Thomas Reid

Thomas Reed of Raymond James asked about NBT Bancorp's planned hiring initiatives to deepen its presence in select markets to support growth, and whether the associated investment costs are already factored into the company's expense guidance.

Answer

Scott Kingsley, President and CEO of NBT Bancorp, and Joseph Ondesko, Treasurer, confirmed that all geographies are considered investable. They highlighted recent additions of high-quality C&I bankers in Maine and new branch commitments in Portland (Bayside, Scarborough). Similar quality hires have been made across Western New York, including in insurance and mortgage. They also mentioned plans for new branches in New Hampshire (greater Manchester market) and Rochester (downtown financial center), indicating these investments are part of their growth strategy.

Thomas Reid from Raymond James asked for the reasons behind the lowered expense outlook and for an update on the company's plans for SBA hiring and de novo branch expansion.

Answer

CFO Susan Cullen attributed the reduced expense guidance to adjustments in incentive compensation accruals and disciplined expense management. She confirmed plans for two branch openings in 2025, one already completed in Jackson Heights and another planned for Chinatown, and noted the company is always open to hiring new revenue-generating teams.

Thomas Reid of Raymond James asked for details on the factors leading to the downward revision of the full-year expense outlook and requested an update on the company's plans for SBA hiring and de novo branch expansion.

Answer

CFO Susan Cullen explained that the reduced expense guidance was driven by true-ups of incentive compensation accruals and disciplined expense management across the company. She confirmed plans for expansion, noting a recently opened branch in Jackson Heights and a second planned branch in Chinatown to accommodate growth. She also added that the bank is continuously evaluating opportunities to hire new revenue-generating teams.

Thomas Reid from Raymond James asked for the reasons behind the lowered expense outlook for 2025 and for an update on the company's plans for SBA hiring and de novo branch expansion.

Answer

Senior EVP and CFO Susan Cullen explained that the reduced expense guidance was due to adjustments in incentive compensation accruals and disciplined expense management. She added that the company has opened a new branch in Jackson Heights and is planning a second Chinatown branch due to strong growth, while continuously evaluating opportunities to add new revenue-generating teams.

Thomas Bernard Reid, on behalf of Steve Moss from Raymond James, asked about the drivers of the strong C&I loan growth, potential hiring opportunities for C&I lenders, and the reasons for the lighter-than-expected wealth management fees.

Answer

President and CEO Anthony Labozzetta attributed the C&I growth to a strategic diversification of products, including ABL, healthcare lending, and SBA loans, rather than a shift away from CRE. CFO Thomas M. Lyons added that growth was primarily from new originations, though line utilization also normalized to around 45%. Regarding wealth management, Mr. Lyons explained that fees were impacted by a lower average AUM balance during the quarter due to market volatility, but the AUM value had recovered by quarter-end.

Thomas Reid of Raymond James inquired about the sustainability of the strong DDA balance growth and the factors driving the slight decrease in the weighted average rate on the loan pipeline.

Answer

CEO Stuart Lubow and CFO Avinash Reddy confirmed the DDA growth was fundamentally strong, driven by new account openings in retail and private banking, not one-time events. Reddy attributed the modest decline in the loan pipeline rate from 7.10% to 6.85% to a mix shift towards floating-rate loans rather than significant competitive spread compression.

Thomas Bernard Reid of Raymond James, on behalf of Steve Moss, asked about credit quality, inquiring if there were any emerging signs of weakness and how the bank has stress-tested lower-yielding loans that are set to mature.

Answer

EVP & Chief Credit Officer Rhett Jordan confirmed that the bank has not seen any signs of weakness in any particular sector and that credit metrics remain strong. He explained that the bank began a forward-looking stress testing project on the maturing loan book 18-24 months ago and remains optimistic about the portfolio's ability to absorb higher rates upon renewal without significant issues.