NBT Bancorp (NBTB) Q4 2024 Earnings Transcript

Group 1: Company Expansion and Mergers - The company is expanding into Buffalo and Rochester, which are the largest markets by population in Upstate New York, enhancing its presence in the region and positioning itself as the community bank with the largest deposit market share [1] - The merger with Evans Bancorp, a $2.3 billion community bank, received regulatory approvals and shareholder support, with a planned closing in the second quarter of 2025 [2][1] - The merger is seen as a natural geographic expansion into the western region of New York, complementing the company's existing footprint [2] Group 2: Financial Performance - Non-interest income constituted 30% of total revenues for 2024, with record revenue and earnings generation across non-banking businesses [3] - The company declared a quarterly cash dividend of $0.34, a 6.3% increase from the previous year's first quarter, marking the 12th consecutive year of annual dividend increases [3] - Net income for the fourth quarter was reported at $36 million, or $0.76 per share, with operating earnings per share at $0.77, a decrease of $0.03 from the prior quarter [5] Group 3: Loan and Deposit Growth - Total loans increased by $319 million, or 3.3%, for the year, with significant growth in commercial and industrial, commercial real estate, indirect auto, and residential lending portfolios [5][6] - Total deposits rose to $11.6 billion, an increase of $578 million, or 5.3%, from December 2023 [6] - The loan portfolio remains diversified, with 53% in commercial relationships and 47% in consumer loans [6] Group 4: Interest Income and Margin - The net interest income for the fourth quarter was 3.34%, up 7 basis points from the prior quarter, primarily due to a decrease in the cost of deposits [7] - The company experienced a $257.5 million growth in average earning assets, contributing to the increase in net interest income [8] - The cost of total deposits decreased by 12 basis points to 1.60% [7] Group 5: Asset Quality and Provisions - A loan loss provision expense of $2.2 million was recorded in the fourth quarter, which was $700,000 lower than the prior quarter [10] - Net charge-offs to total loans increased to 23 basis points in the fourth quarter compared to 16 basis points in the prior quarter, driven by two commercial relationships [11] - Reserve coverage was 1.16% of total loans, covering more than twice the level of non-performing loans [11] Group 6: Future Outlook and Growth Opportunities - The company is optimistic about growth opportunities in the semiconductor chip corridor in Upstate New York, with ongoing investments and expansions [2][36] - The company plans to focus on enhancing its geographic footprint and exploring additional M&A opportunities post-Evans merger [48][52] - The company anticipates continued growth in its fee-based businesses, particularly in retirement plan administration, wealth management, and insurance [27][70]