Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NBT Bancorp Inc (NBTB, Financial) reported a net income increase to $38.1 million or 80¢ per share, up $5.4 million or 11¢ per share from the prior quarter.
- The company achieved a new all-time high in tangible book value per share at $23.83 as of September 30th.
- Noninterest income reached a record high, making up 31% of total revenues, with significant contributions from retirement plan services, wealth management, and insurance services.
- NBT Bancorp Inc (NBTB) declared a 34¢ quarterly cash dividend, marking a 6.3% increase from the previous year and continuing a 12-year streak of annual dividend increases.
- The merger agreement with Evans Bank Corp is expected to expand NBT Bancorp Inc (NBTB)'s geographic footprint into the Buffalo and Rochester markets, enhancing its position as the largest community bank in upstate New York.
Negative Points
- The company's total operating expenses increased by $6.2 million or nearly 7% from the previous quarter, driven by higher salaries, employee benefits, and technology investments.
- NBT Bancorp Inc (NBTB) experienced a loan loss provision expense of $2.9 million, although this was $6 million lower than the prior quarter.
- The company's quarterly cost of total deposits increased by four basis points from the prior quarter to 1.72%, indicating rising funding costs.
- Despite the positive growth in net interest margin, the company faces challenges in managing deposit pricing and funding costs amid a changing interest rate environment.
- The integration activities with Evans Bank Corp require shareholder and regulatory approvals, which could pose potential delays or complications in the merger process.
Q & A Highlights
Q: Can you discuss the impact of the recent 50 basis point rate cut on deposit pricing and how you plan to manage it?
A: Annette Burns, CFO: We have about 40% of our book that is price sensitive, with $3.4 billion in money market accounts and $1.4 billion in CDs. We can be reactive in adjusting these rates. The loan repricing is almost immediate, but there will be some timing differences on the deposit pricing side.
Q: What are your thoughts on fixed-rate asset repricing given the current yield curve?
A: Annette Burns, CFO: We have about $2 billion in cash flows from our loan book annually, and we're still repricing higher. We've seen 2 to 3 basis points a month of asset repricing. If the yield curve holds, we expect this trend to continue.
Q: How do you feel about the loan pipeline, especially with the recent growth in C&I loans?
A: Scott Kingsley, CEO: We feel good about the pipeline. There's a concerted effort to grow C&I loans, which also brings funding opportunities. We're being selective with commercial real estate opportunities, focusing on geographic areas that offer better spreads.
Q: How should we think about the expense run rate going into Q4 and 2025?
A: Annette Burns, CFO: For Q4, if you average the first nine months and adjust for the incentive comp, you'll end up in the right place. For 2025, expect a 4 to 5% increase in the run rate.
Q: Can you provide insights into the seasonality of insurance revenue and the outlook for retirement plan, wealth, and insurance services?
A: Annette Burns, CFO: Insurance revenue is higher in Q3 due to commercial renewals. For non-interest income, averaging the first nine months gives a good quarterly run rate. About half of the growth is market-driven, and the rest is organic.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
