National Bank (NBHC) 23 Oct 242024 Q3 Earnings call transcript

Good morning, everyone, and welcome to the National Bank Holdings Corporation 2024 Third Quarter Earnings Call. My name is Anna, 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, Chief Accounting Officer and 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 Securities and Exchange Commission. of as Bank only These date no of to National speak statements revise and call, the Holdings obligation this undertakes Corporation these update or statements.

In measures believes certain non-GAAP provides are news release provided the measures the of measures, Corporation for today information financial Holdings Reconciliations in Relations investors. the Bank addition, www.nationalbankholdings.com. will on section of useful these posted call GAAP which Investor the reference non-GAAP National to

the pleasure Bank Tim now my Holdings It Chairman to Laney. and Corporation's National is over Mr. CEO, turn and introduce call

joining thank newly Aldis Birkans Van financial Well, results. Officer. as of by company, to joined thanks, newly XXXX Emily. be discuss for our Financial I'm Nicole Quarter and Good well our pleased you in Denabeele, Bank us Third we as appointed morning, role Holdings' Chief President as appointed National his as

began Officer. You're the She our as in she's her to And recently, experience career been has Accounting all familiar Deloitte years over while Most you, of years. with with new many Nicole with for Chief of Aldis. Nicole is X our XX industry. company served and

is want disciplined recognize loan for I pricing. fee as pricing and color of delivered the deposit deposit loan We income going and approach to back do on provide strong earnings and but solid loans on well bankers' quarter to deposits, on. our to Moving generation. Aldis the as disciplined

loan the strong. believe very portfolio remains we Finally,

call. first on that for to turn earnings note, the I'll over her call Nicole And

join call Thank morning. this today. opportunity you, to have I'm good to and the Tim, and pleased

any financial quarter's by our Fed. will remainder policy During year, for cover the the today's highlights interest the of guidance include as decisions as call, I future not rate well does the which

third assets taxable For earnings $X.XX on tangible delivered and On tangible This financial of we earning per return average by income of performance strong net an our of asset taxable XX.X%. grew million common in or fully expansion. XX.X%. net quarter's fully margin by driven the equity $XX.X return resulted our equivalent The annualized, X.X% was linked average interest quarter, in diluted by highlighted on growth average pre-provision net a a increase quarter equivalent of of we a share. revenue earnings basis, interest XX% and

taxable points X.XX%, during interest quarter. margin was basis XX net expanding equivalent third the Fully

disciplined, quarter's expect And the fourth grew average mid result, [ in the balances. bankers basis our spot X.X million a discipline ]. efforts continue a to We margin -- remain as that proactive will cycle. pricing $XX balances interest quarter $XXX net and through grew on our during deposit million the our project we to manage that Deposit in

quality. credit to Turning

quarter forecast, to changes charge-offs the The lowest to reserved points XXXX. for year. million the by XX basis loans continue The of outlook. previously resolved CECL allowance rate the just driven primarily the expense We quarter the We the X.XX%. in XX specifically points for or quarter, ratio basis one in $X total ended net underlying the during the provision of was nonperforming during unemployment loan at since our quarter's bring quarter models level down resulting ratio annualized to early credit

an if We of XX the additional portfolio, loan continue our to loan $XX coverage points hold loss portfolio. entire million marks acquired against across adds applied of loan basis which

million over was the $X.X an increase quarter for prior of a $XX.X third million, income strong quarter. Noninterest the

treasury in detail. fees growth businesses, are number management in which cover within teams more our generating a Aldis and nice fee-based will of Our

XXXX, in our continue of ahead linked We expenses we future the from expense day the range and the of to fourth as to in quarter's to noninterest project technology in a result investments third income $XX for quarter. expense seasonality. second continued million, grow to and quarter quarter noninterest $XX $XX.X the slightly a be quarter payroll approximately in $XX million million. in one of expected our be The of million, we million result range which will the third increased project over XUniFi-related fourth in Noninterest totaled decline the million, is $X.X investment Looking additional quarter quarter XUniFi the third of as quarters. to to increasing to $XX

to our value grow ratio ending X In TCE the $XX.XX. ending terms book quarter Tier at capital at continue quarter share X%, XX.X% capital, ratio the per with ratio and capital leverage at Tangible at the excess we of XX.X%. grew CETX X.X%,

to it of provide more performance over turn detail business. around the that, our will to With Aldis I

and Thank you, Nicole, morning. good

both loan of million fundings weighted balance needs growth, a rate to total quarter loan spot lower and of push the of as to contributed of quarter, during increase in decided basis yield. driving average flat NIM funding environment. our anticipation point net their with a On with income basis, the terms loan In loan expansion. fairly a average totaled nicely XX our in loan portfolio clients portfolio X.X%, growth $XXX rate interest That, a many combined ended

modest quite seeing and our of fourth the robust pipeline quarter's quarter we a fourth a And that pointing rebound mentioned line lines our to solid of quarter. as business. with across in last granular entered most I during utilization, are are diversified a We call,

this, basis touched loans addressing since with in decreasing on third quarter, nonperforming during X already last a good on our progress we assets the nonperforming points Nicole and the points made basis As basis XX by quarter. year's linked-quarter

$XX several loans bucket. said Having credits quarter. total that there past the million criticized XX-day our Our during due that, impacted decreased are

their expect with progress the closely and working respective clients, fourth meaningful make are to teams Our we quarter. during

is on success pricing what deposits to improvement. are of in and respect showing in with loans seeing we signs margin both strategy Our

well were addressing proactively certain the the come decrease our deposit not of While late we cut Fed Fed categories costs. in rate the a until did driving deposit meeting transaction in advance quarter, in

project also cost of peak next X. CDs the or to within our quarter We

the rate significantly with a run which lower rate deposit ended will fourth decrease offset from quarter short-term rate, impact variable the We provide any on an our to loans.

core in also I'm have our highlight growing the delighted fees. to teams progress made banking

other by of During efforts treasury in as over item to management grow our increased trust more both with off to fees XXXX. and sheet well Similarly, positioned is charges XX% client strategic growth this supporting flexibility loan to new noninterest have growth fees, believe of nicely few We great third as line quarter XX% of near-term line quarters. within income added items business, well are additions Cambr entered for our paying upside the various the since our rationalization We initiatives. there provide both the quarter, through fourth as respect we the service next swaps the as other SBA portfolio quarter course products. balance these well with to as

you. back I'll Tim, it to turn

Thank you, Aldis.

convicted at to the and well which that the on capital, right way businesses U.S. meaningful accelerated capital believe to options. has execute small change we of build credit among that of the to liquidity And pace, positioned the XUniFi the banking with continue access the development strength our opportunities. us XUniFi We high and provides medium-sized leave We an ranks those strategic potential remain system. positions strategic opportunities, and us

up lines In On in here fact, the that note, let's we began November. for testing live open of . client speaking XUniFi, next month questions.

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

margin. Maybe me, quarterly? the quarterly the do the margin a -- average Nicole, on the have average Just question you September versus excuse

higher QX Yes. September's Jeff, than margin come monthly did margin. our in

did was improvement rate result bankers' of cost and saw to margin September's to see in our deposits, our bring to benefit down in margin QX monthly cost as we X.X%. an of We proactive September. our efforts deposit Our a

Okay. additional outlook into puts what's of that, into but takes mid -- expectation the 'XX, additional margin from deposit there could know kind and that a you're I see maybe we sounds kind there? look cost doesn't but positioned a like just we cuts, X.X, where you perspective proactive I should approach, forward And also, cuts, of that the a walk think said mid -- of assume

is Yes. Jeff, Aldis. this

neutral margin from in . know, and fairly mid for guidance neutral instance, you are we decreases into huge our next of ] stepping and year. rate Therefore, asset liability this so in cuts. we or As near-term or the don't X.Xs good benefits now X.X [ is expect

fourth as year. next the more we the we'll robust guidance always providing be do, quarter earnings from And for call,

what cuts as And you as reasonable deposit better I about think yields XX that rate are in loan to before costs both any third the basis points the assume than well are quarter. probably trending saw again, it's further

continues dividend to the increases seeing capital front, on build. capital Tim, the here,

know If a on you I to from the priorities with touch that all forward. want could side. just on tools optionality I check look as from just but is big you, capital the in here one we

sense. Well, well with where the to again, culture partner institution positioned the fits, prepared right strategy front. we've the that we are And certainly to execute where makes feel on

to in So delineate comments, investment provide Will we'll be year next we that throughout is clearly as XUniFi. my And I've XUniFi. the that's year's prepared invest the mentioned when continue, expectation guidance, continue my we'll we'll exciting. making do in in

is the XUniFi. at the about in is core think what second of and the way which So bank, what you then can the look efficiency for begin this is I is it to the future investment bank really

is to buyback are buy we're prices. Beyond the we're attitude sale. that, not when think our candidly, We like market these we in things fairly and on traded at

be probably now. that right screen radar the not So on would

We'll from KBW. now Ashley Kate take question next with our

This on Yes. Kelly is Motta. for Kate

you wondering guys and by opportunities seeing I the region. loan best So booked just type growth that for was are

are I I quite think, pipelines mentioned, as our diversified.

middle really across as specialty it our market it geographically footprint as to the So spans well lines. our

viewed stands depend it Certainly, well-diversified through is as it of important one nothing is it's that pipeline pulls a on out But now. and portfolio the So that. credit being today, moment and will pipeline right force. very carefully much how a most driving -- at

from take question Stephens. Andrew Terrell next with our We'll now

than or anything Just XX Nicole, unique yields the bit to this start, more loan It quarter, up terms expected. in I of originated a points. was little Aldis basis

it's should whether recovery anything fees elevated there? anything appreciate, or in Just uniquely or

loan originated we have with our yield third rates continue We of for average be with very weighted to X.X% and quarter. a rates, loan did the disciplined

no There trying if -- ask to you're prepays that that's else impacting are or Andrew. is one-offs no those what anything there's

Yes.

Okay.

reflective just So new mainly origination the of yields. strong

right. That's

Got it.

just in any cuts rate throughout that I'd you've clients, type prior cutting received hear fourth then throughout around looking are rates. to we change in of influences that Fed how preemptive some strategy kind quarter, these lowering those with the like process future and get how And if the of perspective, that your I'm what incremental Okay. of were you type cuts? pushback be your and of curious curious, deposit if to costs couple rates how any a manage to influences you're to of conversations

Look, situation. point down. clients the to as we're win-win our clients to And us, conversations had And be we They we matter, to rates knew frankly, we as it's we've they move moved as very working with thing a was to practical but with with understand continuing weren't of got the lowering us have do. right deposit surprising it little a pushback, and work around rates. up

worked have pushback. very again, Our and clients little with us

have discipline, my and have, nice they've the their have courage the say there, get I'll bankers and out they to pushed it to while again, been the a job. share our had and done to opportunity those conversations have really gives appreciation So may and they me they for relationships to

Understood. Yes.

you contractual more, Can deposits? Okay. rate? a should us viewing we there any on the one any effectively be Cambr floating And of kind ask to deposits. of opportunity if just or here? these just deposits around term I the kind . Cambr source repricing provide could essentially color just as Is Or remind

like our were way are, would of of of part, in for they for as managed call course. on terms part They are exceptions, is the deposits. of most to and a I most beneficiaries other linkage in reach But working rates having client mentioned, way they're up, them, There there's and no And with were the these that contractual managed down. they Tim conversation, out deposits. just rate us

move question We'll Sandler. from Liesch Piper our Andrew with next to

like and well. Tim, a as to my Yes, that Nicole congratulations got several Aldis states. you footprint extend covers

today, when M&A potential the the trying to Are in? you locations at look targets there of you -- you what want at what other If look to interesting? are might get locations out want there in? there, to be be sense opportunities you I'm find franchise that a of deeper just you sort

We would Texas. in Sure. more in do do to more Utah. to love would love We

has always across are adhere growing has set focus only overreaching metrics. into and well the averages, moving principle the then we And beyond one national feel strongly matching it as that's credit and that's have that cultures list. really that the is to the faster Our We the are company, that it of markets there been Frankly, And since served a very it. broad us does about similar. of of management and to that, than the top precision of more a strategies. be at will continue mindsets to be would the the few around risk become and around nonnegotiables, just founding

the the on the seasonality that is in it. noninterest the sense. couple banking aware then line? call, other that of? a income, on is we be discussed seasonality questions follow-up And largely Got Makes mortgage should Or that there you just of

You're correct. income, line. the is track that are QX's do within onetime full to excluding our want point largely I charge. That banking for out noninterest projection on mortgage year we meet to

you there some and well is mortgage As is for related as [indiscernible]. to there bank seasonality the mentioned, seasonality

then Helpful. it. forward? using be tax And we should right. what rate Got All going

year tax to our the year-to-date for indicator XX%. and a XX%, we rate projecting best X/XX, The effective was range through is full Yes. XX% rate in of are rate tax the which

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

you today. Have of us the for rest week. good thank Very care. joining a Take simply and say I'll day good. the

this today's call. conference And concludes

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

now You may disconnect.