National Bank (NBHC) 21 Jan 222021 Q4 Earnings call transcript

00:08 Good morning, everyone, and welcome to the National Bank Holdings Corporation 2021 Fourth Quarter Earnings Call. My name is April and I will be your conference operator for today. At this time, all participants are in a listen-only mode.

We will conduct a question-and-answer session following the prepared remarks.

As a reminder, this call is being recorded for replay purposes. strategy, like forward-looking you limited margins, statements, statements the now call this to allowance, would net regarding contain capital, expenses. will including company's taxes I and to non-interest that remind conference the interest non-interest XX:XX income, deposits, income, loans, but not those differ today. Actual results discussed could materially from recent are more detail Commission. in These forward-looking risks, to and in subject the uncertainties and Securities company's disclosed most filings statements are other with US factors, which the Exchange the of Bank as of this no only to National speak statements revise date call and Holdings obligation These undertakes Corporation these update or statements. XX:XX Corporation reference certain believes addition, non-GAAP Holdings information call useful Bank investors. for National In today provides the measures will which news release on Relations these at Investor non-GAAP posted www.nationalbankholdings.com. measures section of GAAP financial the measures the the Reconciliations in to are provided Holdings is call to now National pleasure and introduce Corporation's my President It turn Chairman, over XX:XX the and Mr. CEO, Bank Laney. Tim Please go ahead.

thanks quarter by XXXX National Good XXXX April. joining enter Bank and for with you Financial record Chief our Call. fourth Holdings XX:XX earnings as year. Aldis earnings Officer morning, We Thank the we momentum Birkans. finished year full I'm and strong and new joined

over of XXXX On pleased Aldis? core fourth Aldis we from for performance delivering loan levels low quality. on detail XX:XX at to our quarter our continue We're expenses XUniFi we hold call financial earning growth, grow rising base I'm believe to deposits more relationship our XXXX and turn relationships levels team that to banking our pipeline flat of expand of attractive positioned credit in record and rate. to operating and benefit impressive an at clients. the I'll that expectations. medium-sized have to business We We a and our record XX:XX to pristine in of we from investments continues share focus opportunity on is note, Our cost benefit realize very is levels. that and of small markets, outside and can the rates, tremendous well full

good Tim. Thank everyone. morning, XX:XX you, And

will highlights Consistent the as any our full yield financial during in always, by our guidance both not XX:XX the guidance include XXXX. past year, changes my fourth it comments I does and large As practice future interest-rate changes the any cover the for as with well share general. quarter cover nor our curve for Fed, policy does include

As million of in as of release, share. income last we diluted reported net per had quarter night's or an $XX.X fourth we delivered excellent $X.XX we earnings

per record despite XX.XX%. capital the with approximately year's full of million was pleased of continued year equity levels throughout income we full loan the new net on excess As higher tangible strong second the relationships. building robust the Tim we And of excess teammates the average $XX.X the year, client return the XXXX XX:XX And assets million had $XXX already half or XXXX, discussed, carried in was and of our of performance during XX:XX a return common X.XX%. very are growth although balance reported For cash $X.XX diluted we an tangible the on share.

fourth balances. classes quarter were loan entered quarter, continued second fundings for the loan $XXX.X loan million, on with strong with the was to XX:XX During we fourth and The a just year geographies most asset new The was important, strong broad growth quarters balances loan as contributing And based growth. our an the annualized production. loan prospects consecutive XX.X% record basis. our which non-PPP loan grew of

with in we $XXX,XXX regard the and fees. to unrealized PPP current ended in the to and XXXX. outstanding year sustain million $XX.X PPP expect approximately We loan this deliver XX% full year to for momentum XX% growth loans, With balances

XX:XX XXXX. our balance clear part of most to expect of deposits. We during first Turning this to sheet the

deposits to the of quarter, this deposits Total points grew total balances the quarter. prior as deposits another X annualized compared And compared the we fully Amd level increases. quarter. grew The deposits to XX of settle X.X% average decreased points points to XX fourth at basis XX.X% interest XXXX. to XXXX. core from quarter an increase was any basis point projected quarter. net to transaction the cost prior of this average During interest the our XX transaction fourth as during fourth equivalent cost does for of not include basis XX point basis Again X.XX%, projection margin XX:XX quarter's basis rate taxable

of our million balance XX:XX profit $XXX,XXX accelerated This $X.X well in sheet mark Fed. the PPP interest our quarter's and interest from loan rate nicely from positioned any increases is from income accretion an acquired portfolio. by net benefited ahead, Looking to

balance Our point sensitive. interest asset And is X.X% our income increase basis is net to grow XXX scenario. in expected sheet annualized rate a

strong charge-offs. another quality points just remained quarter of non-performing annualized of net with Our in asset X basis loans solid reductions and

basis year were respectively. quarter's expense And during year, X full and just XX%, fourth the of reserve NPLs and partially of forecast quality strong our points. our our reduced XX% net charge-offs The the our NPAs an $XXX,XXX in asset XXXX, result just For we for by a and provision in requirements the economic Moody's XX:XX improved offset was being CECL model. loan outlook growth the

million from total for loans was fourth As X.XX%. non-interest Total excluding $X.X the prior a PPP the income our year-end to result, quarter. million a or $XX quarter ACL was decrease

$X.X funds. buildings, continued million the expected, slowdown also to continue as a into to residential our by and the market do a fourth During pickup the consolidated during expect carry strong purchase activity decreased from investment center XX:XX realized driven as million $X in our geographies the seasonal see revenues $X banking our We that in New equity-method banking of quarter. well disposition million gain we quarter As Year.

$XX project we $XX to total million. of XXXX non-interest range in be to the For our income million

Our core single continue fees grow low the banking to to are projected in digits.

million, related the line be compression to range XUniFi Association $X.X XXXX, Bankers Total transaction of we million recent quarter the non-interest outlook. of million. margin investment to the projections investment. compensation initiative. Mortgage expenses XXXX third gain build million out. given slight $X.X and this approximately increase resolutions. $XXX to mortgage-related reminder, quarter. to with [indiscernible] the driven in in prior as decrease mortgage $XXX,XXX are by XX:XX part project $X Mortgage rates. in million realized million mortgage Finstro XUniFi of XX:XX to this related incurred was property lower expect a $XX.X is quarter non-interest total was However, for expense through projected we the our do from in Also expense in OREO of $XXX and $X Looking Figure million ahead a volume a during expenses This The ecosystem the a was we the decrease

As Tim and flat year. to XUniFi the interest excludes the projecting already this XXXX When the projected as FTE on remain it adjustment sent prior inflationary investment have despite the our pressures tax our to XX% expect expected rate always rate, around covered, XX:XX core remain we effective income. are in expenses to

at shares. this for In the terms as had XX:XX of a we decrease of strong to XX.X ratios million capital stock, share management, around diluted our I ratio. XX.XX% XX:XX common share turn million with to that, during the ratio tangible you. result, increased NBHC XX.XX% value is $X.XX capital to to even it Tier Tim, Our projected remained XXXX finally, count quarter $XX per X equity buyback purchased fully leverage book quarter our and another with back Tier X $XX.XX. and activity, will And stock

earning to that grow and core stream care their company I to XX:XX incremental begin will for my through turning our are XXXX, my enterprise earnings, for acquisitions. continue Aldis. expect later focus on each our to diversify of Now thoughtful disciplined year. teammates across grow also core organically teammates thank you, on further challenged with banking record The In an company expectation our this Thank XX:XX our delivering stronger producing taking and XUniFi. clients actions making and ourselves focus to we our results other. want we also and caring We've to for both XX:XX of results. their bank

positioning many national that's providing solutions robust financial precious with medium-sized services owners blockchain stress world-class depository information to management borrowings, provide money. to also needs, or and tools. we're with These address and is equivalent this management an time week, believe We're payment cash that create how turn for payment consortium XUniFi this small information solutions of questions banks of work and information digital to SMBs vision interest financial a operators unparalleled be completed a businesses access will services. save and and digital access changers you financial kind to believe with financial XX:XX thank NBH forward a access solutions marketplace business while it for usher to Our management We and of will to services. alternative for transaction we the its one do platform and will medium-sized partnership over of provenance believe begin and want We small example I businesses. for first a morning. can this of is was of blockchain. business. cost game that lower and that we And range in to a in look April? your just and other provide will and focused information blockchain real-time that providing Earlier in array groundbreaking services, XUniFi reduce on to your our management really announced company Amazon in SMBs this

XX:XX Thank hear [Operator you. of Jeff D.A. Rulis Instructions] Davidson. first we'll from And

Hello. figure the question 'XX on anything what the it's if Don't you up morning. Good framed build-out 'XX outlined initially? Aldis if impact Tim, could a just impact. to XX:XX be know Finstro on early say too and/or revenue the cost.

very morning. about And we're framed certainly pace But at to related focused with prepared it of examples when point incremental of we're very some optimistic beginning partnership Finstro reduce this also incremental core seeing, the publicly and that result particular, we're available anything at expense technology XX:XX related this we that anything to cases looking put recognize use then we as revenues. opportunities. frankly, SBA up and in we're can are this I the around evolve. delivering am really interesting share has would talk Aldis deliver on, both a We're those And incremental shared at I believe in category XUniFi, this We've work not to point. the to which everyone about that results that at XX:XX market

to more come. So

but intense not focus numbers optimistic quite we're around a to ready is we're put about. something those explicit Now expectations, and it

it. Got XX: XX it. Appreciate

Just jumping to topic. another

in words, was to portfolio if us, other when you've -- i.e. the on Thanks. the levels, -- we you at a of loans in framed suppose been the All about the in cash build you think, are in what what big up deployment quarter you one. still -- into look normal you is greater be to you impact sort the And balance did you read this you talked not sheet that there then of into put it got two. securities the XX:XX the as quarter-over-quarter, loans do cash would what spin-off of have remind the release cash would it cash balance to margin? return question to were Could I that,

XX:XX Right.

at So into year-end look -- of the on margin so the about movement. from you late in benefits taking the clearly balance million late deploy that, movements some loans first cash $XXX and actually, see you basis the deposit question table, average year can first. sheet if we Really on cash, the

So that's one.

on that excess points. the XX much cash today how of margin weighing calculation about basis itself? is terms It's In

is XX:XX return. -- -- comfortable what's there I mean, And you balance the that that cash would

money, XX:XX of in you of million Yeah. $XX typically money add Fed, between cash the cash what $XX million, the We terms free top can kind would It's $XXX balance of see it's and the we typically wallet run and the our sheet ATM be. million cash about on million and $XXX cash letters house. at as in on the balance available our

or into the within any what then could saw last But be that shift XX:XX -- total OREO, just I if -- that, of out of rotation any shift the pretty flat. nonperforming within one Okay. you NPAs that one, that is just And color? credit could. The

is It's extremely Obviously, XX:XX into Yeah, LTV that process working you loans to from moving it's and thing. that's NPLs credit SBA SBA a in -- the got addition through it's OREO one type low actually it. coverage. of an related

go to those. as in not of loss. last often frankly and where being end quarter with no on things another And expect almost this up many more one We OREO cases the those through recovery than

So loan this going the is just through process. one

it. Got XX:XX

Okay. Thank you. I'll step back.

Jeff. you, Thank XX:XX

Piper of And Liesch Andrew XX:XX we'll from next Sandler. hear

Andrew, XX:XX morning. good

the on you scenario. interesting Good there. in Good But nice are in doing guys guide, guys. some point morning. a also question and are XX:XX basis up morning, NII fintech the rate on growth front. A mode benefit things the XXX Clearly

is question falls investments line of accelerates do the think maybe how much my boost So you other of franchise? bottom that that, in the or

XX:XX that the because falls how all $X in to $X and the terms to I is investment in of Well, XUniFi, guided of I million of million. expense bottom circled year, think what we've this line, part already for as guidance the up

accelerated So all unless investment of to and see, accretive things, us. can develop. Right there be is change we strategy or of can that now, additional would we

be will very like find very going pace and I tight. it's at, that. a to in opportunities Andrew for continue black estimates think bring down I example, some around again, important to reason of want clarify. to XUniFi discover should an the We'll And such create our in So accelerate find our our accelerate And company great white investment XUniFi for commitment opportunities investment, of we the to need distribution for But need we investing manage it discipline and our XX:XX mortar in pace XX:XX the opportunity and just we about network us look and investment. we our the greater We're question, areas. feel expense offers other is, to to should in are to efficiencies. brick to with

other be offsetting through Our investment opportunities. discipline around action will that on

stock really here, appetite the this with helpful. more XX:XX activity. for repurchase what's at Got level then That's the -- just it. And

XX:XX pointing Aldis me. he's and point I'm at

with say take adhered which obviously, to and we discipline at obviously tangible have very it guess We've earnings. is, and leave I that's continue just the about that, back think we'll a a would watch optimistic that, book at and are this continue go have discipline, it to our its happens that we earn company in I'll benefited And be we the what to what opportunistic dilution. can threshold I any market, where in from to because we've around, pace to would answer. mind, non-answer I'll

Andrew. Sorry,

still right. the helpful. taking step That's Thanks will All I question. for back. XX:XX

bet. You XX:XX

Motta KBW. XX:XX from next we'll of hear And Kelly

morning, Good XX:XX Kelly.

wanted XX:XX and I loan to Hi Tim Aldis. to turn Good morning. growth.

I nice this in You economic had I just but was to give if broad business a -- and maybe pretty said us color some could hear about based quarter. in this winning versus wondering guys also on the was across versus line prepared it so well. stuff, normalizing. your geographies more up as growth it's you XUniFi your bit is how growth really you maybe you markets much new Tim, nice put believe, remarks and of draws

future Just that any help there great. and outlook would how kind be of

with of that XXXX, who later focus ourselves make small have about they for around hit our XX:XX making into around that are medium-sized once I larger become those key clients businesses of we of are and are their their in be the no engage work And some we business. if directly now pleased careful, not all translating doing face. in to absolute that market their metric the I really averages. the I our economic Day by share. on States. that relationship, then to taking about year-end. team's than focus understand, in those the are we've be offices, July the by finally, we've that it and XX:XX like excited Great to in are but I country teams did. firms XX:XX certainly That's the We no that ours mean, attention to the couldn't you mean, clients in decision arena, perhaps business. any of opportunity we certain that business to demonstrate institutions they face we with categories sensitivity, continue but Labor found showing. some pleased of US important And engaging, really prospects been pipeline think a acknowledge one And our national have put does we at markets really share. United you market question. when and difference that an in So, folks of We through the are think the like our back outperform the in best getting understand strategically is engaged done tranches teams with a been were taking transition I again, feel we're to lot what banking able frankly with and it moving virtually am discipline business on we've more a it

And and these it very hard design. alluded seeing by into was way the by represents very promise. both is and wind encouraging, that of That's in for solid XXXX back we'll by we're And they translates coming the continue really at with and year. to that grow the grateful expand momentum continue we very, show very momentum. are as so because our with markets, to into this, a all And it, -- Aldis pleased to way work I to very, but we're and and into come what XX:XX this We

slip maybe I a XX:XX one. could in last if Great. And

side. potential M&A remarks, also I believe the in mentioned You prepared your on traditional

have the and what of is appetite wondering Just been? the how pace there kind of conversations

XX:XX Yeah.

a of high relationships on ensuring by maintain that of do working powerful investors. ourselves we're constantly we develop partners. our to all with in hold around we're might would discipline So standard be front our met And we going would that to groups state We well to a be think there. anything that

part a in decision to where take to best is company, we're other that fundamental capability, consider have for interest important is, an construct company should be investors, received will that's going transaction that the table to selling Kelly their on. to and belief a not of I'm you an us in create our if is what What leave we're only mesh opportunity becoming to not cultures revenue. themselves something we any we And But well and tell If do is are Our there that questions. opportunities space do incremental would marketplace. play unless anything we've we clear unless what going to the well can you're that that's acquisition is believe making incremental focus target I it's where made believe we it. very doesn't expense sure any a incremental that looking and simply it's has stopped. to bring not in out. not going you I --

XX:XX dropped. on of may And We'll move Brett Rabatin Group. she have to Hovde

Hello. XX:XX

out a the much you for how could first, drain deposit I [indiscernible] you may deposits as you just or forward? pandemic. you pandemic And but assumption -- from XX:XX minutes this, of the just I'm wanted liquidity like through your curious How is to I the the the about you of post third talk base? think think about is of going a of late, joined about And kind horizon, on so sticky? increase on what's it look your economy some covered deposits. customers guess, assumption few as And many guys have

begin the has lowered that what think you fight leaning that turn We I industry could accountability relationships. this And of it Great -- deposit to experienced. around these be I calls. fundamentally development XX:XX on new we've I'll prior excess against is, also then would balances really that about by for into tell complacency the around to Aldis more detail. do and But talked question.

temporary what to focus a growing or XX:XX -- the get flex-in new share that, our is of to Now to question, to it's growth So on in Aldis. increase which the throw thing speaks taking back it markets. around we having and your said come one market balances. details this, your expansion excited to be relationships, about and obviously see What could I'll

last provide that deposits year, fourth building throughout we over we necessarily quarter why fourth base it. did grow the are guidance itself and didn't growth -- behind explicit that's client XX%. on transaction And to XX:XX quarter relationship deposit as But

will pace. out. digits and the on some in that it's Most opinion. Fed maybe of mid-single into a tightening think quantitative put I how will liquidity the again, It's withdrawals play estimate But likely by very hard my the down to it. hard slow --

may few kind XX:XX that during covered how have Okay. I'm see then of playing next curious quarter quarters? this, utilization, Fair enough. line and but the And over out again, fourth trended that how you you the

quarter long-term in and that I'd at Yeah, averages. our of of to part the At tables. the the return our it lines also our moment And this growth, that's kind say the XX:XX pick utilization quarter line is loan up. loan end of fourth was

But the last seem line take loan off how drawdown. can were it You was [indiscernible] line to utilization, a benefits see quarter utilization like this to good starting quarter quarter or growth. the

XX:XX Okay. the Great. color. Appreciate

XX:XX You bet. Thank you.

from Terrell hear Stephens. XX:XX of Next we'll Andrew

This Hey, on XX:XX guys. Andrew. is the Congrats [indiscernible] on quarter. great for

XX:XX Thank you, John.

as to I in like dissimilar think base question you beta about NBHC environment? beta? cycle? to assume deposit there rate remind that disclosed rising what in any beta us, And sensitivity be on your guess And for will NII your cycle last the this you can be quick reason a is Aldis, deposit we should again. in guess, XX:XX deposit I thinking how

deposits in I'll Look, XX:XX start bearing non-interest deposit construction that. you deposits. us, XX% Yeah, of all, for of if our so at first look our are

XX% talked to So way my modeled rate on it. just deposit last begin I So beta we XX% between question, And I to prepared quite this. deposits. that in -- rate if to conservative back and -- quite that basis scenario our is any kind deposit are XX:XX you to In well think cycle, if the on conservative back depending in into bodes in tightening XX% was again, is once of bearing kind because shock with. measured you that deposits, get that's rising But there beta your the remarks, that for beta. of go environment mean you XX% we the what for does when point actually it your project X.X% then deposit embedded you interest period XXX total about

today, joined million benefit the For rate. pickup point annualized would approximately translate of basis $X. roughly shock, XXX X.X% Fed XXX basis call after folks at that on be us point $XX the rate fund increase that in have That

appreciate color. you. is do of And can those How force Got you the loan us And the of portfolio? on loan one, one I place last helpful. rate remind floating repricing guys of any dynamics adjustable you have in much That's XX:XX the fixed? floating rate?

XX:XX Yeah.

So first XX% call it would is rate the XX% only with days. majority is Of XX LIBOR is these just is [indiscernible] prime, to book of rates that our to rate that variable loan index approximately an points so -- that only up. for variable of immediate call it as will either XX% XX that benefit XX% loans move the basis The have lift, vast not LIBOR basis points. our floors it, far

I'll all appreciate That's I back. step color. had. I Awesome. XX:XX the

Thank right. April? you, John. All XX:XX

I time. And have would back showing remarks. we like to Laney questions any the for over Mr. to you. this Thank now XX:XX further closing I at call am no turn

Thank right. April. All you XX:XX

I in follow-on questions you would open them meeting. and certainly to day. company. always, anyone have have good your after a thank Again, should just As interest thank you any our are for this We

call. concludes this today's conference And XX:XX

new January XXXX XX, and the it pass to dialing like approximately XXX-XXX-XXXX you telephone by be in call on earnings run this through call, also X for great available will online the beginning to be very available listen hours and replay release If website of have this referencing code on Relations and page. will replay would Investor an will day. XXXXXXX. a company's Thank you and the much The

now may disconnect. You