National Bank (NBHC) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income was $26.1 million ($0.68 per diluted share), with a net interest margin of 3.76% and annualized loan growth of 8.1%; year-to-date net income was $57.5 million ($1.50 per share), down from $72.8 million last year, mainly due to higher funding costs and venture capital investment impairment.

• Return on average tangible assets was 1.06% for Q2 and 1.28% for the first half of 2024; return on average tangible common equity was 12.44% for Q2 and 13.77% for the first half.

• Loans totaled $7.7 billion and deposits $8.4 billion as of June 30, 2024, with transactional deposits at 87.8% of total.

• Credit quality improved, with non-performing loans at 0.34% of total loans and non-performing assets at 0.36% of total loans and OREO, both at their lowest since early 2023.

• Expenses were well managed despite ongoing investments in technology, fraud prevention, and digital platforms.

Financial highlights

• Net interest income (FTE) for Q2 2024 was $85.3 million, nearly flat sequentially; for the first six months, it was $171.0 million, down from $187.5 million year-over-year.

• Non-interest income for Q2 was $14.0 million, impacted by a $3.9 million impairment on venture capital investments; year-to-date non-interest income rose 11.4% to $31.7 million.

• Non-interest expense was $63.1 million in Q2, up slightly, mainly due to technology and Cambr-related investments; efficiency ratio was 64.6% for Q2 and 60.14% for the first half.

• Tangible book value per share increased to $23.74, up $0.42 in Q2.

• Allowance for credit losses was $96.5 million (1.25% of loans) at June 30, 2024; annualized net charge-offs were 0.22% for Q2 and 0.11% year-to-date.

Outlook and guidance

• Full-year loan growth is expected in the mid-single digits, supported by a strong pipeline and digital initiatives.

• Net interest margin guidance for the rest of 2024 remains in the mid-3.7% range, not factoring in any Fed rate changes.

• Second half 2024 non-interest expense projected at $127–$130 million, driven by 2UniFi investments; fee income for H2 2024 guided at $33–$35 million, with mortgage banking upside possible if rates fall.

• Management is prepared to respond to potential Federal Reserve rate cuts and expects to leverage strong capital and liquidity for future growth.

• Future earnings will be influenced by Federal Reserve policy, loan origination, and funding cost management.