NBT Bank Q4 2026 NBT Bancorp Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2026 NBT Bancorp Inc Earnings Call
Speaker #1: Good day, everyone. Welcome to the conference call covering NBT Bancorp's fourth quarter and full year 2025 financial results. This call is being recorded and has been made accessible to the public in accordance with SEC Regulation FD.
Operator: Good day, everyone. Welcome to the conference call covering NBT Bancorp's fourth quarter and full year 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'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. 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. Instructions will follow at that time. As a reminder, this call is being recorded.
Operator: Good day, everyone. Welcome to the conference call covering NBT Bancorp's fourth quarter and full year 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'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. 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. Instructions will follow at that time. As a reminder, this call is being recorded.
Speaker #1: Corresponding presentation slides can be found on the company's website at nbtbancorp.com. Before the call begins, MBT'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.
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. Instructions will follow at that time. As a reminder, this call is being recorded.
Speaker #1: I will now turn the call over to NBT Bancorp's President and CEO, Scott Kingsley, for opening remarks. Mr. Kingsley, please begin.
Operator: I will now turn the call over to NBT Bancorp's President and CEO, Scott Kingsley, for opening remarks. Mr. Kingsley, please begin.
I will now turn the call over to NBT Bancorp's President and CEO, Scott Kingsley, for opening remarks. Mr. Kingsley, please begin.
Speaker #2: Thank you, Tanya. Good morning, and thank you for joining us for this earnings call covering NBT Bancorp's fourth quarter and full year 2025 results.
Scott Kingsley: Thank you, Tanya. Good morning, and thank you for joining us for this earnings call covering NBT Bancorp's Q4 and full year 2025 results. With me today are Annette Burns, NBT's Chief Financial Officer, Joseph Stagliano, President of NBT Bank, and Joseph Ondesko, our Treasurer. Our operating performance for the Q4 continued to reflect the positive attributes of productive fixed-rate 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 Q2. Operating return on assets was 1.37% for the second consecutive quarter, with a return on tangible equity of 17.02%. These metrics demonstrate continued improvement over the prior year quarters and, importantly, reflect the generation of positive operating leverage.
Scott Kingsley: Thank you, Tanya. Good morning, and thank you for joining us for this earnings call covering NBT Bancorp's Q4 and full year 2025 results. With me today are Annette Burns, NBT's Chief Financial Officer, Joseph Stagliano, President of NBT Bank, and Joseph Ondesko, our Treasurer. Our operating performance for the Q4 continued to reflect the positive attributes of productive fixed-rate 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 Q2. Operating return on assets was 1.37% for the second consecutive quarter, with a return on tangible equity of 17.02%. These metrics demonstrate continued improvement over the prior year quarters and, importantly, reflect the generation of positive operating leverage.
Speaker #2: With me today are Annette Burns, NBT's Chief Financial Officer; Joe Stagliano, President of NBT Bank; and Joe Ondesko, our Treasurer. Our operating performance for the fourth quarter continued to reflect the positive attributes of productive, fixed-rate 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.
Speaker #2: Operating return on assets was 1.37% for the second consecutive quarter, with a return on tangible equity of 17.02%. These metrics demonstrate continued improvement over the prior year quarters and, importantly, reflect the generation of positive operating leverage.
Speaker #2: Our tangible book value per share of $26.54 at year-end was 11% higher than a year ago. The continued remix of earning assets, diligent management of funding costs, and the addition of the Evans balance sheet resulted in a 36 basis point improvement in net interest margin year over year.
Scott Kingsley: Our tangible book value per share of $26.54 at year-end was 11% higher than a year ago. The continued remix of earning assets, diligent management of funding costs, and the addition of the Evans balance sheet resulted in a 36 basis point improvement in net interest margin year-over-year. Growth in non-interest income continues to be a highlight, with each of our non-banking businesses achieving record results in both revenue and earnings generation for 2025. In Q3, we were pleased to announce to shareholders a year-over-year improvement of 8.8% to our dividend, marking our 13th consecutive year of annual increases. This is reflective of our strong capital position and our generation of consistent and improving operating earnings. Our capital utilization priorities focus on supporting NBT's organic growth strategies, as well as improving our dividend each year.
Our tangible book value per share of $26.54 at year-end was 11% higher than a year ago. The continued remix of earning assets, diligent management of funding costs, and the addition of the Evans balance sheet resulted in a 36 basis point improvement in net interest margin year-over-year. Growth in non-interest income continues to be a highlight, with each of our non-banking businesses achieving record results in both revenue and earnings generation for 2025. In Q3, we were pleased to announce to shareholders a year-over-year improvement of 8.8% to our dividend, marking our 13th consecutive year of annual increases. This is reflective of our strong capital position and our generation of consistent and improving operating earnings. Our capital utilization priorities focus on supporting NBT's organic growth strategies, as well as improving our dividend each year.
Speaker #2: Growth in non-interest income continues to be a highlight, with each of our non-banking businesses achieving record results in both revenue and earnings generation for 2025.
Speaker #2: In the third quarter, we were pleased to announce to shareholders a year-over-year improvement of 8.8% to our dividend, marking our 13th consecutive year of annual increases.
Speaker #2: This is reflective of our strong capital position and our generation of consistent and improving operating earnings. Our capital utilization priorities focus on supporting NBT's organic growth strategies, as well as improving our dividends each year.
Speaker #2: In addition, our strong capital levels continue to allow us to evaluate a variety of M&A opportunities. Finally, returning capital to shareholders through opportunistic share repurchases is also a component of our capital planning and, as such, we repurchased $250,000 of our own shares in the fourth quarter.
Scott Kingsley: In addition, our strong capital levels continue to allow us to evaluate a variety of M&A opportunities. Finally, returning capital to shareholders through opportunistic share repurchases is also a component of our capital planning, and as such, we repurchased 250,000 of our own shares in Q4. Our transition and integration activities over the past 8 months with the team members who joined us from Evans Bank have been highly successful and have reaffirmed our belief that we have added a customer and community-focused group of talented professionals, group of talented professionals to our ranks. We remain excited about our opportunities in Western New York. Activities have continued to progress across upstate New York's semiconductor chip corridor in Q4, including the official groundbreaking of Micron's planned complex outside of Syracuse.
In addition, our strong capital levels continue to allow us to evaluate a variety of M&A opportunities. Finally, returning capital to shareholders through opportunistic share repurchases is also a component of our capital planning, and as such, we repurchased 250,000 of our own shares in Q4. Our transition and integration activities over the past 8 months with the team members who joined us from Evans Bank have been highly successful and have reaffirmed our belief that we have added a customer and community-focused group of talented professionals, group of talented professionals to our ranks. We remain excited about our opportunities in Western New York. Activities have continued to progress across upstate New York's semiconductor chip corridor in Q4, including the official groundbreaking of Micron's planned complex outside of Syracuse.
Speaker #2: Our transition and integration activities over the past eight months, with the team members who joined us from Evans Bank, have been highly successful and have reaffirmed our belief that we have added a customer and community-focused group of talented professionals.
Speaker #2: Group of talented professionals to our ranks. We remain excited about our opportunities in the Western region Activities have continued to progress across upstate New York's semiconductor chip corridor in the fourth quarter, including the official groundbreaking of Micron's planned complex outside of Syracuse.
Speaker #2: Site development and construction of the first fabrication facility is expected to commence immediately, with completion targeted in 2030. I will now turn the meeting over to Annette to review our fourth quarter results with you in detail.
Scott Kingsley: Site development and construction of the first fabrication facility is expected to commence immediately, with completion targeted in 2030. I will now turn the meeting over to Annette to review our Q4 results with you in detail. Annette?
Site development and construction of the first fabrication facility is expected to commence immediately, with completion targeted in 2030. I will now turn the meeting over to Annette to review our Q4 results with you in detail. Annette?
Speaker #3: Thank you, Scott.
Speaker #3: Thank you, Scott. And good morning, Annette. Turning to the results overview page of our earnings presentation, for the fourth quarter, we reported net income of $55.5 million, or $1.06 per diluted common share.
Annette Burns: ... Thank you, Scott, and good morning. Turning to the results overview page of our earnings presentation, for Q4, we reported net income of $55.5 million, or $1.06 per diluted common share. On a core operating basis, which excludes acquisition-related expenses and securities gains, our operating earnings were $1.05 per share, consistent with the prior quarter. Revenue generation remained favorable and consistent with the prior quarter and grew 25% from Q4 of the prior year, driven by improvements in both net interest income and non-interest income, including the impact of the Evans merger. The next page shows trends in outstanding loans. Including acquired loans from Evans, total loans were up $1.63 billion or 16.3% for the year.
Annette Burns: ... Thank you, Scott, and good morning. Turning to the results overview page of our earnings presentation, for Q4, we reported net income of $55.5 million, or $1.06 per diluted common share. On a core operating basis, which excludes acquisition-related expenses and securities gains, our operating earnings were $1.05 per share, consistent with the prior quarter. Revenue generation remained favorable and consistent with the prior quarter and grew 25% from Q4 of the prior year, driven by improvements in both net interest income and non-interest income, including the impact of the Evans merger. The next page shows trends in outstanding loans. Including acquired loans from Evans, total loans were up $1.63 billion or 16.3% for the year.
Speaker #3: On a core operating basis, which excludes acquisition-related expenses and securities gains, our operating earnings were $1.05 per share, consistent with the prior quarter. Revenue generation remained favorable and consistent with the prior quarter, and grew 25% from the fourth quarter of the prior year, driven by improvements in both net interest income and non-interest income, including the impact of the Evans merger.
Speaker #3: The next page shows trends in outstanding loans. Including acquired loans from Evans, total loans were up $1.63 billion, or 16.3%, for the year.
Speaker #3: During 2025, commercial production remained strong, but we did experience a higher level of commercial real estate payoff. We have captured quality C&I opportunities across our markets, which have provided growth in core deposits, consistent with our focus on holistic relationships.
Annette Burns: During 2025, commercial production remained strong, but we did experience a higher level of commercial real estate payoffs. We have captured quality C&I opportunities across our markets, which have provided growth in core deposits, consistent with our focus 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 six, total deposits were up $2 billion from December 2024, including deposits from Evans. We experienced a favorable change in our mix of deposits out of higher cost time deposits and into checking, savings, and money market products. 58%, or $7.8 billion of our deposit portfolio, consists of no and low-cost checking and savings accounts at a cost of 80 basis points.
Annette Burns: During 2025, commercial production remained strong, but we did experience a higher level of commercial real estate payoffs. We have captured quality C&I opportunities across our markets, which have provided growth in core deposits, consistent with our focus 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 six, total deposits were up $2 billion from December 2024, including deposits from Evans. We experienced a favorable change in our mix of deposits out of higher cost time deposits and into checking, savings, and money market products. 58%, or $7.8 billion of our deposit portfolio, consists of no and low-cost checking and savings accounts at a cost of 80 basis points.
Speaker #3: Our total loan portfolio of 11.6 billion dollars remains very well diversified and is comprised of 56% commercial relationships and 44% consumer loans. On page six, total deposits were up 2 billion dollars from December 2024, including deposits from Evans.
Speaker #3: We experienced a favorable change in our mix of deposits out of higher cost time deposits and into checking, savings, and money market products. 58% or 7.8 billion dollars of our deposit portfolio consists of no and low-cost checking and savings accounts, at a cost of 80 basis points.
Speaker #3: The next slide highlights the detailed changes in our net interest income and margin. Our net interest margin for the fourth quarter decreased one basis point to 3.65% compared with the prior quarter, as lower earning asset yields were largely offset by a reduction in funding costs.
Annette Burns: The next slide highlights the detailed changes on our net interest income and margin. Our net interest margin for the fourth quarter decreased one basis point to 3.65% compared with the prior quarter, as lower earning asset yields were largely offset by a reduction in funding costs. In addition, a higher level of lower yielding, short-term interest-bearing balances in the fourth quarter reduced NIM by one basis point compared to the third quarter. Net interest income for the fourth quarter was $135.4 million, an increase of $1 million above the prior quarter and $29 million above the fourth quarter of 2024.
The next slide highlights the detailed changes on our net interest income and margin. Our net interest margin for the fourth quarter decreased one basis point to 3.65% compared with the prior quarter, as lower earning asset yields were largely offset by a reduction in funding costs. In addition, a higher level of lower yielding, short-term interest-bearing balances in the fourth quarter reduced NIM by one basis point compared to the third quarter. Net interest income for the fourth quarter was $135.4 million, an increase of $1 million above the prior quarter and $29 million above the fourth quarter of 2024.
Speaker #3: In addition, a higher level of lower yielding short-term interest-bearing balances in the fourth quarter reduced NIM by one basis point compared to the third quarter.
Speaker #3: Net interest income for the fourth quarter was $135.4 million, an increase of $1 million above the prior quarter and $29 million above the fourth quarter of 2024.
Speaker #3: The increase in net interest income from the prior quarter was driven by the decrease in interest expense more than offsetting the decrease in interest income, as the decline in short-term interest rates impacted both earning asset yields and funding costs.
Annette Burns: The increase in net interest income from the prior quarter was driven by the decrease in interest expense, more than offsetting the decrease in interest income, as the decline in short-term interest rates impacted both earning asset yields and funding costs. 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. The opportunity for further upward movement in earning asset 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 8.
The increase in net interest income from the prior quarter was driven by the decrease in interest expense, more than offsetting the decrease in interest income, as the decline in short-term interest rates impacted both earning asset yields and funding costs. 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. The opportunity for further upward movement in earning asset 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 8.
Speaker #3: 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.
Speaker #3: The opportunity for further upward movement in earning asset yields will depend on the shape of the yield curve and how we reinvest loan and investment portfolio cash flows.
Speaker #3: The trends in non-interest income are outlined on page eight. Excluding securities gains, our fee income was $49.6 million, a decrease of $1.8 million compared to the seasonally high third quarter, and increased 17.4% from the fourth quarter of 2024.
Annette Burns: Excluding securities gains, our fee income was $49.6 million, a decrease of $1.8 million compared to the seasonally high Q3 and increased 17.4% from the Q4 of 2024. Our combined revenues from the retirement plan services, wealth management, and insurance services exceeded $30 million in quarterly revenues. Consistent with historical trends, the Q4 is typically our lowest quarter in revenue generation for these businesses, while the Q3 is seasonally higher. Non-interest income represented 27% of total revenues in the Q4 and reflects the strength of our diversified revenue base. Total operating expenses, excluding acquisitions expenses, were $112 million for the quarter, a 1.5% increase from the prior quarter, including higher technology, year-end charitable contribution, and marketing costs.
Excluding securities gains, our fee income was $49.6 million, a decrease of $1.8 million compared to the seasonally high Q3 and increased 17.4% from the Q4 of 2024. Our combined revenues from the retirement plan services, wealth management, and insurance services exceeded $30 million in quarterly revenues. Consistent with historical trends, the Q4 is typically our lowest quarter in revenue generation for these businesses, while the Q3 is seasonally higher. Non-interest income represented 27% of total revenues in the Q4 and reflects the strength of our diversified revenue base. Total operating expenses, excluding acquisitions expenses, were $112 million for the quarter, a 1.5% increase from the prior quarter, including higher technology, year-end charitable contribution, and marketing costs.
Speaker #3: Our combined revenues from the retirement plan services, wealth management, and insurance services exceeded $30 million in quarterly revenues. Consistent with historical trends, the fourth quarter is typically our lowest quarter in revenue generation for these businesses, while the third quarter is seasonally higher.
Speaker #3: Non-interest income represented 27% of total revenues in the fourth quarter, and reflects the strength of our diversified revenue base. Total operating expenses excluding acquisition expenses were $112 million for the quarter, a 1.5% increase from the prior quarter, including higher technology year-end charitable contribution and marketing costs.
Speaker #3: The effective tax rate for the fourth quarter was lower than the prior quarter at 20.3%, primarily due to the finalization of the assessment of the deductibility of merger-related expenses and the associated impact on the full-year effective tax rate of 23%.
Annette Burns: The effective tax rate for the fourth quarter was lower than the prior quarter at 20.3%, primarily due to the finalization of the assessment of the deductibility of merger-related expenses and the associated impact on the full-year effective tax rate of 23%. Slide 10 provides an overview of key asset quality metrics. Provision expense for the three months ended 31 December 2025 was $3.8 million, compared to $3.1 million for the third quarter of 2025. The increase in the provision for loan losses was primarily due to a slightly higher level of net charge-offs in the fourth quarter of 2025. Reserves were 1.19% of total loans and covered 2.5 times the level of non-performing loans.
The effective tax rate for the fourth quarter was lower than the prior quarter at 20.3%, primarily due to the finalization of the assessment of the deductibility of merger-related expenses and the associated impact on the full-year effective tax rate of 23%. Slide 10 provides an overview of key asset quality metrics. Provision expense for the three months ended 31 December 2025 was $3.8 million, compared to $3.1 million for the third quarter of 2025. The increase in the provision for loan losses was primarily due to a slightly higher level of net charge-offs in the fourth quarter of 2025. Reserves were 1.19% of total loans and covered 2.5 times the level of non-performing loans.
Speaker #3: Slide 10 provides an overview of key asset quality metrics. Provision expense for the three months ended December 31, 2025, was $3.8 million, compared to $3.1 million for the third quarter of 2025.
Speaker #3: The increase in the provision for loan losses was primarily due to a slightly higher level of net charge-offs in the fourth quarter of 2025.
Speaker #3: Reserves were 1.19% of total loans and covered 2.5 times the level of non-performing loans. In closing, the current level of net interest income and fee-based revenues have produced solid results, with meaningful positive operating leverage.
Annette Burns: In closing, the current level of net interest income and fee-based revenues have produced solid results with meaningful positive operating leverage, supported by disciplined balance sheet management as we've navigated three Federal funds rate cuts in late 2025. Asset quality remains stable, and with our strong capital position, we are well positioned to pursue growth opportunities across all our markets. Thank you for your continued support. At this time, we welcome any questions you may have.
In closing, the current level of net interest income and fee-based revenues have produced solid results with meaningful positive operating leverage, supported by disciplined balance sheet management as we've navigated three Federal funds rate cuts in late 2025. Asset quality remains stable, and with our strong capital position, we are well positioned to pursue growth opportunities across all our markets. Thank you for your continued support. At this time, we welcome any questions you may have.
Speaker #3: Supported by disciplined balance sheet management, as we navigated three federal funds rate cuts in late 2025. Asset quality remained stable, and with our strong capital position, we are well-positioned to pursue growth opportunities across all our markets.
Speaker #3: Thank you for your continued support. At this time, we welcome any questions you may
Speaker #3: have. Certainly.
Operator: Certainly. Thank you. Anyone with a question at this time can press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again, and one moment for our questions. Our first question will be coming from Feddie Strickland of Hovde Group. Your line is open.
Operator: Certainly. Thank you. Anyone with a question at this time can press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again, and one moment for our questions. Our first question will be coming from Feddie Strickland of Hovde Group. Your line is open.
Speaker #1: 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 withdraw your question, please press star 11 again, and one moment for our questions.
Speaker #1: Our first question will be coming from Betty Strickland of Hovegroup. Your line is
Speaker #1: open.
Feddie Strickland: Hey, good morning. Hope you guys are digging out of the snowball right up there. And you mentioned in your opening comments, higher CRE payoffs were part of the slower loan growth. I mean, do you expect any larger payoffs on the commercial side in the next couple quarters? And then broadly, how does that factor into overall loan growth, keeping in mind the runoff portfolios?
Feddie Strickland: Hey, good morning. Hope you guys are digging out of the snowball right up there. And you mentioned in your opening comments, higher CRE payoffs were part of the slower loan growth. I mean, do you expect any larger payoffs on the commercial side in the next couple quarters? And then broadly, how does that factor into overall loan growth, keeping in mind the runoff portfolios?
Speaker #2: Morning. Hope you guys are digging out of the snowball right up there. Just—Annette, you mentioned in your opening comments: higher CRE payoffs were part of the lower loan growth.
Speaker #2: I mean, do you expect any larger payoffs on the commercial side in the next couple of quarters? And then, broadly, how does that factor into overall loan growth, keeping in mind the runoff?
Speaker #2: portfolios? Thanks,
Scott Kingsley: Thanks, Feddie. And yes, we have officially hurdled the 100-inch snow mark in Central New York, so appreciate the sentiments on that. So your question is a good one. So in 2025, we probably had $150 to 175 million of unscheduled commercial real estate payoffs. And where'd they go? Agency money, and in certain of our markets, private equity or private funding. Maybe the private funding more closely aligned with some of the more larger urban areas, you know, southern Hudson Valley, and maybe some things in New England closer to Boston, but meaningful.
Scott Kingsley: Thanks, Feddie. And yes, we have officially hurdled the 100-inch snow mark in Central New York, so appreciate the sentiments on that. So your question is a good one. So in 2025, we probably had $150 to 175 million of unscheduled commercial real estate payoffs. And where'd they go? Agency money, and in certain of our markets, private equity or private funding. Maybe the private funding more closely aligned with some of the more larger urban areas, you know, southern Hudson Valley, and maybe some things in New England closer to Boston, but meaningful.
Speaker #3: Betty. And yes, we have officially hurdled the 100-inch snow mark in Central New York. So I appreciate the sentiments on that. So your question's a good one.
Speaker #3: So in 2025, we probably had $150 to $175 million of unscheduled commercial real estate payoffs. And where did they go? Agency money, and in certain of our markets, private equity or private funding.
Speaker #3: Maybe the private funding is more closely aligned with some of the larger urban areas—southern Hudson Valley, maybe some things in New England, closer to Boston.
Speaker #3: But meaningful. So I think we think that that's an outsized number, but we're planning for that could be a risk for our growth attributes going forward this year as well.
Scott Kingsley: So I think we think that that's an outsized number, but we're planning for that that could be a risk for our growth attributes going forward this year as well, understanding that there's other people out there just looking for yield. And as rates have started to come down a little bit more, you know, I think some of our sponsors are getting offers from, you know, agency structures and other places, you know, that are too good to turn down.
So I think we think that that's an outsized number, but we're planning for that that could be a risk for our growth attributes going forward this year as well, understanding that there's other people out there just looking for yield. And as rates have started to come down a little bit more, you know, I think some of our sponsors are getting offers from, you know, agency structures and other places, you know, that are too good to turn down.
Speaker #3: Understanding that there's other people out there just looking for yield, and as rates have started to come down a little bit more, I think some of our sponsors are getting offers from agencies, structures, and other places that are too good to turn down.
Speaker #2: Gotcha. And along those same lines, I mean, can you just update us on what you're seeing in terms of loan pipelines and opportunity in terms of tight geography? Particularly curious about Rochester and Buffalo, since you've mentioned them in your opening comments.
Feddie Strickland: Gotcha. And along those same lines, I mean, can you just update us on what you're seeing in terms of loan pipelines, opportunity, you know, in terms of type, geography? I'm particularly curious about Rochester and Buffalo, since you've mentioned them in your opening comments.
Feddie Strickland: Gotcha. And along those same lines, I mean, can you just update us on what you're seeing in terms of loan pipelines, opportunity, you know, in terms of type, geography? I'm particularly curious about Rochester and Buffalo, since you've mentioned them in your opening comments.
Speaker #3: Yeah, thank you. So, across the franchise, from Buffalo to Portland, Maine, from Wilkes-Barre, Pennsylvania to Burlington, demand is good. Pipelines are strong—stronger than they were at this point last year.
Scott Kingsley: Yeah, thank you. So, across the franchise, you know, from Buffalo to Portland, Maine, from Wilkes-Barre, Pennsylvania, to Burlington, demand is good. Pipelines are strong, stronger than they were at this point last year. And, you know, we feel pretty good about the opportunities we're getting to see. You know, we have, as you know, we tend to focus on things that are more holistic from a relationship standpoint. So, you know, CRE-only outcomes for us are not as attractive as, you know, something where there's real estate involved, but we get a full operating relationship with the sponsor or through C&I relationships. So no region appears to have a real gap in demand.
Scott Kingsley: Yeah, thank you. So, across the franchise, you know, from Buffalo to Portland, Maine, from Wilkes-Barre, Pennsylvania, to Burlington, demand is good. Pipelines are strong, stronger than they were at this point last year. And, you know, we feel pretty good about the opportunities we're getting to see. You know, we have, as you know, we tend to focus on things that are more holistic from a relationship standpoint. So, you know, CRE-only outcomes for us are not as attractive as, you know, something where there's real estate involved, but we get a full operating relationship with the sponsor or through C&I relationships. So no region appears to have a real gap in demand.
Speaker #3: And we feel pretty good about the opportunities we're getting to see. We have a, as you know, we tend to focus on things that are more holistic from a relationship standpoint.
Speaker #3: So, CRE-only outcomes for us are not as attractive as something where there's real estate involved, but we get a full operating relationship with the sponsor, or through C&I relationships.
Speaker #3: So, no reason appears to have a real gap in demand, I think, certainly given the cost of building compared to maybe early or mid-2024.
Scott Kingsley: You know, I think certainly given the cost of building, you know, compared to maybe, you know, early or mid 2024, you know, there's not as many projects underway, on the multifamily housing side, which is where we tend to have a concentration. But those that are out there are good opportunities. You know, I, I think the pipeline is good in Western New York, in Rochester, and Buffalo. I think the team is really energized. We've added a couple of really talented people to the group. And I think on a going-forward basis, we're, we're pretty bullish on, opportunities we'll see in Western New York.
You know, I think certainly given the cost of building, you know, compared to maybe, you know, early or mid 2024, you know, there's not as many projects underway, on the multifamily housing side, which is where we tend to have a concentration. But those that are out there are good opportunities. You know, I, I think the pipeline is good in Western New York, in Rochester, and Buffalo. I think the team is really energized. We've added a couple of really talented people to the group. And I think on a going-forward basis, we're, we're pretty bullish on, opportunities we'll see in Western New York.
Speaker #3: There's not as many projects underway on the multifamily housing side, which is where we tend to have a concentration. But those that are out there are good opportunities.
Speaker #3: I think the pipeline is good in Western New York and Rochester and Buffalo. I think the team is really energized. We've added a couple of really talented people to the group, and I think on a going-forward basis, we're pretty bullish on opportunities we'll see in Western New York.
Feddie Strickland: I guess just to drill down on that, I mean, is kind of the, you know, mid to lower single-digit growth rate, you know, a good, a good number for 2026?
Speaker #2: And I guess, just to drill down on that, I mean, is kind of the mid- to lower-single-digit growth rate a good number for '26?
Feddie Strickland: I guess just to drill down on that, I mean, is kind of the, you know, mid to lower single-digit growth rate, you know, a good, a good number for 2026?
Speaker #3: I think it is. And reminding people that we still continue to have our just south of $800 million solar loan portfolio that's in runoff.
Scott Kingsley: I think it is, reminding people that, you know, we still continue to have our just south of $800 million solar loan portfolio that's in runoff. And, you know, if we use last year as a marker for that, that's moving downwards about $100 million a year. So, you know, we're seeing good activity around C&I. And we're seeing good opportunities on the CRE side in most of our marketplaces. And again, we can exercise selectivity as to which ones, you know, we put our best foot forward for. And in fairness, starting in Q4, we saw better consumer lending activity, especially on the mortgage side.
Scott Kingsley: I think it is, reminding people that, you know, we still continue to have our just south of $800 million solar loan portfolio that's in runoff. And, you know, if we use last year as a marker for that, that's moving downwards about $100 million a year. So, you know, we're seeing good activity around C&I. And we're seeing good opportunities on the CRE side in most of our marketplaces. And again, we can exercise selectivity as to which ones, you know, we put our best foot forward for. And in fairness, starting in Q4, we saw better consumer lending activity, especially on the mortgage side.
Speaker #3: And if we used last year as a marker for that, that's moving downwards about $100 million a year. So we're seeing good activity around C&I, and we're seeing good opportunities on the CRE side.
Speaker #3: And most of our marketplaces—and again, we can exercise selectivity as to which ones we put our best foot forward for. And, in fairness, starting in the fourth quarter, we saw better consumer lending activity, especially on the mortgage side.
Scott Kingsley: So upbeat that, you know, that customers potentially who were thinking about moving for the last two or three years, you know, can deal with, you know, a low 6% mortgage rate and, you know, given the dynamic of what most people have as equity in their home, you know, decide to do something else.
Speaker #3: So upbeat that customers, potentially, who were thinking about moving for the last two or three years can deal with a low 6% mortgage rate, and given the dynamic of what most people have as equity in their home, decide to do something else.
So upbeat that, you know, that customers potentially who were thinking about moving for the last two or three years, you know, can deal with, you know, a low 6% mortgage rate and, you know, given the dynamic of what most people have as equity in their home, you know, decide to do something else.
Speaker #2: All right, great. Thanks for the color. I'll step back in.
Feddie Strickland: All right, great. Thanks for the color. I'll step back in the queue.
Feddie Strickland: All right, great. Thanks for the color. I'll step back in the queue.
Speaker #2: queue.
Speaker #3: Thank
Speaker #3: You. And our next question will be coming from
Scott Kingsley: Thank you.
Scott Kingsley: Thank you.
Operator: Our next question will be coming from Mark Fitzgibbon of Piper Sandler. Your line is open, Mark.
Operator: Our next question will be coming from Mark Fitzgibbon of Piper Sandler. Your line is open, Mark.
Speaker #1: Mark Fitzgibbon of Piper Sandler, your line is open.
Speaker #1: is open, Mark. Hey,
Mark Fitzgibbon: Hey, guys. Good morning.
Mark Fitzgibbon: Hey, guys. Good morning.
Speaker #4: Guys, good morning. Good morning. First question, I...
Scott Kingsley: Good morning, Mark.
Scott Kingsley: Good morning, Mark.
Speaker #3: Mark.
Mark Fitzgibbon: First question I had, it looked like, Scott, that you had boosted your reserve against the solar book this quarter by a decent amount. I was curious if anything had, you know, fundamentally changed there.
Mark Fitzgibbon: First question I had, it looked like, Scott, that you had boosted your reserve against the solar book this quarter by a decent amount. I was curious if anything had, you know, fundamentally changed there.
Speaker #4: had, it looked like Scott that you had boosted your reserve against the solar book this quarter by a decent amount. I was curious if anything had fundamentally changed there.
Annette Burns: No fundamental change there. I think we were trying to kind of rightsize our coverage allowance, given that it is a runoff portfolio. So really what you saw this quarter is kind of recalibration of that coverage ratio. But no trends or negative concerns as it relates to that book.
Annette Burns: No fundamental change there. I think we were trying to kind of rightsize our coverage allowance, given that it is a runoff portfolio. So really what you saw this quarter is kind of recalibration of that coverage ratio. But no trends or negative concerns as it relates to that book.
Speaker #4: change there. I think we were trying to kind of right-size our coverage No, fundamental allowance, given that it is a runoff portfolio. So really what you saw this quarter is kind of recalibration of that coverage ratio.
Speaker #4: But no trends or negative concerns as it relates to that book. Okay. And then, secondly, I was curious how, if at all, the tensions between the US and Canada are impacting, sort of, the economy and the northernmost markets at your—
Mark Fitzgibbon: Okay. And then secondly, I was curious how, if at all, the tensions between the US and Canada is impacting sort of the economy in the northernmost markets of your footprint?
Mark Fitzgibbon: Okay. And then secondly, I was curious how, if at all, the tensions between the US and Canada is impacting sort of the economy in the northernmost markets of your footprint?
Speaker #4: footprint.
Speaker #3: Yeah, really good question. And
Scott Kingsley: Yeah, really good question, and I think I may have said this before, Mark, but we love the Canadians. You know, we grew up with those people, and we have a lot of. Our customers have a lot of business that are cross-border, whether that's out in Western New York and Buffalo, or whether that's up in Northern New York, closer to Plattsburgh. It's a real issue. You know, I think that the Canadian customers are just frustrated, whether that means they come, you know, into the Adirondacks for seasonal housing or just straight commerce. I think the unpredictability of where we've been, you know, with tariff rates and what things were gonna be accessible to that point.
Scott Kingsley: Yeah, really good question, and I think I may have said this before, Mark, but we love the Canadians. You know, we grew up with those people, and we have a lot of. Our customers have a lot of business that are cross-border, whether that's out in Western New York and Buffalo, or whether that's up in Northern New York, closer to Plattsburgh. It's a real issue. You know, I think that the Canadian customers are just frustrated, whether that means they come, you know, into the Adirondacks for seasonal housing or just straight commerce. I think the unpredictability of where we've been, you know, with tariff rates and what things were gonna be accessible to that point.
Speaker #3: I think I may have said this before, Mark, but we love the Canadians. We grew up with those people, and a lot of our customers have a lot of business that is cross-border, whether that's out in Western New York and Buffalo, or whether that's up in Northern New York, closer to Plattsburgh.
Speaker #3: It's a real issue. I think that the Canadian customers are just frustrated, whether that means they come into the Adirondacks for seasonal housing or just straight commerce.
Speaker #3: I think the unpredictability of where we've been with tariff rates and what things we're going to be assessable to that point. And I think if I was kind of going through the underlying comments what I have heard from people that I've talked to is a sense of can we trust you still?
Scott Kingsley: And I think if I was to kind of go to the underlying comments, you know, what I have heard from people that I've talked to is, you know, a sense of, you know, "Can we trust you still?" and so I think that's caused hesitation in future investments, or in existing investments, you know, moving forward. So, you know, problematic for us, because those are not the highest areas of long-term growth anyways. So it's really important to have that connection to the Canadian base, you know, for some of our customers to do the things they want to do.
And I think if I was to kind of go to the underlying comments, you know, what I have heard from people that I've talked to is, you know, a sense of, you know, "Can we trust you still?" and so I think that's caused hesitation in future investments, or in existing investments, you know, moving forward. So, you know, problematic for us, because those are not the highest areas of long-term growth anyways. So it's really important to have that connection to the Canadian base, you know, for some of our customers to do the things they want to do.
Speaker #3: And so I think that's caused hesitation in future investment or in existing investment moving forward. So problematic for us because those are not the highest areas of long-term growth anyways.
Speaker #3: So it's really important to have that connection to the Canadian base for some of our customers to do the things they want to
Speaker #3: do. Okay, great.
Mark Fitzgibbon: Okay, great. And then I guess, changing gears a little bit. As you think about M&A, I'm curious, are the hurdle rates of return that you're looking for higher today than in the past, given that the market really hasn't been at all enamored of many acquisitions in recent quarters, and obviously, your own frustration with your stock price post Evans?
Mark Fitzgibbon: Okay, great. And then I guess, changing gears a little bit. As you think about M&A, I'm curious, are the hurdle rates of return that you're looking for higher today than in the past, given that the market really hasn't been at all enamored of many acquisitions in recent quarters, and obviously, your own frustration with your stock price post Evans?
Speaker #4: And then I guess changing gears a little bit, as you think about M&A, I'm curious are the hurdle rates of return that you're looking for higher today than in the past, given that the market really hasn't been that enamored of many acquisitions in recent quarters and obviously your own frustration with your stock price
Speaker #4: Post-Evans? So, a couple of things unbundled.
Scott Kingsley: So, a couple things to unbundle there, but thank you for that. And yes, you know, we think that, you know, if you think about it, you know, combination of the Evans transaction and us improving our net interest margin, you know, 35 or almost 40 basis points last year, has shifted the plateau of our earnings capacity, you know, from somewhere close to $0.80 a quarter to $1. And we think that's pretty noticeable. Worked hard to get to that point. But at the same point in time, you know, the construct around people worried about either the execution risk associated with M&A, you know, or the dilution of your attention to other strategic objectives, not an issue for us.
Scott Kingsley: So, a couple things to unbundle there, but thank you for that. And yes, you know, we think that, you know, if you think about it, you know, combination of the Evans transaction and us improving our net interest margin, you know, 35 or almost 40 basis points last year, has shifted the plateau of our earnings capacity, you know, from somewhere close to $0.80 a quarter to $1. And we think that's pretty noticeable. Worked hard to get to that point. But at the same point in time, you know, the construct around people worried about either the execution risk associated with M&A, you know, or the dilution of your attention to other strategic objectives, not an issue for us.
Speaker #3: there, but thank you for that. And yes, we think that if you think about it, a combination of the Evans transaction and us improving our net interest margin 35 or almost 40 basis points last year, has shifted the plateau of our earnings capacity from somewhere close to 80 cents a quarter to a dollar.
Speaker #3: And we think that's pretty noticeable. We worked hard to get to that point. But at the same point in time, the construct around people worried about either the execution risk associated with M&A or the dilution of your attention to other strategic objectives is not an issue for us.
Scott Kingsley: You know, the Evans transaction went as good as we could have hoped for. Their folks are really engaged. You know, we've had to put them through some changes to, you know, some of our systems, but they've, you know, really been good at bringing that alive. And I think that, you know, from a practical standpoint, they're looking forward going forward. Your question on hurdle rate's a good one. You know, we're a $16 billion bank now. So it's not so much what transaction is large enough for us to be interested in, is that, do we put our folks, our organization, through an M&A opportunity that can't at least generate five cents of- or 5% accretion?
You know, the Evans transaction went as good as we could have hoped for. Their folks are really engaged. You know, we've had to put them through some changes to, you know, some of our systems, but they've, you know, really been good at bringing that alive. And I think that, you know, from a practical standpoint, they're looking forward going forward. Your question on hurdle rate's a good one. You know, we're a $16 billion bank now. So it's not so much what transaction is large enough for us to be interested in, is that, do we put our folks, our organization, through an M&A opportunity that can't at least generate five cents of- or 5% accretion?
Speaker #3: The Evans transaction went as well as we could have hoped for. There are folks who are really engaged that we've had to put through some changes to some of our systems, but they've really been good at bringing that alive.
Speaker #3: And I think that from a practical standpoint, they're looking forward going forward. Your question on hurdle rates is a good one. We're a $16 billion bank now.
Speaker #3: So it's not so much what transaction is large enough for us to be interested in is that do we put our folks, our organization, through an M&A opportunity that can't at least generate 5 cents or 5% accretion?
Scott Kingsley: So if we're running kind of off a base of $4 a share, you know, does something have to be north of $0.20 a share for us to really take a hard run at that? Now, you can look at a bunch of different things, and you can accomplish that in a bunch of different ways. You know, but for us, it's generally been, you know, a modest extension of the franchise geographically, or a really productive fill-in opportunity where our concentration hasn't been as high as we'd like it to be. So still having lots of conversations. You know, there's a lot of high quality, like-minded, smaller community banks, you know, across our 7 states. So the opportunities are there, and that's how we kind of think about it from a capital deployment mark.
Speaker #3: So if we're running kind of off a base of $4 a share, does something have to be north of 20 cents a share for us to really take a hard run at that?
So if we're running kind of off a base of $4 a share, you know, does something have to be north of $0.20 a share for us to really take a hard run at that? Now, you can look at a bunch of different things, and you can accomplish that in a bunch of different ways. You know, but for us, it's generally been, you know, a modest extension of the franchise geographically, or a really productive fill-in opportunity where our concentration hasn't been as high as we'd like it to be. So still having lots of conversations. You know, there's a lot of high quality, like-minded, smaller community banks, you know, across our 7 states. So the opportunities are there, and that's how we kind of think about it from a capital deployment mark.
Speaker #3: Now, you can look at a bunch of different things, and you can accomplish that in a bunch of different ways. But for us, it's generally been a modest extension of the franchise geographically or a really productive fill-in opportunity where our concentration hasn't been as high as we'd like it to be.
Speaker #3: So still having lots of conversations, there's a lot of high-quality like-minded smaller community banks across our seven states. So the opportunities are there. And that's how we kind of think about it from a capital deployment,
Speaker #3: Mark. Great.
Mark Fitzgibbon: Great, thank you.
Mark Fitzgibbon: Great, thank you.
Speaker #4: Thank you.
Speaker #1: And our next question will be coming from Thomas Reed of Raymond James. Your line is open, Thomas.
Operator: Our next question will be coming from Thomas Reid of Raymond James. Your line is open, Thomas.
Operator: Our next question will be coming from Thomas Reid of Raymond James. Your line is open, Thomas.
Speaker #4: Hey, guys. This is Thomas on for Steve. Thanks for taking my question. Just wanted to start off, maybe as you guys are looking—or excuse me, as you look to deepen your presence in select markets to support growth, can you talk about maybe any planned hiring initiatives that you may have and whether those investments are already reflected in that expense?
Thomas Reid: Hey, guys, this is Thomas on for Steve. Thanks for taking my question. Just wanted to start off, you know, maybe as you guys are looking, or excuse me, as you look to deepen your presence in select markets to support growth, can you talk about maybe any planned hiring initiatives that you may have, and whether those investments are already reflected in that expense guidance?
Thomas Reid: Hey, guys, this is Thomas on for Steve. Thanks for taking my question. Just wanted to start off, you know, maybe as you guys are looking, or excuse me, as you look to deepen your presence in select markets to support growth, can you talk about maybe any planned hiring initiatives that you may have, and whether those investments are already reflected in that expense guidance?
Speaker #4: guidance? Yeah.
Scott Kingsley: Yeah, and I might even ask Joe to help me a little bit on this one. So I think we believe that all of our geographies are investable today. So yeah, I just use an example. We've added a couple of really high-quality folks to the team up in Maine. You know, we have a really nice base of customers in Maine, but we never fully extended our reach from the standpoint of full holistic banking. And we're doing more of that. So the folks that we've brought on board have C&I backgrounds. We've committed to a branch site off the wharf in Portland, our first true retail branch site, and we're about to make a commitment for another one up there. Joe?
Scott Kingsley: Yeah, and I might even ask Joe to help me a little bit on this one. So I think we believe that all of our geographies are investable today. So yeah, I just use an example. We've added a couple of really high-quality folks to the team up in Maine. You know, we have a really nice base of customers in Maine, but we never fully extended our reach from the standpoint of full holistic banking. And we're doing more of that. So the folks that we've brought on board have C&I backgrounds. We've committed to a branch site off the wharf in Portland, our first true retail branch site, and we're about to make a commitment for another one up there. Joe?
Speaker #3: And I might even ask Joe to help me a little bit on this one. So I think we believe that all of our geographies are investable today.
Speaker #3: So I just use an example. We've added a couple of really high-quality folks to the team up in Maine. We have a really nice base of customers in Maine, but we never fully extended our reach from the standpoint of full holistic banking and we're doing more of that.
Speaker #3: So the folks that we've brought on board have CNI backgrounds. We've committed to a branch site off the Wharf in Portland. Our first true retail branch site.
Speaker #3: And we're about to make a commitment for another one up.
Speaker #3: there. Joe? Yeah, sure,
Joseph Ondesko: Yeah, sure, Scott. Branch site, you know, just off the wharf, we call it Bayside. It's in a marginal way. We've also signed a letter of intent down in Scarborough, so building out our main presence, really important to us. And why is that? We have good quality bankers up there and adding good quality bankers to the team, which Scott just alluded to. Down over in Western New York, the same thing, really good quality hires across all parts of the bank, including insurance and mortgage. Scott mentioned our mortgage results the last quarter or so. We're seeing some really nice pipelines across our entire footprint. So where are our focus areas?
Joseph Stagliano: Yeah, sure, Scott. Branch site, you know, just off the wharf, we call it Bayside. It's in a marginal way. We've also signed a letter of intent down in Scarborough, so building out our main presence, really important to us. And why is that? We have good quality bankers up there and adding good quality bankers to the team, which Scott just alluded to. Down over in Western New York, the same thing, really good quality hires across all parts of the bank, including insurance and mortgage. Scott mentioned our mortgage results the last quarter or so. We're seeing some really nice pipelines across our entire footprint. So where are our focus areas?
Speaker #2: Scott. Branch site just off the Wharf. We call it Bayside. It's a marginal way. We've also signed a letter of intent down in Scarborough.
Speaker #2: So, building out our main presence is really important to us. And why is that? We have good quality bankers up there, and we're adding good quality.
Speaker #2: Bankers to the team, which Scott just alluded to. Down over in Western New York, the same thing—really good quality hires across all parts of the bank.
Speaker #2: Including insurance and mortgage. Scott mentioned our mortgage results the last quarter or so. We're seeing some really nice pipelines across our entire footprint. So where are our focus areas?
Speaker #2: Definitely New England. Maine, we mentioned, but also New Hampshire—the greater Manchester market—a really important market for us, where we're looking for some growth opportunities with some new branches.
Joseph Ondesko: Definitely New England, you know, Maine, we mentioned, but also New Hampshire, the greater Manchester market, really important market for us, where we're looking for some growth opportunities with some new branches, as well as in Rochester. Already looking at sites in Rochester. We have a letter of intent that we've signed in the city and planning on moving a financial center there in downtown Rochester, as well as across other parts of the western region. So still in targets as well as some of our newer markets. We're excited about the prospects that they're gonna bring to us.
Definitely New England, you know, Maine, we mentioned, but also New Hampshire, the greater Manchester market, really important market for us, where we're looking for some growth opportunities with some new branches, as well as in Rochester. Already looking at sites in Rochester. We have a letter of intent that we've signed in the city and planning on moving a financial center there in downtown Rochester, as well as across other parts of the western region. So still in targets as well as some of our newer markets. We're excited about the prospects that they're gonna bring to us.
Speaker #2: As well as in Rochester, we're already looking at sites in Rochester. We have a letter of intent that we've signed in the city, and we're planning on moving a financial center there in downtown Rochester.
Speaker #2: As well as across other parts of the Western region. So still in targets as well as some of our newer markets. We're excited about the prospects that they're going to bring to us.
Speaker #3: Thanks,
Scott Kingsley: Thanks, Joe.
Scott Kingsley: Thanks, Joe.
Speaker #3: Joe.
Speaker #1: As a reminder to
Operator: As a reminder, to ask a question, please press star one, one on your telephone and wait for your name to be announced. Our next question from David Konrad of KBW. Your line is open.
Operator: As a reminder, to ask a question, please press star one, one on your telephone and wait for your name to be announced. Our next question from David Konrad of KBW. Your line is open.
Speaker #1: To ask questions, please press *11 on your telephone and wait for your name to be announced. Our next question comes from David Conrad of KBW.
Speaker #1: Your line is
Speaker #1: open. Hey, good morning.
David Konrad: Hey, good morning. Just had a question on the NIM-
David Konrad: Hey, good morning. Just had a question on the NIM-
Speaker #5: I just had a question out to Dim. Hey, the Dim Outlook next year, it feels like maybe stability might be the key phrase. I'm not sure, but the great news is your deposit costs are down to 2%.
Scott Kingsley: Hey.
Scott Kingsley: Hey.
David Konrad: Hi, the NIM outlook next year. It feels like maybe stability might be the key phrase. I'm not sure, but, you know, the great news is your deposit costs are down to 2%. The bad news is your deposit costs are down to 2%. It might be challenging to reprice and your commercial book, now the portfolio seems to be pretty close to new origination. So maybe talk about the NIM outlook over the next few quarters.
David Konrad: Hi, the NIM outlook next year. It feels like maybe stability might be the key phrase. I'm not sure, but, you know, the great news is your deposit costs are down to 2%. The bad news is your deposit costs are down to 2%. It might be challenging to reprice and your commercial book, now the portfolio seems to be pretty close to new origination. So maybe talk about the NIM outlook over the next few quarters.
Speaker #5: The bad news is your deposit costs are down to 2%. It might be challenging to reprice and your commercial book now the portfolio seems to be pretty close to the new origination.
Speaker #5: So maybe talk about the Dim Outlook over the next few
Speaker #5: So maybe talk about the Dim Outlook over the next few quarters. Sure.
Mark Fitzgibbon: Sure. I'll start on that one. So, you know, you're right. You know, we have our net interest margin at 3.65% is, you know, a very strong NIM. You know, we can really-
Annette Burns: Sure. I'll start on that one. So, you know, you're right. You know, we have our net interest margin at 3.65% is, you know, a very strong NIM. You know, we can really-
Speaker #6: I'll start on that one. So you're right. We have our net interest margin at 3.65%, which is a very strong NIM. We can really throw off some nice core earnings with a NIM like that.
Annette Burns: ... throw off some nice core earnings with a NIM like that. We're neutrally positioned, so we've been actively managing through federal funds rate cuts over the last few months. So when we think about our margin expansion, it's probably in that 2 or 3 basis points a quarter. You know, some of the factors that will influence our ability to reprice our book, if you think about the lending side, probably our largest opportunity is in the residential mortgage book, where we probably have somewhere in the 125 to 130 basis points of room there. Our other books are probably pretty close to market rates at this point. Another area where there's some opportunity is in our investment securities book. Still have some repricing opportunity there.
... throw off some nice core earnings with a NIM like that. We're neutrally positioned, so we've been actively managing through federal funds rate cuts over the last few months. So when we think about our margin expansion, it's probably in that 2 or 3 basis points a quarter. You know, some of the factors that will influence our ability to reprice our book, if you think about the lending side, probably our largest opportunity is in the residential mortgage book, where we probably have somewhere in the 125 to 130 basis points of room there. Our other books are probably pretty close to market rates at this point. Another area where there's some opportunity is in our investment securities book. Still have some repricing opportunity there.
Speaker #6: We're neutrally positioned, so we've been actively managing through Federal Funds rate cuts over the last few months. So, when we think about our margin expansion, it's probably in that two or three basis points a quarter.
Speaker #6: Some of the factors that will influence our ability to reprice our book, if you think about the lending side, probably our largest opportunity is in the residential mortgage book where we probably have somewhere in the 125 to 130 basis points of room there.
Speaker #6: Our other books are probably pretty close to market rates at this point. Another area where there's some opportunity is in our investment securities book.
Speaker #6: Still have some repricing opportunity there. Probably throws somewhere around $25 million in cash flows a month. You're spot on, we have very low funding costs.
Annette Burns: Probably flows somewhere around $25 million in cash flows a month. You're spot on, you know, we have very low funding costs. We talked about having right around $6 billion in deposits that we can, you know, actively reprice with market sensitivity. You know, probably the biggest opportunity there is in our CD book. You know, probably 77% of that reprices in the next two quarters. So I think there is some room, but probably not to the extent that we've seen in 2025. It's probably limited to a few basis points. Net interest income improvement is probably gonna be more focused on, you know, our earning asset growth and the opportunities that we have there.
Probably flows somewhere around $25 million in cash flows a month. You're spot on, you know, we have very low funding costs. We talked about having right around $6 billion in deposits that we can, you know, actively reprice with market sensitivity. You know, probably the biggest opportunity there is in our CD book. You know, probably 77% of that reprices in the next two quarters. So I think there is some room, but probably not to the extent that we've seen in 2025. It's probably limited to a few basis points. Net interest income improvement is probably gonna be more focused on, you know, our earning asset growth and the opportunities that we have there.
Speaker #6: We talked about having right around $6 billion in deposits that we can actively reprice with market sensitivity. Probably the biggest opportunity there is in our CD book.
Speaker #6: Probably 77% of that reprices in the next two quarters. So I think there is some room, but probably not to the extent that we've seen in 2025.
Speaker #6: It's probably limited to a few basis points. Net interest income improvement is probably going to be more focused on our earning asset growth and the opportunities that—
Speaker #6: we have there. Yeah.
Scott Kingsley: Yeah, and then I'll just follow up with that. It's a good observation, Dave, on the commercial crossover where, you know, for the quarter, new activity or new loans had a rate that was not terribly different than portfolio yields. Some of that was yield curve based during 2025. Remember that the two to five-year point of the curve kind of came down 60 to 75 basis points during the year. So, when you started the year and said, "Hey, listen, I still got a gap between new production and portfolio yields," some of that got taken away with just natural market activity. In a couple of our markets, we're seeing a little bit of pressure on spread. They typically are the best assets.
Scott Kingsley: Yeah, and then I'll just follow up with that. It's a good observation, Dave, on the commercial crossover where, you know, for the quarter, new activity or new loans had a rate that was not terribly different than portfolio yields. Some of that was yield curve based during 2025. Remember that the two to five-year point of the curve kind of came down 60 to 75 basis points during the year. So, when you started the year and said, "Hey, listen, I still got a gap between new production and portfolio yields," some of that got taken away with just natural market activity. In a couple of our markets, we're seeing a little bit of pressure on spread. They typically are the best assets.
Speaker #3: And then I'll just follow up with that. It's a good observation, Dave, on the commercial crossover where, for the quarter, new activity or new loans were at a rate that was not terribly different than portfolio yields.
Speaker #3: Some of that was yield curve based during 2025. Remember that the 2 to 5-year point of the curve kind of came down 60 to 75 basis points during the year.
Speaker #3: So when you started the year and said, "Hey, listen, I still got a gap between new production and portfolio yields," some of that got taken away with just natural market activity.
Speaker #3: In a couple of our markets, we're seeing a little bit of pressure on spread. They typically are the best assets. And so, needless to say, whether we're defending or seeing something new, we're very interested in those types of credits.
Scott Kingsley: And, you know, so needless to say, whether we're defending or seeing something new, you know, we're very interested in those types of credits. You know, but holding to, you know, a north of 200 or 225 spread above SOFR has been more difficult in recent months. And maybe that's just a function of market demand right now. You know, there was a little bit of a, you know, a little bit of slowdown in the second half of the year. And it makes a comment about, you know, our opportunity in, in, on the CD book. You know, CD duration today for everybody, not just us, is damn short.
And, you know, so needless to say, whether we're defending or seeing something new, you know, we're very interested in those types of credits. You know, but holding to, you know, a north of 200 or 225 spread above SOFR has been more difficult in recent months. And maybe that's just a function of market demand right now. You know, there was a little bit of a, you know, a little bit of slowdown in the second half of the year. And it makes a comment about, you know, our opportunity in, in, on the CD book. You know, CD duration today for everybody, not just us, is damn short.
Speaker #3: But holding to a north of 200 or 225 spread above SOFR has been more difficult in recent months. And maybe that's just a function of market demand right now.
Speaker #3: There was a little bit of a slowdown in the second half of the year, and it made the comment about our opportunity in the CD book.
Speaker #3: CD duration today for everybody, not just us, is damn short—five to seven to nine-month instruments. Whether we start to see some elongation from us or from others on that.
Scott Kingsley: You know, 5- to 7- to 9-month instruments, and whether we start to see some elongation from us or from others on that so people can lock in some yields, you know, as the, as it looks like the rate structure is more, you know, moving in a direction of down, not up. And lastly, I'll remind everybody that, you know, the customer is used to getting a yield for the last 3 years. So if you're a customer with significant liquidity, whether you've kept it on a bank balance sheet or moved it off, you know, you're used to getting a yield. After going 13 or 14 years with no yield, you now know what that looks like.
You know, 5- to 7- to 9-month instruments, and whether we start to see some elongation from us or from others on that so people can lock in some yields, you know, as the, as it looks like the rate structure is more, you know, moving in a direction of down, not up. And lastly, I'll remind everybody that, you know, the customer is used to getting a yield for the last 3 years. So if you're a customer with significant liquidity, whether you've kept it on a bank balance sheet or moved it off, you know, you're used to getting a yield. After going 13 or 14 years with no yield, you now know what that looks like.
Speaker #3: So, people can lock in some yields as it looks like the rate structure is moving more in a direction of down, not up. And lastly, I'll remind everybody that the customers are used to getting a yield for the last three years.
Speaker #3: So, if you're a customer with significant liquidity, whether you've kept it on a bank balance sheet or moved it off, you're used to getting a yield.
Speaker #3: After going 13 or 14 years with no yield, you now know what that looks like. So I think people utilize the tools that we give them from a treasury management standpoint, and they're very smart with how they do funds
Scott Kingsley: So, I think people utilize the tools that we give them from a treasury management standpoint, and they're very smart with how they do funds management.
So, I think people utilize the tools that we give them from a treasury management standpoint, and they're very smart with how they do funds management.
Speaker #3: management. Great.
David Konrad: Great. Thank you. Appreciate it.
David Konrad: Great. Thank you. Appreciate it.
Speaker #5: Appreciate And our next
Speaker #5: it.
Annette Burns: Thank you.
Annette Burns: Thank you.
Operator: Our next question will be coming from Daniel Cardenas of Janney Montgomery Scott. Your line is open, Daniel.
Operator: Our next question will be coming from Daniel Cardenas of Janney Montgomery Scott. Your line is open, Daniel.
Speaker #1: Question. We'll be coming from Daniel Cardenas of Janney Montgomery Scott. Your line is open.
Speaker #1: Daniel. Good morning, guys.
Daniel Cardenas: Good morning, guys. How are you?
Daniel Cardenas: Good morning, guys. How are you?
Speaker #5: How are
Speaker #5: you? Good
Scott Kingsley: Morning.
Scott Kingsley: Morning.
Daniel Cardenas: So maybe just a question on competitive factors throughout your footprint on the lending side. Would you say competition is fairly rational, or are you beginning to see perhaps a pickup in pressure as people are looking for growth?
Daniel Cardenas: So maybe just a question on competitive factors throughout your footprint on the lending side. Would you say competition is fairly rational, or are you beginning to see perhaps a pickup in pressure as people are looking for growth?
Speaker #5: So maybe, morning. Just a quick question on competitive factors. Throughout your footprint, on the lending side, would you say competition is fairly rational? Are you beginning to see, perhaps, a pickup in pressure as people are looking for
Speaker #5: growth? Yeah.
Scott Kingsley: Yeah, I would say a little bit as people are looking for growth. And if nothing else, a lot of defense when people have really solid customers, where, you know, where they're the incumbent, where they're defending. I don't think we've seen anything irrational from a structural standpoint. And, you know, those have seemed to make sense for us. You know, I mentioned before, some of our payoffs came from agency-based funding sources, where in fairness, both structure and rate is something that are better normally for the customer than, you know, what our standards actually allow for, that way. But I think it's pervasive, and we have so many different markets to be participating in, that I wouldn't make a general construct out of that just today.
Scott Kingsley: Yeah, I would say a little bit as people are looking for growth. And if nothing else, a lot of defense when people have really solid customers, where, you know, where they're the incumbent, where they're defending. I don't think we've seen anything irrational from a structural standpoint. And, you know, those have seemed to make sense for us. You know, I mentioned before, some of our payoffs came from agency-based funding sources, where in fairness, both structure and rate is something that are better normally for the customer than, you know, what our standards actually allow for, that way. But I think it's pervasive, and we have so many different markets to be participating in, that I wouldn't make a general construct out of that just today.
Speaker #3: I would say a little bit, as people are looking for growth. And if nothing else, a lot of defense when people have really solid customers where they're the incumbent, where they're defending.
Speaker #3: I don't think we've seen anything irrational from a structural standpoint, and those have seemed to make sense for us. I mentioned before some of our payoffs came from agency-based funding sources, where, in fairness, both structure and rate are usually better for the customer than what our standards actually allow for that way.
Speaker #3: But I think it's pervasive. And we have so many different markets to be participating in that I wouldn't make a general construct out of that just today.
Speaker #3: But I will say this. If you're a highly rated company and you're doing well and you have a history of doing well, you've been able to demand a lower spread if you're interested in new money this year.
Scott Kingsley: But I will say this, if you're, you know, a highly rated company and you're, you know, you're doing well, and you have a history of doing well, you've been able to demand a lower spread if you're interested in new money this year.
But I will say this, if you're, you know, a highly rated company and you're, you know, you're doing well, and you have a history of doing well, you've been able to demand a lower spread if you're interested in new money this year.
Daniel Cardenas: Good. Good. And then on the deposit front, are there any markets that are able to absorb a decrease in rates as rates come down? You know, are you going to be able to push down deposit costs in any markets better than others?
Daniel Cardenas: Good. Good. And then on the deposit front, are there any markets that are able to absorb a decrease in rates as rates come down? You know, are you going to be able to push down deposit costs in any markets better than others?
Speaker #5: Good. Good. And then on the deposits front, are there any markets that are better able to absorb a decrease in rates as rates come down?
Speaker #5: Are you going to be able to push down deposit costs in any markets better than
Speaker #5: others? Yeah.
Scott Kingsley: I would kind of frame it this way, and Annette, if you have something else, let me know. But, you know, our you know, we have such good market share in so many of our legacy markets, you know, that we've been able to do rational things as rates decline in those markets, you know, pretty uniformly. In some of our other markets where we don't enjoy that kind of a share, you know, maybe we've had to, you know, keep rates a little higher for a little bit longer, or we've got some concentration characteristics that haven't forced down the rates, you know, as fast as the Fed has moved. But generally speaking, Q4 was, you know, pretty indicative of that.
Speaker #3: I would kind of frame it this way. And Annette, if you have something else, let me know. But we have such good market share in so many of our legacy markets that we've been able to do rational things as rates decline in those markets pretty uniformly.
Scott Kingsley: I would kind of frame it this way, and Annette, if you have something else, let me know. But, you know, our you know, we have such good market share in so many of our legacy markets, you know, that we've been able to do rational things as rates decline in those markets, you know, pretty uniformly. In some of our other markets where we don't enjoy that kind of a share, you know, maybe we've had to, you know, keep rates a little higher for a little bit longer, or we've got some concentration characteristics that haven't forced down the rates, you know, as fast as the Fed has moved. But generally speaking, Q4 was, you know, pretty indicative of that.
Speaker #3: In some of our other markets where we don't enjoy that kind of a share, maybe we've had to keep rates a little higher for a little bit longer, or we've got some concentration characteristics that haven't forced down the rates as fast as the Fed has moved.
Speaker #3: But generally speaking, the fourth quarter was pretty indicative of that. $3 billion of our assets repriced immediately upon a Fed's fund decline. And it takes us a little bit longer.
Scott Kingsley: You know, $3 billion of our assets reprice immediately upon a Fed funds decline, and it takes us a little bit longer. There's a little lag there to get the funding costs down. Maybe we're a month or six weeks behind, but so far, we've been pretty diligent at getting it to that point.
You know, $3 billion of our assets reprice immediately upon a Fed funds decline, and it takes us a little bit longer. There's a little lag there to get the funding costs down. Maybe we're a month or six weeks behind, but so far, we've been pretty diligent at getting it to that point.
Speaker #3: There's a little lag there to get the funding costs down, maybe where a month or six weeks behind. But so far, we've been pretty diligent at getting it to that point.
Speaker #3: There's a little lag there to get the funding costs down, maybe we're a month or six weeks behind. But so far, we've been pretty diligent at getting it to that point.
Speaker #5: Great. And then just last question for me on the credit quality front. Any areas that you guys are perhaps tapping the brakes on? I mean, the credit metrics are good.
Daniel Cardenas: ... And then just last question for me on the credit quality front. You know, any areas that you guys are perhaps tapping the brakes on? Your credit metrics are good. Just wondering if you know, maybe you're approaching any particular area with a little bit more caution than maybe you were, you know, 2, 3 quarters ago.
Daniel Cardenas: ... And then just last question for me on the credit quality front. You know, any areas that you guys are perhaps tapping the brakes on? Your credit metrics are good. Just wondering if you know, maybe you're approaching any particular area with a little bit more caution than maybe you were, you know, 2, 3 quarters ago.
Speaker #5: Just wondering if maybe you're approaching any particular area with a little bit more caution than maybe you were two or three quarters ago.
Annette Burns: Well, not necessarily anything new. You know, we have a pretty diversified book, so, you know, we pay attention to concentrations. You know, we're probably a little less excited about hospitality or the office space, but that's, that's not new. So I don't think we have anything that's specific emerging trend from, you know, something that we're going to shy away with. Continuing to just monitor as maturities come due and make sure we understand, you know, what our customer's position is and their ability to refi when that maturity happens. But also pretty well balanced as far as, you know, what our maturity - no, no large maturity walls or anything like that.
Annette Burns: Well, not necessarily anything new. You know, we have a pretty diversified book, so, you know, we pay attention to concentrations. You know, we're probably a little less excited about hospitality or the office space, but that's, that's not new. So I don't think we have anything that's specific emerging trend from, you know, something that we're going to shy away with. Continuing to just monitor as maturities come due and make sure we understand, you know, what our customer's position is and their ability to refi when that maturity happens. But also pretty well balanced as far as, you know, what our maturity - no, no large maturity walls or anything like that.
Speaker #4: Not necessarily anything new. We have a pretty diversified book. So we pay attention to concentrations or probably a little less excited about hospitality or the office space.
Speaker #4: But that's not new. So I don't think we have anything that's specific emerging trend from something that we're going to shy away with. Continuing to just monitor as maturities come due and make sure we understand what our customers' position is and their ability to refi when that maturity happens.
Speaker #4: But also pretty well balanced as far as what our maturity no large maturity walls or anything like that. So just navigating customers and paying attention to our industry composition, but really no emerging industry or anything we're avoiding at this point.
Annette Burns: So just navigating customers and paying attention to our industry composition, but really no emerging industry or anything we're avoiding at this point.
So just navigating customers and paying attention to our industry composition, but really no emerging industry or anything we're avoiding at this point.
Daniel Cardenas: Great. That's it for me. I'll step back. Thank you.
Daniel Cardenas: Great. That's it for me. I'll step back. Thank you.
Speaker #5: Great. That's it for me. I'll step back. Thank
Speaker #5: you. Thank you.
Scott Kingsley: Thank you.
Scott Kingsley: Thank you.
Speaker #1: And our next question will be coming from Matthew Brief of...
Speaker #1: And our next question will be coming from Matthew Brief of...
Operator: Our next question will be coming from Matthew Breese of Stephens-
Operator: Our next question will be coming from Matthew Breese of Stephens-
Speaker #1: C...
Matthew Breese: Hey, good morning.
Matthew Breese: Hey, good morning.
Scott Kingsley: Good morning, Matt.
Scott Kingsley: Good morning, Matt.
Matthew Breese: I wanted to touch on charge-offs a little bit. You know, for a while there, meaning, you know, for the years kind of preceding COVID, you know, charge-offs at NBTB could be anywhere from 30 to 35 basis points per quarter, routinely. And with the consumer balances in, in wind down and coming down, should we reframe charge-off expectations here to something lower? And, and how would you kind of characterize normal with the makeup of the current book?
Speaker #6: I wanted to touch Matt. on charge-offs a little bit. For a while there, meaning for the years kind of preceding COVID, charge-offs at MBTB could be anywhere from 30 to 35 basis points per quarter, routinely.
Matthew Breese: I wanted to touch on charge-offs a little bit. You know, for a while there, meaning, you know, for the years kind of preceding COVID, you know, charge-offs at NBTB could be anywhere from 30 to 35 basis points per quarter, routinely. And with the consumer balances in, in wind down and coming down, should we reframe charge-off expectations here to something lower? And, and how would you kind of characterize normal with the makeup of the current book?
Speaker #6: And with the consumer balances, and wind down, and coming down, should we reframe charge-off expectations here to something lower? And how would you kind of characterize normal with the makeup of the current book?
Speaker #4: Yeah, Matt, that's a good question. Back in maybe five or six years ago, our charge-off rates were probably somewhere in that 25 to 30 basis points.
Annette Burns: Yeah, Matt, that's a good question. You know, back in, you know, maybe five or six years ago, our charge-off rates were probably somewhere in that 25 to 30 basis points. We had a fairly large unsecured consumer book with our LendingClub and Springstone portfolio, as well as our residential solar book, which has much less of an impact. So those were throwing off a little bit higher charge-off rates. As those books wind down, we would expect to see more, you know, lower levels of charge-offs and kind of where we've been running at, somewhere in the 20 basis points range. You know, 15 to 20 basis points range is probably kind of more normalized as those books become smaller and smaller.
Annette Burns: Yeah, Matt, that's a good question. You know, back in, you know, maybe five or six years ago, our charge-off rates were probably somewhere in that 25 to 30 basis points. We had a fairly large unsecured consumer book with our LendingClub and Springstone portfolio, as well as our residential solar book, which has much less of an impact. So those were throwing off a little bit higher charge-off rates. As those books wind down, we would expect to see more, you know, lower levels of charge-offs and kind of where we've been running at, somewhere in the 20 basis points range. You know, 15 to 20 basis points range is probably kind of more normalized as those books become smaller and smaller.
Speaker #4: We had a fairly large unsecured consumer book with our Lending Club in the Springstone portfolio, as well as our residential solar book, which has much less of an impact.
Speaker #4: So those were throwing off a little bit higher charge-off rates. As those books wind down, we would expect to see more lower levels of charge-offs and kind of where we've been running at somewhere in the 20 basis points range.
Speaker #4: 15 to 20 basis points range is probably kind of more normalized as those books become smaller and smaller. Just I think residential solar is somewhere in the 90 to 95 percent charge-off rate.
Annette Burns: You know, I think residential solar is somewhere in the, you know, 90 to 95% charge-off rate, basis point charge-off rate, versus, versus probably somewhere in the closer to, you know, 8 to 10 with that prior book. So, so really, I think that's kind of where we are in 2025, is kind of probably that new normalized rate.
You know, I think residential solar is somewhere in the, you know, 90 to 95% charge-off rate, basis point charge-off rate, versus, versus probably somewhere in the closer to, you know, 8 to 10 with that prior book. So, so really, I think that's kind of where we are in 2025, is kind of probably that new normalized rate.
Speaker #4: Basis point charge-off rate, versus probably somewhere in the closer to 8 to 10 with that prior book. So really, I think that that's kind of where we are in 2025—it's probably that new normalized rate.
Speaker #3: Yeah. And I think, Matt, if you think about it, that we've done such a good job in indirect auto lending and our losses historically.
Scott Kingsley: Yeah, and I think, Matt, if you think about it, that we've done such a good job in indirect auto lending and our losses historically, you know, have kind of been between, you know, 20 to 35 basis points. So despite the cars being way more expensive in 2026 than the last time Matt Breese bought a car, they, you know, we've, we've held in very well on that, and the customers have performed quite well on that side. Someone read to me the other day a statistic that our, our combined mortgage losses from 2020 to 2025 were $31,000. So, you know, we continue to lead with that product. It's really, really important in our core marketplaces.
Scott Kingsley: Yeah, and I think, Matt, if you think about it, that we've done such a good job in indirect auto lending and our losses historically, you know, have kind of been between, you know, 20 to 35 basis points. So despite the cars being way more expensive in 2026 than the last time Matt Breese bought a car, they, you know, we've, we've held in very well on that, and the customers have performed quite well on that side. Someone read to me the other day a statistic that our, our combined mortgage losses from 2020 to 2025 were $31,000. So, you know, we continue to lead with that product. It's really, really important in our core marketplaces.
Speaker #3: I've kind of been between 20 to 35 basis points. So despite the cars being way more expensive in 2026 than the last time Matt Brief bought a car, they we've held in very well on that.
Speaker #3: And the customers have performed quite well on that side. So in red to me the other day, a statistic that our combined mortgage losses from 2020 to 2025 were $31,000.
Speaker #3: So we continue to lead with that product. It's really, really important in our core marketplaces. And so many other opportunities present themselves once you're the core lender on the mortgage side.
Scott Kingsley: So many other opportunities present themselves once you're the core lender on the mortgage side. So, I don't see us, you know, taking our focus away from that line of business either.
So many other opportunities present themselves once you're the core lender on the mortgage side. So, I don't see us, you know, taking our focus away from that line of business either.
Speaker #3: So I don't see us taking our focus away from that line of business
Speaker #3: either. Got it.
Matthew Breese: Got it. Yeah, not the, not the greatest auto customer here. Annette, while you were discussing the reserve on solar, has the appetite to sell that book changed at all? And maybe I'm connecting the wrong dots, but one of my thoughts as you were, you know, discussing the recalibration there, was whether or not you've been listening to bids or rethought kind of, you know, what the mark should be on that book.
Matthew Breese: Got it. Yeah, not the, not the greatest auto customer here. Annette, while you were discussing the reserve on solar, has the appetite to sell that book changed at all? And maybe I'm connecting the wrong dots, but one of my thoughts as you were, you know, discussing the recalibration there, was whether or not you've been listening to bids or rethought kind of, you know, what the mark should be on that book.
Speaker #6: Yeah. Not the greatest auto customer here. Annette, while you were discussing the reserve on solar, has the appetite to sell that book changed at all?
Speaker #6: And maybe I'm connecting the wrong dots, but one of my thoughts as you were discussing the recalibration there was whether or not you've been listening to bids or rethought kind of what the mark should be on that book.
Speaker #3: I'll start with that one, Matt, and have Annette jump in as well. The dilemma we have is so much of our production was sort of in the 2020 to early 2023 timeframe.
Scott Kingsley: I'll start with that one, Matt, and have Annette, you know, jump in as well. The dilemma we have is so much of our production, you know, was sort of in the 2020 to early 2023 timeframe, where we experienced really productive, but substantial growth in that portfolio. I think we all knew what the rate structures looked like in the world then. So, you know, from a marketability of that portfolio, which we would move out of, if we could find something that made sense for us, but right now, it's really just a rate question. I think the assets are performing much better than most other solar portfolios in terms of loss rates and customer performance, but the rates are low.
Scott Kingsley: I'll start with that one, Matt, and have Annette, you know, jump in as well. The dilemma we have is so much of our production, you know, was sort of in the 2020 to early 2023 timeframe, where we experienced really productive, but substantial growth in that portfolio. I think we all knew what the rate structures looked like in the world then. So, you know, from a marketability of that portfolio, which we would move out of, if we could find something that made sense for us, but right now, it's really just a rate question. I think the assets are performing much better than most other solar portfolios in terms of loss rates and customer performance, but the rates are low.
Speaker #3: Where we experienced really productive but substantial growth in that portfolio. And I think we all knew what the rate structures looked like in the world then.
Speaker #3: So from a marketability of that portfolio, which we would move out of if we could find something that made sense for us. But right now, it's really just a rate question.
Speaker #3: I think the assets are performing much better than most other solar portfolios in terms of loss rates and customer performance, but the rates are low.
Speaker #3: And so for us to do that, it would be a substantial outcome. And much like investment portfolio restructurings, we're kind of purist. If we can't find something that's got a terminal value above zero, we don't like to do it.
Scott Kingsley: And, you know, so for us to do that, you know, would be, you know, a substantial outcome. And, you know, much like, you know, investment portfolio restructurings, you know, we're kind of purists. If we can't find something that's got a terminal value above zero, we don't like to do it. So I think for us, we're, you know, hanging in there, you know, waiting for the customer to pay us back and redeploy those, you know, those proceeds in other things.
And, you know, so for us to do that, you know, would be, you know, a substantial outcome. And, you know, much like, you know, investment portfolio restructurings, you know, we're kind of purists. If we can't find something that's got a terminal value above zero, we don't like to do it. So I think for us, we're, you know, hanging in there, you know, waiting for the customer to pay us back and redeploy those, you know, those proceeds in other things.
Speaker #3: So I think for us, we're we're hanging in there waiting for the customer to pay us back. And redeploy those proceeds and other
Speaker #3: things. Understood.
Matthew Breese: Understood. Then last one is just on share repurchases. You know, this quarter's level was a bit higher than I was expecting. What are some of the catalysts or triggers for you to repurchase stock? And is what we saw this quarter something we might see in early 2026?
Matthew Breese: Understood. Then last one is just on share repurchases. You know, this quarter's level was a bit higher than I was expecting. What are some of the catalysts or triggers for you to repurchase stock? And is what we saw this quarter something we might see in early 2026?
Speaker #6: And then last one is just on share repurchases. This quarter's level is a bit higher than I was expecting. What are some of the catalysts or triggers for you to repurchase stock?
Speaker #6: And is what we saw this quarter something we might see in early '26?
Speaker #3: Yeah. Great question, Matt. I said this last quarter—I thought I was going to get to go my whole career and not buy shares.
Scott Kingsley: ... Yeah, great question, Matt. You know, I said this last quarter, I thought I was going to get to go my whole career, not buy shares, but truthfully, the opportunity presented itself. And to your point, two things: value, price, you know, because somebody pointed out earlier, you know, we think our valuation does not fully reflect the improvements we've had from an operating earnings standpoint. And number two is capacity, right? But so with our change of earnings capacity, essentially, those share repurchases that we did in the Q4, a little over $10 million worth, we self-funded in the quarter and didn't change any of our capital ratios.
Scott Kingsley: ... Yeah, great question, Matt. You know, I said this last quarter, I thought I was going to get to go my whole career, not buy shares, but truthfully, the opportunity presented itself. And to your point, two things: value, price, you know, because somebody pointed out earlier, you know, we think our valuation does not fully reflect the improvements we've had from an operating earnings standpoint. And number two is capacity, right? But so with our change of earnings capacity, essentially, those share repurchases that we did in the Q4, a little over $10 million worth, we self-funded in the quarter and didn't change any of our capital ratios.
Speaker #3: But truthfully, the opportunity presented itself. And to your point, two things. Value, price, because somebody pointed out earlier, we think our valuation does not fully reflect the improvements we've had from an operating earnings standpoint.
Speaker #3: And number two is capacity. Right? So with our change of earnings capacity, essentially, those share repurchases that we did in the fourth quarter, a little over $10 million, we self-funded in the quarter.
Speaker #3: And didn't change any of our capital ratios. So I think it presents an opportunity for us to follow that pattern like we did in the fourth quarter.
Scott Kingsley: So I think it presents an opportunity for us to follow that pattern like we did in the fourth quarter, you know, going into the future, and we probably have more capacity than that. But I'm saying we think we can self-fund the level that we bought in the fourth quarter, every quarter.
So I think it presents an opportunity for us to follow that pattern like we did in the fourth quarter, you know, going into the future, and we probably have more capacity than that. But I'm saying we think we can self-fund the level that we bought in the fourth quarter, every quarter.
Speaker #3: Going into the future. And we probably have more capacity than that. But I'm saying we think we can self-fund the level that we bought in the fourth quarter every quarter.
Speaker #6: I'll leave it there.
David Konrad: I'll leave it there. Appreciate it. Thank you.
Matthew Breese: I'll leave it there. Appreciate it. Thank you.
Speaker #6: Appreciate it. Thank you. Thank you,
Scott Kingsley: Thank you, Matt.
Scott Kingsley: Thank you, Matt.
Speaker #3: Matt.
Speaker #4: Okay. As a reminder, if you
Operator: Okay. As a reminder, if you would like to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our next question will come from Feddie Strickland from Hovde Group. Your line is open.
Operator: Okay. As a reminder, if you would like to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our next question will come from Feddie Strickland from Hovde Group. Your line is open.
Speaker #4: If you would like to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
Speaker #4: Our next question will come from Fetty Strickland. And from Hove Group, your line is open.
Speaker #4: Open. Hey, just had a couple quick—
Feddie Strickland: Hey, just had a couple quick follow-ups. First on the margin, I did notice accretion income ticked up some there. Just to clarify, does the margin still increase in Q1, even if that normalizes back down?
Feddie Strickland: Hey, just had a couple quick follow-ups. First on the margin, I did notice accretion income ticked up some there. Just to clarify, does the margin still increase in Q1, even if that normalizes back down?
Speaker #7: follow-ups. First, on the margin, I did notice secretion income ticked up some there. Just to clarify, the margin still increased in the first quarter, even if that normalizes back down.
Speaker #4: So, accretion—usually there are a handful of accelerated payoffs or events affecting accretion during the quarter, which are very hard to predict. We think, working through some of the federal funds rate cuts that happened in December, the margin would probably be fairly stable, if not maybe affected by a basis point or two.
Annette Burns: So accretion, you know, usually there are a handful of accelerated payoffs or, or affecting accretion during the quarter, which are very hard to predict. You know, we think, working through, you know, some of the federal funds rate cuts that happened in December, the margin will probably be fairly stable, if not maybe affected by a basis point or two, barring any, you know, changes that are normalized accretion. So that's kind of how we're thinking about margin for Q1.
Annette Burns: So accretion, you know, usually there are a handful of accelerated payoffs or, or affecting accretion during the quarter, which are very hard to predict. You know, we think, working through, you know, some of the federal funds rate cuts that happened in December, the margin will probably be fairly stable, if not maybe affected by a basis point or two, barring any, you know, changes that are normalized accretion. So that's kind of how we're thinking about margin for Q1.
Speaker #4: Barring any changes that are normalized accretion. So that's kind of how we're thinking about margin for the first quarter.
Speaker #7: Okay. Got it. And then just on fees, I saw there was some seasonal activity-based fees in the wealth line. Do you have a sense for how much of the one-quarter growth is
Feddie Strickland: Okay, got it. And then just on fees, I saw there was some seasonal activity-based fees in the wealth line. Do you have a sense for how much of the linked quarter growth is seasonal?
Feddie Strickland: Okay, got it. And then just on fees, I saw there was some seasonal activity-based fees in the wealth line. Do you have a sense for how much of the linked quarter growth is seasonal?
Speaker #7: seasonal?
Annette Burns: So probably somewhere around $300,000 to $400,000 was seasonal related on the wealth side. So just some activity-based fees, but all in all, a very strong quarter with organic growth and our market helped a little bit with that. On fee income, in general, there's probably somewhere around $1 to 1.5 million of, you know, BOLI gains and other securities gains that are a little harder to predict the activity there. I think BOLI, on a normal run rate basis, is somewhere around $2.4 million.
Annette Burns: So probably somewhere around $300,000 to $400,000 was seasonal related on the wealth side. So just some activity-based fees, but all in all, a very strong quarter with organic growth and our market helped a little bit with that. On fee income, in general, there's probably somewhere around $1 to 1.5 million of, you know, BOLI gains and other securities gains that are a little harder to predict the activity there. I think BOLI, on a normal run rate basis, is somewhere around $2.4 million.
Speaker #4: probably somewhere around 3 to 400,000 was seasonal related on the wealth side. So just some activity-based fees. But all in all, a very strong quarter with organic growth.
Speaker #4: And our market helped a little bit with that. On fee income in general, there's probably somewhere around $1 to $1.5 million of BOLI gains and other securities gains that are a little harder to predict, the activity there.
Speaker #4: I think bully on a normal run rate basis is somewhere around 2.4 million.
Speaker #3: Yeah. And I even followed that up. And I think now that as we've gotten to be a larger enterprise, the seasonality is a bit less noticeable for us.
Scott Kingsley: Yeah, and I even followed that up and, you know, I think now that as we've gotten to be a larger enterprise, you know, the seasonality is a bit less noticeable for us. But you know, kind of as a quick reminder, you know, the insurance business tends to thrive in Q1 and Q3, based on renewal time frames, with a little lower activity in Q2 and Q4. Benefits administration, you know, the retirement plan administration business, usually solid for Q2 and Q3, with a little less activity fees in their Q4. Your observation is astute. Wealth had a really, really strong year and a really strong finish to the year.
Scott Kingsley: Yeah, and I even followed that up and, you know, I think now that as we've gotten to be a larger enterprise, you know, the seasonality is a bit less noticeable for us. But you know, kind of as a quick reminder, you know, the insurance business tends to thrive in Q1 and Q3, based on renewal time frames, with a little lower activity in Q2 and Q4. Benefits administration, you know, the retirement plan administration business, usually solid for Q2 and Q3, with a little less activity fees in their Q4. Your observation is astute. Wealth had a really, really strong year and a really strong finish to the year.
Speaker #3: But kind of as a quick reminder, the insurance business tends to thrive in the first and the third quarter, based on renewal timeframes, with a little lower activity in the second and the fourth.
Speaker #3: Benefits administration, the retirement plan administration business, usually solid first, second, and third, with a little less activity fees in their fourth quarter. Your observation is astute.
Speaker #3: Wealth had a really, really strong year and a really strong finish to the year. And some of that was a bit seasonal. But generally speaking, we're in a really good lift-off point on all those businesses.
Scott Kingsley: You know, some of that was a bit seasonal, but generally speaking, we're in a really good lift-off point, you know, on all those businesses. I think the other thing I think Annette has reminded people from time to time is that in our Q1, we tend to have $0.04 or $0.05 of operating costs that are not usually reflected in some of the other quarters. Some of that is seasonality. It's just more expensive to plow and heat than it is to mow and air condition. That's a basic one. But we also have higher payroll costs in Q1 of the year, and usually higher stock-based compensation expense, just based on the protocol and the timing of how we grant new awards.
You know, some of that was a bit seasonal, but generally speaking, we're in a really good lift-off point, you know, on all those businesses. I think the other thing I think Annette has reminded people from time to time is that in our Q1, we tend to have $0.04 or $0.05 of operating costs that are not usually reflected in some of the other quarters. Some of that is seasonality. It's just more expensive to plow and heat than it is to mow and air condition. That's a basic one. But we also have higher payroll costs in Q1 of the year, and usually higher stock-based compensation expense, just based on the protocol and the timing of how we grant new awards.
Speaker #3: I think the other thing I think Annette has reminded people from time to time is that in our first quarter, we tend to have four or five cents of operating costs that are not usually reflected in some of the other quarters.
Speaker #3: that is seasonality. It's just more Some of expensive to plow and heat than it is to mow and air condition. So that's a basic one.
Speaker #3: But we also have higher payroll costs in the first quarter of the year, and usually higher stock-based compensation expense, just based on the protocol of the timing of how we grant new awards. So, I think we always kind of think about this $0.04 to $0.05 carry that the first quarter has on the op-ex side that usually the other quarters don't have to work through.
Scott Kingsley: So I think we always kind of think about, you know, this $0.04 to $0.05 carry that Q1 has on the OpEx side, that usually the other quarters don't have to work through.
So I think we always kind of think about, you know, this $0.04 to $0.05 carry that Q1 has on the OpEx side, that usually the other quarters don't have to work through.
Speaker #7: Perfect. And Scott, you beat me to my final question on expenses, so I'll step back. Thanks.
Feddie Strickland: Perfect. Thanks, Scott. You beat me to my final question on expenses, so I'll step back. Thanks.
Feddie Strickland: Perfect. Thanks, Scott. You beat me to my final question on expenses, so I'll step back. Thanks.
Scott Kingsley: Thank you.
Scott Kingsley: Thank you.
Speaker #4: And I would now like to turn the call back to Scott Kingsley for his closing. Thanks.
Operator: I would now like to turn the call back to Scott Kingsley for his closing remarks.
Operator: I would now like to turn the call back to Scott Kingsley for his closing remarks.
Speaker #4: In closing, I want to thank
Scott Kingsley: In closing, I want to thank everyone on the call for participating with us today, and we appreciate your interest in NBT. Stay warm. See you next time.
Scott Kingsley: In closing, I want to thank everyone on the call for participating with us today, and we appreciate your interest in NBT. Stay warm. See you next time.
Speaker #3: everyone on the call for participating with us today. And we appreciate your interest in NBT. Stay warm. See you next time.
Operator: Thank you, Mr. Kingsley. This concludes today, today's program. You may now disconnect.
Operator: Thank you, Mr. Kingsley. This concludes today, today's program. You may now disconnect.
