National Bank Holdings Corp. (NYSE:NBHC) Q4 2019 Earnings Conference Call - Final Transcript

Jan 24, 2020 • 11:00 am ET


National Bank Holdings Corp. (NYSE:NBHC) Q4 2019 Earnings Conference Call - Final Transcript


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Aldis Birkans

project no changes in the current rate environment with no further fed interest rate adjustments.

For the fourth quarter, we reported $0.62 of earnings per diluted share. This quarter's results reflect that the expected seasonal slowdown in our fee income as well as the full impact of the both the September and October rate cuts in our net interest margin. This quarter's loan production was $269.5 million. And as I already mentioned, for the full-year 2019, our new loan originations were $1.2 billion. In particular, we are very pleased to have delivered $781.7 million of that production in loans to businesses, driven by our continued focus on the relationships with small to mid-size companies. Our commercial balances outstanding increased 13.4% this past year.

In 2019, our originated and acquired loans grew a solid $339.9 million or 8.5%. The new loan production as well as our overall portfolio remains well diversified across various asset classes and geographies. The regional economies in our markets remain solid and growing. Our small business, middle market and consumer clients generally maintain a positive forward outlook. For full-year 2020, we project our total loan balance growth to be in the high-single digits. I also want to point out that going forward we will no longer separately report loans formerly accounted under ASC 310-30. So this guidance applies to total loans.

Turning to deposits. We are very proud to have grown our average fourth quarter non-interest bearing deposits by 6.7% over the same quarter in 2018. Our total average transaction deposits grew 2.5% this past year, which is a little lower than we had projected. But as we have discussed before, our deposit strategy is based on capturing full client relationships, and during the quarter, we experienced multiple clients using their excess cash to pay down debt, adjust their corporate structure, so use cash for other disbursements. We expect to capture these balances in 2020 and project our total average deposit growth to be approximately 5%. As always, our focus will be on growing our core transaction deposits.

Our fully taxable equivalent net interest margin for the quarter was 3.77% and now reflects the full impact of the LIBOR rate decreases. We ended the year with $5.4 billion in earning assets and project to grow earning assets to $5.7 billion to $5.8 billion by the end of 2020. Assuming no further fed interest rate changes in 2020, the earning asset growth impact to net interest income should overcome the margin compression and we project our full-year 2020 net interest income to be comparable to that of 2019.

Moving on to credit. Once again, we are proud to have reported a very strong quarter as it relates to our credit performance. We ended the year with a non-performing asset ratio of 0.66%, which was down from 0.85% at the end of 2018. It also reflected a decrease from 0.76% at September 30, 2019. The fourth quarter's net charge-offs were just 8 basis points annualized. For 2020, we forecast