National Bank (US:NBHC)2025-10-22 16:00Financial Data and Key Metrics Changes - The company reported net income of $35.3 million or $0.92 of earnings per diluted share for the third quarter, with adjusted net income increasing 30% annualized over the prior quarter to $36.6 million or $0.96 per diluted share [6][7] - The return on tangible common equity was 14.72%, achieved while maintaining a high level of capital [4] - The fully taxable equivalent net interest margin expanded three basis points during the third quarter to 3.98%, with an annualized growth of 11 basis points compared to the same quarter last year [9] Business Line Data and Key Metrics Changes - Loan fundings for the quarter totaled $421 million, bringing total year-to-date loan fundings to $1 billion, with quarterly loan fundings increasing each quarter of 2023 [7][8] - Non-interest income for the third quarter totaled $20.7 million, which is 21% higher than the second quarter and 13% higher than the third quarter of last year [10] - Non-interest expense totaled $67.2 million, including $1.7 million of acquisition expenses and $6.2 million of 2Unify expenses [11] Market Data and Key Metrics Changes - Total deposits ended the quarter $202 million higher than the prior quarter, with average deposits holding steady at $8.2 billion [10] - The cost of deposits totaled 2.08%, while the total cost of funds was 2.1% [10] Company Strategy and Development Direction - The company announced a merger with Vista Bankshares, which is expected to close in the first quarter, and management is optimistic about the strategic value of this transaction [5][13] - The company is focused on maintaining pricing discipline, which has resulted in solid margin expansion [8] - The launch of 2Unify is seen as a significant step forward, with plans to provide revenue guidance in the next quarterly earnings call [11][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the quality of new loan production and the strength of new relationships, despite headwinds from loan payoffs in the commercial real estate (CRE) portfolio [4][5] - Credit quality improved during the quarter, with a 20% reduction in non-performing loans [9] - Management is prepared to adjust deposit rates in response to potential Fed rate cuts, indicating a proactive approach to managing interest margins [22][23] Other Important Information - The company ended the quarter with a strong tangible common equity (TCE) ratio of 10.6% and a common equity Tier 1 ratio of 14.7% [12] - The tangible book value per share grew 12% annualized to $27.45 [12] Q&A Session Summary Question: Can you elaborate on the margin and expected impacts of rate cuts? - Management indicated that the third quarter's margin was positively impacted by recoveries and that they are prepared to adjust deposit rates in line with Fed actions [21][22] Question: What are the expectations for loan growth in Q4? - Management noted that the reduction in loan volume was not driven by directive paydowns and expressed optimism about the loan pipeline for Q4 [32][34] Question: How much are 2Unify expenses expected to be in Q4? - Expected 2Unify expenses for Q4 are in the range of $7 million to $9 million, accounting for increased marketing and variable costs [37] Question: What are the opportunities from the Vista acquisition? - Management highlighted the potential for growth in treasury management and wealth management services, leveraging the strengths of both organizations [55][56]