NBH Bank Expects $38 Million to $40 Million in Third-Quarter Provisions
Key Facts
NBH Bank expects to record a credit-loss provision expense of $38.0 million to $40.0 million for the three months ended September 30, 2026, according to a report the company filed on October 1. The company said credit events affected commercial loans concentrated mainly in the commercial franchise and health care sectors. The original outstanding balance of the affected loan relationships was $65.0 million. The company expects the balance to be reserved against or reduced to an estimated aggregate value of $18.2 million, after assessing the remaining collateral. The provision range announced by the company reflects the expected impact of these credit relationships on its third-quarter accounts.
The company expects to write off $46.8 million of the affected loans during the quarter as a result of the write-downs and specific reserves. This equals the difference between the original outstanding balance of $65.0 million and the estimated aggregate balance of $18.2 million. The filing said the bank will assess the remaining collateral and write the loans down to their estimated value. The affected relationships are concentrated mainly in commercial franchises and health care, according to the company statement. The filing did not provide a breakdown of balances between the two sectors, while the write-off estimate puts expected credit losses at the center of the period’s results.
The company estimated that the impairment charges and reserves would reduce after-tax earnings by about $32.0 million to $34.0 million, or $0.72 to $0.76 per diluted share. The estimate applies to the three and nine months ended September 30, 2026, according to the filing. In addition to the loans, the company expects to record a $4.0 million impairment loss on an investment in one of its fintech partnerships. The investment was classified as a nonmarketable security, and the loss will be included in noninterest income for the quarter. This item separates the investment loss from the impact of provisions and write-offs related to commercial loans.
The outlook follows the company’s credit provision expense of $1.5 million in the second quarter of 2026, compared with $4.0 million in the first quarter. Annualized net charge-offs were 0.27% of total loans in the second quarter, according to the company’s results. For the first half, provision expense was $5.5 million, compared with $10.2 million in the same period of 2025. Net charge-offs also declined to 0.30% of average loans in the first half of 2026, from 0.43% in the first half of 2025. This comparison provides context for the change in credit expense before the exceptional third-quarter estimate announced by the company.
Second-quarter data showed nonperforming loans at 0.31% of total loans on June 30, 2026, compared with 0.34% on December 31, 2025. The allowance for credit losses was 1.13% of total loans in June, compared with 1.18% at the end of 2025. On earnings, the company reported net income of $26.490 million and diluted earnings per share of $0.58 in the second quarter of 2026. In the second quarter of 2025, net income was $34.022 million and diluted earnings per share were $0.88. On October 15, Piper Sandler cut its price target on the stock to $45 from $49 and maintained its Overweight rating, while lowering its 2026 earnings-per-share estimate to $2.11 from $2.84 and its third-quarter estimate to $0.13 from $0.84, citing the previously announced impairment charges.
The company’s shares closed at $39.05 on October 26, according to EL7 data, ahead of results scheduled for after the market close the following day. This price predates the results and does not reflect the market’s reaction to the quarterly figures. The company’s prior announcement focused on loan provisions and write-offs and the impairment loss on its investment in a fintech partnership. Its estimates of the impact on earnings and diluted earnings per share provide a measure of the scale of the items the company said would be reflected in the period. Actual results will be determined by the figures the company reports for the quarter ended September 30.