Stephen M. Moss

Stephen M. Moss asked about NBT Bancorp's expense outlook, specifically inquiring about the expected scale of talent recruitment and the number of de novo branches planned over the next 12 months. He also questioned the company's interest in additional M&A deals and its broader strategic thinking regarding expansion. Furthermore, Mr. Moss sought updated thoughts on purchase accounting accretion and the potential for incremental core margin expansion, and asked for the current percentage of variable rate loans in the portfolio.

Answer

Scott Kingsley, NBT Bancorp's CEO and President, outlined plans for four to six de novo branches annually to improve market concentration, particularly in Rochester, and noted productive talent recruitment in Western New York. Annette Burns, CFO, added that branch optimization and technology investments would help offset growth initiatives, keeping expense growth within historical NBT Bancorp ranges. Mr. Kingsley confirmed interest in M&A for 'fill-in strategies' within their existing footprint and potential expansion, aiming to partner with like-minded community banks. Ms. Burns stated that purchase accounting accretion is stable, with no material change expected for the next four quarters. She also mentioned potential short-term margin pressure in Q4 due to rate cuts but anticipated improvement in 2026 with a steeper yield curve. Ms. Burns and Mr. Kingsley clarified that approximately $3 billion of earning assets are variable rate, with loans accounting for $2.5-$2.6 billion (over 20% of the portfolio).

Stephen M. Moss from Raymond James & Associates inquired about current loan pricing and origination yields, the potential for elevated loan payoffs to continue into 2026, the progress of Bankwell's core deposit initiative and new teams, and the expected deposit beta for non-maturity deposits in response to future Fed rate cuts.

Answer

Courtney Sacchetti (SVP and CFO) stated year-to-date originations had a weighted average rate of 7.86% on $500 million. Chris Gruseke (CEO) confirmed strong loan demand and pricing, attributing the lack of material loan growth to record payoffs, which are expected to remain high in Q4, leading to a flat loan growth outlook for the year. Matt McNeill (President and Chief Banking Officer) added that the bank has demand for higher origination volumes and can manage this with lead time and pricing. Regarding core deposits, Mr. Gruseke noted that teams hired since April are producing, with full impact expected in 2026, focusing on non-interest-bearing accounts. Ms. Sacchetti explained that for the recent rate cut, Bankwell achieved an effective 50% beta on approximately $1 billion of non-maturity interest-bearing deposits, with about $250-260 million indexed to Fed funds and another $250 million repriced at 100% beta.