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NBT BANCORP INC (NBTB)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarter: Net income $54.5M and diluted EPS $1.03; operating diluted EPS $1.05. Net interest margin expanded for the sixth consecutive quarter to 3.66% .
  • EPS beat and revenue slightly below Street: Q3 operating EPS $1.05 versus consensus $0.97; “revenue” (net interest income after provision + noninterest) $182.97M versus consensus $184.08M. Values retrieved from S&P Global.*
  • Full-quarter Evans Bancorp integration drove earning asset growth, fee mix and accretion; deposits reached $13.66B, loan-to-deposit ratio improved to 84.9% .
  • Board raised dividend to $0.37 (+8.8% YoY) and amended repurchase authorization to up to 2,000,000 shares through 2027, adding capital return optionality .
  • Near-term watch: management flagged potential NIM pressure in Q4 amid expected rate cuts, then stabilization and possible improvement in 2026 as deposits reprice and curve steepens .

What Went Well and What Went Wrong

What Went Well

  • NIM expansion and earnings momentum: “Net interest margin… increased seven basis points to 3.66%… sixth consecutive quarter of net interest margin improvement,” supporting record income and ROTCE of 17.35% . CEO: “We achieved record net income and earnings per share… return on average assets of 1.35%… return on average tangible common equity of 17.35%” .
  • Fee income strength and diversification: Noninterest income (ex-securities) was $51.4M (+9.8% QoQ; +13.5% YoY); combined retirement, wealth, insurance exceeded $32M, with seasonal tailwinds and Evans contribution .
  • Balance sheet and capital: Deposits grew to $13.66B; CET1 11.80%, leverage 9.34%; tangible equity/asset 8.58%; dividend increased; sub debt redemption reduced prospective interest costs .

What Went Wrong

  • Provision still present (though lower): Provision for loan losses $3.1M (down from Q2’s acquisition-related spike), with net charge-offs annualized at 0.15% and higher commercial/consumer NCOs QoQ .
  • Variable-rate asset sensitivity creates near-term margin headwind under rate cuts; ~$3B variable assets including ~$2.5–$2.6B loans reprice quickly versus managed lag in ~$6B price-sensitive deposits (including ~$1.4B CDs) .
  • Solar/other consumer portfolios still in planned run-off; market depth for selling solar loans is limited without accepting fair value losses, so accelerated exit is unattractive .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Net Interest Income ($M)$101.67 $124.22 $134.66
Noninterest Income ($M)$45.77 $46.93 $51.41
Net Income ($M)$38.10 $22.51 $54.47
Diluted EPS (GAAP) ($)$0.80 $0.44 $1.03
Operating Diluted EPS (non-GAAP) ($)$0.80 $0.88 $1.05
Net Interest Margin (FTE) (%)3.27% 3.59% 3.66%

Q3 2025 vs Street Consensus (S&P Global):

MetricConsensusActualBeat/Miss
EPS ($)0.97*1.05*Beat*
Revenue ($M)184.08*182.97*Miss (≈$1.1M)*

Values retrieved from S&P Global.*

Segment Breakdown – Loans by Line of Business ($000s):

SegmentQ3 2024Q2 2025Q3 2025
Commercial & Industrial$1,458,926 $1,692,335 $1,644,218
Commercial Real Estate$3,792,498 $4,800,494 $4,830,761
Residential Mortgage$2,143,766 $2,530,344 $2,528,565
Home Equity$328,687 $423,355 $435,584
Indirect Auto$1,235,175 $1,319,401 $1,327,689
Residential Solar & Other Consumer$947,989 $858,751 $828,317
Total Loans$9,907,041 $11,624,680 $11,595,134

Key KPIs:

KPIQ3 2024Q2 2025Q3 2025
ROAA (%)1.12% 0.59% 1.35%
ROTCE (%)14.54% 8.01% 17.35%
Loan-to-Deposit Ratio (%)85.5% 86.0% 84.9%
CET1 Ratio (%)11.86% 11.37% 11.80%
Total Assets ($000)$13,839,552 $16,014,781 $16,112,584
Stockholders’ Equity ($000)$1,521,980 $1,805,166 $1,853,146

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest MarginQ4 2025 into 2026Q3 NIM to improve a few bps from accretion and asset repricing “Short term… fourth quarter could see a little bit of margin pressure… potential improvement in 2026 with curve shape and deposit repricing” Lower near term; constructive medium term
Operating Expenses (ex-acquisition)Near-term run rate / FY26~$105M in Q2 with one extra month of Evans expected in Q3 ~$110M Q3 run rate; cost saves essentially achieved; normal annual growth 3.5%–4.5% in 2026 Raised run rate; cost saves done
Fee Income SeasonalityQ4 2025Seasonal decrease expected; mix impacted by Evans Q4 typically 6%–8% lower than Q3 for benefits admin & insurance; ~$1.5M unique gains elevated Q3 Maintained seasonality
Loan Growth2025–2026Pipeline strong; second-half growth similar to first-half; modest overall Low to mid single-digit growth into early/mid 2026; pipeline “very good,” focus on 85% loan/deposit ratio Clarified pace and balance sheet stance
DividendOngoing$0.37 per share declared in Q3 2025 (+8.8% YoY) $0.37 declared for Q4 2025; 13th consecutive annual increase Maintained
Share RepurchaseThrough 20271,992,400 shares available as of Q2 Authorization amended to up to 2,000,000 shares; through 12/31/2027 Expanded capacity

Earnings Call Themes & Trends

TopicQ1 2025 (Previous Mentions)Q2 2025 (Previous Mentions)Q3 2025 (Current Period)Trend
Margin outlook and repricingNIM up 10 bps to 3.44% on deposit cost declines; ~$2.1B variable loans repriced after Fed cut NIM up to 3.59%; full Evans accretion adds a few bps in Q3; further repricing benefits moderating NIM up to 3.66%; expect slight pressure in Q4 on rate cuts; potential improvement in 2026 Improving, then near-term pressure, constructive 2026
Deposit costs and funding mixActively managed down; 58% low/no-cost deposits Funding costs stabilized; slight improvement possible; deposit mix improved October cost of funds slightly lower than September; single bps; manage lag in $6B price-sensitive deposits ($1.4B CDs) Stabilizing, tactical repricing lag
Evans integration & Western NY expansionClosing planned for May; value proposition and balance sheet leverage for Evans bankers Conversion completed; most cost synergies realized; deposit growth in western region Full quarter impact; branch expansion plans; talent recruitment; 4–6 de novo branches per year Executing and scaling
Semiconductor corridor (Micron)Progress on site milestones; production start mid-’27/early ’28 expected Reaffirmed ecosystem development; tax incentives supportive Site work expected late Q4’25; building start mid/late 2026 Advancing, long-dated
Fee businessesNoninterest income 31% of revenue; seasonal benefits admin/insurance strength Seasonal dip; Evans mix reduces fee ratio; insurance seasonality noted $51.4M fee income ex-securities; Q4 typically 6–8% lower Solid; seasonal Q4 dip ahead
Capital & buybacksStrong capital; focus on Evans and organic growth TBV up; sub debt redemption contemplated Dividend up; repurchase authorization expanded; potential for more active buybacks More optionality
Asset qualityCRE participation write-down; reserves ~1.17% Provision elevated on acquisition; NCOs low; reserves ~1.21% Provision $3.1M; NCOs normalized; reserves 1.20%; NPA/Assets 0.33% Stable/normalized

Management Commentary

  • CEO (prepared): “We achieved record net income and earnings per share… return on average assets of 1.35% and a return on average tangible common equity of 17.35%… sixth consecutive quarter of net interest margin improvement” .
  • CFO (prepared): “Operating earnings per share were $1.05… revenues grew approximately 9% QoQ and 26% YoY, driven by improvements in net interest income, including the impact of the Evans Bancorp merger… NIM increased seven basis points to 3.66%” .
  • Strategy: “We plan to open four to six branches a year… improve concentration in Rochester and other markets; recruiting additional talent in Western NY has been productive” .
  • Cautionary tone: “Recent and expected changes to Fed funds rates will likely challenge future margin improvements compared to our most recent quarters” .

Q&A Highlights

  • Expenses and cost saves: “We think that our cost saves are essentially achieved during the third quarter… $110 million is an appropriate run rate… typical expense increase… 3.5%–4.5%” .
  • Loan growth outlook: Low to mid single-digit into early/mid 2026; preference for ~85% loan-to-deposit ratio; pipelines “very good” with seasonal construction timing .
  • Margin mechanics: Accretion run-rate stabilized; near-term rate cuts could pressure NIM; ~$3B variable-rate assets; $6B deposits are price sensitive ($1.4B CDs) .
  • Solar loans: Limited market depth to sell without fair value losses; portfolio performing as expected; continued planned runoff .
  • Indirect auto: Delinquencies stable; A/B credit focus; footprint lacks public transport, supporting payment behavior .
  • Fee seasonality: Q4 fee income typically 6%–8% lower than Q3; Q3 included ~$1.5M unique gains .
  • Capital management: Comfortable capital levels; may be “more active” with repurchases beyond offsetting stock-based comp if market undervalues earnings capacity .

Estimates Context

  • Q3 EPS beat: Operating EPS $1.05 versus consensus $0.97; implies positive operating leverage and accretion synergies. Values retrieved from S&P Global.*
  • Q3 revenue slight miss: $182.97M actual versus $184.08M consensus; structurally, SPGI “revenue” aligns with net interest income after provision plus noninterest income; provision of $3.1M reduced “revenue” versus pre-provision net interest income . Values retrieved from S&P Global.*
  • Estimate revisions: Management’s caution on near-term NIM under rate cuts and seasonal Q4 fee softness may prompt modest downward adjustments to Q4 EPS/NIM, with 2026 margin recovery potential as deposits reprice and curve steepens .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Strong quarter with clear EPS beat and continued NIM expansion; operating performance reflects Evans accretion and diversified fee engines . Values retrieved from S&P Global.*
  • Expect transitory NIM pressure in Q4 on rate cuts, then stabilization/improvement in 2026 as CDs roll and curve potentially steepens; monitor deposit beta and timing .
  • Capital returns stepped up: dividend raised and buyback authorization expanded; management open to opportunistic repurchases if valuation remains below earnings capacity .
  • Asset quality normalized with reserves at 1.20% and NPA/Assets 0.33%; watch commercial episodics and consumer run-off books (solar) .
  • Loan growth pivot to balanced approach (low/mid single digits) maintaining ~85% L/D; potential securities deployment to optimize earning assets without duration mismatch .
  • Fee businesses provide stability but expect seasonal downtick in Q4; watch ~$32M quarterly run-rate across RPS/wealth/insurance and market sensitivity .
  • Regional expansion (Western NY, NE footprint) plus Micron corridor exposure offer medium-term growth catalysts; monitor execution and timeline milestones .