Question · Q3 2025
Matthew M. Breese posed several margin-related questions, including the spot cost of deposits at quarter-end or the most recent date, and the roll-on versus roll-off dynamics for fixed and adjustable-rate loans. He also questioned when NBT Bancorp expects a more pronounced pickup in securities yields as the back book resets or matures. Finally, Mr. Breese inquired about the potential for near-term securities growth as part of earning asset expansion, and the extent to which the company might utilize its excess cash position for this purpose.
Answer
Scott Kingsley, NBT Bancorp's CEO and President, noted that the spot cost of deposits was not immediately available but likely slightly lower in October than September due to post-Fed rate change adjustments. Annette Burns, CFO, detailed loan roll-on/off dynamics, indicating a 50 bps differential for commercial loans, near parity for indirect auto (depending on the yield curve belly), and about 160 bps room for residential mortgages between portfolio and new origination yields. Mr. Kingsley explained that the securities portfolio is cash-flowing, primarily mortgage-backed, with orderly cash flows of a couple hundred million dollars annually, and acknowledged that portfolio yields are below peers due to not undertaking a one-time restructuring. Regarding earning asset growth, Mr. Kingsley confirmed flexibility for securities growth, emphasizing a duration-based risk-reward approach and no plans for significant duration mismatches, with a primary focus on collateralization for municipal deposits rather than incremental earnings from large security additions.