On Friday, NBT Bancorp (NASDAQ:NBTB) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
NBT Bancorp reported solid first-quarter 2026 financial results, with a 27% increase in net income compared to the same period in 2025, driven by disciplined balance sheet management and diversified revenue streams.
The company’s operating return on assets was 1.29%, and return on tangible equity was 15.50%, reflecting significant improvements over the prior year.
Net interest margin improved by 28 basis points year-over-year, although commercial real estate payoffs and challenging winter conditions impacted early 2026 performance.
Non-interest income reached a new high with growth in retirement plan administration services, and the company continues to focus on organic growth and dividend increases.
The integration of Evans Bancorp is progressing well, and NBT Bancorp is actively exploring M&A opportunities while maintaining strong capital levels.
Loan portfolio diversification is maintained, despite a slight decline in total loans, with a strategic focus on deposit growth and optimizing funding costs.
Management noted continued economic activity in their markets, particularly in advanced manufacturing and infrastructure, with confidence in future growth opportunities.
The company repurchased 250,000 shares in the first quarter and plans to continue opportunistic share repurchases.
Key asset quality metrics showed an increase in provision for loan losses due to a higher level of net charge-offs and non-performing loans, though reserves are well-positioned.
Full Transcript
OPERATOR
Good day everyone. Welcome to the conference call covering NBT Bancorp’s first quarter 2026 financial results. This call is being recorded and has been made accessible to the public in accordance with the SEC Regulation FD. Corresponding presentation slides can be found on the company’s website at nbtbancorp.com before the call begins, NBT’s management would like to remind listeners that as noted in slide 2, 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 listen only mode. Later we’ll conduct a question and answer session. Instructions will follow at that time. As a reminder, this call is being recorded. I will now turn the conference over to NBT Bancorp President and CEO Scott Kingsley for his opening remarks. Mr. Kingsley, please begin.
Scott Kingsley (President and CEO)
Thank you. Good morning and thank you for joining us for this earnings call covering NBT Bancorp’s first quarter 2026 results. With me today are Annette Burns, NBT’s Chief Financial Officer, Joe Stagliano, President of MBT bank and Joe Ondesco, our Treasurer. Our solid operating performance for the first quarter was driven by disciplined balance sheet management, the growth of our diversified revenue streams and the continued benefits of integrating Evans Bancorp into our franchise following the merger in May 2025. These factors have contributed to productive gains in operating leverage. Operating return on assets was 1.29% for the first quarter with a return on tangible equity of 15.50%. These metrics represent meaningful improvement over the first quarter of last year and have provided incremental capital flexibility. Our tangible book value per share of $27.05 at quarter end was more than 9% higher than a year ago. The continued remix of earning assets, diligent management of funding costs and the addition of the Evans balance sheet resulted in a 28 basis point improvement in net interest margin year over year. We got off to a slow start in January and February with the very difficult winter weather conditions and we experienced a higher than expected level of commercial real estate payoffs. With that said, activity since then has been quite good and we are very pleased with the types of customer opportunities we are seeing across our footprint as well as our current pipeline levels. Growth in non interest income continue to be positive, highlighted by a new all time high in quarterly revenue generation from our retirement plan administration business. Our capital utilization priorities remain focused on supporting organic growth while continuing our long standing commitment to annual dividend growth. In addition, our strong capital levels continue to allow us to evaluate a variety of M and A opportunities. Another component of our capital planning is to return capital to shareholders through opportunistic share repurchases. Consistent with that approach, we repurchased 250,000 of our own shares again in the first quarter of 2026. One year in the integration of our Evans bank colleagues has gone smoothly and validated the strong cultural alignment we saw from the outset. Their customer and community focused approach continues to enhance our franchise and we remain excited about the opportunities ahead in the western region of New York. Momentum across upstate New York’s semiconductor corridor continues to build. Since Micron’s groundbreaking late last year and the completion of its site acquisition from Onondaga county in the first quarter, development activity has accelerated. Site development and infrastructure buildout for the first fabrication facility are now underway and we are already seeing tangible benefits with more than a dozen of our customers and securing contracts tied to the project. Stepping back more broadly across our seven state footprint, we continue to see encouraging activity tied to advanced manufacturing, infrastructure investment, housing development and workforce driven economic initiatives. These dynamics are evident across our core markets including manufacturing and defense activity in New England as well as construction and community revitalization efforts throughout our legacy regions. While activity levels can vary quarter to quarter, the depth and diversity of these initiatives reinforce our confidence in the markets we serve. We believe NBT is well positioned to support this activity through our relationship driven model, significant balance sheet capacity and a diversified set of financial solutions. I will now turn over the meeting to Annette to review our first quarter results with you in detail.
Annette Burns (Chief Financial Officer)
Annette thank you Scott and good morning. Turning to the Results Overview page of our earnings presentation for the first quarter we reported net income of $51.1 million or $0.98 per diluted common share. We have improved earnings 27% from the first quarter of 2025 with growth in our balance sheet, net interest margin improvement and a 4.5% year over year growth in our fee based income as well. Earnings were modestly lower than the prior quarter, consistent with seasonal expectations, two fewer days in the quarter and a normalized effective tax rate. The next page shows trends in outstanding loans. Total loans at $11.5 billion were down $50.9 million from December 31, 2025, with other consumer and residential solar portfolios in a planned runoff status representing half of that decline. In addition, we continue to experience an elevated level of commercial payoffs similar to the prior 2/4. Our total loan portfolio remains purposely diversified and is comprised of 56% commercial relationships and 44% consumer loans. On page six total deposits were up $244 million from December 2025, primarily due to the inflow of seasonal municipal deposits during the quarter along with increases in consumer and commercial customer account balances. Generally, in most of our markets, municipal tax collections are concentrated in the first and third quarters of each year. We experienced a favorable change in our mix of deposits out of higher cost time deposits and into checking, savings and money market products. 59% or $8 billion of our deposit portfolio consists of no and low cost checking and savings account at a cost of 38 basis points. The next slide highlights the detailed changes in our net interest income and margin. Our net interest margin in the first quarter increased 7 basis points to 3.72% compared with the prior quarter as the 9 basis point decrease in the cost of funds more than offset the 2 basis point decline in earning asset yields. Loan yields decreased 4 basis points from the prior quarter to 5.66% primarily due to the repricing of variable rate loans following the prior quarter’s federal funds rate decreases. We were able to actively manage our funding costs downward to more than offset that impact as evidenced by the 10 basis point decline in our total cost of deposits to 1.34% for the quarter. Net interest income for the first quarter was $134.3 million, a decrease of $1 million compared to the prior quarter, but more than 25% above the first quarter of 2025. The decrease in net interest income from the prior quarter was driven by two fewer days in the first quarter of 2026. The opportunity for further upward movement in earning asset yields and net interest margin will depend largely 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 8. Excluding securities gains, our fee income was $49.7 million consistent with the prior quarter and increased 4.5% from the first quarter of 2025. Our combined revenues from retirement plan services, wealth management and insurance services exceeded $32 million in quarterly revenues. Noninterest income represented 27% of total revenues in the first quarter and reflects the strength of our diversified revenue base. Total operating expenses were $112 million for the quarter, a 0.5% increase from the prior quarter. Salaries and employee benefit costs were $68.8 million, an increase of $2.8 million from the prior quarter. This increase was primarily driven by seasonally higher payroll taxes and stock based compensation partially offset by lower medical expenses. In addition, annual merit increases occurred in mid March at an average rate of 3.3%. The quarter over quarter increase in occupancy expenses was expected driven by increases in seasonal costs including utilities and higher maintenance costs. The effective tax rate for the first quarter was higher than the prior quarter at 23.3% primarily due to the finalization of the deductibility of last year’s merger related expenses and the associated impact on the full year effective tax rate in 2025. Slide 10 provides an overview of key asset quality metrics. Provision expense for the three months ended March 31, 2026 was $5.6 million compared to $3.8 million for the fourth quarter of 2025. The increase in provision for loan losses was primarily due to a slightly higher level of net charge offs and non performing loans resulting in a higher level of allowance for loan losses. Reserves were 1.2% of total loans and covered more than two times the level of non performing loans. In closing, we believe the strength of our franchise positions us well for growth opportunities as they arise. We continue to see productive engagement across our markets reflecting our ongoing investment in our people and communities. Thank you for your interest in our results. At this time we welcome any questions you may have.
OPERATOR
Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment please. Our first question comes from the line of Mark Shutley with kbw.
Mark Shutley (Equity Analyst)
Hey, good morning. Good morning. So expenses came in a little bit better than, you know, we were expecting despite sort of the seasonal factors there. So I was wondering if you could maybe update us on your outlook there and sort of maybe what’s an appropriate run rate for the year?
Annette Burns (Chief Financial Officer)
Sure, I’ll take that. Mark. So yes, there were some seasonality in our first quarter expenses, primarily higher levels of salaries and benefit costs related to payroll taxes and stock based compensation as well as some higher level of occupancy costs. As we look into the next quarter and we think about salaries and benefit costs, we’ll probably see some increased costs related to our merit increases as well as an additional payroll day as well as our occupancy expense. Seasonal increase will probably be offset in the second quarter by just increase in productivity across our markets like higher travel training as well as technology initiatives. So with all that being said, our run rate in the first quarter was right around 112 million that will probably be a good place to be in the second quarter. And we still think our run rate or overall increase in occupancy or overall operating expenses typically runs between 3% and 4% annually. We still think that that is, you know, kind of where we’re landing for 2026.
Scott Kingsley (President and CEO)
And Mark, we had some costs in the third and the fourth quarter of last year on the operating expense side that were a little bit higher than sort of standard run rate, you know, some specific initiatives or some specific costs that we incurred in those quarters. So not unusual for sort of the other, the other expense line to be a little bit lower in the first quarter with that, as Annette mentioned, with the costs associated with stock based compensation and payroll taxes to kind of be the higher one.
Mark Shutley (Equity Analyst)
Great, that’s helpful. Thank you. And then maybe …
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