance stock units. Stock option grants are for a fixed number of common shares and are issued at exercise prices which are not less than the fair value of a share of stock at the date of grant. The options vest over a time period stated in each option agreement and may be subject to other performance vesting conditions, which require the related compensation expense to be recorded ratably over the requisite service period starting when such conditions become probable. Restricted stock is granted for a fixed number of shares, the transferability of which is restricted until such shares become vested according to the terms in the award agreement. Restricted shares may have multiple vesting qualifications, which can include time vesting of a set portion of the restricted shares and performance criterion, such as market criteria that are tied to specified market conditions of the Company’s common stock price and performance targets tied to the Company’s earnings per share.

The fair value of stock options is measured using a Black-Scholes model. The fair value of time-based restricted stock awards and performance stock units with performance based vesting criteria is based on the Company’s stock price on the date of grant. The fair value of performance stock units with market-based vesting criteria is measured using a Monte Carlo simulation model. Compensation expense for the portion of the awards that contain performance and service vesting conditions is recognized over the requisite service period based on the fair value of the awards on the grant date. Compensation expense for the portion of the awards that contain a market vesting condition is recognized over the derived service period based on the fair value of the awards on the grant date. The amortization of stock-based compensation reflects any estimated forfeitures, and the expense realized in subsequent periods may be adjusted to reflect the actual forfeitures realized. The outstanding stock options primarily carry a maximum contractual term of ten years. To the extent that any award is forfeited, surrendered, terminated, expires, or lapses without being vested or exercised, the shares of stock subject to such award not delivered are again made available for awards under the Plan.

All excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) are recognized in the consolidated statements of operations as a component of income tax expense or benefit and are classified as an operating activity within the Company’s consolidated statements of cash flows. The tax effects of exercised, expired or vested awards are treated as discrete items in the reporting period in which they occur and may result in increased volatility in our effective tax rate. Cash paid by the Company when directly withholding shares for tax withholding purposes is classified as a financing activity in the consolidated statements of cash flows.

Income taxes

o) Income taxes—The Company and its subsidiaries file U.S. federal and certain state income tax returns on a consolidated basis. Additionally, the Company and its subsidiaries file separate state income tax returns with various state jurisdictions. The provision for income taxes includes the income tax balances of the Company and all of its subsidiaries.

Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. Deferred tax assets and liabilities are adjusted for the effects of changes in tax rates in the period of change. The Company establishes a valuation allowance when management believes, based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized.

The Company recognizes and measures income tax benefits based upon a two-step model: 1) a tax position must be more likely than not to be sustained based solely on its technical merits in order to be recognized; and 2) the benefit is measured as the largest dollar amount of that position that is more likely than not to be sustained upon settlement. The difference between the benefit recognized for a position in this model and the tax benefit claimed on a tax return is treated as an unrecognized tax benefit. The Company recognizes income tax related interest and penalties in other non-interest expense.

Earnings per share

p) Earnings per share—The Company applies the two-class method of computing earnings per share as certain of the Company's restricted shares are entitled to non-forfeitable dividends and are therefore considered to be a class of participating securities. The two-class method allocates income according to dividends declared and participation rights in undistributed income. Basic earnings per share is computed by dividing income allocated to common shareholders by the weighted average number of common shares outstanding during each period. Diluted income per common share is computed by dividing income allocated to common shareholders by the weighted average common shares outstanding during the period, plus amounts representing the dilutive effect of stock options outstanding, certain unvested restricted shares, or other contracts to issue common shares (“common stock equivalents”) using the treasury stock method. Common stock equivalents are excluded from the computation of diluted earnings per common share in periods in which they have an anti-dilutive effect.

Interest Rate Swap Derivatives

q) Interest Rate Swap Derivatives—The Company carries all derivatives on the statement of financial condition at fair value. All derivative instruments are recognized as either assets or liabilities depending on the rights or obligations under the contracts. All gains and losses on the derivatives due to changes in fair value are recognized in earnings each period.

The Company offers interest rate swap products to certain of its clients to manage potential changes in interest rates. Each contract between the Company and a client is offset with a contract between the Company and an institutional counterparty, thus minimizing the Company's exposure to rate changes. The Company's portfolio consists of a “matched book,” and as such, changes in fair value of the swap pairs will largely offset in earnings. In accordance with applicable accounting guidance, if certain conditions are met, a derivative may be designated as (1) a hedge of the exposure to changes in the fair value of a recognized asset or liability, or of an unrecognized firm commitment, that are attributable to a particular risk (referred to as a fair value hedge) or (2) a hedge of the exposure to variability in the cash flows of a recognized asset or liability, or of a forecasted transaction, that is attributable to a particular risk (referred to as a cash flow hedge). The Company documents all hedging relationships at the inception of each hedging relationship and uses industry accepted methodologies and ranges to determine the effectiveness of each hedge. The fair value of the hedged item is calculated using the estimated future cash flows of the hedged item and applying discount rates equal to the market interest rate for the hedged item at the inception of the hedging relationship (inception benchmark interest rate plus an inception credit spread), adjusted for changes in the designated benchmark interest rate thereafter.

Treasury stock

r) Treasury stock —When the Company acquires treasury stock, the sum of the consideration paid and direct transaction costs after tax is recognized as a deduction from equity. The cost basis for the reissuance of treasury stock is determined using a first-in, first-out basis. To the extent that the reissuance price is more than the cost basis (gain), the excess is recorded as an increase to additional paid-in capital in the consolidated statements of financial condition. If the reissuance price is less than the cost basis (loss), the difference is recorded to additional paid-in capital to the extent there is a cumulative treasury stock paid-in capital balance. Any loss in excess of the cumulative treasury stock paid-in capital balance is charged to retained earnings.

Acquisition activities

s) Acquisition activities—The Company accounts for business combinations under the acquisition method of accounting. Assets acquired and liabilities assumed are measured and recorded at fair value at the date of acquisition, including identifiable intangible assets. If the fair value of net assets acquired exceeds the fair value of consideration paid, a bargain purchase gain is recognized at the date of acquisition. Conversely, if the consideration paid exceeds the fair value of the net assets acquired, goodwill is recognized at the acquisition date. Fair values are subject to refinement for up to a maximum of one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Adjustments recorded to the acquired assets and liabilities assumed are applied prospectively in accordance with Accounting Standards Codification (“ASC”) Topic 805. The determination of the fair value of loans acquired takes into account credit quality deterioration and probability of loss; therefore, the related ALL is not carried forward at the time of acquisition.

Identifiable intangible assets are recognized separately if they arise from contractual or other legal rights or if they are separable (i.e., capable of being sold, transferred, licensed, rented, or exchanged separately from the entity). Deposit liabilities and the related depositor relationship intangible assets, known as the core deposit intangible assets, may be exchanged in observable exchange transactions. As a result, the core deposit intangible asset is considered identifiable, because the separability criterion has been met.

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Acquisition Activities - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Jan. 01, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Closing price	$ 32.43
Goodwill		$ 115,027	$ 115,027
Acquisition related expenses			(7,957)	$ (2,691)
Amortization and accretion of purchase discounts and premiums		(2,047)	(2,911)	(2,581)
Amortization of acquired identifiable intangibles		1,183	2,170	5,342
Pro forma information
Total revenue			268,200	266,500
Net income			$ 67,800	$ 16,600
Basic earnings per share (in dollars per share)			$ 2.20	$ 0.55
Diluted earnings per share (in dollars per share)			$ 2.16	$ 0.53
Core Deposits
Business Acquisition [Line Items]
Intangible asset		48,800
Amortization of acquired identifiable intangibles		1,200	$ (2,200)	$ 5,300
Mortgage servicing rights
Business Acquisition [Line Items]
Amortization of acquired identifiable intangibles		$ 824	754
Peoples Inc
Business Acquisition [Line Items]
Cash	$ 36,189
Cash consideration	3,398,477
Restricted cash placed in escrow	$ 10,000
Restricted Cash, Asset, Statement of Financial Position [Extensible List]		Other Assets
Transaction value	146,402
Mortgage repurchase reserve	4,000
Gross contractual amounts receivable	713,600
Loans not expected to be collected	2,100
Goodwill	55,397
Acquisition related expenses			$ 8,000	2,700
Amortization and accretion of purchase discounts and premiums				700
Amortization of acquired identifiable intangibles				$ 1,000
FHLB borrowings	33,825
Peoples Inc | Core Deposits
Business Acquisition [Line Items]
Intangible asset	10,477
Peoples Inc | Mortgage servicing rights
Business Acquisition [Line Items]
Intangible asset	$ 4,301

XML

Parent Company Only Financial Statements - Condensed Statements of Financial Condition (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
ASSETS
Cash and cash equivalents	$ 110,190	$ 109,556
Other assets	194,813	159,240
Total assets	5,895,512	5,676,666
LIABILITIES AND SHAREHOLDERS' EQUITY
Other liabilities	126,850	78,332
Total liabilities	5,128,592	4,981,660
Stockholders' equity	766,920	695,006	$ 532,407	$ 536,189
Total liabilities and shareholders' equity	5,895,512	5,676,666
Parent Company [Member] | Reportable Legal Entities [Member]
ASSETS
Cash and cash equivalents	105,012	71,997
Investment in subsidiaries	654,508	612,784
Other assets	18,095	21,002
Total assets	777,615	705,783
LIABILITIES AND SHAREHOLDERS' EQUITY
Other liabilities	10,695	10,777
Total liabilities	10,695	10,777
Stockholders' equity	766,920	695,006
Total liabilities and shareholders' equity	$ 777,615	$ 705,783

XML

Parent Company Only Financial Statements

12 Months Ended

Dec. 31, 2019

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Parent Company Only Financial Statements

Note 24 Parent Company Only Financial Statements

Parent company only financial information for National Bank Holdings Corporation is summarized as follows:

Condensed Statements of Financial Condition

	December 31, 2019		December 31, 2018
ASSETS
Cash and cash equivalents	$	105,012	$	71,997
Investment in subsidiaries		654,508		612,784
Other assets		18,095		21,002
Total assets	$	777,615	$	705,783
LIABILITIES AND STOCKHOLDERS’ EQUITY
Other liabilities	$	10,695	$	10,777
Total liabilities		10,695		10,777
Shareholders’ equity		766,920		695,006
Total liabilities and shareholders’ equity	$	777,615	$	705,783

Condensed Statements of Operations

	For the years ended December 31,
	2019		2018		2017
Income
Interest income	$	—	$	112	$	45
Equity in undistributed earnings (losses) of subsidiaries		28,133		19,682		(11,192)
Distributions from subsidiaries		55,725		47,338		28,903
Total income		83,858		67,132		17,756
Expenses
Salaries and benefits		4,925		4,455		3,680
Other expenses		2,463		4,467		3,587
Total expenses		7,388		8,922		7,267
Income before income taxes		76,470		58,210		10,489
Income tax benefit		(3,895)		(3,241)		(4,090)
Net income	$	80,365	$	61,451	$	14,579

Condensed Statements of Cash Flows

	For the years ended December 31,
	2019		2018		2017
Cash flows from operating activities:
Net income	$	80,365	$	61,451	$	14,579
Equity in undistributed (earnings) losses of subsidiaries		(28,133)		(19,682)		11,192
Stock-based compensation expense		4,869		4,420		3,648
Net excess tax benefit on stock-based compensation		(2,160)		(1,286)		(4,225)
Other		5,045		9,230		6,680
Net cash provided by operating activities		59,986		54,133		31,874
Cash flows from investing activities:
Outlay for business combinations		—		(36,189)		—
Net cash used in investing activities		—		(36,189)		—
Cash flows from financing activities:
Capital contribution		—		—		(5,000)
Issuance of stock under purchase and equity compensation plans		(6,229)		(772)		(8,395)
Proceeds from exercise of stock options		2,788		7,576		104
Payment of dividends		(23,530)		(16,624)		(9,401)
Net cash used in financing activities		(26,971)		(9,820)		(22,692)
Net increase in cash, cash equivalents and restricted cash		33,015		8,124		9,182
Cash, cash equivalents and restricted cash at beginning of the year		81,997		73,873		64,691
Cash, cash equivalents and restricted cash at end of the year	$	115,012	$	81,997	$	73,873

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Premises and Equipment

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Premises and Equipment

Note 9 Premises and Equipment

Premises and equipment consisted of the following at December 31, 2019 and 2018:

	December 31, 2019		December 31, 2018
Land	$	32,911	$	32,058
Buildings and improvements		94,260		88,955
Equipment		56,523		52,354
Total premises and equipment, at cost		183,694		173,367
Less: accumulated depreciation and amortization		(71,543)		(63,381)
Premises and equipment, net	$	112,151	$	109,986

The Company recorded $8.2 million, $8.6 million and $7.6 million of depreciation expense during 2019, 2018 and 2017, respectively, as a component of occupancy and equipment expense in the consolidated statements of operations. The Company disposed of $0.0 million, $1.7 million and $2.3 million of premises and equipment, net, during 2019, 2018 and 2017, respectively. During 2019, the Company recognized $0.9 million of impairments in its consolidated statements of operations from the consolidation of four banking centers classified as held-for-sale totaling $3.4 million.

During 2018, the Company consolidated one banking center acquired in the Peoples acquisition that was valued at fair value less cost to sell at the date of acquisition. The banking center totaled $4.6 million and was classified as held-for-sale at December 31, 2018.

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Income Taxes - Significant Components of Deferred Taxes (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Excess tax basis of acquired loans over carrying value	$ 2,053	$ 3,076
Allowance for loan losses	9,414	8,521
Intangible assets		1,937
Other real estate owned	810	439
Accrued stock-based compensation	1,945	2,889
Accrued compensation	3,425	3,046
Capitalized start-up costs	1,885	2,199
Accrued expenses	1,051	1,357
Net deferred loan fees	63
Net operating loss	707	807
Lease liability	7,113
Net unrealized losses on investment securities		3,543
Other	1,910	1,960
Total deferred tax assets	30,376	29,774
Deferred tax liabilities:
Intangible assets	(327)
Net unrealized gains on investment securities	(647)
Premises and equipment	(1,852)	(114)
Right of use assets	(7,033)
Prepaid expenses	(209)	(210)
Net deferred loan fees		(174)
Mortgage servicing rights	(634)	(854)
Other	(196)	(71)
Total deferred tax liabilities	(10,898)	(1,423)
Net deferred tax asset	$ 19,478	$ 28,351

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Basis of Presentation

12 Months Ended

Dec. 31, 2019

Basis of Presentation

Basis of Presentation

NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2019, 2018 and 2017

Note 1 Basis of Presentation

National Bank Holdings Corporation (“NBHC” or the “Company”) is a bank holding company that was incorporated in the State of Delaware in 2009. The Company is headquartered in Denver, Colorado, and its primary operations are conducted through its wholly owned subsidiary, NBH Bank (the "Bank"), a Colorado state-chartered bank and a member of the Federal Reserve System. The Company provides a variety of banking products to both commercial and consumer clients through a network of 101 banking centers as of December 31, 2019, located primarily in Colorado and the greater Kansas City region, and through online and mobile banking products and services.

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, NBH Bank. The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and where applicable, with general practices in the banking industry or guidelines prescribed by bank regulatory agencies. The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results presented. All such adjustments are of a normal recurring nature. All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications of prior years' amounts are made whenever necessary to conform to current period presentation. All amounts are in thousands, except share data, or as otherwise noted.

The Company's significant accounting policies followed in the preparation of the consolidated financial statements are disclosed in note 2. GAAP requires management to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosures of contingent assets and liabilities. By their nature, estimates are based on judgment and available information. Management has made significant estimates in certain areas, such as the amount and timing of expected cash flows from assets, the valuation of other real estate owned, the fair value adjustments on assets acquired and liabilities assumed, the valuation of core deposit intangible assets, the valuation of investment securities for other-than-temporary impairment (“OTTI”), the valuation of stock-based compensation, the valuation of mortgage servicing rights, the fair values of financial instruments, the allowance for loan losses, and contingent liabilities. Because of the inherent uncertainties associated with any estimation process and future changes in market and economic conditions, it is possible that actual results could differ significantly from those estimates.

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Stock-based Compensation and Benefits - Schedule Of Weighted Average Assumptions Using Black-Scholes option-Pricing Model (Details) - Stock options [Member] - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share Based Compensation [Line Items]
Weighted average fair value	$ 6.31	$ 7.43	$ 7.84
Risk-free interest rate	2.35%	2.69%	2.14%
Expected volatility	20.56%	20.75%	21.61%
Expected term (years)	6 years 18 days	6 years 1 month 6 days	6 years 1 month 2 days
Dividend yield	2.00%	1.13%	0.83%

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Earnings Per Share - Narrative (Details) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Earnings Per Share
Shares outstanding	31,176,627	30,769,063
Outstanding stock options to purchase common stock	657,114	1,264,876	1,598,318
Outstanding stock options to purchase common stock, per share	$ 26.69	$ 22.33	$ 20.62
Restricted shares outstanding	281,072	338,543	288,639

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Non-marketable Securities

12 Months Ended

Dec. 31, 2019

Disclosure Non Marketable Securities Narrative [Abstract]

Non-marketable Securities

Note 5 Non-marketable Securities

Non-marketable securities include FRB stock and FHLB stock. At December 31, 2019, the Company held $13.9 million of FRB stock and $15.8 million of FHLB stock for regulatory or debt facility purposes. At December 31, 2018, the Company held $13.9 million of FRB stock and $13.6 million of FHLB stock.

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 investments carried at cost. Management evaluated all of the non-marketable securities and concluded that no OTTI existed at December 31, 2019 or December 31, 2018.

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Fair Value Measurements - Tables of Financial Instruments Measured At Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	$ 766,799	$ 860,082
Total liabilities at fair value	22,998	4,121
Loans held for sale member
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	117,444	48,120
Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	372	441
Mortgage-Backed Securities (MBS) [Member] | Residential Mortgage Pass-Through Securities Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	95,256	146,642
Mortgage-Backed Securities (MBS) [Member] | Other Residential MBS Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	542,037	643,381
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	765,284	859,211
Total liabilities at fair value	22,558	3,577
Level 2 [Member] | Loans held for sale member
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	117,444	48,120
Level 2 [Member] | Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	372	441
Level 2 [Member] | Mortgage-Backed Securities (MBS) [Member] | Residential Mortgage Pass-Through Securities Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	95,256	146,642
Level 2 [Member] | Mortgage-Backed Securities (MBS) [Member] | Other Residential MBS Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	542,037	643,381
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	1,515	871
Total liabilities at fair value	440	544
Interest rate swap derivatives [Member] | Derivative [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	10,175	20,627
Total liabilities at fair value	22,558	3,577
Interest rate swap derivatives [Member] | Level 2 [Member] | Derivative [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	10,175	20,627
Total liabilities at fair value	22,558	3,577
Mortgage banking derivatives | Derivative [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	1,515	871
Total liabilities at fair value	440	544
Mortgage banking derivatives | Level 3 [Member] | Derivative [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	1,515	871
Total liabilities at fair value	$ 440	$ 544

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Derivatives - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Derivative [Line Items]
Termination value of derivatives in net liability position	$ 22.6
Collateral Already Posted, Aggregate Fair Value	26.2
Hedged Loans	405.9	$ 522.7
Cumulative fair value hedge adjustment	13.9	13.2
Interest Rate Lock Commitments [Member]
Derivative [Line Items]
Notional amount		50.1
Interest Rate Lock Commitments Notional Amount Member
Derivative [Line Items]
Notional amount	99.8
Forward Contract Notional [Member]
Derivative [Line Items]
Notional amount	181.5	77.6
Designated as Hedging Instrument [Member] | Interest rate swap derivatives [Member]
Derivative [Line Items]
Notional amount	403.7	473.4
Not Designated as Hedging Instrument, Economic Hedge [Member] | Interest rate swap derivatives [Member]
Derivative [Line Items]
Notional amount	$ 478.9	$ 206.8

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Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Note 11 Goodwill and Intangible Assets

Goodwill and core deposit intangible

In connection with our acquisitions, the Company recorded goodwill of $115.0 million and core deposit intangible assets of $48.8 million. Goodwill is measured as the excess of the fair value of consideration paid over the fair value of net assets acquired. No goodwill impairment was recorded during the years ended December 31, 2019 or December 31, 2018.

The gross carrying amount of the core deposit intangibles and the associated accumulated amortization at December 31, 2019 and December 31, 2018, are presented as follows:

December 31, 2019

December 31, 2018

Gross

Net

Gross

Net

carrying

Accumulated

carrying

carrying

Accumulated

carrying

amount

amortization

amount

amount

amortization

amount

Core deposit intangible

$

48,834

$

(40,103)

$

8,731

$

48,834

$

(38,920)

$

9,914

The accumulated amortization of the core deposit intangible assets was $40.1 million and $38.9 million at December 31, 2019 and 2018, respectively.

The Company is amortizing the core deposit intangibles from acquisitions on a straight line basis over 7-10 years from the date of the respective acquisition, which represents the expected useful life of the assets. The Company recognized core deposit intangible amortization expense of $1.2 million, $2.2 million and $5.3 million during 2019, 2018 and 2017, respectively.

The following table shows the estimated future amortization expense for the core deposit intangibles as of December 31, 2019:

Years ending December 31,		Amount
2020	$	1,183
2021		1,183
2022		1,127
2023		1,048
2024		1,048

Mortgage servicing rights

Mortgage servicing rights represent rights to service loans originated by the Company and sold to government sponsored enterprises including FHLMC, FNMA, GNMA and FHLB. Mortgage loans serviced for others were $308.4 million at December 31, 2019 and $389.0 million at December 31, 2018 and are included in other assets in the consolidated statements of financial condition.

Below are the changes in the MSRs for the years presented:

	For the years ended December 31,
	2019		2018
Beginning balance	$	3,556	$	—
Acquired through acquisition		—		4,301
Originations		27		30
Impairment		(129)		(21)
Amortization		(824)		(754)
Ending balance	$	2,630	$	3,556
Fair value of mortgage servicing rights	$	2,630	$	3,884

The fair value of MSRs was determined based upon a discounted cash flow analysis. The cash flow analysis included assumptions for discount rates and prepayment speeds. Discount rates ranged from 9.5% to 10.5% and the constant prepayment speed ranged from 14.8% to 22.0% for the December 31, 2019 valuation. Discount rates ranged from 9.5% to 10.5% and the constant prepayment speed ranged from 12.2% to 17.2% for the December 31, 2018 valuation. Included in mortgage banking income in the consolidated statements of operations were service fees of $1.0 million and $1.1 million for the years ended December 31, 2019 and 2018.

MSRs are evaluated and impairment is recognized to the extent fair value is less than the carrying amount. The Company evaluates impairment by stratifying MSRs based on the predominant risk characteristics of the underlying loans, including

loan type and loan term. The Company is amortizing the MSRs in proportion to and over the period of the estimated net servicing income of the underlying loans. The Company recognized MSRs amortization expense of $0.8 million and $0.8 million during the years ended December 31, 2019 and 2018, respectively.

The following table shows the estimated future amortization expense for the MSRs as of December 31, 2019:

Years ending December 31,		Amount
2020	$	512
2021		412
2022		332
2023		267
2024		215

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Revenue from Contracts with Clients

12 Months Ended

Dec. 31, 2019

Revenue from Contracts with Clients

Revenue from Contracts with Clients

Note 15 Revenue from Contracts with Clients

Revenue is recognized when obligations under the terms of a contract with clients are satisfied. Below is the detail of the Company’s revenue from contracts with clients.

Service charges and other fees

Service charge fees are primarily comprised of monthly service fees, check orders, and other deposit account related fees. Other fees include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to clients’ accounts.

Bank card fees

Bank card fees are primarily comprised of debit card income, ATM fees, merchant services income, and other fees. Debit card income is primarily comprised of interchange fees earned whenever the Bank’s debit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a Bank cardholder uses a non-Bank ATM or a non-Bank cardholder uses a Bank ATM. Merchant services income mainly represents fees charged to merchants to process their debit card transactions. The Company’s performance obligation for bank card fees are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Gain on OREO sales, net

Gain on OREO Sales, net is recognized when the Company meets its performance obligation to transfer title to the buyer. The gain or loss is measured as the excess of the proceeds received compared to the OREO carrying value. Sales proceeds are received in cash at the time of transfer.

The following table presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, and non-interest expense in-scope of Topic 606 for the years ended December 31, 2019, 2018 and 2017.

	For the years ended December 31,
	2019		2018		2017
Non-interest income
In-scope of Topic 606:
Service charges and other fees	$	19,720	$	20,408	$	19,070
Bank card fees		14,595		14,489		12,026
Gain on banking center divestiture		—		—		2,942
Non-interest income (in-scope of Topic 606)		34,315		34,897		34,038
Non-interest income (out-of-scope of Topic 606)		48,437		35,878		5,167
Total non-interest income	$	82,752	$	70,775	$	39,205
Non-interest expense
In-scope of Topic 606:
Gain on OREO sales, net		7,193		488		4,150
Total revenue in-scope of Topic 606	$	41,508	$	35,385	$	38,188

Contract acquisition costs

In connection with the adoption of Topic 606, an entity is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a client if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a client that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less. The Company has not capitalized any contract acquisition costs.

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Income Taxes

12 Months Ended

Dec. 31, 2019

Income Taxes

Income Taxes

Note 19 Income Taxes

Income tax expense attributable to income before taxes was $15.8 million, $12.2 million and $21.3 million for 2019, 2018 and 2017, respectively. Included in income tax expense was $2.2 million, $1.3 million and $4.2 million of tax benefits from stock compensation activity during 2019, 2018 and 2017, respectively. During the fourth quarter of 2017, the Company remeasured its deferred tax asset as a result of the enactment of the “Tax Cuts and Jobs Act”, which among other items reduced the federal corporate tax rate to 21% effective January 1, 2018. Income tax expense recorded in 2017 included an $18.5 million non-cash one-time charge primarily related to this remeasurement.

(a) Income taxes

Total income taxes for 2019, 2018 and 2017 were allocated as follows:

	For the years ended December 31,
	2019		2018		2017
Current expense:
U.S. federal	$	8,947	$	427	$	1,230
State and local		2,280		1,530		169
Total current income tax expense		11,227		1,957		1,399
Deferred expense:
U.S. federal		4,115		10,110		17,639
State and local		487		163		2,245
Total deferred income tax expense		4,602		10,273		19,884
Income tax expense	$	15,829	$	12,230	$	21,283

(b) Tax Rate Reconciliation

The reconciliation between the income tax expenses and the amounts computed by applying the U.S. federal income tax rate to pretax income is as follows:

	For the years ended December 31,
	2019		2018		2017
Income tax at federal statutory rates (21%, 21% and 35%, respectively)	$	20,201	$	15,473	$	12,550
State income taxes, net of federal benefits		2,186		1,337		265
Tax-exempt loan interest income		(4,354)		(4,089)		(5,380)
Bank-owned life insurance income		(475)		136		(813)
Stock-based compensation		(1,925)		(1,207)		(3,998)
Deferred tax rate change		—		—		18,457
Other		196		580		202
Income tax expense	$	15,829	$	12,230	$	21,283

(c) Significant Components of Deferred Taxes

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2019 and 2018 are presented below:

	December 31, 2019		December 31, 2018
Deferred tax assets:
Excess tax basis of acquired loans over carrying value	$	2,053	$	3,076
Allowance for loan losses		9,414		8,521
Intangible assets		—		1,937
Other real estate owned		810		439
Accrued stock-based compensation		1,945		2,889
Accrued compensation		3,425		3,046
Capitalized start-up costs		1,885		2,199
Accrued expenses		1,051		1,357
Net deferred loan fees		63		—
Net operating loss		707		807
Lease liability		7,113		—
Net unrealized losses on investment securities		—		3,543
Other		1,910		1,960
Total deferred tax assets		30,376		29,774
Deferred tax liabilities:
Intangible assets		(327)		—
Net unrealized gains on investment securities		(647)		—
Premises and equipment		(1,852)		(114)
Right of use assets		(7,033)		—
Prepaid expenses		(209)		(210)
Net deferred loan fees		—		(174)
Mortgage servicing rights		(634)		(854)
Other		(196)		(71)
Total deferred tax liabilities		(10,898)		(1,423)
Net deferred tax asset	$	19,478	$	28,351

At December 31, 2019, the Company had federal and state net operating loss carryovers (NOLs) of $2.7 million and $3.7 million, respectively, which are available to offset future taxable income. The federal NOLs expire in varying amounts through 2034, and the state NOLs expire in varying amounts between 2026 and 2034. The Company does not expect any tax attribute carryovers to expire before they are utilized.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, if any (including the impact of available carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. For the years ended December 31, 2019 and 2018, management believes a valuation allowance on the deferred tax asset is not necessary based on the current and future projected earnings of the Company. The Company has no ASC 740-10 unrecognized tax benefits recorded as of December 31, 2019 and 2018 and does not expect the total amount of unrecognized tax benefits to significantly increase within the next 12 months. The Company and its subsidiary bank are subject to income tax by federal, state and local government taxing authorities. The Company’s tax returns for the years ended December 31, 2016 through 2019 remain subject to examination for U.S. federal income tax authorities. The years open to examination by state and local government authorities vary by jurisdiction.

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Stock-based Compensation and Benefits (Tables)

12 Months Ended

Dec. 31, 2019

Stock-based Compensation and Benefits

Schedule of weighted average assumptions using Black-Scholes option-pricing model

Below are the weighted average assumptions used in the Black-Scholes option pricing model to determine fair value of the Company’s stock options granted in 2019, 2018 and 2017:

	2019		2018		2017
Weighted average fair value	$	6.31	$	7.43	$	7.84
Weighted average risk-free interest rate (1)		2.35%		2.69%		2.14%
Expected volatility (2)		20.56%		20.75%		21.61%
Expected term (years) (3)		6.05		6.10		6.09
Dividend yield (4)		2.00%		1.13%		0.83%

(1)	The risk-free rate for the expected term of the options was based on the U.S. Treasury yield curve at the date of grant and based on the expected term.
(2)	Expected volatility was calculated using historical volatility of the Company’s stock price for a period commensurate with the expected term of the options. For periods prior to the third quarter of 2018, expected volatility was calculated using a historical volatility of the Company’s stock price coupled with those of a peer group of eight comparable publicly traded companies for a period commensurate with the expected term of the options.
(3)	The expected term was estimated to be the average of the contractual vesting term and time to expiration.
(4)	The dividend yield was calculated in accordance with the Company’s dividend policy at the time of grant. For historical dividend rates, refer to the table under Item 5 on page 31.

Summary of Option Activity

				Weighted
				average
		Weighted		remaining
		average		contractual	Aggregate
		exercise		term in	intrinsic
	Options	price		years	value
Outstanding at December 31, 2018	1,264,876	$	22.33	3.92	$	11,387
Granted	149,290		34.21
Exercised	(705,474)		20.12
Forfeited	(51,578)		31.47
Outstanding at December 31, 2019	657,114	$	26.69	6.41	$	5,626
Options exercisable at December 31, 2019	405,225		22.30	4.98		5,240
Options vested and expected to vest	631,916		26.40	6.31		5,590

Summary of outstanding stock options

The following table summarizes the Company’s outstanding stock options:

				Options outstanding				Options exercisable
					Weighted average
				Number	remaining contractual	Weighted average		Number	Weighted average
Range of exercise price				outstanding	life (years)	exercise price		exercisable	exercise price
$	18.00	-	18.99	73,868	3.83	$	18.60	73,868	$	18.60
	19.00	-	19.99	168,189	5.77		19.38	168,189		19.38
	20.00	-	20.99	78,041	1.48		20.05	78,041		20.05
	21.00	and above		337,016	8.43		33.64	85,127		33.32

Summary of Restricted Stock Activity

The following table summarizes restricted stock and performance stock unit activity during 2019 and 2018:

		Weighted				Weighted
	Restricted	average grant-		Performance		average grant-
	stock shares	date fair value		stock units		date fair value
Unvested at December 31, 2017	163,557	$	22.60	125,082	$	23.90
Granted	92,133		33.69	77,125		30.38
Vested	(94,775)		23.71	—		—
Forfeited	(14,421)		29.37	(10,158)		25.90
Unvested at December 31, 2018	146,494		28.19	192,049		26.40
Granted	86,689		35.05	60,781		30.85
Adjustment due to performance	—		—	22,246		17.36
Vested	(85,266)		25.21	(95,308)		18.02
Forfeited	(25,719)		32.68	(20,894)		31.48
Unvested at December 31, 2019	122,198	$	34.19	158,874	$	31.19

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Deposits (Tables)

12 Months Ended

Dec. 31, 2019

Deposits [Abstract]

Summary of Time Deposits Based Upon Contractual Maturity

Years ending December 31,	Amount
2020	$	726,903
2021		211,787
2022		94,464
2023		19,696
2024		4,263
Thereafter		1,040
Total time deposits	$	1,058,153

Schedule of Interest Expense on Deposits

The Company incurred interest expense on deposits as follows during the years indicated:

	For the years ended December 31,
	2019		2018		2017
Interest bearing demand deposits	$	1,514	$	887	$	445
Money market accounts		9,046		5,622		4,077
Savings accounts		2,717		2,249		1,481
Time deposits		16,526		12,283		10,169
Total	$	29,803	$	21,041	$	16,172

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Leases (Tables)

12 Months Ended

Dec. 31, 2019

Leases

Summary of future minimum lease payments

Below is a summary of undiscounted future minimum lease payments as of December 31, 2019 per ASC Topic 842:

Years ending December 31,	Amount
2020	$	5,267
2021		5,046
2022		4,605
2023		4,308
2024		3,920
Thereafter		15,624
Total lease payments		38,770
Less: Imputed interest		(9,254)
Present value of operating lease liabilities	$	29,516

Summary of Future Minimum Lease Payments

Below is a summary of undiscounted future minimum lease payments as of December 31, 2018 per ASC Topic 840:

Years ending December 31,	Amount
2019	$	3,092
2020		2,981
2021		3,091
2022		3,052
2023		2,047
Thereafter		10,163
Total	$	24,426

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Deposits - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deposits [Abstract]
Total Deposits	$ 4,737,132	$ 4,535,621
Time deposits	1,058,153	$ 1,080,529
Minimum reserve required	$ 0

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Investment Securities - Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) security	Dec. 31, 2018 USD ($) security	Dec. 31, 2017 USD ($)
Investment securities total	$ 800,000	$ 1,000,000
Amortized cost	638,009	809,725
Available-for-sale securities	638,249	791,102
Held-to-maturity securities	$ 182,884	$ 235,398
Number of securities | security	67	211
Fair value of available-for-sale securities in an unrealized loss position	$ 308,569	$ 682,892
Gain/(loss) on recovery of securities with previously incurred OTTI		200
Fair value of available-for-sale security with OTTI			$ 300
Fair value of collateral	$ 17,600	16,000
OTTI charges recorded			$ 200
Residential mortgage loans held for sale period	45 days
Fair value of available-for-sale investment securities pledged as collateral	$ 352,300	$ 318,100
Type of available-for-sale investment securities collateral	us-gaap:AssetPledgedAsCollateralMember	us-gaap:AssetPledgedAsCollateralMember
Number of held-to-maturity securities in unrealized loss positions | security	13	49
Fair value of held-to-maturity securities in an unrealized loss position	$ 43,295	$ 229,649
Held-to-maturity investment securities pledged as collateral	$ 144,200	$ 133,100
Type of held-to-maturity investment securities collateral	us-gaap:AssetPledgedAsCollateralMember	us-gaap:AssetPledgedAsCollateralMember
Municipal securities maturing within one to five years [Member]
Amortized cost	$ 500
Available-for-sale securities	500
Other Securities Investments with No Contractual Maturity [Member]
Amortized cost	500
Other Securities [Member]
Amortized cost	469	$ 469
Available-for-sale securities	$ 469	$ 469

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Investment Securities - Summary of Held-to-Maturity Securities, Unrealized Losses (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Schedule of Held-to-maturity Securities [Line Items]
Fair Value, Less than 12 months	$ 14,403	$ 61,895
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(35)	(460)
Fair Value, 12 months or more	28,892	167,754
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(429)	(4,014)
Total Fair Value	43,295	229,649
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss	(464)	(4,474)
Residential Mortgage Pass-Through Securities Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Fair Value, Less than 12 months	10,478	26,660
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(26)	(381)
Fair Value, 12 months or more	338	126,475
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(3)	(2,324)
Total Fair Value	10,816	153,135
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss	(29)	(2,705)
Other Residential MBS Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Fair Value, Less than 12 months	3,925	35,235
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(9)	(79)
Fair Value, 12 months or more	28,554	41,279
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(426)	(1,690)
Total Fair Value	32,479	76,514
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ (435)	$ (1,769)

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Borrowings - Schedule of Selected Information Regarding Repurchase Agreements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Deposits [Abstract]
Maximum amount of outstanding agreements at any month end during the period	$ 68,600	$ 142,292	$ 130,463
Average amount outstanding during the period	$ 60,445	$ 87,691	$ 88,390
Weighted average interest rate for the period	1.11%	0.34%	0.19%

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2019

Earnings Per Share

Schedule of Computation of Basic and Diluted Income (Loss) Per Share

The following table illustrates the computation of basic and diluted earnings per share for 2019, 2018 and 2017:

	For the years ended December 31,
	2019		2018		2017
Net income	$	80,365	$	61,451	$	14,579
Less: income allocated to participating securities		(94)		(70)		(56)
Income allocated to common shareholders	$	80,271	$	61,381	$	14,523
Weighted average shares outstanding for basic earnings per common share		31,175,825		30,748,234		26,928,763
Dilutive effect of equity awards		354,992		681,840		772,392
Dilutive effect of warrants		—		—		8,504
Weighted average shares outstanding for diluted earnings per common share		31,530,817		31,430,074		27,709,659
Basic earnings per share	$	2.57	$	2.00	$	0.54
Diluted earnings per share		2.55		1.95		0.53

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Tables of Financial Instruments Measured At Fair Value on Recurring Basis

The tables below present the financial instruments measured at fair value on a recurring basis as of December 31, 2019 and 2018, on the consolidated statements of financial condition utilizing the hierarchy structure described above:

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities available-for-sale:
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	—	$	95,256	$	—	$	95,256
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		—		542,037		—		542,037
Municipal securities		—		372		—		372
Loans held for sale		—		117,444		—		117,444
Interest rate swap derivatives		—		10,175		—		10,175
Mortgage banking derivatives		—		—		1,515		1,515
Total assets at fair value	$	—	$	765,284	$	1,515	$	766,799
Liabilities:
Interest rate swap derivatives	$	—	$	22,558	$	—	$	22,558
Mortgage banking derivatives		—		—		440		440
Total liabilities at fair value	$	—	$	22,558	$	440	$	22,998

	December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities available-for-sale:
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	—	$	146,642	$	—	$	146,642
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		—		643,381		—		643,381
Municipal securities		—		441		—		441
Loans held for sale		—		48,120		—		48,120
Interest rate swap derivatives		—		20,627		—		20,627
Mortgage banking derivatives		—		—		871		871
Total assets at fair value	$	—	$	859,211	$	871	$	860,082
Liabilities:
Interest rate swap derivatives	$	—	$	3,577	$	—	$	3,577
Mortgage banking derivatives		—		—		544		544
Total liabilities at fair value	$	—	$	3,577	$	544	$	4,121

Table of Changes in Level 3 Financial Instruments

The table below details the changes in level 3 financial instruments during 2019:

		Mortgage banking
		derivatives, net
Balance at December 31, 2018	$	327
Gain included in earnings, net		1,327
Fees and costs included in earnings, net		(579)
Balance at December 31, 2019	$	1,075

Table of assets recorded at fair value on a non-recurring basis

The tables below provide information regarding the assets recorded at fair value on a non-recurring basis at December 31, 2019 and 2018. The premises and equipment loss was measured as of the third quarter of 2019.

	December 31, 2019
	Total		Losses from fair value changes
Impaired loans	$	32,763	$	8,271
Other real estate owned		7,300		1,082
Premises and equipment		3,385		898
Mortgage servicing rights		2,630		129
Total	$	46,078	$	10,380

	December 31, 2018
	Total		Losses from fair value changes
Impaired loans	$	31,079	$	2,120
Other real estate owned		10,596		230
Mortgage servicing rights		3,556		21
Total	$	45,231	$	2,371

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Acquisition Activities (Tables)

12 Months Ended

Dec. 31, 2019

Acquisition Activities

Net Assets acquired (at fair value) and consideration transferred

Assets:
Cash and due from banks	$	105,173
Investment securities available-for-sale		118,512
Non-marketable securities		4,796
Loans		542,707
Loans held for sale		54,260
Other real estate owned		1,253
Premises and equipment		18,584
Core deposit intangible asset		10,477
Mortgage servicing rights		4,301
Other assets		15,361
Total assets acquired		875,424
Liabilities:
Total deposits		729,911
FHLB borrowings		33,825
Other liabilities		20,683
Total liabilities assumed		784,419
Identifiable net assets acquired	$	91,005
Consideration:
NBHC common stock paid at January 1, 2018, closing price of $32.43	$	110,213
Cash		36,189
Total		146,402
Goodwill	$	55,397

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Other Real Estate Owned - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Other Real Estate Owned
Other real estate owned	$ 7,300	$ 10,596	$ 10,491
Decrease in OREO	3,300
OREO sales	4,919	25,858
OREO Sold NBV	4,900	25,900
Gain (loss) on OREO sales, net	$ 7,193	$ 488	$ 4,150

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Loans - Summary of Company's Carrying Value of Non-Accrual TDR's (Details) - Non-Accruing TDR [Member] - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Loans [Line Items]
Carrying Value of Non - Accruing TDR's	$ 4,854	$ 3,438
Commercial [Member]
Loans [Line Items]
Carrying Value of Non - Accruing TDR's	1,891	1,854
Commercial Real Estate [Member]
Loans [Line Items]
Carrying Value of Non - Accruing TDR's	410
Residential Real Estate Segment [Member]
Loans [Line Items]
Carrying Value of Non - Accruing TDR's	$ 2,553	$ 1,584

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Loans - Additional Information Regarding Impaired Loans (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Loans [Line Items]
Unpaid principal balance, Total	$ 48,355	$ 42,726
Recorded investment of impaired loans	32,763	31,079
Loans and Leases Receivable, Allowance	1,795	1,169
Commercial and Industrial [Member]
Loans [Line Items]
Unpaid principal balance with no related allowance recorded	16,001	4,374
Recorded investment with no related allowance recorded	10,548	3,029
Unpaid principal balance of impaired loans with an allowance recorded	8,209	7,252
Recorded investment of impaired loans with an allowance recorded	5,501	4,627
Allowance for loan losses allocated with an allowance recorded	1,530	996
Food and Agriculture [Member]
Loans [Line Items]
Unpaid principal balance with no related allowance recorded	1,468	1,468
Recorded investment with no related allowance recorded	1,220	1,260
Unpaid principal balance of impaired loans with an allowance recorded	757	883
Recorded investment of impaired loans with an allowance recorded	751	845
Allowance for loan losses allocated with an allowance recorded	35	46
Energy Loans [Member]
Loans [Line Items]
Unpaid principal balance with no related allowance recorded		5,366
Recorded investment with no related allowance recorded		742
Unpaid principal balance of impaired loans with an allowance recorded	5,559
Recorded investment of impaired loans with an allowance recorded	934
Allowance for loan losses allocated with an allowance recorded	195
Commercial Loan [Member]
Loans [Line Items]
Unpaid principal balance with no related allowance recorded	20,734	18,338
Recorded investment with no related allowance recorded	14,153	11,640
Unpaid principal balance of impaired loans with an allowance recorded	15,236	9,497
Recorded investment of impaired loans with an allowance recorded	7,691	6,641
Allowance for loan losses allocated with an allowance recorded	1,763	1,132
Commercial Construction [Member]
Loans [Line Items]
Unpaid principal balance with no related allowance recorded		1,435
Recorded investment with no related allowance recorded		1,208
Commercial Acquisition/Development [Member]
Loans [Line Items]
Unpaid principal balance with no related allowance recorded	458	378
Recorded investment with no related allowance recorded	415	121
Owner-Occupied [Member]
Loans [Line Items]
Unpaid principal balance with no related allowance recorded	3,265	7,130
Recorded investment with no related allowance recorded	2,385	6,609
Unpaid principal balance of impaired loans with an allowance recorded	711	1,362
Recorded investment of impaired loans with an allowance recorded	505	1,169
Allowance for loan losses allocated with an allowance recorded	3	90
Non Owner-Occupied [Member]
Loans [Line Items]
Unpaid principal balance with no related allowance recorded	90	641
Recorded investment with no related allowance recorded	26	547
Unpaid principal balance of impaired loans with an allowance recorded	232	313
Recorded investment of impaired loans with an allowance recorded	171	254
Allowance for loan losses allocated with an allowance recorded	1	2
Total Commercial Real Estate [Member]
Loans [Line Items]
Unpaid principal balance with no related allowance recorded	548	2,454
Recorded investment with no related allowance recorded	441	1,876
Unpaid principal balance of impaired loans with an allowance recorded	232	313
Recorded investment of impaired loans with an allowance recorded	171	254
Allowance for loan losses allocated with an allowance recorded	1	2
Senior lien
Loans [Line Items]
Unpaid principal balance with no related allowance recorded	4,355	4,229
Recorded investment with no related allowance recorded	3,967	3,814
Unpaid principal balance of impaired loans with an allowance recorded	5,808	6,032
Recorded investment of impaired loans with an allowance recorded	5,034	5,178
Allowance for loan losses allocated with an allowance recorded	25	27
Junior lien
Loans [Line Items]
Unpaid principal balance with no related allowance recorded	311	409
Recorded investment with no related allowance recorded	269	341
Unpaid principal balance of impaired loans with an allowance recorded	1,074	1,408
Recorded investment of impaired loans with an allowance recorded	987	1,293
Allowance for loan losses allocated with an allowance recorded	6	8
Residential Real Estate Segment [Member]
Loans [Line Items]
Unpaid principal balance with no related allowance recorded	4,666	4,638
Recorded investment with no related allowance recorded	4,236	4,155
Unpaid principal balance of impaired loans with an allowance recorded	6,882	7,440
Recorded investment of impaired loans with an allowance recorded	6,021	6,471
Allowance for loan losses allocated with an allowance recorded	31	35
Consumer [Member]
Loans [Line Items]
Unpaid principal balance with no related allowance recorded	57	46
Recorded investment with no related allowance recorded	50	42
Impaired Loans With No Related Allowance Recorded [Member] [Member]
Loans [Line Items]
Unpaid principal balance with no related allowance recorded	26,005	25,476
Recorded investment with no related allowance recorded	18,880	17,713
Impaired Loans With Related Allowance Recorded [Member]
Loans [Line Items]
Unpaid principal balance of impaired loans with an allowance recorded	22,350	17,250
Recorded investment of impaired loans with an allowance recorded	13,883	13,366
Allowance for loan losses allocated with an allowance recorded	$ 1,795	$ 1,169

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Leases - ASC Topic 840 - (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Future minimum lease payments
2019	$ 3,092
2020	2,981
2021	3,091
2022	3,052
2023	2,047
Thereafter	10,163
Total	$ 24,426

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Consolidated Statements of Financial Condition - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
ASSETS
Cash and due from banks	$ 109,690	$ 109,056
Interest bearing bank deposits	500	500
Cash and cash equivalents	110,190	109,556
Investment securities available-for-sale (at fair value)	638,249	791,102
Investment securities held-to-maturity (fair value of $183,741 and $230,926 at December 31, 2019 and December 31, 2018, respectively)	182,884	235,398
Non-marketable securities	29,751	27,555
Loans	4,415,406	4,092,308
Allowance for loan losses	(39,064)	(35,692)
Loans, net	4,376,342	4,056,616
Loans held for sale	117,444	48,120
Other real estate owned	7,300	10,596
Premises and equipment, net	112,151	109,986
Goodwill	115,027	115,027
Intangible assets, net	11,361	13,470
Other assets	194,813	159,240
Total assets	5,895,512	5,676,666
Liabilities:
Non-interest bearing demand deposits	1,184,945	1,072,029
Interest bearing demand deposits	738,496	688,255
Savings and money market	1,755,538	1,694,808
Time deposits	1,058,153	1,080,529
Total deposits	4,737,132	4,535,621
Securities sold under agreements to repurchase	56,935	66,047
Federal Home Loan Bank advances	207,675	301,660
Other liabilities	126,850	78,332
Total liabilities	5,128,592	4,981,660
Shareholders' equity:
Common stock, par value $0.01 per share: 400,000,000 shares authorized; 51,487,907 and 51,498,016 shares issued; 31,176,627 and 30,769,063 shares outstanding at December 31, 2019 and December 31, 2018, respectively	515	515
Additional paid-in capital	1,009,223	1,014,399
Retained earnings	164,082	106,990
Treasury stock of 20,189,082 and 20,582,459 shares at December 31, 2019 and December 31, 2018, respectively, at cost	(408,962)	(415,623)
Accumulated other comprehensive income (loss), net of tax	2,062	(11,275)
Total shareholders' equity	766,920	695,006
Total liabilities and shareholders' equity	$ 5,895,512	$ 5,676,666

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Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Comprehensive Income [Abstract]
Tax (expense) benefit on net unrealized gains arising during the period	$ 4,510	$ (876)	$ (1,871)
Tax (expense) benefit of amortization of net unrealized holding gains to income	$ 320	$ 361	$ 828

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Recent Accounting Pronouncements

12 Months Ended

Dec. 31, 2019

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Note 3 Recent Accounting Pronouncements

Revenue from Contracts with Customers—In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. This update supersedes revenue recognition requirements in ASC Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance in the FASB Accounting Standards Codification. The new guidance stipulates that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides specific steps that entities should apply in order to achieve this principle.

The new guidance does not apply to revenue associated with financial assets and liabilities, including loans, leases, securities, and derivatives that are accounted for under other GAAP. Accordingly, the majority of the Company’s revenues are not affected. The Company adopted ASU 2014-09 on January 1, 2018 utilizing the modified retrospective approach. Additionally, the Company has determined certain service charges, bank card fees and real estate sales are within the scope of the ASU, but has not identified changes to the timing or amount of revenue recognition. Accounting policies and procedures did not change materially as the principles of revenue recognition from the ASU are largely consistent with existing guidance and current practices applied by the Company. Refer to note 15 of our consolidated financial statements for required disclosures under the new standard.

Leases—In February 2016, the FASB issued ASU 2016-02, Leases. The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases. The new standard established a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statements. ASU 2016-02 became effective for the Company on January 1, 2019 and initially required transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. In July 2018, the Financial Accounting Standards Board issued ASU 2018-11 which, among other things, provided an additional transition method that allows entities to not apply the guidance in ASU 2016-02 in the comparative periods presented in the financial statements and instead recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We elected to apply certain practical expedients provided under ASU 2016-02 whereby we will not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases. We also did not apply the recognition requirements of ASU 2016-02 to any short-term leases (as defined by related accounting guidance). The updates did not significantly change lease accounting requirements applicable to lessors and did not significantly impact our financial statements in relation to contracts whereby we act as a lessor. We applied the modified-retrospective transition approach prescribed by ASU 2018-11. Upon adoption of ASU 2016-02 and ASU 2018-11 on January 1, 2019, we recognized right-of-use assets and related lease liabilities totaling $30.5 million with a cumulative-effect adjustment to beginning retained earnings of $0.3 million, after tax. Refer to note 8 – Leases of our consolidated financial statements for further detail.

Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities—In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2018. The Company early adopted ASU 2017-12 during the first quarter of 2018 and recorded a cumulative effect adjustment of $26 thousand within equity in the consolidated statements of financial condition.

Reclassification of Certain Tax Effects—In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This update allows a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The amendments eliminate the stranded tax effects that were created as a result of the reduction of historical U.S. federal corporate income tax rate to the newly enacted U.S. federal corporate income tax rate. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company early adopted ASU 2018-02 in the first quarter of 2018, resulting in a $1.5 million reclassification from accumulated other comprehensive loss to retained earnings on the consolidated statements of financial condition and the consolidated statements of changes in shareholders’ equity.

Other Pronouncements—The Company early adopted ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (Subtopic 350-40) on a prospective basis with no material impact on its financial statements. The Company also adopted ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting; ASU 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825); ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments and ASU 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20) with no material impact on its financial statements.

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Stock-based Compensation and Benefits - Summarizes Information about Outstanding Stock Options (Details) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Number	657,114	1,264,876	1,598,318
Options Outstanding, Weighted Average Remaining Contractual Life in years	6 years 4 months 28 days	3 years 11 months 1 day
Options Outstanding, Weighted Average Exercise Price	$ 26.69	$ 22.33	$ 20.62
Options Vested, Number	631,916
Options Vested, Weighted Average Exercise Price	$ 26.40
18.00 - 18.99
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Low Range of Exercise Price	18.00
Options Outstanding, High Range of Exercise Price	$ 18.99
Options Outstanding, Number	73,868
Options Outstanding, Weighted Average Remaining Contractual Life in years	3 years 9 months 29 days
Options Outstanding, Weighted Average Exercise Price	$ 18.60
Options Vested, Number	73,868
Options Vested, Weighted Average Exercise Price	$ 18.60
19.00 - 19.99
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Low Range of Exercise Price	19.00
Options Outstanding, High Range of Exercise Price	$ 19.99
Options Outstanding, Number	168,189
Options Outstanding, Weighted Average Remaining Contractual Life in years	5 years 9 months 7 days
Options Outstanding, Weighted Average Exercise Price	$ 19.38
Options Vested, Number	168,189
Options Vested, Weighted Average Exercise Price	$ 19.38
20.00 - 20.99
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Low Range of Exercise Price	20.00
Options Outstanding, High Range of Exercise Price	$ 20.99
Options Outstanding, Number	78,041
Options Outstanding, Weighted Average Remaining Contractual Life in years	1 year 5 months 23 days
Options Outstanding, Weighted Average Exercise Price	$ 20.05
Options Vested, Number	78,041
Options Vested, Weighted Average Exercise Price	$ 20.05
21.00 and above
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Low Range of Exercise Price	21.00
Options Outstanding, Exercise Price	$ 21.00
Options Outstanding, Number	337,016
Options Outstanding, Weighted Average Remaining Contractual Life in years	8 years 5 months 4 days
Options Outstanding, Weighted Average Exercise Price	$ 33.64
Options Vested, Number	85,127
Options Vested, Weighted Average Exercise Price	$ 33.32

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Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current expense: [Abstract]
U.S. federal													$ 8,947	$ 427	$ 1,230
State and local													2,280	1,530	169
Total current income tax expense													11,227	1,957	1,399
Deferred expense:
U.S. federal													4,115	10,110	17,639
State and local													487	163	2,245
Total deferred income tax expense													4,602	10,273	19,884
Income tax expense	$ 3,864	$ 5,419	$ 3,179	$ 3,367	$ 3,381	$ 4,354	$ 2,800	$ 1,695	$ 18,615	$ 1,733	$ 2,175	$ (1,240)	$ 15,829	$ 12,230	$ 21,283

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Allowance for Loan Losses

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Allowance for Loan Losses

Note 7 Allowance for Loan Losses

The tables below detail the Company’s allowance for loan losses and recorded investment in loans as of and for the years ended December 31, 2019 and 2018:

	Year ended December 31, 2019
			Non-owner
			occupied
			commercial		Residential
	Commercial		real estate		real estate		Consumer		Total
Beginning balance	$	27,137	$	4,406	$	3,800	$	349	$	35,692
Originated and acquired beginning balance		26,946		4,406		3,760		349		35,461
Charge-offs		(7,422)		(116)		(124)		(937)		(8,599)
Recoveries		102		12		34		180		328
Provision		10,636		548		(202)		712		11,694
Originated and acquired ending balance		30,262		4,850		3,468		304		38,884
ASC 310-30 beginning balance		191		—		40		—		231
Charge-offs		—		—		—		—		—
Recoveries		—		—		—		—		—
Recoupment		(11)		—		(40)		—		(51)
ASC 310-30 ending balance		180		—		—		—		180
Ending balance	$	30,442	$	4,850	$	3,468	$	304	$	39,064
Ending allowance balance attributable to:
Originated and acquired loans individually evaluated for impairment	$	1,763	$	1	$	31	$	—	$	1,795
Originated and acquired loans collectively evaluated for impairment		28,499		4,849		3,437		304		37,089
ASC 310-30 loans		180		—		—		—		180
Total ending allowance balance	$	30,442	$	4,850	$	3,468	$	304	$	39,064
Loans:
Originated and acquired loans individually evaluated for impairment	$	21,844	$	612	$	10,257	$	50	$	32,763
Originated and acquired loans collectively evaluated for impairment		2,955,163		597,506		754,154		21,726		4,328,549
ASC 310-30 loans		15,300		32,788		6,006		—		54,094
Total loans	$	2,992,307	$	630,906	$	770,417	$	21,776	$	4,415,406

	Year ended December 31, 2018
			Non-owner
			occupied
			commercial		Residential
	Commercial		real estate		real estate		Consumer		Total
Beginning balance	$	21,385	$	5,609	$	3,965	$	305	$	31,264
Originated and acquired beginning balance		21,340		5,583		3,965		305		31,193
Charge-offs		(833)		(11)		(118)		(1,134)		(2,096)
Recoveries		1,171		—		14		204		1,389
Provision		5,268		(1,166)		(101)		974		4,975
Originated and acquired ending balance		26,946		4,406		3,760		349		35,461
ASC 310-30 beginning balance		45		26		—		—		71
Charge-offs		(62)		—		—		—		(62)
Recoveries		—		—		—		—		—
Provision (recoupment)		208		(26)		40		—		222
ASC 310-30 ending balance		191		—		40		—		231
Ending balance	$	27,137	$	4,406	$	3,800	$	349	$	35,692
Ending allowance balance attributable to:
Originated and acquired loans individually evaluated for impairment	$	1,132	$	2	$	35	$	—	$	1,169
Originated and acquired loans collectively evaluated for impairment		25,814		4,404		3,725		349		34,292
ASC 310-30 loans		191		—		40		—		231
Total ending allowance balance	$	27,137	$	4,406	$	3,800	$	349	$	35,692
Loans:
Originated and acquired loans individually evaluated for impairment	$	18,282	$	2,129	$	5,169	$	5,499	$	31,079
Originated and acquired loans collectively evaluated for impairment		2,605,891		549,690		815,651		19,118		3,990,350
ASC 310-30 loans		20,398		40,393		9,995		93		70,879
Total loans	$	2,644,571	$	592,212	$	830,815	$	24,710	$	4,092,308

In evaluating the loan portfolio for an appropriate ALL level, non-impaired originated and acquired loans were grouped into segments based on broad characteristics such as primary use and underlying collateral. Within the segments, the portfolio was further disaggregated into classes of loans with similar attributes and risk characteristics for purposes of applying loss ratios and determining applicable subjective adjustments to the ALL. The application of subjective adjustments was based upon qualitative risk factors, including economic trends and conditions, industry conditions, asset quality, loss trends, lending management, portfolio growth and loan review/internal audit results.

Net charge-offs on originated and acquired loans during 2019 were $8.3 million and included $6.6 million for one previously identified acquired commercial loan that was charged-off during 2019. Management’s evaluation of credit quality resulted in provision for originated and acquired loan losses of $11.7 million during 2019 and included $6.6 million related to the loan described above. Provision for originated and acquired loans during the year ended December 31, 2018 was $5.0 million and was lowered by a recovery of $1.1 million.

During 2019 and 2018, the Company re-estimated the expected cash flows of the loan pools accounted for under ASC 310-30. The remeasurement in 2019 resulted in recoupment of $51 thousand. The remeasurement in 2018 resulted in provision of $222 thousand, primarily driven by the commercial segment.

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Subsequent Event (Details) - USD ($) $ in Millions	Feb. 26, 2020	Dec. 31, 2019	Aug. 31, 2016
Subsequent Event [Line Items]
Remaining authorized amount			$ 12.6
New Board Authorized Share Repurchase Program
Subsequent Event [Line Items]
Remaining authorized amount		$ 12.6
Subsequent Event
Subsequent Event [Line Items]
Stock repurchase, authorized amount	$ 62.6
Subsequent Event | New Board Authorized Share Repurchase Program
Subsequent Event [Line Items]
Stock repurchase, authorized amount	$ 50.0

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Loans (Tables)

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Loan Portfolio Composition Including Carrying Value by Segment of Originated and Acquired Loans Accounted for under ASC Topic 310-30 and Loans Covered by the FDIC Loss Sharing Agreements

	December 31, 2019
	Originated and		ASC
	acquired loans		310-30 loans		Total loans		% of total
Commercial	$	2,977,007	$	15,300	$	2,992,307	67.8%
Commercial real estate non-owner occupied		598,118		32,788		630,906	14.3%
Residential real estate		764,411		6,006		770,417	17.4%
Consumer		21,776		—		21,776	0.5%
Total	$	4,361,312	$	54,094	$	4,415,406	100.0%

	December 31, 2018
	Originated and		ASC
	acquired loans		310-30 loans		Total loans		% of total
Commercial	$	2,624,173	$	20,398	$	2,644,571	64.6%
Commercial real estate non-owner occupied		551,819		40,393		592,212	14.5%
Residential real estate		820,820		9,995		830,815	20.3%
Consumer		24,617		93		24,710	0.6%
Total	$	4,021,429	$	70,879	$	4,092,308	100.0%

Past Due Financing Receivables

Delinquency for originated and acquired loans is shown in the following tables at December 31, 2019 and 2018:

	December 31, 2019
			Greater
	30-89 days		than 90 days				Total past				Total
	past due and		past due and		Non-accrual		due and				originated and
	accruing		accruing		loans		non-accrual		Current		acquired loans
Originated and acquired loans:
Commercial:
Commercial and industrial	$	2,478	$	879	$	9,396	$	12,753	$	2,193,244	$	2,205,997
Owner occupied commercial real estate		569		—		2,264		2,833		477,073		479,906
Food and agriculture		179		—		317		496		248,089		248,585
Energy		—		—		934		934		41,585		42,519
Total commercial		3,226		879		12,911		17,016		2,959,991		2,977,007
Commercial real estate non-owner occupied:
Construction		—		—		—		—		77,733		77,733
Acquisition/development		—		—		416		416		14,623		15,039
Multifamily		—		—		—		—		54,693		54,693
Non-owner occupied		438		—		43		481		450,172		450,653
Total commercial real estate		438		—		459		897		597,221		598,118
Residential real estate:
Senior lien		1,747		—		7,597		9,344		663,353		672,697
Junior lien		245		79		731		1,055		90,659		91,714
Total residential real estate		1,992		79		8,328		10,399		754,012		764,411
Consumer		116		—		50		166		21,610		21,776
Total originated and acquired loans	$	5,772	$	958	$	21,748	$	28,478	$	4,332,834	$	4,361,312

	December 31, 2018
			Greater
	30-89 days		than 90 days				Total past				Total
	past due and		past due and		Non-accrual		due and				originated and
	accruing		accruing		loans		non-accrual		Current		acquired loans
Originated and acquired loans:
Commercial:
Commercial and industrial	$	495	$	74	$	5,510	$	6,079	$	1,925,068	$	1,931,147
Owner occupied commercial real estate		893		—		6,931		7,824		413,842		421,666
Food and agriculture		141		125		768		1,034		221,122		222,156
Energy		—		—		742		742		48,462		49,204
Total commercial		1,529		199		13,951		15,679		2,608,494		2,624,173
Commercial real estate non-owner occupied:
Construction		—		—		1,208		1,208		93,646		94,854
Acquisition/development		—		—		121		121		19,529		19,650
Multifamily		—		—		—		—		56,685		56,685
Non-owner occupied		328		132		572		1,032		379,598		380,630
Total commercial real estate		328		132		1,901		2,361		549,458		551,819
Residential real estate:
Senior lien		2,106		548		7,790		10,444		712,592		723,036
Junior lien		556		—		772		1,328		96,456		97,784
Total residential real estate		2,662		548		8,562		11,772		809,048		820,820
Consumer		91		16		42		149		24,468		24,617
Total originated and acquired loans	$	4,610	$	895	$	24,456	$	29,961	$	3,991,468	$	4,021,429

Credit Exposure for Loans as Determined by Company's Internal Risk Rating System

Credit exposure for all loans as determined by the Company’s internal risk rating system was as follows at December 31, 2019 and 2018, respectively:

	December 31, 2019
			Special
	Pass		mention		Substandard		Doubtful		Total
Originated and acquired loans:
Commercial:
Commercial and industrial	$	2,162,045	$	28,144	$	14,287	$	1,521	$	2,205,997
Owner occupied commercial real estate		430,793		39,597		9,516		—		479,906
Food and agriculture		246,282		1,219		1,052		32		248,585
Energy		41,585		—		739		195		42,519
Total commercial		2,880,705		68,960		25,594		1,748		2,977,007
Commercial real estate non-owner occupied:
Construction		77,733		—		—		—		77,733
Acquisition/development		14,585		—		454		—		15,039
Multifamily		54,210		—		483		—		54,693
Non-owner occupied		434,694		15,238		721		—		450,653
Total commercial real estate		581,222		15,238		1,658		—		598,118
Residential real estate:
Senior lien		664,387		80		8,230		—		672,697
Junior lien		90,517		365		832		—		91,714
Total residential real estate		754,904		445		9,062		—		764,411
Consumer		21,725		1		50		—		21,776
Total originated and acquired loans	$	4,238,556	$	84,644	$	36,364	$	1,748	$	4,361,312
Loans accounted for under ASC 310-30:
Commercial	$	12,523	$	659	$	2,118	$	—	$	15,300
Commercial real estate non-owner occupied		32,109		71		608		—		32,788
Residential real estate		4,089		360		1,557		—		6,006
Consumer		—		—		—		—		—
Total loans accounted for under ASC 310-30	$	48,721	$	1,090	$	4,283	$	—	$	54,094
Total loans	$	4,287,277	$	85,734	$	40,647	$	1,748	$	4,415,406

	December 31, 2018
			Special
	Pass		mention		Substandard		Doubtful		Total
Originated and acquired loans:
Commercial:
Commercial and industrial	$	1,890,710	$	16,531	$	22,919	$	987	$	1,931,147
Owner occupied commercial real estate		393,404		16,349		11,828		85		421,666
Food and agriculture		220,004		1,260		847		45		222,156
Energy		48,462		—		742		—		49,204
Total commercial		2,552,580		34,140		36,336		1,117		2,624,173
Commercial real estate non-owner occupied:
Construction		92,731		915		1,208		—		94,854
Acquisition/development		19,529		—		121		—		19,650
Multifamily		56,685		—		—		—		56,685
Non-owner occupied		355,776		23,243		1,611		—		380,630
Total commercial real estate		524,721		24,158		2,940		—		551,819
Residential real estate:
Senior lien		710,972		3,571		8,493		—		723,036
Junior lien		96,456		415		913		—		97,784
Total residential real estate		807,428		3,986		9,406		—		820,820
Consumer		24,575		—		42		—		24,617
Total originated and acquired loans	$	3,909,304	$	62,284	$	48,724	$	1,117	$	4,021,429
Loans accounted for under ASC 310-30:
Commercial	$	17,579	$	537	$	2,282	$	—	$	20,398
Commercial real estate non-owner occupied		39,322		246		825		—		40,393
Residential real estate		7,484		908		1,603		—		9,995
Consumer		—		—		93		—		93
Total loans accounted for under ASC 310-30	$	64,385	$	1,691	$	4,803	$	—	$	70,879
Total loans	$	3,973,689	$	63,975	$	53,527	$	1,117	$	4,092,308

Schedule Of Impaired Financing Receivable With And Without Related Allowance

Additional information regarding impaired loans at December 31, 2019 and 2018 is set forth in the table below:

	December 31, 2019						December 31, 2018
					Allowance						Allowance
	Unpaid				for loan		Unpaid				for loan
	principal		Recorded		losses		principal		Recorded		losses
	balance		investment		allocated		balance		investment		allocated
With no related allowance recorded:
Commercial:
Commercial and industrial	$	16,001	$	10,548	$	—	$	4,374	$	3,029	$	—
Owner occupied commercial real estate		3,265		2,385		—		7,130		6,609		—
Food and agriculture		1,468		1,220		—		1,468		1,260		—
Energy		—		—		—		5,366		742		—
Total commercial		20,734		14,153		—		18,338		11,640		—
Commercial real estate non-owner occupied:
Construction		—		—		—		1,435		1,208		—
Acquisition/development		458		415		—		378		121		—
Multifamily		—		—		—		—		—		—
Non-owner occupied		90		26		—		641		547		—
Total commercial real estate		548		441		—		2,454		1,876		—
Residential real estate:
Senior lien		4,355		3,967		—		4,229		3,814		—
Junior lien		311		269		—		409		341		—
Total residential real estate		4,666		4,236		—		4,638		4,155		—
Consumer		57		50		—		46		42		—
Total impaired loans with no related allowance recorded	$	26,005	$	18,880	$	—	$	25,476	$	17,713	$	—
With a related allowance recorded:
Commercial:
Commercial and industrial	$	8,209	$	5,501	$	1,530	$	7,252	$	4,627	$	996
Owner occupied commercial real estate		711		505		3		1,362		1,169		90
Food and agriculture		757		751		35		883		845		46
Energy		5,559		934		195		—		—		—
Total commercial		15,236		7,691		1,763		9,497		6,641		1,132
Commercial real estate non-owner occupied:
Construction		—		—		—		—		—		—
Acquisition/development		—		—		—		—		—		—
Multifamily		—		—		—		—		—		—
Non-owner occupied		232		171		1		313		254		2
Total commercial real estate		232		171		1		313		254		2
Residential real estate:
Senior lien		5,808		5,034		25		6,032		5,178		27
Junior lien		1,074		987		6		1,408		1,293		8
Total residential real estate		6,882		6,021		31		7,440		6,471		35
Consumer		—		—		—		—		—		—
Total impaired loans with a related allowance recorded	$	22,350	$	13,883	$	1,795	$	17,250	$	13,366	$	1,169
Total impaired loans	$	48,355	$	32,763	$	1,795	$	42,726	$	31,079	$	1,169

Schedule of Impaired Financing Receivable, Average Recorded Investment and Interest Income Recognized

The table below shows additional information regarding the average recorded investment and interest income recognized on impaired loans for the years presented:

	For the years ended
	December 31, 2019				December 31, 2018				December 31, 2017
	Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	13,062	$	248	$	3,248	$	168	$	5,609	$	152
Owner occupied commercial real estate		2,849		27		6,799		38		4,155		80
Food and agriculture		1,316		—		1,259		98		1,422		244
Energy		—		—		884		—		8,004		156
Total Commercial		17,227		275		12,190		304		19,190		632
Commercial real estate non-owner occupied:
Construction		—		—		1,208		—		—		—
Acquisition/development		575		—		606		—		—		—
Multifamily		—		—		—		—		—		—
Non-owner occupied		28		—		573		—		878		22
Total commercial real estate		603		—		2,387		—		878		22
Residential real estate:
Senior lien		4,081		1		3,904		—		326		—
Junior lien		287		2		355		2		—		—
Total residential real estate		4,368		3		4,259		2		326		—
Consumer		11		—		12		—		—		—
Total impaired loans with no related allowance recorded	$	22,209	$	278	$	18,848	$	306	$	20,394	$	654
With a related allowance recorded:
Commercial:
Commercial and industrial	$	5,788	$	—	$	4,677	$	—	$	7,331	$	—
Owner occupied commercial real estate		554		17		1,220		19		747		20
Food and agriculture		796		12		862		5		2,092		5
Energy		865		—		—		—		—		—
Total Commercial		8,003		29		6,759		24		10,170		25
Commercial real estate non-owner occupied:
Construction		—		—		—		—		188		—
Acquisition/development		—		—		—		—		—		—
Multifamily		—		—		—		—		30		1
Non-owner occupied		207		14		288		16		213		9
Total commercial real estate		207		14		288		16		431		10
Residential real estate:
Senior lien		5,241		66		5,412		57		5,986		67
Junior lien		1,034		34		1,331		43		1,225		42
Total residential real estate		6,275		100		6,743		100		7,211		109
Consumer		49		—		36		—		163		—
Total impaired loans with a related allowance recorded	$	14,534	$	143	$	13,826	$	140	$	17,975	$	144
Total impaired loans	$	36,743	$	421	$	32,674	$	446	$	38,369	$	798

Additional Information Related to Accruing TDR's

	December 31, 2019
	Recorded		Average year-to-date		Unpaid		Unfunded commitments
	investment		recorded investment		principal balance		to fund TDRs
Commercial	$	5,615	$	5,788	$	5,714	$	—
Commercial real estate non-owner occupied		141		172		192		—
Residential real estate		1,129		1,178		1,206		12
Consumer		—		—		—		—
Total	$	6,885	$	7,138	$	7,112	$	12

	December 31, 2018
	Recorded		Average year-to-date		Unpaid		Unfunded commitments
	investment		recorded investment		principal balance		to fund TDRs
Commercial	$	2,730	$	2,827	$	3,155	$	—
Commercial real estate non-owner occupied		229		260		280		—
Residential real estate		1,114		1,163		1,121		12
Consumer		—		—		—		—
Total	$	4,073	$	4,250	$	4,556	$	12

Summary of Company's Carrying Value of Non-Accrual TDR's

The following table summarizes the Company’s carrying value of non-accrual TDRs as of December 31, 2019 and 2018:

	December 31, 2019		December 31, 2018
Commercial	$	1,891	$	1,854
Commercial real estate non-owner occupied		410		—
Residential real estate		2,553		1,584
Consumer		—		—
Total non-accruing TDRs	$	4,854	$	3,438

Re-Measurement of Loans Accounted for Under ASC Topic 310-30 Resulting in Changes in Carrying Amount of Accretable Yield

	December 31, 2019		December 31, 2018
Accretable yield beginning balance	$	35,901	$	46,568
Reclassification from non-accretable difference		6,195		10,751
Reclassification to non-accretable difference		(921)		(2,263)
Accretion		(13,041)		(19,155)
Accretable yield ending balance	$	28,134	$	35,901

Composition of Net Book Value for Loans Accounted for under ASC Topic 310-30

Below is the composition of the net book value for loans accounted for under ASC 310-30 at December 31, 2019 and 2018:

	December 31, 2019		December 31, 2018
Contractual cash flows	$	391,167	$	420,994
Non-accretable difference		(308,939)		(314,214)
Accretable yield		(28,134)		(35,901)
Loans accounted for under ASC 310-30	$	54,094	$	70,879

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Acquisition Activities

12 Months Ended

Dec. 31, 2019

Acquisition Activities

Acquisition Activities

Note 26 Acquisition Activities

On January 1, 2018, the Company completed its acquisition of Peoples, Inc. (“Peoples”), the bank holding company of Colorado-based Peoples National Bank and Kansas-based Peoples Bank. Immediately following the completion of the acquisition, Peoples National Bank and Peoples Bank merged into NBH Bank. Pursuant to the merger agreement executed in June 2017, the Company paid $36.2 million of cash consideration and 3,398,477 shares of the Company’s Class A common stock in exchange for all of the outstanding common stock of Peoples. Included in the cash consideration is $10.0 million of restricted cash placed in escrow for certain potential liabilities for which the Company is indemnified pursuant to the merger agreement. The restricted cash is included in other assets in the Company’s consolidated statements of financial condition at December 31, 2019. The transaction was valued at $146.4 million in the aggregate, based on the Company’s closing price of $32.43 on the acquisition date. Acquisition-related costs of $8.0 million on a pre-tax basis were included in the Company’s consolidated statements of operations for the year ended December 31, 2018. The results of Peoples are included in the results of the Company subsequent to the acquisition date.

The Company determined that this acquisition constitutes a business combination as defined in ASC Topic 805. Accordingly, as of the date of the acquisition, the Company recorded the assets acquired and liabilities assumed at fair value. The Company determined fair values in accordance with the guidance provided in ASC Topic 820. Fair value is established by discounting the expected future cash flows with a market discount rate for like maturities and risk instruments. The estimation of expected future cash flows, market conditions and other future events and actual results could differ materially. The determination of the fair values of fixed assets, loans, OREO, core deposit intangible, mortgage servicing rights and mortgage repurchase reserve involves a high degree of judgment and complexity.

The table below summarizes the net assets acquired (at fair value) and consideration transferred in connection with the Peoples acquisition:

Assets:
Cash and due from banks	$	105,173
Investment securities available-for-sale		118,512
Non-marketable securities		4,796
Loans		542,707
Loans held for sale		54,260
Other real estate owned		1,253
Premises and equipment		18,584
Core deposit intangible asset		10,477
Mortgage servicing rights		4,301
Other assets		15,361
Total assets acquired		875,424
Liabilities:
Total deposits		729,911
FHLB borrowings		33,825
Other liabilities		20,683
Total liabilities assumed		784,419
Identifiable net assets acquired	$	91,005
Consideration:
NBHC common stock paid at January 1, 2018, closing price of $32.43	$	110,213
Cash		36,189
Total		146,402
Goodwill	$	55,397

In connection with the Peoples acquisition, the Company recorded $55.4 million of goodwill, a $10.5 million core deposit intangible asset, a $4.3 million mortgage servicing rights intangible asset and a $4.0 million mortgage repurchase reserve, included in other liabilities. The core deposit intangible is being amortized straight-line over ten years and the mortgage servicing rights intangible is amortized in proportion to and over the period of the estimated net servicing income. The FHLB borrowings of $33.8 million were paid off during the first quarter of 2018. The goodwill associated with this transaction is not tax deductible.

At the date of acquisition, the gross contractual amounts receivable, inclusive of all principal and interest, was $713.6 million. The Company’s best estimate of the contractual principal cash flows for loans not expected to be collected was $2.1 million.

The following unaudited pro forma information combines the historical results of Peoples and the Company. In accordance with the merger agreement, the Peoples national mortgage business was wound down prior to acquisition. Accordingly, the pro forma information excludes the results of the Peoples national mortgage business for prior periods presented. The pro forma financial information does not include the potential impacts of possible business model changes, current market conditions, revenue enhancements, expense efficiencies, or other factors.

If the Peoples acquisition had been completed on January 1, 2017, pro forma total revenue for the Company would have been approximately $268.2 million and $266.5 million for the years ended December 31, 2018 and 2017, respectively. Pro forma net income for the Company would have been approximately $67.8 million and $16.6 million for the years ended December 31, 2018 and 2017, respectively. Pro forma basic and dilutive earnings per share for the Company would have been $2.20 and $2.16 for the year ended December 31, 2018, respectively, and $0.55 and $0.53 for the year ended December 31, 2017, respectively.

For the year ended December 31, 2018, the pro forma information reflects adjustments made to exclude acquisition-related expenses of the Company of $8.0 million. For the year ended December 31, 2017, the pro-forma information reflects adjustments made to exclude acquisition-related expenses of the Company of $2.7 million and include estimated amortization and accretion of purchase discounts and premiums of $0.7 million in addition to estimated amortization of acquired identifiable intangibles of $1.0 million. The pro forma information is theoretical in nature and not necessarily indicative of future consolidated results of operations of the Company or the consolidated results of operations which would have resulted had the Company acquired Peoples during the periods presented.

The Company has determined that it is impractical to report the amounts of revenue and earnings of legacy Peoples since the acquisition date. Peoples operations were completely integrated shortly after the acquisition date. Accordingly, reliable and separate complete revenue and earnings information is no longer available. In addition, such amounts would require significant estimates related to the proper allocation of merger cost savings that cannot be objectively made.

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Parent Company Only Financial Statements - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net income	$ 19,519	$ 21,642	$ 20,282	$ 18,922	$ 17,235	$ 18,240	$ 17,512	$ 8,464	$ (10,119)	$ 7,231	$ 9,209	$ 8,258	$ 80,365	$ 61,451	$ 14,579
Stock-based compensation expense													4,869	4,420	3,648
Net excess tax (benefit) deficit on stock-based compensation													(2,160)	(1,286)	(4,225)
Net cash provided by operating activities													42,476	73,574	58,139
Cash flows from investing activities:
Net cash used in investing activities													(113,285)	(102,017)	(178,517)
Cash flows from financing activities:
Issuance of stock under purchase and equity compensation plans													(6,229)	(772)	(8,395)
Proceeds from exercise of stock options													2,788	7,576	104
Payment of dividends													(23,530)	(16,624)	(9,401)
Net cash provided by (used in) financing activities													71,443	(109,365)	225,006
Increase (decrease) in cash, cash equivalents and restricted cash													634	(137,808)	104,628
Cash, cash equivalents and restricted cash at beginning of the year				119,556				257,364				152,736	119,556	257,364	152,736
Cash, cash equivalents and restricted cash at end of period	120,190				119,556				257,364				120,190	119,556	257,364
Parent Company [Member] | Reportable Legal Entities [Member]
Cash flows from operating activities:
Net income													80,365	61,451	14,579
Equity in undistributed (earnings) losses of subsidiaries													(28,133)	(19,682)	11,192
Stock-based compensation expense													4,869	4,420	3,648
Net excess tax (benefit) deficit on stock-based compensation													(2,160)	(1,286)	(4,225)
Other													5,045	9,230	6,680
Net cash provided by operating activities													59,986	54,133	31,874
Cash flows from investing activities:
Outlay for business combinations														(36,189)
Net cash used in investing activities														(36,189)
Cash flows from financing activities:
Capital Contribution															(5,000)
Issuance of stock under purchase and equity compensation plans													(6,229)	(772)	(8,395)
Proceeds from exercise of stock options													2,788	7,576	104
Payment of dividends													(23,530)	(16,624)	(9,401)
Net cash provided by (used in) financing activities													(26,971)	(9,820)	(22,692)
Increase (decrease) in cash, cash equivalents and restricted cash													33,015	8,124	9,182
Cash, cash equivalents and restricted cash at beginning of the year				$ 81,997				$ 73,873				$ 64,691	81,997	73,873	64,691
Cash, cash equivalents and restricted cash at end of period	$ 115,012				$ 81,997				$ 73,873				$ 115,012	$ 81,997	$ 73,873

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Fair Value Measurements - Table of Valuation Techniques and Unobservable Inputs Used in Valuation of Financial Instruments Falling Within Level 3 of Fair Value Hierarchy (Details)	Dec. 31, 2019	Dec. 31, 2018
Minimum | Impaired Loans [Member] | Measurement Input, Discount Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Loan measurement input (as a percent)	0
Minimum | Mortgage servicing rights member | Measurement Input, Discount Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Servicing assets measurement input (as a percent)	0.095	0.095
Minimum | Mortgage servicing rights member | Measurement Input, Constant Prepayment Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Servicing assets measurement input (as a percent)	0.148	0.122
Maximum | Impaired Loans [Member] | Measurement Input, Discount Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Loan measurement input (as a percent)	0.25
Maximum | Mortgage servicing rights member | Measurement Input, Discount Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Servicing assets measurement input (as a percent)	0.105	0.105
Maximum | Mortgage servicing rights member | Measurement Input, Constant Prepayment Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Servicing assets measurement input (as a percent)	0.220	0.172

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Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 22 Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to disclose the fair value of its financial instruments. 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. For disclosure purposes, the Company groups its financial and non-financial assets and liabilities into three different levels based on the nature of the instrument and the availability and reliability of the information that is used to determine fair value. The three levels are defined as follows:

● Level 1—Includes assets or liabilities in which the valuation methodologies are based on unadjusted quoted prices in active markets for identical assets or liabilities.

● Level 2—Includes assets or liabilities in which the inputs to the valuation methodologies are based on similar assets or liabilities in inactive markets, quoted prices for identical or similar assets or liabilities in inactive markets, and inputs other than quoted prices that are observable, such as interest rates, yield curves, volatilities, prepayment speeds, and other inputs obtained from observable market input.

● Level 3—Includes assets or liabilities in which the inputs to the valuation methodology are based on at least one significant assumption that is not observable in the marketplace. These valuations may rely on management’s judgment and may include internally-developed model-based valuation techniques.

Level 1 inputs are considered to be the most transparent and reliable and level 3 inputs are considered to be the least transparent and reliable. The Company assumes the use of the principal market to conduct a transaction of each particular asset or liability being measured and then considers the assumptions that market participants would use when pricing the asset or liability. Whenever possible, the Company first looks for quoted prices for identical assets or liabilities in active markets (level 1 inputs) to value each asset or liability. However, when inputs from identical assets or liabilities on active markets are not available, the Company utilizes market observable data for similar assets and liabilities. The Company maximizes the use of observable inputs and limits the use of unobservable inputs to occasions when observable inputs are not available. The need to use unobservable inputs generally results from the lack of market liquidity of the actual financial instrument or of the underlying collateral. While third party price indications may be available in those cases, limited trading activity can challenge the observability of those inputs.

Changes in the valuation inputs used for measuring the fair value of financial instruments may occur due to changes in current market conditions or other factors. Such changes may necessitate a transfer of the financial instruments to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfer occurs. During 2019 and 2018, there were no transfers of financial instruments between the hierarchy levels.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of each instrument under the valuation hierarchy:

Fair Value of Financial Instruments Measured on a Recurring Basis

Investment securities available-for-sale—Investment securities available-for-sale are carried at fair value on a recurring basis. To the extent possible, observable quoted prices in an active market are used to determine fair value and, as such, these securities are classified as level 1. At December 31, 2019 and 2018, the Company did not hold any level 1 securities. When quoted market prices in active markets for identical assets or liabilities are not available, quoted prices of securities with similar characteristics, discounted cash flows or other pricing characteristics are used to estimate fair values and the securities are then classified as level 2.

Loans held for sale—The Company has elected to record loans originated and intended for sale in the secondary market at estimated fair value. The portfolio consists primarily of fixed rate residential mortgage loans that are sold within 45 days. The Company estimates fair value based on quoted market prices for similar loans in the secondary market and is classified as level 2.

Interest rate swap derivatives—The Company's derivative instruments are limited to interest rate swaps that may be accounted for as fair value hedges or non-designated hedges. The fair values of the swaps incorporate credit valuation adjustments in order to appropriately reflect nonperformance risk in the fair value measurements. The credit valuation adjustment is the dollar amount of the fair value adjustment related to credit risk and utilizes a probability weighted calculation to quantify the potential loss over the life of the trade. The credit valuation adjustments are calculated by determining the total expected exposure of the derivatives (which incorporates both the current and potential future exposure) and then applying the respective counterparties’ credit spreads to the exposure offset by marketable collateral posted, if any. Certain derivative transactions are executed with counterparties who are large financial institutions ("dealers"). International Swaps and Derivative Association Master Agreements and Credit Support Annexes are employed for all contracts with dealers. These contracts contain bilateral collateral arrangements. The fair value inputs of these financial instruments are determined using discounted cash flow analysis through the use of third-party models whose significant inputs are readily observable market parameters, primarily yield curves, with appropriate adjustments for liquidity and credit risk, and are classified as level 2.

Mortgage banking derivatives—The Company relies on a third-party pricing service to value its mortgage banking derivative financial assets and liabilities, which the Company classifies as a level 3 valuation. The external valuation model to estimate the fair value of its interest rate lock commitments to originate residential mortgage loans held for sale includes grouping the interest rate lock commitments by interest rate and terms, applying an estimated pull-through rate based on historical experience, and then multiplying by quoted investor prices determined to be reasonably applicable to the loan commitment groups based on interest rate, terms, and rate lock expiration dates of the loan commitment groups. The Company also relies on an external valuation model to estimate the fair value of its forward commitments to sell residential mortgage loans (i.e., an estimate of what the Company would receive or pay to terminate the forward delivery contract based on market prices for similar financial instruments), which includes matching specific terms and maturities of the forward commitments against applicable investor pricing.

The tables below present the financial instruments measured at fair value on a recurring basis as of December 31, 2019 and 2018, on the consolidated statements of financial condition utilizing the hierarchy structure described above:

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities available-for-sale:
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	—	$	95,256	$	—	$	95,256
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		—		542,037		—		542,037
Municipal securities		—		372		—		372
Loans held for sale		—		117,444		—		117,444
Interest rate swap derivatives		—		10,175		—		10,175
Mortgage banking derivatives		—		—		1,515		1,515
Total assets at fair value	$	—	$	765,284	$	1,515	$	766,799
Liabilities:
Interest rate swap derivatives	$	—	$	22,558	$	—	$	22,558
Mortgage banking derivatives		—		—		440		440
Total liabilities at fair value	$	—	$	22,558	$	440	$	22,998

	December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities available-for-sale:
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	—	$	146,642	$	—	$	146,642
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		—		643,381		—		643,381
Municipal securities		—		441		—		441
Loans held for sale		—		48,120		—		48,120
Interest rate swap derivatives		—		20,627		—		20,627
Mortgage banking derivatives		—		—		871		871
Total assets at fair value	$	—	$	859,211	$	871	$	860,082
Liabilities:
Interest rate swap derivatives	$	—	$	3,577	$	—	$	3,577
Mortgage banking derivatives		—		—		544		544
Total liabilities at fair value	$	—	$	3,577	$	544	$	4,121

The table below details the changes in level 3 financial instruments during 2019:

		Mortgage banking
		derivatives, net
Balance at December 31, 2018	$	327
Gain included in earnings, net		1,327
Fees and costs included in earnings, net		(579)
Balance at December 31, 2019	$	1,075

Fair Value of Financial Instruments Measured on a Non-recurring Basis

Certain assets may be recorded at fair value on a non-recurring basis as conditions warrant. These non-recurring fair value measurements typically result from the application of lower of cost or fair value accounting or a write-down occurring during the period.

Impaired loans—The Company records collateral dependent loans that are considered to be impaired at their estimated fair value. A loan is considered impaired when it is probable that the Company will be unable to collect all contractual amounts due in accordance with the terms of the loan agreement. Collateral dependent impaired loans are measured based on the fair value of the collateral. The Company relies on third-party appraisals and internal assessments, utilizing a discount rate in the range of 0% - 25%, in determining the estimated fair values of these loans. The inputs used to determine the fair values of loans are considered level 3 inputs in the fair value hierarchy. At December 31, 2019, the Company recorded a specific reserve of $1.8 million related to seven originated and acquired loans with a carrying balance of $5.9 million. At December 31, 2018, the Company recorded a specific reserve balance of $1.1 million related to four originated and acquired loans at fair value on a non-recurring basis with a carrying balance of $4.9 million.

OREO—OREO is recorded at the fair value of the collateral less estimated selling costs. The estimated fair values of OREO are updated periodically and further write-downs may be taken to reflect a new basis. The Company recognized $1.1 million and $0.2 million of OREO impairments in its consolidated statements of operations during 2019 and 2018, respectively. The fair values of OREO are derived from third party price opinions or appraisals that generally use an income approach or a market value approach. If reasonable comparable appraisals are not available, then the Company may use internally developed models to determine fair values. The inputs used to determine the fair value of OREO properties are considered level 3 inputs in the fair value hierarchy.

Mortgage servicing rights—Mortgage servicing rights represent the value associated with servicing residential real estate loans that have been sold to outside investors with servicing retained. The fair value for servicing assets is determined through discounted cash flow analysis and utilizes discount rates ranging from 9.5% to 10.5% at December 31, 2019 and prepayment speed assumption ranges of 14.8% to 22.0% at December 31, 2019 as inputs. Discount rates ranged from 9.5% to 10.5% and the prepayment speed ranged from 12.2% to 17.2% for the December 31, 2018 valuation. Mortgage servicing rights are subject to impairment testing. The carrying values of these rights are reviewed quarterly for impairment based upon the calculation of fair value. For purposes of measuring impairment, the rights are stratified into certain risk characteristics including note type and note term. If the valuation model reflects a value less than the carrying value, mortgage servicing rights are adjusted to fair value through a valuation allowance. The Company recognized $129 thousand and $21 thousand of mortgage servicing rights impairment during the years ended December 31, 2019 and 2018, which is included in mortgage banking income on the consolidated statements of operations. The inputs used to determine the fair values of mortgage servicing rights are considered level 3 inputs in the fair value hierarchy.

Premises and equipment—During the fourth quarter of 2019, the Company consolidated four banking centers in the Colorado and Kansas City markets. Premise and equipment held-for-sale are written down to estimated fair value less costs to sell in the period in which the held-for-sale criteria are met. Fair value is estimated in a process which considers current local commercial real estate market conditions and the judgment of the sales agent and often involves obtaining third party appraisals from certified real estate appraisers. These fair value measurements are classified as Level 3. Unobservable inputs to these measurements, which include estimates and judgments often used in conjunction with appraisals, are not readily quantifiable. The Company recognized $0.9 million of impairment in its consolidated statements of operations related to banking centers classified as held-for-sale totaling $3.4 million during the year ended December 31, 2019.

The Company may be required to record fair value adjustments on other available-for-sale and municipal securities valued at par on a non-recurring basis.

The tables below provide information regarding the assets recorded at fair value on a non-recurring basis at December 31, 2019 and 2018. The premises and equipment loss was measured as of the third quarter of 2019.

	December 31, 2019
	Total		Losses from fair value changes
Impaired loans	$	32,763	$	8,271
Other real estate owned		7,300		1,082
Premises and equipment		3,385		898
Mortgage servicing rights		2,630		129
Total	$	46,078	$	10,380

	December 31, 2018
	Total		Losses from fair value changes
Impaired loans	$	31,079	$	2,120
Other real estate owned		10,596		230
Mortgage servicing rights		3,556		21
Total	$	45,231	$	2,371

The Company did not record any liabilities measured at fair value on a non-recurring basis during 2019 and 2018.

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Basis of Presentation (Details)	12 Months Ended
	Dec. 31, 2019 item
Basis of Presentation
Number of full service banking offices	101

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes

Components of Income Tax Expense

Total income taxes for 2019, 2018 and 2017 were allocated as follows:

	For the years ended December 31,
	2019		2018		2017
Current expense:
U.S. federal	$	8,947	$	427	$	1,230
State and local		2,280		1,530		169
Total current income tax expense		11,227		1,957		1,399
Deferred expense:
U.S. federal		4,115		10,110		17,639
State and local		487		163		2,245
Total deferred income tax expense		4,602		10,273		19,884
Income tax expense	$	15,829	$	12,230	$	21,283

Components of Tax Rate Reconciliation

The reconciliation between the income tax expenses and the amounts computed by applying the U.S. federal income tax rate to pretax income is as follows:

	For the years ended December 31,
	2019		2018		2017
Income tax at federal statutory rates (21%, 21% and 35%, respectively)	$	20,201	$	15,473	$	12,550
State income taxes, net of federal benefits		2,186		1,337		265
Tax-exempt loan interest income		(4,354)		(4,089)		(5,380)
Bank-owned life insurance income		(475)		136		(813)
Stock-based compensation		(1,925)		(1,207)		(3,998)
Deferred tax rate change		—		—		18,457
Other		196		580		202
Income tax expense	$	15,829	$	12,230	$	21,283

Significant Components of Deferred Taxes

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2019 and 2018 are presented below:

	December 31, 2019		December 31, 2018
Deferred tax assets:
Excess tax basis of acquired loans over carrying value	$	2,053	$	3,076
Allowance for loan losses		9,414		8,521
Intangible assets		—		1,937
Other real estate owned		810		439
Accrued stock-based compensation		1,945		2,889
Accrued compensation		3,425		3,046
Capitalized start-up costs		1,885		2,199
Accrued expenses		1,051		1,357
Net deferred loan fees		63		—
Net operating loss		707		807
Lease liability		7,113		—
Net unrealized losses on investment securities		—		3,543
Other		1,910		1,960
Total deferred tax assets		30,376		29,774
Deferred tax liabilities:
Intangible assets		(327)		—
Net unrealized gains on investment securities		(647)		—
Premises and equipment		(1,852)		(114)
Right of use assets		(7,033)		—
Prepaid expenses		(209)		(210)
Net deferred loan fees		—		(174)
Mortgage servicing rights		(634)		(854)
Other		(196)		(71)
Total deferred tax liabilities		(10,898)		(1,423)
Net deferred tax asset	$	19,478	$	28,351

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Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

The fair value of financial instruments at December 31, 2019 and 2018 are set forth below:

	Level in fair value	December 31, 2019				December 31, 2018
	measurement	Carrying		Estimated		Carrying		Estimated
	hierarchy	amount		fair value		amount		fair value
ASSETS
Cash and cash equivalents	Level 1	$	110,190	$	110,190	$	109,556	$	109,556
Mortgage-backed securities—residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises available-for-sale	Level 2		95,256		95,256		146,642		146,642
Mortgage-backed securities—other residential mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored enterprises available-for-sale	Level 2		542,037		542,037		643,381		643,381
Municipal securities available-for-sale	Level 2		372		372		441		441
Municipal securities available-for-sale	Level 3		115		115		169		169
Other available-for-sale securities	Level 3		469		469		469		469
Mortgage-backed securities—residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	Level 2		127,560		128,770		157,115		154,412
Mortgage-backed securities—other residential mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	Level 2		55,324		54,971		78,283		76,514
Non-marketable securities	Level 2		29,751		29,751		27,555		27,555
Loans receivable	Level 3		4,415,406		4,481,209		4,092,308		4,082,146
Loans held for sale	Level 2		117,444		117,444		48,120		48,120
Accrued interest receivable	Level 2		19,157		19,157		17,852		17,852
Interest rate swap derivatives	Level 2		10,175		10,175		20,627		20,627
Mortgage banking derivatives	Level 3		1,515		1,515		871		871
LIABILITIES
Deposit transaction accounts	Level 2		3,678,979		3,678,979		3,445,092		3,445,092
Time deposits	Level 2		1,058,153		1,058,354		1,080,529		1,068,233
Securities sold under agreements to repurchase	Level 2		56,935		56,935		66,047		66,047
Federal Home Loan Bank advances	Level 2		207,675		207,890		301,660		301,933
Accrued interest payable	Level 2		9,328		9,328		6,889		6,889
Interest rate swap derivatives	Level 2		22,558		22,558		3,577		3,577
Mortgage banking derivatives	Level 3		440		440		544		544

XML

Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Investment securities held-to-maturity, fair value	$ 183,741	$ 230,926
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized	400,000,000	400,000,000
Common Stock, shares issued	51,487,907	51,498,016
Common Stock, shares outstanding	31,176,627	30,769,063
Treasury stock, shares	20,189,082	20,582,459

XML

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Common stock [Member]	Additional paid-in capital [Member]	Retained earnings [Member]	Treasury stock [Member]	Accumulated other comprehensive (loss) income, net [Member]	Total
Balance in the beginning at Dec. 31, 2016	$ 514	$ 984,087	$ 55,454	$ (502,104)	$ (1,762)	$ 536,189
Increase (Decrease) in Stockholders' Equity
Net income			14,579			14,579
Stock-based compensation		3,648				3,648
Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock, net	1	(15,134)		6,842		(8,291)
Cash dividends declared			(9,238)			(9,238)
Warrant exercise		(1,933)		1,933
Other comprehensive income (loss)					(4,480)	(4,480)
Balance in the ending at Dec. 31, 2017	515	970,668	60,795	(493,329)	(6,242)	532,407
Increase (Decrease) in Stockholders' Equity
Net income			61,451			61,451
Stock-based compensation		4,420				4,420
Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock, net		(2,932)		9,736		6,804
Reissuance of treasury stock of 3,398,477 shares for acquisition of Peoples, Inc.		42,243		67,970		110,213
Cash dividends declared			(16,761)			(16,761)
Reclassification of certain tax effects from accumulated other comprehensive income			1,479		(1,479)
Cumulative effect adjustment			26			26
Other comprehensive income (loss)					(3,554)	(3,554)
Balance in the ending at Dec. 31, 2018	515	1,014,399	106,990	(415,623)	(11,275)	695,006
Increase (Decrease) in Stockholders' Equity
Net income			80,365			80,365
Stock-based compensation		4,869				4,869
Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock, net		(10,045)		6,661		(3,384)
Cash dividends declared			(23,529)			(23,529)
Cumulative effect adjustment			256			256
Other comprehensive income (loss)					13,337	13,337
Balance in the ending at Dec. 31, 2019	$ 515	$ 1,009,223	$ 164,082	$ (408,962)	$ 2,062	$ 766,920

XML

Other Real Estate Owned - Summary of Activity in OREO Balances (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Other Real Estate [Roll Forward]
Beginning balance	$ 7,300	$ 10,596	$ 10,491
Acquired through acquisition		1,253
Transfers from loan portfolio, at fair value	2,705	24,940	$ 1,800
Impairments	(1,082)	(230)
Sales	(4,919)	(25,858)
Ending balance	$ 10,596	$ 10,491

XML

Loans - Additional Information Related to Accruing TDR's (Details) - Accruing TDR [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Loans [Line Items]
Recorded investment	$ 6,885	$ 4,073
Average year-to- date recorded investment	7,138	4,250
Unpaid principal balance	7,112	4,556
Unfunded commitments to fund TDRs	12	12
Commercial [Member]
Loans [Line Items]
Recorded investment	5,615	2,730
Average year-to- date recorded investment	5,788	2,827
Unpaid principal balance	5,714	3,155
Commercial Real Estate [Member]
Loans [Line Items]
Recorded investment	141	229
Average year-to- date recorded investment	172	260
Unpaid principal balance	192	280
Residential Real Estate Segment [Member]
Loans [Line Items]
Recorded investment	1,129	1,114
Average year-to- date recorded investment	1,178	1,163
Unpaid principal balance	1,206	1,121
Unfunded commitments to fund TDRs	$ 12	$ 12

XML

Loans - Credit Exposure for Loans as Determined by Company's Internal Risk Rating System (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Loans [Line Items]
Total Loans	$ 4,415,406	$ 4,092,308
Commercial Loan [Member]
Loans [Line Items]
Total Loans	2,992,307	2,644,571
Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	770,417	830,815
Consumer [Member]
Loans [Line Items]
Total Loans	21,776	24,710
Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	630,906	592,212
Originated and acquired loans [Member]
Loans [Line Items]
Total Loans	4,361,312	4,021,429
Originated and acquired loans [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	2,977,007	2,624,173
Originated and acquired loans [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	764,411	820,820
Originated and acquired loans [Member] | Consumer [Member]
Loans [Line Items]
Total Loans	21,776	24,617
Originated and acquired loans [Member] | Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	598,118	551,819
ASC 310-30 [Member]
Loans [Line Items]
Total Loans	54,094	70,879
ASC 310-30 [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	15,300	20,398
ASC 310-30 [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	6,006	9,995
ASC 310-30 [Member] | Consumer [Member]
Loans [Line Items]
Total Loans		93
ASC 310-30 [Member] | Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	32,788	40,393
Total Loans [Member]
Loans [Line Items]
Total Loans	4,415,406	4,092,308
Total Loans [Member] | Originated and acquired loans [Member]
Loans [Line Items]
Total Loans	4,361,312	4,021,429
Total Loans [Member] | Originated and acquired loans [Member] | Commercial and Industrial [Member]
Loans [Line Items]
Total Loans	2,205,997	1,931,147
Total Loans [Member] | Originated and acquired loans [Member] | Food and Agriculture [Member]
Loans [Line Items]
Total Loans	248,585	222,156
Total Loans [Member] | Originated and acquired loans [Member] | Energy Loans [Member]
Loans [Line Items]
Total Loans	42,519	49,204
Total Loans [Member] | Originated and acquired loans [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	2,977,007	2,624,173
Total Loans [Member] | Originated and acquired loans [Member] | Total Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	598,118	551,819
Total Loans [Member] | Originated and acquired loans [Member] | Commercial Construction [Member]
Loans [Line Items]
Total Loans	77,733	94,854
Total Loans [Member] | Originated and acquired loans [Member] | Commercial Acquisition/Development [Member]
Loans [Line Items]
Total Loans	15,039	19,650
Total Loans [Member] | Originated and acquired loans [Member] | Multifamily [Member]
Loans [Line Items]
Total Loans	54,693	56,685
Total Loans [Member] | Originated and acquired loans [Member] | Owner-Occupied [Member]
Loans [Line Items]
Total Loans	479,906	421,666
Total Loans [Member] | Originated and acquired loans [Member] | Non Owner-Occupied [Member]
Loans [Line Items]
Total Loans	450,653	380,630
Total Loans [Member] | Originated and acquired loans [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	764,411	820,820
Total Loans [Member] | Originated and acquired loans [Member] | Senior lien
Loans [Line Items]
Total Loans	672,697	723,036
Total Loans [Member] | Originated and acquired loans [Member] | Junior lien
Loans [Line Items]
Total Loans	91,714	97,784
Total Loans [Member] | Originated and acquired loans [Member] | Consumer [Member]
Loans [Line Items]
Total Loans	21,776	24,617
Total Loans [Member] | ASC 310-30 [Member]
Loans [Line Items]
Total Loans	54,094	70,879
Total Loans [Member] | ASC 310-30 [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	15,300	20,398
Total Loans [Member] | ASC 310-30 [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	6,006	9,995
Total Loans [Member] | ASC 310-30 [Member] | Consumer [Member]
Loans [Line Items]
Total Loans		93
Total Loans [Member] | ASC 310-30 [Member] | Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	32,788	40,393
Total Loans [Member] | Pass [Member]
Loans [Line Items]
Total Loans	4,287,277	3,973,689
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member]
Loans [Line Items]
Total Loans	4,238,556	3,909,304
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Commercial and Industrial [Member]
Loans [Line Items]
Total Loans	2,162,045	1,890,710
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Food and Agriculture [Member]
Loans [Line Items]
Total Loans	246,282	220,004
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Energy Loans [Member]
Loans [Line Items]
Total Loans	41,585	48,462
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	2,880,705	2,552,580
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Total Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	581,222	524,721
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Commercial Construction [Member]
Loans [Line Items]
Total Loans	77,733	92,731
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Commercial Acquisition/Development [Member]
Loans [Line Items]
Total Loans	14,585	19,529
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Multifamily [Member]
Loans [Line Items]
Total Loans	54,210	56,685
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Owner-Occupied [Member]
Loans [Line Items]
Total Loans	430,793	393,404
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Non Owner-Occupied [Member]
Loans [Line Items]
Total Loans	434,694	355,776
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	754,904	807,428
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Senior lien
Loans [Line Items]
Total Loans	664,387	710,972
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Junior lien
Loans [Line Items]
Total Loans	90,517	96,456
Total Loans [Member] | Pass [Member] | Originated and acquired loans [Member] | Consumer [Member]
Loans [Line Items]
Total Loans	21,725	24,575
Total Loans [Member] | Pass [Member] | ASC 310-30 [Member]
Loans [Line Items]
Total Loans	48,721	64,385
Total Loans [Member] | Pass [Member] | ASC 310-30 [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	12,523	17,579
Total Loans [Member] | Pass [Member] | ASC 310-30 [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	4,089	7,484
Total Loans [Member] | Pass [Member] | ASC 310-30 [Member] | Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	32,109	39,322
Total Loans [Member] | Special Mention [Member]
Loans [Line Items]
Total Loans	85,734	63,975
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member]
Loans [Line Items]
Total Loans	84,644	62,284
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Commercial and Industrial [Member]
Loans [Line Items]
Total Loans	28,144	16,531
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Food and Agriculture [Member]
Loans [Line Items]
Total Loans	1,219	1,260
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	68,960	34,140
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Total Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	15,238	24,158
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Commercial Construction [Member]
Loans [Line Items]
Total Loans		915
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Owner-Occupied [Member]
Loans [Line Items]
Total Loans	39,597	16,349
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Non Owner-Occupied [Member]
Loans [Line Items]
Total Loans	15,238	23,243
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	445	3,986
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Senior lien
Loans [Line Items]
Total Loans	80	3,571
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Junior lien
Loans [Line Items]
Total Loans	365	415
Total Loans [Member] | Special Mention [Member] | Originated and acquired loans [Member] | Consumer [Member]
Loans [Line Items]
Total Loans	1
Total Loans [Member] | Special Mention [Member] | ASC 310-30 [Member]
Loans [Line Items]
Total Loans	1,090	1,691
Total Loans [Member] | Special Mention [Member] | ASC 310-30 [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	659	537
Total Loans [Member] | Special Mention [Member] | ASC 310-30 [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	360	908
Total Loans [Member] | Special Mention [Member] | ASC 310-30 [Member] | Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	71	246
Total Loans [Member] | Substandard [Member]
Loans [Line Items]
Total Loans	40,647	53,527
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member]
Loans [Line Items]
Total Loans	36,364	48,724
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Commercial and Industrial [Member]
Loans [Line Items]
Total Loans	14,287	22,919
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Food and Agriculture [Member]
Loans [Line Items]
Total Loans	1,052	847
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Energy Loans [Member]
Loans [Line Items]
Total Loans	739	742
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	25,594	36,336
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Total Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	1,658	2,940
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Commercial Construction [Member]
Loans [Line Items]
Total Loans		1,208
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Commercial Acquisition/Development [Member]
Loans [Line Items]
Total Loans	454	121
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Multifamily [Member]
Loans [Line Items]
Total Loans	483
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Owner-Occupied [Member]
Loans [Line Items]
Total Loans	9,516	11,828
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Non Owner-Occupied [Member]
Loans [Line Items]
Total Loans	721	1,611
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	9,062	9,406
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Senior lien
Loans [Line Items]
Total Loans	8,230	8,493
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Junior lien
Loans [Line Items]
Total Loans	832	913
Total Loans [Member] | Substandard [Member] | Originated and acquired loans [Member] | Consumer [Member]
Loans [Line Items]
Total Loans	50	42
Total Loans [Member] | Substandard [Member] | ASC 310-30 [Member]
Loans [Line Items]
Total Loans	4,283	4,803
Total Loans [Member] | Substandard [Member] | ASC 310-30 [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	2,118	2,282
Total Loans [Member] | Substandard [Member] | ASC 310-30 [Member] | Residential Real Estate Segment [Member]
Loans [Line Items]
Total Loans	1,557	1,603
Total Loans [Member] | Substandard [Member] | ASC 310-30 [Member] | Consumer [Member]
Loans [Line Items]
Total Loans		93
Total Loans [Member] | Substandard [Member] | ASC 310-30 [Member] | Commercial Real Estate [Member]
Loans [Line Items]
Total Loans	608	825
Total Loans [Member] | Doubtful [Member]
Loans [Line Items]
Total Loans	1,748	1,117
Total Loans [Member] | Doubtful [Member] | Originated and acquired loans [Member]
Loans [Line Items]
Total Loans	1,748	1,117
Total Loans [Member] | Doubtful [Member] | Originated and acquired loans [Member] | Commercial and Industrial [Member]
Loans [Line Items]
Total Loans	1,521	987
Total Loans [Member] | Doubtful [Member] | Originated and acquired loans [Member] | Food and Agriculture [Member]
Loans [Line Items]
Total Loans	32	45
Total Loans [Member] | Doubtful [Member] | Originated and acquired loans [Member] | Energy Loans [Member]
Loans [Line Items]
Total Loans	195
Total Loans [Member] | Doubtful [Member] | Originated and acquired loans [Member] | Commercial Loan [Member]
Loans [Line Items]
Total Loans	$ 1,748	1,117
Total Loans [Member] | Doubtful [Member] | Originated and acquired loans [Member] | Owner-Occupied [Member]
Loans [Line Items]
Total Loans		$ 85

XML

Leases - ASC Topic 842 - (Details) - USD ($) $ in Thousands		12 Months Ended
	Jan. 01, 2019	Dec. 31, 2019	Dec. 31, 2018
Leases
Lease right-of-use	$ 30,500	$ 29,200
Lease liabilities		$ 29,516
Operating Lease, Liability, Statement of Financial Position [Extensible List]		Other Liabilities
Cumulative effect of adjustment to retained earnings	$ 300	$ 256	$ 26
Weighted-average remaining lease term (in years)		5 years 1 month 6 days
Weighted-average discount rate (in percent)		3.36%
Rent expense		$ 5,700
Remaining undiscounted cash flows
2020		5,267
2021		5,046
2022		4,605
2023		4,308
2024		3,920
Thereafter		15,624
Total lease payments		38,770
Less: Imputed interest		(9,254)
Present value of operating lease liabilities		$ 29,516
Maximum
Leases
Term of lease (in years)		10 years
Minimum
Leases
Term of lease (in years)		1 year

XML

Investment Securities

12 Months Ended

Dec. 31, 2019

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Note 4 Investment Securities

The Company’s investment securities portfolio is comprised of available-for-sale and held-to-maturity investment securities. These investment securities totaled $0.8 billion at December 31, 2019 and included $0.6 billion of available-for-sale securities and $0.2 billion of held-to-maturity securities. At December 31, 2018, investment securities totaled $1.0 billion and included $0.8 billion of available-for-sale securities and $0.2 billion of held-to-maturity securities.

Available-for-sale

At December 31, 2019 and 2018, the Company held $638.2 million and $791.1 million of available-for-sale investment securities, respectively. Available-for-sale securities are summarized as follows as of the dates indicated:

	December 31, 2019
	Amortized		Gross		Gross
	cost		unrealized gains		unrealized losses		Fair value
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	93,770	$	1,497	$	(11)	$	95,256
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		543,275		3,818		(5,056)		542,037
Municipal securities		495		—		(8)		487
Other securities		469		—		—		469
Total investment securities available-for-sale	$	638,009	$	5,315	$	(5,075)	$	638,249

	December 31, 2018
	Amortized		Gross		Gross
	cost		unrealized gains		unrealized losses		Fair value
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	147,283	$	1,232	$	(1,873)	$	146,642
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		661,354		1,056		(19,029)		643,381
Municipal securities		619		—		(9)		610
Other securities		469		—		—		469
Total investment securities available-for-sale	$	809,725	$	2,288	$	(20,911)	$	791,102

At December 31, 2019 and 2018, mortgage-backed securities represented primarily all of the Company’s available-for-sale investment portfolio, and all mortgage-backed securities were backed by government sponsored enterprises (“GSE”) collateral such as FHLMC, FNMA and GNMA.

The tables below summarize the available-for-sale securities with unrealized losses as of the dates shown, along with the length of the impairment period:

	December 31, 2019
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	10,413	$	(7)	$	1,421	$	(4)	$	11,834	$	(11)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		41,983		(281)		254,380		(4,775)		296,363		(5,056)
Municipal securities		—		—		372		(8)		372		(8)
Total	$	52,396	$	(288)	$	256,173	$	(4,787)	$	308,569	$	(5,075)

	December 31, 2018
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	30,853	$	(392)	$	69,169	$	(1,481)	$	100,022	$	(1,873)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		127,767		(1,150)		454,662		(17,879)		582,429		(19,029)
Municipal securities		441		(9)		—		—		441		(9)
Total	$	159,061	$	(1,551)	$	523,831	$	(19,360)	$	682,892	$	(20,911)

The unrealized losses in the Company’s investment portfolio at December 31, 2019 were caused by changes in interest rates. The portfolio included 67 securities, having an aggregate fair value of $308.6 million, which were in an unrealized loss position at December 31, 2019, compared to 211 securities, with an aggregate fair value of $682.9 million at December 31, 2018.

Management evaluated all of the available for sale securities in an unrealized loss position at December 31, 2019 and December 31, 2018 and concluded no OTTI existed. During the year ended December 31, 2018, the Company recorded a

$0.2 million recovery included in other non-interest expense related to one security with an aggregate fair value of $0.3 million, which had previously incurred OTTI of $0.2 million during the year ended December 31, 2017. The Company has no intention to sell these securities before recovery of their amortized cost and believes it will not be required to sell the securities before the recovery of their amortized cost.

Certain securities are pledged as collateral for public deposits, securities sold under agreements to repurchase and to secure borrowing capacity at the FRB and FHLB, if needed. The fair value of available-for-sale investment securities pledged as collateral totaled $352.3 million and $318.1 million at December 31, 2019 and 2018, respectively. The Bank also had investment securities pledged as collateral for FHLB advances totaling $17.6 million and $16.0 million at December 31, 2019 and 2018, respectively.

Mortgage-backed securities may have actual maturities that differ from contractual maturities depending on the repayment characteristics and experience of the underlying financial instruments.

As of December 31, 2019, the entire municipal securities portfolio with an amortized cost and fair value of $0.5 million was due between one to five years. Other securities of $0.5 million as of December 31, 2019 have no stated contractual maturity date.

Held-to-maturity

At December 31, 2019 and 2018, the Company held $182.9 million and $235.4 million of held-to-maturity investment securities, respectively. Held-to-maturity investment securities are summarized as follows as of the dates indicated:

	December 31, 2019
			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	127,560	$	1,239	$	(29)	$	128,770
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		55,324		82		(435)		54,971
Total investment securities held-to-maturity	$	182,884	$	1,321	$	(464)	$	183,741

	December 31, 2018
			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	157,115	$	2	$	(2,705)	$	154,412
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		78,283		—		(1,769)		76,514
Total investment securities held-to-maturity	$	235,398	$	2	$	(4,474)	$	230,926

The tables below summarize the held-to-maturity securities with unrealized losses as of the dates shown, along with the length of the impairment period:

	December 31, 2019
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	10,478	$	(26)	$	338	$	(3)	$	10,816	$	(29)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		3,925		(9)		28,554		(426)		32,479		(435)
Total	$	14,403	$	(35)	$	28,892	$	(429)	$	43,295	$	(464)

	December 31, 2018
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	26,660	$	(381)	$	126,475	$	(2,324)	$	153,135	$	(2,705)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		35,235		(79)		41,279		(1,690)		76,514		(1,769)
Total	$	61,895	$	(460)	$	167,754	$	(4,014)	$	229,649	$	(4,474)

The held-to-maturity portfolio included 13 securities, having an aggregate fair value of $43.3 million, which were in an unrealized loss position at December 31, 2019, compared to 49 securities, with a fair value of $229.6 million, at December 31, 2018.

The unrealized losses in the Company’s investments at December 31, 2019 and December 31, 2018 were caused by changes in interest rates. Management evaluated all of the held-to-maturity securities in an unrealized loss position and concluded that no OTTI existed at December 31, 2019 or December 31, 2018. The Company has no intention to sell these securities before recovery of their amortized cost and believes it will not be required to sell the securities before the recovery of their amortized cost.

The carrying value of held-to-maturity investment securities pledged as collateral totaled $144.2 million and $133.1 million at December 31, 2019 and 2018, respectively.

Actual maturities of mortgage-backed securities may differ from scheduled maturities depending on the repayment characteristics and experience of the underlying financial instruments.

XML

Stock-based Compensation and Benefits - Summary of Restricted Stock Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Unvested Restricted shares, Beginning (in shares)	146,494	163,557
Unvested Restricted shares, Granted (in shares)	86,689	92,133
Unvested Restricted shares, Vested (in shares)	(85,266)	(94,775)
Unvested Restricted shares, Forfeited (in shares)	(25,719)	(14,421)
Unvested Restricted shares, Ending (in shares)	122,198	146,494
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Weighted average grant-date fair value, Beginning (in dollars per share)	$ 28.19	$ 22.60
Weighted average grant-date fair value, Granted (in dollars per share)	35.05	33.69
Weighted average grant-date fair value, Vested (in dollars per share)	25.21	23.71
Weighted average grant-date fair value, Forfeited (in dollars per share)	32.68	29.37
Weighted average grant-date fair value, Ending (in dollars per share)	$ 34.19	$ 28.19
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Unvested Restricted shares, Beginning (in shares)	192,049	125,082
Unvested Restricted shares, Granted (in shares)	60,781	77,125
Unvested Restricted shares, Net adjustment due to performance (in shares)	22,246
Unvested Restricted shares, Vested (in shares)	(95,308)
Unvested Restricted shares, Forfeited (in shares)	(20,894)	(10,158)
Unvested Restricted shares, Ending (in shares)	158,874	192,049
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Weighted average grant-date fair value, Beginning (in dollars per share)	$ 26.40	$ 23.90
Weighted average grant-date fair value, Granted (in dollars per share)	30.85	30.38
Weighted average grant-date fair value, Net adjustment due to performance (in dollars per share)	17.36
Weighted average grant-date fair value, Vested (in dollars per share)	18.02
Weighted average grant-date fair value, Forfeited (in dollars per share)	31.48	25.90
Weighted average grant-date fair value, Ending (in dollars per share)	$ 31.19	$ 26.40

XML

Earnings Per Share - Schedule of Computation of Basic and Diluted Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net income	$ 19,519	$ 21,642	$ 20,282	$ 18,922	$ 17,235	$ 18,240	$ 17,512	$ 8,464	$ (10,119)	$ 7,231	$ 9,209	$ 8,258	$ 80,365	$ 61,451	$ 14,579
Less: income allocated to participating securities													(94)	(70)	(56)
Income allocated to common shareholders													$ 80,271	$ 61,381	$ 14,523
Weighted average shares outstanding for basic earnings per common share													31,175,825	30,748,234	26,928,763
Weighted average shares outstanding for diluted earnings per common share													31,530,817	31,430,074	27,709,659
Basic earnings per share (in dollars per share)	$ 0.62	$ 0.69	$ 0.65	$ 0.61	$ 0.56	$ 0.59	$ 0.57	$ 0.28	$ (0.37)	$ 0.27	$ 0.34	$ 0.31	$ 2.57	$ 2.00	$ 0.54
Diluted earnings per share (in dollars per share)	$ 0.62	$ 0.69	$ 0.64	$ 0.60	$ 0.55	$ 0.58	$ 0.56	$ 0.27	$ (0.37)	$ 0.26	$ 0.33	$ 0.30	$ 2.55	$ 1.95	$ 0.53
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive effect of equity awards													354,992	681,840	772,392
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive effect of equity awards															8,504

XML

Leases

12 Months Ended

Dec. 31, 2019

Leases

Leases

Note 8 Leases

The Company adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019. As a result of the adoption, the Company recorded right-of-use (“ROU”) lease assets and lease liabilities of $30.5 million with a cumulative effect adjustment to beginning retained earnings of $0.3 million. As of December 31, 2019, ROU assets totaled $29.2 million included in other

assets and the related lease liabilities totaled $29.5 million included in other liabilities on the consolidated statements of financial condition.

The ROU assets represent the Company’s right to use, or control the use of, an underlying asset for the lease term and the lease liabilities represent the Company’s obligation to make lease payments arising from the lease terms. The updates did not significantly change lease accounting requirements applicable to lessors and did not significantly impact our financial statements in relation to contracts whereby we act as a lessor.

The Company has operating leases for banking centers, corporate offices and ATM locations, with remaining lease terms ranging from one year to ten years. The Company only included reasonably certain renewal options in the lease terms. The weighted-average remaining lease term for our operating leases was 5.1 years at December 31, 2019. As of December 31, 2019, the weighted-average discount rate was 3.36%, utilizing the Company’s incremental FHLB borrowing rate for borrowings of a similar term at the date of lease commencement.

Rent expense totaled $5.7 million for the year ended December 31, 2019, and was recorded within occupancy and equipment on the consolidated statements of operations. Lease payments do not include non-lease components such as real estate taxes, insurance and common area maintenance.

The tables below represent undiscounted future cash flows under the current and prior lease guidance. Current guidance per ASC Topic 842 requires that optional renewal periods be included when it is reasonably certain they will be exercised.

Below is a summary of undiscounted future minimum lease payments as of December 31, 2019 per ASC Topic 842:

Years ending December 31,	Amount
2020	$	5,267
2021		5,046
2022		4,605
2023		4,308
2024		3,920
Thereafter		15,624
Total lease payments		38,770
Less: Imputed interest		(9,254)
Present value of operating lease liabilities	$	29,516

Below is a summary of undiscounted future minimum lease payments as of December 31, 2018 per ASC Topic 840:

Years ending December 31,	Amount
2019	$	3,092
2020		2,981
2021		3,091
2022		3,052
2023		2,047
Thereafter		10,163
Total	$	24,426

XML

Quarterly Results of Operations

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results of Operations

Note 25 Quarterly Results of Operations (unaudited)

The following is a summary of quarterly results:

	December 31, 2019
	Fourth		Third		Second		First
	quarter		quarter		quarter		quarter		Total
Interest and dividend income	$	59,616	$	61,372	$	62,193	$	59,420	$	242,601
Interest expense		9,228		9,587		9,702		8,254		36,771
Net interest income before provision for loan losses		50,388		51,785		52,491		51,166		205,830
Provision for loan losses		1,180		5,690		3,239		1,534		11,643
Net interest income after provision for loan losses		49,208		46,095		49,252		49,632		194,187
Non-interest income		20,282		24,759		20,660		17,051		82,752
Non-interest expense		46,107		43,793		46,451		44,394		180,745
Income before income taxes		23,383		27,061		23,461		22,289		96,194
Income tax expense		3,864		5,419		3,179		3,367		15,829
Net income	$	19,519	$	21,642	$	20,282	$	18,922	$	80,365
Earnings per share-basic	$	0.62	$	0.69	$	0.65	$	0.61	$	2.57
Earnings per share-diluted		0.62		0.69		0.64		0.60		2.55

	December 31, 2018
	Fourth		Third		Second		First
	quarter		quarter		quarter		quarter		Total
Interest and dividend income	$	57,780	$	55,909	$	54,911	$	52,791	$	221,391
Interest expense		7,148		6,137		5,525		5,144		23,954
Net interest income before provision for loan losses		50,632		49,772		49,386		47,647		197,437
Provision for loan losses		2,476		807		1,873		41		5,197
Net interest income after provision for loan losses		48,156		48,965		47,513		47,606		192,240
Non-interest income		15,317		18,061		19,562		17,835		70,775
Non-interest expense		42,857		44,432		46,763		55,282		189,334
Income before income taxes		20,616		22,594		20,312		10,159		73,681
Income tax expense		3,381		4,354		2,800		1,695		12,230
Net income	$	17,235	$	18,240	$	17,512	$	8,464	$	61,451
Earnings per share-basic	$	0.56	$	0.59	$	0.57	$	0.28	$	2.00
Earnings per share-diluted		0.55		0.58		0.56		0.27		1.95

	December 31, 2017
	Fourth		Third		Second		First
	quarter		quarter		quarter		quarter		Total
Interest and dividend income	$	41,889	$	42,579	$	41,213	$	38,740	$	164,421
Interest expense		4,976		4,681		4,440		4,018		18,115
Net interest income before provision for loan losses		36,913		37,898		36,773		34,722		146,306
Provision for loan losses		3,272		3,880		4,025		1,795		12,972
Net interest income after provision for loan losses		33,641		34,018		32,748		32,927		133,334
Non-interest income		8,883		9,551		12,075		8,696		39,205
Non-interest expense		34,028		34,605		33,439		34,605		136,677
Income before income taxes		8,496		8,964		11,384		7,018		35,862
Income tax expense (benefit)		18,615		1,733		2,175		(1,240)		21,283
Net (loss) income	$	(10,119)	$	7,231	$	9,209	$	8,258	$	14,579
(Loss) earnings per share-basic	$	(0.37)	$	0.27	$	0.34	$	0.31	$	0.54
(Loss) earnings per share-diluted		(0.37)		0.26		0.33		0.30		0.53

XML

Quarterly Results of Operations - Summary of Quarterly Results (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Quarterly Financial Information Disclosure [Abstract]
Interest and dividend income	$ 59,616	$ 61,372	$ 62,193	$ 59,420	$ 57,780	$ 55,909	$ 54,911	$ 52,791	$ 41,889	$ 42,579	$ 41,213	$ 38,740	$ 242,601	$ 221,391	$ 164,421
Interest expense	9,228	9,587	9,702	8,254	7,148	6,137	5,525	5,144	4,976	4,681	4,440	4,018	36,771	23,954	18,115
Net interest income before provision for loan losses	50,388	51,785	52,491	51,166	50,632	49,772	49,386	47,647	36,913	37,898	36,773	34,722	205,830	197,437	146,306
Provision for loan losses	1,180	5,690	3,239	1,534	2,476	807	1,873	41	3,272	3,880	4,025	1,795	11,643	5,197	12,972
Net interest income after provision for loan losses	49,208	46,095	49,252	49,632	48,156	48,965	47,513	47,606	33,641	34,018	32,748	32,927	194,187	192,240	133,334
Non-interest income	20,282	24,759	20,660	17,051	15,317	18,061	19,562	17,835	8,883	9,551	12,075	8,696	82,752	70,775	39,205
Non-interest expense	46,107	43,793	46,451	44,394	42,857	44,432	46,763	55,282	34,028	34,605	33,439	34,605	180,745	189,334	136,677
Income before income taxes	23,383	27,061	23,461	22,289	20,616	22,594	20,312	10,159	8,496	8,964	11,384	7,018	96,194	73,681	35,862
Income tax expense (benefit)	3,864	5,419	3,179	3,367	3,381	4,354	2,800	1,695	18,615	1,733	2,175	(1,240)	15,829	12,230	21,283
Net income	$ 19,519	$ 21,642	$ 20,282	$ 18,922	$ 17,235	$ 18,240	$ 17,512	$ 8,464	$ (10,119)	$ 7,231	$ 9,209	$ 8,258	$ 80,365	$ 61,451	$ 14,579
Earnings per share-basic (in dollars per share)	$ 0.62	$ 0.69	$ 0.65	$ 0.61	$ 0.56	$ 0.59	$ 0.57	$ 0.28	$ (0.37)	$ 0.27	$ 0.34	$ 0.31	$ 2.57	$ 2.00	$ 0.54
Earnings per share-diluted (in dollars per share)	$ 0.62	$ 0.69	$ 0.64	$ 0.60	$ 0.55	$ 0.58	$ 0.56	$ 0.27	$ (0.37)	$ 0.26	$ 0.33	$ 0.30	$ 2.55	$ 1.95	$ 0.53

XML

Fair Value of Financial Instruments - Schedule of Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
ASSETS:
Cash and cash equivalents	$ 110,190	$ 109,556
Investment securities available-for-sale (at fair value)	638,249	791,102
Mortgage-backed securities-residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	182,884	235,398
Non-marketable securities	29,751	27,555
Loans receivable	4,376,342	4,056,616
Carrying amount of loan investments	4,415,406	4,092,308
Loans held-for-sale	117,444	48,120
LIABILITIES:
Time deposits	1,058,153	1,080,529
Securities sold under agreements to repurchase	56,935	66,047
Federal Home Loan Bank advances	207,675	301,660
Residential Mortgage Pass-Through Securities Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
ASSETS:
Investment securities available-for-sale (at fair value)	95,256	146,642
Mortgage-backed securities-residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	127,560	157,115
Other Residential MBS Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
ASSETS:
Investment securities available-for-sale (at fair value)	542,037	643,381
Mortgage-backed securities-residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	55,324	78,283
Other Securities [Member]
ASSETS:
Investment securities available-for-sale (at fair value)	469	469
Municipal [Member]
ASSETS:
Investment securities available-for-sale (at fair value)	487	610
Carrying Amount [Member] | Level 1 [Member]
ASSETS:
Cash and cash equivalents	110,190	109,556
Carrying Amount [Member] | Level 2 [Member]
ASSETS:
Non-marketable securities	29,751	27,555
Loans held-for-sale	117,444	48,120
Accrued interest receivable	19,157	17,852
LIABILITIES:
Deposit transaction accounts	3,678,979	3,445,092
Time deposits	1,058,153	1,080,529
Securities sold under agreements to repurchase	56,935	66,047
Federal Home Loan Bank advances	207,675	301,660
Accrued interest payable	9,328	6,889
Carrying Amount [Member] | Level 3 [Member]
ASSETS:
Carrying amount of loan investments	4,415,406	4,092,308
Carrying Amount [Member] | Residential Mortgage Pass-Through Securities Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member] | Level 2 [Member]
ASSETS:
Investment securities available-for-sale (at fair value)	95,256	146,642
Mortgage-backed securities-residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	127,560	157,115
Carrying Amount [Member] | Other Residential MBS Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member] | Level 2 [Member]
ASSETS:
Investment securities available-for-sale (at fair value)	542,037	643,381
Mortgage-backed securities-residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	55,324	78,283
Carrying Amount [Member] | Other Securities [Member] | Level 3 [Member]
ASSETS:
Investment securities available-for-sale (at fair value)	469	469
Carrying Amount [Member] | Municipal [Member] | Level 2 [Member]
ASSETS:
Municipal obligations	372	441
Carrying Amount [Member] | Municipal [Member] | Level 3 [Member]
ASSETS:
Municipal obligations	115	169
Estimated Fair Value [Member] | Level 1 [Member]
ASSETS:
Cash and cash equivalents	110,190	109,556
Estimated Fair Value [Member] | Level 2 [Member]
ASSETS:
Non-marketable securities	29,751	27,555
Loans held-for-sale	117,444	48,120
Accrued interest receivable	19,157	17,852
LIABILITIES:
Deposit transaction accounts	3,678,979	3,445,092
Time deposits	1,058,354	1,068,233
Securities sold under agreements to repurchase	56,935	66,047
Federal Home Loan Bank advances	207,890	301,933
Accrued interest payable	9,328	6,889
Estimated Fair Value [Member] | Level 3 [Member]
ASSETS:
Carrying amount of loan investments	4,481,209	4,082,146
Estimated Fair Value [Member] | Residential Mortgage Pass-Through Securities Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member] | Level 2 [Member]
ASSETS:
Investment securities available-for-sale (at fair value)	95,256	146,642
Mortgage-backed securities-residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	128,770	154,412
Estimated Fair Value [Member] | Other Residential MBS Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member] | Level 2 [Member]
ASSETS:
Investment securities available-for-sale (at fair value)	542,037	643,381
Mortgage-backed securities-residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	54,971	76,514
Estimated Fair Value [Member] | Other Securities [Member] | Level 3 [Member]
ASSETS:
Investment securities available-for-sale (at fair value)	469	469
Estimated Fair Value [Member] | Municipal [Member] | Level 2 [Member]
ASSETS:
Municipal obligations	372	441
Estimated Fair Value [Member] | Municipal [Member] | Level 3 [Member]
ASSETS:
Municipal obligations	115	169
Interest rate swap derivatives [Member] | Carrying Amount [Member] | Level 2 [Member]
ASSETS:
Derivative asset	10,175	20,627
LIABILITIES:
Derivative liability	22,558	3,577
Interest rate swap derivatives [Member] | Estimated Fair Value [Member] | Level 2 [Member]
ASSETS:
Derivative asset	10,175	20,627
LIABILITIES:
Derivative liability	22,558	3,577
Mortgage banking derivatives | Carrying Amount [Member] | Level 3 [Member]
ASSETS:
Derivative asset	1,515	871
LIABILITIES:
Derivative liability	440	544
Mortgage banking derivatives | Estimated Fair Value [Member] | Level 3 [Member]
ASSETS:
Derivative asset	1,515	871
LIABILITIES:
Derivative liability	$ 440	$ 544

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies

Commitments and Contingencies

Note 21 Commitments and Contingencies

In the normal course of business, the Company enters into various off-balance sheet commitments to help meet the financing needs of clients. These financial instruments include commitments to extend credit, commercial and consumer lines of credit and standby letters of credit. The same credit policies are applied to these commitments as the loans on the consolidated statements of financial condition; however, these commitments involve varying degrees of credit risk in excess of the amount recognized in the consolidated statements of financial condition. At December 31, 2019 and 2018, the Company had loan commitments totaling $850.3 million and $773.5 million, respectively, and standby letters of credit that totaled $11.9 million and $10.6 million, respectively. The total amounts of unused commitments do not necessarily represent future credit exposure or cash requirements, as commitments often expire without being drawn upon. However, the contractual amount of these commitments, offset by any additional collateral pledged, represents the Company’s potential credit loss exposure.

Total unfunded commitments at December 31, 2019 and 2018 were as follows:

	December 31, 2019		December 31, 2018
Commitments to fund loans	$	249,914	$	183,946
Unfunded commitments under lines of credit		600,407		589,573
Commercial and standby letters of credit		11,929		10,558
Total unfunded commitments	$	862,250	$	784,077

Commitments to fund loans—Commitments to fund loans are legally binding agreements to lend to clients in accordance with predetermined contractual provisions providing there have been no violations of any conditions specified in the contract. These commitments are generally at variable interest rates and are for specific periods or contain termination clauses and may require the payment of a fee. The total amounts of unused commitments are not necessarily representative of future credit exposure or cash requirements, as commitments often expire without being drawn upon.

Unfunded commitments under lines of credit—In the ordinary course of business, the Company extends revolving credit to its clients. These arrangements may require the payment of a fee.

Commercial and standby letters of credit—As a provider of financial services, the Company routinely issues commercial and standby letters of credit, which may be financial standby letters of credit or performance standby letters of credit. These are various forms of “back-up” commitments to guarantee the performance of a client to a third party. While these arrangements represent a potential cash outlay for the Company, the majority of these letters of credit will expire without being drawn upon. Letters of credit are subject to the same underwriting and credit approval process as traditional loans, and as such, many of them have various forms of collateral securing the commitment, which may include real estate, personal property, receivables or marketable securities.

Contingencies

Mortgage loans sold to investors may be subject to repurchase or indemnification in the event of specific default by the borrower or subsequent discovery that underwriting standards were not met. The Company established a reserve liability for expected losses related to these representations and warranties based upon management’s evaluation of actual and historic loss history, delinquency trends in the portfolio and economic conditions. The Company recorded a repurchase reserve of $2.6 million and $3.4 million at December 31, 2019 and 2018, respectively, which is included in other liabilities on the consolidated statements of financial condition.

In the ordinary course of business, the Company and the Bank may be subject to litigation. Based upon the available information and advice from the Company’s legal counsel, management does not believe that any potential, threatened or pending litigation to which it is a party will have a material adverse effect on the Company’s liquidity, financial condition or results of operations.

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Investment Securities (Tables)

12 Months Ended

Dec. 31, 2019

Investments, Debt and Equity Securities [Abstract]

Available-for-sale Securities

	December 31, 2019
	Amortized		Gross		Gross
	cost		unrealized gains		unrealized losses		Fair value
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	93,770	$	1,497	$	(11)	$	95,256
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		543,275		3,818		(5,056)		542,037
Municipal securities		495		—		(8)		487
Other securities		469		—		—		469
Total investment securities available-for-sale	$	638,009	$	5,315	$	(5,075)	$	638,249

	December 31, 2018
	Amortized		Gross		Gross
	cost		unrealized gains		unrealized losses		Fair value
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	147,283	$	1,232	$	(1,873)	$	146,642
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		661,354		1,056		(19,029)		643,381
Municipal securities		619		—		(9)		610
Other securities		469		—		—		469
Total investment securities available-for-sale	$	809,725	$	2,288	$	(20,911)	$	791,102

Summary of unrealized losses for available-for-sale securities

The tables below summarize the available-for-sale securities with unrealized losses as of the dates shown, along with the length of the impairment period:

	December 31, 2019
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	10,413	$	(7)	$	1,421	$	(4)	$	11,834	$	(11)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		41,983		(281)		254,380		(4,775)		296,363		(5,056)
Municipal securities		—		—		372		(8)		372		(8)
Total	$	52,396	$	(288)	$	256,173	$	(4,787)	$	308,569	$	(5,075)

	December 31, 2018
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	30,853	$	(392)	$	69,169	$	(1,481)	$	100,022	$	(1,873)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		127,767		(1,150)		454,662		(17,879)		582,429		(19,029)
Municipal securities		441		(9)		—		—		441		(9)
Total	$	159,061	$	(1,551)	$	523,831	$	(19,360)	$	682,892	$	(20,911)

Held-to-maturity Securities

	December 31, 2019
			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	127,560	$	1,239	$	(29)	$	128,770
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		55,324		82		(435)		54,971
Total investment securities held-to-maturity	$	182,884	$	1,321	$	(464)	$	183,741

	December 31, 2018
			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	157,115	$	2	$	(2,705)	$	154,412
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		78,283		—		(1,769)		76,514
Total investment securities held-to-maturity	$	235,398	$	2	$	(4,474)	$	230,926

Summary of unrealized losses for held-to-maturity securities

The tables below summarize the held-to-maturity securities with unrealized losses as of the dates shown, along with the length of the impairment period:

	December 31, 2019
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	10,478	$	(26)	$	338	$	(3)	$	10,816	$	(29)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		3,925		(9)		28,554		(426)		32,479		(435)
Total	$	14,403	$	(35)	$	28,892	$	(429)	$	43,295	$	(464)

	December 31, 2018
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities:
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	26,660	$	(381)	$	126,475	$	(2,324)	$	153,135	$	(2,705)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		35,235		(79)		41,279		(1,690)		76,514		(1,769)
Total	$	61,895	$	(460)	$	167,754	$	(4,014)	$	229,649	$	(4,474)

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Fair Value Measurements - Table of Changes in Level 3 Financial Instruments (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	$ 327
Gain included in earnings, net	1,327
Settlements	(579)
Ending Balance	$ 1,075

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Derivatives - Derivatives on the Income Statement (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Designated as Hedging Instrument [Member]
Derivative [Line Items]
Amount of (loss) recognized in income on hedged items	$ (9,603)	$ (13,972)
Not Designated as Hedging Instrument, Economic Hedge [Member]
Derivative [Line Items]
Amount of gain (loss) recognized in income on derivatives	1,460	50
Fair Value Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Amount of gain (loss) recognized in income on derivatives	10,397	13,513
Interest rate products [Member] | Designated as Hedging Instrument [Member] | Interest income [Member]
Derivative [Line Items]
Amount of (loss) recognized in income on hedged items	(9,603)	(13,972)
Interest rate products [Member] | Not Designated as Hedging Instrument, Economic Hedge [Member] | Other Non-Interest expense [Member]
Derivative [Line Items]
Amount of gain (loss) recognized in income on derivatives	133	55
Interest rate products [Member] | Fair Value Hedging [Member] | Designated as Hedging Instrument [Member] | Interest income [Member]
Derivative [Line Items]
Amount of gain (loss) recognized in income on derivatives	10,397	13,513
Forward Contracts [Member] | Not Designated as Hedging Instrument, Economic Hedge [Member] | Mortgage banking income [Member]
Derivative [Line Items]
Amount of gain (loss) recognized in income on derivatives	189	1,324
Interest Rate Lock Commitments [Member] | Not Designated as Hedging Instrument, Economic Hedge [Member] | Mortgage banking income [Member]
Derivative [Line Items]
Amount of gain (loss) recognized in income on derivatives	$ 1,138	$ (1,329)

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Derivatives

12 Months Ended

Dec. 31, 2019

Derivatives

Derivatives

Note 20 Derivatives

Risk management objective of using derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company has established policies that neither carrying value nor fair value at risk should exceed established guidelines. The Company has designed strategies to confine these risks within the established limits and identify appropriate trade-offs in the financial structure of its balance sheet. These strategies include the use of derivative financial instruments to help achieve the desired balance sheet repricing structure while meeting the desired objectives of its clients. Currently the Company employs certain interest rate swaps that are designated as fair value hedges as well as economic hedges. The Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions.

Fair values of derivative instruments on the balance sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated statements of financial condition as of December 31, 2019 and 2018.

Information about the valuation methods used to measure fair value is provided in note 22.

		Asset derivatives fair value					Liability derivatives fair value
	Balance Sheet	December 31,		December 31,		Balance Sheet	December 31,		December 31,
	location	2019		2018		Location	2019		2018
Derivatives designated as hedging instruments:
Interest rate products	Other assets	$	1,171	$	17,436	Other liabilities	$	13,537	$	228
Total derivatives designated as hedging instruments		$	1,171	$	17,436		$	13,537	$	228
Derivatives not designated as hedging instruments:
Interest rate products	Other assets	$	9,004	$	3,191	Other liabilities	$	9,021	$	3,349
Interest rate lock commitments	Other assets		1,499		871	Other liabilities		141		72
Forward contracts	Other assets		16		—	Other liabilities		299		472
Total derivatives not designated as hedging instruments		$	10,519	$	4,062		$	9,461	$	3,893

Fair value hedges

Interest rate swaps designated as fair value hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount. As of December 31, 2019, the Company had interest rate swaps with a notional amount of $403.7 million that were designated as fair value hedges of interest rate risk. These interest rate swaps were associated with $405.9 million of the Company’s fixed-rate loans, excluding a gain of $13.9 million from the fair value hedge adjustment in the carrying amount. The Company’s fixed rate loans are included in loans receivable on the statements of financial condition.

As of December 31, 2018, the Company had interest rate swaps with a notional amount of $473.4 million that were designated as fair value hedges. These interest rate swaps were associated with $522.7 million of the Company’s fixed-rate loans as of December 31, 2018, excluding a loss of $13.2 million from the fair value hedge adjustment in the carrying amount as of December 31, 2018.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in earnings. The Company includes the gain or loss on the hedged items in the same line item as the offsetting loss or gain on the related derivatives.

Non-designated hedges

Derivatives not designated as hedges are not speculative and consist of interest rate swaps with commercial banking clients that facilitate their respective risk management strategies. Interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the client swaps and the offsetting swaps are recognized directly in earnings. As of December 31, 2019, the Company had matched interest rate swap transactions with an aggregate notional amount of $478.9 million related to this program. As of December 31, 2018, the Company had matched interest rate swap transactions with an aggregate notional amount of $206.8 million related to this program.

As part of its mortgage banking activities, the Company enters into interest rate lock commitments, which are commitments to originate loans where the interest rate on the loan is determined prior to funding and the clients have locked into that interest rate. The Company then locks in the loan and interest rate with an investor and commits to deliver the loan if settlement occurs ("best efforts") or commits to deliver the locked loan in a binding ("mandatory") delivery program with an investor. Fair value changes of certain loans under interest rate lock commitments are hedged with forward sales contracts of MBS. Forward sales contracts of MBS are recorded at fair value with changes in fair value recorded in non-interest income. Interest rate lock commitments and commitments to deliver loans to investors are considered derivatives. The market value of interest rate lock commitments and best efforts contracts are not readily ascertainable with precision because they are not actively traded in stand-alone markets. The Company determines the fair value of interest rate lock commitments and delivery contracts by measuring the fair value of the underlying assets. The fair value of the underlying assets is impacted by current interest rates, remaining origination fees, costs of production to be incurred, and the probability that the interest rate lock commitments will close or will be funded.

Certain additional risks arise from these forward delivery contracts in that the counterparties to the contracts may not be able to meet the terms of the contracts. The Company does not expect any counterparty to any MBS contract to fail to meet its obligation. Additional risks inherent in mandatory delivery programs include the risk that, if the Company fails to deliver the loans subject to interest rate risk lock commitments, it will still be obligated to “pair off” MBS to the counterparty. Should this be required, the Company could incur significant costs in acquiring replacement loans and such costs could have an adverse effect on the consolidated financial statements.

The fair value of the mortgage banking derivative is recorded as a freestanding asset or liability with the change in value being recognized in current earnings during the period of change.

The Company had interest rate lock commitments with a notional value of $99.8 million and forward contracts with a notional value of $181.5 million at December 31, 2019. The Company had interest rate lock commitments with a notional value of $50.1 million and forward contracts with a notional value of $77.6 million at December 31, 2018.

Effect of derivative instruments on the consolidated statements of operations

The tables below present the effect of the Company’s derivative financial instruments on the consolidated statements of operations for 2019 and 2018:

	Location of gain (loss)	Amount of gain (loss) recognized in income on derivatives
Derivatives in fair value	recognized in income on	For the years ended December 31,
hedging relationships	derivatives	2019		2018
Interest rate products	Interest and fees on loans	$	10,397	$	13,513
Total		$	10,397	$	13,513

	Location of gain (loss)	Amount of gain (loss) recognized in income on hedged items
	recognized in income on	For the years ended December 31,
Hedged items	hedged items	2019		2018
Interest rate products	Interest and fees on loans	$	(9,603)	$	(13,972)
Total		$	(9,603)	$	(13,972)

	Location of gain (loss)	Amount of gain (loss) recognized in income on derivatives
Derivatives not designated	recognized in income on	For the years ended December 31,
as hedging instruments	derivatives	2019		2018
Interest rate products	Other non-interest expense	$	133	$	55
Interest rate lock commitments	Mortgage banking income		1,138		(1,329)
Forward contracts	Mortgage banking income		189		1,324
Total		$	1,460	$	50

Credit-risk-related contingent features

The Company has agreements with its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness for reasons other than an error or omission of an administrative or operational nature, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

The Company also has agreements with certain of its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well/adequately capitalized institution, then the counterparty has the right to terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

As of December 31, 2019, the termination value of derivatives in a net liability position related to these agreements was $22.6 million, which includes accrued interest but excludes any adjustment for nonperformance risk. The Company has minimum collateral posting thresholds with certain of its derivative counterparties and, as of December 31, 2019, the Company had posted $26.2 million in eligible collateral. If the Company had breached any of these provisions at December 31, 2019, it could have been required to settle its obligations under the agreements at the termination value.

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Deposits

12 Months Ended

Dec. 31, 2019

Deposits [Abstract]

Deposits

Note 12 Deposits

Total deposits were $4.7 billion and $4.5 billion at December 31, 2019 and 2018, respectively. Time deposits were $1.1 billion and $1.1 billion at December 31, 2019 and 2018, respectively. The following table summarizes the Company’s time deposits by remaining contractual maturity:

Years ending December 31,	Amount
2020	$	726,903
2021		211,787
2022		94,464
2023		19,696
2024		4,263
Thereafter		1,040
Total time deposits	$	1,058,153

The Company incurred interest expense on deposits as follows during the years indicated:

	For the years ended December 31,
	2019		2018		2017
Interest bearing demand deposits	$	1,514	$	887	$	445
Money market accounts		9,046		5,622		4,077
Savings accounts		2,717		2,249		1,481
Time deposits		16,526		12,283		10,169
Total	$	29,803	$	21,041	$	16,172

The Federal Reserve System requires cash balances to be maintained at the FRB based on certain deposit levels. There was no minimum reserve requirement for the Bank at December 31, 2019.

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Stock-based Compensation and Benefits

12 Months Ended

Dec. 31, 2019

Stock-based Compensation and Benefits

Stock-based Compensation and Benefits

Note 16 Stock-based Compensation and Benefits

The Company provides stock-based compensation in accordance with shareholder-approved plans. In 2014, shareholders approved the 2014 Omnibus Incentive Plan (the "2014 Plan"). The 2014 Plan replaces the NBH Holdings Corp. 2009 Equity Incentive Plan (the "Prior Plan"), pursuant to which the Company granted equity awards prior to the approval of the 2014 Plan. Pursuant to the 2014 Plan, the Compensation Committee of the Board of Directors has the authority to grant, from time to time, awards of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, other stock-based awards, or any combination thereof to eligible persons.

As of December 31, 2019, the aggregate number of Class A common stock available for issuance under the 2014 Plan is 4,996,156 shares. Any shares that are subject to stock options or stock appreciation rights under the 2014 Plan will be counted against the amount available for issuance as one share for every one share granted, and any shares that are subject to awards under the 2014 Plan other than stock options or stock appreciation rights will be counted against the amount available for issuance as 3.25 shares for every one share granted. The 2014 Plan provides for recycling of shares from both the Prior Plan and the 2014 Plan, the terms of which are further described in the Company's Proxy Statement for its 2014 Annual Meeting of Shareholders. Upon an option exercise, it is the Company’s policy to issue shares from treasury stock.

To date, the Company has issued stock options, restricted stock and performance stock units under the plans. The Compensation Committee sets the option exercise price at the time of grant, but in no case is the exercise price less than the fair market value of a share of stock at the date of grant.

Stock options

The Company issues stock options, which are primarily time-vesting with 1/3 vesting on each of the first, second and third anniversary of the date of grant or date of hire. The expense associated with the awarded stock options was measured at fair value using a Black-Scholes option-pricing model. The outstanding option awards vest or have vested over 1-4 years of continuous service and have 10-year contractual terms.

Below are the weighted average assumptions used in the Black-Scholes option pricing model to determine fair value of the Company’s stock options granted in 2019, 2018 and 2017:

	2019		2018		2017
Weighted average fair value	$	6.31	$	7.43	$	7.84
Weighted average risk-free interest rate (1)		2.35%		2.69%		2.14%
Expected volatility (2)		20.56%		20.75%		21.61%
Expected term (years) (3)		6.05		6.10		6.09
Dividend yield (4)		2.00%		1.13%		0.83%

(1)	The risk-free rate for the expected term of the options was based on the U.S. Treasury yield curve at the date of grant and based on the expected term.
(2)	Expected volatility was calculated using historical volatility of the Company’s stock price for a period commensurate with the expected term of the options. For periods prior to the third quarter of 2018, expected volatility was calculated using a historical volatility of the Company’s stock price coupled with those of a peer group of eight comparable publicly traded companies for a period commensurate with the expected term of the options.
(3)	The expected term was estimated to be the average of the contractual vesting term and time to expiration.
(4)	The dividend yield was calculated in accordance with the Company’s dividend policy at the time of grant. For historical dividend rates, refer to the table under Item 5 on page 31.

The Company issued stock options in accordance with the 2014 Plan during 2019. The following table summarizes stock option activity for 2019:

				Weighted
				average
		Weighted		remaining
		average		contractual	Aggregate
		exercise		term in	intrinsic
	Options	price		years	value
Outstanding at December 31, 2018	1,264,876	$	22.33	3.92	$	11,387
Granted	149,290		34.21
Exercised	(705,474)		20.12
Forfeited	(51,578)		31.47
Outstanding at December 31, 2019	657,114	$	26.69	6.41	$	5,626
Options exercisable at December 31, 2019	405,225		22.30	4.98		5,240
Options vested and expected to vest	631,916		26.40	6.31		5,590

Stock option expense is a component of salaries and benefits in the consolidated statements of operations and totaled $0.7 million, $0.8 million and $0.7 million for 2019, 2018 and 2017, respectively. At December 31, 2019, there was $0.8 million of total unrecognized compensation cost related to non-vested stock options granted under the plans. The cost is expected to be recognized over a weighted average period of 2.0 years.

The following table summarizes the Company’s outstanding stock options:

				Options outstanding				Options exercisable
					Weighted average
				Number	remaining contractual	Weighted average		Number	Weighted average
Range of exercise price				outstanding	life (years)	exercise price		exercisable	exercise price
$	18.00	-	18.99	73,868	3.83	$	18.60	73,868	$	18.60
	19.00	-	19.99	168,189	5.77		19.38	168,189		19.38
	20.00	-	20.99	78,041	1.48		20.05	78,041		20.05
	21.00	and above		337,016	8.43		33.64	85,127		33.32

Restricted stock awards

The Company issues primarily time-based restricted stock awards that vest over a range of a 1 – 3 year period. Restricted stock with time-based vesting was valued at the fair value of the shares on the date of grant as they are assumed to be held beyond the vesting period.

Performance stock units

During the years ended December 2019, 2018 and 2017, the Company granted 60,781, 77,125, and 49,758 performance stock units in accordance with the 2014 Plan, respectively. The Company grants performance stock units which represent initial target awards and do not reflect potential increases or decreases resulting from the final performance results, which are to be determined at the end of the three-year performance period (vesting date). The actual number of shares to be awarded at the end of the performance period will range from 0% - 150% of the initial target awards. 60% of the award is based on the Company’s cumulative earnings per share (EPS target) during the performance period, and 40% of the award is based on the Company’s cumulative total shareholder return (TSR target), or TSR, during the performance period. On the vesting date, the Company’s TSR will be compared to the respective TSRs of the companies comprising the KBW Regional Index at the grant date to determine the shares awarded. The fair value of the EPS target portion of the award was determined based on the closing stock price of the Company’s common stock on the grant date. The fair value of the TSR target portion of the award was determined using a Monte Carlo Simulation at the grant date. The weighted-average grant date fair value per unit for awards granted during 2019 of the EPS target portion and the TSR target portion was $34.08 and $27.01, respectively. During 2019, the Company awarded an additional 22,246 units due to final performance results related to performance stock units granted in 2016.

The following table summarizes restricted stock and performance stock unit activity during 2019 and 2018:

		Weighted				Weighted
	Restricted	average grant-		Performance		average grant-
	stock shares	date fair value		stock units		date fair value
Unvested at December 31, 2017	163,557	$	22.60	125,082	$	23.90
Granted	92,133		33.69	77,125		30.38
Vested	(94,775)		23.71	—		—
Forfeited	(14,421)		29.37	(10,158)		25.90
Unvested at December 31, 2018	146,494		28.19	192,049		26.40
Granted	86,689		35.05	60,781		30.85
Adjustment due to performance	—		—	22,246		17.36
Vested	(85,266)		25.21	(95,308)		18.02
Forfeited	(25,719)		32.68	(20,894)		31.48
Unvested at December 31, 2019	122,198	$	34.19	158,874	$	31.19

As of December 31, 2019, the total unrecognized compensation cost related to the non-vested restricted stock awards and performance stock units totaled $2.0 million and $2.7 million, respectively, and is expected to be recognized over a weighted average period of approximately 1.9 years and 1.7 years, respectively. Expense related to non-vested restricted stock awards

totaled $2.2 million, $2.1 million and $2.2 million during 2019, 2018 and 2017, respectively. Expense related to non-vested performance stock units totaled $2.0 million, $1.5 million and $0.8 million during 2019, 2018 and 2017, respectively. Expense related to non-vested restricted stock awards and units is a component of salaries and benefits in the Company’s consolidated statements of operations.

Employee stock purchase plan

The 2014 Employee Stock Purchase Plan (“ESPP”) is intended to be a qualified plan within the meaning of Section 423 of the Internal Revenue Code of 1986 and allows eligible employees to purchase shares of common stock through payroll deductions up to a limit of $25,000 per calendar year and 2,000 shares per offering period. The price an employee pays for shares is 90.0% of the fair market value of Company common stock on the last day of the offering period. The offering periods are the six-month periods commencing on March 1 and September 1 of each year and ending on August 31 and February 28 (or February 29 in the case of a leap year) of each year. There are no vesting or other restrictions on the stock purchased by employees under the ESPP. Employees purchased 16,556 shares and 12,515 shares during 2019 and 2018, respectively. The total number of shares of common stock reserved for issuance under the ESPP totaled 400,000 shares, of which 326,088 were available for issuance at December 31, 2019.

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Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2019

Summary of gross carrying amount of intangible assets and the associated accumulated amortization

The gross carrying amount of the core deposit intangibles and the associated accumulated amortization at December 31, 2019 and December 31, 2018, are presented as follows:

December 31, 2019

December 31, 2018

Gross

Net

Gross

Net

carrying

Accumulated

carrying

carrying

Accumulated

carrying

amount

amortization

amount

amount

amortization

amount

Core deposit intangible

$

48,834

$

(40,103)

$

8,731

$

48,834

$

(38,920)

$

9,914

Summary of changes in the mortgage servicing rights

Below are the changes in the MSRs for the years presented:

	For the years ended December 31,
	2019		2018
Beginning balance	$	3,556	$	—
Acquired through acquisition		—		4,301
Originations		27		30
Impairment		(129)		(21)
Amortization		(824)		(754)
Ending balance	$	2,630	$	3,556
Fair value of mortgage servicing rights	$	2,630	$	3,884

Core Deposits

Summary of estimated future amortization expense for the next five fiscal years

The following table shows the estimated future amortization expense for the core deposit intangibles as of December 31, 2019:

Years ending December 31,		Amount
2020	$	1,183
2021		1,183
2022		1,127
2023		1,048
2024		1,048

Mortgage servicing rights

Summary of estimated future amortization expense for the next five fiscal years

The following table shows the estimated future amortization expense for the MSRs as of December 31, 2019:

Years ending December 31,		Amount
2020	$	512
2021		412
2022		332
2023		267
2024		215

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Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Summary of Company's Allowance for Loan Losses ("ALL") and Recorded Investment in Loans

The tables below detail the Company’s allowance for loan losses and recorded investment in loans as of and for the years ended December 31, 2019 and 2018:

	Year ended December 31, 2019
			Non-owner
			occupied
			commercial		Residential
	Commercial		real estate		real estate		Consumer		Total
Beginning balance	$	27,137	$	4,406	$	3,800	$	349	$	35,692
Originated and acquired beginning balance		26,946		4,406		3,760		349		35,461
Charge-offs		(7,422)		(116)		(124)		(937)		(8,599)
Recoveries		102		12		34		180		328
Provision		10,636		548		(202)		712		11,694
Originated and acquired ending balance		30,262		4,850		3,468		304		38,884
ASC 310-30 beginning balance		191		—		40		—		231
Charge-offs		—		—		—		—		—
Recoveries		—		—		—		—		—
Recoupment		(11)		—		(40)		—		(51)
ASC 310-30 ending balance		180		—		—		—		180
Ending balance	$	30,442	$	4,850	$	3,468	$	304	$	39,064
Ending allowance balance attributable to:
Originated and acquired loans individually evaluated for impairment	$	1,763	$	1	$	31	$	—	$	1,795
Originated and acquired loans collectively evaluated for impairment		28,499		4,849		3,437		304		37,089
ASC 310-30 loans		180		—		—		—		180
Total ending allowance balance	$	30,442	$	4,850	$	3,468	$	304	$	39,064
Loans:
Originated and acquired loans individually evaluated for impairment	$	21,844	$	612	$	10,257	$	50	$	32,763
Originated and acquired loans collectively evaluated for impairment		2,955,163		597,506		754,154		21,726		4,328,549
ASC 310-30 loans		15,300		32,788		6,006		—		54,094
Total loans	$	2,992,307	$	630,906	$	770,417	$	21,776	$	4,415,406

	Year ended December 31, 2018
			Non-owner
			occupied
			commercial		Residential
	Commercial		real estate		real estate		Consumer		Total
Beginning balance	$	21,385	$	5,609	$	3,965	$	305	$	31,264
Originated and acquired beginning balance		21,340		5,583		3,965		305		31,193
Charge-offs		(833)		(11)		(118)		(1,134)		(2,096)
Recoveries		1,171		—		14		204		1,389
Provision		5,268		(1,166)		(101)		974		4,975
Originated and acquired ending balance		26,946		4,406		3,760		349		35,461
ASC 310-30 beginning balance		45		26		—		—		71
Charge-offs		(62)		—		—		—		(62)
Recoveries		—		—		—		—		—
Provision (recoupment)		208		(26)		40		—		222
ASC 310-30 ending balance		191		—		40		—		231
Ending balance	$	27,137	$	4,406	$	3,800	$	349	$	35,692
Ending allowance balance attributable to:
Originated and acquired loans individually evaluated for impairment	$	1,132	$	2	$	35	$	—	$	1,169
Originated and acquired loans collectively evaluated for impairment		25,814		4,404		3,725		349		34,292
ASC 310-30 loans		191		—		40		—		231
Total ending allowance balance	$	27,137	$	4,406	$	3,800	$	349	$	35,692
Loans:
Originated and acquired loans individually evaluated for impairment	$	18,282	$	2,129	$	5,169	$	5,499	$	31,079
Originated and acquired loans collectively evaluated for impairment		2,605,891		549,690		815,651		19,118		3,990,350
ASC 310-30 loans		20,398		40,393		9,995		93		70,879
Total loans	$	2,644,571	$	592,212	$	830,815	$	24,710	$	4,092,308

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Revenue from Contracts with Clients (Tables)

12 Months Ended

Dec. 31, 2019

Revenue from Contracts with Clients

Summary of non-interest income segregated by revenue streams

	For the years ended December 31,
	2019		2018		2017
Non-interest income
In-scope of Topic 606:
Service charges and other fees	$	19,720	$	20,408	$	19,070
Bank card fees		14,595		14,489		12,026
Gain on banking center divestiture		—		—		2,942
Non-interest income (in-scope of Topic 606)		34,315		34,897		34,038
Non-interest income (out-of-scope of Topic 606)		48,437		35,878		5,167
Total non-interest income	$	82,752	$	70,775	$	39,205
Non-interest expense
In-scope of Topic 606:
Gain on OREO sales, net		7,193		488		4,150
Total revenue in-scope of Topic 606	$	41,508	$	35,385	$	38,188

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Deposits - Summary of Time Deposits Based Upon Contractual Maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deposits [Abstract]
2020	$ 726,903
2021	211,787
2022	94,464
2023	19,696
2024	4,263
Thereafter	1,040
Time Deposits, Total	$ 1,058,153	$ 1,080,529

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Investment Securities - Summary of Available-for-Sale Investment Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	$ 638,009	$ 809,725
Gross unrealized gains	5,315	2,288
Gross unrealized losses	(5,075)	(20,911)
Investment securities available-for-sale (at fair value)	638,249	791,102
Residential Mortgage Pass-Through Securities Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	93,770	147,283
Gross unrealized gains	1,497	1,232
Gross unrealized losses	(11)	(1,873)
Investment securities available-for-sale (at fair value)	95,256	146,642
Other Residential MBS Issued or Guaranteed by U.S. Government Agencies or Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	543,275	661,354
Gross unrealized gains	3,818	1,056
Gross unrealized losses	(5,056)	(19,029)
Investment securities available-for-sale (at fair value)	542,037	643,381
Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	495	619
Gross unrealized losses	(8)	(9)
Investment securities available-for-sale (at fair value)	487	610
Other Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	469	469
Investment securities available-for-sale (at fair value)	$ 469	$ 469

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Non-Marketable Securities - Narrative (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Schedule of Cost-method Investments [Line Items]
Federal Reserve Bank stock	$ 13.9	$ 13.9
FHLB Des Moines Stock [Member]
Schedule of Cost-method Investments [Line Items]
FHLB Stock	$ 15.8	$ 13.6

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Regulatory Capital - Capital Ratio Requirements under Prompt Corrective Action or Other Regulatory Requirements (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Parent Company [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Leverage Ratio	11.00%	10.50%
Common equity risk-based ratio	13.20%	12.90%
Risk-based capital Ratio	13.20%	12.90%
Total risk-based capital Ratio	14.10%	13.80%
Leverage Amount	$ 640,440	$ 580,504
Common equity risk-based amount	640,440	580,504
Risk-based capital amount	640,440	580,504
Total risk-based capital Amount	$ 682,645	$ 620,275
Required to be considered adequately capitalized Ratio, leverage ratio	4.00%	4.00%
Required to be considered adequately capitalized Ratio, risk-based common equity capital ratio	7.00%	7.00%
Required to be considered adequately capitalized Ratio, risk-based capital ratio	8.50%	8.50%
Required to be considered adequately capitalized Ratio, Total risk-based capital ratio	10.50%	10.50%
Required to be considered adequately capitalized leverage Amount	$ 231,950	$ 220,988
Required to be considered adequately capitalized common equity capital amount	405,912	386,728
Required to be considered adequately capitalized risk-based capital Amount	412,620	382,306
Required to be considered adequately capitalized Total risk-based capital Amount	$ 509,707	$ 472,261
NBH Bank [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Leverage Ratio	9.10%	9.00%
Common equity risk-based ratio	10.90%	11.10%
Risk-based capital Ratio	10.90%	11.10%
Total risk-based capital Ratio	11.80%	12.00%
Leverage Amount	$ 528,028	$ 498,283
Common equity risk-based amount	528,028	498,283
Risk-based capital amount	528,028	498,283
Total risk-based capital Amount	$ 570,233	$ 538,054
Required to be considered well capitalized Ratio, leverage ratio	5.00%	5.00%
Required to be considered adequately capitalized Ratio, risk-based common equity capital ratio	6.50%	6.50%
Required to be considered well capitalized Ratio, risk-based capital ratio	8.00%	8.00%
Required to be considered well capitalized Ratio, Total risk-based capital ratio	10.00%	10.00%
Required to be considered well capitalized leverage Amount	$ 289,926	$ 275,703
Required to be considered well capitalized common equity capital amount	376,903	358,414
Required to be considered well capitalized risk-based capital Amount	387,701	358,938
Required to be considered well capitalized Total risk-based capital Amount	$ 484,626	$ 448,672
Required to be considered adequately capitalized Ratio, leverage ratio	4.00%	4.00%
Required to be considered adequately capitalized Ratio, risk-based common equity capital ratio	7.00%	7.00%
Required to be considered adequately capitalized Ratio, risk-based capital ratio	8.50%	8.50%
Required to be considered adequately capitalized Ratio, Total risk-based capital ratio	10.50%	10.50%
Required to be considered adequately capitalized leverage Amount	$ 231,940	$ 220,563
Required to be considered adequately capitalized common equity capital amount	405,896	385,984
Required to be considered adequately capitalized risk-based capital Amount	411,932	381,372
Required to be considered adequately capitalized Total risk-based capital Amount	$ 508,857	$ 471,106