National Bank (US:NBHC)2019-07-24 20:45Financial Data and Key Metrics Changes - The company reported record quarterly net income of $20.3 million and earnings per diluted share of $0.64 for Q2 2019, representing a 7.2% increase on a linked-quarter basis and a 15.8% increase year-over-year [6][22] - Earnings assets grew at an annualized rate of 10.7%, driven by loan and deposit growth, as well as strong performance from the residential mortgage group [6][12] - The annualized net charge-offs on originated and acquired loans were only two basis points, indicating strong credit quality [6][15] Business Line Data and Key Metrics Changes - Commercial loan growth was strong at 18.5% annualized, with total originated and acquired loans outstanding growing 8.3% annualized [7][10] - New loan originations for the quarter totaled $290.5 million, with year-to-date loan balances growing 12.4% annualized [7][9] - Non-interest-bearing deposits grew at an annualized rate of 17.2%, now representing 24.9% of total deposits [10][12] Market Data and Key Metrics Changes - The company’s markets are performing better than national averages, contributing to strong growth in transaction deposits [5][10] - The average transaction deposit cost was just 40 basis points, supporting net interest income growth despite declining market rates [12][13] Company Strategy and Development Direction - The company aims to maintain a diversified loan portfolio and is focused on growing core banking relationships while managing expenses efficiently [24][56] - The management is open to potential M&A opportunities but emphasizes a methodical approach to any acquisitions [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 10% growth in originated and acquired loan balances for the full year 2019, supported by strong local economies [9][24] - The company anticipates a slight decrease in net interest margin due to expected interest rate cuts but remains optimistic about overall performance [13][14] Other Important Information - The effective tax rate for the quarter was 13.6%, with expectations for the remainder of 2019 to be in the range of 18.5% to 19.5% [22] - Non-interest income reached a record $20.7 million, driven by strong performance in service charges and bank card fees [16][18] Q&A Session Summary Question: Capital plans and M&A discussions - Management indicated they are in discussions with potential partners and are open to M&A opportunities, but will proceed cautiously [28][29] Question: Fee income growth in mortgage banking - The company aims to keep mortgage banking revenue below 15% of total revenue and views refinancing revenue as a hedge against rate pressures [32][34] Question: Credit profile and industry outlook - Management is monitoring credit quality closely, particularly in sectors like agriculture, and has selectively exited higher-risk areas [36][39] Question: Lending environment and competition - The company is experiencing strong yields and pricing in its commercial banking space, benefiting from rational competition in its core markets [68][70] Question: Growth in specific geographic markets - All markets are performing well, with notable growth in Colorado, Texas, and new teams in Salt Lake City and Kansas City [94][95]