National Bank (NBHC) 25 Apr 242024 Q1 Earnings call transcript

Good morning, everyone, and welcome to the National Bank Holdings Corporation 2024 First Quarter Earnings Conference Call. My name is Shelly, and I will 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 Gooden, Director of Investor Relations. Please go ahead.

good and Shelly, you, morning. Thank

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

and today pleasure non-GAAP Investor turn to news the for are addition, these measures investors. financial will information In in non-GAAP provided reference Reconciliations useful National call now measures, posted is Bank GAAP Corporation of provides the certain the Corporation's of my President Bank National believes the www.nationalbankholdings.com. Mr. release call It section Holdings Relations Tim Laney. Holdings which the on over Chairman, introduce CEO, to and measures

annualized National Bank return delivered equity per Officer, quarter $X.XX morning, Good Financial tangible quarterly over and quarter us first and thank cycle. preserving of up, low well we you light second takes Holdings' XX.XX%. picked managed, Emily. loan XXXX action were share investments client first the over a our early pipeline future, of interest we and the discuss I'm million are X.X% joining diluted And earnings quarter. rates. with Thanks, We date us related rate I'll of our quarter, common business joined were for in results. near strong deposit this Birkans. production Aldis for start Chief on by a in as that the the grew deferring Once down the while strong to slow $XX rates of have experienced of not expense X lowering of year, charge-offs. We Credit this clients clear entire Expenses amortization We in Reserve deposits incurring fact became we the it basis coming of quarter. the with points very through activity anticipation in Federal XUniFi in of across remains a beta to detailed on especially our more cover that Aldis after the our Aldis? XUniFi. update a core with

morning. right. Tim, All Thanks, and good

I touch guidance call, any rate future quarter XXXX. a Fed. just this our by will our as reminder, the highlights the And cover on well interest for policy first the During as does as financial guidance for not include changes

the to financial results. Turning

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

The X.X%, assets was on return equity was first the quarter's tangible tangible XX.X%. return and on

quarter lines were levels. ended we balances and hope loan needs delayed evident of were This from funding the And the funding many is X.X%. still of the early million expectations decreased rate achieving our interest the quarter, utilization especially Tim $XXX discussed, at costs. projects cut high. Similarly, lower credit already have that the low quite During feedback or historically the with commercial clients when was in commercial year as our our received

in day recognized was The decrease in of equivalent loan million Net the mid-single first fee for our quite $X.X loan digits. X.XX%. by at quarter, quarter. accelerated the enter interest strong, to income margin in expect and we Fully X income in quarter primarily guidance driven As pipelines million. second net linked-quarter taxable came growth QX first portfolio was meet quarter year the our less $XX.X the we interest of are full and

continue new yields. rate Our and to benefit our favorably loan were at average asset earning originations during quarter an X.X% of the

deposit is XX.X%, is deposit rate date and this pricing cycle overall the Our to on beta pressure abating.

Looking ahead rest and spot an to the million NIM XXXX, mid-X we the project average for our million the $XXX on Xs. Deposit quarter on basis. a settle balances during balance of basis in grew $XX

tax benefited inflows platform This we in from the seasonal quarter, Cambr deposits.

FHLB are our our deposits more such, to paid borrowings as favorable off we As all funding of costs. these

of remains quality, it asset In terms our strong.

expense. increased have the to and built loans. recorded quarter, to reserves nonaccrual We support basis allowance total overall charge-offs During we loan to incurred points sufficient in our no ratio and net X provision any X.XX%

in against charges quarter. the service marks on portfolio. in bank to loan we fees, while the diversification a are which saw fee $XX.X prior strong by gains million driven for momentum And XX our of million loan basis acquired seasonal if hold million $X.X quarter a applied $XX.X coverage SBA approximately trust first Cambr loan income from equates across loan and loss Total we a we income or portfolio, the and our Additionally, from gaining still noninterest efforts, was whole sale, card increase slowdown fees. points

gain $XXX,XXX This benefited we center quarter, the also banking from sale on building. a a of

$XX rollout we full XXXX, the income quarter for of expense year $X project million quarter payroll approximately guidance plan $XX.X $XX and million, and to and of yield-related to our rest on be The million. Noninterest the for this taxes. For elevated was included expense the to our continue on totaled fee budget we dates. meet targeted million with

$XXX our XXXX, full of guidance original of rest to year the expenses million. our noninterest million $XXX for we towards trending see ahead Looking

book excess X.X%, $XX.XX. In will quarter a we to I at leverage capital ending with and Tangible Tier per ratio terms XX%. at coming quarter value the share continue Tim, X the with back TCE grow capital, of grew to ending our X.X% at in turn a you. that, ratio

Tier tangible totaled ratio quarter per XX.XX% book value our quarter, in share earnings X increasing common capital the resulted at during solid end. Well, Aldis. $X.XX Thanks, equity and

Now we the that medium-sized turning believe a build-out progress banking. a being small U.S. remain change and enthusiastic highly of the about to banking businesses made can XUniFi, platform, we the platform, access in way

Additionally, call simply we're do XUniFi owners time We is XUniFi on money tracking year. meaningfully these today. stress project release in up by business questions to believe testing expect that let's quarter of tools we open that to discussion. and and exist lives. target reduce not within user and work this be X the building save the businesses in and will for their Shelly, fourth for All note,

question Jeff from first our coming Davidson. Rulis And Instructions] [Operator is with D.A.

Cambr influx I FHLB, for the no guess stickiness balance out. but related paydown those those from It staying get flow to and sense the tax-related, expectation the wanted I kind guess on a of of on just sheet. there's of that of deposits sounded

Yes, and this April before is of out do quarter. come as Obviously, to coming level the there certain Aldis. sticky will and is the second years some at well. be that a of But we've in in months this looked seasonal patterns expect their in rest here

The growing pretty is average that to balances across expect that we trend impressive platform continue. so

of you guide. would a then, turning pretty kind to big drop-off, look building terms like of margin? And lean there, if back of tailwinds okay. on at year, the mid-X.XX% -- you and that. sounds do guess looking rates the got margin some then It interest-bearing in a about good guess that what I kind more average I of think it, direction pipeline, loan you of given towards to half the FHLB pretty Got the

on year Just in wanted expectations. full to of kind kind of check

where -- mentioned, Cambr is it's certainly as fluctuations, think we I to adding There as growth timing hard X%. I come of accretive DDAs Yes. I or the loan loans mean, are flow high be might give mentioned, quarter-to-quarter. as we it. you you will well, regardless fund given down how That margin to as the as

will So too. timing that of matter,

shift up certainly but either. for So our in QX for tailwinds get to up maybe ahead there is margin expectations of to set want here don't -- we

last think at And level I about the had a think of before kind levels? in? NII, Are coming And rebounds? NII maybe maybe that kind the reassessing on the guess, point, can you recover or or thoughts I you on a related on quarter. we should Any front margin guide the this margin of those,

again, think That's NII the growth. asset I driven will be certainly, growth. by driven by earning loan Well, Yes.

certainly a loan first bit The came the given in lower performance. quarter lighter than we expected,

in does earning it at that give that make up is to of estimate for we the the the into growth towards holding here, margin you if asset NII will going the Xs, year a from you hard whether good pretty But guidance. NII. to full So what the loan do rest mid-X to tell growth, again, look

be we'll first to if and like can, would back would suggest it I hard any as I deliver think plan gap working that quarter. our NII teams loan that end, to they the that from add pipeline quarter on cover balances then current relates by

Motta is question coming KBW. next Our Kelly from with

I dropped the on for where share the apologize. on. and the seeing was alluded best X pipeline. off minute opportunities. a I during to you are prepared loan could or just wondering you where appreciate coming you're just remarks, yields if I I the new color loan

to versus as up shaping pipeline. this of mix sort any Just now pipelines last and are that the how color time of quarter

what to markets. was market Yes, is loan We're going buildup it's And first point to is, nice understand usage also analyzing clients, our quarter seeing major in the down, businesses to trying we there, middle which still that, all our pruning largely that we're probably so were being part the in on -- out not across important we're talking drivers of line geography. C&I, to frankly of addition in selectively portfolio. the it

So exposure. industries are reducing proactively where we there targeted are

reducing And that our area state where total represents of so transportation that industry. like the book, X% you exposure, an of about just we're imagine that actually can given

certainly in we're new that not clients space. So adding

not to focus is Service-related because I estate commercial activity manufacturing of a core real strong. are this really market. that's lot just speak So strong. in a can't in businesses

with So little Kelly, a hope helps that color. I

impact even to seeing platform of X Yes, wondering QX. I are I you kind could know testing how NBHC it's what about love shine have frame of certainly. we if And could balance sheet color add to to type this as for yet. that the some to for That's have do, not to really results. start think Just to growth? Will But quantify you it very as XUniFi, version more ready fee ready time a we're that the that this helpful. about through to it take going in of maybe opportunity?

it's -- new banking. great business, tell but business, Strategically, a not generator, you Strategically new I completely product, Yes. a a not income a think a should fee of building would way just we a XUniFi as about new question. that

say the sources. where the important we'll to and time preserve in becomes building. But there run the so rest bank saving client more data is reality environment moves And AI experience, that really force core the in And of lakes well transferable that us features the its be what it building of core the data that that doing would out everybody with XUniFi. are that such largely the teams and investors, interesting this example in just and XUniFi bank run is already terms is the are a XUniFi way it forth. it's benefiting is over about so of with be our different is better only in could benefit got that suggest lives we artificial being to that the our and and I business seeing is crossover built most of life. I've intelligence to security impressed are For And optionality couldn't such in that I technical conjunction beauty as will as bank are talking good is its into the a very a on money. bank. Then probably level the own

is functionality, an architecture. In terms API-first this of

haven't and us So of unlike to be vast It again, of able nimble adjust clients been the flexibility being previously will the with find is anything do to responsive business more that the to banking ways done. that allow majority really in and in today. you beauty industry

question next with Sandler. coming Our Andrew Piper is from Liesch

the that in question deposits on Cambr in, a quarter. Just the came

Just curious between off. might paid be and what that the difference FHLB those the funding borrowings you

specific paid what cost to a the just of talk couple necessarily if benefit that don't we annualized million be same deposit we Again, dollar our balances bottom persisted the to I'll say these but FHLB, difference versus at pricing, would Yes. line.

curious in helpful. And But that's the right are deal the process it. All right thought far right, additional additional on targets past? M&A your Got distant going, the deals with Tim, M&A conversations How what's other now? the too then prospective last just on not for Cambr year, now. outlook

we targeting, markets spending what know been $X that clear has been would in And to that's growth we're range billion where markets, And institutions Well, understand. billion have in that we've in which $X be ideally we growth high. our activity time. certainly in been and

And question coming from our Jeff is Davidson. next with D.A. Rulis

a to of get flows of nonperforming what and was hoping the more little came on I color loans in those loans. characteristics linked-quarter, the

do believe the increase asking quarter that this want like Yes. to negative trend. NPAs the we I because point over don't Thanks represents for in anything a make

fact, we will just special call points a moved NPAs not also these expected, basis I'll point are In concern on they of, well quite assets that the them, frankly, below an group we that be preserved no were focus. nonperformers believe and has bank stagnant front. believe as, down that for, out and year-end. very we amount NPAs are XX couple There by our receiving that as out I'll intense quickly of of

percent a points? loans, Tim, XX the that's of basis And

Yes, yes.

then great. And more follow-up. Okay, one

any Just on see line hope the touched hard was that'd the -- item if that potentially see X, kind it and within were -- and But come just impacts see you card those card makes what a wanted sense. those back. to linked-quarter those or to to -- some seasonality revenues wanted what service just of there down, charging but been briefly, changes

-- first of items. those us all Yes. for is That's both line for seasonality quarter

actually... So

to dip. first seen you this If it you years. quarter compared We've of year, for that year quarter see quarter would last -- first

Right.

and card So we quarter bank back that seeing the to activity March in in do of here second expect already here into month come good April. in starting in

deposits because lot to share It the card in prompts a closed encouraging banking deposits we is movement positive around quarter personal activity And out see relationships. should second. our relates nice we to another and we as started banking a point of thought into the another moved personal

see to So contribute that additional to certainly was well. fee time will refreshing over income and that as

a in I weeds, guess of update while want nice item. sequential the banking the outlook don't the for that in we're had you line to I the mortgage know if sort uptick. year

gain But market's our fee guidance, for dramatically, been our the rates at it's business item. numbers. the line has a what in Even I'll guided, I our would Not embedded have morning, change markets each total don't numbers month for that given numbers. that should embedded year meet in specifically. we Again, up better in conservative, on but been GDP are mortgage say sale what this or somewhat the say right? that be quite able planned changed, this bit, to plan we to if And that again, the we planned really our

is great. it. full The Yes. noninterest year guide I income appreciate

Thank course. you. of Yes,

Our next question from Kelly is with KBW. coming Motta

working some on M&A initiatives to I you're been on. I powder appreciate guys keep did in other the as and the some dry see want that and you of capital maybe build the have that nicely, on color you active for buyback very past. as well that the understanding did

you that method guys how deployment. capital wondering are Just of approaching

as at there We're interesting a high probably there. discussing We action opportunity do I can could be believe buyback as some recall. frequency

capital have an and increase us might And watch out our that frankly, We the growth appropriate. we're place. I'll it dividend will dividend we're this right about and twice kind whether or in also of buyback, we're confidence be trigger realizing, higher that at a market if talking with continue authorized also, year. we the pull gives the we not to each point point think the we'll that

consideration. So that's another

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

and of day. Thank just good you, you those Thank that all asked you. thoughtful Shelly. I'll thank questions, you wish a

this concludes conference today's And call.

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

disconnect. now may You