NBTB - Earnings call transcript Q2 2024

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Operator

Good day, everyone. Welcome to the conference call covering NBT Bancorp's Second Quarter 2024 Financial Results. 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. Actual results may differ from those projected.

measures discussed. non-GAAP certain addition, will be In Reconciliations of participants today's numbers are are the appendix contained within presentation. At a mode. for listen-only these in this time, all follow question-and-answer Later, conduct session at that and we time. a instructions will will

As Kingsley, now the a please President CEO begin. conference will his for Bancorp turn Scott NBT reminder, Kingsley is to opening recorded. I call and this being over remarks. Mr.

Scott Kingsley

NBT XXXX us the results. With Michelle. leadership Bank, Joe transition President entire Salisbury as Thank Directors, today Rick NBT retirement Joe Treasurer. This well to smooth August. team also Bancorp's very management team management and results have and following pleased of for the now would to Board. We're like joining Rick's of this supporting morning, our our and for NBT as first on a Burns; May, earnings Good through thanks second Chief you, continue in is a insight important today. Cantele merger, the second want contributions, for member us Board as our our will been of NBT's you we invaluable. of our our N.A.; quarter and to review in extend me following senior are the Annette Financial and earnings Watt with to to his covering congratulate call completion you provide thank quarter Officer, call He the our Ondesko, transition. I John guidance from Stagliano, upcoming

to first collaboration the model our our second -- of half for diversified of the business XXXX and of continues our balance the the strength operating first and first the team. quarter reflect sheet, performance the half and of quarter Our

reaching we're asset new highlight, be trend. Noninterest productively revenues it we but of increased making footprint loans A yields cautious margin continued total quarter, incrementally quarterly earning and as and to second on a improved high. income second for XX% positive as all-time our than result, higher a our still costs. pronouncing a the net interest funding the across quarter up During grew

Micron X.X% it X under cash that plan as We part, in billion consecutive XX% support Department to and it with will, favorable in Commerce consistent commitment and April, semiconductor much announced shareholders. a a invest This Technology in plant announce a has are also that near $XXX $X.X an demonstrates shareholders. our past pleased long-term Act was the years. In in our U.S. of returns to providing annual the our to manufacturing represents increase dividend the its increases, provide the XXth chip to and entered The Clay as grant our complex also improvement of a into to agreement town Syracuse. CHIPS year to Science dividend of increase new over of quarterly represents billion

significant support by Upstate Additional in to over from planned. NBT tax quarter County. in to program to review and Annette play chip services billion and to the I'll all financial uniquely types providing second continues customers $X.X for as living investments with and state and specific a progress a the meeting working Annette? in turn New role the of results our prospects time, you this corridor. At York Site infrastructure is credit CHIPS Onondaga the State's York the significant includes Green Clay positioned complex New detail,

Annette Burns

and Scott, everyone. morning, you, Thank good

our Turning presentation. earnings page of overview to the results

share. of quarter, income the reported we per or net $XX.X For $X.XX second million

at in Tangible offset share $XX.XX basis the was the the year our the from which was quarter for and and were costs shows second Our and XX for net million next points of more of our trends $XXX $X.XX in indirect per growth commercial or our NBT. The of funding per up improvement book share interest margin asset annualized loans loans. high yield June in points up as X outstanding up quarter in auto was portfolios. X quarter basis of quarter. prior Total an was from X.X% end as all-time of first XXXX than page the included increase the X.XX%, value earning in

planned other consumer the that X.X% are in and solar portfolios Excluding residential increased or annualized. runoff $XXX status, loans a contractual million

first rates. basis Second points were quarter new continued origination yields of XXXX, loan up quarter higher X from of reflective the

of and level portfolio deposits of of consumer loan remains balances in diversified and XX% along growth municipal deposits. Page very XX% from million of Our December comprised relationship loans. On XXXX. $XX.XX were with well X, and $X.XX saw total We $XXX.X consumer accounts million billion is commercial higher up a

diversification included accounts into base. The higher-yielding have money the a by type, some and shows continues customer remixing of its granularity and checking and no which mix our summary interest and low We savings of company from deposit to deep interest instruments. deposit time experience our market

points at our X.XX%. The the looks quarter from slide Our margin. to detailed interest deposits and quarterly basis X changes the total prior next income of cost in net increased

increase quarter quarter. The interest see although funding during margin results. second continued to in increase primary And first costs, the was net the stabilization X. to above income slow the the on costs. We income interest The are trends outlined The drivers million pace an in we interest-bearing of deposit the increase noninterest asset during Page an the to yields by in our net increase partially continue saw in $X loan in quarter. linked income increase quarter growth, an and was interest offset in net

and by market first wealth and growth, of of quarterly the Excluding fee in marks an XXXX second reached our XX% a and noninterest income retirement organic plan revenues by record management consistent our the is administration was to conditions quarter. favorable plan new performance higher which securities losses, due the account high $XX.X This quarter positive activity-based from growth income and million, increased market businesses. Retirement previous increase administration with driven fees. quarter of from $XXX,XXX

increased agency strength revenues to services total Insurance sources growth. a due new in lower recorded accounting remains in the seasonally due performance revenues. for of revenues company, quarter. The diversification for high also revenue of were management first wealth quarter our core and by favorable the second XX% account the the market $XXX,XXX Our to

fee X.X% retirement rate insurance management growth Our administration, a business meaningful a over of the plan compounded and has annual wealth agency X-year income lines of demonstrated period.

Moving on to noninterest expense.

nonperforming to second coverage the XX points XXXX total basis quarter. sheet changes the management of X We costs. loans from and total $XX.X to likely were managing linked This past operating were the to strength efficiency which the XX overview the second net ability quarter. Technology provision costs than time, of credit $XXX,XXX closing, several million continued $X.X decreased expenses due growth, was at related and in well-balanced quarter metrics. X.X% up and stable provisioning to $X.XX to was interest the granular per loans the effectively, that service offset We towards in portion expense on and increases over historical with of and compensation quarter, provisioning X.XX% quarter. The XXXX. Net and prior Our savings organic higher quality unchanged basis quarter assets We medical points. Reserve us our employee $X.X this merit decrease the decreased deposit and the while base, to partly prior life support noninterest costs data the from quarter, quality, in the fourth points to income a shareholders, of customers loans emerging margin in allowed to you we of is the first committed cost Nonperforming activity XXXX. Occupancy was strong stock-based This of income reserves in the for at expenses and expected investments continued loan continue to quarter. of mix $XX.X has generation expense were benefit and active by remain is also charge-offs a may quarter quarters. the We which XXX% decreased the seasonal we assets any and to growth, offset see placed extend expense the and with of million and achieved driver experienced quarter, growth million our specific balancing income trend basis quarter managing continue believe support full previously total primarily And charge-off for our will needs. In will of a more challenges primarily capital loans. $X.X second key be below stabilization quarter people. On and XX Salaries flexibility increase our the interest position you of norms quarter. growth relationship dividend second payroll continued including prior for initiatives. for seasonal future in effective various due of than loss our which net points higher quarter risk. Thank were higher the due basis of ends million engagement organic to quarter costs balance your net or higher past taxes factors, $XXX,XXX due to lower first provide of opportunities effectively have. to cost the million in prepayment quarter million in continued our welcome X a to first a on change loan quarter's the for from to the pleased XXXX pay nonaccrual capitalize total compared interest covered were necessary expenses $X.X to to questions fee speeds, utility increase provide an growth to asset first help recorded support. XX, efficiencies in commercial of Slide the

Operator

from comes [Operator Steve first Instructions] Raymond with Our Moss question James.

Unknown Analyst

This for Steve in Moss. is Henry filling

expectations and current wondering of C&I could and start side. I'll I expect should we the to was a loan XXXX? through a pace CRE the if So your if loan about growth talk on little similar continue you on bit maybe pace

Scott Kingsley

start I'll quarter, very had CRE that on We a on C&I second side. take and the Henry, the and strong both one.

obviously Some years. stubbornly line or low of the X X the utilization, for C&I from growth which been came past has

the had we year. the projects, given projects in nice And quarters climate there. A to be underway. lot some be the just movement that tend seasonal, are of where tends that So markets are to mid-X our they those most of or stronger in, construction of are improvement whether

think in And and on. terms I that opportunities for selecting that very are of can we it's feel the those in we us, seeing markets market, capitalize we're the best stable growing. opportunities

even standpoint. We results little have a bit in were a activity I But that the probably midyear our the expectations tick customer a probably to above bias a think existing But we bit development loan towards little terms year. base supporting our of second from them where quarter down at year. point new very the We'd expect with growth. of for the stand happy balance of

Unknown Analyst

provision And looks bit just then but a growth, I guess it in looking and reserve extension quarter like it portfolio the the little expense, loan provision for for specific us a that also up for relationship. through was ticked much give specific Could on you that portfolio extension? was how of some the expense, much maybe for specifically how breakdown credit? then this color quarter's And

Annette Burns

specific supporting payments, $X.X So extension I extension of loan that of increase effective could fairly the then of And evenly life. reserve the million the the rest say and was think between expense. related the probably of growth you of provision growth in

Scott Kingsley

the of for charge-offs covering the quarter. And course, loan

Annette Burns

Yes.

Unknown Analyst

to follow-up say be And relationship When would then on you that. just reserve you that expect fully resolved? a specific

Scott Kingsley

a it's great I say would question.

think But handicap being into at in difficult that improvement XXXX we're this it's or are the optimistic I there place very that in cautiously credit. for to time, point if happens for in plans future. us that

Unknown Analyst

margin. throughout of NIM, rest where on just the I to that question, could the around going And see you more touch last specifically NIM then thoughts you outlook curious year. guess, the I the my if moving was your and the

Annette Burns

I see we're this some to It environments. stabilization interest pleased quarter. think So depends rate on in

when deposit there we as We're a to move stay these a in have to long month think higher. costs basis I is that rates short-term rates. on a stabilized. believe the as decrease few ready points continue We'll rates see probably

repricing, and that, to see a I our to to that lot there's pleased continue asset see of continue. just think think I we variables.

word for to the So improvement further think we is stabilization go forward. hoping see as and us I

Operator

with Our from Inc. Breese Matthew next question comes Stephens

Matthew Breese

on some to NIM floating you deeper. the Maybe to hoping of of dynamics loans a SOFR, blended dive the is up into little or provide just meaning the percentage priced shortening was start, prime could pure the yields bit curve? what on And today? books, those rate the I

Annette Burns

Sure.

X.X% $X.X about a portion around to that's and floating, equity pure commercial primarily today. $X.X bit is Our rate, of The is home Adjustable is right is billion. billion. floating probably little yield which that fixed another

Matthew Breese

the the imply on for of fixed that that the remainder And low of it Is rate book of Okay. does portion for in that what kind the imply to Is yields mid-Xs. what somewhere accurate? does the book, -- that?

Scott Kingsley

fact Yes. residential lien that And of because we I low high much Xs. whether that be than it it -- can't to you the to mortgage, you would that or get we to be might blend portfolioed But the X. much say first that different have so that. high would Xs But can't for

XX adjusted -- rates, months on starts us your variable. on years. And is if generally market And commercial. and taken well we deposit the -- think Again, over Fed that the X That's most thought is I would that think that. then right to into that's for the rates. point the here off which the confident of comes to pure rate our when of obviously, the last has point that lowering the going portfolio we the that piece be change piece to just certain we most more

Fed or to of SOFR those within month the whether happen prime, decision. it's So tied a

position would We I interest very is ourselves, neutral a very, find what say, in in rate also today.

change. So of regardless very a neutral depending or movement we down, we're expect modest interest what that a or a timing fast that huge downtick movement the of it's not down uptick rate huge there's probably whether just on rate so a

Matthew Breese

the it, high about quite bit XXs, in those have a mean Maybe and assume Scott. in would rate low to to Xs, I think high last point, loan maybe I point, of your fixed Xs. low you better even mid- new loans, I if understand that that portfolios Xs. to yields are

So the normalized NIM it optimistic portfolio. is today quite on yield reset more expansion or It a is Why not the feels rate the your quarter. a on opportunity fixed in higher the NIM? bit of like NIM where outlook than loan second

Scott Kingsley

Yes.

customer, point a still acumen own funding. comes think it's finding give we're their more and just I is that well both ways where tools just to that using they efficient excess generally, taken. be the the that And So fact place we with from that them finding their

So customer that's And trying we things efficient probably most we that. in generally, net the of is to for finding we balanced and rates retention trying -- all a more in where raising world our We're for on year. But products. outcome any the discourage the haven't their be to liquidity. aren't Obviously, do customer. a right don't the

that bit it. process way we generally still a finding So that, legs efficient be to with little liquidity. think still more has attached are more to their people just a That

Matthew Breese

change rate this, you repricing loans as and color was us fast some with Okay. was of was this of and duration the interesting folks expectations Can the -- parcel And part with to loan then that and give relative just what the that are duration give for there? thought. a us hearing portfolio thought some fixed as I there was reserves Maybe what sense dynamic. lot the we're is reset a how not it

Scott Kingsley

of little then a take Annette some holistically, going has ask started rates. I'll on that. and for since extension bit details the for But raising Fed Sure. been duration that

rate you really fixed prepayment pay trend quickly. When what's a books we out that loans lower yourself think a into that, given time. prepayment no blended meaningful that still And of is from quarter quarter with over you to replacing the to start a move get base off a today. portion when pronounced residential start you and fixed-rate to find commercial higher I for multi-quarter the fact on have most customer us for there's mortgages motivation

way just time listen, the think it. to make the duration thought volatility this I made this was to I expectations. trying that or our get do speeds of prepayment arms So around a prudent saying, we're decision was our continued changes just on some in to quarter. it we And

Annette Burns

I stabilize we and we're that would end of the of phase after will kind that, that feel just that to like this. extension in things add

Matthew Breese

just Obviously, impact And in know the do all But Malta, to Capital of investments, meaningful money of a York, others and what's takes deposits some income on have going that Region and When investments semiconductor some to that. you on bit more. a to growing. and Clay, or in in New and you chip chip There's I've puts ton right. your influence just one-off, fee there's portfolios there's expect winded, area of then a into I all balance growth the kind loan sheet long growth your point for when earlier portfolio. one coming the been plants. in All do on and expect are

Joseph R. Stagliano

is Joe I'll one. that Stagliano. this on Matt, jump in

So great question.

today, to is X quarter in projecting expect it So as years going like complete, and associated when Clay. With the fabrication it Clay. take to it's in stands the take and construction start X about during begin to Construction start before first beginning jobs plan plant construction with up. there going to They're construction time of about about is XXXX, X,XXX years to chip begins. to That's looks we that up construction. so the jobs the expect they that, Micron moving

the XXXX. around the expect to chip line come production We first off

in hiring that, X,XXX with be along as XX complete years workers, to directly XX their with workers the about and to next jobs they're over So they the then plants. additional build-out Micron XX,XXX about going their plant associated indirect

happening. close agencies. the really of the get established and along really some to are at folks Micron terms insight government And So different they've in some what's our way relationships the to strong teams staying officials across

good GlobalFoundries at of in Malta, activity. up really happening what's like So lot a

Region, some in branches Country. We're extra deposit strongest Some some and in through up good up seeing is transaction our the loan happening with growth activity North of the Capital our growth. that

that up set begin expect good pace some We years the site. over Micron of in Clay couple to really and the at next

activity in area lot Albany, going in we work the up construction, Malta It's to So right site Clay. of a see now. lot and up see on a the up what in at to the of around we expect Saratoga leading continue to Micron

Scott Kingsley

leader We're are own Matt, chip try I enhanced to across all economic relative able with stay that to to our a just desire to to across being to opportunities what of so that, our demographic know that promote is and the understanding on the markets corridor, that that is looks making the believe capitalize just New you completely development this customers our a with our a York. as like. would Upstate of education opportunities. I engaged usual sure not that add we've this in like again, to agencies happen engaged better and for these change opportunity

So customer I think informed. well rises opportunity and our just to want in boats. out all our that base sure front But very this we is base customer future make that or probably of be

to continues our objective. it So be

Operator

from Our KBW. Instructions] O'Connell Christopher [Operator next question comes with

Christopher O'Connell

the So just has was much here. book in just reprice cost CD did quarter-over-quarter The are the And of how the half margin CD wanted second on new at? 'XX? circle not I And wondering CDs back move where a dynamics basis. of to to priced being to

Scott Kingsley

of But be with in start So Annette CD terms thinking the but rates, have have modestly. and about new CDs, lowered I'll we repricing. the of new front end amount

some in on they is are Xs, where Chris. outcome, high a something the of based Xs probably tiered kind So low

some upon that probably are positive along results see renewal net will And that so line. we

Annette Burns

half year, reprice. I And $XXX another the maybe think Yes. of the probably million we're seeing back

Christopher O'Connell

or basically So net the I minus there plus from neutral, here? cost mean

Annette Burns

maturing. that There reprice on down is to opportunity piece

Christopher O'Connell

well. Part core Yes. quarter. pretty it's seasonal, expense as And of on then be seemed the really good basis but on solid a to side,

for quarter, run first -- or back think the is up QX about year. off better hold? flattish $XX stepping of quarter half $XX I basis you're do for you the the think results there? on of it of kind still kind rate this last up in a the the think Do range quarterly to able to million steps Or you talking of million

Annette Burns

of A will that rate up. additional that increase We have it will step by do one about the alone quarters, day we that each reminder so run expense $X.XX. think payroll

So things have of in more bit markets there's our little little some drift that a And probably like activity and upward. a of cost that. the will probably just

Scott Kingsley

been we as that challenges challenges has of in organization and to our pointed that idea on and our whole very be generation, income net to decisioning very the Chris, expense And there embracing the are operating need disciplined improve interest side.

think we But the a the going to if year, make in structural to second balance pace. great opportunity have us again, of I'd that. So some that. a and the investments found half more forward tempered itself presents we'll at And for ahead go do like on

Christopher O'Connell

side, organic market then across a the well. driven, back that year good for seasonal the I occur so of but Any I on fee And might those you just of year fluctuations be businesses? in to growth or the really know the mean, lot factors overall half as kind businesses, far aware of of see

Annette Burns

would say Yes, like been their various good year. little of really that. services better seasonal that's it -- and really half half, than a actuarial a plan typically, half administration, first their is and of activity there I retirement things has bit is around that just the second first

for plan has market performance us. retirement back tailwind the to reminder as nice strong expect for be really that wouldn't services, half I So a been

a plan but think hundred and couple third just So a that And little in good if the of management see services, of not bit will I -- quarters. still thousand wealth just continues, in insurance, there's retirement quarter. seasonality

Christopher O'Connell

insurance, some talk market kind out maybe the could organic of think pace the and businesses. I you the growth of impacts. And recent of wealth been What's of retirement just about backing

Scott Kingsley

Annette for. to that Chris, come I'll touch on and quick, really back

Annette's plan and been we've has over able space said acquisitions been of last mostly side. the little compounded Part the that probably in of do, been has annual opportunistic those and in in the X/X over at a I years growth script, our businesses retirement looked rate that, that to it from think we've insurance generated X%. X some

that, some So I that makes sense. pattern think

got those look digit businesses X% those you at generally in the to mid-single some lost retirement their with side are new growth, business. Because in plans when growth maybe difference look the where speaking, people businesses the between plan range on reasons. market support. at plan acquired, X% But we and remember, for versus So businesses, we various

a new if in think where get the X% growth we our is our to like and can the a can is X%, we we X% I pattern point X%, replicated. in be business X%, side think to really and that's lost

Christopher O'Connell

And just environment then lastly M&A. you talk would looking me, for about there? M&A did any be participate discussions change in you do or you what to guys if in the And

Scott Kingsley

Yes.

because you've desirable So what very to able want our I on a basis think good -- that, is us. history we to support growth which is you think at. we allocation, And we're be that long-term know to organic relative capital for that's

ours. to And quarter, we improve that every this our our have making that capital need objective fortune a capacity very company. good shareholders to the did in year. -- shareholders supportive the we are we in that the As sure that's of of of the The to has participate dividend stated

transactions. We're a basis, from all on itself, in Salisbury transaction year. earned than there, where what to transaction a an did the analyze enabled the last acquirer to we're from a support from that under position sitting I like now that the came after year. again potential learn an back that, from be crossover to being really of able think we've standpoint experienced dilution we able we capital And M&A more

level. to confidence credit getting and interest fair the think I marks through and high is relative complications our rate assumptions pretty value at a So of marks

like just but have love fill whether York. I people before, plenty all We we in We able think talked be unlikely that's Pennsylvania, in those or trying. would that to just those City, England, south some we're are be don't New again, a of in, potentially Philadelphia. further a going we Western footprint. model participant represented have in spots to opportunities in Boston New New our York Greater and to extension we've in states, some are geographies. But we X how geographic markets, about well natural we where little think to in to differentiate positioned there's We across our saying gaps filling meaningful know we're of consider

Christopher O'Connell

at chatter, the has that discussions it Or up fairly or is And general all has year-to-date? still tepid? M&A picked

Scott Kingsley

So it's last People a dynamics decisioning to think to lot to NBT, partner process hearing in speak think people a approval the standpoint?" So interested because the regulatory just own with interested and I What we're the completed year. Salisbury did of about that finding a interested went work? "How experience. in math that of our are people. an from opportunity we into Again, in I the transaction was are

the people So of it's independence to We with says, what not a we again, here's an have that remember, acquirer. to proposition not are NBT. if find opportunity. about, discussion difficult value And the aggressive try someday, not is thinking you're

Christopher O'Connell

of growth pace lower few at given pace would the change growth to guess, anticipated over a look does the mean or, organic in your trends markets. next want demographic that And the you organic years, enhance loan-to-deposit close higher looking to I terms what Or your you does kind going consider vehicles are I be in target? Meaning, are XXX% growth organic really going ratio help has forward? of to for anything to you more loan-to-deposit even that ratio? going own to funding

Scott Kingsley

Yes.

is was about if think it's necessary. single-digit we challenge question. opportunity important. if support words, But that think I to think a would funding as critically growth over that both willing would had standpoint be organic us take we to a In reasonable we time, how on to mid- that to from a start and other transactionally, I upper organically

we with long-term change connected what People for we've franchises. that doing does again, had where around high-quality that to question about, we're geographically of are think we're, Your today. probably already looking relationships understanding

not ratios it very loan-to-deposit bump the just It's So we're of don't We of that many markets indicative radically I have that of across. changes don't we or in think north people that come that. targets into most XXX%. the

Operator

further Scott remarks. back call his I'm for not closing turn Kingsley the questions. I will showing to now any

Scott Kingsley

for X Thank everyone to participation and Thank for you. your And on you talk we'll In NBT. want in thank closing, interest you. your in months. to today's call I

Operator

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

You may disconnect. Have a great day.

NBT Bancorp (NBTB) 23 Jul 242024 Q2 Earnings call transcript