NBTB - Earnings call transcript Q4 2020

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Operator

Good day, everyone. Welcome to the NBT Bancorp Fourth Quarter 2020 Financial Results Conference Call. This call is being recorded and has been made accessible to the public in accordance with the SEC's Regulation FD. Corresponding presentation slides can be found on the company's website at nbtbancorp.com.

Before the call begins, NBT's management would like to remind listeners that, as noted on Slide 2, today's presentation may contain forward-looking statements as defined by the Securities and Exchange Commission. from differ may results those projected. Actual

certain these numbers addition, presentation. Instructions]. non-GAAP appendix measures for Reconciliations [Operator discussed. be are today's will of In contained the within

now call NBT to President remarks. and Jr., recorded. As Mr. conference Watt, Bancorp is John his reminder, turn the this I a would for like CEO, Watt, to over begin. being opening please

John Watt

our us fourth you thank NBT's for and results. today for XXXX joining and quarter call Welcome, full year covering earnings

you are and with Chief me Financial and Moran; highlights Joining to John NBT's our Risk Officer, review Officer, Credit Chief Amy Wiles.

will your on unexpected momentum NBT we remarks, our XXXX that this of enters The many were fronts. Following unprecedented. said, With take questions. with events year and

enhanced of opportunistic resilient optionality financial Our we and when the credit by our to raise; as did strong provides exited diversified which we an grow sheet; and capital us performance balance in our portfolios the XXXX capital XXXX, the in was crisis. base,

record and across auto in originations X-state of close build Our last billion platform. was indirect the our production time pipelines $X mortgage Commercial active the loan August, are month-over-month. in and year. this to is business the at continue building all-time for XXXX, XXXX experienced Since high an and production pipeline to our

the management which relationships will by bankers continuing positive are our services to and administration strengths under outcomes underlying Finally, in and our This organization like of retirement of at XXXX, management core team under Amy fee-based record wealth year in platforms our to demonstrates strongly the outcome for exited focused Strong deferrals, assets a other. and the managed of are well with highs. positioned year discuss. no result customer related

this of our footprint. to in branch optimization first achieved program NBT our lean have share the support going into heavy the PPP $X.X expense significant onetime that for with round loans saves per We and year fourth will quarter Street Main forward. across plan for million already businesses $X.XX to charge program of latest a after associated the yield earnings the and $X.XX funded

Finally, repurchase To payable will the about program dividend $X.XX to in yesterday, authorized million. performance, our our John X greater March Financial over Officer, our double stock reloaded financial number detail turn the the Board XX of to approved talk and Moran. shares a to on call Chief I

John Moran

Thanks, John.

Turning X. to Slide

quarter our quarter $X.XX. fourth As of $X.X We of per quarter million million of puts adjusted total the highlighted, for were per That charges $X.XX $X.X such full John share this at $X.XX for did year. share and earnings branch earnings optimization year. the record a charges for the and

XX can PPP to for was you see, points, the up to down of down XQ from XXXX. the below half averages. loans, as Charge-offs levels losses ticked levels loan remained but of As and first the provision compared excluding historical substantially basis

Our X.XX%, X.XX% reserve coverage in excluding PPP loans from decreased slightly to XQ.

up million as points, X%, in period. basis, Our core the with loans. basis $XX basis continued PPP, XX value On in trends compared were XX to excluding up CETX XX% loans Tangible with underlying and under shows outstanding to just to TCE net book per a third improving ratio up X the Slide the points quarter. our $XX quarter. to of grow, revenue performance compared as continues operating up year pre-provision hold million, share ago well for

a more pipelines fairly headwind, have fully, originations to suggested exited the in John and activity new momentum with utilization as remain all in lending. both reopened our but parts improved good businesses. of our has we consumer steadily continue of brisk. been footprint commercial year As Line rebuild earlier, and several Substantially, commercial remains

on stronger $XXX increased were the liquidity with up remains elevated quarter, for about our various programs. and point-to-point Customer Deposits core X. deposits with up Slide associated million government even support to cash Moving $XXX million.

As than we stickier have have expected. last we remained deposits would highlighted these quarter,

in of book of low costs, basis to evident funding continued quarter support deposits, the exception total our in took with additional priced during higher margin. pricing levels demand manage cost and XX have Those are the deposits. point in actively our deposit actions our We both The actions, rack combined helped we rates.

hallmark While Core particularly planned NBT our now of have back CDs, pleased and deposit we remain franchise, some been costs active in very book, funding strategy. are with legacy majority the we do has opportunities actions repricing of completed. of our lower to rate long around the a results our the

margin. in million, detailed and our Next, changes and X, and increased outcome was better-than-expected our see basis for Slide the fees forgiveness drove NII $X.X income net margin shift reported a points. interest you'll X Mix up on the quarter. PPP from

to points Our basis costs the to fees impact liquidity mix support excluding this normalized PPP due aforementioned of in deposit and quarter. was excess PPP NIM, about provided towards reduction forgiveness of due stable lending, and X the higher-yielding consumer The fairly recognized margin loans. shift

forward, to excess course compression lower of the core of PPP Slide X noninterest liquidity. assets shows a income. reprice Looking in over environment, to excluding would 'XX, we as see margin and expect trends continue impact in rate the

of $XX Retail XX% gains was strength to NBT remains this More revenue levels. fee Excluding total modest losses, compared stable depressed nearly for XQ's from and securities their rebound banking peers. at linked broadly, income and have was our million. as key revenue, our a fees quarter non-spread continued

growth XQ they course normal expected balances other service levels up of quarter. and levels would line most third acquisition revenue XQ from compared charges demonstrate on have modestly year The higher stable. lower to activity RPA were benefited income. continued at we ago, and on ATM versus were Other lower recent our debit swap in have card fees ABG a but as While held improved have XXXX, seasonality. lines from strong better the over was cash than improved to

Turning to X. Slide noninterest expense on

the operating were our million. $XX for $XX quarter. several just in driven and normal million Increases over timing by Adjusting the categories branch charges, in total million operating for expenses Our core were seasonality. $X.X expenses optimization were

provision of were line The unfunded expense approximately as up other down. for commitments the was and included $X pipelines utilization in line increase million

We focusing below operational expenses net peers. remains have that and our committed to on with while outcome, excellence to effectively managing our We're pleased and our continued remain structure. overhead manage we ratio cost

During of approved. XXXX, plans to consolidate XX or the were footprint branches X%

We expect key these to from in realize about annualized of an overview XX, savings we quality On $X.X provide metrics. million Slide asset actions.

on but benefit to they net in from our of consumer than and diversity charge-offs the moment, the Excluding absolute. are NPAs and at we detail low more basis Both some loan of XX higher a portfolios, but nature in PPP, NPLs continuing moved lower our normal prime at quarter, points. the remained again remain provide levels this will Amy and underwriting. our migration conservative book of granularity the impact

of from Amy of On As second a and XX% approximately reserve peak loans, walk quarter to XX, X.X% the our the deferrals category. Slide quarter. down prior loan reserve allocations will at of during we share, running total are forward from year-end now our the a provide by

to of of is around and the but provisions, and In rollout there virus, the clearly, terms path efficacy the of outlook the economic ultimately, compliance improve, vaccine the still stimulus uncertainty outlook latest on package. continues

ratio loan portfolio and basis our conservative to the of in risk allowance estimate points credit appropriately XXX was PPP, today. Excluding our

the additional be of activity some I'll Risk factors our of Credit heavier to we for experienced reserving versus first path Officer, that, the the and X quarters Amy With that will believe details sheet provisioning growth to XXXX. it Chief front. charge-off over Amy? balance needs in future the that credit model-driven in continue turn Wiles, on We

Amy Wiles

on million deferrals total XX very their peak Thank down be you, strong or of reducing January ratio John. substantially total has $XXX to to pay deferrals of billion continued X.X% to XX% as of The bank-wide, at $X.X loans. return to from

larger commercial which deferrals largest loans the Our million, portfolio. $XX of or category represents XX% commercial the X.X% represent at of

only Our or $X.X small strong, with portfolio. on is deferral business the total million of X.X% very

have of run modifications the XXXX. and only and are additional needed and shown included that all XX these various relationships. represents that We numbers beyond maturities on through in days, the completed This have loans here fourth quarter XXX forbearance commercial

our which real improving and our So encouraging not seeing are very each than less down the supported a of XX% the that by of to represents shows Performance lending These number slide on are average our areas. and manageable deferrals. And our payments markets. particularly represents deferrals borrowers. estate loan deferrals FICO we rates secured and portfolio Hospitality portfolios stimulus of XXX also lending, X%, X are a with total at all in at positive next the origination, increase scores total note focus I X.X% consumer compared with in deferrals. fundamentals unemployment consumer centered have of loans, strong prime it's home of that remaining XX% is would our our noteworthy, in commercial trends reporting consumer of in and and years. X.X% to an are rate portfolios, is also The prior It deferrals respectively. new portfolios largest

I this calls, XX% loan-to-value were of conservative deferral. that underwritten note on these As mentioned sponsors. our strong with prior would we've and on And segment only remain

here. So we handful to of credits are a just down

credits. total, million In deferral of XX% small COVID. with top-tier and this on Restaurant only XX% is up liquidity strong entertainment relatively segment at with history fact, a includes this and make operating smaller some $XX each strong relationships and very pre and X number, sponsors of

the X% remaining estate, are noted our real estate on total retailers The virtually returned segment commercial have office, deferrals slide, all with automotive of primarily the As pay. and retailer real commercial general deferral. remaining on to only

by we strong to across results. John. I again, the and strong you, year. Back will the board saying very close how seeing pleased are and So we manageable are ended resiliency

John Watt

take and your will the Manager, us and this Bill Burns; is John you, our that I FP&A Annette Chief Corporate as mention Treasurer, Mark joining on Officer; Thank Accounting Whitaker. Mershon; also Amy. morning call we questions

Operator

[Operator Instructions].

first with Twerdahl Piper Our Alex from comes Sandler. question

Alex Twerdahl

a the of. to and dig you to capital guys First off, much increased buyback too used little you typically bit which in authorization, something haven't is notice wanted

conversations now thought if are talk little $XX about bit a curious there's know And out on - sort there's deployment? And you're billion, priorities So has M&A. process picking give? And any was been I around up? if the you I could was additional a market, you're if M&A changed little a a bit capital above rank color if focus then the in bit Or there buyback? more you could little the just what your for seeing of of then wondering that I

John Watt

one, that take Thank to you. Glad Alex.

many You've story our us capital strategies. allocate heard from primarily and growth to expansion this our organic times. We

feel come quiver the in a to that appropriate addition, we we bank In about as back size. think a would in the have we M&A, to moment. have arrows of that it's that I'll And this all normally

that sure as that But we plenty make So approved of the opportunistically to the course, with the throughout had we then asked buyback. of well. the to and yesterday - dividend do flexibility We'll Board yesterday respect we year. that's

about the way of shareholders. that's allocation in which we think capital capital and to So return

we're manageable. I credit partner the think year. front, Durbin place On in the make - have pushed fortunate M&A where be is to a out had I potential to amendment are a understanding going a we

can and XXXX So we that having identifying feel conversations gives we've in had. reduction been go to before that the keep time partners into fee. having the that we us we the That of appropriate impact

them contiguous the the most cultures. appropriate for are billion our with past, as to that align in billion in being for We geographically to and we range to aligned strategy. said integratable we've partners look and look $X be As $X.X

virtual, imagine. of and risk continue has So environment But to you is continue us the more if more there improved, those. allow part the as lines and the diligence deep most for due time will understanding that might

Alex Twerdahl

being Great. sort alluded a growth good as other secondary about loan into follow-up, you as about then And growth shape. just you've That's the of And for adjusted in if loan wondering priority good target share one, color. you of you're with of for or respect couple with have you I growth to and was if And guys next adjustments have any made? pipes you that pretty to being the how what talked quarters number thinking a versus selling sheet just organic the loan market you've then that us? balance put could on the you sort

John Watt

targets I'll and I'll for over a turn with respect color the - to give about it markets, talk ourselves. to John then little you set to we've about

to The there, there we're pipeline a high-end is Connecticut. activity. flurry got team and So now pipelines I've of opportunities. This York a was we've that's fight about competitive, is Focus banking Maine place the X-state building particularly and New great that screenings Central learning the I'm there maintain in but under during observe have there Connecticut, a across will commercial, sort in hard pretty and and been to it's team platform. of building new has Hampshire, pipeline structure and appropriate is week-long New on going lower pricing, What been of excited to I us are of phone NBT and and all on our business active. in is radar in that end the feel about in to good. ready now the momentum that pandemic execute makes week,

don't color So set and you of across why - handle the we've that for markets. targets sort ourselves. the John,

John Moran

little production up. are and a last we net it. the headwinds it Production alluded year utilization. more how's John So Alex, given good paydowns Translating of has certainly really that Yes. growth picking full. The pipelines to bit been a line some going? is I was on that challenging, faced think into pretty Activity story.

we the get balance have that think able we keep That's going that versus shift of of in of growth again that. But for that one to we're into optimistic started X-X sort family one sort strategic stay next around as we're on sheet. to think terms pull sheet The selling. flexible growth balance certainly, kind be now, another. lever that I of can approach, cautiously we rates year. in portfolio we did or most way loan a And historical I we'll forward, we'll terms in look that on of of the thing back net to

Operator

Instructions]. [Operator

Our comes Matthew next with question Breese Stephens. from

Matthew Breese

following And loan maybe up just question. on growth the

geographies, segments, are to CRE, is pretty give as segments pipelines the maybe it strongest? what of some Could widespread. are a what the little C&I, mentioned like and You of sounds strength - you lending us insight lending bit

John Watt

way, we of multifamily CRE Connecticut. asset the it good in add-on a in a of about in and we're We're in opportunities hospitality warehouse mix. C&I looking to business We're then and for mix mix is in and not In in to there. CRE mend seeing banking, it's which the in relationships CRE. Matt, our It's start core. we Sure. pretty are new seeing, customers and otherwise, class nor before But new thinking and opportunities C&I opportunities And obviously, seeing needs a retail.

Matthew Breese

are Slide real coming real commercial yield, X. one I And appreciate new on at? detail Okay. provided new average then area commercial in estate yields the terms isn't of loan The is on loan estate. Where

John Moran

begins Yes, kind that's it Matt, today Moran. Xs, real John Yes. Commercial Xs. X it's high yields XX, kind and estate X is call yield book that of mid-Xs, of XX, the low so

Matthew Breese

I've considering your it XX a be? to me call XX Why is I points X lot than might I'd basis it, maybe, don't XX versus just number peers, that X lower peers. strikes of what heard John, know, that

John Moran

with. think can doing I business think part and But we're and I weigh kind well. it's of - of certainly John here Amy is in customer selection it who as

are I if be best tend project. XXX, deals. add pretty competitive that. sure quality plus I'm situations. top, to what about focused as would doing estate We're of about right Amy, markets. over best really think real for our borrowers, on a we in XXX not commercial developers When I on of to you of not LIBOR an feels BC-type swap commercial kind A would And consider sort the real So John, mentioned, John estate, lot those the of

John Watt

And never not yield outsized England, we'd go has wanted to that us particularly we're market, been. down also competitive, agree, to up, but but had I'd we risk palatable and No, that would is New drive in very selective. we

of there play to are we lots to the because of of hard and people the around it, got win. we're talking So banks to, quality

Matthew Breese

pressure And Where just that. stabilization is to were some where appreciate are? switching Could I I you throughout NIM, you Understood. to then the your NIM quantify the maybe exit 'XX? see you might the know what And year. likely point? that expectations we mentioned core

John Moran

of the stab But compression question. XX mean, Yes. in out with has a of take because mid-single-digit normal still are would lending, kind it's everything get would on it liquidity taking given coming, we're What quarter liquidity, at tough arms than more our PPP things February. on certainly. first environment, core core become PPP to think see obviously, is completely else, a call has and I if so big quarter that it another little out from the of days pieces a excess sort it - of a excess some a many basis, round And unique in single I impact we basis, kind bit book? core I in That's PPP, around the going moving it's low margin you difficult a of, to call digit, tell - depending the on still it, there

Matthew Breese

just Understood. Last me, for Okay. one on expenses.

that there were to we us usual this expenses get for you of Could consider sense 'XX? expenses rate maybe should like just what us? quantify that give sounds quarter. be some You a of you half had kind that And mentioned higher several for for type core to first it than the seasonal, run the would

John Moran

Yes.

- you're $XX of and the Matt, pieces then off unfunded million first, of just optimization; I about $X.X the million, second, think of $XX.X GAAP in two million branch if in biggest is expenses that, million under commitments. $X going $X million

in added line. you a bunch kind ones that there. tell took nothing other particular a kind in I two would just little of increase those at $X.X if It's be out, up. million it'd of So you, the of

projects. bit little heavy The there, would and just ran on services given outside professional delta be fees the other of timing a we big In line.

little the On line, true of bit of fourth little the medical employee bit a in a benefits up, salaried quarter.

you the comp would of into - down items, it normalize some high-XXs. you spike we some normal those There's puts New XQ, if think you, in low-XXs, in York. it's have kind wintertime equity for seasonality. back remind just I So and resets I also Upstate

got plow heat all and we've that. So and

So XQ little as can us for heavy run well. bit a

Operator

to call not further I Instructions]. any now the his remarks. questions. back John showing closing turn [Operator I'm for will Watt

John Watt

Thank you.

like in So pretty how today. we on us But year all exiting that in XXXX, about XXXX markets. closing, call are growing the Certainly, momentum, wasn't pipelines, joining back, stability thank to expected. we we're you happy looking active year the the for entering and I'd

good appreciate Thanks. we So Have interest your again, a your today NBT. day. in participation and continued

Operator

on NBT who to concludes your Thank This for this conference you participated everyone call today's interest program. in Bancorp.

Have disconnect. a may You great day.

NBT Bancorp (NBTB) 28 Jan 212020 Q4 Earnings call transcript