NBT Bancorp Inc. Q4 FY2025 earnings call

• Operating return on assets was 1.37% for the second consecutive quarter with a return on tangible equity of 17.02%. Tangible book value per share at year-end was $26.54, 11% higher than a year ago.
• Net interest margin improved 36 basis points year-over-year. Noninterest income from nonbanking businesses achieved record results in 2025.
• Dividend increased 8.8% year-over-year, marking 13th consecutive year of annual increases. Repurchased 250,000 shares in Q4.
• Successful integration of Evans Bancorp. Progress in Western NY semiconductor chip corridor, including Micron's groundbreaking in Syracuse with site development and construction to commence immediately and complete by 2030.

For the fourth quarter, net income was $55.5 million or $1.06 per diluted common share. Core operating earnings were $1.05 per share, consistent with prior quarter. Total loans were up $1.63 billion or 16.3% for the year, with 56% commercial relationships and 44% consumer loans. Total deposits were up $2 billion from December 2024, with 58% or $7.8 billion of the deposit portfolio consisting of no and low-cost checking and savings accounts. Net interest margin was 3.65% in Q4, a 36 basis point improvement year-over-year. Noninterest income had record results for nonbanking businesses in 2025, representing 27% of total revenues in Q4.

• Expect mid- to lower single-digit loan growth in 2026, considering CRE payoffs.
• NIM outlook is stable with potential for a few basis points improvement from earning asset growth and deposit repricing.
• Share repurchases based on value and capacity, with potential for similar activity in early 2026 if opportunities arise.

• Higher than expected commercial real estate payoffs could impact loan growth in 2026.
• Tensions between US and Canada affecting northern markets, causing hesitation in future investments.
• Solar book marketability issues due to low rates, making it challenging to sell the portfolio profitably.

Q: Do you expect any larger payoffs on the commercial side in the next couple of quarters?

A: In 2025, there was $150 million to $175 million of unscheduled commercial real estate payoffs, which could impact 2026 growth as sponsors get offers from other places.

Q: How is loan pipeline in Rochester and Buffalo?

A: Pipelines are strong, demand is good across the franchise, with focus on holistic relationships in these areas.

Q: Any change in appetite to sell the solar book?

A: The solar book's marketability is affected by low rates; we're waiting for a terminal value above zero to sell it.