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

Jan 24, 2020 • 11:00 am ET

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

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Q & A
Operator
Operator

[Operator Instructions]

Executive
G. Timothy Laney

Thank you, Amy.

Operator
Operator

Your first question today comes from the line of Chris McGratty with KBW. Your line is open.

Executive
G. Timothy Laney

Good morning, Chris.

Analyst
Chris McGratty

Hey Tim. Hey everybody. Maybe want to start on loan growth, Tim. Loan growth in the fourth quarter a little soft. Could you speak to the client activity, pipelines today, and obviously you're talking about high-single-digit growth next year. So it seems like a little bit of a one-off this quarter, but any color on growth would be great.

Executive
G. Timothy Laney

Yeah, thanks for asking the question. And Aldis and Rick, feel free to jump in here.

We did see something that was rather unusual, but we actually will in many respects view it is a positive reflection on the quality of the loan book. We saw a substantial number of clients paying down their revolving lines of credit using excess cash on their balance sheet at quarter end to reduce debt and pursue other activities. And Aldis, I think it's fair to say -- and I want to point out that in no cases are we talking about having lost clients. These are revolving lines that naturally move up and down, but the anomaly in the fourth quarter was almost $60 million, $65 million swing. Or is that too high?

Executive
Aldis Birkans

It was more of $50 million. Chris, good morning. And this is Aldis, by the way. In the fourth quarter, we -- revolving lines drew net $1.7 million, while in the prior four-quarter average for that was about $49 million. So that -- call it $50 million around that upswing that we were counting on, did not experience it. But to Tim's point, the good news here is that we didn't lose clients. They used their excess cash -- actually that impacted somewhat the behavior in deposit side as well, as I mentioned in my prepared remarks, where our clients just found themselves to be in very solid position heading into the end of the year.

Executive
G. Timothy Laney

I think the last thing I would add is, in terms of net production in the quarter, in terms of working with existing and new clients, we track very well. So we really feel like we were able to isolate this fourth quarter anomaly. And again, I think that answers your question about as well as we could answer it, Chris.

Analyst
Chris McGratty

That's great. Thanks, Tim. Maybe a question on capital. Could you just, entering the New Year, remind us or refresh us the priorities? It feels like organic growth, semi-annual dividends, but maybe speak to the other two buybacks or inorganic growth. Thanks.

Executive
G. Timothy Laney

Right, right. Look we're actually pleased with the level of acquisition activity and opportunities in our market. We've said consistently that we believe operating with excess capital would put us in a position to take advantage of the right opportunities. Unfortunately, candidly, as we've looked at a number of situations, we found that the credit books, that the loan books in a number of these situations just were