Q3 2025 NBT Bancorp Inc Earnings Call
Speaker #1: Good day everyone , and welcome to the conference call covering and third quarter 2020 financial results . This call is being recorded and has been made accessible to the public in accordance with SEC regulation .
Operator: Good day, everyone. Welcome to the conference call covering NBT Bancorp Inc.'s third quarter 2025 financial results. This call is being recorded and has been made accessible to the public in accordance with SEC Regulation FD. Corresponding presentation slides can be found on the company's website at nbtbancorp.com. Before the call begins, NBT Bancorp Inc.'s management would like to remind listeners that, as noted on slide two, today's presentation may contain forward-looking statements as defined by the Securities and Exchange Commission. Actual results may differ from those projected. In addition, certain non-GAAP measures will be discussed. Reconciliations for these numbers are contained within the appendix of today's presentation. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this call is being recorded.
Speaker #1: FD . Corresponding presentation slides can be found on the company's website at NBT Bancorp Inc . Before the call begins , MTS management would like to remind listeners that , as noted on slide two , today's presentation may contain forward looking statements as defined by the Securities and Exchange Commission .
Speaker #1: Actual results may differ from those projected. In addition, certain non-GAAP measures will be discussed. Reconciliations for these numbers are contained within the appendix of today's presentation.
Speaker #1: At this time , all participants are in a listen only mode . Later , we will conduct a question and answer session and instructions will follow at that time .
Speaker #1: As a reminder , this call is being recorded . I will now turn the conference over to the NBT Bancorp Inc president and CEO Scott Kingsley for his opening remarks .
Operator: I will now turn the conference over to the NBT Bancorp Inc. President and CEO, Scott Kingsley, for his opening remarks. Mr. Kingsley, please begin.
Speaker #1: Mr. Kingsley , please begin .
Speaker #2: Thank you . Good morning , and thank you for joining us for this earnings call covering NBT Bancorp Inc third quarter 2020 results .
Scott Kingsley: Thank you. Good morning, and thank you for joining us for this earnings call covering NBT Bancorp Inc.'s third quarter 2025 results. With me today are Annette Burns, NBT's Chief Financial Officer, Joe Stagliano, President of NBT Bank, and Joan Desco, our Treasurer. Our operating performance for the third quarter reflected the positive attributes of productive asset repricing trends, the diversification of our revenue streams, prudent balance sheet growth, and the additive impact of our merger with Evans Bancorp completed in the second quarter. Operating return on assets was 1.37% for the third quarter, with a return on equity of 12.1% and an ROTCE of 17.6%. Each metric demonstrates continued improvement over the linked and prior year quarters and, importantly, reflects the generation of positive operating leverage.
Speaker #2: With me today are Annette Burns chief Financial Officer , Joseph Stagliano president of NBT Bank , and Joanne , our treasurer . Our operating performance for the third quarter , reflected the positive attributes of productive asset repricing trends .
Speaker #2: The diversification of our revenue streams , prudent balance sheet growth and the additive impact of our merger with Evans Bank Corp. completed in the second quarter .
Speaker #2: Operating return on assets was 1.37% for the third quarter , with a return on equity of 12.1% and an ROTC of 17.6% . Each metric demonstrates continued improvement over the length and prior year quarter's , and importantly , reflects the generation of positive operating leverage .
Speaker #2: Our tangible book value per share of $25.51 at September 30th is 7% higher than a year ago , and above the level it was at when we announced the Evans merger 13 months ago .
Scott Kingsley: Our tangible book value per share of $25.51 at September 30 is 7% higher than a year ago and above the level it was at when we announced the Evans Bancorp merger 13 months ago. This continued capital strength has us very well positioned to support all our strategic growth initiatives. The continued remix of earning assets, diligent management of funding costs, and the addition of the Evans Bancorp balance sheet resulted in an improvement in net interest margin for the sixth consecutive quarter. We are pleased with our progress to date with net interest margin expansion. However, recent and expected changes to Fed funds rates will likely challenge future margin improvements compared to our most recent quarters. Growth in non-interest income continues to be a highlight, with each of our non-banking businesses achieving productive improvements in both revenue and earnings generation year over year.
Speaker #2: This continued capital strength has us very well positioned to support all our strategic growth initiatives . The continued remix of earning assets , diligent management of funding costs and the addition of the Evans balance sheet resulted in an improvement in net interest margin for the sixth consecutive quarter .
Speaker #2: We are pleased with our progress to date with net interest margin expansion . However , recent and expected changes to fed funds rates will likely challenge future margin improvements compared to our most recent quarters .
Speaker #2: Growth in non-interest income continues to be a highlight with each of our non-banking businesses achieving productive improvements in both revenue and earnings generation year over year .
Speaker #2: We were also pleased to announce an 8.8% improvement to our dividend to shareholders earlier in the quarter, marking our 13th consecutive year of increases.
Scott Kingsley: We were also pleased to announce an 8.8% improvement to our dividend to shareholders earlier in the quarter, marking our 13th consecutive year of increases. This reflects our strong capital position and our generation of consistent and improving operating earnings. As we have stated before, our capital utilization priorities are to continue to support NBT's organic growth and the consistent improvement to the quarterly dividend we pay our shareholders. In addition, we appreciate the opportunity to evaluate and partner with other like-minded community banks. Returning capital to shareholders in opportunistic share repurchases is also part of our capital planning, and as such, we renewed our 2 million share repurchase authorization through the end of 2027.
Speaker #2: This reflects our strong capital position in our generation of consistent and improving operating earnings . As we have stated before , our capital utilization priorities are to continue to support organic growth and the consistent improvement to the quarterly dividend we pay our shareholders .
Speaker #2: In addition , we appreciate the opportunity to evaluate and partner with other like minded community banks , returning capital to shareholders in opportunistic share repurchases is also part of our capital planning , and as such , we renewed our 2 million share repurchase authorization through the end of 2027 .
Speaker #2: Before turning the meeting over to Annette to review our third quarter results with you in detail , Joseph Stagliano will provide some additional color on our progress in the western region of New York and other initiatives across the markets .
Scott Kingsley: Before turning the meeting over to Annette to review our third quarter results with you in detail, Joe Stagliano will provide some additional color on our progress in the Western region of New York and other initiatives across the markets. Joe?
Speaker #2: Joe , thank you . Scott . We continue .
Joseph R. Stagliano: Thank you, Scott. We continue to build on the momentum of our successful Evans Bancorp integration. Since the merger, we have experienced solid growth in deposits in the Western region of New York, and we are retaining key lending relationships despite experiencing approximately $30 million of net contractual runoff in the portfolio. Customer sentiment remains strong, and employee engagement is high. Let me walk you through some of our key market developments. In Buffalo and Rochester, we've had success recruiting and onboarding talented professionals across all lines of business, which complements the strong team we already have in place. Our new Webster branch in Greater Rochester opened in April, and it's off to a promising start. To support our growth initiative in Rochester, we plan to open a financial center in the market during 2026.
Speaker #3: To build on the momentum of our successful Evans Bank integration. Since the merger, we've experienced solid growth in deposits in the western region of New York, and we are retaining key lending relationships despite experiencing approximately $30 million of net contractual runoff in the portfolio.
Speaker #3: Customer sentiment remains strong , and employee engagement is high . Let me walk you through some of our key market developments in Buffalo and Rochester .
Speaker #3: We've had success recruiting and onboarding talented professionals across all lines of business, which complements the strong team we already have in place.
Speaker #3: Our new Webster branch in Greater Rochester opened in April , and it's off to a promising start to support growth . To support our growth initiatives in Rochester , we plan to open a financial center in the market during 2026 .
Speaker #3: Additionally , we are exploring locations in the Finger Lakes to fill in our branch network . In this attractive region . In the second half of 2026 , we expect to break ground on a new branch location near the planned micron chip fabrication site in Clay , New York .
Joseph R. Stagliano: Additionally, we are exploring locations in the Finger Lakes to fill in our branch network in this attractive region. In the second half of 2026, we expect to break ground on a new branch location near the planned Micron Chip Fabrication site in Clayton, New York. In addition, our current team of bankers and network of locations in the Mohawk Valley are well positioned to support the growth anticipated from Chobani's plans for a new facility expected to add 1,000 jobs to the area. Our new Malta, New York branch near Global Foundries is seeing excellent traffic and growth. In the Hudson Valley, IBM has announced plans to expand in Poughkeepsie, and we are seeing positive demographic shifts in the region. We entered this market through our merger with Salisbury Bank and are eager to improve our concentration characteristics in this region.
Speaker #3: In addition, our current team of bankers and network of locations in the Mohawk Valley are well positioned to support the growth anticipated from Chobani.
Speaker #3: Plans for a new facility expected to add 1000 jobs to the area . Our new Malta New York branch near GlobalFoundries is seeing excellent traffic and growth in the Hudson Valley .
Speaker #3: IBM has announced plans to expand the Poughkeepsie , and we are seeing positive demographic shifts in the region . We entered this market through our merger with Salisbury Bank and are eager to improve our concentration characteristics in this region .
Speaker #3: Earlier this year , we opened our fourth branch in Burlington , Vermont , are seeing good momentum . We are set to open an additional branch office in Portland , Maine in early 2026 .
Joseph R. Stagliano: Earlier this year, we opened our fourth branch in Burlington, Vermont, and we are seeing good momentum. We are set to open an additional branch office in Portland, Maine, in early 2026. We've also secured a site in Torrington, Connecticut, that will connect our presence in West Hartford with our locations in Litchfield County in early 2026. In addition, we remain focused on scaling our operations in New Hampshire, supported by the strong team of bankers we have in place there. Our team continues to evaluate both new locations and branch optimization using an active and structured process. This dual focus ensures that we remain agile and responsive to market needs as we maintain operational efficiency. I will now turn it over to Annette.
Speaker #3: We've also secured a site in Torrington , Connecticut , that will connect our presence in West Hartford with our locations in Litchfield County in early 2026 .
Speaker #3: In addition , we remain focused on scaling our operations in New Hampshire , supported by the strong team of bankers we have in place there and we .
Speaker #3: Our team continues to evaluate both new locations and branch optimization using an active and structured process . This dual focus ensures that we remain agile and responsive to market needs as we maintain operational efficiency .
Speaker #3: I will now turn it over to Annette .
Speaker #4: Thank you , Joe , and good morning . Turning to the results overview page of our earnings presentation in the third quarter , we reported net income of $54.5 million , or $1.03 per diluted common share , excluding acquisition expenses .
Annette Burns: Thank you, Joe, and good morning. Turning to the results overview page of our earnings presentation, in the third quarter, we reported net income of $54.5 million, or $1.03 per diluted common share. Excluding acquisition expenses, our operating earnings per share were $1.05, an increase of $0.17 per share compared to the prior quarter. Revenues grew approximately 9% from the prior quarter and 26% from the third quarter of the prior year, driven by improvements in net interest income, including the impact of the Evans Bancorp merger. The next page shows trends in outstanding loans. Total loans were up $1.6 billion for the year, including acquired loans from Evans Bancorp. Excluding consumer loans in a planned contractual runoff status and the loans acquired from Evans Bancorp, annualized loan growth in 2025 was approximately 1% higher from December 2024.
Speaker #4: Our operating earnings per share were $1.05 , an increase of $0.17 per share compared to the prior quarter . Revenues grew approximately 9% from the prior quarter and 26% from the third quarter of the prior year , driven by improvements in net interest income , including the impact of the merger .
Speaker #4: The next page shows trends in outstanding loans . Total loans were up $1.6 billion for the year , including acquired loans from Evans .
Speaker #4: Excluding consumer loans and a planned contractual runoff status, and the loans acquired from Evans, annualized loan growth in 2025 was approximately 1% higher than in December 2024.
Speaker #4: Growth in commercial indirect auto and home equity loans were partly offset by declines in residential mortgage balances during 2025 . We have experienced a higher level of commercial real estate payoffs , while production has remained strong .
Annette Burns: Growth in commercial, indirect auto, and home equity loans were partly offset by declines in residential mortgage balances. During 2025, we have experienced a higher level of commercial real estate payoffs, while production has remained strong. We have captured quality lending opportunities across our markets, which has also provided growth in core deposits. This gives us flexibility to remain disciplined in our loan pricing and focused on holistic relationships. Our total loan portfolio of $11.6 billion remains very well diversified and is comprised of 56% commercial relationships and 44% consumer loans. On page seven, total deposits of $13.7 billion were up $2.1 billion from December 2024. Excluding the deposits acquired from Evans Bancorp, deposits increased $250 million from the end of 2024, with growth in checking and money market accounts.
Speaker #4: We have captured quality lending opportunities across our markets , which has also provided growth in core deposits . This gives us flexibility to remain disciplined in our loan pricing and focused on holistic relationships .
Speaker #4: Our total loan portfolio of $11.6 billion remains very well diversified and is comprised of 56% commercial relationships and 44% consumer loans . On page seven , total deposits of $13.7 billion were up $2.1 billion from December 2024 .
Speaker #4: Excluding the deposits acquired from Evans , deposits increased $250 million from the end of 2024 , with growth in checking and money market accounts , 58% of our deposit portfolio consists of no and low cost checking and savings accounts .
Annette Burns: 58% of our deposit portfolio consists of no and low-cost checking and savings accounts, while 42% is held in higher-cost time and money market accounts. The next slide highlights the detailed changes in our net interest income and margin. Our net interest margin in the third quarter increased seven basis points to 3.66% from the prior quarter, primarily driven by the continued improvement in earning asset yields. Net interest income for the third quarter was $134.7 million, an increase of $10 million above the prior quarter and $33 million above the third quarter of 2024. The increase in net interest income from the prior quarter was largely attributed to the first quarter impact of the Evans Bancorp acquisition, along with earning asset yield improvement.
Speaker #4: While 42% is held in higher cost time and money market accounts . The next slide highlights the detailed changes in our net interest income and margin .
Speaker #4: Our net interest margin in the third quarter increased seven basis points to 3.66% from the prior quarter , primarily driven by the continued improvement in earning asset yields , net interest income for the third quarter was $134.7 million , an increase of $10 million above the prior quarter , and $33 million above the third quarter of 2020 .
Speaker #4: For the increase in net interest income from the prior quarter was largely attributed to the first quarter impact of the Evans acquisition , along with earning asset yield improvement .
Speaker #4: As a reminder , approximately $3 billion of earning assets reprice almost immediately with changes in the federal funds rate . While approximately $6 billion of our deposits principally money market and CD accounts , remain price sensitive .
Annette Burns: As a reminder, approximately $3 billion of earning assets repriced almost immediately with changes in the federal funds rate, while approximately $6 billion of our deposits, principally money market and CD accounts, remain price sensitive. The opportunity for further upward movement in yields will depend on the shape of the yield curve and how we reinvest loan and investment portfolio cash flows. The trends in non-interest income are outlined on page eight. Excluding securities gains, our fee income was $51.4 million, an increase of 9.8% compared to the previous quarter, and an increase of 13.5% from the third quarter of 2024. The seasonally higher third quarter also benefited from a full quarter of Evans activity. Our combined revenue from retirement plan services, wealth management, and insurance services exceeded $32 million in quarterly revenues.
Speaker #4: The opportunity for further upward movement in yields will depend on the shape of the yield curve and how we reinvest loan and investment portfolio cash flows.
Speaker #4: The trends in non-interest income are outlined on page eight , excluding securities gains . Our fee income was $51.4 million , an increase of 9.8% compared to the previous quarter and an increase of 13.5% from the third quarter of 2020 .
Speaker #4: For the seasonally higher third quarter , also benefited benefited from a full quarter of Evans activity . Our combined revenue from retirement plan services , wealth management and insurance services exceeded $32 million in quarterly revenues .
Speaker #4: As a reminder, and consistent with historical trends, the fourth quarter is typically our lowest quarter in revenue generation for these businesses.
Annette Burns: As a reminder, and consistent with historical trends, the fourth quarter is typically our lowest quarter in revenue generation for these businesses. Non-interest income represented 28% of total revenues in the third quarter and reflects the strength of our diversified revenue base. Total operating expenses, excluding acquisition expenses, were $110 million for the quarter, a 4.4% increase from the prior quarter and reflected a full quarter of Evans activity. Salaries and employee benefit costs were $66.6 million, an increase of $2.5 million from the prior quarter. This increase was primarily driven by the full quarter impact of Evans, higher incentive compensation, and higher medical costs. Slide 10 provides an overview of key asset quality metrics. Provision expense for the three months ended September 30, 2025, was $3.1 million compared to $17.8 million for the second quarter of 2025.
Speaker #4: Non-interest income represented 28% of total revenues in the third quarter , and reflects the strength of our diversified revenue base . Total operating expenses , excluding acquisition expenses , were $110 million for the quarter , a 4.4.
Speaker #4: 4% increase from the prior quarter , and reflected a full quarter of Evans activity . Salaries and employee benefit costs were $66.6 million , an increase of $2.5 million from the prior quarter .
Speaker #4: This increase was primarily driven by the full quarter impact of Evan's higher incentive compensation and higher medical costs. Slide ten provides an overview of key asset quality metrics.
Speaker #4: Provision expense for the three months ended September 30th , 2025 was $3.1 million compared to $17.8 million for the second quarter of 2025 .
Speaker #4: The decrease in provision for loan losses during the quarter was attributable to $13 million of acquisition related provision for loan losses in the second quarter , partially offset by net charge offs returning to a more normalized level in the third quarter .
Annette Burns: The decrease in provision for loan losses during the quarter was attributable to $13 million of acquisition-related provision for loan losses in the second quarter, partially offset by net charge-offs returning to a more normalized level in the third quarter. Reserves were 1.2% of total loans and covered two and a half times the level of non-performing loans. In closing, growth in our net interest income and fee-based revenues drove our record performance in the third quarter and contributed to our meaningfully improved operating performance for the first nine months of 2025. We are in a strong capital position, have growth opportunities across all our markets, and are well positioned to take advantage of them. Thank you for your continued support. At this time, we welcome any questions you may have.
Speaker #4: Reserves were 1.2% of total loans and covered two and a half times the level of nonperforming loans . In closing . Growth in our net interest income and fee based revenues drove our record performance in the third quarter , and contributed to our meaningfully improved operating performance for the first nine months of 2025 .
Speaker #4: We are in a strong capital position . Have growth opportunities across all our markets , and are well positioned to take advantage of them .
Speaker #4: Thank you for your continued support . At this time , we welcome any questions you may have .
Speaker #1: Thank you . And anyone with a question at this time can press star one one on your telephone and wait for your name to be announced .
Operator: Thank you. Anyone with a question at this time can press star 11 on your telephone and wait for your name to be announced. To remove yourself, press star 11 again. One moment for our first question. It comes from the line of Feddie Strickland with Hopty Group LLC. Please proceed.
Speaker #1: To remove yourself , press star one one again . One moment . For our first question . It comes from the line of fatty Strickland with hefty group , LLC .
Speaker #1: Please proceed .
Speaker #5: Hey . Good morning . Just wanted to start on expenses . You've got a full run rate of Evans now on expense line .
[Analyst]: Hey, good morning. Just wanted to start on expenses. You've got a full run rate of Evans now on the expense line, and I was just wondering if you could talk about where you're at in terms of cost saves and maybe what we should expect in terms of the total expense line over the next quarter or so.
Speaker #5: I was just wondering if you could talk about where you're at in terms of cost saves and maybe what we should expect in terms of the total expense line over the next quarter or so ?
Speaker #4: Sure . Happy to take that . And good morning . We think that our cost days are essentially achieved during the third quarter .
Annette Burns: Sure. Happy to take that. Good morning. We think that our cost saves are essentially achieved during the third quarter. We don't expect to have any additional meaningful impact related to those on a go-forward basis. The run rate that we had in the third quarter of $110 million is an appropriate run rate as we look forward. Just as a reminder, we typically see merit increases starting in the first quarter, and our typical expense increase going forward typically runs somewhere between 3.5% and 4.5%. That's kind of how we think about 2026.
Speaker #4: So we don't expect to have any additional meaningful impact related to those on a go forward basis . The run rate that we had in the fourth , in the third quarter of 110 million is is an appropriate run rate as we look forward , just as a reminder , we typically see merit increases starting in the first quarter .
Speaker #4: And you know , running off our typical expense increase going forward typically run somewhere between three and a half and four , 4.5% .
Speaker #4: That's kind of how we think about 2026 .
Speaker #5: Got it . That's helpful . And just wanted to ask , you know , thinking about loan growth . It sounds like you've got , you know , some new hires there that should help the pipeline longer term .
[Analyst]: Got it. That's helpful. Just wanted to ask, you know, thinking about loan growth, it sounds like you've got some new hires there that should help the pipeline longer term. What should we think over the next couple of quarters in terms of net new loan growth, and keeping in mind, what's the level of runoff that you expect in the residential solar and other consumer book?
Speaker #5: You know , what should we think over the next couple quarters in terms of net new loan growth ? And keeping in mind , you know , what's the level of runoff that you expect in the residential solar and other consumer book .
Speaker #2: So let's attack that instead . Morning . Let's attack that one together in terms of our activity for the last two quarters , it's actually been very robust .
Scott Kingsley: Let's attack that one. Feddie, good morning. Let's attack that one together. In terms of our activity for the last two quarters, it's actually been very robust. We experienced a much higher level of payoffs than we had anticipated and, quite frankly, than we had experienced a year ago. I think as we roll into early to mid-2026, a low to mid-single-digit growth rate is probably appropriate for our markets. Standalone, our markets still have really good activity levels in them, and our pipeline, quite frankly, is very good. Getting things on the construction side to a closing outcome, as you know, in our weather, we probably don't close a whole bunch of those in December through February. Quite frankly, we like where the pipeline is with that and think there's really good opportunities.
Speaker #2: We experienced a much higher level of of payoffs than , than we had anticipated . And quite frankly , than we had experienced .
Speaker #2: You know , in a year ago . But I think as we roll into , you know , early to mid 2026 , low to mid single digit growth rate is probably appropriate for our markets .
Speaker #2: Stand alone , our markets still have really good activity levels in them and our pipeline quite frankly is very good . You know getting things on the construction side , you know to a closing outcome , as you know , in our weather , you know , we probably don't close a whole bunch of those in December through February .
Speaker #2: But quite frankly , we would like where the pipeline is with that and think there's really good opportunities . We look at where we are from a balance sheet perspective right now , and really like where we're centered holistically , which means , you know , an 85% loan to deposit ratio for us , quite frankly , is more comfortable for us than something in the 90s .
Scott Kingsley: We were looking at where we are from a balance sheet perspective right now and really like where we're centered holistically, which means an 85% loan-to-deposit ratio for us, quite frankly, is more comfortable for us than something in the 90s. We think it gives us longer-term optionality from an invested asset standpoint. At that level and where we are and those expected growth rates, we could still move up earning assets. They might just not all be loans, but we're very comfortable with that from an outcome standpoint. I think it's probably almost as important for us that we've continued this steady growth on the funding side, mostly on the core deposit side. That's how we're kind of framing where we think the balance sheet moves.
Speaker #2: We think it gives us longer term optionality from a from an asset standpoint . So at that level and where we are and you know , those expected growth rates , we could still move up earning assets .
Speaker #2: They might just not all be loans . So but we're very comfortable with that from an outcome standpoint . And think it's probably almost as important for us that we've continued this steady growth .
Speaker #2: On the funding side . You know , mostly on the deposit side . So that's how we're kind of framing where we think the balance sheet moves .
Speaker #5: All right . Great . That's it for me . Thanks for taking my questions .
[Analyst]: All right, great. That's it for me. Thanks for taking my questions.
Speaker #2: Appreciate the call . Thanks .
Scott Kingsley: Appreciate the call. Thanks.
Speaker #1: Our next question comes from the line of Steve Moss with Raymond James. Please proceed.
Operator: Our next question comes from the line of Stephen Moss with Raymond James. Please proceed.
Speaker #6: Hi . Good morning .
[Analyst]: Good morning.
Scott Kingsley: Morning, Steve.
Speaker #7: Good morning . Maybe just to start off . Morning , Scott . Maybe following up on expenses here . You guys mentioned the recruiting recruitment of talent here .
[Analyst]: Maybe just to start off, good morning, Scott. Maybe just, you know, following up on expenses here. You guys mentioned the recruitment of talent here and the de novo branches as well. Just maybe curious as to if you could size up, you know, what your expected talent recruitment is going to be and kind of how you think about how many de novo branches you may add over the next, you know, 12 months or so.
Speaker #7: And the de novo branches as well . Just maybe curious as to if you could size up . You know , what you're expected .
Speaker #7: Talent recruitment is going to be and kind of how you're thinking about how many de branches you may add over the next 12 months or so .
Speaker #2: So I kind of frame it this way . Steven , I'll ask Annette and Joe to comment if I if I've left something out .
Scott Kingsley: I kind of frame it this way, Steve, and I'll ask Annette and Joe to comment if I've left something out. I think in terms on the branch side, we're thinking, you know, four to six a year, to improve our concentration in some of the markets that we're either new to or where our concentration is, quite frankly, not robust enough. As an example, I think we've said from the beginning that Rochester, New York, as an example, is one of those markets where, when we partnered with Evans Bancorp, their concentration was mostly on the east side of Rochester, in some great spots. Building that out across central city Rochester and maybe even to the west side, maybe there's a concentration of two to four more sites for us over the next couple of years, to use that example.
Speaker #2: I think in terms of the branch side , I think we're thinking , you know , 4 to 6 a year , you know , to improve our concentration in some of the markets that we're either new to or where our concentration is , quite frankly , not robust enough .
Speaker #2: So as an example , I think we've said that from the beginning that Rochester , New York is the example is one of those markets where , you know , when we partnered with Evans , their concentration was mostly on the east side of Rochester .
Speaker #2: You know , in some great spots . But building that out across sort of , you know , Central City , Rochester and maybe even to the west side , you know , maybe there's a concentration of 2 to 4 more sites for us over the next couple of years .
Speaker #2: Use that example . I think that's also a spot for us where , you know , the recruiting of additional talent in the western region of New York State has been very productive for us .
Scott Kingsley: I think that's also a spot for us where the recruiting of additional talent in the western region of New York State has been very productive for us. We had this "let's hold stuff in from Evans Bancorp" posture for the first five or six months, and we think we've done that, and we think our team has done very well on that. Now we're in a position to be a little bit more assertive and add some people to the mix that we think can move up some of our long-term expectations on the growth side.
Speaker #2: You know , we had this let's hold stuff in from Evans posture for the first 5 or 6 months , and we think we've done that .
Speaker #2: And we think our team has done very well on that . And now we're in a position to be a little bit more assertive and add some people to the mix that , you , we think can move up some of our long term expectations .
Speaker #2: On the growth side .
Speaker #4: And then I would just say from a expense management , I think we look at branch optimization to kind of offset some of the growth initiatives .
Annette Burns: I would just say from an expense management, I think we look at branch optimization to kind of offset some of the growth initiatives, as well as technology investments to help improve efficiencies. Given that, I don't think that we would see an outside expense growth than what we historically see from NBT.
Speaker #4: And then, as well as technology investments to help improve efficiencies. Given that, I don't think that we would see an outsized expense growth in what we historically see from NBT.
Speaker #7: Okay , that's that's helpful . And then just in terms of maybe just thinking about your presence across upstate New York , just kind of curious , you know , are you are you interested in additional M&A deals or just kind of how you're thinking about things at the current time ?
[Analyst]: Okay. That's helpful. In terms of maybe just thinking about your presence across upstate New York, I'm curious, are you interested in additional M&A deals, or just how you're thinking about things at the current time?
Speaker #2: So you kind of both ways say that we are interested in building out the franchise . You know , that now goes from Buffalo to Portland and Wilkes-Barre , Pennsylvania to Burlington .
Scott Kingsley: Steve, I'd frame it kind of both ways, saying that we're interested in building out the franchise, you know, that now goes from Buffalo to Portland and Wilkes-Barre, Pennsylvania to Burlington. Fill-in strategies for us are probably first in our mind. Would we move the franchise another 50 miles west, south, east? For sure. Frankly, filling in some of those from an opportunistic build-out standpoint, including the potential for M&A, is absolutely primary for us. We have the opportunity to have discussions with like-minded smaller community banks, and we're hoping that we've left a good impression and that if long-term independence is not in their plans, they'll see the value proposition of talking to us.
Speaker #2: Fill in strategies for us are are probably first in our mind . You know , would we move the franchise another 50 miles west , south , east for sure .
Speaker #2: But frankly , filling in some of those from an opportunistic build out standpoint , including the potential for M&A , is absolutely primary for us .
Speaker #2: So , you know , we are you know , we have the opportunity to have discussions with like minded smaller community banks . And , you know , we're hoping that we've left a good impression in that if long term independence is not in their plans , they'll see the value proposition of talking to us .
Speaker #7: Okay . Appreciate that , Scott . And then maybe just one on on the core margin here , just kind of , you know , curious .
[Analyst]: Okay. Appreciate that, Scott. Maybe just one on the core margin here. Just kind of curious, any updated thoughts around purchase accounting accretion going forward here? Could we see any incremental core margin expansion here?
Speaker #7: Any updated thoughts around purchase accounting , accretion going forward here ? And , you know , could we see any incremental core margin expansion here ?
Speaker #4: Great question . So from an accretion standpoint , I think that's fairly stabilized . And appropriate run rate . So I don't think we'll have any material that over the next , let's say four quarters or so .
Annette Burns: Great question. From an accretion standpoint, I think that's fairly stabilized and an appropriate run rate. I don't think we'll have any material change of that over the next, let's say, four quarters or so. As we think about the margin, in the short term, with the potential for multiple rate cuts in our near future here, we think there might be a little bit of margin pressure, and that's really because even though we're neutrally positioned, our assets reprice almost immediately while we have to actively manage our deposit repricing. As a reminder, $6 billion of our deposits that we're able to reprice, about $1.4 billion of those are in CDs. It might take a full quarter to work through those to help offset those asset repricing. The fourth quarter could see a little bit of pressure.
Speaker #4: As we think about the margin , you know , you know , in the short term with the potential for multiple rate cuts in our near future , here , we think there might be a little bit of margin pressure .
Speaker #4: And that's really because even though we're neutrally positioned , our assets reprice almost immediately while we have to actively manage our deposit repricing as a reminder , you know , 6 billion of our assets , of our deposits that we're able to reprice about 1.4 billion of those are in CDs change of .
Speaker #4: So it might take a little like a full quarter to work through those to help offset those asset repricing . So the fourth quarter could see a little bit of pressure .
Speaker #4: And then looking out into 2026 , you know , especially if we see an improvement in the shape of the yield curve , we could see some margin improvement .
Annette Burns: Looking out into 2026, especially if we see an improvement in the shape of the yield curve, we could see some margin improvement, jumping off of the fourth quarter.
Speaker #4: Jumping off of the fourth quarter .
Speaker #7: Okay . And just one follow up there . Just what percentage of loans are variable rate these days .
[Analyst]: Okay. Just one follow-up there. What percentage of loans are variable rate these days?
Speaker #4: Somewhere around 3 billion . Our variable rate . .
Annette Burns: Somewhere around $3 billion are variable rate.
Speaker #2: Yeah . And Steve that that includes all of our assets that are variable . So the loans are probably two and a half to $2.6 billion , which , you know , quicken my head .
Scott Kingsley: Yeah, Steve, that includes all of our assets that are variable. The loans are probably $2.5 to $2.6 billion, which, quick in my head, that's a little over 20%. There's probably $100 to $150 million worth of investment securities that are variable. Currently, we find ourselves in a Fed funds sold position. Those overnight funds obviously move with changes and so forth or Fed funds changes, and that's a couple hundred million for us.
Speaker #2: That's a little over 20% . And and then there's probably 100 to $150 million worth of investment securities that are variable . And then currently , we find ourselves in a fed funds sold position .
Speaker #2: So, those overnight funds obviously move with changes in SOFR or Fed Funds changes. And that's a couple hundred million for us.
Speaker #7: Perfect. All right. I appreciate all the call here, and I'll step back in the queue.
[Analyst]: Perfect. All right. I appreciate all the call here, and I'll step back in the queue.
Speaker #2: Appreciate it Steve .
Scott Kingsley: Appreciate it, Steve.
Speaker #1: Thank you . Our next question comes from the line of Mark Fitzgibbon with Piper Sandler . Please proceed .
Operator: Thank you. Our next question comes from the line of Mark Fitzgibbon with Piper Sandler. Please proceed.
Speaker #8: Good morning . Just wanted to follow up with a question on the solar loans . I guess I'm curious , is there any way to kind of accelerate the exit of those .
[Analyst]: Good morning. I just wanted to follow up with a question on the solar loans. I guess I'm curious, is there any way to kind of accelerate the exit of those? Is there kind of any depth to the market to sell those loans?
Speaker #8: Is there kind of any depth to the market to sell those loans?
Speaker #2: That's a really good question . And something we spent a lot of time with today . Market answer is no for that . There is there's desire potentially for that asset .
Scott Kingsley: That's a really good question and something we spent a lot of time with. Today, Mark answers no for that. There is desire potentially for that asset. In other words, people still like the asset class a lot, you know, despite all of the volatility and future volatility associated with new originations. Remember, we still have a fair portion of our loans that were originated in the 2020 to 2023 operating years, and they contain yields that are lower than the market is demanding today. For us to move that on an accelerated basis, we would have to embrace a fair value loss today. Not something we need to do. Those assets are performing, again, not utopian yields, but those assets are performing the way they're supposed to perform, and our credit characteristics have been exactly in line with what we expected.
Speaker #2: In other words , people still like the asset class a lot . You know , despite all of the volatility and future volatility associated with new originations .
Speaker #2: But remember , you know , we still have a fair portion of our loans that were originated in the 2020 to 2023 operating years .
Speaker #2: And you know , they contain yields that are lower than the market is demanding today . So for us to move that on an accelerated basis , we would have to embrace , you know , a fair value loss today and not something we need to do .
Speaker #2: Those assets are performing again , not utopian yields , but those assets are performing the way they're supposed to perform . And our credit characteristics have been exactly in line .
Speaker #2: What we expected .
Speaker #8: Okay . And then I guess I'm curious , are you seeing any pressure at all on auto loan delinquencies right now ?
[Analyst]: Okay. I guess I'm curious, are you seeing any pressure at all on auto loan delinquencies right now?
Speaker #2: Not not in significant at all . You know , quite frankly , it's been very consistent . Remember we're in the A and B paper A and B paper classes .
Scott Kingsley: Not significant at all. Quite frankly, it's been very consistent. Remember, we're in the A and B paper classes. I think both from an origination standpoint, we might see this going forward with a couple of the industry announcements that capacity for C and D lending might be more substantially impacted over the next 3 months, 12 months period of time. For us, it's been great. Remembering, we're making our indirect auto loans in our footprint, and most of our footprint doesn't have meaningful public transportation. People are making their car loan payments so they can go to work.
Speaker #2: I think you know, from an origination standpoint, we might see this going forward. You know, with a couple of the industry announcements, that capacity for C and D lending might be more substantially impacted over the next three months.
Speaker #2: 12 months period of time . But for us , it's been great . And remembering , you know , we're making our indirect auto loans in our footprint .
Speaker #2: And most of our footprint does have meaningful public transportation, so people are making their car loan payments so they can go to work.
Speaker #8: Okay . And then one for Annette . Annette , your comments earlier , I think you said with respect to the margin , it'd be challenging to improve .
[Analyst]: Okay. One for Annette. Annette, your comments earlier, I think you said, with respect to the margin, it'd be challenging to improve it. Should we take that to mean that the margin will decline, or do you sort of think you can hold the margin somewhere close to the current level?
Speaker #8: It . Should we take that to mean that the margin will decline or are you sort of think you can hold the margin somewhere close to the current level ?
Speaker #4: So for the fourth quarter , you know , that's where we're reflecting . It might be a little bit of a challenge to hold .
Annette Burns: For the fourth quarter, that's where we're reflecting it might be a little bit of a challenge to hold, but a few basis points for one direction or the other. I think we kind of stabilize pending no further rate actions and have the ability to see a little bit of margin improvement quarter over quarter, as we still have some opportunity to reprice our loan book.
Speaker #4: But , you know , a few basis points for you . Know , one , one direction or the other , you know , and then I think we kind of stabilize pending no further rate actions .
Speaker #4: And have the ability to see a little bit of margin improvement quarter over quarter as we still have some opportunity to reprice , you know , our loan book .
Speaker #4: .
Speaker #2: And , Mark , we've been very deliberate about making sure that we're holding spreads on new assets that we're winning . We don't think at this point in time , in sort of the credit cycle , which is probably closer to mature , is the right time to be reaching for growth .
Scott Kingsley: Mark, we've been very deliberate about making sure that we're holding spreads on the new assets that we're winning. We don't think at this point in time in sort of the credit cycle, which is probably closer to mature, is the right time to be reaching for growth.
Speaker #8: Okay . And then lastly , no updates on the timing for the micron technology project .
[Analyst]: Okay. Lastly, no updates on the timing for the Micron Technology project?
Speaker #2: Yeah . know , you know , $64,000 question . So thanks for asking it today . The we still expect shovels in the ground at the site here late in the fourth quarter .
Scott Kingsley: Yeah. You know, $64,000 question, so thanks for asking it. Today, we still expect shovels in the ground at the site here late in the fourth quarter. If you know our zip code very well, the shovel has to have a lot of pressure on it to get into the ground in the next couple of months. Our perspective today on that, Mark, is that the site will be improved relative to taking on fill, because this site, quite frankly, is a touch wet. I think the next five to seven months, our site fill, making sure that the activity has been compressed with the expectation that building actually starts mid to late 2026.
Speaker #2: But if you know our zip code very well, the shovel has to have a lot of pressure on it to get into the ground in the next couple of months.
Speaker #2: Our perspective today on that mark is that the site will be improved relative to , you know , taking on Phil and , you know , because this site , quite frankly , is a touch wet .
Speaker #2: So I think the next 5 to 7 months , our site fill , you know , making You sure that , you know the activity has been compressed with the expectation that building actually starts mid to late 2026 .
Speaker #8: Great . Thank you .
[Analyst]: Great. Thank you.
Speaker #2: Appreciate that .
Scott Kingsley: Appreciate that.
Speaker #1: Thank you . Our next question is from the line of Matthew Brees with Stephens Inc. Please proceed .
Operator: Thank you. Our next question is from the line of Matthew Breese with Stephens Inc. Please proceed.
Speaker #7: Hey good morning .
[Analyst]: Hey, good morning.
Speaker #2: Good morning Matt . .
Scott Kingsley: Morning, Matt.
Speaker #9: A few kinds of margin related questions . First , do you happen to have the spot cost of deposits either at quarter end or , you know , most recent date .
[Analyst]: A few kind of margin-related questions. First, do you happen to have the spot cost of deposits either at quarter end or, you know, most recent date? I was hoping you could provide some color on the roll-on versus roll-off dynamics of fixed and/or adjustable rate loans today.
Speaker #9: And then I was hoping you could provide some color on the role on versus roll off dynamics of of fixed or and or adjustable rate loans today .
Speaker #2: On a spot side Matt , let's get back to you . You know we don't have that sitting in front of us today .
Scott Kingsley: On the spot side, Matt, let's get back to you. We don't have that sitting in front of us today. I will say this. We're pretty sure because we made some adjustments to deposit costs after the Fed rate change in September that October's cost of funds are probably slightly lower than September's. My guess is it's measured in single basis points. Let's reframe your second part of your question, if you would.
Speaker #2: I will say this . We're pretty sure because we made some adjustments to deposit costs after the fed rate change in September , that October's cost of funds are probably slightly lower than September's .
Speaker #2: But my guess is it's measured in single basis points. So let's reframe your second part of your question, if you would.
Speaker #9: Yeah . For your fixed rate and adjustable rate loans , what is the role on versus roll off rates .
[Analyst]: For your fixed rate and adjustable rate loans, what is the roll-on versus roll-off rates?
Speaker #4: So maybe I'll take that based on book . So for our commercial portfolio we probably have about a 50 basis point differential . Now between our portfolio yields and our origination rates .
Annette Burns: I will take that based on book. For our commercial portfolio, we probably have about a 50 basis point differential now between our portfolio yields and our origination rates. For indirect auto, we're just about there. That is dependent on the belly of the curve where we price those auto loans. If you look at our presentation, we're probably a little bit lower on our new origination rates than our current portfolio yields. That is going to probably fluctuate from quarter to quarter. Where we have the most room is in our residential mortgages, which is still about 160 basis points of room between our portfolio yields and our new origination rates.
Speaker #4: You know , for indirect auto we're we're just about there . And really that's dependent on the belly of the curve where we price those auto loans .
Speaker #4: So if you look at our presentation we're probably a little bit lower on our new origination rates than our current portfolio yield . So that's going to probably fluctuate from quarter to quarter .
Speaker #4: And then you know where we have the most room is in our residential mortgages , which is about still about 160 basis points of room between our portfolio yields and our new origination rates .
Speaker #9: Okay . And then this one kind of leads into my next question , which is your securities yields are still , you pretty low relative to what you could go purchase something at today .
[Analyst]: Okay. This one kind of leads into my next question, which is your securities yields are still, you know, pretty low relative to what you could go purchase something at today. When do we see a more pronounced pickup in securities yields as, you know, the backbook starts to reset or mature?
Speaker #9: When do we see a more pronounced pickup in securities yields as the back book starts to reset or mature .
Speaker #2: So our portfolio today is very much a cash flowing portfolio . So it's mostly mortgage backed securities . So it's pretty orderly . It's in the line of , you know , a couple hundred million dollars a year from a cash flow standpoint .
Scott Kingsley: Our portfolio today is very much a cash-flowing portfolio. It is mostly mortgage-backed securities, so it is pretty orderly. It is in the line of a couple hundred million dollars a year from a cash flow standpoint. We do not think that changes much. We will acknowledge your comment that our portfolio yields are now below our peer group because we think we are the last ones in the peer group that did not do a one-time charge or a restructuring.
Speaker #2: So , you know , we don't think that changes much , but we will acknowledge your comment that our portfolio yields are now below our peer group because we think we're the last ones in the peer group that did not do a one time charge or a restructuring .
Speaker #9: Okay . And then just last one , Scott , you know , your comments on , you know , perhaps earning asset growth , you know , beyond loan growth ?
[Analyst]: Okay. Just last one, Scott, your comments on perhaps earning asset growth beyond loan growth, I felt like was enough of a subtle hint that we might see some securities growth near term. To what extent might that happen, and to what extent do you lean into kind of your excess cash position to do that?
Speaker #9: I felt like that was a not-so-subtle hint that we might see some securities growth in the near term. To what extent might that happen, and to what extent do you lean into your excess cash position to do that?
Speaker #2: Yeah , that's a terrific question . You know , I think today we have that flexibility . Today . And maybe over the last couple of years we didn't enjoy that flexibility at the same level .
Scott Kingsley: Yeah, that's a terrific question. I think today we have that flexibility. Maybe over the last couple of years, we didn't enjoy that flexibility at the same level. I think it's a duration-based risk-reward for us, Matt. Today, when you stay in the short-term end, setting aside expectations that short-term rates may come down a little bit, there's really not much of a penalty to stay in Fed funds or something very short-term. That probably gets a little bit more definition to it after the expected changes in Fed funds rates here in the fourth quarter, and we'll assess it from there. When we kind of look at that, we've never taken a real mismatch in terms of duration in our portfolios. I wouldn't expect to start that in this cycle.
Speaker #2: So I think it's a duration based risk reward for us , Matt . That , you know , today when you stay in the short term end , you know , setting aside expectations of short term rates may come down a little bit .
Speaker #2: There's really not much of a penalty to stay in Fed Funds or something very short term. That probably gets a little bit more definition to it.
Speaker #2: After the expected changes in fed funds rates here in the fourth quarter . And we'll assess it from there . You know , when we kind of look at that as , you know , we've never taken a real mismatch in terms of duration in our portfolios .
Speaker #2: So, I wouldn't expect to start that in this cycle. But I do think an opportunity does present itself for us to continue to analyze.
Scott Kingsley: I do think an opportunity does present itself for us to continue to analyze if we can leg into that a little bit more. Remember, we are very deliberate about how we handle the investment portfolio that we inherited from Evans Bancorp and where we pushed those cash flows to, what we disposed of, and what we decided to retain. Our construct around investment securities continues to be making sure we have enough latitude to support the collateralization for our municipal deposits. That's more of our focus point than whether we have incremental earnings opportunity associated with a $50 million, $60 million, $100 million leg in on the security side.
Speaker #2: You know , if we can dig into that a little bit more . Remember , we're very deliberate about how we handled the investment portfolio that we inherited from Evans and where we , you know , pushed those cash flows to , you know , what we disposed of and what we decided to retain our construct around investment securities continues to be making sure we have enough latitude to support the Collateralization for our municipal deposits .
Speaker #2: So that's more of our focus point than, you know, whether we have incremental earnings opportunity associated with a $50 million, $60 million, or $100 million leg on the security side.
Speaker #9: Great . I'll leave it there . Thanks for taking my questions .
[Analyst]: Great. I'll leave it there. Thanks for taking my questions.
Speaker #2: Perfect . Thank you .
Scott Kingsley: Perfect. Thank you.
Speaker #1: Thank you . Our next question is from the line of David Conrad with KBW . Please proceed .
Operator: Thank you. Our next question is from the line of David Conrad with KBW. Please proceed.
Speaker #7: Hey . Good morning . Want to switch gears a little bit and talk about fee income ? I thought it was a really good quarter , particularly in insurance , just maybe .
[Analyst]: Hey, good morning. I want to switch gears a little bit and talk about the fee income. I thought it was a really good quarter, particularly in insurance. I know it's seasonally probably your strongest quarter there, but highlight what's going on there and maybe, is 7% an annual growth rate that you can think about in 2026?
Speaker #7: I know it's seasonally . Probably your strongest quarter there , but , you know , highlight what's going on there and maybe , you know , is 7% an annual growth rate that you can think about in 2026 .
Speaker #4: Good question . So for our insurance , insurance business , our third quarter is our most seasonally high , probably to the tune of about $1 million .
Annette Burns: Good question. For our insurance business, our third quarter is our most seasonally high, probably to the tune of about $1 million. That's just some seasonality of some of our municipal customers. The first and third quarter are typically higher for our insurance business. The growth rate of around 7%, I would say somewhere those high, high mid-single digits is an appropriate run rate. Seeing some good commercial growth across our business line. Commercial business or our insurance business is very integrated with our banking business. There are a lot of referral opportunities as it relates to that, and that's what drives the growth there.
Speaker #4: And that's just due to the seasonality of some of our municipal customers. So, the first and third quarters are typically higher for our insurance business.
Speaker #4: The growth rate of around 7%, I would say somewhere in the high, high, mid-single digits is an appropriate run rate.
Speaker #4: Seeing some good commercial growth across our business line, commercial business or our insurance business is very integrated, you know, with our banking business.
Speaker #4: So a lot of referral opportunities as it relates to that . And that's what drives the growth there .
Speaker #2: Yeah . And to follow that , David , you know the rate of change on you know , rate increase that the insurance companies have been able to be approved for is a little bit less than we experienced over the last couple of years .
Scott Kingsley: Yeah, to follow that, David, the rate of change on, you know, on rate increase that the insurance companies have been able to be approved for is a little bit less than we experienced over the last couple of years. In other words, new rate structures were generating growth for most agencies in the 4% to 6% rate before you even add new customer development.
Speaker #2: So in other words, you know, new rate structures were generating growth for most agencies in the 4% to 6% range, before you even add new customer development.
Speaker #7: Got it . And then maybe a last question , follow up here . Help us out a little bit on next quarter in your outlook as we get a little bit more seasonally challenged in the fourth quarter for the for the total fee income business .
[Analyst]: Got it. Maybe a last question follow-up here. Help us out a little bit on next quarter in your outlook as we get a little bit more seasonally challenged in the fourth quarter for the total fee income business.
Speaker #2: Yeah . So historically and I'll and Annette will remind me if I'm wrong on this historically fee income for benefits administration and insurance has typically been 6 to 8% lower in the fourth quarter than it was experienced in the third quarter .
Scott Kingsley: Yeah. Historically, and Annette will remind me if I'm wrong on this, historically, fee income for benefits administration and insurance has typically been 6% to 8% lower in the fourth quarter than it was experienced in the third quarter. There's nothing for us today telling us that we'd be outside of that expectation.
Speaker #2: And there's nothing for us today telling us that we'd be outside of that expectation .
Speaker #4: And I would also just remind there's probably about a million and a half of unique items to the quarter . Gains in the third quarter , so that also kind of made the third quarter a little higher .
Annette Burns: I would also just remind there's probably about $1.5 million of unique items to the quarter gains in the third quarter. That also kind of made the third quarter a little higher.
Speaker #7: Perfect . Thank you .
[Analyst]: Perfect. Thank you.
Speaker #2: Appreciate it David .
Scott Kingsley: Appreciate it, David.
Speaker #1: Thank you again . If you have a question please press star one one to get in the queue and wait for your name to be announced .
Operator: Thank you. Again, if you have a question, please press star 11 to get in the queue and wait for your name to be announced. To remove yourself, press star 11 again. All right. We have a question from the line of Feddie Strickland with Hopty Group. Please proceed.
Speaker #1: To remove yourself , press star one one again . All right . We have a question from the line of Freddie Strickland with hobby Group .
Speaker #1: Please proceed .
Speaker #10: Hey , just ask a quick follow .
[Analyst]: Hey, just had a quick follow-up from Capital. We talked a little bit about, you know, M&A down the road already, but just wanted to get your thoughts on capital management. Any sort of capital ratio number you're trying to manage to, and could we see buybacks executed beyond the level of offsetting the stock-based comp?
Speaker #5: Up on Capital . Talked a little bit about , M&A down the road already , but just wanted to get your thoughts on capital management .
Speaker #5: Any sort of capital ratio number you're trying to manage to? And could we see buybacks executed beyond the level of offsetting stock-based comp?
Speaker #2: So thank you for the question . And good reference point over the last two and a half years , we've been really , really deliberate on capital retention because we were going through , you know , the completion and closing of both the Salisbury transaction as well as the Evans transaction .
Scott Kingsley: Thank you for the question, and good reference point. Over the last two and a half years, we've been really, really deliberate on capital retention because we were going through the completion and closing of both the Salisbury transaction as well as the Evans transaction. We weren't active, real active in a lot of our other attributes because we wanted to make sure we had the purchase accounting right and that our estimates of impact on dilution were appropriate. We've gone through that. We're very comfortable. Matter of fact, we've exceeded our expectations on getting back to pre-announcement levels of capital. Holistically, right now, we're really comfortable from a capital position. I would argue on most days, we have too much, just given the risk attributes of our balance sheet.
Speaker #2: So we weren't active , real active in a lot of our other attributes because we wanted to make sure we had the purchase accounting .
Speaker #2: Right . And that our estimates of impact on on dilution were appropriate . We've gone through that . You know , we're very comfortable .
Speaker #2: Matter of fact, we've exceeded our expectations on getting back to pre-announcement levels of capital holistically. Right now, we're really comfortable from a capital position.
Speaker #2: And I would argue on most days we have too much . And , you know , just given the risk attributes of our balance sheet .
Speaker #2: But that being said, I think we're in a spot from a maintenance standpoint of our capital levels holistically, and specifically at the bank, where we can embrace every opportunity that we have.
Scott Kingsley: That being said, I think we're in a spot from a maintenance standpoint of our capital levels, holistically and specifically at the bank, where we can embrace every opportunity that we have without worrying about that. To your question, historically, we always tried to cover equity-based compensation plans with repurchases so that we didn't dilute ourselves on a creep basis. Today, given where valuations are for high-quality earnings generation characteristics like we have, suggests that maybe we should be a little bit more active with repurchase activity. It has never been our principal focus relative to capital management, but we find ourselves in a position today where we're not sure the market has fully recognized our capacity for earnings.
Speaker #2: You know , without worrying about that to your question , you know , historically , we always tried to cover equity based compensation plans with repurchases so that we didn't dilute ourselves on a creek basis today , given where valuations are for high quality earnings generation characteristics like we have suggest that maybe we should be a little bit more active with repurchase activity has never been our principal focus relative to capital management , you know , but we find ourselves in a position today where we're not sure the market has fully recognized our capacity for earnings .
Speaker #5: Heartbreak . And just one one last one on the margin , you know , understand the dynamics of repricing loans versus deposits and the lag on deposits .
[Analyst]: All right. Great. Just one last one on the margin. You know, understand the dynamics of repricing loans versus deposits and relying on deposits. It sounds like if we get some level of steepness in the yield curve and a couple more cuts, and you start to get the benefit of those, you know, deposit costs lower, maybe into mid-2026, I mean, could we see some initial pressure on the margin near term, but maybe the margin start to come up a little bit over time with maybe some backbook loan repricing, the deposit lag piece, and, you know, assuming we have some level of steepness in the curve?
Speaker #5: But it sounds like if we get some level of steepness in the yield curve and a couple more cuts and you start to get the benefit of those , you know , deposit costs lower , maybe into mid 26 .
Speaker #5: I mean , could we see some initial pressure on the margin near term . But maybe the margins start to come up a little bit over time with maybe some back loan repricing .
Speaker #5: The deposit lag piece . And you know , assuming we have some level of steepness in the curve .
Speaker #4: I think that's a good summary of how we're thinking about margin and potential for margin improvement with just a reminder that , you you're probably not going to see the same level of benefit that we saw in 2025 just because a lot of our loan book has , has repriced .
Annette Burns: I think that's a good summary of how we're thinking about margin and, you know, potential for margin improvement. Just a reminder that, you know, you're probably not going to see the same level of benefit that we saw in 2025 just because, you know, a lot of our loan book has repriced. It's really less of an opportunity than what we've seen.
Speaker #4: And so it's really less of an opportunity than what we've seen .
Speaker #5: Fair enough . Thanks for additional color .
[Analyst]: Fair enough. Thanks for additional color.
Speaker #2: Appreciate the question .
Scott Kingsley: Appreciate the question.
Speaker #1: Thank you so much . And as I'm not showing any further questions in the queue , I will turn the call back to Scott Kingsley for his closing remarks .
Operator: Thank you so much. As I'm not showing any further questions in the queue, I will turn the call back to Scott Kingsley for his closing remarks.
Speaker #2: Thank you . In closing , I want to thank everyone on the call for participating today and for your continued interest in NBT and at least for this week .
Scott Kingsley: Thank you. In closing, I want to thank everyone on the call for participating today and for your continued interest in NBT Bancorp Inc. At least for this week, go Bills.
Speaker #2: Go bills .
Speaker #1: And thank you , Mr. Kingsley . This concludes our program . You may disconnect and have a great day .
Operator: Thank you, Mr. Kingsley. This concludes our program. You may disconnect and have a great day.
Scott Kingsley: Thank you.