National Bank Holdings Corporation Q3 FY2025 earnings call

Key Points - Tim Laney: Discussed $0.96 earnings per diluted share and 14.72% return on tangible common equity, mentioned new loan production and merger with Vista Bancshares. - Nicole Van Denabeele: Covered financial results, including net income, adjusted net income, net interest margin, deposit growth, noninterest income/expense, liquidity, capital levels, and share repurchases. - Aldis Birkans: Talked about progress on Vista merger, normalized loan production, growth in C&I portfolio, disciplined CRE exposure management, and positive credit metrics with reduced nonperforming loans.

For the third quarter, National Bank Holdings reported net income of $35.3 million or $0.92 of earnings per diluted share. Excluding acquisition expenses, adjusted net income increased 30% annualized to $36.6 million or $0.96 of earnings per diluted share. Fully taxable equivalent adjusted pre-provision net revenue grew 17.5% annualized. Net interest margin was 3.98%, up 3 basis points from the prior quarter. Total deposits ended the quarter $202 million higher than the prior quarter end. Noninterest income totaled $20.7 million, 21% higher than the second quarter. Noninterest expense was $67.2 million, including $1.7 million of acquisition expenses and $6.2 million of 2UniFi expense. Loan fundings were $421 million for the quarter, with commercial banking, particularly C&I, leading growth. CRE portfolio had loan paydowns but remained well-balanced with a risk-based capital ratio of 132%.

Guidance - Fully taxable equivalent net interest margin expected to remain in the mid-3.9s for the remainder of 2025. - Total noninterest income projected to be in the range of $15 million to $17 million for the remainder of 2025. - Core noninterest expense expected to be in the range of $64 million to $66 million before acquisition-related expenses for the remainder of the year. - Projected tangible book value per share growth and continued share repurchases.

Risks - Competition from private credit in commercial real estate sectors, which is impacting loan paydowns. - Potential risks in ag commodity row crops and transportation sectors, though NBH has limited exposure to these.

Q: Wanted to dig into the margin in a little more detail.

A: Nicole mentioned the third quarter margin was positively impacted by a $0.5 million interest and fee recovery, about 2 basis points. Looking ahead to rate cuts, teams are teeing up actions to lower deposit rates to offset variable loan portfolio repricing.

Q: On the expense side, the 2UniFi step-up.

A: Nicole said the step-up was expected with launching 2UniFi, including depreciation expense of capitalized development asset, and continued marketing and variable expenses as clients are onboarded.

Q: On loan growth and paydowns.

A: Tim said third quarter reduction was not from directive paydowns but heavy payoffs to perm financing. Aldis mentioned healthy pipeline entering fourth quarter.

Q: On Vista deal and fee income.

A: Tim was excited about the caliber of Vista's leadership and teams, and synergies in treasury management, wealth, and trust, with work already underway between teams.

Q: On private credit competition.

A: Tim said primarily in commercial real estate sectors.

Q: On capital deployment and buyback.

A: Aldis said they have $35-36 million authorization left for buybacks, being opportunistic with potential M&A.