NBT Bancorp (US:NBTB)2020-07-28 17:22Financial Data and Key Metrics Changes - Net income for the second quarter was $24.7 million, or $0.56 per share, after a CECL provision and charge-offs [8] - Pre-provision net revenue (PPNR) was nearly $51 million, up 13% linked quarter and 8% year-over-year, with a PPNR return on average assets at just over 190 basis points [12] - Tangible book value per share increased by 2.6%, and the CET1 ratio improved by 44 basis points compared to the first quarter [13] Business Line Data and Key Metrics Changes - End of period loans increased by over $380 million, driven by $510 million in net PPP loans; excluding PPP, core loans decreased by $130 million or 2% [14] - Non-interest income decreased by $1.4 million from the previous quarter but remained stable year-over-year, with non-spread revenue constituting 30% of total revenue [23] Market Data and Key Metrics Changes - Deposits stood at $8.8 billion, up nearly $1 billion for the quarter, with non-interest bearing deposits growing by approximately $685 million [18] - The cost of interest-bearing deposits decreased by 50% from first quarter levels to 34 basis points [19] Company Strategy and Development Direction - The company plans to deploy excess cash into more productive earning assets over the next year and evaluate fee-based acquisition opportunities [34] - The management expressed optimism about organic growth opportunities in consumer and commercial lending, particularly in New England [51] Management Comments on Operating Environment and Future Outlook - Management noted that while the current economic environment is challenging, they are cautiously optimistic about a return to normal business operations [16] - The company expects some increase in charge-offs in the second half of the year, particularly as deferrals come to an end [71] Other Important Information - The company raised $100 million in subordinated debt to enhance capital flexibility [8] - Total deferrals stood at $622 million, or 8.8% of total loans, down from close to 15% [35] Q&A Session Summary Question: Discussion on the $10 billion threshold and loan growth strategies - Management acknowledged that crossing the $10 billion threshold allows for more aggressive loan growth strategies, particularly in consumer and commercial lending [50][51] Question: Concerns about due diligence in the current environment for M&A - Management indicated that while it is early to fully understand potential partners, they are focused on relationship building and smaller acquisition opportunities [54][55] Question: Insights on operating expenses and future trends - Management noted that while there was a reduction in operating expenses, they expect some normalization as branches reopen fully [62][63] Question: Liquidity deployment and organic loan growth expectations - Management highlighted that they have seen significant deposit inflows and are considering securities as a redeployment option, while also managing loan growth cautiously [66][67] Question: Projections for net charge-offs and deferral trends - Management expects an increase in charge-offs in the second half of the year, particularly as deferrals end, but noted strong return-to-pay rates among deferrals [71][72]