Earnings call transcript: NBT Bancorp beats Q3 2025 forecasts with strong EPS

NBT Bancorp Inc. (NBTB), a regional bank with a market capitalization of $2.18 billion, reported its financial results for the third quarter of 2025, surpassing market expectations with an earnings per share (EPS) of $1.05, compared to the forecasted $0.97. This represents an EPS surprise of 8.25%. Revenue also exceeded expectations, coming in at $186 million against a forecast of $183.68 million, marking a 1.26% surprise. Following the earnings announcement, NBT Bancorp’s stock saw a 1.96% increase, closing at $41.62 in premarket trading. According to InvestingPro, the company has maintained consistent profitability and shows strong dividend performance, with 12 consecutive years of dividend increases.

Key Takeaways

• NBT Bancorp’s Q3 2025 EPS of $1.05 exceeded forecasts by 8.25%.
• Revenue grew by 26% year-over-year, reaching $186 million.
• Stock price rose by 1.96% in premarket trading after earnings release.
• The company completed its merger integration with Evans Bancorp.
• Expansion plans include new branches in the Northeastern U.S.

Company Performance

NBT Bancorp demonstrated robust performance in Q3 2025, with net income reaching $54.5 million. The company’s revenue saw substantial growth, increasing by 9% quarter-over-quarter and 26% year-over-year, building on its impressive 14.42% revenue growth over the last twelve months. The bank’s operating return on assets stood at 1.37%, while return on equity was recorded at 12.1%. These metrics underscore NBT Bancorp’s solid financial health and strategic positioning in the market. InvestingPro analysis reveals 5+ additional key insights about NBT Bancorp’s financial health and growth prospects.

Financial Highlights

• Revenue: $186 million, up 26% year-over-year
• Earnings per share: $1.05, up from $0.97 forecast
• Operating return on assets: 1.37%
• Return on equity: 12.1%
• Tangible book value per share: $25.51, a 7% increase from the previous year

Earnings vs. Forecast

NBT Bancorp’s actual EPS of $1.05 was notably higher than the forecasted $0.97, resulting in an 8.25% earnings surprise. Revenue also surpassed expectations, with a 1.26% surprise over the anticipated $183.68 million. This marks a significant achievement for the company, reflecting its effective operational strategies and market positioning.

Market Reaction

In response to the positive earnings results, NBT Bancorp’s stock price increased by 1.96% in premarket trading, reaching $41.62. This movement reflects investor confidence in the company’s financial health and growth prospects. Trading at a P/E ratio of 15.07 and supported by a 3.69% dividend yield, InvestingPro’s Fair Value analysis suggests the stock is currently slightly undervalued. The stock is currently trading closer to its 52-week high of $52.44, with analysts setting price targets between $47 and $52, indicating potential further upside.

Outlook & Guidance

Looking forward, NBT Bancorp expects low to mid-single-digit loan growth and anticipates potential margin pressure in Q4 2025, with prospects for improvement in 2026. The company remains committed to expanding its branch network and exploring selective mergers and acquisitions within the community banking sector.

Executive Commentary

"We’re interested in building out the franchise that now goes from Buffalo to Portland and Wilkes-Barre, Pennsylvania to Burlington," said Scott Kingsley, CEO. Annette Burns, CFO, highlighted the integration of the insurance business with banking operations, stating, "Our insurance business is very integrated with our banking business."

Risks and Challenges

• Potential margin pressure in Q4 2025 could affect profitability.
• Economic uncertainties may impact loan growth projections.
• Integration of new branches and acquisitions poses operational challenges.
• Competition in the community banking sector remains intense.
• Regulatory changes could influence future strategic decisions.

Q&A

During the earnings call, analysts inquired about the performance of NBT Bancorp’s solar loan portfolio and confirmed stable auto loan delinquencies. Discussions also covered potential growth in the securities portfolio and capital management strategies, providing insights into the company’s future direction.

Full transcript - NBT Bancorp Inc (NBTB) Q3 2025:

Conference Call Moderator: Today, everyone, welcome to the conference call covering NBT Bancorp’s third quarter 2025 financial results. This call is being recorded and has been made accessible to the public in accordance with SEC Regulation FD. Corresponding presentation slides can be found on the company’s website at nbtbancorp.com. Before the call begins, NBT Bancorp’s management would like to remind listeners that, as noted on slide two, today’s presentation may contain forward-looking statements as defined by the Securities and Exchange Commission. Actual results may differ from those projected. In addition, certain non-GAAP measures will be discussed. Reconciliations for these numbers are contained within the appendix of today’s presentation. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this call is being recorded.

I will now turn the conference over to the NBT Bancorp President and CEO, Scott Kingsley, for his opening remarks. Mr. Kingsley, please begin.

Scott Kingsley, President and CEO, NBT Bancorp: Thank you. Good morning, and thank you for joining us for this earnings call covering NBT Bancorp’s third quarter 2025 results. With me today are Annette Burns, NBT’s Chief Financial Officer, Joe Stagliano, President of NBT Bank, and Joe Ondesko, our Treasurer. Our operating performance for the third quarter reflected the positive attributes of productive asset repricing trends, the diversification of our revenue streams, prudent balance sheet growth, and the additive impact of our merger with Evans Bancorp completed in the second quarter. Operating return on assets was 1.37% for the third quarter, with a return on equity of 12.1% and an ROTCE of 17.6%. Each metric demonstrates continued improvement over the linked and prior year quarters and, importantly, reflects the generation of positive operating leverage.

Our tangible book value per share of $25.51 at September 30 is 7% higher than a year ago and above the level it was at when we announced the Evans merger 13 months ago. This continued capital strength has us very well positioned to support all our strategic growth initiatives. The continued remix of earning assets, diligent management of funding costs, and the addition of the Evans balance sheet resulted in an improvement in net interest margin for the sixth consecutive quarter. We are pleased with our progress to date with net interest margin expansion. However, recent and expected changes to Fed funds rates will likely challenge future margin improvements compared to our most recent quarters. Growth in non-interest income continues to be a highlight, with each of our non-banking businesses achieving productive improvements in both revenue and earnings generation year over year.

We were also pleased to announce an 8.8% improvement to our dividend to shareholders earlier in the quarter, marking our 13th consecutive year of increases. This reflects our strong capital position and our generation of consistent and improving operating earnings. As we have stated before, our capital utilization priorities are to continue to support NBT’s organic growth and the consistent improvement to the quarterly dividend we pay our shareholders. In addition, we appreciate the opportunity to evaluate and partner with other like-minded community banks. Returning capital to shareholders in opportunistic share repurchases is also part of our capital planning, and as such, we renewed our 2 million share repurchase authorization through the end of 2027.

Before turning the meeting over to Annette to review our third quarter results with you in detail, Joe Stagliano will provide some additional color on our progress in the Western region of New York and other initiatives across the markets. Joe?

Joe Stagliano, President of NBT Bank, NBT Bancorp: Thank you, Scott. We continue to build on the momentum of our successful Evans Bancorp integration. Since the merger, we’ve experienced solid growth in deposits in the Western region of New York, and we are retaining key lending relationships despite experiencing approximately $30 million of net contractual runoff in the portfolio. Customer sentiment remains strong, and employee engagement is high. Let me walk you through some of our key market developments. In Buffalo and Rochester, we’ve had success recruiting and onboarding talented professionals across all lines of business, which complements the strong team we already have in place. Our new Webster branch in Greater Rochester opened in April, and it’s off to a promising start. To support growth, to support our growth initiative in Rochester, we plan to open a financial center in the market during 2026.

Additionally, we are exploring locations in the Finger Lakes to fill in our branch network in this attractive region. In the second half of 2026, we expect to break ground on a new branch location near the planned Micron chip fabrication site in Clay, New York. In addition, our current team of bankers and network of locations in the Mohawk Valley are well positioned to support the growth anticipated from Chobani’s plans for a new facility expected to add 1,000 jobs to the area. Our new Malta, New York branch near GlobalFoundries is seeing excellent traffic and growth. In the Hudson Valley, IBM has announced plans to expand into Poughkeepsie, and we are seeing positive demographic shifts in the region. We entered this market through our merger with Salisbury Bank and are eager to improve our concentration characteristics in this region.

Earlier this year, we opened our fourth branch in Burlington, Vermont, and we are seeing good momentum. We are set to open an additional branch office in Portland, Maine, in early 2026. We’ve also secured a site in Torrington, Connecticut, that will connect our presence in West Hartford with our locations in Litchfield County in early 2026. In addition, we remain focused on scaling our operations in New Hampshire, supported by the strong team of bankers we have in place there. Our team continues to evaluate both new locations and branch optimization using an active and structured process. This dual focus ensures that we remain agile and responsive to market needs as we maintain operational efficiency. I will now turn it over to Annette.

Annette Burns, Chief Financial Officer, NBT Bancorp: Thank you, Joe, and good morning. Turning to the results overview page of our earnings presentation, in the third quarter, we reported net income of $54.5 million, or $1.03 per diluted common share. Excluding acquisition expenses, our operating earnings per share were $1.05, an increase of $0.17 per share compared to the prior quarter. Revenues grew approximately 9% from the prior quarter and 26% from the third quarter of the prior year, driven by improvements in net interest income, including the impact of the Evans Bancorp merger. The next page shows trends in outstanding loans. Total loans were up $1.6 billion for the year, including acquired loans from Evans Bancorp. Excluding consumer loans in a planned contractual runoff status and the loans acquired from Evans Bancorp, annualized loan growth in 2025 was approximately 1% higher from December 2024.

Growth in commercial, indirect auto, and home equity loans were partly offset by declines in residential mortgage balances. During 2025, we have experienced a higher level of commercial real estate payoffs, while production has remained strong. We have captured quality lending opportunities across our markets, which has also provided growth in core deposits. This gives us flexibility to remain disciplined in our loan pricing and focused on holistic relationships. Our total loan portfolio of $11.6 billion remains very well diversified and is comprised of 56% commercial relationships and 44% consumer loans. On page seven, total deposits of $13.7 billion were up $2.1 billion from December 2024. Excluding the deposits acquired from Evans Bancorp, deposits increased $250 million from the end of 2024, with growth in checking and money market accounts.

58% of our deposit portfolio consists of no and low-cost checking and savings accounts, while 42% is held in higher-cost time and money market accounts. The next slide highlights the detailed changes in our net interest income and margin. Our net interest margin in the third quarter increased seven basis points to 3.66% from the prior quarter, primarily driven by the continued improvement in earning asset yields. Net interest income for the third quarter was $134.7 million, an increase of $10 million above the prior quarter and $33 million above the third quarter of 2024. The increase in net interest income from the prior quarter was largely attributed to the first quarter impact of the Evans Bancorp acquisition, along with earning asset yield improvement.

As a reminder, approximately $3 billion of earning assets repriced almost immediately with changes in the federal funds rate, while approximately $6 billion of our deposits, principally money market and CD accounts, remain price sensitive. The opportunity for further upward movement in yields will depend on the shape of the yield curve and how we reinvest loan and investment portfolio cash flows. The trends in non-interest income are outlined on page eight. Excluding securities gains, our fee income was $51.4 million, an increase of 9.8% compared to the previous quarter, and an increase of 13.5% from the third quarter of 2024. The seasonally higher third quarter also benefited from a full quarter of Evans activity. Our combined revenue from retirement plan services, wealth management, and insurance services exceeded $32 million in quarterly revenues.

As a reminder, and consistent with historical trends, the fourth quarter is typically our lowest quarter in revenue generation for these businesses. Non-interest income represented 28% of total revenues in the third quarter and reflects the strength of our diversified revenue base. Total operating expenses, excluding acquisition expenses, were $110 million for the quarter, a 4.4% increase from the prior quarter and reflected a full quarter of Evans activity. Salaries and employee benefit costs were $66.6 million, an increase of $2.5 million from the prior quarter. This increase was primarily driven by the full quarter impact of Evans, higher incentive compensation, and higher medical costs. Slide 10 provides an overview of key asset quality metrics. Provision expense for the three months ended September 30, 2025, was $3.1 million compared to $17.8 million for the second quarter of 2025.

The decrease in provision for loan losses during the quarter was attributable to $13 million of acquisition-related provision for loan losses in the second quarter, partially offset by net charge-offs returning to a more normalized level in the third quarter. Reserves were 1.2% of total loans and covered two and a half times the level of non-performing loans. In closing, growth in our net interest income and fee-based revenues drove our record performance in the third quarter and contributed to our meaningfully improved operating performance for the first nine months of 2025. We are in a strong capital position, have growth opportunities across all our markets, and are well positioned to take advantage of them. Thank you for your continued support. At this time, we welcome any questions you may have.

Conference Call Moderator: Thank you. Anyone with a question at this time can press star one one on your telephone and wait for your name to be announced. To remove yourself, press star one one again. One moment for our first question. It comes from the line of Feddie Justin Strickland with Hofdy Group LLC. Please proceed.

Hey, good morning. Just wanted to start on expenses. You’ve got a full run rate of Evans now on the expense line, and I was just wondering if you could talk about where you’re at in terms of cost saves and maybe what we should expect in terms of the total expense line over the next quarter or so.

Annette Burns, Chief Financial Officer, NBT Bancorp: Sure, happy to take that. Good morning. We think that our cost saves are essentially achieved during the third quarter, so we don’t expect to have any additional meaningful impact related to those on a go-forward basis. The run rate that we had in the third quarter of $110 million is an appropriate run rate as we look forward. Just as a reminder, we typically see merit increases starting in the first quarter, and our typical expense increase going forward typically runs somewhere between 3.5% and 4.5%. That’s kind of how we think about 2026.

Got it. That’s helpful. I just wanted to ask, you know, thinking about loan growth, it sounds like you’ve got, you know, some new hires there that should help the pipeline longer term. What should we think over the next couple of quarters in terms of net new loan growth, and keeping in mind, you know, what’s the level of runoff that you expect in the residential, solar, and other consumer book?

Scott Kingsley, President and CEO, NBT Bancorp: Let’s attack that one and say good morning. Let’s attack that one together. In terms of our activity for the last two quarters, it’s actually been very robust. We experienced a much higher level of payoffs than we had anticipated and, quite frankly, than we had experienced a year ago. I think as we roll into early to mid-2026, low to mid-single-digit growth rate is probably appropriate for our markets. Standalone, our markets still have really good activity levels in them, and our pipeline, quite frankly, is very good. Getting things on the construction side to a closing outcome, as you know, in our weather, we probably don’t close a whole bunch of those in December through February. Quite frankly, we like where the pipeline is with that and think there’s really good opportunities.

We were looking at where we are from a balance sheet perspective right now and really like where we’re centered holistically, which means an 85% loan-to-deposit ratio for us, quite frankly, is more comfortable for us than something in the 90s. We think it gives us longer-term optionality from an invested asset standpoint. At that level and where we are and those expected growth rates, we could still move up earning assets. They might just not all be loans. We’re very comfortable with that from an outcome standpoint and think it’s probably almost as important for us that we’ve continued this steady growth on the funding side, mostly on the core deposit side. That’s how we’re kind of framing where we think the balance sheet moves.

All right, great. That’s it for me. Thanks for taking my questions.

Appreciate the call. Thanks.

Conference Call Moderator: Our next question comes from the line of Stephen M. Moss with Raymond James. Please proceed.

Good morning.

Scott Kingsley, President and CEO, NBT Bancorp: Morning. Maybe just to start off, good morning, Scott. Maybe just, you know, following up on expenses here. You guys mentioned the recruitment of talent here and the de novo branches as well. Just maybe curious as to if you could size up, you know, what your expected talent recruitment is going to be and kind of how you think about how many de novo branches you may add over the next, you know, 12 months or so. I kind of frame it this way, Steve, and I’ll ask Annette and Joe to comment if I’ve left something out. I think in terms on the branch side, I think we’re thinking, you know, four to six a year, you know, to improve our concentration in some of the markets that we’re either new to or where our concentration is, quite frankly, not robust enough.

As an example, I think we’ve said that from the beginning that Rochester, New York, as an example, is one of those markets where, you know, when we partnered with Evans Bancorp, their concentration was mostly on the east side of Rochester, you know, in some great spots. Building that out across sort of, you know, central city Rochester and maybe even to the west side, you know, maybe there’s a concentration of two to four more sites for us over the next couple of years, to use that example. I think that’s also a spot for us where, you know, the recruiting of additional talent in the western region of New York State has been very productive for us.

You know, we had this "let’s hold stuff in from Evans" posture for the first five or six months, and we think we’ve done that, and we think our team has done very well on that. Now we’re in a position to be a little bit more assertive and add some people to the mix that, you know, we think can move up some of our long-term expectations on the growth side.

Annette Burns, Chief Financial Officer, NBT Bancorp: I would just say from an expense management, I think we look at branch optimization to kind of offset some of the growth initiatives, as well as technology investments to help improve efficiencies. Given that, I don’t think that we would see an outside expense growth in what we historically see from NBT Bancorp.

Okay. That’s helpful. Just in terms of maybe just thinking about your presence across Upstate New York, just kind of curious, are you interested in additional M&A deals or just kind of how you’re thinking about things at the current time?

Scott Kingsley, President and CEO, NBT Bancorp: You might frame it kind of both ways, saying that we’re interested in building out the franchise that now goes from Buffalo to Portland and Wilkes-Barre, Pennsylvania to Burlington. Fill-in strategies for us are probably first in our mind. Would we move the franchise another 50 miles west, south, east? For sure. Frankly, filling in some of those from an opportunistic build-out standpoint, including the potential for M&A, is absolutely primary for us. We have the opportunity to have discussions with like-minded smaller community banks, and we’re hoping that we’ve left a good impression and that if long-term independence is not in their plans, they’ll see the value proposition of talking to us.

Okay. Appreciate that, Scott. Maybe just one on the core margin here. Just kind of, you know, curious, any updated thoughts around purchase accounting accretion going forward here? You know, could we see any incremental core margin expansion here?

Annette Burns, Chief Financial Officer, NBT Bancorp: Great question. From an accretion standpoint, I think that’s fairly stabilized and an appropriate run rate. I don’t think we’ll have any material change of that over the next, let’s say, four quarters or so. As we think about the margin, in the short term with the potential for multiple rate cuts in our near future here, we think there might be a little bit of margin pressure, and that’s really because even though we’re neutrally positioned, our assets reprice almost immediately while we have to actively manage our deposit repricing. As a reminder, $6 billion of our deposits that we’re able to reprice, about $1.4 billion of those are in CDs. It might take a little, like a full quarter to work through those to help offset those asset repricing. The fourth quarter could see a little bit of pressure.

Looking out into 2026, especially if we see an improvement in the shape of the yield curve, we could see some margin improvement jumping off of the fourth quarter.

Okay. Just one follow-up there, what percentage of loans are variable rate these days?

Somewhere around $3 billion are variable rate.

Scott Kingsley, President and CEO, NBT Bancorp: Yeah. Steve, that includes all of our assets that are variable. The loans are probably $2.5 to $2.6 billion, which, quick in my head, that’s a little over 20%. There’s probably $100 to $150 million worth of investment securities that are variable. Currently, we find ourselves in a Fed funds sold position. Those overnight funds obviously move with changes and so forth or Fed funds changes. That’s a couple hundred million for us.

Perfect. All right. I appreciate all the call here, and I’ll step back in the queue.

Appreciate it, Steve.

Conference Call Moderator: Thank you. Our next question comes from the line of Mark Thomas Fitzgibbon with Piper Sandler. Please proceed.

Good morning. Just wanted to follow up with a question on the solar loans. I guess I’m curious, is there any way to kind of accelerate the exit of those? Is there kind of any depth to the market to sell those loans?

Scott Kingsley, President and CEO, NBT Bancorp: That’s a really good question and something we spent a lot of time with. Today, Mark answers no for that. There’s desire potentially for that asset. In other words, people still like the asset class a lot, despite all of the volatility and future volatility associated with new originations. Remember, we still have a fair portion of our loans that were originated in the 2020 to 2023 operating years, and they contain yields that are lower than the market is demanding today. For us to move that on an accelerated basis, we would have to embrace a fair value loss today. Not something we need to do. Those assets are performing, again, not utopian yields, but those assets are performing the way they’re supposed to perform, and our credit characteristics have been exactly in line with what we expected.

Okay. I guess I’m curious, are you seeing any pressure at all on auto loan delinquencies right now?

Not significant at all. Quite frankly, it’s been very consistent. Remember, we’re in the A and B paper classes. I think both from an origination standpoint, we might see this going forward with a couple of the industry announcements that capacity for C and D lending might be more substantially impacted over the next 3 months, 12 months period of time. For us, it’s been great. Remembering, we’re making our indirect auto loans in our footprint, and most of our footprint doesn’t have meaningful public transportation. People are making their car loan payments so they can go to work.

Okay. One for Annette. Annette, your comments earlier, I think you said with respect to the margin, it’d be challenging to improve it. Should we take that to mean that the margin will decline, or do you sort of think you can hold the margin somewhere close to the current level?

Annette Burns, Chief Financial Officer, NBT Bancorp: For the fourth quarter, that’s where we’re reflecting it might be a little bit of a challenge to hold, but a few basis points for one direction or the other. I think we kind of stabilize pending no further rate actions and have the ability to see a little bit of margin improvement quarter over quarter as we still have some opportunity to reprice our loan book.

Scott Kingsley, President and CEO, NBT Bancorp: Mark, we’ve been very deliberate about making sure that we’re holding spreads on new assets that we’re winning. We don’t think at this point in time in sort of the credit cycle, which is probably closer to mature, is the right time to be reaching for growth.

Okay. Lastly, no updates on the timing for the Micron project?

Yeah. You know, $64,000 question, so thanks for asking it. Today, we still expect shovels in the ground at the site here late in the fourth quarter. If you know our zip code very well, the shovel has to have a lot of pressure on it to get into the ground in the next couple of months. Our perspective today on that, Mark, is that the site will be improved relative to taking on fill, and because this site, quite frankly, is a touch wet. I think the next five to seven months are site fill, making sure that the activity has been compressed with the expectation that building actually starts mid to late 2026.

Great, thank you.

Appreciate that.

Conference Call Moderator: Thank you. Our next question is from the line of Matthew M. Breese with Stephens, Inc. Please proceed.

Hey, good morning.

Scott Kingsley, President and CEO, NBT Bancorp: Morning, Matt.

A few kind of margin-related questions. First, do you happen to have the spot cost of deposits either at quarter end or, you know, most recent date? I was hoping you could provide some color on the roll-on versus roll-off dynamics of fixed and/or adjustable rate loans today.

On the spot side now, let’s get back to you. You know, we don’t have that sitting in front of us today. I will say this. We’re pretty sure because we made some adjustments to deposit costs after the Fed rate change in September that October’s cost of funds are probably slightly lower than September’s. My guess is it’s measured in single basis points. Let’s reframe your second part of your question if you would.

Yeah. For your fixed rate and adjustable rate loans, what is the roll-on versus roll-off rates?

Annette Burns, Chief Financial Officer, NBT Bancorp: I’ll take that based on book. For our commercial portfolio, we probably have about a 50 bps differential now between our portfolio yields and our origination rates. For indirect auto, we’re just about there, and that’s dependent on the belly of the curve where we price those auto loans. If you look at our presentation, we’re probably a little bit lower on our new origination rates than our current portfolio yields. That’s going to probably fluctuate from quarter to quarter. Where we have the most room is in our residential mortgages, which is still about 160 bps of room between our portfolio yields and our new origination rates.

Okay. This one kind of leads into my next question, which is your securities yields are still, you know, pretty low relative to what you could go purchase something at today. When do we see a more pronounced pickup in securities yields as, you know, the back book starts to reset or mature?

Scott Kingsley, President and CEO, NBT Bancorp: Our portfolio today is very much a cash-flowing portfolio. It’s mostly mortgage-backed securities, so it’s pretty orderly. It’s in the line of a couple hundred million dollars a year from a cash flow standpoint. We don’t think that changes much. We will acknowledge your comment that our portfolio yields are now below our peer group because we think we’re the last ones in the peer group that did not do a one-time charge or a restructuring.

Okay. Just last one, Scott, your comments on perhaps earning asset growth, you know, beyond loan growth, I felt like was a not-so-subtle hint that we might see some securities growth near term. To what extent might that happen and to what extent do you lean into kind of your excess cash position to do that?

Yeah, that’s a terrific question. I think today we have that flexibility. Maybe over the last couple of years, we didn’t enjoy that flexibility at the same level. I think it’s a duration-based risk-reward for us, Matt. Today, when you stay in the short-term end, setting aside expectations that short-term rates may come down a little bit, there’s really not much of a penalty to stay in Fed funds or something very short-term. That probably gets a little bit more definition to it after the expected changes in Fed funds rates here in the fourth quarter, and we’ll assess it from there. When we look at that, we’ve never taken a real mismatch in terms of duration in our portfolios. I wouldn’t expect to start that in this cycle.

I do think an opportunity does present itself for us to continue to analyze if we can leg into that a little bit more. Remember, we were very deliberate about how we handled the investment portfolio that we inherited from Evans Bancorp and where we pushed those cash flows to, what we disposed of, and what we decided to retain. Our construct around investment securities continues to be making sure we have enough latitude to support the collateralization for our municipal deposits. That’s more of our focus point than whether we have incremental earnings opportunity associated with a $50 million, $60 million, $100 million leg in on the security side.

Great. I’ll leave it there. Thanks for taking my questions.

Perfect. Thank you.

Conference Call Moderator: Thank you. Our next question is from the line of David Conrad with KBW. Please proceed.

Hey, good morning. I want to switch gears a little bit and talk about the fee income. I thought it was a really good quarter, particularly in insurance. I know it’s seasonally probably your strongest quarter there, but highlight what’s going on there and maybe, is 7% an annual growth rate that you can think about in 2026?

Annette Burns, Chief Financial Officer, NBT Bancorp: Good question. For our insurance business, our third quarter is our most seasonally high, probably to the tune of about $1 million. That’s just some seasonality of some of our municipal customers. The first and third quarter are typically higher for our insurance business. The growth rate of around 7%, I would say somewhere those high, high mid-single digits is an appropriate run rate. Seeing some good commercial growth across our business line. Our insurance business is very integrated with our banking business. A lot of referral opportunities as it relates to that, and that’s what drives the growth there.

Scott Kingsley, President and CEO, NBT Bancorp: To follow that, David, the rate of change on rate increase that the insurance companies have been able to be approved for is a little bit less than we experienced over the last couple of years. In other words, new rate structures were generating growth for most agencies in the 4% to 6% rate before you even add new customer development.

Got it. Maybe a last question follow-up here. Help us out a little bit on next quarter and your outlook as we can get a little bit more seasonally challenged in the fourth quarter for the total fee income business.

Yeah. Historically, and Annette Burns will remind me if I’m wrong on this, historically, fee income for benefits administration and insurance has typically been 6% to 8% lower in the fourth quarter than it was experienced in the third quarter. There’s nothing for us today telling us that we’d be outside of that expectation.

Annette Burns, Chief Financial Officer, NBT Bancorp: I would also just remind there’s probably about $1.5 million of unique items to the quarter gains in the third quarter, so that also kind of made the third quarter a little higher.

Perfect. Thank you.

Scott Kingsley, President and CEO, NBT Bancorp: Appreciate it, David.

Conference Call Moderator: Thank you. Again, if you have a question, please press star one one to get in the queue and wait for your name to be announced. To remove yourself, press star one one again. All right. We have a question from the line of Feddie Justin Strickland with Hofdy Group. Please proceed.

Hey, just kind of a quick follow-up on capital. We talked a little bit about, you know, M&A down the road already, but just wanted to get your thoughts on capital management. Any sort of capital ratio number you’re trying to manage to, and could we see buybacks executed beyond the level of offsetting stock-based comp?

Scott Kingsley, President and CEO, NBT Bancorp: Thank you for the question and good reference point. Over the last two and a half years, we’ve been really, really deliberate on capital retention because we were going through the completion and closing of both the Salisbury transaction as well as the Evans transaction. We weren’t real active in a lot of our other attributes because we wanted to make sure we had the purchase accounting right and that our estimates of impact on dilution were appropriate. We’ve gone through that. We’re very comfortable. As a matter of fact, we’ve exceeded our expectations on getting back to pre-announcement levels of capital. Holistically, right now, we’re really comfortable from a capital position. I would argue on most states we have too much, just given the risk attributes of our balance sheet.

That being said, I think we’re in a spot from a maintenance standpoint of our capital levels holistically and specifically at the bank where we can embrace every opportunity that we have without worrying about that. To your question, historically, we always tried to cover equity-based compensation plans with repurchases so that we didn’t dilute ourselves on a creek basis. Today, given where valuations are for high-quality earnings generation characteristics like we have, suggests that maybe we should be a little bit more active with repurchase activity. It has never been our principal focus relative to capital management, but we find ourselves in a position today where we’re not sure the market has fully recognized our capacity for earnings.

All right. Great. Just one last one on the margin. I understand the dynamics of repricing loans versus deposits and relying on deposits. It sounds like if we get some level of steepness in the yield curve and a couple more cuts and you start to get the benefit of those, deposit costs lower, maybe into mid-2026, I mean, could we see some initial pressure on the margin near term, but maybe the margin starts to come up a little bit over time with maybe some back book loan repricing, the deposit lag piece, and assuming we have some level of steepness in the curve?

Annette Burns, Chief Financial Officer, NBT Bancorp: I think that’s a good summary of how we’re thinking about margin and, you know, potential for margin improvement. Just a reminder that, you know, you’re probably not going to see the same level of benefit that we saw in 2025 just because, you know, a lot of our loan book has repriced. It’s really less of an opportunity than what we’ve seen.

Fair enough. Thanks for additional color.

Scott Kingsley, President and CEO, NBT Bancorp: Appreciate the question.

Conference Call Moderator: Thank you so much. As I’m not showing any further questions in the queue, I will turn the call back to Scott Kingsley for his closing remarks.

Scott Kingsley, President and CEO, NBT Bancorp: Thank you. In closing, I want to thank everyone on the call for participating today and for your continued interest in NBT Bancorp. At least for this week, go Bills.

Conference Call Moderator: Thank you, Mr. Kingsley. This concludes our program. You may disconnect and have a great day.

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