NBT Bancorp (US:NBTB)2020-10-27 17:46Financial Data and Key Metrics Changes - NBT achieved earnings of $0.80 per share, supported by lower provisions, focused expense control, and strong fee-based income [9][12] - The provision for loan losses was down to $3.3 million, significantly lower than the previous quarter and the same quarter last year [12][28] - Pre-provision net revenue (PPNR) was nearly $50 million, down about $1 million from the previous quarter but higher compared to the year-ago period [14] - Tangible book value per share increased approximately 3%, and the Common Equity Tier 1 (CET1) ratio improved by about 30 basis points compared to the second quarter [14] Business Line Data and Key Metrics Changes - Core loans, excluding PPP loans, decreased by about 1% for the quarter, with commercial activity resetting lower compared to previous robust levels [15] - New England commercial loans increased approximately 35% year-over-year, driven by strong commercial real estate activity [16] - Deposits rose over $140 million for the quarter, with core deposits up an even stronger $190 million [17] - Non-interest income increased by $2.8 million from the previous quarter, up just over 5% from last year, with retail banking fees rebounding from depressed levels [23] Market Data and Key Metrics Changes - Customer cash remains elevated due to increased liquidity from government support programs, leading to stickier deposits than expected [17] - The cost of total deposits was low at 19 basis points, reflecting effective management of funding costs [18] Company Strategy and Development Direction - The company is focused on long-term growth, expanding in New England, and acquiring new customers in its operational states [6][7] - NBT has implemented a new digital banking platform and launched a market-leading mortgage origination system to enhance customer experience [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about loan growth as commercial activity rebuilds, particularly in New England [47] - The environment remains fluid with uncertainty around the economy and pandemic, but management believes charge-off activity will be a significant factor in future provisioning needs [29][60] Other Important Information - The Board approved a $0.27 dividend payable on December 15 and reaffirmed the dividend strategy for upcoming quarters [10] - The company announced the consolidation of seven branches, expected to result in approximately $1 million in annual savings starting next year [26] Q&A Session Summary Question: NII and Margin Outlook - Management indicated that liquidity redeployment will be crucial for reversing NII in coming quarters, with cautious optimism for loan growth [46][47] Question: Operating Expenses - Other operating expenses were flat, with a slight decrease in travel and entertainment costs due to COVID-19 [53] Question: Fee Income Outlook - Fee income is expected to trend slightly down in Q4 due to seasonality, but optimism remains for growth in 2021 driven by strong business pipelines [55] Question: Charge-Off Expectations - Full-year net charge-offs are expected to be higher than year-to-date levels, with some loans potentially moving to charge-off status in Q4 [58][60] Question: M&A Pipeline - Management sees improved visibility into credit portfolios in early 2021, with M&A being a significant growth tool alongside organic growth [61][62] Question: New Loan Yields - Loan yields are under pressure, with new loans expected to be lower than existing costs, impacting overall profitability [68][70]