National Bank Holdings Corporation (NBHC) CEO Timothy Laney on Q1 2022 Results - Earnings Call Transcript

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National Bank Holdings Corporation (NYSE:NBHC) Q1 2022 Earnings Conference Call April 19, 2022 11:00 AM ET

Company Participants

Timothy Laney – Chairman, President and Chief Executive Officer

Aldis Birkans – Chief Financial Officer

Conference Call Participants

Brett Rabatin – Hovde Group, LLC

Andrew Liesch – Piper Sandler Companies

Jeffrey Rulis – D. A. Davidson & Co.

Kelly Motta – Keefe, Bruyette & Woods, Inc.

Andrew Terrell – Stephens Inc.

Operator

Good morning, everyone and welcome to the National Bank Holdings Corporation 2022, First Quarter earnings call. My name is Keith and I will be your conference operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session following the prepared remarks. As a reminder, this conference is being recorded for replay purposes.

I would like to remind you that this conference call will contain forward-looking statements, including, but not limited to statements regarding 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 this date of this call. And National Bank Holdings Corporation will undertake no obligation to update or revise these statements. In addition, this call will reference certain non-GAAP measures which National Bank Holdings Corporation believes provides 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. It is now my pleasure to turn the call over and introduce National Bank Holdings Corporation's Chairman, President and CEO, Mr. Timothy Laney.

Timothy Laney

Thank you Keith. Good morning and thank you for joining us as we discussed, both National Bank Holdings First Quarter 2022 financial results. And last evening's announced acquisition of Utah-based Rock Canyon bank. I'm joined by Aldis Birkans, our Chief Financial Officer. With respect to the first quarter, our focus on small and medium-sized businesses operating in great U.S. markets continued to produce solid results. Our teams delivered record first quarter annualized loan growth of 15.8%.

Most important, the newer read originations remain granular and diversified in nature. We're working with businesses whose balance sheets are very strong and well-positioned for economic shocks. To that end, we ended the quarter with record low non-performing assets and positive asset quality trends across the board. Our focus on earning the full relationship of our clients resulted in attractive growth in transaction deposits and treasury management fees. I'll add that we feel very good about our new market share gains and our momentum on that front. Finally, it's noteworthy that net interest income is well-positioned to benefit from rising rates, and more broadly, we believe our balance sheet is well-positioned to avoid major AOCI shocks.

Turning to last evenings announcement, on the acquisition of Utah's Rock Canyon Bank. This move accelerates our strategy to expand in the Salt Lake City region, while also adding a best-in-class SBA program that is scalable across our geographic footprint and to unify. Rock Canyon is the number one bank originator of SBA loans in the state of Utah. We fully expect to deliver increased the income from this impressive capability and I do want to take a moment and recognize and thank the Rowley Family for the great bank that they've built and for their willingness to establish this new partnership on an exclusive basis.

When coupled with our recently announced acquisition of the Bank of Jackson Hole, we have added scalable fee income capabilities in the SBA and wealth management areas while expanding into some of the most attractive markets in the United States. On that note, I'll turn the call over to Aldis for more details.

Aldis Birkans

Alright. Thank you Timothy and good morning, everyone. I will cover the Rock Canyon Bank acquisition deal metrics and then provide an update in our first-quarter results as well as an update on our full-year 2022 guidance. We're pleased to announce another acquisition in a short period of time. We believe the combination of NBH Bank, Rock Canyon Bank, and the previously announced acquisition of Bank of Jackson Hole results in a highly diversified, well-capitalized balance sheet and adds multiple additional revenue streams through SBA loan production and above management business.

With regard to this acquisition, Rock Canyon Bank is an $800 million asset bank that has $500 million in loan balances and $740 million in deposits. They operate in the fast-growing Salt Lake City and prolonged region. Based on the April 14th, 2022 NBHC stock price of $38.69 million, this is a $136 million transaction. As part of the total consideration, NBH will issue a fixed amount of 3.1 million shares and pace $16.1 million in cash. This represents approximately 1.8 times throughout carrying us tangible book value and the result in a 2.5-year tangible book value dilution, earn-back for NBHC shareholders, using the crossover method.

As always, we have been realistic and appropriately conservative with our modeling assumptions. And we have not built in any additional revenue synergies into our financial modeling. Now turning to the first quarter's results. For the first quarter, NBHC earned net income of $18.4 million or $0.60 of earnings per diluted share. We grew our loan book a strong 15.8% annualized, which has always been led by growth in our commercial loan book of, 19.7%.

During the first quarter, we grew our average transaction deposit balances by 4.9% annualized and continue to maintain diligent expense control with portal non-interest expense decreasing by $0.4 on a linked-quarter basis. As we discussed during our last earnings call, we entered the year with strong loan pipelines. This clearly contributed to a record first-quarter loan fundings, and the second highest quarter of loan production in our company's history.

During the quarter, we funded $419.7 million in loans and we have funded nearly $1.7 billion in loans over the past four quarters. Further, our pipelines remain strong. Looking ahead, while multiple geopolitical and inflationary uncertainties could weigh on the U.S. economy. We feel comfortable with our prior loan growth guidance of 10% to 12% for the full year. Furthermore, at this point, we see enough momentum to deliver or even beat the high-end of this range.

The first quarter's fully taxable equivalent net interest margin was 2.9% and the fully taxable equivalent net interest income was $48 million as all material PBP fee impact was already realized last year. And while the impact of March is 25 basis points increase in the federal funds rate at a nominal impact in our first-quarter results, as Timothy mentioned, NBHC's net interest income will benefit nicely from this and any further short-term interest rate increases in the coming quarters. Going forward, we project net interest margin to expand to 3% in the second quarter of this year.

And to retain positive trends in the following quarters. In terms of our asset quality remains strong with positive trends across the board. The first quarter's net charge-offs were just five basis points, annualized, non-performing assets decreased another four basis points. And non-accrual loans remained at the record low 24 basis points of total loans. The strong asset quality along with the current credit outlook that resulted in a $322,000 loan loss allowance release this quarter.

The resulting allowance to total loans at the quarter end was 1.04% Total first-quarter non-interest income was $19.1 million. Both service charges in bankcard income were up nicely. An increased 3.8% on a year-over-year basis. The first quarter is seasonally slow for these line items, but we continue to experience nice growth on year-over-year basis.

Mortgage income was clearly impacted by the rapid increase in mortgage rates. Having said that, when breaking down our mortgage revenues between volume on the rate, it's notable that our lock volume during the first quarter was 6% higher than during the fourth quarter of last year. On the other hand, the margin compression that resulted in a $721,000 decrease in our mortgage revenue on a linked-quarter basis.

Looking ahead for the full year 2022 we are adjusting our fee income guidance of $78 million to $82 million. The decrease from the prior guidance is entirely due to the impact of higher mortgage rates are having an outer mortgage revenue. We expect net interest income expansion, and expense control to mitigate this decline. Turning to expenses, non-interest expense. This quarter was $44.1 million. Net reduction of $423,000 from the prior quarter.

This was a clean quarter for our quarter expense run rates and the decrease in the compensation line was mainly due to fewer -- fewer payroll days during the quarter. For full year 2022, we are lowering our guidance for non-interest expense to be in the range of $183 million to $187 million. This guidance is for our core operations and does not include M&A related transaction costs, which is other reminder between the two deals are to be -- are projected to be in approximately $23.5 million on pretax basis.

During the first quarter of 2022, we incurred approximately $250,000 in transaction related costs. Our capital ratios continue to remain strong at 10.5% tier 1 leverage ratio and 13.9% CET1 ratio as of the quarter-end. On proforma basis with the to announce M&A transactions, we will continue to maintain strong 9% year on one leverage ratio and 12% CET1 ratio, still providing us with plenty of optionality. And with that, I will turn it back to --

Timothy Laney

Thank you Aldis. We clearly believe the acquisitions of Rock Canyon and Bank of Jackson Hole represent attractive uses of excess capital. My expectation is that we will enhance our operating leverage while also growing new diverse revenue streams and attractive low cost deposit basis. We'll remain focused on expanding and fast-growing and strategically important markets while adding capabilities that will be leveraged across our geographic and to unify platforms. And on that note, Keith, I'll stop and ask you to open up the lines for questions.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, if you'd like to ask a question, please signal by pressing [Operator Instructions], please make sure your mute function is turned off to allow your signal to reach our equipment [Operator Instructions]. We'll take our first question from Brett. Excuse me. Tongue-tied. Brett Rabatin from Hovde Group, LLC, please go ahead.

Brett Rabatin

Hey, guys. Good morning.

Aldis Birkans

Good morning.

Timothy Laney

Morning.

Brett Rabatin

Congrats on another deal. Two questions around the transaction. One obviously, the other deal was a big opportunity on the trust and asset management side. And this one is from a fee income perspective with SBA. And it looks like they did 12 million of fee income last year. Can you maybe quantify the SBA opportunity as you see it being placed on your footprint or -- or -- or your operations and then can you talk about their loan portfolio yield, which I think is about 7%, so it's obviously a little higher yielding portfolio.

Aldis Birkans

Yes, I'll take the second, the second part first. So yes, there are portfolio yielding nicely near 7%. They've been able to maintain it through this extremely low rate environment. So average is one of the things we liked about it. There's best practices to be learned from that group and they've been able to maintain it. As the recently as the last quarter, this quarter, so as far as we can tell, in terms of production levels, so, uh, those -- those are nice yields.

In terms of the SBA loan production, they originate near $200 million and in SBA production a year, which would be nice supplement to what we already do to call it $1.7 billion loan production over the last four quarters for us. But what we are excited about visibility to transition, as Timothy mentioned the best practices that we see in their business and across our footprint.

Timothy Laney

I would add that the way I think about it and we're not ready to provide guidance around what we expect this to skill to geographically and ultimately to unify [Indiscernible]. But what I would tell you is that we have a strong SBA business at now. National Bank Holdings focused on what I would say, the more complex SBA transactions. What -- what we are so very impressed with at Rock Canyon Bank and it's the reason they are the number 1 bank SBA lender in the State of Utah is they've really defined a very efficient process for addressing small, medium-sized business SBA loan needs.

And again, speed is a key here. But we've been very impressed with the quality of the administration and the underwriting around that works. So we actually believe it will add an alternative stream and an alternative process for -- for kind of standard SBA business opportunities.

Brett Rabatin

Okay. And just going back, all of this on the loan portfolio. I mean, look at the regulatory filings, nothing stands out. Is SBA a big chunk of the 7% performance on the yield or are there other things lean in on that

Aldis Birkans

No. It's across the board. They have some high grade, they have SBA, they have CNR, CRE, and all parts of the portfolio are let's just say accretive to our yields.

Brett Rabatin

Okay. And the guidance for expenses, you added a color there on the end about the expenses for these deals, does the fee income of $78 million to $80 million, that guidance, does that exclude or include the transaction's closing later this year?

Aldis Birkans

That excludes. So my guidance is purely on NBHC alone basis. And I'll be certainly we will look to close and integrate these deals as quickly as we can. But until we have more clarity on throughout, regulatory applications will hold off on how much does the offer contribute this year. But I did want to provide the expense given that's likely to hit -- the transaction costs will hit this year.

Brett Rabatin

And with that 78 to 82, would seem like you're employing that the mortgage recovers throughout the year in terms of revenues, is that a fair assumption to make relative to the first-quarter?

Aldis Birkans

Yes. So the way I would look at it is, we projecting the mortgage revenues to be, for next couple quarters, be in line with the first-quarter, and then have seasonal slowdown in the fourth.

Brett Rabatin

Okay. And then a last quick one and I'll let somebody else jump in. The tax rate this quarter, obviously lower. Can you talk about the sustainability of the tax rate or any thoughts around that going forward?

Aldis Birkans

Yeah. I'll Just given the quarter. But the quarter relative to the prior quarter came in, tax rate came down. I would put it closer to 17% to 18% at this point on full year, that will impact our net income and taxable income will be these transaction costs, which is probably also reason why first-quarter is a bit lower as we are starting to project that transaction costs hitting this year's [Indiscernible] taxable income.

Timothy Laney

And Brett, I would remind you as it relates to any step-down in mortgage-related revenue. We've always viewed the mortgage businesses a nice hedge to our commercial banking business. And we're certainly seeing volume ramp up in commercial. Therefore, we expect the net interest income to continue to grow. And would expect there to be some nice offset over the course of the year. So more to come on that front, but that's the way we've always looked at those two businesses and how they operate in a complementary fashion.

Brett Rabatin

Okay. Thanks. Appreciate all the color.

Aldis Birkans

All right. You bet, man.

Operator

We'll take our next question from Andrew Liesch with Piper Sandler Companies. Please go ahead.

Andrew Liesch

Hey, good morning, guys. Congrats on another deal here [Indiscernible]

Aldis Birkans

Thank you.

Andrew Liesch

The question on the loan growth that Rock Canyon has been putting up was like it's been pretty strong. Curious how much of that was from PPP? How much is it from retaining SBA loans? And are they selling all the guaranteed portion or are they're retaining some of it? Just trying to get a sense of what growth could possibly be here from the acquired franchise going forward?

Aldis Birkans

And its cancer is kind of combination of all above their PPP presence wasn't in terms of on-balance sheet growth that material. For example, they had all of the PPP loans gone as of the year-end. In terms of historical growth yes they have been solid double-digit growers on both sides of the balance sheet actually not just loans and deposits. And the way we looked at it we took it down to more of up my guided 2022 per NBH 10% to 12% levels to be conservative back to being conservative on assumptions. But that's how we model them going forward.

Andrew Liesch

Got it okay and then how does this bank affect your asset sensitivity? It seems like this available liquidity that they have is to make NBH even more asset sensitive.

Aldis Birkans

It is a fair assumption. Yes. They are setting on $300 million of cash, but no liquidity, no [Indiscernible], no investment portfolio. Cash is clearly going to provide a lot of asset sensitivity and lot of opportunity for us in these higher rates as well. So that's something that we like and frankly again, not modeled in any way or shape perform in our EPS accretion assumptions.

Andrew Liesch

Got it. And then just under deposit base looks like there's some jumbo CD in some broker deposits. Discuss on the makeup of that, do you intend to run those off just given that the rest of it is pretty low cost funding and very core?

Aldis Birkans

Exactly. So anything that is more of them. I'll call it wholesale type of deposits inherited from years before that they have such as broker deposits. That is planned to be runoff and we're not going to. We'll institute on that front. Bill will have a very disciplined approach the way we've had on our relationship building on deposit side with our clients and pertaining core deposits.

Andrew Liesch

Got it. Very helpful. Convert my questions. I'll step back. Thank you.

Aldis Birkans

Thanks, Andrew and Keith

Operator

We'll take our next question from Jeffrey Rulis with D. A. Davidson & Co. Please go ahead.

Aldis Birkans

Good morning Jeffrey.

Jeffrey Rulis

Good morning. So clearly, there's a common thread with these last couple of deals on the -- on the diversity of the fee income side. And I guess strategically just trying to think about the opportunity, not only retain what these banks do well, I think on both deals you've talked about how you can extend that to your legacy platform. So maybe just in this, maybe oversimplifying. But if the bank is, call it 25% of revenues or fee income in kind of a normalized mortgage environment.

Is there a way that kind of talk about what these banks due to you in the short term, say they're closed in early parts are well, later this year or early next year? What that target of fee income to revenue would be? And then fully flex what that could be. Again, apologize if that's over simplifying, but just trying to get a sense for -- you retain the business of what you buy, but as you extend it to your platform, what could it be as well?

Timothy Laney

Look, you're asking the perfect question. We're just not at a point where we're comfortable providing guidance. But the framework that you're using to think about where this could go was exactly where our heads are at. And we have no doubt that both capabilities, but wealth management in this particular SBA capability are going to very quickly contribute across the rest of our franchise.

That will be a focus. I would also say we should not lose sight of the fact that this puts us in incredibly attractive markets, whether we're talking about the wealth market of Jackson Hole, the growth market of Boise is the expansion in Salt Lake City and the wastage region. It's a -- I would tell you, we believe we've been as we always are relatively conservative in our outlook for what these two great banks will bring to NBH.

Jeffrey Rulis

Okay. Appreciate it.

Timothy Laney

That's a long way of saying we're on the same page and we'll be coming back to you with guidance and an appropriate time frame.

Jeffrey Rulis

Makes sense. Okay. While on the deal, all this just kind of housekeeping the got the earn back on tangible book, just backing into the -- do you have both a tangible book dilution as a percent and what would see so double-count impact from this transaction be.

Timothy Laney

Yeah. So the day one dilution is 4% on our tangible book as of modeled as of December 31st. Jump-off point of last year. And in terms of double-counting, right now what we are assuming that the double-count is equal to non-PCB mark.

Jeffrey Rulis

Okay. And maybe a last one, this is broader. Things you've touched on before all this in the past, that margin of when we get to 3% in the second quarter. What do you think that figure you touched on liquidity weighing on that margin by a certain basis point, is it -- If fully balanced? And I know that's hypothetical but you ever figured that if you were to right-size the balance sheet, what that margin, how much underwater is that given liquidity? Thanks.

Aldis Birkans

Yes. So if -- rightsizing there could be two ways, right? You could add loans and increase the interest income or you could call it, take out the cash and the reduce cash. Reducing cash is the more conservative way to look at -- looking at it, but right now, in the first-quarter, for example, it's around 30 basis points compression impact from cash. Next quarter, that if -- when we report 3%, let's say, which we we're projecting, that cash projection impacts still is around 26, 27 basis points. So our core margin will be three in a quarter to 330 ex-cash or excess liquidity. That helped?

Jeffrey Rulis

Great. Yes, that does. That's exactly what I was looking for. So thank you.

Timothy Laney

Jeffrey you were asking about tangible book dilution, or our use of tangible book here. As we look at a number of banks reporting 10% to 15% hits to their tangible book as a result of AOCI, we feel pretty good about the use of capital here, particularly when you think about the accretion of earnings that we're picking up and feel reasonably confident that this 2.5 year earn-back, we're targeting as something that will be but it's interesting times to be thinking about deploying capital in this manner versus seeing it run down on something like an AOCI hit.

Jeffrey Rulis

Good point. Thank you.

Aldis Birkans

All I'll just specific -- to be more specific on tangible book value dilution, that one at 4.6% to be precise

Jeffrey Rulis

Got it.

Operator

We'll take our next question from Kelly Motta with Keefe, Bruyette & Woods, Inc.. Please go ahead.

Kelly Motta

Hey, Timothy and Aldis. Good morning, congrats on the deal.

Aldis Birkans

Thank you [Indiscernible]

Kelly Motta

And maybe sticking with capital with the Q deals pending. Is it fair to say that you will be out of the market for buyback for the remainder of the year, at least while they are pending or do you have any stock plans in place to allow you to the active while those are ongoing?

Aldis Birkans

I will simply say that is not fair to say.

Kelly Motta

Got it. Okay. That's helpful. And then circling back to this, the income guidance, I know a lot of the differences is just what's going on with the mortgage market. I don't believe you had much by way of the -- to unify revenues coming in this year, but just wanted to confirm that and also see if -- if what the deal is feel like they add some nice fee diversification that you can export to you to buy if the pending transactions change your thoughts or timeline at all in terms of implementing to unify?

Timothy Laney

We really -- we really think at this point in 2022 the -- of likelihood of seeing incremental contribution would come out of the Finstro partnership and investment which will be a capability within to unify. But we do not expect to have enough of the framework in place with two unify, nor enough time in terms of having closed these two transactions in '22 to see a convergence of those capabilities in this year. Certainly over time, both of those capabilities and our need for those capabilities were strategic drivers of the acquisitions.

Aldis Birkans

And I'll add on to be fair on the other side of the income statement on expense as we haven't had a whole lot of unify expense hitting the just yet either, so if you look at the projection it does imply a bit of a ramp up on the quarterly run rate basis and a portion of that is based on our two unify build-out expense that I guided at the beginning of the year.

Kelly Motta

Got it. Okay. That's helpful. And then turning to the NIM, you helped with cash component in the earlier question, but just wondering with that 330, how much of -- sorry the 3%, how much of that is related just to the right hike we had. And if you are building out any further rate increases in 2Q that hope improve that number.

Aldis Birkans

No. I mean, we historically have done is we deal with information that we know and not putting any forecaster or any you expected rate hikes or for that matter, rate cuts when we do our projections. So it is a true impact from the loan growth. So I will not dismiss the loan growth. Our loan growth this quarter, this last quarter fall at extremely solid came in a little bit later in the quarter and didn't have a whole lot of benefit. In the first quarter's net interest income, which is just put that in perspective. For example, if our average balances for loan balances grew only $37 million.

If you look at our SBA balances, netting all of their thing out, be jumping off at a $161 million higher than the prior quarter. So there is a $120 million of earning asset balance day one in second quarter that is earning quite a bit more interest income. And then certainly the rate increases I'm estimating about, given there was late in the quarter again, March 16th increase on a benefited involved 2, maybe 3 basis points and it quite originated loan yield. In the first quarter, I think we have about 5 to 6 basis points pick up, again, originated loan yield from that in the second quarter.

Kelly Motta

Great. That's super helpful. Thanks, Aldis. And thanks, Timothy. Appreciate it.

Aldis Birkans

Thanks Kelly. Thanks for the questions.

Operator

We'll take our next question from Andrew Terrell with Stephens Inc. Please go ahead.

Andrew Terrell

Hey, good morning.

Aldis Birkans

Good morning.

Andrew Terrell

Congrats on the deal.

Aldis Birkans

Thank you, Andrew. Good morning.

Andrew Terrell

Maybe just first kind of quick question on acquisition. I think with both of these kind of in the fold, especially if you closed before the end of 2022 and just given kind of some of the growth, it seems like you'll be pretty close to that $10 billion mark on total assets. I was hoping you had kind of the Durbin impact for the pro forma company, if you could disclose it.

Aldis Birkans

We do. In terms of individual deal accretion numbers that we put into two decks, that they are viewed on standalone basis. And we certainly don't sugar that $10 billion mark nor do we do on a pro forma basis just yet. So there's a time delay, obviously, in terms of when the Durbin impact kicks. Having said that, our estimate is on pro forma basis on pro forma revenue basis, Durbin impact is only going to be about two percentage points. So total revenues once we cross $10 billion.

Andrew Terrell

Okay. Got it. I appreciate it. And all is I wanted to clarify. I think last quarter when we discussed the expense guidance, it was exclusive of $4 million to $5 million of build-out costs related to two unify, but it sounds like just a minute ago, the expense guidance, the updated guidance for 183 to 187 for this year included those costs. Did I hear that correctly?

Aldis Birkans

The second part you did in the last year or last quarter when I guided for full-year, it also included so both so those are my prior guidance to this guidance apples-to-apples reduction and both include to unify build-out costs.

Andrew Terrell

Understand. Okay. And then I hear you on all the loan growth commentary and it sounds sounds very strong. I was hoping you could speak to maybe how you're thinking about growth on the other side of the balance sheet just from an organic standpoint and within a deposit book?

Timothy Laney

I think our model serves us extraordinarily well with a focus on small and medium-sized business. It's so critical to have bankers that are rewarded and focused on capturing the full relationship of a client and having the treasury management capabilities that allow us to compete with the majors is been a huge differentiator. And so we'll continue to watch our low cost transaction deposit relationships grow. And with that growth we're talking about very sticky, low cost, attractive funding for the bank as Aldis pointed out earlier, we've never been reliant on wholesale funding.

It's not something we ever expect to have to do. And certainly with acquisitions like this, delivering very attractive, low cost deposit basis, it just puts us in a room to take very nice, attractive, low-cost liquidity and put it to work. So I think the trap as we've discussed before, that bank leadership teams to fall into a simply looking at the kind of stimulus related balances that are sitting on a lot of balance sheets and get complacent. I think what you really got to do is be measuring new relationship activity. Are you taking market share? Are you capturing the full relationships of those clients? When you do that I think it positions you will for the future.

Andrew Terrell

That's very helpful. I appreciate it. If I could just speak to one last one and -- I saw the bond book was built a little bit this past quarter. You still have a fair amount of excess liquidity on the balance sheet and I know both of the announced acquisition improve that excess liquidity position. Does it to announce deals and just given that fact lead you to be more inclined to put some minor work in the bond book in future quarters, or should we think about the bond book is kind of static from here? Thanks.

Aldis Birkans

Another great question. That's a good question. I think it all depends. And certainly the yield curve backing up to the point where it is, it starts, it starts becoming more attractive, especially if you stop thinking and believing the stagflation or slowdown of U.S. economy and you start thinking, is the rates are going -- long term, it's going to go much more higher. So we will be optimistic. I would say, I think without these two transactions, less so. With these two transactions coming onto our books and knowing that we will receive the cash balances of each one of them, we might free invest, let's say some of that -- their cash on our balance sheet and then absorbed our cash as a replacement in terms of our liquidity on day one, if that makes sense.

Andrew Terrell

Yeah. That makes total sense. I appreciate you guys both taking my questions and congrats on another deal.

Timothy Laney

Thank you very much.

Operator

And thank you. I am showing we have no further questions at this time. I will turn the call back to Mr. Laney for his closing remarks.

Timothy Laney

Great. Thank you very much. I do want to thank everyone that joined us today. We are clearly pleased to be at a point in the year where we've announced two incredibly attractive acquisitions, great new partners, great new teams. Look forward to working with our new teammates. We appreciate all the questions this morning. Wish everyone a good day and a good rest of the week. Thank you.

Operator

And this concludes today's conference. If you would like to listen to the telephone replay of this call, it will be available beginning in approximately four hours and will run through April 24th, 2022, by dialing 88820311112, and referencing pass code 2525902. The earnings release and an online replay of this call will also be available on the company's website. On the Investor Relations page. Thank you very much and have a great day. You may now disconnect.

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