NBHC - Earnings call transcript Q2 2021 | National Bank Holdings Corporation

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Operator

Good morning, everyone. Welcome to the National Bank Holdings Corporation 2021 Second Quarter Earnings Call. My name is Alan; I'll 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.

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

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

Tim Laney

Credit pandemic. relationship third in recovered from to entered continues operate new you, focus we growth personal, have new thanks across largely X.X% growth of Aldis National With Quarter during renewed and quarter. banking quality realizing Holdings' the pristine, quarter Second We're our Financial segments. market growing I'm for Earnings loan our we and Birkans. and Alan. Call. with Good Bank that a pipeline very XXXX Officer, joined important, Equally a joining realized by the be Thank annualized share, relationships. on strong markets we business morning, Chief the near of commercial

second growth the you. very for strong we half that I'll And hand result, well on to a during I believe off Aldis, note, are of it As year. positioned the

Aldis Birkans

you, this earnings Thank you Tim, joining everyone. Thank quarter. morning, and call for right. good All our

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

and for dividend X.XX% at dividend equity return earlier our and quarter, second quarterly year, assets $X.XX XX.XX%. Also calendar on the return was in share. increase was tangible this on stands per a Our tangible average now our average announced we

As call, this not about our did earnings disappoint. and quarter's excited during we we pipelines, loan production quarter our loan discussed last are

The which fundings loan production highest were $XXX.X loan second our second quarter's in was million, quarter non-PPP history.

grew X.X% result, annualized. solid loan a As the a we our quarter during core book

received also the on payments X this of the loan expect PPP to balances loans. round forgiven. XX% loans been we the stage, of of most PPP And at than more deferred end fee X the recognized over be this remaining And to digits by We be loan expect is year. outstanding of half Protection regards single in building of we high annualized details non-PPP second on had for to the our development loan continue this of as are pleased $XXX.X grow mid- our we with Paycheck loans, To A to the XXXX. million few have bankers of extra markets. very XX, books next we balance off this of time, With million. all of The Protection the accordingly, to PPP our our book loan efforts. across to business quarters. June project the XXXX. most efforts our have remaining At X pipelines and be X/X and nicely date, round Program Program revenue the Paycheck $X forgiveness And we

Turning to deposits.

in growth $XXX.X we This increasing strong deposits annualized. average or deposits the transaction with XX.X% continued quarter, million

mark. crossed also quarter our second $X average total billion time the The first the marked deposits

cash strong in XX.X% million interest the our are we points our net had X.XX% equivalent our holding on basis a during resulting of the dilutive basis impact another the was growth deposits quarter this importantly, margin. margin excess decreased XXXX. benefited base, point earning X More taxable which or points cost fully deposit The XX asset of total a and and annualized. decreased The it $XXX.X average second grew total basis quarter, X has

to Given shift in cash of start higher-yielding our back seeing expect the coming strong the loan from earning return quarters asset mix we to loan balances. pipelines,

interest coming This $XX.X our asset loan $X quarter's project fully million net And grew to Stripping linked taxable in PPP the equivalent income loan income included fees. net of interest fees, income our interest we normalizes, mix quarters. net $XXX,XXX. million earning grow was and the out core PPP as quarter

strong from Our prior criticized reductions in and X classified were basis solid quarter. the just with remained charge-offs the nonperforming quarter asset loans Net points. quality for

than this XX% XX% decreased lower ago. and are assets year nonperforming Our a quarter

economic to PPP, is in loans ACL Our $X.X release resulted X.XX%. trends down with to excellent PPP this NPA forecast toll a improving combined projections excluding was quarter. the provision Moody's model of resulting loan now loans, CECL to ratio, from million These The total credit excluding X.XX%.

benefit Lastly, $X.X prior from discounts $XX.X second from to acquisitions. as noninterest fair of reminder, allowance a in for we quarter's income the was million to losses, million. credit continue value Total addition

grew engagement core of we a linked linked-quarter Our basis the service basis over last card XX.X% XX.X% quarter able quarter strong, fees. activity and year. deliver XX.X% account banking second client second XXXX, were annualized of for to on while business the total and quarter over Total solid revenues bank grew a XX.X% charges consumer and on was growth and annualized spending both in our

The associated this gains of realized compared million other XXXX. benefited center noninterest income which $X.X the sale banking quarter from during consolidations, from with of of first consolidated such to estate line real gain quarter the $XXX,XXX

nonmortgage a first to we million mortgage the residential down some from Looking margin regard X explain are compression to came income of we the impacted approximately totaled sale Mortgage With points to quarter, million margin half longer-term rates quarter be this banking our during was ahead, Having lower range. $XX income in from increase see mortgage as gain an the second. revenues. mortgage the volume in in in far this $XX decrease business, recovery margins. gain This in the which in fee X.X XX% the second about well to $X.X the said million $XX for that, first quarter half The are on Xs the high quarter's so as on million second quarter. points XXXX, July. sale of of both projecting encouraged first to

The reduced other contributing factor activity. for linked the revenue volumes refinancing drop from quarter was

for Looking range project in ahead, half $XX and would market second million XXXX. be to the to given of conditions, we mortgage-related trending the current the million the of revenue $XX

a by occupancy run and to to banking also efforts a starting rate are the linked-quarter $XX.X banking mortgage-related in equipment commissions On basis, million, center decreased items. expense Turning center decrease lower as Noninterest our totaled in these expense line $X.X expenses. costs. We've driven seen lower and million. materialize expenses consolidation consolidation

XXXX, half we expense are projecting of second the be $XX the to range noninterest in $XX million For of million. to

deploy to future. Finally, to options provide consider strategically in our capital the and we strong as excess many remain how our capital ratios

grown Our of you. annualized Tim, tangible first per share I XXXX. with book turn half and ended will it that, value an the X% $XX.XX to at for have quarter back

Tim Laney

open our note, levels we're this new year. that growth of up have during line of ask continue Thanks, be relationship seeing Aldis. Look, and the share. second loan in to like believe questions. -- say the half to market thanks I'll you On production positioned we realize Alan, for the to potential well we in ask bankers record our markets to I take what and

Operator

[Operator We'll Hovde our Brett take from Instructions] first with Group. Rabatin question

BrettRabatin

over if the despite Can Wanted XQ. more was a $XX feeling if just $XX in it maybe to heard you you're a margin. I writing to the to the pipeline? a versus the of for levels million this mortgage it correctly, like the gain XQ margin like maybe that the were I I talk better you're what first seeing is back go And million. on about increase ask, maybe if guidance my mortgage you half on correctly, down little little got about notes correct, from gain better maybe and sale little sale for in XQ expecting year just sounds back sounded And

AldisBirkans

you right. I heard Yes, think it

take year account volumes, in and unusually quarters have $XX for certainly typically the to terms But fourth seasonality industry. this the million, year quarter last although were QX So quarter $XX that the profitable place, just yet. the that there to million rate And higher was first necessarily of takes that into a on saw one, environment. linked down the big was financing we by quarter not certainly the we're activity recovery of the XX% driven impact that almost basis, seeing

steady quarter on going the So second quarter. into the margins from are the are volumes while somewhat recovering, third

TimLaney

seen you alternatively want speak to in new financing. Aldis, to what may we've home

AldisBirkans

Yes. No, certainly, Tim.

purchase market. last volume been linked good quarter we've on year. in business that so us that we mortgage on market, our what the purchases spend grew over And like the we'd and XX% for news quarter, focused the same and the bankers XX% we has is, the attention always us grew And for

So what market are we for are activity providing bankers. the our markets markets see certainly and providing opportunities our the that

TimLaney

think to attractive continue markets be that's very grow. I point, in encouraging the is And operate Brett, that we most these and

real challenges this before discussed is so The finding housing. the we've demand strong. And -- the simply remains

BrettRabatin

definitely the the across it's case many Yes, markets country. in

kind to deeper bit existing just loan see were wanted that's guys to adds, new growth? increased And of unique driving into loan loan C&I you dive and client a was wanted a ask doing that quarter what's the I things, more little growth. strong thing maybe other this The clients just if with that utilization,

TimLaney

-- Great growth. cylinders Olympic running it across reality the regard. the close home or question. is say I Olympic teams I whether is the medals. mean our I is weightlifting we're the all I to they're guess feel talk market seeing would the it that we're And share the I on board, it when of like And teams, spirit what was badminton about in season, bringing of of beauty in in our

remainder to the business fully see banking so through And year. our in performance group business expect the or strong of I small

look all-time I come strong the banking of again, shy you prospects record in combined ever and of third banking a clients as on with commercial efforts at seen just them. of And focus to our And pipelines base touch an new both were attributed the course breaking the year. that's and think to over with really as lot we the to last as Aldis loan quarter If quarter, in be we've out, continuing second pointed business we into production.

as on strong that And we markets soon break realize the so us. credit, our foot bring off to took we started as opportunities these the

been would is thing other hyper point new relationship growth. The we've banking focused I that personal the in out on arena

And a I And focus couldn't I think to be not be complacent deposit well. very on all one focus team's be reasons Aldis our we're as arena growing new easy balances see market to going what of proud this to space consumer of that's relationships the nice more core believe in in relates become it related. that share. these and bank the stickiness personal banking for really liquidity taking and would might I sitting the on on it as of stimulus beyond

across business. summarizing of very So that, of would all say, lines solid all of I our performance

Operator

next will the question with Andrew Sandler. Piper And take Okay. we'll from come Liesch

AndrewLiesch

theme based Just record the is what's at the even think loan sticking you could Tim, growth have you high I growth production surpass that digits. that that keep here. guidance? you being from do did, the year you with second growth in reasonable for could But mid- what non-PPP mentioned And to then -- just think on to the me. what seems single of you half guide end? you high that mean

TimLaney

we're in markets look, reasonably and can believe should I Aldis, table. all say, guidance. I But the record learned I track -- based to we're think And and then what think of we conservative then to we're we're to to performing we're being that our strong be end -- at always of unexpected Go Aldis. we've somewhat the bring a going in, obviously, expectation ahead, just I'll always there's that strive where that the going higher have guidance. toward the that. on beat a sorry, And

AldisBirkans

last the just Yes. of of piece in the that's quite part is terms in And seen color in hedge quarters so what elevated we've guidance. several payoffs, paydowns, the one of unknown maybe

TimLaney

really clear And resides when balance about amount sheet. It's largely. liquidity of to we that it's payoffs, there, our about an talk clients' paydowns, not on amazing be losing relationships

on clients focused a to knowing that that frankly, needs on care growth. that's hyper front. borrowing to back stand their growing share, feel and good about going just we're new about level market So existing gain. we've hyper been, That's and but It's greater so important, -- why will all where see focused we market literally as we come taking the share their of where being on

AndrewLiesch

there's at here, stands helpful. what mean, reserve the it's looking ratio it. got level guys? you the the to do see do But -- operate? for where right And for you benefit the is your know you Got you I right obviously, Like think you model-driven. discount, That's accounting ratio? I reserve just appropriate from in but there where what's purchase guys most then

AldisBirkans

environment the X can X% that to I reference right allowance, us Yes. don't XXXX entered most I the we say is appropriate was will for a what entered macroeconomic But that. And we the model in CECL right? way day on because around for know ACL point -- total on of dictate best when with loans.

outlook. from macroeconomic here the point of be where that, with. my certainly, by go where But dictated start you is So the we will mind, reference in kind

TimLaney

the economic to to and beneficial. suggest that our recognizing it. they're that fight our make on other for own of we stress once beyond not year to extremely that than that, and again, we're as test in said the And is dire said party -- stress It's that entirely a the step frankly, of portfolio there's but our loan perform is I'll to from team Having you the simple portfolio bring granularity and of of the reserve certainly most situations and of and as X%. to certainly X% always model, tension could in a going a that listeners loan for out disconnected, lower be the, that. bias argument and our third how at testing, granular Having that that there, work to be hold if continues as we bit and pretty I would we and coming want guess, level a I CECL, analysis to on diversity do remind away the hold portfolio look And to review objectivity at suspect, can. as going going much to CECL

Operator

All right.

on will Stephens. move we So to with Terrell Andrew

AndrewTerrell

quickly. really margin the on maybe So

I origination the ballpark. we the X% think in since production talked pictures stepped several ago, then. new months of Clearly, kind up kind of yields about

balance coming kind a wanted then where were to balance new sheet? get Just today of maybe the of to that sense blended off how and production the compares on sheet what's yields rolling

TimLaney

great question. Yes,

AldisBirkans

X%. if a quarter this PPP loan loan there's in there. second was PPP table production certainly you that were NIM origination look look out -- benefit, of the Yes, And XXX at loan loans, the million originated benefit XXX. But for quarter you item if core volume first the quarter in at year and year, fourth strip last of our for so our new $XXX originated right at first of line XXX yields certainly fee acceleration loan and FTE,

book lower seem originated the So new loan accretive on those that's loan originations. displacing our accretive something to to they're X% with and new rolling certainly origination accretive yields and be it is off rebuilding and basis

TimLaney

I loan we're risk of not is tenured And which in that's variable important. all mind, think mean rates, those book. to virtually taking get I keep

AndrewTerrell

it. Got

the then we And make loan sheet sounds just Okay. up it several the hold of given is material from to the here? like where over plan book expect right Or kind and kind maybe sure balance deploy you several quarters? got the the purchases the think deployment. next cash excess for liquidity of quarters, is next the into just to just on messaging growth I've on securities over It shaping should

AldisBirkans

yield some material see added you'll the curve. quarter, purchases last Again, in think here. from don't the securities of I backup we

displaced just X% we is able originations, coming and But asset earning to or in cash in cash that the growing powerful needed. we looking to benefit You basis benefit that some stop we're growth quarters. interest that see material table, quite nothing and talked cash on flowing as the about the loan now point loan that's that that. expect the redirect all XX back being absorbed new and add highly a with do and flow net flow and our income the cash again, securities the of be it's can being with, But to if

TimLaney

powerful math. Very

AndrewTerrell

on sneak authorization And Okay. there. million bit valuation Is during out the quarter? little with the a And little $XX be repurchases any to the past I might it share if quarter, Apologies were made a opportunistic fair more more know X then missed just a say coming there if it, in then over I in. there's can you but the I buyback?

AldisBirkans

done but of answer To your Yes. second quarter, the in first question, nothing -- part the

Operator

Kelly come question from of with Motta next your will line the And KBW.

KellyMotta

on circle newer color I if more I any share getting was would any than pattern just your the if wanted front or If around back those be range or gains. to it's helpful. maybe you're it's gains. growth that? expansion and there's Utah-based where market the loan wondering that to broad-based Just

TimLaney

markets really It what we're quarter very the I and good good specialty feel all momentum seeing of very felt across board. mean in good seeing and broad-based. the feel we're our our the is geographic we and about businesses, about the in second pipeline about

about mean, in, City, these I stellar have the delivering City, markets Kansas that businesses And country. Salt we rest specialty new job I'll really lot you're stepping and everyone, faster of front bank. Dallas, much have our recovered there the remind talking teams a operating in a incredible to pretty relationships of we of then than and So up I the range the benefit of operate clearly Lake mean, are Colorado, Austin, markets whether from done

pleased, So and the report diversified that really Kelly, to board. across I'm it's

KellyMotta

back related switching wrong, see in that the but if any and of or end just quarter just the this a there's kind seems then was correct to to me And it what mortgage of sort more your plan branch market. through? pull great expense, really the nice have in last benefits certainly towards implying is and please or quarter. to low you Is expenses. right? I'm Wondering, bit more guidance, -- that's like if coming No, It better changes the of minus was of of Great.

AldisBirkans

No. Yes.

the expect two as some beginning loading main banking run again, will commissions, mortgage got to as now that seasonal be benefit. the there quarter, and so slowdown we hold fourth and taking drivers do will center our rate of -- well that's certainly the some the You specifically talking efficiencies there,

are that realizing. we taking I'll rate the we year's are of some million year by that the those run say year we you for the full guidance, from year X full if ones. stripped $X So at expenses than savings lower way, last are and out commission-related main in about this last year are this year. guiding And -- looked core

is redeploying So implemented. all some of that the be of result make into cost we and taking staying up there in those technology the efficiencies the the that of we've efficiencies that's guidance. and sure they'd to are But embedded

guidance So all the that. of is $XX to $XX reflecting million million

TimLaney

small way, clients to strategy of brick-and-mortar it's even I in -- investment more somewhat locations, point what's around look on space. and but we we're sales inspiring we'll come I a continue brick-and-mortar see company on realizing while converting to doing expense can the that. expect is continue it, consolidated with share by the digital time around on and those consolidations, retaining offerings even and of medium-sized traditional as the think brick-and-mortar again, and accomplishing for seeing question the in and fact and the this your we're our business so technology. industry done But successfully to savings while that digital incredible around platform This it this retaining others more the appropriate take and teams at provide is our about the to greater ties clients look really that ecosystems and More have to should we we alternatives an Aldis' system we're to encouraging, we're in and commitment small is investors to, excited the Kelly, digital. the front, call very think to and those banking trend from think businesses job where that And that audience medium-sized what's ahead. revenue do mix really critical to a an an the more of here

Operator

Companies. question Levi be Our will with next from Posen D.A. Davidson

LeviPosen

was the maybe to I was little it think but did securities of add, what's those I timing the a this maybe when earlier, bit hinted wondering that quarter you on? came

AldisBirkans

-- on quarter, when take backed in actually, with up June, earlier A than the purchased on some even little this May we really Yes, securities. the they for the pretty part a little was rates example. April add lift heavier in did quarter and early the of came throughout

LeviPosen

Okay.

it And it increase so curve, movement a movement both is to potentially it into and appetite calculations into would your the fair to in your as say margin deploy that loans works yield of positive securities?

AldisBirkans

it target to love think where is long-term securities. deploy billion all loans. in assets $X.X would Certainly I in earning XX% being right are now, the we of again, about for of The securities, us

we assets, -- earning are $XXX have out that. So took if million certainly about today's you over we about

that's from where I'm seeing not much necessarily here. more saying I'm increasing portfolio us that So

LeviPosen

last capital things. And of X X Great. then Okay. M&A for and the me on just the side

there on the environment sort on you the updated thoughts quarters economic to couple growth seems of mentioned back. types been down confidence transactions those that a all considering. in X Now at all? table? of still ago, of the -- Any of you've you is Or and that were guys M&A has X narrowed returned think Are were I

TimLaney

felt medium-sized like to that were think for creating And country size. emerging see another. there right company can we we've we It's our fit and solved of we small alternative be will of reason We X focused traditional small- medium is exclusive looked believe an be an today. actually technology, a and continue business. that lot hyper at important ultimately, are that and for using not can small or in around opportunistic the on you opportunities frankly, that be the for we in of regardless out well number they businesses and are basis question. understand on any businesses have some there banking tell an Where ecosystem bank as the businesses I a as problems medium-sized of their We'll

focused our looking working together given space. to bring background focus interesting team, bringing Just at a on and some to traditional very and that are together as in we very alternatives banking

So but more will you of coming the information full come, tell that our on in energy lot we that you that's to are of a time I and spirit more spending be back with where transparency front. to and soon hope to

Operator

I'm this questions showing no further we have at time.

now I'll the Laney back call turn his Mr. So remarks. to for closing

Tim Laney

Thank asked look our for on thank that today, forward joining reporting you, a the before quarter call, to thoughtful your time. we know what questions right. you second third. all will of and all think we I and to want for we individuals earnings strong be All Thank first questions and Alan, it

Have everyone. day. a thanks, again, good So

Operator

call. will conference conclude this today's And

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

You may now disconnect.

Tim Laney	President and CEO
Aldis Birkans	CFO
Levi Posen	D.A. Davidson
Andrew Liesch	Piper Sandler
Andrew Terrell	Stephens
Brett Rabatin	Hovde Group
Kelly Motta	KBW

National Bank (NBHC) 27 Jul 212021 Q2 Earnings call transcript