National Bank (US:NBHC)2025-10-22 16:02Financial 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 [8][9] - The return on tangible common equity was 14.72%, and the adjusted return on average tangible common equity was 14.7% [5][9] - 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 [10] 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 [9][19] - 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 [11] - Non-interest expense totaled $67.2 million, including $1.7 million of acquisition expenses and $6.2 million of 2Unify expenses [12] Market Data and Key Metrics Changes - Total deposits increased by $202 million compared to the prior quarter, with average deposits holding steady at $8.2 billion [11] - The cost of deposits was 2.08%, and the total cost of funds was 2.1% [11] - Credit quality improved with a 20% reduction in non-performing loans, now standing at $27 million, and the non-performing loan ratio improved to 36 basis points [10][11] Company Strategy and Development Direction - The company announced a merger with Vista Bankshares, expected to close in the first quarter, which is anticipated to enhance the company's market position and capabilities [6][8] - The company is focused on maintaining pricing discipline and managing loan and deposit pricing to achieve solid margin expansion [9][10] - The launch of 2Unify is seen as a strategic initiative, with plans to provide revenue guidance in the next quarterly earnings call [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about new loan production and the quality of new relationships, despite headwinds from payoffs in the commercial real estate portfolio [5][6] - The company expects to maintain a mid-three nines net interest margin for the remainder of 2023, not accounting for future Fed interest rate changes [10] - Management highlighted the importance of proactive measures to resolve problem loans, resulting in net recoveries during the quarter [10] Other Important Information - The company repurchased 240,000 shares during the quarter, totaling $8.9 million, with a total of 359,000 shares repurchased year-to-date [13] - The tangible book value per share grew 12% annualized to $27.45 [13] - The company continues to hold $18 million of marks against its acquired loan portfolio, providing additional loan loss coverage [10] 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 interest and fees recovered, and they are prepared to adjust deposit rates in line with potential Fed rate cuts [23][25] Question: What are the expectations for 2Unify expenses moving forward? - Management expects 2Unify expenses to be in the range of $7 million to $9 million for Q4, accounting for increased marketing and variable costs [41] Question: How is the company positioned regarding loan growth and paydowns? - Management clarified that the reduction in loan volume was due to heavy payoffs rather than directive paydowns, and they are optimistic about the loan pipeline for Q4 [35][37] Question: What are the company's thoughts on private credit competition? - Management noted that competition from private credit is primarily seen in the commercial real estate sector, with pricing and credit terms being challenging [55] Question: What opportunities does the Vista acquisition present? - Management expressed excitement about the caliber of leadership from Vista Bankshares and the potential for growth in treasury management and wealth services [64][68]