National Bank (NBHC) 24 Jan 242023 Q4 Earnings call transcript

Good morning, everyone, and welcome to the National Bank Holdings Corporation 2023 Fourth Quarter Earnings Call. My name is Anna, and I'll be your conference operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I will now turn the call over to [ Emily Good, ] Director of Investor Relations.

Thank you, Anna, and good morning.

call remarks, today's question-and-answer by begin session. will with followed prepared a We to this expense. statements you contain would allowance, net remind I like income, noninterest that strategy, deposits, including, margins, not interest income, company's and forward-looking but conference limited the to, noninterest regarding taxes loans, capital, statements, will call Actual results those from materially discussed today. could differ company's These U.S. in more disclosed factors, which forward-looking statements are the are with subject in to most the risks, filings uncertainties and other recent detail as only no of date Securities or and speak Exchange Bank undertakes statements call, this Corporation revise National obligation the and Commission. These of update these Holdings statements. to

In Bank will Holdings today for reference National provides believes, measures useful information which addition, the Corporation investors. certain call non-GAAP

are Relations the the Bank President to introduce Reconciliations Mr. posted on Holdings of release section turn provided and Chairman, in now financial of the GAAP these non-GAAP my Investor news National Corporation's It measures Tim www.nationalbankholdings.com. is to over pleasure Laney. CEO, call measures and the

Thanks, and thank Quarter joining Officer. National XXXX discuss Chief for Emily. by Birkans, Good we financial our Bank Fourth Year Full Aldis and Financial morning, I'm us the joined Holdings as results. you

year-end. fact, year Solid CETX tangible XX.XX%. generated to fourth contributed record of our totaled on growing -- a focused at We year. We quarter per in $X.XX capital common the share. a full And tangible results on of return earnings average equity during XX.XX% capital ratio

client earning from we and basis may like prepared the all to XXXX call markets. any We activity, environment a to we're our relationship we strength. of over that strong of full quality We X for in turn from the operating points that we're continue entered We charge-offs just I'll you. to of remain on navigate and economic seeing focused Aldis, benefit note, what face. strong on net in clients, Credit remains position of with XXXX.

you, Tim, and good Well, morning. right. thank All

for the financial rate practice, fourth guidance highlights full our well cover and the I policy as call, this Consistent interest year Fed. does quarter any by guidance the changes the past for will future During XXXX. both with our include share not our as

optimistic are outlook our in not reflect and environment do projections footprint the recessionary our markets, cautiously the We economic about either.

in and release, the delivered of record reported night's we net we finished record strong financial revenues quarter income. As with last another net and a year performance

For of quarter, share fourth of million reported $X.XX. earnings the we income per net $XX.X or diluted

common record income return our million, For XX.X% the a and was year on our full equity. XXXX, tangible $XXX solid net reported a we

loan During and our Cambr the by XXXX, grew acquisition, important per value completing improved share grew by XX.X%. we our book book tangible X.X%, core liquidity our base and common strategically deposit by

continue client robust our focus We bankers' building relationships. on pleased new to continued be with

annualized. loan our indicators operate many that balances quarter, in or million the fronts. During national markets economic outperforming are XX.X% We in $XXX.X grew the broad

However, for our XXXX, the a economy. slowing ignore possibility for for outlook cannot

the taxable fee. receipt margin $X.X project we loan net quarter was by and was for digits. in XXXX, X.XX% the growth of equivalent Fully prepayment mid-single net For balance interest helped the loan a million

fee Excluding income, strong our this interest margin loan X.XX%. additional was still a net

we incorporating that to in XX%. this taxable be the net are with been for equivalent And rate project $XXX to to interest we Our million has projections. fully cycle any I our already deposit And as income NBH's in mentioned, $XXX rate total date million changes not range. mind, beta, XXXX, in interest

it strong. remains quality, In terms asset of

points net were fourth with year we X basis X also quarter's points of net just ratio and loan full improved X.XX%. basis Our annualized, ratio asset nonperforming X to basis our points to points nonaccrual X.XX%, also finished X just charge-offs and basis improved the charge-offs. The

of an expense of million nonperforming reserve provision to for quarter, allowance $X.X ACL to loan. loans. X.XX% the total increased the Most was credit we our existing of increase and recorded losses our for During

We taken this expect for project will Total be this to coming cover quarter associated fourth $XX for sufficient income be the XXXX, noninterest million, quarters, believe range of to charge-off. the reserve was work specific loan loan the the and to total the million and $XX.X noninterest in we out million. income our quarter we over to $XX

items the totaling million. Noninterest million and $X elevated ] various to was totaled quarter $XX.X expense approximately fourth for slightly due [ nonrecurring

to million XXXX. tax for XXXX, quarter's to prior amount year increased by million. effective is realize XX.X% be in sorry rate of development the we noninterest XUniFi linked $XXX to the continued of projected total fourth $XXX expense the was of interest The contribute in to lower approximately expect the buildout, the are expense range ahead -- $XX to driven investment in we XUniFi, credits. expense These Looking Most similar credits million $X tax non-interest project the to an due research which quarter our of additional a and increase. tax than related million and is

effective be XXXXs to in project tax XX% rate we to such, the As XX.X% range.

projected always, the income. on FTE this rate adjustment interest excludes As tax

X terms ratio. strong In the capital of a quarter X.XX% management, ended X.XX% TCE and we Tier ratio leverage a with

grew value during As per to book already XX.X% XXXX I mentioned, tangible $XX.XX. share

around you. I the we that, of with to outstanding project it shares. turn shares remain will million And back count, share XX.X In diluted terms to

Aldis. Thank you,

While we that making XXXX our we improve deliver results positioned future well while meaningful during believe we're company. investments solid also will believe to

discussed, had manage environments. of M&A capital this, support present liquidity and want themselves. Having that a to prepare be believe opportunity said buybacks, a capital and we'll for prudently we As now on as the positioned should We I range growth, to clear focus previously well activity we during building broad XXXX. organic we're economic

to On questions. that ask I'll open up call you the note, Anna, for

now D.A. Davidson. Jeff with We'll first our question Instructions] [Operator from take Rulis

Tim, share I and this focus you assume the just -- count has flattish this meant. kind support Wanted in count. Tim. that circle of kind what capital to back you talked a you'll last -- you of you active that been wanted sort I clarify capital, mentioned think all to is options the Did that year can to share on front? and of the of on building on your flattish there loop comment in number buyback about be 'XX. guess

No, active. not necessarily, actually, issue it that seems will We the many really throughout not don't we shares be that year.

staying to back to at any way, So we is diluted and/or incorporate obviously, it feels the be count not another the unless right price. and does share it like activity. buy the fully buyback Said M&A opportunity flat going have do unchanged,

any I any some that's is rates, can in And and attractive if on of conversations more a Tim, value headwind. if appetite? kind fair just guess, don't on I the kind pullback of about M&A that your M&A, deals assumption know together thoughts But less of come

and getting we Well, all And as began describe purposeful I M&A that. think you at fair we I and head. the our the conversations maybe very were about to And not being the focus hit leave it value. out XXXX pipeline I It's nail should to in working resume would really on 'XX, targeted. closed we as

newer just markets outlook, on touch there the the acquired broad-based and how then of past And growth have of acquired And from the at growth areas the maybe are in that performed growth those you kind strength. enough. particular loan a looking footprint have that some to you kind some could if standpoint? of deals Fair of if

as as of relates more As Hole. the do with it our for limits their other only pleased estate do pleased acquisitions, last but have best lot reducing that commercial we I teams of clients enter it company Hole Wyoming work for Bank with objectives say we how of us in acquisition say remain production house Canyon relates point in of commercial conservative Rock Hole estate we Jackson It on to in created X where the will the to real will a real the capacity much hold. have Hole, terms Jackson we Jackson the to very our exposure, and to hit Bank Utah-based Bank Jackson as our the and based because what balanced getting teams XXXX. of a we not I'm we

good I we're think a position in there. So

out [ that now our of are could coming as nice are capability the the market. be relates the of the organization as out timing think believe generation very us of it's sales franchise. it top to we a Canyon rest may As being of that right We be and down ] giving not okay a Canyon, to applied relates build the to opportunity for really I look road. And loan lot our it Rock Rock us of contributor SBA growth throughout that to SBA earnings exactly while business, that

organizational changes serious making In growth. supporting the -- on the of that fact, particular verge step some next step pretty in we're next that as as

that middle the out Texas, in obvious. in terms pretty was City. Kansas Swift now proud really historically that in markets, team Utah Range terms of there got of Taylor I We've like stepped But seeing say, obvious. potential that really from. of is what do of market pretty We've benefiting And Colorado we're based our and think market coming of we're kind it's whether we to seen that's Jackson Jokingly momentum is would market described through We of market. is Idaho Chiefs. up. that's Front of acquisitions that market growth that's entered both. solid nice player. out or of in like we've to In road, or of I'm But a as through that acquisition. with more the really growth something The organic the do in Midwest Bank Hole

could last Tim. one, this. one And all there it squeeze for if in I

margin, just up outlook remind would if you maybe margin to cuts vacuum didn't year, just the no just X in cuts, a Fed X -- what us think incorporate that the to moves, on frame be? kind sideways of cuts, I impact Just the but on could this of know up-down impact you

that the a part rate we disclosure Well, that way of in be Yes. I'll and our K neutral. say are model vacuum, we will

where our years. had reality, we hurt and out for matter. it benefit on, or would asset sensitivity because to as the closed that the be maintaining the obviously, as world, come the deposit In moves not theoretical contributor several loan the that we big or all margin a rate that we've well. to down, we movements pricing by ability model we'll earning today is over is assets So volumes all up know, how of grow see last But

that But that Okay. that just point what XXXX [ be good Is to core Difficulty] [Technical would point ] you'd jump-off into XXX. a going

by is second maintain our XXX XXXX in of portfolio to investment about December to billion be That million jumping by portfolio we than sit that half less expect order thing we'll XXXX. in ran a the we to that's XX. say rebuild is purposefully That did, addition off $XXX investment is will what today. One on. asset clearly lower-yielding $XX correct. do I size asset off into I coming during the that where

impact calculation for why might towards giving of really for guidance So percentage that income that year. is margin, calculation of the geared the this net interest which

Fedorjaka question our next take now from We'll Matt with KBW.

limited saw you're it using it Cambr, you're a this know disclose give growth of I be loan fund help you if I on to strong wondering could that bit and on but the we if about able what how any was was color used you'll quarter? to some little maybe

that enhancing Aldis, translate fee add? develop but Cambr be will liquidity. been with in income as that Cambr as XXXX. We're to not And additional contributor will continuing march of to Cambr give through has investment we within certainly would the into making actually out capabilities. bank a for what is you liquidity, we us more source a even those performing expectations. flexibility It only

not think fourth on it I'll growth, It that I you our That growth you sheet. summarized in we generated the summarized in at Cambr. was say in, market our that balance not organic was footprints that was you from the are Tim. if look but well, deposit quarter, generated well

towards all noninterest-bearing the of you know seeing this Wondering down the had at banks end outflows. down year seen pace a at deposits. I we've lot Are here could some slow all? if maybe touch the slowed we January of and of all? into decline seeing on at Has

morning. outflows in you adventure if are the see that We've being or debt definitely seen whether daily come accounts utilized ACA of call a trials it's stabilizing it's a the slowdown [indiscernible] the pace not, you how and and as almost the from here in in

seen whether I know, So bottom significant don't certainly flows we call here, out. a slowdown we've it in the but

guys could had And more then looking in on on Obviously, sneak if and I a you year just everything great credit. great is credit. here one

not will you're closely? know I be -- watching more assuming if a problems wondering recession. in you do what Just we more some get here But XXXX, if

with test an as us a reminder, second it It a team ] [ granular very our proactively we our identify year team us portfolio Well, and do with internal it's twice issues. because the review. once a year external a stress helps helps emerging

always them tend with to And been that these as don't fundamental the possible to with rapidly and take as well. position has our so banking deal in age issues problems belief

stress you, Great scenario economic side of Recession, still even I capitalized. So about recession that on into scenarios, comes tell or where worse test different as worst talking and well that's the we than the in downturns, company the out we're the other can a of

environment in the current is business are than as will make the age underwritten past. go credit vigilant. to up like more portfolio, the being So underwritten pleased And I of strongest conservative case is what would business determine higher performing being a in of quite can of so fair well. the an some I'm in expectation that you end underwritten because certainly, we rates feel in even terms we're with standards metrics being coming the the on being I'm the from portfolio with business. it amount that's the It's new the and could positioned, well even seeing and that particularly teams

take with caller, Stephens. is [Operator our We'll Instructions] Andrew next Terrell who

income are expense you start, Maybe provided any here provided? expectations any in on or baked get the guide I Tim, there not, guess, a I the just expectations or fee from expense of you XUniFi. one, to or guide whether would kind are XUniFi, hoping sense expectations what and to family for wanted or I revenue XXXX incremental Are towards on there to in in that this you you year? if of guidance. throughout your be within XUniFi about And of think then talk recall, I testing Can friends you that XXXX. correctly accomplish kind in working just saves

Andrew.

that pleased exactly a that's we're targeted to well, on increasingly by are into of go I'm second you serves unique in. on time, report encouraged all of the grow friends that we work and to testing XUniFi half memory Your family my capabilities are of and right. the in around XUniFi the suspect built. and listening terms seeing year. budget We're teammates number being in of is what this I

out that continuing technology. expense the can not the show embedded. have very year our overall make in this I'll well pleased investment that invest, in I'm something we second deep on in it's simulate half a you share this so more security-based And just might as I And public and of where manage statement What be making referenced Cambr that we're excited intention but to sometime particular, in tell to to going right at the road XUniFi, time. Again, there we'll to with continue XUniFi. be been I continuing company invest while expenses earlier, to is as only in as

in worrying the around you I credit I with that. the me what activity think list be fraud should fraud would ask 'XX? increasing on and first about put industry the If below

management, hyper-focused we the protecting and bank. just So are on our fraud clients protecting

and mortgage trying come there to a been business. about rates past helpful, potential any down of of within very how the over you couple the the there, on ask just should color come And remind you've If kind I Have as sense Tim. come get upside I really of volumes all years. as business. maybe made kind just your That's appreciate Can have mortgage us, changes I'm rates mortgage down well? another think you down really there. could just of

staff. the that probably more down some proud commitment leadership a during And can commitment they've bring of is support do I'm in times mortgage the your only you And work They of banking have. the to losing team. never fact, in times difficult like We, is these. in Yes. that business. way slow that made money

And the we've XXXX. year. we're seen in so fact, a we're positive, albeit during in they smaller the course methodically staffing brought contributor over positive of a than historically. But And down fact,

question, At the online time, interesting at bankers the second the is the a bring recruiting continually are at back to leads again, of the I part this is jobs pipeline that building right looking same their and also they So why are think your challenging. which and right time. to mortgage and

So, I Aldis, that. know, add don't anything to you would

to benefit Yes. Well, we my there is income the I'll mortgage similar in XXXX that or say in is fee terms of XXXX. in guidance embedded recognized for what mortgage

whether So the evolves be economy I'll could potentially calls the you let what how make judgment there. kind and there, from upside of --

exactly it to that rates see right. greater is support of certainly -- movement reality if full to downward in mean we'll we're that Andrew see we activity. rate I potential. And the realize and business really drop, We're need the in is markets

you fee pretty Aldis, level stable 'XX to this, million or 'XX. income And Okay. banking mortgage $XX said in of in so the guidance, a

correct. That's

We'll with now from Piper Sandler. question Andrew Liesch take a

Aldis.

the -- securities to deposits complete raise of to repurchases? you book, some you on rebuild on going fund these On those of how Or cash do that? have hand? go the the it going to just are be to you Is plan

I type be think March last to much of going of little from sitting cash It's of we'd year still a perspective. too be combination a --

cash So it not on day does need to much be to as day.

of structure and front. portfolio. everybody for asset portfolio to duration manage we'll reminder. or highly don't is investment portfolio. therefore, model how there. And repurpose deposits just us We $XXX probably due thresholds. we for And do. necessarily look that's liquidity look whatever some investment liquidity, store that fund another from additional maintaining go we'll use and what sheet and for liquidity rest of to or And million for the and and that on liquidity So maintain in a growth this this incremental liquid this for ahead then know we liquidity again, of we here to on knows book call a our But we a [ balance need, implies it, in just into raise investment it for increasing credit ] us, short I yield we year

increased can as aside quarter there maybe is business? you it's collateral nonaccrual the that their just detail loan, guess, update I monitoring for provision what any drove how And long that you reserves identified then any set like or in you've the it. this been And on far as provide

half Yes. Maybe you're we start were cooperative a we're a slowly resolved dealing the a would we cover believe with That again, I'll will of year. third has moving at at more And to than I'll one high it's you that and Aldis, quarter. of year, this first say referring that in strong to the end it collateral, with like now. typically any have And bank, be can in of detail? want little half potential. this another first loan operating we're fully in the partnership other level. entity I dealing operating that expect we to with resolved the more reference but We've been had strong resolved. it discussing it I

specific this was say million just of the approximately $X.X credit. provision million to expense of embedded of in I'll Yes. there reserve related $X.X

point accordingly credit the points, certainly too. but percentage being would that sometimes by to a out, our And or total basis loans would ACL become worked is that drop charge-off,

little loans So it. a inflated because that additional be of reserve. is The fully to total specific we would ACL reserved for

a of it Got that portion right? But still it. also Is growth. allowance for quarter was decent seems the like

Absolutely.

Yes. Absolutely.

the seeing you're Okay. in Nothing else portfolio? that

whole XXXX performance credit around No. I well is all-time our uncertainty monitoring And and remains portfolio given of evidenced economic our portfolio -- around as the metrics, as vigilance the very at strong. by all mean, look, an in the outcomes. high, as

feel like good I we've So it. a got handle on

closing will And Laney back I the am now remarks. I call Thank questions further no we have you. showing to for this at time. Mr. his turn

in say for everyone Anna. day. National good to And Holdings. interest and Bank quickly, just we'll thanks a for you, your joining Thank Have today

today's concludes This conference call.

XX of be this hours, to and like listen great Thank Investor on page. will available telephone on the much, the would call, you will be the If day. website have link Relations replay a company's it in you and to the very approximately

may disconnect. You now