• Net Income: $38.1 million or 80 per share, an increase of $5.4 million or 11 per share from the prior quarter.
• Tangible Book Value per Share: $23.83, up $1.29 per share from the end of the second quarter.
• Total Loans: Up $256 million for the year or 3.5% annualized; excluding certain portfolios, loans increased $384 million or 6% annualized.
• Loan Yields: Increased by 11 basis points from the second quarter of 2024.
• Total Deposits: $11.6 billion, up $619.3 million from December 2023.
• Net Interest Margin: 3.27%, up nine basis points from the prior quarter.
• Net Interest Income: Increased by $4.5 million from the linked second quarter results.
• Noninterest Income: Record high of $45.3 million, an increase of 12.1% from the third quarter of 2023.
• Operating Expenses: $95.7 million, up $6.2 million or almost 7% from the linked second quarter.
• Loan Loss Provision Expense: $2.9 million, $6 million lower than the prior quarter.
• Net Charge Offs to Total Loans: 16 basis points in the third quarter of 2024.
• Reserve Coverage: 1.21% of total loans, consistent with the prior quarter.

• Warning! GuruFocus has detected 6 Warning Sign with NBTB.

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 (NASDAQ:NBTB) 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 (NASDAQ: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 (NASDAQ: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 (NASDAQ: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.