Q2 2026 National Bank Holdings Corp Earnings Call

July 22, 2026

Operator 2: Ladies and gentlemen, you are on hold for the National Bank Holdings Corporation conference call. We are awaiting additional participants and plan to be underway shortly. We thank you for your patience, and please continue to stay on the line. Good morning, everyone, and welcome to the National Bank Holdings Corporation 2025 Q4 earnings call. My name is Margo, and I'll be your conference operator today. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded for replay purposes. I will now turn the call over to Emily Gooden, Chief Accounting Officer and Director of Investor Relations.

Speaker #1: We thank you for your patience, and please continue to stay on the line. Good morning, everyone, and welcome to the National Bank Holdings Corporation 2025 fourth quarter earnings call.

Operator: Good morning, everyone, and welcome to the National Bank Holdings Corporation 2025 Q4 earnings call. My name is Margo, and I'll be your conference operator today. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded for replay purposes. I will now turn the call over to Emily Gooden, Chief Accounting Officer and Director of Investor Relations.

Speaker #1: My name is Margo, and I'll be your conference operator today. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded for replay purposes.

Speaker #1: I will now turn the call over to Emily Gooden, Chief Accounting Officer and Director of Investor Relations.

Speaker #2: Thank you, Margo, and good morning. We will begin today's call with prepared remarks, followed by a question-and-answer session. I would like to remind you that this conference call will contain forward-looking statements, including but not limited to statements regarding the company's strategy, loans, deposits, capital, net interest income, non-interest income, margins, allowance, taxes, and non-interest expense.

Emily Gooden: Thank you, Margo, and good morning. We will begin today's call with prepared remarks, followed by a question-and-answer session. I would like to remind you that this conference call will contain forward-looking statements, including but not limited to statements regarding the company's strategy, loans, deposits, capital, net interest income, non-interest income, margins, allowance taxes, and non-interest expense. Actual results could differ materially from those discussed today. These forward-looking statements are subject to risks, uncertainties, and other factors, which are disclosed in more detail in the company's most recent filings with the U.S. Securities and Exchange Commission. These statements speak only as of the date of this call. National Bank Holdings Corporation undertakes no obligation to update or revise these statements. In addition, the call today will reference certain non-GAAP measures, which National Bank Holdings Corporation believes provides useful information for investors.

Emily Gooden: Thank you, Margo, and good morning. We will begin today's call with prepared remarks, followed by a question-and-answer session. I would like to remind you that this conference call will contain forward-looking statements, including but not limited to statements regarding the company's strategy, loans, deposits, capital, net interest income, non-interest income, margins, allowance taxes, and non-interest expense. Actual results could differ materially from those discussed today. These forward-looking statements are subject to risks, uncertainties, and other factors, which are disclosed in more detail in the company's most recent filings with the US Securities and Exchange Commission. These statements speak only as of the date of this call. National Bank Holdings Corporation undertakes no obligation to update or revise these statements. In addition, the call today will reference certain non-GAAP measures, which National Bank Holdings Corporation believes provides useful information for investors.

Speaker #2: Actual results could differ materially from those discussed today. These forward-looking statements are subject to risks, uncertainties, and other factors, which are disclosed in more detail in the company's most recent filings with the U.S.

Speaker #2: Securities and Exchange Commission. These statements speak only as of the date of this call, and National Bank Holdings Corporation undertakes no obligation to update or revise these statements.

Speaker #2: In addition, the call today will reference certain non-GAAP measures, which National Bank Holdings Corporation believes provide useful information for investors. Reconciliations of these non-GAAP financial measures to the GAAP measures are provided in the news release posted on the Investor Relations section of www.nationalbankholdings.com.

Emily Gooden: Reconciliations of these non-GAAP financial measures to the GAAP measures are provided in the news release posted on the investor relations section of www.nationalbankholdings.com. It is now my pleasure to turn the call over and introduce National Bank Holdings Corporation's Chairman and CEO, Mr. Tim Laney.

Speaker #2: It is now my pleasure to turn the call over and introduce National Bank Holdings Corporation's Chairman and CEO, Mr. Tim Laney.

Speaker #3: Well, thank you, Emily. Good morning, and thank you for joining us as we discuss National Bank Holdings second quarter 2026 financial performance. I'm joined by our president, Aldis Birkans.

Tim Laney: Well, thank you, Emily. Good morning and thank you for joining us as we discuss National Bank Holdings' Q2 2026 financial performance. I'm joined by our President, Aldis Birkans, our Chief Financial Officer, Nicole Denabeele, and John Steinmetz, our Executive Vice Chair and Executive Managing Director of Strategic Initiatives. Our team delivered solid Q2 results with record loan production and 10% year-to-date loan growth. Strong credit metrics reflect our intense focus on prudent growth. Our commitment to developing full banking relationships with our clients continues to translate into operating with a low-cost and diversified deposit franchise. Expenses continue to be well managed. We expect to meet or exceed savings resulting from the Vista integration. Before I turn the call over to Nicole, I want to share how pleased I am with the revenue lift we're seeing from the Vista acquisition.

Tim Laney: Well, thank you, Emily. Good morning and thank you for joining us as we discuss National Bank Holdings' Q2 2026 financial performance. I'm joined by our President, Aldis Birkans, our Chief Financial Officer, Nicole Van Denabeele, and John Steinmetz, our Executive Vice Chair and Executive Managing Director of Strategic Initiatives. Our team delivered solid Q2 results with record loan production and 10% year-to-date loan growth. Strong credit metrics reflect our intense focus on prudent growth. Our commitment to developing full banking relationships with our clients continues to translate into operating with a low-cost and diversified deposit franchise. Expenses continue to be well managed. We expect to meet or exceed savings resulting from the Vista integration. Before I turn the call over to Nicole, I want to share how pleased I am with the revenue lift we're seeing from the Vista acquisition.

Speaker #3: Our chief financial officer, Nicole Denabeele, and John Steinmetz, our executive vice chair and executive managing director of strategic initiatives. Our team delivered solid second quarter results with record loan production and 10% year-to-date loan growth.

Speaker #3: Strong credit metrics reflect our intense focus on prudent growth. Our commitment to developing full banking relationships with our clients continues to translate into operating with a low-cost and diversified deposit franchise.

Speaker #3: Expenses continue to be well-managed, and we expect to meet or exceed savings resulting from the Vista integration. Before I turn the call over to Nicole, I want to share how pleased I am with the revenue lift we're seeing from the Vista acquisition.

Speaker #3: Our bankers are excelling at delivering quality results for our shareholders. I also want to recognize our countless teammates that have positioned our company to seamlessly integrate the Vista acquisition with all conversions targeted to be complete by quarter end.

Tim Laney: Our bankers are excelling at delivering quality results for our shareholders. I also want to recognize our countless teammates that have positioned our company to seamlessly integrate the Vista acquisition, with all conversions targeted to be complete by quarter end. On that note, I'll turn the call over to Nicole. Nicole?

Speaker #3: And on that note, I'll turn the call over to Nicole. Nicole?

Speaker #4: Thank you, Tim, and good morning. This morning, I'll walk through our second quarter, the demonstrated strong operating momentum across the bank, and I'll provide our outlook for the second half of the year.

Emily Gooden: Thank you, Tim, good morning.

Nicole Van Denabeele: Thank you, Tim, good morning.

Nicole Van Denabeele: This morning, I'll walk through a Q2 that demonstrated strong operating momentum across the bank, I'll provide our outlook for the H2 of the year. As a reminder, our guidance does not include any future interest rate policy changes by the Fed. For the Q2, on an adjusted basis, we reported net income of $35.3 million, or $0.78 of earnings per diluted share. Annualized, this is 33% higher than the prior quarter. The Q2's adjusted return on average tangible assets increased 6 basis points to 1.3%, and the adjusted return on average tangible equity increased 92 basis points to 12.7%. Year to date, we grew our fully taxable equivalent pre-provision net revenue by 23% over the same period last year, generated a record level of loan production, and maintained a top quartile net interest margin. Turning to the balance sheet.

Speaker #4: As a reminder, our guidance does not include any future interest rate policy changes by the Fed. For the second quarter, on an adjusted basis, we reported net income of $35.3 million, or $0.78 of earnings per diluted share.

Speaker #4: Annualized, this is 33% higher than the prior quarter. The second quarter's adjusted return on average tangible assets increased 6 basis points to 1.3%, and the adjusted return on average tangible equity increased 92 basis points to 12.7%.

Speaker #4: Year-to-date, we grew our fully taxable equivalent pre-provision net revenue by 23% over the same period last year, generated a record level of loan production, and maintained a top quartile net interest margin.

Speaker #4: Turning to the balance sheet, client activity was strong during the quarter, and our pipelines continue to build as we move into the back half of the year.

Nicole Van Denabeele: Client activity was strong during the quarter, our pipelines continue to build as we move into the H2 of the year. Our teams generated record quarterly loan originations of $927 million, driving year-to-date annualized loan growth of 10%. With that momentum carrying into the Q3, we expect full-year loan portfolio growth of 10%. Fully taxable equivalent net interest income for the quarter totaled $111.5 million, an increase of 25% compared to the Q2 of last year. Net interest margin during the Q2 was a strong 3.94% and remains in the top quartile of our peers. For the remainder of the year, we expect a net interest margin near 4%. We demonstrated success in gaining full client relationships, which drove average deposit balance growth of 2.3% annualized.

Speaker #4: Our teams generated record quarterly loan originations of $927 million, driving year-to-date annualized loan growth of 10%. With that momentum carrying into the third quarter, we expect full-year loan portfolio growth of 10%.

Speaker #4: Fully taxable equivalent net interest income for the quarter totaled $111.5 million, an increase of 25% compared to the same quarter, the second quarter of last year.

Speaker #4: Net interest margin during the second quarter was a strong 3.94% and remains in the top quartile of our peers. For the remainder of the year, we expect a net interest margin near 4%.

Speaker #4: We demonstrated success in gaining full client relationships, which drove average deposit balance growth of 2.3% annualized. Deposit costs improved 1 basis point during the quarter and remained a low 1.93%, with a total cost of funds of 2.01%.

Nicole Van Denabeele: Deposit costs improved one basis point during the quarter and remained a low 1.93%, with a total cost of funds of 2.01%. The loan-to-deposit ratio ended the quarter at 94.1%. Turning to asset quality. Credit quality remains strong. We recorded $1.5 million of provision expense, primarily to support the loan growth during the quarter. Q2's net charge-offs were 27 basis points annualized. NPAs remained a low 35 basis points, and the allowance coverage ratio totaled 1.13%. Our allowance coverage on NPLs improved from two times to three times of coverage over the past year, underscoring our positive credit quality trends. Additionally, we hold $19.6 million of marks against our acquired loan portfolio, which provides an additional 20 basis points of loan loss coverage if applied across the entire loan book. Fee income was another area of positive momentum this quarter, increasing 40% annualized over the linked quarter.

Speaker #4: The loan-to-deposit ratio ended the quarter at 94.1%. Turning to asset quality, credit quality remained strong. We recorded 1.5 million dollars of provision expense primarily to support the loan growth during the quarter.

Speaker #4: Second quarter's net charge-offs were $27 basis points annualized. Non-performing assets remained a low 35 basis points and the allowance coverage ratio totaled 1.13%. Our allowance coverage on non-performing loans improved from 2 times to 3 times of coverage over the past year underscoring our positive credit quality trends.

Speaker #4: Additionally, we hold 19.6 million dollars of marks against our acquired loan portfolio which provides an additional 20 basis points of loan loss coverage if applied across the entire loan book.

Speaker #4: The income was another area of positive momentum this quarter increasing 40% annualized over the linked quarter. Non-interest income totaled 19.8 million dollars and Aldis will provide more detail on that shortly.

Nicole Van Denabeele: Non-interest income totaled $19.8 million. Aldis will provide more detail on that shortly. We expect full-year fee income to be within our previously guided range of $75 to $80 million. Non-interest expense totaled $95 million for the quarter, including $11.2 million of acquisition and restructuring expenses. Excluding these one-time items, non-interest expense was $83.7 million, up from the linked quarter due to merit increases and one additional day in Q2. As expected, the majority of expense synergies from the Vista acquisition will come online following system integration in Q3. As previously guided, we continue to project total non-interest expense for the full year to be in the range of $320 to $330 million. Our capital levels remain well in excess of well-capitalized regulatory thresholds. Common Equity Tier 1 ratio ended the quarter at 12.3%, and our total capital ratio was 15.4%.

Speaker #4: We expect full-year fee income to be within our previously guided range of $75 to $80 million. Non-interest expense totaled $95 million for the quarter, including $11.2 million of acquisition and restructuring expenses.

Speaker #4: Excluding these one-time items, non-interest expense was $83.7 million up from the linked quarter due to merit increases and one additional day in the second quarter.

Speaker #4: As expected, the majority of expense synergies from the Vista acquisition will come online following system integration in the third quarter. As previously guided, we continue to project total non-interest expense for the full year to be in the range of $320 to $330 million.

Speaker #4: Our capital levels remain well in excess of well-capitalized regulatory thresholds. Common equity Tier 1 ratio ended the quarter at 12.3% and our total capital ratio was 15.4%.

Speaker #4: Tangible book value per share grew to $26.23, with earnings more than covering the quarterly dividend and $11 million of share repurchases during the quarter.

Nicole Van Denabeele: Tangible book value per share grew to $26.23, with earnings more than covering the quarterly dividend and $11 million of share repurchases during the quarter. Importantly, we believe we are on track to deliver earnings in excess of $1 per share in Q4 2026. With that, I will turn the call over to Aldis.

Speaker #4: Importantly, we believe we are on track to deliver earnings in excess of $1.00 per share in the fourth quarter of 2026. With that, I will turn the call over to Aldis.

Speaker #3: All right. Well, thank you, Nicole, and good morning. I'll start with a highlight of the quarter: loan production. As Nicole mentioned, we funded a record $927 million during the quarter.

Aldis Birkans: All right. Well, thank you, Nicole, and good morning. I'll start with the highlight of the quarter, loan production. As Nicole mentioned, we funded a record $927 million during the quarter. To put that in perspective, year-to-date production now stands at $1.7 billion, which already exceeds our total fundings for all of 2025. That's a meaningful marker of how much the growth engine has accelerated. It puts us nicely on track to hit our full-year 10% loan growth guidance. What I'm most encouraged by is how broad-based this production was. It was not a one team or one region story. We saw contributions across most asset classes and most of our geographies. That granularity matters as the whole franchise is pulling in the same direction.

Speaker #3: To put that in perspective, year-to-date production now stands at $1.7 billion. It's already exceeded our total fundings for all of 2025. That's a meaningful marker of how much the growth engine has accelerated, and it puts us nicely on track to hit our full-year 10% loan growth guidance.

Speaker #3: What I'm most encouraged by is how broad-based this production was. It was not a one-team or one-region story. We saw contributions across most asset classes and most of our geographies.

Speaker #3: That granularity matters as the whole franchise is fully in the same direction. Several of our teams are truly just gaining momentum and we are heading into the back half of the year with healthy pipelines across the board.

Aldis Birkans: Several of our teams are truly just gaining momentum, we are heading into the back half of the year with healthy pipelines across the board. It's also worth highlighting that our loan utilizations continue to move up towards historic

Speaker #3: It's also worth highlighting that results are trending up toward historical averages, as our clients are becoming increasingly comfortable with the economic outlook. Turning to credit, we continue to see overall credit trends improve, with both classified and criticized loans being down on a linked-quarter and year-over-year basis.

Tim Laney: Our clients are becoming increasingly comfortable with the economic outlook. Turning to credit, we continue to see overall credit trends improve, with both classified and criticized loans being down on the linked-quarter and on a year-over-year basis. Our past due loans also were down. Both NPAs and NPLs remained at low levels. Simply put, credit remains in a very good shape. Fee income is another strong point. Non-interest income grew 10% on linked-quarter basis, or 40% annualized. The fee income increase was driven by strong growth in service charges, card income, and treasury management activity. In addition, we continue to benefit from a more diversified fee base, with solid contributions from trust and wealth, Cambr, and swap income, all adding to the robust growth.

Aldis Birkans: Our clients are becoming increasingly comfortable with the economic outlook. Turning to credit, we continue to see overall credit trends improve, with both classified and criticized loans being down on the linked-quarter and on a year-over-year basis. Our past due loans also were down. Both NPAs and NPLs remained at low levels. Simply put, credit remains in a very good shape. Fee income is another strong point. Non-interest income grew 10% on linked-quarter basis, or 40% annualized. The fee income increase was driven by strong growth in service charges, card income, and treasury management activity. In addition, we continue to benefit from a more diversified fee base, with solid contributions from trust and wealth, Cambr, and swap income, all adding to the robust growth.

Speaker #3: Our past due loans were also down. Both NPAs and NPLs remained at low levels. Simply put, credit remains in very good shape. Fee income is another strong point.

Speaker #3: Non-interest income grew 10% on linked quarter basis or 40% annualized. The fee income increase was driven by strong growth in service charges, card income, and treasury management activity.

Speaker #3: In addition, we continue to benefit from a more diversified fee base, with solid contributions from trust and wealth, amber, and swap income all adding to the robust growth.

Speaker #3: Finally, turning to the operational side of the Vista Bank acquisition integration, we remain firmly on plan. And John will give us more perspective on that.

Tim Laney: Finally, turning to the operational side of the Vista Bank acquisition integration, we remain firmly on plan, John will give us more perspective on that. John?

Aldis Birkans: Finally, turning to the operational side of the Vista Bank acquisition integration, we remain firmly on plan, John will give us more perspective on that. John?

Speaker #3: John?

Speaker #2: Thank you, Aldis, and good morning, everyone. When we spoke last quarter, the story was about bringing two strong, seasoned companies together. This quarter, the story is about what we are accomplishing now that we are one team.

John Steinmetz: Thank you, Aldis, good morning, everyone. When we spoke last quarter, the story was about bringing two strong, seasoned companies together. This quarter, the story is about what we are accomplishing now that we are one team. Much of the heavy integration work that defined our first few months together is now behind us, our core conversion is on track to occur in Q3. That means our teams are now spending more time doing what they love, taking care of our clients, and originating record loan production. The people-first culture we described at close is no longer something we are building towards. It's simply how we operate. The culture has become the pinnacle of our recruiting success. Since 7 January, when the merger closed, we've added numerous seasoned banking professionals throughout our entire franchise.

Speaker #2: Much of the heavy integration work that defined our first few months together is now behind us and our core conversion is on track to occur in the third quarter.

Speaker #2: That means our teams are now spending more time doing what they love: taking care of our clients and originating record loan production. The people-first culture we described at close is no longer something we are building towards.

Speaker #2: It's simply how we operate. The culture has become the pinnacle of our recruiting success. Since January 7, when the merger closed, we've added numerous seasoned banking professionals throughout our entire franchise.

Speaker #2: Bankers are developing new client relationships, broadening our reach, and increasing market share within the communities that we have the privilege to serve. I've always said, and truly believe, the best bankers bank the best clients—and we are watching that unfold.

John Steinmetz: Bankers are developing new client relationships, broadening the reach, and increasing market share within the communities that we have the privilege to serve. I've always said and truly believe the best bankers bank the best clients, and we are watching that unfold. Looking to the back half of the year, our focus shifts from integrating to compounding shareholder value. Introducing clients to products and services such as treasury management, trust and wealth, residential mortgage, and other sophisticated products leverages the strength of National Bank Holdings Corporation. Each of these lets us go deeper with the clients, and that is where durable, profitable, and long-term growth comes from. We will keep running this company for the long run, disciplined on credit, thoughtful on capital, and relentless on service. In conclusion, I would like to take a moment to thank our most important asset, our people.

Speaker #2: Looking to the back half of the year, our focus shifts from integrating to compounding shareholder value. Introducing clients to products and services such as treasury management, trust and wealth, residential mortgage, and other sophisticated products leverages the strength of National Bank Holdings Corporation.

Speaker #2: Each of these lets us go deeper with the clients and that is where durable, profitable, and long-term growth comes from. We will keep running this company for the long run.

Speaker #2: Disciplined on credit, thoughtful on capital, and relentless on service. In conclusion, I would like to take a moment to thank our most important asset: our people.

Speaker #2: You, they, are the reason I am confident about the ability to exceed our clients and shareholders' expectations. We thank you for your trust as the powerful combination we thought was possible becomes a reality and has demonstrated by the quarter's performance and that is why I know the best is yet to come.

John Steinmetz: You, they, are the reason I am confident about the ability to exceed our clients' and shareholders' expectations. We thank you for your trust as the powerful combination we thought was possible becomes a reality and as demonstrated by the quarter's performance, that is why I know the best is yet to come. With that, Tim, I'll turn it back to you.

Speaker #2: With that, Tim, I'll turn it back to you.

Speaker #3: Thank you, John. Well, as you've heard, we're experiencing strong momentum across our core banking franchise. We expect this momentum to build in our favor, and as Nicole shared, we believe we're on track to realize $1-plus of EPS in the fourth quarter of this year.

Tim Laney: Thank you, John. Well, as you've heard, we're experiencing strong momentum across our core banking franchise. We expect this momentum to build in our favor, as Nicole shared, we believe we're on track to realize $1-plus of EPS in Q4 of this year. On other fronts, while 2UniFi revenue growth has been slow in coming, investments in the business remain well-managed and partnership potential is very solid. We continue to grow our tangible capital and ended the quarter with a Common Equity Tier 1 ratio of 12.3%. Our balance sheet supports meaningful optionality. We will continue to invest in talent. We will opportunistically buy back shares, and we'll reconsider M&A once we complete the Vista integration. Make no mistake, we are in great markets, our team is well-positioned to deliver meaningful value for our shareholders.

Speaker #3: On other fronts, while two-unified revenue growth has been slow in coming, investments in the business remain well managed, and partnership potential is very solid.

Speaker #3: We continue to grow our tangible capital and ended the quarter with a Common Equity Tier 1 ratio of 12.3%. Our balance sheet supports meaningful optionality.

Speaker #3: We will continue to invest in talent. We will opportunistically buy back shares, and we'll reconsider M&A once we complete the Vista integration. Make no mistake, we are in great markets, and our team is well positioned to deliver meaningful value for our shareholders.

Speaker #3: And on that note, let's open up this call for questions.

Tim Laney: On that note, let's open up this call for questions.

Speaker #1: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Operator 2: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one to ask a question. We'll take our first question from Jeff Rulis with D.A. Davidson. Please go ahead.

Operator: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one to ask a question. We'll take our first question from Jeff Rulis with D.A. Davidson. Please go ahead.

Speaker #1: And again, that is star one to ask a question. We'll take our first question from Jeff Rulas with DA Davidson. Please go ahead.

Speaker #4: Thanks. Good morning. Good morning.

Jeff Rulis: Thanks. Good morning.

Tim Laney: Hey, Jeff. Good morning.

Jeff Rulis: Wanted to get into the loan growth. The funding side is pretty impressive. Just wanted to ask about the net level and what maybe is kind of a headwind to that as we're assuming some payoffs or just if you could describe kind of the undertow of why the net remains at maybe 10%, admittedly strong fundings. Thanks.

Speaker #3: I wanted to get into the loan growth. The funding side is pretty impressive. I just wanted to ask about the net level and what maybe is kind of a headwind to that, as we're assuming some payoffs. Or just, if you could describe kind of the undertow of why the net remains at maybe 10%, admittedly strong fundings.

Speaker #3: Thanks.

Speaker #4: Yeah, Jeff, this is Aldis. I'll take that. As you said, the loan growth or the loan originations were extremely strong. We're very proud of that, what teams accomplished this quarter.

Tim Laney: Yeah, Jeff, this is Aldis. I'll take that. As you said, the loan growth or the loan originations were extremely strong. We're very proud of that, what teams accomplished this quarter. The little bit of headwind that came through was a little higher acquired loan churn, so to say. Again, that's not unusual. If you look in the Q1, it was a little bit lower. On average year-to-date basis, it actually is where we were expecting, and therefore, the year-to-date loan growth is at 10%, where we had been guiding. I do think that that's going to even out here going in the H2 of the year. But again, $1.7 billion loan production for the H1 of the year is very impressive. We're very happy with that.

Aldis Birkans: Yeah, Jeff, this is Aldis. I'll take that. As you said, the loan growth or the loan originations were extremely strong. We're very proud of that, what teams accomplished this quarter. The little bit of headwind that came through was a little higher acquired loan churn, so to say. Again, that's not unusual. If you look in the Q1, it was a little bit lower. On average year-to-date basis, it actually is where we were expecting, and therefore, the year-to-date loan growth is at 10%, where we had been guiding. I do think that that's going to even out here going in the H2 of the year. But again, $1.7 billion loan production for the H1 of the year is very impressive. We're very happy with that.

Speaker #4: The little bit of headwind that came through was a little higher acquired loan churn, so to say. Again, that's not unusual if you look in the first quarter.

Speaker #4: It was a little bit lower, so on an average year-to-date basis, it actually is where we were expecting. Therefore, year-to-date loan growth is at 10%, which is where we had been guiding.

Speaker #4: So, I do think that that's going to even out here going into the second half of the year. But again, $1.7 billion in loan production for the first half of the year is very impressive.

Speaker #4: We're very happy with that.

John Steinmetz: Jeff, hi. I would add the reality is when you see some of the longer term debt that's coming in for renewal, you are seeing competition against those higher yielding loans. We have discipline around total client profitability, and there's a point where we are willing to let business

Tim Laney: Jeff, hi. I would add the reality is when you see some of the longer term debt that's coming in for renewal, you are seeing competition against those higher yielding loans. We have discipline around total client profitability, and there's a point where we are willing to let business

Speaker #3: Jeff, I would add that the reality is, when you see some of the longer-term debt that's coming in for renewal, you are seeing competition against those higher-yielding loans.

Speaker #3: We have discipline around total client profitability, and there's a point where we are willing to let business go elsewhere if we don't believe it's going to achieve our desired levels of profitability.

Tim Laney: go elsewhere if we don't believe it's going to achieve our desired levels of profitability. That clearly also, that dynamic has put a little interim pressure on the margin. On the whole, we still have confidence when we look at where margin's going to hold for the year. Given what we understand about what's renewing in our loan portfolio and what that looks like the remainder of the year, we still feel very confident about a very strong margin holding in.

Speaker #3: That clearly also that dynamic is putting a has put a little interim pressure on the margin, but on the whole, we still have confidence when we look at where margin's going to hold for the year, given what we understand about what's renewing in our loan portfolio and what that looks like the remainder of the year.

Speaker #3: We still feel very confident about a very strong margin holding in. I hope that kind of helps.

Jeff Rulis: Great.

Tim Laney: I hope that kind of helps.

Speaker #4: Yeah, yeah. It sounds like well, I guess just to understand that fully, it sounds like maybe some Vista attrition is what is against some of the record fundings.

Jeff Rulis: Yeah. Well, I guess just to understand that fully, it sounds like maybe some Vista attrition is what is against some of the record fundings. Am I hearing that right?

Speaker #4: Am I hearing that right?

Speaker #2: Well, it's a combination of it. So the Vista was a contributor, but again, if I look at the first half of the year, for the first six months, it's exactly where we expect it to be.

Aldis Birkans: Well, it's a combination. Vista was a contributor, but again, if I look at H1, for the first six months, it's exactly where we expect it to be. I think it's not to be lost the point that Tim is making there. We did see, and that kind of goes down back to kind of the NIM discussion on the loan yields. If you see the loan yields came in a little bit. That is due to the higher loans churning, and that's both on NBH and Vista side.

Speaker #2: But I think it's important not to lose the point that Tim is making—that we did see, and that kind of goes back to the NIM discussion on the loan yields.

Speaker #2: If you see, the loan yields came in a little bit. That is due to the higher loans churning, and that's both on the NBH and Vista sides.

Speaker #3: But I want to be clear. Our bankers have done a phenomenal job of retaining clients through the Vista acquisition, so that isn't some unique driver of this.

Tim Laney: I want to be clear. Our bankers have done a phenomenal job of retaining clients through the Vista acquisition. That isn't some unique driver of this. I'm going to bring you back to what I said before. Where you're seeing attrition of business, I would say, frankly, it's more in this current environment price sensitivity than anything else. We've had discipline through the years around relationship pricing. We don't look at just the credit. We can be more flexible where we have, for example, robust depository treasury management relationships. What we're not going to do is pursue business that's either too high in risk or not generating adequate profitability. I can't say enough about the job our bankers have done to retain relationships through this integration and not only that, but focus on growing beyond it.

Aldis Birkans: I want to be clear. Our bankers have done a phenomenal job of retaining clients through the Vista acquisition. That isn't some unique driver of this. I'm going to bring you back to what I said before. Where you're seeing attrition of business, I would say, frankly, it's more in this current environment price sensitivity than anything else. We've had discipline through the years around relationship pricing. We don't look at just the credit. We can be more flexible where we have, for example, robust depository treasury management relationships. What we're not going to do is pursue business that's either too high in risk or not generating adequate profitability. I can't say enough about the job our bankers have done to retain relationships through this integration and not only that, but focus on growing beyond it.

Speaker #3: I'm going to bring you back to what I said before. Where you see attrition of business, I would say, frankly, it's more in this current environment price sensitivity than anything else.

Speaker #3: And we've had discipline through the years around relationship pricing. We don't look at just the credit. We can be more flexible where we have, for example, robust depository and treasury management relationships.

Speaker #3: But what we're not going to do is pursue business that's either too high in risk or not generating adequate profitability. So I can't say enough about the job our bankers have done to retain relationships through this integration and not only that, but focus on growing beyond it.

Speaker #4: Thanks. If I could just pop over to the expense side, I got that full-year guide. I guess, maybe, could we get a normalized quarterly expense run rate, maybe in the second half? It sounds like the conversion—and maybe even a better question is the Q4 run rate or where you exit the year.

Jeff Rulis: Thanks. If I could just hop over to the expense side. I got that full-year guide. I guess a normalized quarterly expense run rate maybe in H2. It sounds like the conversion and maybe even a better question is the Q4 run rate of where you exit the year as we try to pull out those merger expenses and see where you land.

Speaker #4: As we try to pull out those merger expenses and see where you land.

Speaker #5: Yeah. Good morning, Jeff. This is Nicole. I'll be happy to give some color there. So I will say Q2's expenses came in in line with our expectation.

Nicole Van Denabeele: Yes. Good morning, Jeff. This is Nicole. I will be happy to give some color there. I will say Q2's expenses came in in line with our expectation. As I mentioned in Q1, we have made some investments in new banker talent. Q2, we also have merit increases coming online one additional day in the quarter. We are on track to meet our full-year expense guide of $320 to $330 million. To your point, we will see the benefit of the expense synergies from the acquisition. Those will come fully online in Q4. That will be our first kind of clean quarter. I do think it is reasonable to expect in Q4 that expenses would be below $80 million.

Speaker #5: As I mentioned in Q1, we have made some investments in new banker talent. Q2, we also have merit increases coming online. One additional day in the quarter.

Speaker #5: We are on track to meet our full-year expense guide of $320 to $330 million. To your point, we will see the benefit of the expense synergies from the acquisition.

Speaker #5: Those will come fully online in the fourth quarter. That'll be our first kind of clean quarter. And I do think it is reasonable to expect in the fourth quarter that expenses would be below 80 million.

Speaker #4: Got it. That's helpful. Maybe while I have you—the margin average in June, do you have that figure?

Jeff Rulis: Got it. That is helpful. Maybe while I have you, the margin average in June, do you have that figure?

Speaker #5: Yes, I do. I do. And I'll be happy to give you more color on margin broadly. I'll start by saying we're proud of maintaining a top quartile margin.

Nicole Van Denabeele: Yes, I do. I will be happy, Jeff, to give you more color on margin broadly. I will start by saying we are proud of maintaining a top quartile margin. June's margin, we exited the month with a June month-end margin of right at 4%, that gives us confidence guiding forward to a near 4% margin. Breaking down Q2's margin in some of its pieces, I will say positives for Q2 margin are cost of deposits improved one basis point. We did have a three basis point increase in our cost of funds, and that was entirely driven by the sub-debt issuance that we did at the end of Q1. That sub-debt issuance came fully online in Q2.

Speaker #5: June's margin—we exited the month with a June month-end margin of right at 4%. That gives us confidence in guiding forward to a near 4% margin.

Speaker #5: Breaking down Q2's margin a little bit, in some of its pieces, I will say positives for Q2 margin are: cost of deposits improved one basis point.

Speaker #5: We did have a three basis point increase in our cost of funds, and that was entirely driven by the sub debt issuance that we did at the end of the first quarter.

Speaker #5: So that sub debt issuance came fully online in the second quarter. If you strip out that impact, Q2's cost of funds was flat with the first quarter, which we are proud of given the funding pressures in the industry that we were able to hold our cost of funds flat.

Nicole Van Denabeele: If you strip out that impact, Q2's cost of funds was flat with Q1, which we are proud of given the funding pressures in the industry that we were able to hold our cost of funds flat.

Speaker #5: Additionally, average earning asset balances increased 9% over the first quarter. Average loan balances increased 15% over the first quarter. Where we did experience margin compression was in our loan yields for the second quarter, which Tim and Aldis have both mentioned.

Nicole Van Denabeele: Average earning asset balances increased 9% over Q1. Average loan balances increased 15% over Q1. Where we did experience margin compression was in our loan yields for Q2, which Tim and Aldis have both mentioned. A couple of impacts there. We are impacted by some churn of loans on the existing book where you have loans in the high sixes. Renewing, we did have new loan origination yields for Q2 right about 6.4%, 6.5%. At those levels, new loan originations are still accretive to margin. While those loan yields came in a little bit, we are maintaining our spreads and still picking up margin accretion from new loan activity. The Q2 loan yields were also impacted by some volatility in purchase accounting accretion volume, and that will vary quarter-to-quarter, give or take a few basis points.

Speaker #5: A couple of impacts there. So we are impacted by some churn of loans on the existing book, where you have loans in the high sixes.

Speaker #5: Renewing, we did have new loan origination yields for Q2 right about 6.4%, 6.5%. At those levels, new loan originations are still accretive to margin.

Speaker #5: So while that while those loan yields came in a little bit, we are maintaining our spreads and still picking up margin accretion from new loan activity.

Speaker #5: And then the second quarter loan yields were also impacted by some volatility in purchase accounting accretion volume. And that will vary quarter to quarter, give or take a few basis points.

Speaker #4: Thanks, Nicole. Appreciate it.

Tim Laney: Thanks, Nicole. Appreciate it.

Speaker #1: And next, we'll go to Kelly Amada with KBW. Please go ahead.

Operator 2: Next we'll go to Kelly Motta with KBW. Please go ahead.

Operator: Next we'll go to Kelly Motta with KBW. Please go ahead.

Speaker #6: Thanks. Good morning, and thanks for the question. I appreciate that. I think you reiterated both your fee and expense guidance. Just wondering if you could provide an update on the contribution of Two Unified.

Kelly Motta: Thanks. Good morning. Thanks for the question.

Tim Laney: Good morning.

Kelly Motta: I appreciate, I think you reiterated both your fee and expense guidance. Wondering if you could provide an update on the contribution of 2UniFi. I think previously you said that was about $22 million of expenses and $2 to $4 million in the fee run rate, if that's still embedded in that outlook and any updated thoughts on kind of where progress on that stands.

Speaker #6: I think previously you said that was about $22 million of expenses and $2 to $4 million in the fee run rate. Is that still embedded in that outlook, and any updated thoughts on where progress on that stands?

Speaker #3: Yeah, Kelly, thanks for the question. Look, our revenue performance on Two Unified has been underwhelming to date. There is good news, though. We've seen, in the second quarter, full applications growing dramatically.

Tim Laney: Yeah. Kelly, thanks for the question. Look, our revenue performance on 2UniFi has been underwhelming to date. There is good news there. We've seen in the Q2 applications, full applications growing dramatically. Applications up 800% over the Q1. Conversions are not dialed in yet, and that's where you get the revenue. As a practical matter, what we're seeing is applications that are not still hitting our credit risk profile, and we're not going to compromise on that. It speaks to our need to do more targeted marketing, to think more about attracting the right kind of applications, because at this point, we're seeing dramatic increase in applications coming in from pure startup businesses, which as a commercial bank, we're not equipped to bank. Frankly, the other is just straight up credit quality issues.

Speaker #3: Applications are up 800% over the first quarter, but conversions are not dialed in yet, and that's where you get the revenue. As a practical matter, what we're seeing is applications that are still not hitting our credit risk profile.

Speaker #3: And we're not going to compromise on that. It speaks to our need to do more targeted marketing, to think more about attracting the right kind of applications. Because at this point, we're seeing a dramatic increase in applications coming in from pure startup businesses, which, as a commercial bank, we're not equipped to bank.

Speaker #3: And frankly, the other is just straight-up credit quality issues. And so it speaks to the need, again, to continue to refine our application target marketing, and we're doing just that.

Tim Laney: It speaks to the need, again, to continue to refine our application target marketing, and we're doing just that. There is some positive news. While the dollars are small, we're seeing deposit growth in the business. The beauty of that is these are granular small business deposit accounts. We love the granularity. It's just building on a very small base, and we've got to see that grow. Nicole, if you want to speak to how we're adjusting and thinking about filling gaps. We didn't attribute a lot of revenue to 2UniFi this year. Our intention is to fill those gaps, and you may want to speak to how we're going to address that.

Speaker #3: There is some positive news while the dollars are small. We're seeing deposit growth in the business. The beauty of that is these are granular small business deposit accounts.

Speaker #3: We love the granularity. It's just building on a very small base, and we've got to see that grow. So, Nicole, if you want to speak to how we're adjusting and thinking about filling gaps driven by—we didn't attribute a lot of revenue to Two Unified this year.

Speaker #3: Our intention is to fill those gaps and you may want to speak to how we're going to address that.

Speaker #6: Yeah. So Kelly, your numbers are right on with what we had previously guided. So two to four million of revenue from two unified. We do feel confident in our overall fee income guide.

Nicole Van Denabeele: Yeah. Kelly, your numbers are right on with what we had previously guided. $2 to $4 million of revenue from 2UniFi. We do feel confident in our overall fee income guide regardless of where the 2UniFi revenue comes in. We are seeing some nice lift in other areas of our diversified fee revenue. On the expense side, your number is accurate, right? $20 to $22 million of 2UniFi expenses, which is flat to last year, even with bringing on a full year of amortization of the capitalized asset. I will say from a 2UniFi expense standpoint, expenses are well managed, and we are on track to meet that guide.

Speaker #6: Regardless of where the two unified revenue comes in, we're seeing some nice lift in other areas of our diversified fee revenue. And then on the expense side, your number is accurate, right?

Speaker #6: $20 to $22 million of two unified expenses, which is flat to last year, even with bringing on a full year of amortization of the capitalized asset.

Speaker #6: I will say, from a total unified expense standpoint, expenses are well managed and we are on track to meet that guide. Okay. All right.

Kelly Motta: Okay. All right. Got it. That is helpful. I would like to pivot just overall to funding. I think loan growth has been super strong at NBH and definitely a highlight. It looks like deposit balances, at least on a spot basis, were down slightly and you utilized some greater amount of borrowings. Just wondering how you guys are thinking about the loan to deposit ratio and the funding of that kind of 10% loan growth going forward.

Speaker #6: Got it. That's helpful. Then I'd like to pivot just overall to funding. I think loan growth has been super strong at NBH and definitely a highlight.

Speaker #6: It looks like deposit balances, at least on a spot basis, were down slightly and you utilized some greater amount of borrowings. Just wondering how you guys are thinking about the loan-to-deposit ratio and the funding of that kind of 10% loan growth going forward.

Speaker #4: Yeah, Kelly, this is Aldis. I'll take that. In terms of—again, we usually look at the average deposit balances too, because that kind of measures the overall strength of the balance sheet and takes out the day-to-day volatility at the quarter ends.

Aldis Birkans: Yeah, Kelly, this is Aldis. I will take that. In terms of, again, we usually look at the average deposit balances too because that kind of measures the overall strength of the balance sheet and takes out the day-to-day volatility at the quarter ends. For example, the tax seasonality in Q1, we were benefiting some from that. Adjusting for that, really actually transaction deposits were flat even on spot basis and grew $115 million on the average basis. There is plenty momentum. It is, as always for us, focused on relationship banking. Our bankers know that it is full balance sheet approach to how we go to market and we expect to be able to support our growth with core deposits.

Speaker #4: For example, the tax seasonality in the first quarter—we were benefiting some from that. So, adjusting for that, actually transaction deposits were flat even on a spot basis and grew $115 million on the average basis.

Speaker #4: So, there is plenty of momentum. It is, as always for us, focused on relationship banking. Our bankers know that it is full balance sheet.

Speaker #4: Approach to how we go to market and we expect to be able to support our growth with core deposits.

Speaker #3: Yeah. I would add we also historically have gone through cycles where when you see a slight step up in more commercial real estate production you tend to see less deposit growth.

Tim Laney: Yeah, I would add, we also historically have gone through cycles where when you see a slight step up in more commercial real estate production, you tend to see less deposit growth. That is why we are hyper-focused over time on growing commercial banking relationships in the C&I space. That is where you really pick up the full treasury management depository relationships that have made this company so strong over the years. We certainly make no apologies for the granularity and the breadth of our deposit base. I think the fact that we actually saw cost on that deposit book come down a basis point speaks to the strength of those relationship deposits. Make no mistake, if we had wanted to grow deposits more and play the pricing game, we could have certainly done that.

Speaker #3: It's why we are hyper-focused over time on growing commercial banking relationships in the C and I space. That's where you really pick up the full treasury management depository relationships that have made this company so strong over the years.

Speaker #3: And we certainly make no apologies for the granularity and the breadth of our deposit base, and I think the fact that we actually saw cost on that deposit book come down a basis point speaks to the strength of those relationship deposits. And make no mistake, if we had wanted to grow deposits more and play the pricing game, we could have certainly done that.

Speaker #6: Got it, that's helpful. Maybe one last piece for Nicole—probably just to understand the dynamics of the margin. It seems like some of the variance between Q2 and Q1 was due to some higher loan fees in Q1, maybe accretion.

Kelly Motta: Got it. That's helpful. Maybe last piece for Nicole, probably, just to understand the dynamics of the margin. It seems like some of the variance between Q2 and Q1 was just some higher loan fees in Q1, maybe accretion. Do you have those numbers handy just so we can get a better sense of underlying trends? Because clearly at a 394 margin, still one of the better ones in the industry, but I think some of us were looking for flattish because of those dynamics. Thanks.

Speaker #6: Do you have those numbers handy, just so we can get a better sense of underlying trends? Because, clearly, at a 394 margin, still one of the better ones in the industry, but I think some of us were looking for flattish because of those dynamics.

Speaker #6: Thanks.

Nicole Van Denabeele: Yeah, Kelly. Thanks for the question. I would say, as I mentioned, we will continue to see some volatility just related to the pattern of how that mark accretion comes in, just driven by payoffs, pay downs, and the volume of those and the timing that they hit. I wouldn't expect that to be more than a couple of basis points of margin volatility over time. I think that's the piece that you're seeing from Q1 to Q2.

Speaker #5: Yeah. Kelly, thanks for the question. I would say as I mentioned, we will continue to see some volatility just related to the pattern of how that mark accretion comes in just driven by payoffs, pay downs, and the volume of those and the timing that they hit.

Speaker #5: I wouldn't expect that to be more than a couple of basis points of margin volatility over time. And I think that's the piece that you're seeing from Q1 to Q2.

Speaker #6: Got it. Thank you. I'll step back.

Kelly Motta: Got it. Thank you. I'll step back.

Speaker #4: Thank you, Kelly.

Aldis Birkans: Thank you, Kelly.

Speaker #1: Thank you. And we'll next go to Matthew Clark with Piper Sandler. Please go ahead.

Operator 2: Thank you. We'll next go to Matthew Clark with Piper Sandler. Please go ahead.

Operator: Thank you. We'll next go to Matthew Clark with Piper Sandler. Please go ahead.

Speaker #7: Hey, good morning everyone.

Matthew Clark: Hey, good morning, everyone.

Speaker #4: Good morning.

Aldis Birkans: Good morning.

Tim Laney: Good morning.

Speaker #7: Nicole, just along those lines, on that last question, can you give us the accretion that was part of interest income this quarter?

Matthew Clark: Nicole, just along those lines of that last question, can you just give us the accretion that was part of net interest income this quarter? I think it was $1.4 million last quarter.

Speaker #7: I think it was 1.4 million last quarter.

Speaker #5: Yeah. It was $1.4 million last quarter, and it was about $1 million this quarter.

Nicole Van Denabeele: Yeah. It was $1.4 million last quarter, and it was about $1 million this quarter.

Speaker #7: Okay.

Matthew Clark: Okay. Got it.

Speaker #5: I guess I should clarify regarding the Vista acquisition. We do still have some accretion impacts from prior acquisitions, and that can drive some volatility over time as well.

Nicole Van Denabeele: I guess I should clarify, related to the Vista acquisition, we do still have some accretion impacts from prior acquisitions that can drive some volatility over time as well.

Speaker #7: Okay. And then on loan yields, I understand why they were down this quarter, but what's your outlook on loan yields going forward?

Matthew Clark: Okay. On loan yields, I understand why they were down this quarter, but what's your outlook on loan yields going forward?

Speaker #5: Yeah, we think that loan yields have roughly normalized, so we believe that they've settled in where they're going to be. Like I mentioned, new loan origination yields in Q2 are right about 6.4% to 6.5%.

Nicole Van Denabeele: Yeah. We think that loan yields have roughly normalized. We believe that they've settled in where they're going to be. Like I mentioned, new loan origination yields in Q2, right about 6.4%, 6.5%, we feel like that's hit a normalized level.

Speaker #5: And we feel like that that's hit a normalized level.

Speaker #3: I think it's such an important question because we do spend a lot of time looking at our book of remaining renewals throughout the year, and that's where you become somewhat vulnerable.

Aldis Birkans: I think it's such an important question because we do spend a lot of time looking at our book remaining renewals throughout the year, that's where you become somewhat vulnerable. We feel like at this point, renewals are going to be well managed and that's what gives us the confidence that we believe we can hold our position here through the remainder of the year.

Speaker #3: And we feel like at this point, renewals are going to be well managed and that's what gives us the confidence that we believe we can hold our position here through the remainder of the year.

Speaker #7: Okay. And then, just on the overall margin, it sounds like there was some nice lift at the end of the quarter. I guess, what drove that margin up to 4% at the end of the quarter relative to the two-quarter average?

Matthew Clark: Okay. Just on the overall margin, it sounds like there was some nice lift at the end of the quarter. I guess, what drove that margin up to 4% at the end of the quarter relative to the Q2 average?

Speaker #4: Yeah. No, as Nicole mentioned, that around 4% June margin was what we would call actually clean. So the volatility of that mark impact that we talked about was realized earlier in the quarter—earlier in the quarter, previous month, so to say.

Tim Laney: Yeah. As Nicole mentioned, that around 4% June margin was what we would call actually clean. The volatility of that mark impact that we talked about was realized earlier in the quarter, previous month, so to say. June actually felt very clean. That's why we were very comfortable sharing it.

Speaker #4: So June actually felt very clean. That's why we were very comfortable sharing it.

Speaker #7: Okay. But it's not like deposit costs are down further in June? I don't know if you have the spot rate at the end of June.

Matthew Clark: Okay. It's not like deposit costs are down further in June. I don't know if you have the spot rate at the end of June.

Speaker #3: There really are not. I mean, I think Aldis answered the question. It was really about where we absorbed that impact and it was early in the quarter.

Tim Laney: They're really not. I think Aldis answered the question. It was really about where we absorbed that impact, and it was early in the quarter.

Speaker #7: Okay, got it. Sounds good. And then, on the buyback, do you have the weighted average price at which you bought back shares this quarter?

Matthew Clark: Okay. Got it. Sounds good. On the buyback, do you have the weighted average price that you bought back shares this quarter?

Speaker #3: Oh, no, that we've shared that. Halfway.

Aldis Birkans: I don't know that we've shared that halfway.

Speaker #4: We typically don't disclose that, but again, as Tim mentioned, it's opportunistic as the market moves around. I think it's reasonable to say that it was done at a price lower than where we trade today or yesterday.

Nicole Van Denabeele: We typically don't disclose that. Again, as Tim mentioned, we're opportunistic as market moves around and I think it's reasonable to say that it was done at prices lower than where we trade today or yesterday.

Aldis Birkans: We typically don't disclose that. Again, as Tim mentioned, we're opportunistic as market moves around and I think it's reasonable to say that it was done at prices lower than where we trade today or yesterday.

Speaker #7: Okay. And then just on criticize, it sounds like criticize was down. Can you give us the dollars or percentages from one Q to two Q?

Matthew Clark: Okay. Then just on criticize, it sounds like criticize was down. Can you give us the dollars or percentages from Q1 to Q2?

Speaker #4: Criticized was just at 3%. That was, by the way, the lowest level criticized for a company since 2022.

Aldis Birkans: Criticize was just at 3%. By the way, that was the lowest level criticize for the company since 2022.

Speaker #7: And how does that compare to Q1? Sorry, I don't have it at my fingertips.

Matthew Clark: How that compares to Q1? Sorry, I don't have it at my fingertips.

Aldis Birkans: It was down from about 10, 11 basis points.

Speaker #4: It was down from about 10 and 11 basis points.

Speaker #7: Got it. Okay. Sounds good. And I guess last one for me, just on the income from partnerships and other fees, I think they were up a million one this quarter.

Matthew Clark: I guess last one for me, just on the income from partnerships and other fees. I think they were up $1.1 million this quarter. If you could provide maybe what the contribution in dollars was this quarter versus last, and what do you view as kind of a normalized level if you were to kind of smooth it out just so we can help forecast it.

Speaker #7: If you could provide maybe what the contribution in dollars was this quarter versus last, and what do you view as kind of a normalized level if you were to smooth it out?

Speaker #7: Just so we can help forecast it.

Aldis Birkans: That one is a tough one because as you know, those can be lumpy and infrequent, so to say. I don't think we have a good guidance here. I do want to reiterate, even if you back that out, our trust involved grew 10% on linked quarter basis, 30% on year-over-year. Cambr fees are up near 10% growth on the linked quarter basis, 40% year-over-year. We did have nice swap fee income. Again, that can be lumpy, but we did have half a million in derivative type of swap product sold income. There is more than just the income from partnerships. That one is lumpy as you know. We don't plan on it. To be clear, in our guidance and in the plan, we don't plan on it because again, it's so hard to estimate.

Speaker #4: That one is a tough one because, as you know, those can be lumpy and infrequent, so to say. So I don't think we have good guidance here.

Speaker #4: I do want to reiterate, even if you back that out, trust in both grew 10% on a quarter basis and 30% year over year.

Speaker #4: Camber fees are up near 10% growth in the link quarter basis, 40% year over year. We did have nice swap fee income again, that can be lumpy, but we did have half a million in derivatives type of swap product sold income.

Speaker #4: So, there is more than just the income from partnerships, but that one is lumpy, as you know, and we don't plan on it.

Speaker #4: So to be clear, in our guidance and in the plan, we don't plan on it because again, it's so hard to estimate.

Speaker #7: Understood. Thanks again.

Matthew Clark: Understood. Thanks again.

Speaker #1: Thank you. And we'll return to Kelly Amato with KBW. Please go ahead.

Operator 2: Thank you. We'll return to Kelly Motta with KBW. Please go ahead.

Operator: Thank you. We'll return to Kelly Motta with KBW. Please go ahead.

Speaker #6: Hey, thanks for letting me jump back in. I think, importantly, you reiterated that dollar run rate in Q4 2026. Just wanted to confirm that that didn't include the impact of any strategic optimizations, such as a TU Unify sale.

Kelly Motta: Hey. Thanks for letting me jump back. I think importantly, you reiterated that dollar run rate for Q2 2026. Just wanted to confirm that that didn't include the impact of any strategic optimization such as a 2UniFi sale.

Speaker #5: It does not include anything related to a two-unify sale to get to the one dollar.

Nicole Van Denabeele: It does not include anything related to a 2UniFi sale to get to the $1.

Kelly Motta: Got it. Thank you.

Speaker #6: Got it. Thank you.

Speaker #1: We'll also return to Jeff Rulas with DA Davidson. Please go ahead.

Operator 2: We'll also return to Jeff Rulis with D.A. Davidson. Please go ahead.

Operator: We'll also return to Jeff Rulis with D.A. Davidson. Please go ahead.

Speaker #2: Yeah, thanks. Maybe to that, and the partnership potential to share some of the costs—any update, Tim, on that progress, or maybe no progress?

Jeff Rulis: Yeah, thanks. Maybe to that and the partnership potential to share some of the costs. Maybe any update, Tim, on that progress or maybe no progress?

Speaker #3: Just the conversations and the work are active. The volatility in the fintech market is high, and that makes it difficult to give any kind of defined timeline for getting something like that completed.

Tim Laney: Jeff, the conversations and the work is active. The volatility in the fintech market is high, that makes it difficult to give any kind of a defined timeline for getting something like that completed. I'm not going to mislead anyone. The word volatility's come up quite a bit. If we think the commercial banking market is volatile, go spend some time in this fintech market. It's very volatile right now.

Speaker #3: And I'm not going to mislead anyone. It's we've the word volatility has come up quite a bit if we think it's the commercial banking market is volatile.

Speaker #3: Go spend some time in this fintech market. It's very volatile right now.

Speaker #2: Okay. Thanks. And what other question I had on the kind of the net charge off levels, just trying to get a sense, it sounds like you feel pretty comfortable on the credit side, but still somewhat elevated.

Jeff Rulis: Okay, thanks. One other question I had on the net charge-off levels, just trying to get a sense. It sounds like you feel pretty comfortable on the credit side, but still somewhat elevated. That continues to come down. It sounds like the provision this quarter was largely for growth. Any update on maybe the outlook of future net charge-off levels and/or provisioning range? Either specific or just broad trends would be helpful.

Speaker #2: That continues to come down. Trying to and it sounds like the provision this quarter was largely for growth. Any update on maybe the outlook of future net charge off levels and/or provisioning range either specific or just broad trends would be helpful.

Speaker #3: I mean, there's probably no better indication of where we think charge-offs are going than to look at criticized classified levels and the fact that they've come down to historical levels.

Tim Laney: There's probably no better indication of where we think charge-offs are going than to look at criticized classified levels and the fact that they've come down to historical levels. I think that's probably the best indication we can give. Keep in mind, not unlike any other financial institution, we put the portfolio through an extensive testing process to come up with allowance provision and the quantitative and qualitative metrics lead us to where we're at today. I guess the short of it is we feel quite good, very good about the portfolio, and where it stands. We don't see, for example, a pig in the python. We don't see issues that are haunting us that could be issues a quarter, two quarters, three quarters from now.

Speaker #3: I think that's probably the best indication we can give keep in mind. Our not unlike any other financial institution, we put the portfolio through an extensive testing process to come up with allowance provision and the quantitative and qualitative metrics lead us to where we're at today.

Speaker #3: So I guess the short of it is we feel quite good, very good, about the portfolio and where it stands. And we don't see, for example, a 'pig in the python.'

Speaker #3: We don't see issues that are haunting us that could be issues a quarter, two quarters, three quarters from now.

Speaker #4: And Tim, if I could, I'd like to just say the fact that we've been able to drive record loan production two quarters in a row, and bring the two organizations together and experience the type of $927 million in growth, is simply remarkable.

John Steinmetz: Tim, if I could, I'd like to just say, the fact that we've been able to drive record loan production two quarters in a row and bring the two organizations together and experience the type of $927 million in growth is simply remarkable. Classified assets down 47% year over year, I think it really speaks to the future of the company.

Speaker #4: And classified assets down 47% year over year, I think it really speaks to the future of the company.

Speaker #3: Thank you, John. I agree. I hope folks appreciate that we've done what we said we would do in terms of addressing any prospective concerns in the portfolio and to John's point, we've done that while growing the company nicely and we believe in prudent growth and we're not going to we're not going to hide from issues.

Tim Laney: Thank you, John. I agree. I hope folks appreciate that we've done what we said we would do in terms of addressing any prospective concerns in the portfolio. To John's point, we've done that while growing the company nicely. We believe in prudent growth. We're not going to hide from issues. We never have. We're not going to. Right now, there are no issues to talk about.

Speaker #3: We never have. We're not going to. And right now, there are no issues to talk about.

Speaker #2: I guess, more specifically, the net charge-off level—if you could break out where that came from within each segment—and was that shared, Vista or NBHC?

Jeff Rulis: I guess more specifically than that charge-off level, if you could break out where that came from within segment and was that shared Vista Bank or NBHC? I know it's a combined company now. Then maybe if you could speak to, is 30 basis points annualized net charge-offs to average loans a go rate that we should assume, or is this winding down?

Speaker #2: I know it's a combined company now, but and then maybe if you could speak to is 30 basis points annualized net charge off to average loans a go rate that we should assume or is it is this winding down?

Speaker #3: Yeah. We actually fully expect it to continue to wind down, to work its way down. And look, these have historically both been very well-run organizations.

Tim Laney: Yeah.

Tim Laney: That'd be great.

Jeff Rulis: That'd be great.

Tim Laney: We actually, we fully expect it to continue to wind down, to work its way down. Look, these have historically both been very well-run organizations. Both have had minor issues, but no major outliers. To the extent, if I had to look back and question activities on the NBH side, I would say perhaps we were overly aggressive in attacking what we thought could be concerning issues, and we were willing to do whatever we had to move that risk out of the balance sheet. It cost us some money in that period of time, but it sets us up beautifully as we look ahead. The answer to your question is, we do fully expect that 30 basis points to come down.

Speaker #3: Both have had minor issues, but no major outliers. I mean, to the extent that if I had to look back and question activities on the NBH side, I would say perhaps we were overly aggressive in attacking what we thought could be concerning issues, and we were willing to do whatever we had to do to move that risk out of the balance sheet.

Speaker #3: It cost us some money in that period of time, but it sets us up beautifully as we look ahead. So, the answer to your question is we do fully expect that 30 basis points to come down.

Speaker #2: And the makeup of the net charge-off this quarter?

Jeff Rulis: The makeup of the net charge-offs this quarter?

Speaker #4: Yeah, and I'll just say that on this charge-off for this quarter— which is why we did not have the need to reserve for it, right?

Aldis Birkans: Yeah. I'll just say that on the charge-offs for this quarter, which is why we did not have the need to reserve for it, right? They were fully reserved for and spoken for from periods before. That tells you that these credits were credits that we've been working on for a while, known, and it's just cleaning it out.

Speaker #4: They were fully reserved for it and spoken for from periods before. So that tells you that these credits were credits that we've been working on for a while.

Speaker #4: Known, and it's just cleaning it out.

Speaker #2: Aldis, do you have the loan type and the is it a legacy NBHC or is it Vista credits?

Jeff Rulis: Aldis, do you have the loan type and is it a legacy NBHC or is it Vista credits?

Speaker #4: Yeah. I think there was it's a difference between half and half. Give it half and half is between legacy Vista, which again was covered through purchase accounting.

Aldis Birkans: I think it's a difference between half and half. Half and half is between legacy Vista, which again, was covered through purchase accounting, so there's no provision expense impact there. Then half is legacy NBH. In terms of asset class-

Speaker #4: So there's no provision expense impact there. But in the half is legacy NBH. And in terms of asset class, I don't have a dichotomy.

Tim Laney: Yeah

Aldis Birkans: I'm sorry if I don't have it in front of me.

Tim Laney: I can tell you. We saw exposure in the franchise space that had to be cleaned up. We had dealt with some historical transportation. As we've reported before, the exposure in that transportation space is down, what, 1.5% of the book, if that. Not even that now.

Speaker #3: I can tell you, I mean, we saw exposure in the franchise space that had to be cleaned up. We had dealt with some historical transportation, and as we've reported before, the exposure in that transportation space is down to, what, one and a half percent of the book, if that, not even that now.

Aldis Birkans: Less than that.

Speaker #4: Less than that.

Tim Laney: Now I'm being shown less than 1%. I'm sorry. I should've known that. Again, we've been active where we felt like there was risk either on the horizon or embedded in something that we had exposed ourselves to. Again, we make no apologies for being aggressive and taking that risk off our balance sheet.

Speaker #3: Now I'm being shown less than 1%. I'm sorry, I should have known that. But again, we've been active where we felt like there was risk, either on the horizon or embedded in something that we had exposed ourselves to.

Speaker #3: And again, we make no apologies for being aggressive and taking that risk off our balance sheet.

Speaker #2: Maybe last one. Is just the broad reserve to loans levels. I know that you mentioned I think about a 20 basis point. If you include the marks, but the consolidated figure, is that continues to trend lower?

Jeff Rulis: Maybe last one is just the broad reserve to loans levels. I know that you mentioned about a 20 basis point if you include the marks.

Jeff Rulis: The consolidated figure, as that continues to trend lower, is there a level that you feel like the reserve release may continue going forward?

Speaker #2: Is there a level where you feel like the reserve release may continue going forward?

Speaker #3: Yeah, I think our belief—and again, a lot of this is driven by the modeling, the third-party modeling—but I believe we're at a point where it would be reasonable to expect it to be somewhat flat.

Tim Laney: Yeah. I think our belief, again, a lot of this is driven by the third-party modeling, I believe we're at a point where it would be reasonable to expect it to be somewhat flat. I'll defer to you, Nicole. Anything you would add?

Speaker #3: And I'll defer to you, Nicole. Anything you would add?

Speaker #1: Yeah, I'll agree with that. And I think, to reiterate what Aldis was saying and to put a finer point on it, the reason that reserve level came down is because some of the specific reserves that we had set aside to cover the loans through the workout process—as they've been worked out—those specific reserves come off and bring that level down.

Nicole Van Denabeele: Yeah. I'll agree with that. I think to reiterate what Aldis was saying, to put a finer point on it, the reason that reserve level came down is because some of the specific reserves that we had set aside to cover the loans through the workout process, as they've been worked out, those specific reserves come off and bring that level down.

Speaker #2: That's right. Okay, appreciate the color. Thanks.

Tim Laney: That's right.

Jeff Rulis: Okay. Appreciate the color. Thanks.

Speaker #3: Yeah. Thanks for the question.

Tim Laney: Thanks for the question.

Speaker #5: Thank you. I am showing we have no further questions at this time. I will now turn the call back over to Mr. Laney for his closing remarks.

Operator 2: Thank you. I am showing we have no further questions at this time. I will now turn the call back over to Mr. Laney for his closing remarks.

Operator: Thank you. I am showing we have no further questions at this time. I will now turn the call back over to Mr. Laney for his closing remarks.

Speaker #3: Thank you very much. I genuinely appreciate the coverage and the questions we received this morning, as well as the interest in our company from our teammates who are listening in this morning.

Tim Laney: Thank you very much. I do genuinely appreciate the coverage and the questions we received this morning, the interest in our company. For our teammates that are listening in this morning, I will end by saying thank you again for what was a remarkable quarter and for helping us build toward an exciting H2. On that note, I will wish everybody a good day and rest of the week. Thank you.

Speaker #3: I'll end by saying thank you again for what was a remarkable quarter, and for helping us build toward an exciting second half of the year.

Speaker #3: And on that note, I wish everybody a good day and the rest of the week. Thank you.

Speaker #5: And this concludes today's conference call. If you would like to listen to the telephone replay of this call, it will be available in approximately 24 hours.

Operator 2: This concludes today's conference call. If you would like to listen to the telephone replay of this call, it will be available in approximately 24 hours, and the link will be on the company's website on the investor relations page. Thank you very much and have a great day. You may now disconnect.

Operator: This concludes today's conference call. If you would like to listen to the telephone replay of this call, it will be available in approximately 24 hours, and the link will be on the company's website on the investor relations page. Thank you very much and have a great day. You may now disconnect.

Speaker #5: And the link will be on the company's website on the investor relations page. Thank you very much and have a great day. You may now disconnect.

Q2 2026 National Bank Holdings Corp Earnings Call

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