$65 Million in Affected Loans Put National Bank Under Credit Pressure in Third Quarter
Key Facts
National Bank Holdings said in a pre-release filing for its third-quarter results that commercial loans with an outstanding principal balance of $65.0 million were tied to credit events affecting the period ended September 30. The company estimated that the balance of these loans would fall to about $18.2 million after charge-offs or provisions. It also expected to charge off $46.8 million of loans, with a credit provision expense of between $38.0 and $40.0 million for the quarter. The loans were concentrated mainly in the commercial franchise and healthcare sectors, according to the filing. The company estimated that these developments, together with an impairment of an investment in a technology partnership, would reduce after-tax earnings by between $32.0 and $34.0 million, or $0.72 to $0.76 per diluted share.
The pre-release filing also included a $4.0 million impairment charge on an investment in a financial technology partnership, which the company said would reduce noninterest income in the third quarter. In an earlier results preview, Investing.com, citing Reuters, reported an estimate of earnings of $0.815 per share and revenue of $136.2 million ahead of the results announcement. The same report cited the earnings reduction range the company had previously announced: $32 to $34 million after tax, equivalent to $0.72 to $0.76 per diluted share. These estimates show the scale of the impact the company expected from the loans and investment, but do not mean that the full estimated value of loans to be charged off became realized losses. The company had scheduled its results release for after the market close on October 27, followed by a review call the next day.
The estimates came after the company reported net income of $26.5 million, or $0.58 per diluted share, in the second quarter, compared with net income of $20.8 million and earnings of $0.46 per share in the first quarter of 2026. At the end of June, nonperforming loans were 0.31% of total loans, compared with 0.34% at the end of December 2025, while the allowance for credit losses declined to 1.13% of loans from 1.18%. Chief Executive Tim Laney said in the second-quarter results announcement that the company's teams recorded a quarterly record in loan production, at $926.9 million. He added that loan growth since the start of the year was 10% on an annualized basis, while maintaining strong credit quality. These metrics provide context for the figures released ahead of the third-quarter results, when the pre-release disclosure centered on a specific group of commercial loans.
The company scheduled its results release for after the market close on October 27 and invited investors to a review call at 11:00 a.m. Eastern Time on October 28. The board also approved an additional share repurchase authorization of up to $40.1 million on September 30, alongside $59.9 million remaining under the prior authorization. The decision raised total repurchase capacity to $100.0 million, with no expiration date specified for the authorization. The company's shares closed at $39.05 on October 26, before the results announcement. This was the latest price in the available data before the report was released and does not represent the market's response to the results.