National Bank Holdings Corporation (NBHC) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with improved asset quality, disciplined credit management, and robust capital ratios. The company projects a 10% loan growth in 2026 and maintains a strong margin. Despite some uncertainties in partnership finalization for 2UniFi, the strategic focus on loan growth, share buybacks, and stable noninterest expenses are positive indicators. The market cap suggests a moderate reaction, thus predicting a positive stock price movement of 2% to 8% over the next two weeks.
Key Financial Performance
Tangible Book Value Per Share Grew by 10% year-over-year. This growth was attributed to the successful execution of strategic priorities, including the Vista Bank acquisition.
CET1 Capital Ratio Increased to 14.89%, reflecting a strong capital position and disciplined financial management.
Net Interest Margin (NIM) Full year NIM was 3.94%, while the fourth quarter NIM was 3.97%. The increase in the fourth quarter was due to disciplined deposit and loan pricing.
Net Income (Adjusted) Fourth quarter net income totaled $22.7 million or $0.60 per diluted share, excluding one-time items. Full year adjusted net income was $117.6 million or $3.06 per diluted share. The adjustments were due to acquisition costs and strategic sales of securities.
Provision Expense Fourth quarter provision expense was $9.1 million, driven by charge-offs and specific reserves related to problem loans. This was part of a strategy to clean up the balance sheet.
Loan Originations Full year loan originations totaled $1.6 billion, with $591 million in the fourth quarter alone. This reflects strong franchise strength and high-quality, relationship-driven business.
Nonperforming Asset Ratio Improved by 11 basis points to 36 basis points of total loans, indicating better asset quality.
Net Charge-Offs 34 basis points of loans for the year, reflecting disciplined credit management.
Allowance to Total Loans Ratio Ended the year at 1.18%, consistent with the prior quarter, showing stable credit reserves.
Noninterest Income Fourth quarter noninterest income was $14.4 million, including $3.3 million in pretax securities losses. Full year noninterest income was impacted by strategic actions to remain below $10 billion in assets.
Noninterest Expense Fourth quarter noninterest expense was $72.4 million, including $5.4 million in acquisition costs. Full year noninterest expense was $265 million, including $7.2 million in acquisition costs and $22 million related to 2UniFi.
Effective Tax Rate 2025 effective tax rate was 18%, influenced by the mix of taxable versus nontaxable income.
TCE Ratio Ended the year at 11%, reflecting a robust capital base.
Tier 1 Leverage Ratio Ended the year at 11.6%, indicating strong financial health.
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Operating Highlights
2UniFi Phase 1 Completion: Completed Phase 1 of the 2UniFi build, including the launch of a fully automated SBA loan offering and a business suite deposit account. The platform integrates financial products and services for small business owners, providing a unified view of accounts, cash balances, and lending options.
Vista Bank Acquisition: Successfully closed the acquisition of Vista Bank, adding $2.4 billion of earning assets and expanding the loan portfolio to $9.4 billion. The acquisition strengthens market presence in Texas and resort markets like Jackson Hole, Aspen, and Palm Beach.
Operational Efficiencies Post-Acquisition: Projected cost savings from operational efficiencies following the integration of Vista Bank, with lower expenses expected in the second half of 2026.
Net Interest Margin: Maintained a strong net interest margin of 3.94% for 2025, with projections to remain around 4% in 2026.
Strategic Sale of Securities: Sold investment securities strategically to remain below $10 billion in assets, preserving $10 million in interchange income for an additional year.
Focus on Texas and Resort Markets: Emphasized growth opportunities in Texas and affluent resort markets, leveraging the Vista acquisition to deepen client relationships and expand services.
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Risk or Challenges
Acquisition Costs: The fourth quarter was impacted by $4.1 million in after-tax acquisition costs related to the Vista Bank acquisition, which could strain financial resources and impact profitability in the short term.
Problem Loans: The company addressed lingering problem loans, resulting in $9.1 million of provision expense related to charge-offs and specific reserves, which could indicate ongoing credit quality challenges.
Strategic Sale of Securities: A $2.6 million after-tax loss was incurred on the strategic sale of investment securities to remain below $10 billion in assets, which could impact financial performance.
Noninterest Expense: Noninterest expense for 2026 is projected to increase to $320 million to $330 million, reflecting acquisition-related costs and operational expenses, which could pressure margins.
Loan-to-Deposit Ratio: The company aims to maintain a loan-to-deposit ratio of approximately 90%, which could pose liquidity risks if not managed effectively.
Commercial Real Estate Loan Balances: Decline in commercial real estate loan balances due to accelerated payoffs as clients move to alternative funding sources, which could impact loan growth.
2UniFi Investment: The company has invested heavily in the 2UniFi platform, with $22 million spent in 2025 and ongoing expenses projected, which could strain resources if the platform does not generate expected returns.
Provision Expense: Provision expense in 2026 is expected to cover net charge-offs and new loan growth at a rate consistent with the current 1.2% allowance to total loans ratio, which could impact profitability if credit quality deteriorates.
Integration and Rebranding Costs: The company expects to incur one-time expenses associated with the Vista acquisition and rebranding, which could temporarily impact financial performance.
Economic and Market Conditions: Pressure on net interest margins due to variable rate loans repricing ahead of Fed rate cuts and lagging deposit rate adjustments, which could impact profitability.
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Guidance & Outlook
Loan Growth: The company projects 2026 loan growth to be approximately 10%, with a combined loan portfolio of approximately $9.4 billion at the start of the year.
Earning Asset Growth: The company expects earning asset growth of 7% to 10% during 2026, with a goal to hold approximately 15% of total assets in cash and investments and maintain a loan-to-deposit ratio of approximately 90%.
Net Interest Margin: The company projects the 2026 fully taxable equivalent net interest margin to remain around 4%, excluding the impact of future rate moves.
Provision Expense: Provision expense in 2026 is projected to cover net charge-offs and new loan growth at a rate consistent with the current 1.2% allowance to total loans ratio.
Noninterest Income: The company projects total noninterest income to be in the range of $75 million to $80 million for 2026.
Noninterest Expense: The company projects noninterest expense for 2026 to be $320 million to $330 million, with higher expenses in the first half of the year and lower expenses in the back half due to cost savings from operational efficiencies.
2UniFi Revenue Contribution: The company expects $2 million to $4 million in revenue contribution from 2UniFi in 2026, with flat year-over-year expenses for the platform.
Effective Tax Rate: The company expects an effective tax rate of approximately 20% for 2026.
Earnings Per Share: The company anticipates delivering earnings in excess of $1 per share in the fourth quarter of 2026, setting the stage for full-year earnings exceeding $4 per share in 2027.
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Shareholder Return Plan
Share Buybacks: During 2025, the company executed share buybacks as part of its capital management strategy.
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Key Q&A
Q:Can you confirm the projections of 10% loan growth in 2026, a margin near 4% for the full year, earnings over $1 in Q4, and over $4 in 2027?
A:Yes, that is correct.
Q:What is the revenue projection for 2UniFi in 2026 and its associated costs?
A:The revenue projection for 2UniFi in 2026 is $2 million to $4 million, and the expenses will remain flat at $22 million, consistent with 2025.
Q:What are the plans for scaling 2UniFi and its financial impact in 2027?
A:The focus is on Phase 1 product activation with clients and driving revenue. Management is also exploring partnerships that could potentially move 2UniFi off the financials of the bank, but it is too early to provide definitive targets for 2027.
Q:Can you provide details on the three loans that made up the bulk of the net charge-offs and the expectations for credit metrics in 2026?
A:The issues were with a few relationships that were expected to resolve in 2025 but did not. The decision was made to address these aggressively in 2025 to have a clean runway for 2026. Management expects credit metrics to improve in 2026.
Q:What are the drivers of the projected 10% loan growth in 2026?
A:The growth is driven by strong production in all markets, including Texas and resort markets. The addition of expertise and teammates through acquisitions and the continuation of strong commercial loan origination are key factors.
Q:Why was the margin down this quarter, and what is the outlook for margins?
A:The December margin was 3.97%. There were no interest reversals in Q4, and the loans worked through were already on nonaccrual. Deposit pricing adjustments caused a lag effect, but the year ended with a strong margin of 3.97%.
Q:Does the 2UniFi expense guide for 2026 include potential impacts of partnerships?
A:No, the partnership's financial impact is not included in the 2026 guidance. The expense guide remains flat at $22 million, which includes an uptick in depreciation.
Q:What was the margin for December 2025, and what were the spot deposit costs at the end of December?
A:The margin for December 2025 was 3.97%, and the spot deposit cost at the end of December was 1.82%.
Q:What is causing the delay in announcing a partnership for 2UniFi?
A:The delay is due to differing needs and expectations between the parties involved. Management remains focused on bringing the right partnership together.
Q:Was there any revenue from 2UniFi in Q4, and what is the appetite for share buybacks?
A:There was some revenue from 2UniFi in Q4, but it was not meaningful. The company has a strong interest in share buybacks, with a $100 million buyback authorization announced.
Q:What was the payoff activity in Q4, and what is the confidence level for 10% loan growth in 2026?
A:Payoff activity in Q4 was influenced by competition and risk management decisions. Management is confident in achieving 10% loan growth in 2026 due to reduced scheduled maturities and strong production capabilities.
Q:Is there an active effort to recruit and retain talent in light of market disruptions?
A:Yes, there is an active effort to recruit and retain talent, with a focus on supporting and augmenting the existing team.
Q:Review of Unclear Management Responses
A:Management avoided providing definitive targets for 2027 regarding 2UniFi's financial impact, citing it as too early to share specific details. Additionally, there was a lack of clarity on the exact timeline for finalizing a partnership for 2UniFi, with management attributing delays to differing needs and expectations between parties.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Clients
NBH family
Phase build
SBA capital
Texas economy
Today
Vista acquisition
Vista balance
access
account
analytics
architecture
banking charter
capability
capital expenditure
capital loan
cash
company
contribution
experience
future
goal
insight
investment
member
opportunity
owner
place
platform
product
profile
provision expense
relationship
resort market
security
service
set
shift
technology
trust
NBHC Transcript
National Bank Holdings Corporation (NBHC) Q4 2025 Earnings Call Transcript
Positive1-28
The earnings call highlights strong financial performance with improved asset quality, disciplined credit management, and robust capital ratios. The company projects a 10% loan growth in 2026 and maintains a strong margin. Despite some uncertainties in partnership finalization for 2UniFi, the strategic focus on loan growth, share buybacks, and stable noninterest expenses are positive indicators. The market cap suggests a moderate reaction, thus predicting a positive stock price movement of 2% to 8% over the next two weeks.
National Bank Holdings Corporation (NBHC) Q3 2025 Earnings Call Transcript
Positive10-22
The earnings call highlights strong financial performance, with increased loan fundings, deposits, and noninterest income. Despite higher expenses related to 2UniFi, the company projects continued growth and plans to manage costs effectively. The Q&A section reveals optimism about maintaining margins, resuming loan growth, and leveraging acquisitions. Share repurchases and a healthy pipeline further support a positive outlook. While some uncertainties exist regarding future expenses, the overall sentiment is positive, suggesting a potential stock price increase of 2% to 8% over the next two weeks.
National Bank Holdings Corporation (NBHC) Q2 2025 Earnings Conference Call Transcript
Positive7-23
The earnings call reveals strong financial performance with a 19.9% YoY growth in net income and a 26% increase in loan fundings. Positive guidance on margin expansion and Unifi platform's potential adds to the optimism. Despite some concerns over higher-risk loans, management has addressed most issues. The market strategy, focusing on fee income and partnerships, is promising. The lack of specifics on M&A is a minor concern, but overall, the financial health and strategic direction suggest a positive stock price movement.
Earnings call transcript: National Bank Holdings' Q4 2024 earnings beat estimates
Unknown1-23
The earnings call presents a mixed picture: strong financial performance with increased earnings per share and net income, alongside a robust net interest margin. However, concerns about rising non-interest expenses and competitive pressures in the loan market temper optimism. The lack of detailed shareholder return plans and unclear guidance on loan growth further contribute to uncertainty. The Q&A session highlighted potential weaknesses in the transportation sector and management's vague responses to strategic questions. Given the small market cap, the stock is likely to remain stable, resulting in a neutral prediction.
NBHC Report
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