NBT Bancorp Fourth Quarter 2025 Earnings Call - Operating Leverage and Diversified Fees Offset CRE Payoffs and Solar Run-off

Tanya, Conference Call Moderator, NBT Bancorp: 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.

I will now turn the call over to NBT Bancorp’s President and CEO, Scott Kingsley, for opening remarks. Mr. Kingsley, please begin.

Scott Kingsley, President and CEO, NBT Bancorp: 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. 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. 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.

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 the third quarter, we were pleased to announce to shareholders a year-over-year improvement of 8.8% to our dividend, marking our thirteenth 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.

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. 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 to our ranks. We remain excited about our opportunities in the Western New York. 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.

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. Annette?

Annette Burns, Chief Financial Officer, NBT Bancorp: Thank you, Scott, and good morning. 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. 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. 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.

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 6, 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. The next slide highlights the detailed changes on our net interest income and margin. Our net interest margin for the fourth quarter decreased 1 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 1 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 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.

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. 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. 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.

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 December 31, 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.

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 3 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.

Tanya, Conference Call Moderator, NBT Bancorp: 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.

Feddie Strickland, Analyst, Hovde Group: Hey, good 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 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 run-off portfolios?

Annette Burns, Chief Financial Officer, NBT Bancorp: Thanks, 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 is a good one. So in 2025, we probably had $150 million-$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.

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, 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.

Feddie Strickland, Analyst, Hovde Group: Gotcha. 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.

Scott Kingsley, President and CEO, NBT Bancorp: ... Yeah, thank you. So, across the franchise, you know, from, 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, we feel pretty good about the opportunities we’re getting to see. You know, we, we have a, 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.

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 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 pretty bullish on, opportunities we’ll see in Western New York.

Feddie Strickland, Analyst, Hovde Group: 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?

Scott Kingsley, President and CEO, NBT Bancorp: I think it is. And reminding people that, you know, we still continue to have our, just south of $800 million solar loan portfolio that’s in run-off. 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 the fourth quarter, we saw better consumer lending activity, especially on the mortgage side.

So upbeat that, you know, 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.

Feddie Strickland, Analyst, Hovde Group: All right, great! Thanks for the color. I’ll step back in the queue.

Scott Kingsley, President and CEO, NBT Bancorp: Thank you.

Tanya, Conference Call Moderator, NBT Bancorp: Our next question will be coming from Mark Fitzgibbon of Piper Sandler. Your line is open, Mark.

Mark Fitzgibbon, Analyst, Piper Sandler: Hey, guys. Good morning.

Scott Kingsley, President and CEO, NBT Bancorp: Good morning, Mark.

Mark Fitzgibbon, Analyst, Piper Sandler: 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?

Annette Burns, Chief Financial Officer, NBT Bancorp: No fundamental change there. I think we were trying to kind of rightsize our coverage allowance, given that it is a run-off portfolio. So really what you saw this quarter is kind of recalibration of that, of that, coverage ratio. But, but no, trends or negative concerns as it relates to that book.

Mark Fitzgibbon, Analyst, Piper Sandler: Okay. And then secondly, I was curious how, if at all, the tensions between the U.S. and Canada is impacting sort of the economy in the northernmost markets of your footprint?

Scott Kingsley, President and CEO, NBT Bancorp: 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.

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.

Mark Fitzgibbon, Analyst, Piper Sandler: 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 an enamored of many acquisitions in recent quarters, and obviously your own frustration with your stock price post Evans?

Scott Kingsley, President and CEO, NBT Bancorp: So, a couple things unbundled 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.

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 $0.05 of accretion or 5% accretion?...

So if we’re running kind of off a base of four dollars a share, you know, does something have to be north of twenty cents 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.

Annette Burns, Chief Financial Officer, NBT Bancorp: Great. Thank you.

Tanya, Conference Call Moderator, NBT Bancorp: Our next question will be coming from Thomas Reed of Raymond James. Your line is open, Thomas.

Thomas Reed, Analyst, Raymond James: 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?

Scott Kingsley, President and CEO, NBT Bancorp: 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 I’ll 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?

Joe Stagliano, President of NBT Bank, NBT Bancorp: Yeah, sure, Scott. Branch site, you know, just off the wharf, we call it Bayside. It’s on 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?

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 fill in targets as well as some of our newer markets. We’re excited about the prospects that they’re going to bring to us.

Thomas Reed, Analyst, Raymond James: Thanks, Joe.

Tanya, Conference Call Moderator, NBT Bancorp: As a reminder, to ask questions, please press star one, one on your telephone and wait for your name to be announced. Our next question comes from David Konrad of KBW. Your line is open.

David Konrad, Analyst, KBW: Hey, good morning. Just had a question on the NIM- hey, 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.

Annette Burns, Chief Financial Officer, NBT Bancorp: 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 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, you know, 125-130 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. Probably throws somewhere around, you know, $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 going to be more focused on, you know, our earning asset growth and the opportunities that we have there.

Scott Kingsley, President and CEO, NBT Bancorp: 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 2- to 5-year point of the curve kind of came down 60-75 basis points during the year. So what 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.

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 slowdown in the second half of the year. And I made the comment about, you know, our opportunity in on the CD book. You know, CD duration today for everybody, not just us, is damn short.

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, you know, 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.

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.

Daniel Cardenas, Analyst, Janney Montgomery Scott: Great. Thank you. Appreciate it.

Tanya, Conference Call Moderator, NBT Bancorp: Our next question will be coming from Daniel Cardenas of Janney Montgomery Scott. Your line is open, Daniel.

Daniel Cardenas, Analyst, Janney Montgomery Scott: Good morning, guys. How are you?

Scott Kingsley, President and CEO, NBT Bancorp: Morning.

Daniel Cardenas, Analyst, Janney Montgomery Scott: 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?

Scott Kingsley, President and CEO, NBT Bancorp: 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.

But I will say this: if you’re a, you know, 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, Analyst, Janney Montgomery Scott: Good. Good. And then on the deposits front, are there any markets that are able to absorb a decrease in rates as rates come down? Are you gonna be able to push down deposit costs in any markets better than others?

Scott Kingsley, President and CEO, NBT Bancorp: 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, the fourth quarter was, you know, pretty indicative of that.

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.

Daniel Cardenas, Analyst, Janney Montgomery Scott: Great. 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.

Annette Burns, Chief Financial Officer, NBT Bancorp: 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 not new. So I don’t think we have anything that’s specific emerging trend from something that we’re gonna shy away with. Continuing to just monitor as maturities come due and make sure we understand what our customer’s position is and their ability to refi when that maturity happens. 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.

Feddie Strickland, Analyst, Hovde Group: ... Great, that’s it for me. I’ll step back. Thank you.

Scott Kingsley, President and CEO, NBT Bancorp: Thank you.

Tanya, Conference Call Moderator, NBT Bancorp: Our next question will be coming from Matthew Breese of Stephens-

Matthew Breese, Analyst, Stephens: Hey, good morning.

Scott Kingsley, President and CEO, NBT Bancorp: Good morning, Matt.

Matthew Breese, Analyst, Stephens: 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 30-35 basis points per quarter routinely. And with the consumer balances in 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?

Annette Burns, Chief Financial Officer, NBT Bancorp: Yeah, Matt, that’s a good question. I you know, back in, back in, you know, maybe 5 or 6 years ago, our, our charge-off rates were probably somewhere in that 25-30 basis points. We had a fairly large unsecured consumer book with our LendingClub in 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’re been running at, somewhere in the, you know, 20 basis points range, you know, 15-20 basis points range. It’s probably kind of more normalized as those books become smaller and smaller.

Just a, you know, I think residential solar is somewhere in the, you know, 90%-95% charge-off rate, basis point charge-off rate, versus probably somewhere in the closer to, you know, 8-10 with that, prior book. So really, I think that that’s kind of where we are in 2025, is kind of probably that new normalized rate.

Scott Kingsley, President and CEO, NBT Bancorp: 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, 20-35 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 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 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.

And 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.

Matthew Breese, Analyst, Stephens: Got it. 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? 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.

Scott Kingsley, President and CEO, NBT Bancorp: 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. 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.

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, we’re hanging in there, you know, waiting for the customer to pay us back and redeploy those, you know, those proceeds and other things.

Matthew Breese, Analyst, Stephens: Understood. And 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, is what we saw this quarter something we might see in early 2026?

Scott Kingsley, President and CEO, NBT Bancorp: Yeah, great question, Matt. You know, I said this last quarter, I thought I was going to get to go my whole career and 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 fourth quarter, a little over $10 million worth, we self-funded in the quarter 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, 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.

Matthew Breese, Analyst, Stephens: I’ll leave it there. Appreciate it. Thank you.

Scott Kingsley, President and CEO, NBT Bancorp: Thank you, Matt.

Tanya, Conference Call Moderator, NBT Bancorp: 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.

Feddie Strickland, Analyst, Hovde Group: 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, the margin still increase in the first quarter, even if that normalizes back down?

Annette Burns, Chief Financial Officer, NBT Bancorp: 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 the first quarter.

Feddie Strickland, Analyst, Hovde Group: 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 loan quarter growth was seasonal?

Annette Burns, Chief Financial Officer, NBT Bancorp: So, probably somewhere around $300,000-$400,000 was seasonal related on the wealth side. Some 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 million-$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.

Scott Kingsley, President and CEO, NBT Bancorp: Yeah, and I even follow 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 the first and the third quarter, based on renewal time frames, with a little lower activity in the second and the fourth. Benefits administration, you know, the retirement plan administration business, usually solid first, second, third, with a little less activity fees in their fourth quarter. Your observation is astute. Wealth had a really, really strong year and a really strong finish to the year.

And, 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 first quarter, 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. So that’s a basic one. 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 and the timing of how we grant new awards.

I think we always kind of think about, you know, this $0.04-$0.05 carry that the first quarter has on the OpEx side, that usually the other quarters don’t have to work through.

Feddie Strickland, Analyst, Hovde Group: Perfect. Thanks, Scott. You beat me to my final question on expenses, so I’ll step back. Thanks.

Scott Kingsley, President and CEO, NBT Bancorp: Thanks.

Tanya, Conference Call Moderator, NBT Bancorp: I would now like to turn the call back to Scott Kingsley for his closing remarks.

Scott Kingsley, President and CEO, NBT Bancorp: 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.

Tanya, Conference Call Moderator, NBT Bancorp: Thank you, Mr. Kingsley. This concludes today’s program. You may now disconnect.