Daniel Cardenas

Daniel Cardenas questioned Camden National's ability to maintain deposit growth in 2026 to match lending growth expectations, considering the current loan-to-deposit ratio. He also asked for an outlook on operating expenses, specifically if low single-digit year-over-year growth is a reasonable assumption for 2026, and sought clarification on the go-forward effective tax rate.

Answer

Simon Griffiths, President and Chief Executive Officer, expressed confidence in achieving low to mid-single-digit deposit growth in 2026, driven by resources, focus on primary relationships, and leveraging digital capabilities. Mike Archer, Executive Vice President and Chief Financial Officer, suggested an efficiency ratio in the mid-50s as a good annual outlook, noting that the company balances investment with self-funding and automation. Mr. Archer also indicated that the effective tax rate is expected to sneak up by about 1% in 2026 due to the non-recurrence of certain tax credit benefits from 2025.

Daniel Cardenas of Janney Montgomery Scott asked about competitive factors in NBT Bancorp's lending footprint, specifically whether competition remains rational or if there's an increasing pressure for growth. He also inquired if any markets are better positioned to absorb decreases in deposit rates than others, and if NBT Bancorp is exercising more caution or 'tapping the brakes' on credit quality in any particular areas compared to previous quarters.

Answer

Scott Kingsley, President and CEO of NBT Bancorp, noted a slight increase in competitive pressure as institutions seek growth and defend existing customers, but he hasn't observed irrational structural competition. He added that highly rated companies can demand lower spreads for new money. Regarding deposit rates, Kingsley explained that in legacy markets with strong share, NBT Bancorp can uniformly adjust rates as the Fed moves, while in newer markets with less share, rates might remain higher for longer. Annette Burns, CFO, added that while $3 billion of assets reprice immediately, there's a 1-6 week lag for funding costs to adjust. On credit quality, Burns stated there are no new specific areas of concern, reiterating existing caution around hospitality and office space. She emphasized monitoring concentrations and maturities but noted no large maturity walls or emerging industries to avoid.

Daniel Cardenas asked about the competitive landscape on the lending side, specifically if it remains rational or if there's increased pressure for growth. He also inquired about NBT Bancorp's ability to decrease deposit costs in different markets and any areas of credit quality where the bank is exercising more caution.

Answer

President and CEO Scott Kingsley and CFO Annette Burns noted a slight pickup in pressure for growth and significant defense for existing solid customers, but no irrational structural competition. They mentioned payoffs to agency-based funding offering better terms. Scott Kingsley and Annette Burns explained that legacy markets with strong share allow for rational, uniform deposit rate declines, while markets with less share might see rates held higher longer. Annette Burns stated that there are no new specific areas of credit quality concern, with continued attention to concentrations in hospitality and office space, which is not a new trend. The bank monitors maturities and customer positions but has no large maturity walls.

Daniel Cardenas asked for color on competitive factors on the deposit side, specifically whether the markets were behaving rationally given the company's goal to fund loan growth with deposits.

Answer

CEO Christopher McComish explained that early in Q4, competitive pressure on deposit rates was higher, with some competitors holding elevated rates. However, the market became more rational in the second half of the quarter. He noted that the company uses a responsive exception pricing process rather than aggressive public advertising, which has been effective in attracting and retaining deposits, supporting the projection for deposit growth to match loan growth.

Daniel Cardenas asked for insights into the competitive factors on the deposit side, particularly whether the markets S&T Bancorp operates in are behaving rationally, given the company's goal to fund loan growth with deposits.

Answer

CEO Christopher McComish described competitive pressures on deposit rates as elevated early in Q4 but becoming more rational in the latter half. He highlighted S&T Bancorp's effective 'responsive exception pricing process' for attracting and retaining deposits, expressing optimism about their ability to meet deposit growth projections to fund loan growth.

Daniel Cardenas inquired about the deposit growth outlook for 2025, the company's priorities for capital deployment, specifically its stance on stock repurchases, and asked for the quarter-end AOCI number.

Answer

CEO Chris McComish expressed confidence in maintaining deposit growth momentum, viewing the changing rate environment as an opportunity. Executive Mark Kochvar described stock repurchases as the 'least favorite' use of capital, prioritizing organic growth, inorganic opportunities, and dividends first. He also provided the quarter-end AOCI figure of $77 million.

Daniel Cardenas asked about the talent identification process for Northwest Bancshares' new de novo offices, specifically whether staff is already identified or if it's an ongoing search. He also requested color on the run-up of loan and deposit portfolios from the Penns Woods transaction, asking if it's in line with expectations or better/worse.

Answer

Louis Torchio (President and CEO, Northwest Bancshares Inc) confirmed that talent identification for de novo offices is an ongoing search, with commercial hires made and deposit gathering campaigns planned for 2026. Douglas Schosser (CFO, Northwest Bancshares Inc) stated that the Penns Woods loan and deposit portfolios are in line with expectations, possibly slightly better, with no significant concerns. Torchio added that integration and execution are going well, achieving expected cost savings, and anticipating future value from an improved product set.

Daniel Cardenas sought clarification on the provision guidance, asking if the expected 'slight increase' for 2025 is relative to a normalized level that excludes the Q4 derisking impact. He also asked about the company's intentions for share buybacks in 2025 and whether the pending acquisition of Penns Woods would restrict such activity.

Answer

Chief Financial Officer Douglas Schosser confirmed that the provision guidance assumes a normalized base, excluding the one-time impacts from Q4's derisking transactions, and that increases would be to provide for new loan growth. On capital deployment, Schosser reiterated the bank's priorities: supporting the dividend, funding organic growth, and pursuing strategic M&A. He stated that share buybacks are the last priority and are not contemplated in the near or intermediate future.

Daniel Cardenas inquired about potential future balance sheet restructuring, whether provisioning would rise with classified loans, the number of credits driving the classified increase, and the expected breakeven period for potential de novo branches.

Answer

CFO Douglas Schosser confirmed there are no immediate plans for balance sheet restructuring and does not expect material provision increases for the healthcare portfolio, as provisions have already been made. Executive Thomas Creal noted the classified increase was driven by a net of five credits with no geographic concentration. Management deferred the question on de novo breakeven timing, stating the strategy is still under review.

Daniel Cardenas of Janney Montgomery Scott inquired about the company's capital management strategy, specifically its appetite for stock repurchases. He also asked for an update on the M&A environment and where Peoples Bancorp sees potential opportunities for franchise expansion.

Answer

CFO Kathryn Bailey described the company's share repurchase approach as 'opportunistic,' noting some activity in April but emphasizing that they are not overly aggressive. President & CEO Tyler Wilcox stated that building capital is a priority to be poised for a transformative M&A deal that would take the bank over the $10 billion asset threshold. He confirmed active conversations are occurring, with a preference for larger deals in or adjacent to their existing footprint.

Daniel Cardenas asked for the forward-looking tax rate, a breakdown of the improvements in criticized and classified loans, and the company's geographic priorities for potential acquisitions.

Answer

Kathryn Bailey, CFO, guided the tax rate to be closer to 22% to 22.5%. Tyler Wilcox, President, detailed the credit quality improvement, attributing it to approximately $28 million in upgrades (often after receiving updated client financials) and $22 million in paydowns. For M&A, Mr. Wilcox prioritized in-market opportunities in Ohio, Kentucky, and West Virginia, with a strong interest in expanding into contiguous markets like Virginia, Southwest Pennsylvania, and Southern Indiana, while also evaluating national specialty finance businesses.

Daniel Cardenas asked how much of the Q4 charge-offs were covered by specific reserves, the outlook for rebuilding the reserve level, and whether recent market M&A has spurred talent acquisition opportunities.

Answer

CFO Kathryn Bailey confirmed about $3 million in Q4 charge-offs, all from the leasing portfolio, were covered by existing specific reserves. Both she and Executive Tyler Wilcox expressed confidence in the current reserve level and do not foresee a significant build, absent a negative economic shift. Tyler Wilcox affirmed they are actively hiring talent, having recently added nine commercial bankers in core markets to capitalize on market disruption.

Daniel Cardenas asked about the potential for stock repurchase activity given the improving TCE ratio. He also inquired about the specific rates and terms offered on the special deposit products during the third quarter.

Answer

CFO Kathryn Bailey reiterated the bank's capital priorities, placing organic growth and the dividend ahead of M&A and buybacks, but stated they will continue to evaluate repurchases opportunistically. She specified that the Q3 special deposit product was a 5-month CD with a rate close to, and at times slightly above, 5%, which has since been lowered to around 4.5%.

Asked about the quarterly cash flow from the securities portfolio and its intended use, and inquired about the current M&A environment, including the level of discussions and potential geographic expansion.

Answer

The securities portfolio generates about $15 million a month in runoff. The strategy is to opportunistically reinvest these proceeds and other cash into the securities portfolio to generate margin, in addition to funding loan growth. On M&A, the company is frequently presented with opportunities but remains disciplined, focusing on shareholder value and cultural fit, with nothing imminent.

Daniel Cardenas asked about the quarterly cash flow from the securities portfolio, how those proceeds would be deployed, and for an update on the M&A environment, including potential geographic expansion.

Answer

EVP & CFO Neelesh Kalani stated the securities portfolio generates about $15 million in monthly runoff and that the bank is now more open to growing the portfolio to enhance margin, especially given market volatility. CEO Thomas Quinn addressed M&A by stating that while they receive many inquiries, the bank remains highly disciplined, focusing on shareholder value, payback period, and cultural fit, and that nothing is imminent.

Daniel Cardenas asked for the size of the loan participation portfolio, whether other loans within it were being watched, and for specific details on the property whose loan recently became nonperforming.

Answer

An executive, likely Chief Credit Officer Brian Taake, stated the shared national credit portfolio has been reduced to just over $115 million across 10 relationships and is not a major concern. He explained the nonperforming loan was for a mixed-use property that suffered from post-rehabilitation tenancy issues, not mismanagement. The property is located in Allegheny County, just outside the downtown Pittsburgh district.

Daniel Cardenas asked for an update on criticized loan levels, whether charge-offs are expected to normalize, the amount of remaining deposits from the exited tax program, and the size of the customer segment with low or no balances that the bank is targeting.

Answer

Chief Credit Officer Michael Mulford stated that criticized loans have been fairly stable, with a large relationship payoff being offset by downgrades of a few other commercial relationships, including in hospitality and healthcare. Management confirmed they expect charge-offs to elevate slightly back toward more normal historical levels in the coming quarters. President and CEO Dennis Shaffer reported that $14 million in deposits from the old tax program remained at quarter-end but were in the process of being closed out. The team did not have a precise number for the low/no balance customer base but affirmed it represents a clear opportunity.