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National Bank Holdings Corporation (NYSE:NBHC)
Q4 2019 Earnings Call
Jan 24, 2020, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning everyone and welcome to the National Bank Holdings Corporation 2019 Fourth Quarter Earnings Call. My name is Amy, 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 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 and National Bank Holdings Corporation undertakes no obligation to update or revise these statements.

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

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Thank you, Amy.

Good morning and thank you for joining National Bank Holdings Fourth Quarter and Full-Year 2019 Earnings Call. I have with me, our Chief Financial Officer, Aldis Birkans, and Rick Newfield, our Chief Risk Management Officer. We're pleased to report record full-year earnings of $2.55 per share. We benefit from having strong teams operating in high performing US markets. Our relationship banking model continues to yield solid loan, deposit and fee income growth, and Aldis will be covering these results in greater detail in just a moment.

We believe we're well positioned in 2020 to create meaningful value for our shareholders and other stakeholders. Our focus is on delivering solid growth, maintaining a low risk profile and continuing our track record of improving our productivity. Aldis?

Aldis Birkans -- Chief Financial Officer and Treasurer

Thank you, Tim, and good morning.

2019 was a very strong year for us on many fronts. Before I move on to the fourth quarter review and the 2020 guidance, I would like to recap our financial accomplishments for full-year 2019. As Tim mentioned, we finished the year with a record annual earnings of $2.55 per diluted share. That is 18.1% earnings growth over the prior year's adjusted EPS. We grew our quarterly average earning assets by 5.5% over the fourth quarter 2018. For the second year in a row, we delivered $1.2 billion in new loan originations. We grew our average non-interest bearing deposit balances 6.7% over the prior year's fourth quarter and improved our non-interest bearing deposit mix to 25% of total deposits.

We increased our non-interest income $12 million over the prior year, and we did that while improving our efficiency ratio to 61.15%. As we look toward 2020, the guidance I will provide is based on an assumption that the current economic conditions will persist throughout this year and we will continue to see our local market activity outperform the national averages. We also project no changes in the current rate environment with no further fed interest rate adjustments.

For the fourth quarter, we reported $0.62 of earnings per diluted share. This quarter's results reflect that the expected seasonal slowdown in our fee income as well as the full impact of the both the September and October rate cuts in our net interest margin. This quarter's loan production was $269.5 million. And as I already mentioned, for the full-year 2019, our new loan originations were $1.2 billion. In particular, we are very pleased to have delivered $781.7 million of that production in loans to businesses, driven by our continued focus on the relationships with small to mid-size companies. Our commercial balances outstanding increased 13.4% this past year.

In 2019, our originated and acquired loans grew a solid $339.9 million or 8.5%. The new loan production as well as our overall portfolio remains well diversified across various asset classes and geographies. The regional economies in our markets remain solid and growing. Our small business, middle market and consumer clients generally maintain a positive forward outlook. For full-year 2020, we project our total loan balance growth to be in the high-single digits. I also want to point out that going forward we will no longer separately report loans formerly accounted under ASC 310-30. So this guidance applies to total loans.

Turning to deposits. We are very proud to have grown our average fourth quarter non-interest bearing deposits by 6.7% over the same quarter in 2018. Our total average transaction deposits grew 2.5% this past year, which is a little lower than we had projected. But as we have discussed before, our deposit strategy is based on capturing full client relationships, and during the quarter, we experienced multiple clients using their excess cash to pay down debt, adjust their corporate structure, so use cash for other disbursements. We expect to capture these balances in 2020 and project our total average deposit growth to be approximately 5%. As always, our focus will be on growing our core transaction deposits.

Our fully taxable equivalent net interest margin for the quarter was 3.77% and now reflects the full impact of the LIBOR rate decreases. We ended the year with $5.4 billion in earning assets and project to grow earning assets to $5.7 billion to $5.8 billion by the end of 2020. Assuming no further fed interest rate changes in 2020, the earning asset growth impact to net interest income should overcome the margin compression and we project our full-year 2020 net interest income to be comparable to that of 2019.

Moving on to credit. Once again, we are proud to have reported a very strong quarter as it relates to our credit performance. We ended the year with a non-performing asset ratio of 0.66%, which was down from 0.85% at the end of 2018. It also reflected a decrease from 0.76% at September 30, 2019. The fourth quarter's net charge-offs were just 8 basis points annualized. For 2020, we forecast our loan loss provision expense to be in the range of $10 million to $11 million, as we expect to cover both total loan balance growth and net charge-offs at about 15 basis points.

With regards to our CECL day one impact, we anticipate an increase in our allowance for credit losses of approximately $5 million to $8 million. Approximately half of this increase is driven by the inclusion of acquired loans as well as loans formerly accounted under ASC 310-30 within the model. The rest of the increase is driven by the impact of the lifetime loss methodology as required by the new accounting standard. As a reminder, we also continue to hold significant loan marks against the acquired loans that over time will continue to be amortized through -- through interest income.

Moving on to non-interest income. For full-year 2019, we recorded record non-interest revenues driven by our mortgage business, and we continue to be very pleased how this mortgage activity acted as a natural hedge to the margin headwinds during 2019. Let me provide you a little more color on the mortgage activity this past year. For the full-year 2019, our residential mortgage banking group generated $1.4 billion in mortgage loans. This was 30% increase over the prior year. As the market rates were decreasing during the summer, we benefited from the high levels of financing activity, and our purchase to refi split for 2019 was 60% purchase and 40% refinance. As a reminder, our longer-term run rate for this business is closer to 80% purchase and 20% refinance.

For 2020, we project our total non-interest income in the range of $76 million to $78 million. Service charges and bank card fees are expected to grow at mid-single digits. For the residential mortgage banking, we expect the purchase market to grow at 5%, while the refinancing activity is expected to trend downward toward 30% of our overall residential mortgage production volume. Regarding expenses, we the end of the year on a good note coming in below our full-year guidance with total expenses of $180.7 million. In 2019, we benefited nicely from the OREO and problem asset workout initiatives, which offset the higher commission expense from the residential mortgage business. In aggregate, I'm proud to report that we had another solid year of expense control, which we will continue into this year.

For 2020, we project our total expenses in the range of $182 million to $184 million. Embedded in this expense guidance is approximately $0.5 million to $1.0 million related to OREO and problem loan workout expense. Excluding OREO and problem loan expense, our full-year operating expense is projected to be in the range of $181 million to $183 million, which represents a further decrease from the $184.8 million incurred in 2019 and reflects our team's continued focus on identifying operating efficiencies. We're projecting the 2020 effective tax rate, we expect it to be in the range of 18.5% to 19%. As always, this projected rate excludes the FTE adjustment on interest income. As it relates to capital, we finished the year with a strong 11% Tier 1 leverage capital ratio. Tangible book value ended the year at $20.89 per share, which is 11.3% increase over the prior year.For 2020, we expect fully diluted shares outstanding to remain around $31.5 million to $31.6 million.

I'll close by saying that I'm very proud of what our teams accomplished in 2019, which resulted in record earnings per share and record return on equity. We have built a solid foundation for continued growth in 2020 and I'm excited about our momentum going into this year. Tim, that concludes my comments.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Thank you, Aldis.

And I agree with you. We're very proud of having delivered another record year of earnings, representing 18.1% growth over the prior year's earnings per share. More important, we believe this was accomplished while maintaining a low risk profile and while remaining intensely focused on earning the full banking relationship of our clients. As Aldis shared with you, we're pleased with our momentum as we enter the New Year. And while I believe the guidance Aldis shared with you is appropriate, you should certainly expect us to work to deliver better than expected results.

On that note, I'll stop and we'll open up the lines for your questions.

Questions and Answers:

Operator

[Operator Instructions]

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Thank you, Amy.

Operator

Your first question today comes from the line of Chris McGratty with KBW. Your line is open.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Good morning, Chris.

Chris McGratty -- KBW -- Analyst

Hey Tim. Hey everybody. Maybe want to start on loan growth, Tim. Loan growth in the fourth quarter a little soft. Could you speak to the client activity, pipelines today, and obviously you're talking about high-single-digit growth next year. So it seems like a little bit of a one-off this quarter, but any color on growth would be great.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Yeah, thanks for asking the question. And Aldis and Rick, feel free to jump in here.

We did see something that was rather unusual, but we actually will in many respects view it is a positive reflection on the quality of the loan book. We saw a substantial number of clients paying down their revolving lines of credit using excess cash on their balance sheet at quarter end to reduce debt and pursue other activities. And Aldis, I think it's fair to say -- and I want to point out that in no cases are we talking about having lost clients. These are revolving lines that naturally move up and down, but the anomaly in the fourth quarter was almost $60 million, $65 million swing. Or is that too high?

Aldis Birkans -- Chief Financial Officer and Treasurer

It was more of $50 million. Chris, good morning. And this is Aldis, by the way. In the fourth quarter, we -- revolving lines drew net $1.7 million, while in the prior four-quarter average for that was about $49 million. So that -- call it $50 million around that upswing that we were counting on, did not experience it. But to Tim's point, the good news here is that we didn't lose clients. They used their excess cash -- actually that impacted somewhat the behavior in deposit side as well, as I mentioned in my prepared remarks, where our clients just found themselves to be in very solid position heading into the end of the year.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

I think the last thing I would add is, in terms of net production in the quarter, in terms of working with existing and new clients, we track very well. So we really feel like we were able to isolate this fourth quarter anomaly. And again, I think that answers your question about as well as we could answer it, Chris.

Chris McGratty -- KBW -- Analyst

That's great. Thanks, Tim. Maybe a question on capital. Could you just, entering the New Year, remind us or refresh us the priorities? It feels like organic growth, semi-annual dividends, but maybe speak to the other two buybacks or inorganic growth. Thanks.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Right, right. Look we're actually pleased with the level of acquisition activity and opportunities in our market. We've said consistently that we believe operating with excess capital would put us in a position to take advantage of the right opportunities. Unfortunately, candidly, as we've looked at a number of situations, we found that the credit books, that the loan books in a number of these situations just were not something we could get comfortable with. But we're actually optimistic that there can be some intelligent strategic end-market kind of acquisitions in 2020 that would frankly, give us an opportunity to not only expand our market share in these markets, but realize some other efficiencies and pull some other levers that are in front of us.

Chris McGratty -- KBW -- Analyst

When you say strategic does that -- is that code for larger deals being contemplated? Like MOEs are obviously the popular discussion point today, but what do you mean by strategic, Tim?

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Yeah. Thank you. What I'm really referring to is acquisitions that would complement our existing activity and advance our current strategy. One good example would be -- and I think at least one analyst has called this out as we came into the year. We recognize we have opportunity as we see more and more of our clients move toward our digital platform in the consumer world to think about levers, we can pull there and we think we've gotten pretty good at pulling those levers and the experiments we've done in the past, and the opportunity to continue to grow either organically or through acquisition and then apply those practices to an acquired target could be very, very interesting. And we consider that strategic.

Chris McGratty -- KBW -- Analyst

Got it. Thanks, Tim.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

You bet.

Operator

Your next question today comes from the line of Gordon McGuire of Stephens Inc. Your line is open.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Hi Gordon.

Gordon McGuire -- Stephens Inc. -- Analyst

Hi Tim, how are you?

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Doing well, thank you.

Gordon McGuire -- Stephens Inc. -- Analyst

Good. So I'm trying to do some back-of-the-envelope math on the expense guidance. If I back out the swap adjustments this quarter and the problem asset expense, it looks like 4Q expenses run rate about $186 million range. And if I kind of back-of-the-envelope the mortgage fee guide, it seems to be about $2 million lower year-over-year. So maybe -- your expense guidance would imply about -- no, sorry, the 4Q run rate would imply about $185 million run rate for 2020, ex the change in mortgage. So with your guidance of $181 million, $183 million, ex the net problem assets, I guess what's driving that churn in that fall out? You just referenced some of the digital strategies being able to maybe consolidate a little bit, but I guess I would have expected you thought to drive some year-over-year growth.

Is there anything specific you can point to that would have expense fall out this year?

Aldis Birkans -- Chief Financial Officer and Treasurer

Yeah, it's -- pretty much every loan category as we look at 2020, and the margin compression challenge is real, and we challenged our teams to be very smart and strategic on how and where we spend money. And yes, Utah. We continue investing Utah. So if you isolated Utah year-over-year, that is actually an increase in expense for us. But it's going to be compensation in some parts. If you think about four banking center closure that we announced last year, we said $800,000 one-time charge that we'll earn back within a year, while that's about $800,000 annual run rate that we are taking out.

Other initiatives that are in there that I don't want to go into detail here, but there is a lot of pieces to be looking at and making sure that we are taking out expense. The other way, internally how we look at it and maybe it's a little bit more color how managed expense and it might be helpful is really three components, right. There is core, there is a mortgage rate compensation that comes into play and then there is the OREO, right. And as I said, this going backwards in the order of how I mentioned, OREO this year is going to be net cost to us about $1.5 million to -- $0.5 million to $1.0 million is going to come in chunky. So it's hard to tell which quarter it comes through in terms of -- we have few properties that we're going to look to liquidate.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Gordon, I'll also add that -- and I'll complement you on some analysis you did coming into the year, that your instincts are we think accurate. We're not ready to talk specifically about other levers that can be pulled related to other work in those. Those levers and the impact of those levers are not impact -- are not included in the current forecast that Aldis has shared this morning.

So again a bit premature to be talking about that in more detail but we recognize there are other opportunities and other levers out there related to our expense run rate.

Aldis Birkans -- Chief Financial Officer and Treasurer

And then finishing my thought in terms of those three components. Mortgage compensation, variable compensation is about 35% 36% of the gain on sale that you've seen a fee income and that in terms of the timing, that will be again, seasonally driven and which quarter we -- heavier in the summer months. And then the rest of it's accounted [Phonetic] on core. So hopefully that helps.

Gordon McGuire -- Stephens Inc. -- Analyst

It does help. Thank you. Aldis, the guidance for total deposit growth, I believe, mid-single digits. Did you mentioned the mix, the expectation for the mix of deposit growth?

Aldis Birkans -- Chief Financial Officer and Treasurer

We don't break that out. We do -- our approach clearly is on the relationship banking. So for us, it is growing -- starts with growing checking accounts and then everything after that. So we don't necessarily target a mix, but we target 5% overall deposit growth.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

And I think our track record speaks for itself. We don't lean into the CD market, the brokered money market. Our belief is, that as you're growing these relationships, particularly with small and mid-sized business that you're picking up attractive balances and still more important, are equally important sticky balances. So I think reflecting on historic mix at least over the last year or two, would probably -- wouldn't you say be a good...

Aldis Birkans -- Chief Financial Officer and Treasurer

Yes.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Governor?

Aldis Birkans -- Chief Financial Officer and Treasurer

Yeah.

Gordon McGuire -- Stephens Inc. -- Analyst

Got it. And then just last one. I believe securities are kind of getting real close to the 15% of assets. So is the expectation to start growing the securities portfolio next quarter?

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Yes, the expectation is to maintain investment portfolio at and about 15% of our total earning assets. I'll throw in that mix also our kind of free cash. So, but we using investment portfolio purely for liquidity management. And we feel like the combination of cash and investments should be around 15% of our earning assets. So as our earning assets are going to grow next year, you will see that we can start adding out investments.

Gordon McGuire -- Stephens Inc. -- Analyst

Got it. Well, thank you.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

You bet. Thank you, Gordon.

Operator

Your next question comes from the line of Jeff Rulis of D.A. Davidson. Your line is open.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Good morning.

Jake Stern -- D.A. Davidson -- Analyst

Hi, this is actually Jake Stern on for Jeff Rulis.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Yeah, Jake, Jeff had given us a heads up, you were going to be joining us. So thank you, and what questions can we answer for you?

Jake Stern -- D.A. Davidson -- Analyst

Yeah, yeah. Thank you. Absolutely. So first and foremost, just some thoughts on the mortgage business going forward. Is this an area you would like to invest in more, or is 2020 a year to look at areas to drive efficiencies or trim costs where we can?

G. Timothy Laney -- Chairman, President and Chief Executive Officer

The way we think about the mortgage business is that generally speaking, we expect to contribute in that 10% to 15% range of our total revenue and contribution. And really would view any periods of time where we might be exceeding that is anomalies just related to very healthy markets in the opportunity to serve clients in our existing markets. So while we may grow in certain markets incrementally, I wouldn't say it's a business that, again we expect to grow to a point where it would be contributing beyond 10% to 15% of our total business.

Aldis Birkans -- Chief Financial Officer and Treasurer

And just a little color to this past year and last quarter, but also for the full year. Mortgage business, it was about 14%, little north of 14%. Still well within the 15% item, the threshold that Tim mentioned. And obviously 2019 was a very healthy year for mortgage. So there is opportunity to grow and grow it as part of our totla company, but we're not going to over emphasize it.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

And I guess what I would add is, I'm very pleased with our residential banking team leadership. And one focus that we do have as we come into 2020 is, really doing an even better job of the connectivity between our consumer bankers and our mortgage bankers, and ensuring that we're expanding our consumer relationships when and wherever it makes sense.

Jake Stern -- D.A. Davidson -- Analyst

Wonderful. I appreciate the color on that. And just a couple of questions regarding to M&A. So are you guys seeking any opportunities from fall-outs from past deals I guess externally?

G. Timothy Laney -- Chairman, President and Chief Executive Officer

That's interesting. I would -- I can't think of anything that we've looked at in the last four months. I may be wrong. Aldis is looking at me funny. I can't think of anything that we've looked at in the last four or five months that would have represented a fallout from another bank. If anything, we looked at a number of situations where it just did not make sense for us to move any of that.

Jake Stern -- D.A. Davidson -- Analyst

Okay, thank you. And then I guess second question to follow that up would be, if you guys had any talks I guess, less or more than I guess six to 12 months ago?

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Any --? I'm sorry, expand on that. I may have missed the...

Jake Stern -- D.A. Davidson -- Analyst

Yeah, no, I was kind of referencing -- have you guys had more or less talks in...

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Activity. Activity wise.

Jake Stern -- D.A. Davidson -- Analyst

Yeah.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

It's interesting. Yes. Activity has really picked up in the last six months.

Jake Stern -- D.A. Davidson -- Analyst

Okay, thank you. And then, next question. Tangible common equity was well above 11%. Now with some CECL clarity, is there any plan to get more aggressive with capital deployment?

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Well, again we're a bit like a broken record. We continue to believe that operating with a slightly higher level of tangible common equity gives us optionality. We believe we're in good position given our capital levels and earnings as we looked at 2020 to continue our track record of increasing our dividend twice each year. We certainly are encouraged around the level of M&A activity that we're seeing that could make sense for us.

And then finally, we've never said we won't buy back shares. It remains an option. It's not a focus at today's price, but we certainly stand ready. Or maybe the best way to put it is, we're certainly opportunistic on that front and we've demonstrated that in the past.

Jake Stern -- D.A. Davidson -- Analyst

Wonderful. Thank you for answering that as well. Just one last question, I'll hop off here. You mentioned that it looks like $0.5 million to $1.5 million of your -- looks like expense will be related to OREO and workout. So of that range, is it possibly you could break that out for me, OREO and I guess workout costs? For each one.

Aldis Birkans -- Chief Financial Officer and Treasurer

Yeah, it's hard to break them apart. Again, some of that -- or very much all of that depends on the timing on some of these OREO properties as we are able to liquidate them. And therefore -- and as you've seen in the past for us that predicting that timing is very difficult, as those are complex contracts. So at this point, I think I'll stick with my overall guidance.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

And for those of us that are newer to our name, we've had some incredible years in the past, realizing some very nice gains on the acquired OREO. Again, a reminder is we're talking about a bulk of this. These are from the previously acquired troubled institutions and it's been a very nice profit center for us. We expect some nominal tick up here in 2020, not at the levels we saw in 2019, but we do see some upside over the course of the year on that front. And maybe since, Jake, you asked about OREO, I'll just ask -- since we have Rick with us, our Chief Risk Management Executive.

Rick, I would ask you to share your views just broadly on 2019's performance from a risk management standpoint, and your thoughts on our loan portfolio and credit risk management as we move into 2020.

Richard U. Newfield -- Chief Risk Management Officer

Sure, Tim. Glad to do that. Good morning, everyone.

Look, I feel very good about how our loan portfolio performed and our overall credit quality in 2019. And based on our credit metrics at year-end, our company is well positioned as we head into 2020. We improved our classified loan ratio by about 30% year-over-year with that classified loan ratio improving from 1.24% at year-end 2019.

I think it's also important to note that our classified loans are diverse and granular with no systemic or industry sector trends that I would note. Our non-performing asset ratio as Aldis pointed out, improved from 0.85% at year-end 2018, to 0.66% year-end 2019. And then charge-offs for the 2019 year were only 20 basis points. But maybe taking a step further, Tim, I'll remind you that we conduct stress testing twice a year with one of those tests being conducted by a third-party. Based on those results, we believe our loan portfolio will hold up well to a range of economic scenarios. To a large degree, I believe this is driven by the granularity and the diversity in our loan portfolio. In fact, the average size of our originated commercial loans in 2019 was $783,000. Our disciplined adherence to our concentration limits and our willingness to exit a business line as we did with energy, a number of years ago, also contributed to the resiliency of our loan book.

Finally, our focus on minimizing concentration risk is well demonstrated by the level of non-owner occupied commercial real estate, at about 40% [Phonetic] of our loans to just 90% of our company's risk-based capital. That's well below the regulatory guideline of 300%. I believe the facts speak to the strong quality of our loan portfolio as we move into this year, Tim.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Thank you, Rick. Jake, I know that's a lot more than you asked for. But you opened that door, and I wanted to give Rick a chance to provide everyone on the call with his observations on risk management.

Jake Stern -- D.A. Davidson -- Analyst

No, no. That's absolutely OK. I appreciate all the color you guys provided. And thank you for answering my questions.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Good day.

Operator

[Operator Instructions]

Your next question comes from the line of Andrew Liesch of Sandler O'Neill. Your line is open.

Andrew Liesch -- Piper Sandler -- Analyst

Hi, it's actually Piper Sandler now.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Yeah, that's interesting.

Andrew Liesch -- Piper Sandler -- Analyst

Yeah. You've answered most of my questions, but I'm just curious if you look at your growth outlook for this year, how do you view it from a geographical distribution. I know you're pretty optimistic about Utah and that market is performing well. And you're in some other markets that are also doing very well, but these are also very competitive. So just how do you -- do you see loan growth playing out this year from a geographic standpoint?

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Yeah. So look, virtually every market we operate in continues to perform better than the national averages on almost any economic measure you could evaluate. And so Colorado just continues to be a force. We're fortunate to be based here. We're excited about the prospects -- the ongoing prospects here. We find the competition in this market -- in the Colorado market to be for the most part very rational. There are some smaller community banks that occasionally will kind of do things that we scratch our head over, but broadly speaking, we believe it to be rational market. That's certainly the case for the Kansas City Overland Park market. Major players there tend to be very rational and we really like competing in that sandbox.

And as we've said before, we feel like that Kansas City Overland Park market is a bit of a hidden jewel. I think more and more people are coming to appreciate it every day. We've seen in the last year, a year and a half, our Texas activities only pick up and grow. That's really Dallas and Austin based activity, which we feel good about. And we certainly are excited about what we're seeing from our teams in Utah, which I'll remind you, we're in that market, really focused on small and mid-size banking. We do have a small mortgage team there. We may be adding this year just a very small kind of premier consumer bank coverage, just to support our business clients, personal needs, but the real opportunity and Utah has been in that small business, mid-size business space.

So as you think about each of those markets I just discussed, they're all great markets to be in and we feel good about all of them.

Andrew Liesch -- Piper Sandler -- Analyst

Okay, thank you. You've covered everything else that I wanted to ask today. So, thanks so much.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Thank you very much, Andrew.

Operator

I'm showing we have no further questions at this time. I will now turn the call back to Mr. Laney, for his closing remarks.

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Thank you, Amy. I do want to thank everyone, in particular the participants that were asking questions this morning. As always, we are open to any follow-up questions for clarification. Thanks for joining and have a good day. And we'll be talking again soon. Bye now.

Operator

And this concludes today's conference call. If you would like to listen to the telephone replay of this call, it will be available beginning in approximately two hours and will run through February 6, 2020, by dialing (855) 859-2056 or (404) 537-3406, and referencing this conference ID of 6668206. The earnings release and an online replay of this call will also be available on the company's website on the Investor Relations.

Thank you very much and have a great day. You may now disconnect.

Duration: 37 minutes

Call participants:

G. Timothy Laney -- Chairman, President and Chief Executive Officer

Aldis Birkans -- Chief Financial Officer and Treasurer

Richard U. Newfield -- Chief Risk Management Officer

Chris McGratty -- KBW -- Analyst

Gordon McGuire -- Stephens Inc. -- Analyst

Jake Stern -- D.A. Davidson -- Analyst

Andrew Liesch -- Piper Sandler -- Analyst

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