Name: NBT BANCORP INC Q4 2024 Earnings Call
Start: 2025-01-28T15:01:00.000Z

Executive Summary

Q4 2024 delivered its third consecutive quarter of net interest margin expansion to 3.34% (+7 bps QoQ) and net interest income growth to $106.1M, while diluted EPS was $0.76 (down $0.04 QoQ; up $0.12 YoY) and operating diluted EPS was $0.77 .
Total net revenue was $148.5M, up modestly QoQ, as lower deposit costs (1.60%, -12 bps QoQ) and improved funding mix offset a 5 bps decline in earning asset yields to 4.96% .
Asset quality mixed: nonperforming assets rose to 0.38% of assets on a CRE nonaccrual, and net charge-offs increased to 0.23% of average loans; allowance coverage eased to 1.16% reflecting mix shifts and prior specific reserve release .
Evans Bancorp merger achieved regulatory and shareholder approvals; management continues to target a Q2 2025 close alongside core conversion, and raised the quarterly dividend to $0.34 (+6.3% YoY) for Q1 2025 .
S&P Global consensus estimates for Q4 were unavailable due to a data limit; estimate comparison is not shown. Wall Street estimates context will be updated when accessible (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

Net interest margin expanded for the third straight quarter to 3.34% on lower deposit costs and improved funding mix; net interest income rose $4.4M QoQ to $106.1M .
Fee businesses remained a strength: noninterest income excl. securities was $42.2M (+11.1% YoY), with retirement plan administration and wealth management fees up YoY on organic growth and market performance .
CEO tone constructive: “Three consecutive quarters of growth in net interest income and margin along with continued strong results from our diverse mix of fee businesses drove NBT’s operating performance in the fourth quarter of 2024.” .
Capital robust: CET1 11.93%, leverage 10.24%, tangible equity to assets 8.42%, tangible book value per share at $23.88 (record), and dividend increased to $0.34 for Q1 2025 .

What Went Wrong

Asset quality pressure: nonperforming assets rose to 0.38% of assets due to a CRE relationship placed on nonaccrual; net charge‑offs increased to 23 bps annualized (two CRE relationships and runoff portfolios) .
Loan yields declined 9 bps QoQ to 5.65% given repricing of $2.1B variable‑rate loans; earning asset yields fell 5 bps to 4.96% .
Operating expenses increased 4.8% QoQ to $100.8M, driven by higher medical costs, incentive compensation, and other expenses (office supplies, postage, advertising) .
YoY, allowance for loan losses ratio moderated to 1.16% and the coverage of nonperforming loans declined versus prior periods, consistent with mix shifts and specific reserve release .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Net Revenue ($USD Millions)	$140.4 (Net interest $97.2 + noninterest $43.2)	$147.4 (Net interest $101.7 + noninterest $45.8)	$148.5 (Net interest $106.1 + noninterest $42.4)
Diluted EPS ($)	$0.69	$0.80	$0.76
Operating Diluted EPS ($)	$0.69	$0.80	$0.77
Net Interest Margin (FTE, %)	3.18%	3.27%	3.34%
Earning Asset Yields (%)	4.92%	5.01%	4.96%
Total Cost of Deposits (%)	1.68%	1.72%	1.60%
Total Cost of Funds (%)	1.85%	1.85%	1.71%
Net Interest Income ($USD Millions)	$97.2	$101.7	$106.1
Noninterest Income ($USD Millions)	$43.2	$45.8	$42.4

Note: Consensus EPS/Revenue comparisons are omitted because S&P Global estimate data was unavailable due to a daily limit.

Segment (Loan) Breakdown ($USD Thousands)

Loan Category	Q2 2024	Q3 2024	Q4 2024
Commercial & Industrial	$1,397,935	$1,458,926	$1,426,482
Commercial Real Estate	$3,784,214	$3,792,498	$3,876,698
Residential Real Estate	$2,134,875	$2,143,766	$2,142,249
Home Equity	$326,556	$328,687	$334,268
Indirect Auto	$1,225,786	$1,235,175	$1,273,253
Residential Solar	$861,883	$839,659	$820,079
Other Consumer	$123,098	$108,330	$96,881
Total Loans	$9,854,347	$9,907,041	$9,969,910

KPIs and Credit

KPI	Q2 2024	Q3 2024	Q4 2024
Period‑End Deposits ($USD Billions)	$11.27	$11.59	$11.55
Period‑End Loans ($USD Billions)	$9.85	$9.91	$9.97
Loan‑to‑Deposit Ratio (%)	87.4%	85.5%	86.3%
Nonperforming Assets / Total Assets (%)	0.28%	0.27%	0.38%
Net Charge‑offs / Avg Loans (annualized, %)	0.15%	0.16%	0.23%
Allowance for Loan Losses / Total Loans (%)	1.22%	1.21%	1.16%
CET1 Ratio (%)	11.70%	11.86%	11.93%
Tangible Book Value per Share ($)	$22.54	$23.83	$23.88

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Noninterest expense run rate	1H 2025	FY 2025 run-rate +4–5% YoY (baseline from 2024)	$97–$99M per quarter (Q1 likely ~$99M on seasonality)	Clarified/Updated
Effective tax rate	FY 2025	Not specified	22.5%–23%	New range provided
Deposit costs trajectory	Near-term	Stable at 1.72% in Sep 2024	“More room to go”: MM accounts repricing quickly; CDs lag; Q1 to reflect residual December cuts	Lower expected
NIM trajectory	Near-term	NIM 3.27% in Q3, improved QoQ	Positive bias with lower funding costs; legacy NII/NIM opportunity improved vs late Q3	Constructive
Evans Bancorp merger timing	2025	Target 2Q 2025 pending approvals	Approvals and shareholder vote obtained; close targeted for Q2 2025 with core conversion	Maintained, de‑risked
Dividend	Q1 2025	$0.32 in Q1 2024	$0.34 (+6.3% YoY), payable Mar 17, 2025	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
NIM and funding costs	NIM 3.18% (Q2); 3.27% (Q3); focus on yield curve mid‑point; manage deposit pricing	NIM 3.34%; deposit costs -12 bps QoQ; improved funding mix	Improving
Asset yields/loan repricing	Asset yields 4.92%→5.01%; ~$2B annual loan cash flows; repricing depends on curve	Asset yields 4.96%; ~$2.1B variable loans repriced down; new originations above portfolio yields	Mixed (down near-term)
Deposit costs	1.68% (Q2)→1.72% (Q3); cycle beta ~31%	1.60% (Q4); “more room to go” esp. MM; CDs lag	Improving
Fee businesses	Record $43.3M (Q2); record $45.3M (Q3); ~31% of revenues	$42.2M excl. secs; seasonal step-down; retirement/wealth up YoY	Strong YoY; seasonal
Asset quality/credit	NPA ~0.28% (Q2–Q3); provision volatile with growth/CECL	NPA 0.38%; CRE nonaccrual; NCOs up; reserve coverage >2x NPLs	Slightly weaker
CHIPS corridor	Positioned along Upstate NY chip corridor; Micron timeline shifted	Activity progressing; infrastructure investments; bullish medium‑term	Positive structural
Evans merger	Announced Q3; target 2Q 2025 close	Approvals and vote obtained; close planned Q2 with core conversion	De‑risked execution

Management Commentary

Strategic emphasis: “Three consecutive quarters of growth in net interest income and margin along with continued strong results from our diverse mix of fee businesses drove NBT’s operating performance in the fourth quarter of 2024.” — Scott A. Kingsley, CEO .
Market positioning: “NBT is uniquely positioned to play a significant role in providing financial services to all types of customers and prospects living and working along the Upstate New York semiconductor CHIP corridor.” — CEO .
Evans integration: “We continue to expect the merger to close in the second quarter of 2025 in conjunction with the core system conversion… team members… are working closely to plan a smooth transition.” — CEO .
Funding strategy: “Approximately $5 billion of our deposits are price sensitive… money market accounts… can react fairly quickly… CDs will lag.” — CFO .
Expense framework: “Run rate… $97M to $99M a quarter… first quarter might pick up a little higher, closer to the $99 million.” — CFO .

Q&A Highlights

Loan repricing and asset yields: ~$2.2B annual loan cash flows expected to reprice higher over time; variable SOFR‑based commercial loans adjust quickly with Fed moves; new volumes priced 50–200 bps over portfolio depending on product .
Expense run‑rate: Organic run‑rate guided to $97–$99M per quarter in 1H’25; Q1 seasonally higher; FY 2025 framed as +4–5% YoY vs 2024 base .
Reserve dynamics: Coverage ratio declines reflect mix (runoff of higher‑reserved consumer/solar portfolios) and specific reserve release on CRE charge‑down; unemployment and prepayment assumptions stabilized .
Evans timing and approach: No pull‑forward of close; NBT will close concurrent with core conversion to reduce integration risk; balance sheet actions expected to be modest and focused on municipal pledging/investment portfolio positioning .
Tax rate guide: 22.5%–23% for FY 2025 .

Estimates Context

S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable due to an access limit, so beat/miss analysis to consensus is not shown. When available, we will anchor comparisons to S&P Global Wall Street consensus and update the recap accordingly.
Near-term estimate implications: Management’s outlook suggests potential upward revisions to net interest income and margin given declining deposit costs, alongside typical Q1 seasonality in fee income; we will reassess once estimates are accessible .

Key Takeaways for Investors

Margin inflection is durable: Funding cost declines (-12 bps QoQ) and improved mix lifted NIM to 3.34% for the third straight quarter; watch deposit repricing progress in Q1 for continued NIM support .
Fee income diversification remains a core differentiator: Retirement and wealth businesses grew YoY; seasonal Q4 moderation should reverse into the year .
Credit watchlist: NPA uptick to 0.38% and higher NCOs reflect isolated CRE and runoff portfolios; reserve coverage remains >2x NPLs, but monitor CRE lease‑up dynamics .
Evans merger catalyst: Regulatory and shareholder approvals de‑risk closing; Q2 2025 close with core conversion should enable Western NY expansion and cross‑sell opportunities in wealth/insurance .
Expense discipline: Management guided to $97–$99M quarterly run‑rate in 1H’25 despite seasonal Q1 pressures; supports operating leverage as NII improves .
Dividend trajectory: Q1 2025 dividend raised to $0.34 (+6.3% YoY), signaling confidence in capital generation; CET1 at 11.93% provides flexibility .
Trading lens: Near term, focus on deposit cost trajectory and spot NIM trends; medium term, Evans integration execution and CHIPS corridor‑driven commercial activity are narrative drivers .

NBT BANCORP INC (NBTB)·Q4 2024 Earnings Summary