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NBT BANCORP INC (NBTB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered positive operating leverage: net interest margin rose 10 bps to 3.44%, net interest income increased to $107.2M, and operating EPS was $0.80; GAAP diluted EPS was $0.77 .
  • EPS beat Wall Street consensus, while revenue modestly missed: normalized EPS $0.80 vs $0.742 consensus (beat), revenue $147.1M vs $151.0M consensus (miss). Values retrieved from S&P Global.*
  • Deposit costs fell 11 bps to 1.49% and cost of funds declined 11 bps to 1.60%, supporting margin expansion despite slightly lower loan yields post December Fed cut .
  • Credit costs rose: net charge-offs increased to 27 bps, including a $2.1M write-down on a nonperforming CRE loan; management expects auto and residential solar to remain the main charge-off drivers .
  • Evans Bancorp merger closed May 2; updated deal modeling implies ~4% tangible book dilution (vs ~5% prior) and ~$0.30 EPS accretion (vs $0.38 prior), with full cost saves by year-end 2025; integration progressing well and expands NBT’s footprint in Buffalo/Rochester .

What Went Well and What Went Wrong

What Went Well

  • Margin and funding: NIM (FTE) increased to 3.44% as total cost of deposits fell to 1.49% and cost of funds to 1.60% .
  • Fee businesses strength: noninterest income (ex-securities) rose to $47.6M; Retirement Plan Services (+$2.9M QoQ) and Wealth Management (+$1.2M YoY) led growth; insurance revenues benefited from seasonality .
  • Management execution and tone: “Growth in both net interest income and noninterest income…resulted in positive operating leverage” and “our capital position remains a key strength” — Scott A. Kingsley (CEO) .

What Went Wrong

  • Higher provision and NCOs: provision rose to $7.6M from $2.2M in Q4; net charge-offs increased to 27 bps, including a $2.1M CRE write-down; NPL ratio remained 0.48% .
  • Loan growth muted: period-end loans up only $10.4M (0.4% annualized), with consumer runoff and seasonally weak residential mortgage; management trimmed full-year loan growth outlook to 2–3% from 3–5% .
  • Revenue miss vs consensus: S&P Global consensus revenue exceeded actual by ~$3.9M as loan yields dipped 3 bps post Fed cut and two fewer calendar days weighed on net interest income growth . Values retrieved from S&P Global.*

Financial Results

Core P&L and Margins (USD Millions unless noted)

MetricQ3 2024Q4 2024Q1 2025
Net Interest Income$101.669 $106.105 $107.223
Total Noninterest Income$45.774 $42.426 $47.452
Provision for Loan Losses$2.920 $2.209 $7.554
Net Income$38.097 $36.005 $36.745
Diluted EPS (GAAP)$0.80 $0.76 $0.77
Operating Diluted EPS (Non-GAAP)$0.80 $0.77 $0.80
NIM (FTE)3.27% 3.34% 3.44%
ROA (reported)1.12% 1.04% 1.08%
ROE (reported)10.21% 9.44% 9.68%

Funding, Yields, and Deposits

MetricQ3 2024Q4 2024Q1 2025
Total Deposits ($)$11,588.278M $11,546.761M $11,708.511M
Loan-to-Deposit Ratio85.5% 86.3% 85.2%
Total Cost of Deposits1.72% 1.60% 1.49%
Total Cost of Funds1.85% 1.71% 1.60%
Loan Yields5.74% 5.65% 5.62%
Earning Asset Yields5.01% 4.96% 4.95%

Asset Quality

MetricQ3 2024Q4 2024Q1 2025
NCOs to Avg Loans0.16% 0.23% 0.27%
NPLs / Total Loans0.38% 0.52% 0.48%
NPAs / Total Assets0.27% 0.38% 0.35%
ALLL / Total Loans1.21% 1.16% 1.17%

Loans by Segment (Period-End, USD Thousands)

SegmentQ3 2024Q4 2024Q1 2025
Commercial & Industrial$1,458,926 $1,426,482 $1,436,990
Commercial Real Estate$3,792,498 $3,876,698 $3,890,115
Residential Real Estate$2,143,766 $2,142,249 $2,127,588
Home Equity$328,687 $334,268 $331,400
Indirect Auto$1,235,175 $1,273,253 $1,309,084
Residential Solar & Other Consumer$839,659 $916,960 $885,090
Total Loans$9,907,041 $9,969,910 $9,980,267

Fee Income Components (USD Thousands)

ComponentQ3 2024Q4 2024Q1 2025
Retirement Plan Admin Fees$14,578 $12,924 $15,858
Wealth Management$10,929 $10,842 $10,946
Insurance Services$4,913 $3,883 $4,761
BOLI Income$1,868 $2,271 $3,397

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan Growth (YoY)FY 2025~3–5% (commentary entering Q1) ~2–3% Lowered
Fee Income Run-Rate (ex-BOLI)Q2 2025N/A~$46M “good run rate” New
Operating Expenses (ex-acq.)Q2 2025N/A~$98.7M run-rate; Salaries & benefits ~$61M New
Deposit CostsNear-termDeclining in Q4 Further declines likely to slow absent Fed action Qualitative
Evans Merger — TBV DilutionDeal modeling~5% (Sep announcement) ~4% Improved
Evans Merger — EPS AccretionDeal modeling~$0.38 (Sep announcement) ~$0.30 Lower
Effective Tax RateQ1 202521.7% in Q1 2024 22.2% Higher
DividendQ1/Q2 2025$0.34 declared Jan 27 $0.34 declared May 20 Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
NIM trajectoryNIM up to 3.27% NIM up to 3.34% NIM up to 3.44% Improving sequentially
Deposit costs1.72% total cost of deposits 1.60% 1.49% Declining, pace may slow
Fee businessesRecord noninterest income; strong RPS/Wealth/Insurance Steady; seasonal moderation 12.7% QoQ increase ex-securities; RPS seasonal uplift Solid momentum
Loan growth+$256M YTD; diversified portfolio +$319M YoY; CRE growth Modest (+$10.4M); consumer runoff; lower resi originations Slower; guidance cut
Asset qualityStable NPAs 0.27% NPAs up to 0.38% on CRE NCOs 27 bps incl. $2.1M CRE write-down Mixed; episodic CRE
M&A (Evans)Announced; strategic fit Regulatory approvals; shareholder vote Closing May 2; accretion/dilution updated Executed integration
Semiconductor corridor (CHIPS)——Active regional engagement; Micron timeline commentary Emerging regional tailwind
Tariffs/Macro——Tariff impacts episodic; watching consumer unemployment Monitoring risks

Management Commentary

  • “Growth in both net interest income and noninterest income…resulted in the generation of positive operating leverage… Our capital position remains a key strength as we execute on strategic growth initiatives.” — Scott A. Kingsley, CEO .
  • “Operating return on assets was 1.11%… return on equity of 10%… ROTCE of 14%… improved over linked and prior year quarters.” — Scott A. Kingsley (prepared remarks) .
  • “Net interest margin… increased 10 basis points to 3.44%… primarily driven by the decrease in the cost of interest-bearing deposits.” — Annette L. Burns, CFO .
  • “Excluding the Other Consumer and Residential Solar portfolios… loans increased $40 million, or 1.8% annualized… 53% commercial, 47% consumer.” — Annette L. Burns .
  • “Included in net charge-offs… a $2.1 million write-down of a commercial real estate loan… Excluding… write-down, net charge-offs… were 18 basis points.” — Annette L. Burns .

Q&A Highlights

  • Credit demand and pricing: Pipelines remain solid across markets; competition generally rational with episodic exceptions .
  • Evans synergy and accretion: TBV dilution now ~4% (vs ~5% prior), EPS accretion ~$0.30 (vs ~$0.38), assuming full cost saves by end-2025 .
  • Loan growth outlook trimmed: From 3–5% to 2–3% given macro uncertainty and slower resi mortgage; more secondary-market sales to keep funding channels active .
  • Deposit costs: Declines accelerated in Q1 but likely to slow absent further Fed action; liquidity positioned conservatively heading into close .
  • CRE credit detail: Remaining exposure ~$11.5–12.0M; property occupancy low-80s generating positive cash flow; potential OREO in Q2 .
  • Portfolio repricing: ~$2B of loan cash flows to reprice; more yield pickup expected in commercial than consumer; resi production limited .

Estimates Context

MetricQ3 2024Q4 2024Q1 2025
Primary EPS Consensus Mean$0.7725*$0.7600*$0.7417*
Primary EPS (Normalized) Actual$0.8000*$0.7700*$0.8000*
EPS Result vs ConsensusBeat*Beat*Beat*
Revenue Consensus Mean ($)$145,239,670*$146,665,000*$151,038,750*
Revenue Actual ($)$144,523,000*$146,322,000*$147,121,000*
Revenue Result vs ConsensusMiss*Miss*Miss*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Margin expansion and funding discipline are the core Q1 story; continued deposit repricing benefits should support NIM but pace may slow without further rate cuts .
  • EPS outperformance vs consensus reflects diversified fee strength and funding cost control; however, revenue misses underscore sensitivity to loan yields and calendar effects. Values retrieved from S&P Global.*
  • Credit normalization bears watching: episodic CRE charge-offs and ongoing runoff portfolios (auto, residential solar) drove higher provisioning; underlying consumer delinquencies remain stable for now .
  • Loan growth trajectory moderated to 2–3% for 2025; expect mix shift toward commercial, with resi mortgage contribution constrained near-term .
  • Evans integration is a medium-term catalyst: footprint extension, leadership continuity, and cost saves drive ~$0.30 EPS accretion by YE25 with improved TBV dilution; modest securities portfolio repositioning post-close anticipated .
  • Fee businesses (RPS, Wealth, Insurance) provide resilient, market-linked revenue; ~$46M ex-BOLI run-rate offers stability amid yield curve uncertainties .
  • Capital remains strong (CET1 12.12%, leverage 10.39%); tangible book per share increased to $24.74; dividend maintained at $0.34, supporting total-return profile .