NBT Bancorp (NBTB) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - NBT Bancorp reported net income of $36.7 million or$ 0.77 per share, with operating earnings per share at $0.80, an increase of$ 0.03 compared to the prior quarter [10] - Revenues increased by 4.4% from the prior quarter and nearly 12% from the same quarter last year, driven by improvements in net interest income and fee-based revenues [10] - Operating return on assets was 1.11%, return on equity was 10%, and return on tangible common equity (ROTCE) was 14% [4][5] Business Line Data and Key Metrics Changes - Total loans increased by $40 million or 1.8%, with a diversified portfolio comprising 53% commercial and 47% consumer loans [13] - Non-interest income represented 31% of total revenues, with fee income increasing by 12.7% compared to the linked fourth quarter [18] - Net interest margin increased by 10 basis points to 3.44%, primarily due to a decrease in the cost of interest-bearing deposits [15][16] Market Data and Key Metrics Changes - Total deposits rose to$ 11.7 billion, up $162 million from the linked fourth quarter, mainly due to seasonal municipal deposits [14] - The deposit portfolio consists of 58% no and low-cost checking and savings accounts, while 42% is held in time and money market accounts [14] Company Strategy and Development Direction - The company is focused on supporting the semiconductor chip corridor in upstate New York, with plans to enhance financial services in this growing ecosystem [6][7] - The merger with Evans Bancorp is expected to expand the company's footprint in Buffalo and Rochester, adding over 200 employees and more than 40,000 customers [8][9] Management's Comments on Operating Environment and Future Outlook - Management noted that while macro uncertainties exist, customer pipelines remain stable across various markets [29][31] - The company anticipates modest loan growth of 2% to 3% for the upcoming quarter, down from a previous estimate of 3% to 5% due to macroeconomic uncertainties [58] Other Important Information - Net charge-offs to average loans were 27 basis points, with a significant write-down of a commercial real estate loan included in this figure [21][60] - The company has added over$ 100 million to shareholders' equity in the past fifteen months while maintaining a strong capital position [6] Q&A Session Summary Question: Credit demand in the market - Management indicated that pipelines are good and consistent across their footprint, with no significant project abandonment despite macro uncertainties [29][31] Question: Supply of credit and competition - Management noted that competition remains reasonable and disciplined, with some smaller banks occasionally competing outside of comfort levels [32][33] Question: Opportunities from the Evans merger - Management expressed confidence that the merger will allow Evans bankers to leverage a larger balance sheet to expand client relationships and drive loan growth [34][36] Question: Impact of the CHIPS Act on projects - Management confirmed that while there are contractual obligations related to the CHIPS Act, the overall sentiment for semiconductor manufacturing in the U.S. remains strong [44][45] Question: Fee income and loan growth expectations - Management provided insights on fee income sensitivity to market conditions and adjusted loan growth expectations for the second quarter [50][58] Question: Charge-offs and credit quality - Management indicated that charge-offs are expected to be primarily from auto and residential solar portfolios, with commercial charge-offs being more episodic [110] Question: Overall M&A appetite - Management stated that the focus remains on the Evans acquisition, but they are open to discussions with other community banks for future opportunities [101][102]