Earnings call transcript Q4 2022

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Operator

Good day, everyone. Welcome to the conference call covering NBT Bancorp's Fourth Quarter and Full Year 2022 Financial Results. This call is being recorded and 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. non-GAAP appendix measures for Reconciliations discussed. be are today's will of In contained the within

this follow at listen-only time. in conduct At question-and-answer that participants we a will Later, will a Instructions session. all time, mode. are

reminder, a is being As recorded. call this

Mr. to the John for Jr. H. over would Watt, begin. NBT to remarks. please I And turn Bancorp now Watt, his like conference President CEO, opening and

John H. Watt

our joining call morning, year and thank Bancorp's you, quarter covering Thank and fourth for NBT Chris, good XXXX you results. earnings and full

Joining Kingsley; me and Officer, today our are Chief Burns; NBC's Chief Financial Officer, Annette our Scott Treasurer, Ondesko. Joe Accounting

scale results growth tangible $X.XX operating share leverage. the with and We Return average of operating assets for for was achieved securities report loan year full We're year, excluding very on equity by quarter in for pleased X.X% year losses. the superior earnings expenses and our at XXXX, XX.X%. on common to $X.XX approximately for the per with strong and build create acquisition-related defined connection operating higher return the to strategy

pleased over a our total volatile underscored rate we're movements year operating unfavorable and XX% of fixed market returns, shareholder In results equity returns in XXXX. drove interest income and by that

second Also, pleased all-stock This transaction in building, to of scale acquire Salisbury line very pending Bancorp with close shareholder XXXX, regulatory in December. and is the our we announce in to were quarter strategies the around approvals. to Salisbury an required agreement expected

digital in loans fourth to quarter. since Credit our the the strong businesses digital commercial quarter. residential customers consumer XXXX. services cumulative lending fourth adoption increase In strong XX.X%, the with year down finishing XXXX, in throughout our was in the a remained with X% and of growth start with nonperforming embrace continued Loan XX% quality solar

share: fab ahead NBT to plant York, business and Mercedes. generally the in optimistic. on across chip infrastructure build bill a Wolfspeed are fabrication is their many Projects banking moving Across with out with commercial active bidding five near are has XXXX associated and York the Utica, customers and planning York our our customers our next and by their work funded new in markets, the preparing New large customers Micron contract are and the fair upstate years. our and New sentiment chip fronts recently is over begun; New support chip Upstate corridor communities the announced Syracuse winning

of we dividend Board approved consecutive XX on shareholders. long-term March years increases for consistent our and payable continued commitment and our marked it's XX. Yesterday, annual returns a favorable notable our $X.XX dividend providing that In XXXX, to

optimistic my the who So, NBT emphasizing positioned how more team talented We made that has dedicated could team about possible. not remarks by I'll be our XXXX. that and well at to us it enter results XXXX conclude was

you. With Scott, that last you will over walk it through Scott, to the turn year. said, prior I'll our I'll turn the of and who the meeting quarter over detail to

Scott Kingsley

Thank you, good John, and everyone. morning,

or last linked $X.XX despite were a and $X.XX, of were previously overview earnings combination third $X.XX expenses were the $X.XX announced with compared share income Bancorp. acquisition results excluding per our page $X.X in the results million the of fourth to earnings incurred our per per Salisbury quarter $X.XX the quarter lower of in PPP share. achieved quarter to presentation, of share XXXX operating in our a share to the share with quarter results year share and These a recognition Fourth of fourth quarter related a XXXX. Turning fourth $X.XX the reported decline we consistent quarter the than

investment a portion securities over solid in The incremental the liquidity improvement funds into organic loan growth, was yields increases year asset half targeted deployment our in income Federal from in two result the the first of continued and the Reserve's the Fed net of of the interest excess rate. quarters higher comparative of

million We quarter recorded quarter a the share million a $X.X fourth XXXX in an loan million quarter the fourth XXXX's or than also loan loss in the of per or provision provision expense expense million $X.XX in recorded of quarter. higher to third $X.X was difference. provision $X.X compared Fourth share loss $X.XX the $X.X linked

loans points in the of and fourth quarter XX $X.X quarter. loans basis points basis quarter points linked charge-offs in Net to net of of or basis XXXX were third X of million XX in compared charge-offs the fourth the

September, from of X.XX% coverage loans of to for reserve increased loan end at provided the Our which slightly X.XX% growth.

in diversified The next both and quarter as of XXXX, up of were Total portfolios. higher in on XX commercial remains basis from and well variable were new points our quarter yields and as consumer well reflective our included million loans. page the and growth third balanced yields outstanding consumer the rate loans trends evenly billion $XXX commercial is Loan shows for Total higher loan between very portfolio portfolios of $X.XX rates. outstanding. volume up

the to third end of monetary XXXX deposit $XXX laddered group policy, end rate-sensitive treasury million customers, down quarter year-end XXXX certain larger, our accounts. X.X% higher or than in by wealth of million ended deposits tighter the the our the higher security were from end The XXXX, balances. pre-pandemic the for declined on below The lower. was strategy deposits XXXX. deposits balances management rate are still in more alternatives, of concentrated a $XXX and from XX% Even inflation and primarily weigh effects Total decrease of continue own including deployed though year

borrowing an the net we a position to liquidity position. from quarter, overnight shifted excess During fourth

in XX fourth quarter. XX points total points third basis quarter quarterly the to total And linked up points the points compared quarter. points points the fourth third deposits to basis cost in points XX funds of XX quarter in deposits moved basis basis basis X to basis from cost our the increased of Our increased XX third the in basis Interest-bearing quarter. from XX in to

of next the last of slide interest the our looks as year detailed up quarter changes earning quarter interest higher at and increased XX from in XXXX, was was up income quarter of third from the margin basis yield income quarter the X.XX%, linked of compared million and fourth on third fourth net points points $XX.X higher net XXXX. $X.X margin. assets. basis XX and quarter reflective million Reported interest The fourth Net than to

on continue modestly our to higher to in continue expected rates to interest next rate the quarters. assets move the variable are the few earning near-term, With yields to expected rise over

cash blended from also flows yields. to interest-earning levels assets reinvest our at our current We expect portfolio above

profile levels increased strength, we would in core deposit expect XXXX. beta our believe funding remains deposit we a of Although

Going significant critical will continue net forward, ability we to our sustain during retaining the be and margin interest a XXXX. in to achieved improvements of growing deposits element

The trends in income noninterest on are summarized next page. the

[Technical the Excluding our was million down security from third XX% Difficulty] gains in $X income fee quarter. linked losses, and

linked and and certain retirement typically of plan third quarter third were the challenging higher Similarly, three management than $XXX,XXX of Our seasonally well revenues first revenues market quarter. million, the are as revenue in lower businesses decreased administration the quarters wealth year insurance as our a conditions the below $X.X combined agency reflective quarter. in fourth

that recognized million plan the administration cycle. XXXX, generally service statutory on retirement In business revenues a of six-year full on company's recur $X.X year restatement to plan related basis, a requirements document

million driven in decreased the card of Durbin of $X.X beginning fourth utilization the income Card levels compared to of transaction the for to being bank in by card Amendment the the interchange debit subject the from quarter. per and lower compensatory fourth of Dodd-Frank XXXX, opportunity transactional Lower in the third which activities. our the caps quarter services in to third quarter mix provisions income linked resulted card Act changes services XXXX, quarter

we comparatively this lower rate opportunities fee to environment. continue addition, experience In lending commercial interest rising in

to Turning now expense. noninterest

or for Salaries Our was expenses or merger-related than one quarter. day quarter, less XXXX above more quarter plans. the million fourth employee quarter, operating in the and the the of million of expenses and payroll than third quarter were in million favorable million million and benefit quarter were reflective $X.X benefit higher X.X% during our of the costs of linked of X.X% incurred the certain lower total experience included $XX.X and $X linked X.X% which third $XX.X $X.X

including increases The and for services next X% quarters in the higher fill included early tactical to anticipate expect engagement We'd some compensation probably we efforts open several levels positions core initiatives. seasonal support our growth of strategic some external customer upward operating our also and over continue several XXXX, objectives. would quarter merit-based of higher drift than X%. modestly costs, to as to historical expenses in We somewhat

infrastructure. and invest tools in people, we In to our customer-facing technology-related and our processing addition to investing in order advance applications in continue to to expect

loss an of slide, presentation. also loan next of walk metrics. A the the On we asset of reserve changes provide key at available overview forward is quality the appendix our

I in have by consumer previously quarterly which business. in summarized points the As other were provided basis selected to the a with components line earnings fourth with status. quarters, were XXXX the X previous unsecured In of charge-offs points our are charge-offs prior data charge-offs we XX [run-off] compared quarter release, our of portfolio, in in net the concentrated Consistent quarter. financial planned (ph) fourth net summary quarter mentioned, basis the of net

Nonperforming quarter. declined again this loans

historical experience and recoveries. We our levels conservative are have higher continuing underwriting than to benefit from to of continued

closing more favorable thoughts. very XXXX higher line income, diversified I and we We Improving in productive As are for prepared outcomes and interest leverage. with than fee levels noninterest net up offset expense, results some of on achieved. has started [Technical allowed pleased have operating wrap remarks, footing the from which Difficulty] our results quality my income credit strong gains additive

an Our the to opportunities beyond. us for position several capital put we in quarters XXXX continue growth and results consider past as accumulation over enviable

to With you time. questions that, have this happy answer Chris? we're at may any

Operator

And Steve [Operator our Raymond you, Thank come will question James. of Instructions] Moss first sir. from

line is open. Your

Steve Moss

Hi, good morning.

Scott Kingsley

Steve. morning, Good

John H. Watt

Steve. morning, Good

Steve Moss

with just here. off Maybe loan growth start

before. just commercial in in quarter of but was -- remain the you investment of versus had And York kind pipeline strong. good how business You activity, loan as is to the now guys growth. growth continues hear supporting New curious ongoing for terms Upstate I to

Just forward. curious as to expectations going

John H. Watt

the question. Appreciate

economic to all, pipelines long York, before, First with years, respect NBT going best development And build we for as immediately. playing are to growth I said of periods us. of are that opportunity Upstate New a Those game. over not that's in when is long-term

quite in released Although, under in large receiving our be the have several to projects. of involved been infrastructure awards that's customers funding recently, infrastructure been successful

the and the respect refilling But across of we With and to the the opportunities. we're look feel it convert in to we Clearly, close, seven of there's take to and the pipeline that a quarter pretty lot on. pipeline given opportunities the to fourth good a diversity those at going healthy. pending did commercial itself bucket states, it's about

On mortgage the down. doubt business consumer has residential the there's slowed no that side,

there So, this loan while. be growth is and rate environment will more in a muted for

back see half again. of that shifts we'll the Although, not market on or whether housing very year, the We're closely. the watching

our program, lending quarter. mentioned very the and growth We fourth in strong Sungage third

will think to talk I that Scott subject. also

year going servicing there'll in all of partner level its engaged now it's We asset. funding to The to off that. investors into that expect is diversifies likelihood that we'll and and other this beauty sources hold as actively the be the our in Sungage retain

exceptions. generally speaking, those with So, optimistic

Steve Moss

helpful. and you on new coming what's these on loan rate That's then, Okay. And days, can there? give on the just maybe pricing, color any loans

Scott Kingsley

Sure.

their pricing of board, in to sort our is all little fair the a experience market of across pretty us I have their people bit have less Steve, production think standpoint, costs sheet. experience loan as So, been new that on started a balance discipline actually some excess around the in some or increase in has liquidity to holistically above clearly portfolios. started From of X% funding

in that pronounced, today. think bit which a seeing what the I we're some is of little even discipline is market more

that at lot the pushback to XXXX year the of us the of today. for time. I maybe to there exists out until of or not from think later pricing today. of banks' meaningfully midyear pricing on at even a are they our levels excess price the the the point forward we're forward are that didn't And portfolio at getting going yields most people important that's the think above on have But standpoint, are sheet a probably least blended as books balance generally, most liquidity probably curve, So, I because proposals noted, that relative certainly that force

Steve Moss

there's next one some just I last the curious the in we one just maybe you thinking margin. hear then, February points in And helpful. but That's of XX about If Okay. get quarters. about uptick that to basis costs, mean, I how me. kind points couple curious you and just basis in for think in of are guys how XX March, deposit

Scott Kingsley

Yes.

have have I a in told probably think would we interest a of quarter possibilities. have we ago us, would allowed tick would that, up For for margin bit expansion you the that net thought that little

with the a that were about probably in quarter, the fourth more think in in I cautious drop funding little levels September. than bit we

those yes, relative that. think improvement we're I find with rate sources. still and assets two is question So, anticipating we'll The to get can variable moves, the logical we

I think low. before, pointed out probably, I deposit beta as, very our we mean remains

people the in have largest the to X%-s had treasury some realize have but have acumen, extent got today. drops not XXX yielding. with the have at We drops we're granular on And we've think in opportunities are primarily a in a balances, drops helping just those customers. higher I But yield in most that people very end base. as, there deposit focused us, high short-term our other front been again, found balances, treasury And and of without others the in high curve the relationships,

to for believe sources to of first a funding think be NIM like the that in Steve, is holding but I us our the will possibility come I think half place. year, back to that So, upon your incumbent we'd around question, stability

Steve Moss

all you Okay, much very the for Thank great. color.

Scott Kingsley

Appreciate Steve. Thanks the questions. it, for

John H. Watt

Steve. Thanks,

Operator

line come Company. Thank Piper you. And [Operator of next Instructions] Alex from & question Twerdahl our will the Sandler of

Your line is open.

Alex Twerdahl

morning, good guys. Hey,

Scott Kingsley

Hey, good morning, Alex.

John H. Watt

Alex. Good morning,

Alex Twerdahl

of talked curious, about this happened expectations back sight have what just of off, any sort but flows I of what might you next just be over to First sort on couple for going you of months? quarter, of line do sort deposits, was of deposit kind the

Scott Kingsley

So, good question.

there accounts, on, have balance out of with influenced pressure deposit deposit that of general little for Alex. So, that. higher the what our of there's huge has section base is that -- Again, not a granularity we're higher what relative not that cross seeing by other we yield, today, is bit our again, The base level has been broad much been opportunities advantage. in

where was everybody it I that pre-pandemic. a probably which bit competition is little to than has investment think higher relative think portfolio remembering is we an going,

be in front the So, some because relative important cash probably net off flows the will loss but today, not position stimulate that everybody. one those. investment sources for is can't of us, for portfolio But of probably a only of liquidity to one end

for there's with little a more our in deposit bit that have even dollars. historically So, I in think which competition mind, markets, incremental been very stable

framing So, of I that, we're think how Alex. that's sort

choices Typically, the for think is I well, And benefit we some think net a as other that. as the they us inflow from much still quarter on side. first that as we'll have deposit quarter municipal

Alex Twerdahl

that the of us Okay. to That's of you deposits more quarter, overall deposits sort what percentage that of a of looking and considered was last you some able this was this that risk"? Are I kind alluded give still "at bit you or on category, saw what it of quarter, might quantify it be a color might where like sort for. is frothier little sort where to quarter of be -- the in

Scott Kingsley

customers our of Alex. $XXX million getting solution yields that a management a outstanding like in balances balance X.X% X% sheet [indiscernible] this that in related Well, million short-term -- left range. our for of or $XXX the XXX deposits again, deposit had treasury And typically terms right, in Deposits something the found higher balances. in the that balance wealth year to to top decline

the So, fairness. small of accounts in an group enormous concentration in

else. don't I if Alex, there's that, than anything know Other

think, they just offerings, sort are in doing geared money or achieving they the think of near-term attached relative some to that If requirements people yields. for or other them But other offerings, certainly seeing approaching CDs I some toward mid-term typically are X%. market some be your have was whether those we're to what question I markets high-yield

Alex Twerdahl

the something point to $X.X fees, a that that six-year And Got alluded expense clarification that a on of we're cycle, that's you on then, just on the and back or fee little million to it. the better? do that XXXX? million come $X.X we you explain down Or go just bit in a XXXX going can -- in maybe then by see how is

Scott Kingsley

sure. Yes,

statutory a the requirements benefit that refreshed typically foretake plan either a five are -- be of there So, requirements other cycle. recurring documents to or premise [indiscernible] year six within on to

we'd a run indicative requirements So, you'd quarter start that that be organic business before exactly more that And to requirements, opportunities more recurs is XXXX we for XXXX XXXX to on in probably likely, right. for expect of We XXXX or be of had statutory the $X.X growth be fourth legal of we million rate where would line changes, don't event? able on. in the us. Probably most think XXXX. The to any is depending important that capitalize plan

Alex Twerdahl

Okay.

and of that's kind of point the $X.X kind the was So, fee million XXXX, million, XXXX administration the line? earlier for in plan retirement starting the $XX.X

Scott Kingsley

quarters. much the Yes, fair conclusion, Alex. that's more concentrated in first Absolutely three a

think sort October. early up that we of I finished in program

Alex Twerdahl

then, just And for question Okay. me. a final

saw drawn rates lines I curious, function customers I'm year. of paying it of that that have those down gone out the end just a bit credit think commercial is a lines available is yet? or utilization increased function I lines, the that down a of into just in the of little been haven't presentation

John H. Watt

to are many customer remain of relationships stay have likely and several and unfunded. down also they Clearly, credit Well, they're I in large that liquidity pay lines there that their them to it's liquidity, And think debt. unfunded unfunded of components couple of with that portfolio other draw that excess to smart a accommodations are think are excess customers using some I function of factors. to

out here, system, we there. we're going in there I incremental see think of And XXXX. borrowing of moves likely excess didn't see forward liquidity kind the it's to So, as mixed bag a that

Alex Twerdahl

Okay. for questions. That's helpful. Thanks taking my

Scott Kingsley

Appreciate, Alex.

John H. Watt

Alex. Thanks,

Operator

Next KBW. Thank come question [Operator you. will Instructions] Chris of O'Connell from

Your line is open.

Chris O'Connell

morning. good Hey,

John H. Watt

morning, Good Chris.

Chris O'Connell

the monthly that on the up us you the flows give helping flows and are out portfolio? deposit with guys funding loan of either having question flows the some can following off cash Just quarterly there, cash or portfolio coming investment investment

Scott Kingsley

Sure. Chris, piece is mortgage-backed our securities. investment of large portfolio the

slowed where And think to And million little of I million accelerates the to rise. month half year, Maybe rates safe flows so, the that think $XX about portfolio. it's bit a to $XX cash since that's got a in flow are. again second given But still those the down off cash of current but... rates started

Chris O'Connell

got you along chance for extremely lines, the Okay, it. just basis to either guess, you a betas, deposit or, of I cycle guys which guess peers on any And of to around those commentary but so well quantify could some cycle? held obviously kind relative have expecting to I the this last far, go-forward increase in

Scott Kingsley

Yes.

were So, quarter. will XX Chris, surprised were basis higher higher they'll be to points XX it be I'll October, Deposit throughout in the in And necessary not kind of deposit points generally marching effects quarter. basis the were to that would this. costs in and than But hold Certainly, December they if they the costs that's would suggest that, were in frame happen think than be to up in January December. balances. trend going line up like I

is come relationships. go to It's balances, the in side for balance the Excess operating important all objective us sheet, those operating of to our from always first important but retain those retain us and can of the those for liquidity accounts cases. really some sustaining

about is kind we're this how thinking So, of it.

funded mark end the us XX% that's and two the deposits alternative again, and and high years. funded the of The year, we're the X% for for last at borrowing --

and growth to deposit good we environment. to gathering, have rate back we it's it that would that we're If normalized we're of capable have in an deposits So, achieved important historically a good for more I rate. get at suspect any growing cycle, know of pretty we and think apparatus

short-term bit after you I But yields? bit be itself stability Yes, of a maybe Will that little there reconciles more. rate now get pressure little with think a something that's to more change.

Chris O'Connell

line bit financial the services of -- just helpful. in of the first and of believe like the is, fourth between you the that quarter That's line, great. the and seasonality there's on first Okay, what going quarter? fourth remind for third quarter expectations insurances, us versus I a is years. what into that seasonality or And the Can little

Scott Kingsley

asking because at once Yes, year good people Chris, about to seasonality. is it a sounds the there some question, absolutely. of And, for actually thanks least remind the --

normally as relates specifically, So, quarter. our to revenue it insurance the is quarter fourth weakest

and make our around insurance, in the cases. and side renewal January unusual agency. first we centric in retail third not that's Whether changes stronger, for property people that the insurance of or of to of commercial think the are their originated plan X or type it's to The effective to centered really have dates quarter casualty on that it's be each stuff, tend X, benefits-related dates July I those

to So, we seasonality, in combined compared your our again, question normally back quarter. improvement first in around fourth the just see management wealth $X.XX linked and to insurance to fiscal $X.XX quarter

us for share in just maintenance However, the to to and that unusual per in. utilities incur of relative costs on another live we geography winter the not side $X.XX the it's

obligation frankly, first elevated and that most that tax I with quite share typically some a payroll $X.XX just in incur to compensation loaded. be front quarter tend the equity we remember this associated And $X.XX people think, to

substantial that. each that a sticks normally of from in unusual, anything two XX a the a is seasonality for payroll out XXXX quarters, will highly -- or goes quirky, that's comment or it's past with bit one that along not has little a that us. I day days make which four So, standpoint, fluctuation there's but

little easier model a our should So, in be something some bit to stability of year. costs I next think terms the of probably of operating that's

Chris O'Connell

credit the guys in buckets seeing be can of into in a residential then, as commercial to look movement generally, portfolios cause But kind give us XXXX? you your you well doesn't an are markets for in so concern mean super guys Okay, I or quarter. And There either the just in lastly, out outlook or ton far. you any held you this great. of of what areas on the seem in

John H. Watt

week, Thank comprehensive company a in at ended commercial of this one. and place terms the books that Board. a of did management Last a And never of seen risk with we consumer both history year we've credit our from take quality that in completed that our perspective. our portfolio. I'll We credit the you. the review of

With normalized that in said, I head be now, over portfolios. but reversion a there'll would towards over into immediately, it'll we'll consumer more we XXXX expect environment time, but it not time, and that as certainly pre-pandemic a levels see initially don't the see come. We that

strong. Commercial as don't of Business level sustainability very nonperforming and portfolio, well over the time. revert to in credit $X loan of think portfolio, in I very strong. longer probably of the more book that total banking nonperforming a a there's back a normalized period will million excess

feeling deposit So, line, feel it we We not the each see now of cracks. sorry, good of talk that classes in CRE don't we feel in we're pretty loan about but and now. those one the asset product -- good others certain I segments LTVs CRE. I'm know about about the

So, there. pretty stable

Scott Kingsley

add has net charge-offs quick to a provide for will provision that me we will our a real loan and that Let philosophy growth. for been provide that provision we

level has and higher loan a segments is And portfolios of coverage in growth sometimes portfolio certain that versus others. that our in different

all. to takeaway here But I -- think at have is that the in not important we wavered

that think, judicious dynamic with. that's above we the and are slightly to I we group. you'll our certainly given X.XX%, of appropriate expect ratios of think peer the probably forward go And find economic coverage So, conditions

Chris O'Connell

taking Got it. the I color. Thanks my questions. for appreciate

Scott Kingsley

Thank Chris. you,

John H. Watt

Thanks, Chris.

Operator

the Thank Matthew of you. Breese next Inc. Instructions] [Operator of Our Stephens will from line question come

open. is line Your

Matthew Breese

morning. good Hi,

John H. Watt

Hi, Matt.

Scott Kingsley

Good morning, Matt.

Matthew Breese

again. out even follow-up. risk we mix back granularity I the break just saw little I on bit a to could is the given here? wondering I you mean, about the the Scott, pre-COVID mean, And or levels I hoping guess, of a crystal we -- talked you book. prior? noninterest-bearing I deposits could go think was I was overall you have do ball of at

see to granular X%? continues at or a And advantage, north how that is be that X% offers it? mobile every Assuming it structural of risk is we day banking from continually

Scott Kingsley

a into the ball guess it treasury our little larger So, I have same our the full-time But migration way, professionals way, point, this seen higher question. pure not flows. alternatives, say by Matt. would I clear with this that net bit would I acumen And is at away with their it It's frame crystal typically morning. that DDA we really a good what been of managing relative much to customers businesses but other from a noninterest has cash is

a So, that. seen little bit we've of

the a that of think think even of retail near section of broad have amounts I instruments the whether that just cross alternative term, lion's in machinations of where is much the the customers, through business, that business, share lot moving prolific. small don't certain our our they're liquidity or going excess in they that of into off

for or our peer-based have what is up We got net people time, $XX,XXX balances differential? just -- some over portfolio excess if the deposit to address in you've them, moving $XX,XXX, It's of products products.

our be levels seeing customers bit affected. balances, deposit will historic you're still better than But moving but type a into of higher they're our that portfolio. affected, So, I think on historically those own I is at even checking products think becoming have even those what off little pure money they've been market

peer on think an a retail on I'd the to our come side. I advantage of think will be small business granularity say, Matt, and portfolio back deposit I comparison, around our So,

that's a some the to and and low will truly, rates I large about those be be really still challenge that us fairness, a some and, reminding expectations how be for in But large everybody, task customers we'll think effective over I will are of us. managing customer borrowing their continue of for managing time. like think relationships at something that

Matthew Breese

it. Got

well you'd there XXX%. loan impact below on does put Okay. the us growth any to start at up what that or just yourself, it your limitations any But still point in deposit And mind? then, loan you'd ceiling at ratio acknowledging to outlook? keep XX%, like And ticked to

John H. Watt

up. it there start will me pick let and So, then Scott

anybody being have company the NBT comfortable that's very territory. historically, a feel if But pre-pandemic itself time getting to we the us the period deposit that successfully at to for we demand being low see presents I loan of loan right fast. installed think, place at there and knows in operated not a a I very we're don't this adverse ratio yield. that XX%-s, at in long that

view headroom demand, still keep we'll that and loan here if So, we we strong, funding. got

Scott Kingsley

made that, been loan comments on only think similar Matt, John, I we've we expect that, thing residential to certainly that John don't results. is add portfolio XXXX be would in growth the XXXX's to pretty think I I some the transparent that, to and in solar this about

John H. Watt

True.

Scott Kingsley

I past talked yield a where credit We're effective We instrument. a as the average very that bit with also meaningfully for a has performance. instrument that have higher performance little a think in balance more both type capacity from are happy today. of think well It's base borrower that sheet than we about we've score. FICO we as

borrowing like we So, base there. the

business for has securitization, is and partnership with headed. that say will ultimately lines getting warehouse Sungage business that's where of matured that to more that I forward that them, matured, opportunities our become But has as flow credit

to And be forward. balance so, need the sheet proliferate going as our anywhere utilization of won't near

to I that loan deposit bit more a that relative to us So, gives think room ratio. little

think million ever of to was I been. portfolio hundred coming remind our portfolio, off we had that than million investment it couple people but cash flow million also should $XXX do dollars $XXX larger of only a not the have we

And now liquidity world. demand or a may the not time, our of lots expensive really instruments source over in thing. on thing. the bit loan little are liquidity deposit of that some depending but most we wholesale not for will a lending how change other fairness, may but our X% be yields more loan on net is mix deposit not to ratio of or funding within north, exists also sources base, that side, bad So, bad a a much It's that on see us, than

Matthew Breese

Understood.

Okay.

exposures much within questions cycle that is kind everything exposure stratify more floor As Could car imagine, have? COVID the you can going the this versus finance dealer you in auto with we're prices, during indirect getting stage how then, just plan remind of and FICO on you on And there. lending? book, us

Scott Kingsley

Sure, absolutely.

that's portfolio So, indirect that billion auto. under $X all is just

really We have plan and/or finance dealer financing, of very, just legacy relationship… some very floor small older amounts

John H. Watt

Legacy $XX less than million.

Scott Kingsley

So, most of is that. that indicative of

XXX. high, indirect average your band the historical terms Index still And point, FICO auto, for is In very, very from above an FICO Manheim to standards. buoyant of very

instruments. I were which think the during last the yield, that that quickly customer loans of we their historical auto meant the lining years silver through lower couple to is in working pay of their indirect than very that made down is

still don't a everybody So, lot concerned that value work. I are we standpoint, markets inventory. little bit enjoy drives in especially to public relative loan a today. we're -- There a vehicle a transportation not the And think our is backlog to where from of of

[late that at say Historically, So, not portfolio have from characteristics a commentary standpoint, customer unemployment and been hit] employment outcomes. that able the portfolio I'd and being concerned the the that of to in performance still about (ph). manage characteristics or

productive still we a standpoint, year additive from portfolio net think that something long. be our to all mix meaningfully that's will So,

Matthew Breese

Got it.

me. year more Scott, dealer low Yes, a next? single in just bit had hoping side? could a expect we that looking Are versus you digits be at on expense one you XXXX. expenses Last this for you. digit overall mentioned slight you growth specific migration single was there. or I Thank Okay. mid higher

Scott Kingsley

a framed way, quarter operating probably merit baseline Yes. talk and before I we If this would to our is expenses really third midpoint about operating tell I you the our quarter that fourth it good between increases. expenses start

first in X% the to quarter sort X%. neighborhood folks late change We of of our for merit expect a

and times with -- And do the more deal We changes in hired needs we the higher merit with. with compression people of that think that have some being than some is what recent compression peers. some at a have about of to their maybe combination we rates, little

the I most board think that's for enterprises. across

forward. standard of So, X% bit that going sort a we suspect inflationary little increases, instead the we're of historical of above type of

incurred price seeing impacted is rest to expect more of tools by that a inflationary change than else a year we're that, base, relates But base. our of some other little really maybe our up that push signs being little on not anything utilization it that basis bit nonoperating As operating in meaningfully the fully bit. next a technology

Matthew Breese

had. I That's my all for it. I Perfect. Thanks questions. appreciate taking

Scott Kingsley

let more. Matt, me give you one

Someone me. just reminded

Durbin still And because a a share more comparison the We per that of the think as negative without us to $X.XX bit half FDIC of the us year. probably a are basis impact, first dollar reminder, Our collect little year, because, started July. a cost have but on saying, terms in friends obviously, base. goes deposit I of next trying assessment at for that think this in we in year next that a higher the

first So, less debit million interchange is in expectation XXXX. revenues $X the compared to the our of year in half

Matthew Breese

it. Got

or a that to What have you is in of on -- said amount terms Do $X.XX. relative Okay. you points? basis dollar deposits that

Scott Kingsley

Yes.

head, million X So, it basis it's points. in is expected of expense. X $X.X that points or And my basis must mean

Matthew Breese

Got it.

Thank appreciate Scott. Okay. questions. taking my you, Thank I you, John.

Scott Kingsley

Matt. you, Thank

John H. Watt

Thanks, Matt.

Operator

further now to I you. turn closing will remarks. questions. Watt Thank now am for any not John back showing I the his call

John H. Watt

you in fourth all you end end you, to of year day. with forward first thank and and XXXX for Thank Thanks. Chris, great Look a Have at call. participating our quarter. the up catching the quarter

Operator

Thank program. our you, Mr. This Watt. concludes

now have may day. disconnect great a You and

NBT Bancorp (NBTB) 24 Jan 232022 Q4 Earnings call transcript