• Net Income: $36 million for the fourth quarter, or $0.76 per share.
• Operating Earnings Per Share: $0.77, excluding merger costs and securities gains.
• Tangible Book Value Per Share: $23.88 as of December 31, up $0.05 from the previous quarter.
• Total Loans: Increased by $319 million for the year, a 3.3% growth.
• Loan Portfolio: $10 billion, with 53% commercial and 47% consumer loans.
• Total Deposits: $11.6 billion, up $578 million or 5.3% from December 2023.
• Net Interest Margin: 3.34% for the fourth quarter, up 7 basis points from the prior quarter.
• Net Interest Income: Increased by $4.4 million from the linked third quarter.
• Fee Income: $42.2 million, an 11.1% increase compared to the fourth quarter of 2023.
• Total Operating Expenses: $99.8 million for the quarter, a 4.8% increase from the linked third quarter.
• Loan Loss Provision Expense: $2.2 million, $700,000 lower than the prior quarter.
• Net Charge-Offs: 23 basis points in the fourth quarter, compared to 16 basis points in the prior quarter.
• Non-Performing Assets: Increased by $14.4 million from the prior quarter.
• Reserve Coverage: 1.16% of total loans, covering more than 2 times the level of nonperforming loans.

• Warning! GuruFocus has detected 5 Warning Sign with NBTB.

Release Date: January 28, 2025

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 strong operating performance for the fourth quarter and full year 2024, reflecting a robust balance sheet and diversified business model.
• The company achieved a 6.3% increase in its quarterly cash dividend, marking the 12th consecutive year of annual dividend increases.
• Non-interest income made up 30% of total revenues for 2024, with each non-banking business achieving record revenue and earnings.
• The merger with Evans Bancorp is expected to expand NBTB's geographic footprint into Western New York, enhancing its market presence.
• NBTB's net interest margin improved for the third consecutive quarter, driven by lower funding costs and a favorable funding mix.

Negative Points

• Fourth quarter loan yields declined by 9 basis points due to a decrease in short-term rates, impacting overall earnings.
• Operating expenses increased by 4.8% in the fourth quarter, primarily due to higher salaries and employee benefits.
• Net charge-offs to total loans increased to 23 basis points, driven by two commercial relationships.
• Non-performing assets increased by $14.4 million, attributed to a commercial real estate relationship placed into non-accrual status.
• The loan loss reserve coverage ratio decreased, influenced by the runoff of certain consumer portfolios and specific charge-offs.

Q & A Highlights

Q: Can you provide an update on the margin trends and loan pricing? A: Annette Burns, CFO, explained that approximately $2.2 billion in loans are expected to reprice into higher rates, depending on the yield curve. New volume rates are higher than portfolio rates across various sectors, with auto loans 50 basis points higher, commercial loans 75 to 100 basis points higher, and residential loans about 200 basis points higher.

Q: What is the outlook for expenses in the coming quarters? A: Annette Burns, CFO, stated that the run rate for expenses is expected to be between $97 million to $99 million per quarter, considering higher payroll and stock-based compensation costs in the first quarter. A 4% to 5% increase in operating costs is anticipated for 2025.

Q: Can you discuss the loan loss reserve ratio trends and the impact of the consumer portfolio runoff? A: Annette Burns, CFO, noted that the decrease in the coverage ratio for CRE is due to the release of a specific reserve. The consumer portfolio runoff, particularly in solar and specialty consumer loans, is impacting provisioning needs due to changes in loan mix.

Q: What are the expectations for fee business growth in 2025? A: Scott Kingsley, CEO, expressed optimism about mid-single-digit growth in fee businesses, including retirement plan administration, wealth management, and insurance. These businesses have shown a 9% compounded annual growth rate over the past five years.

Q: With the Evans merger, are there any plans to adjust the closing date or balance sheet actions? A: Scott Kingsley, CEO, confirmed that the merger is on track for a second-quarter 2025 closing. There are no immediate plans to adjust the balance sheet significantly, but they are considering early deployment of cash flows to avoid concentrated actions post-closing.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.