National Bank Holdings (NBHC)

Regional banking company National Bank Holdings (NYSE:NBHC) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 3.7% year on year to $108.9 million. Its GAAP profit of $0.92 per share was 8.2% above analysts’ consensus estimates.

Company Overview

Operating under familiar local brands like Community Banks of Colorado, Bank Midwest, and Bank of Jackson Hole, National Bank Holdings (NYSE:NBHC) operates regional banks across Colorado, Kansas, Missouri, Wyoming, Texas, and other western states, offering commercial, business, and consumer banking services.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

National Bank Holdings competes with larger regional banks like Zions Bancorporation (NASDAQ:ZION), U.S. Bancorp (NYSE:USB), and BOK Financial (NASDAQ:BOKF), as well as local community banks throughout its western and midwestern markets.

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Luckily, National Bank Holdings’s revenue grew at a decent 5.6% compounded annual growth rate over the last five years. Its growth was slightly above the average banking company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. National Bank Holdings’s recent performance shows its demand has slowed as its revenue was flat over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, National Bank Holdings reported modest year-on-year revenue growth of 3.7% but beat Wall Street’s estimates by 3.9%.

Net interest income made up 77.6% of the company’s total revenue during the last five years, meaning lending operations are National Bank Holdings’s largest source of revenue.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

Topline growth alone doesn't tell the complete story - the profitability of that growth shapes actual earnings impact. Banks track this dynamic through efficiency ratios, which compare non-interest expenses such as personnel, rent, IT, and marketing costs to total revenue streams.

Markets emphasize efficiency ratio trends over static measurements, recognizing that revenue compositions drive different expense bases. Lower efficiency ratios signal superior performance by indicating that banks are controlling costs effectively relative to their income.

Over the last five years, National Bank Holdings’s efficiency ratio has swelled by 4.2 percentage points, clocking in at 57.5% for the past 12 months. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

National Bank Holdings’s efficiency ratio came in at 57.3% this quarter, beating analysts’ expectations by 158 basis points (100 basis points = 1 percentage point). This result was in line with the same quarter last year.

For the next 12 months, Wall Street expects National Bank Holdings to maintain its trailing one-year ratio with a projection of 58.1%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

National Bank Holdings’s unimpressive 4.1% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For National Bank Holdings, its two-year annual EPS declines of 1.9% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, National Bank Holdings reported EPS of $0.92, up from $0.86 in the same quarter last year. This print beat analysts’ estimates by 8.2%. Over the next 12 months, Wall Street expects National Bank Holdings’s full-year EPS of $3.18 to grow 2.4%.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. Traditional metrics like EPS are helpful but face distortion from M&A activity and loan loss accounting rules.

National Bank Holdings’s TBVPS grew at a mediocre 4.4% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 13.6% annually over the last two years from $21.26 to $27.45 per share.

Over the next 12 months, Consensus estimates call for National Bank Holdings’s TBVPS to grow by 3.5% to $28.40, paltry growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, National Bank Holdings has averaged a Tier 1 capital ratio of 13.2%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, National Bank Holdings has averaged an ROE of 10.3%, healthy for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for National Bank Holdings.

We enjoyed seeing National Bank Holdings beat analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its net interest income missed. Zooming out, while it was a perfect quarter, we think it was a decent one. The stock traded up 1.2% to $37.49 immediately following the results.

Updated: December 4, 2025 at 11:39 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in National Bank Holdings.

We see the value of companies driving economic growth, but in the case of National Bank Holdings, we’re out. To kick things off, its revenue growth was uninspiring over the last five years. And while its estimated net interest income growth for the next 12 months is great, the downside is its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. On top of that, its estimated sales for the next 12 months are weak.

National Bank Holdings’s P/B ratio based on the next 12 months is 1x. At this valuation, there’s a lot of good news priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $44.50 on the company (compared to the current share price of $38.61).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.