NBT Bancorp Inc.

Good day, everyone. Welcome to the conference call covering NBT's Bancorp's fourth quarter and full year 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'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. Instructions will follow at that time. As a reminder, this call is being recorded. I will now turn the call over to MBT's Bancorp President and CEO, Scott Kingsley, for opening remarks. Mr. Kingsley, please begin.

Thank you, Tanya. Good morning, and thank you for joining us for this earnings call covering NBT Bancorp's fourth quarter and full year 2025 results. With me today are Annette Burns, NBT's Chief Financial Officer, Joe Stagliano, President of NBT Bank, and Joe Ondesco, our Treasurer. Our operating performance for the fourth quarter continued to reflect the positive attributes of productive fixed-rate 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 second consecutive quarter, with a return on tangible equity of 17.02%. These metrics demonstrate continued improvement over the prior year quarters and, importantly, reflect a generation of positive operating leverage. Our tangible book value per share of $26.54 at year end was 11% 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 36 basis point improvement in net interest margin year over year. Growth in non-interest income continues to be a highlight, with each of our non-banking businesses achieving record results in both revenue and earnings generation for 2025. In the third quarter, we were pleased to announce to shareholders a year-over-year improvement of 8.8% to our dividend, marking our 13th consecutive year of annual increases. This is reflective of our strong capital position in our generation of consistent and improving operating earnings. Our capital utilization priorities focus on supporting NVT's organic growth strategies as well as improving our dividends each year. In addition, our strong capital levels continue to allow us to evaluate a variety of M&A opportunities. Finally, returning capital to shareholders through opportunistic share repurchases is also a component of our capital planning, and as such, we repurchased 250,000 of our own shares in the fourth quarter. Our transition and integration activities over the past eight months with the team members who joined us from Evans Bank have been highly successful and have reaffirmed our belief that we have added a customer and community-focused group of talented professionals to our ranks. We remain excited about our opportunities in the western region of New York. Activities have continued to progress across upstate New York's semiconductor chip corridor in the fourth quarter, including the official groundbreaking of Micron's planned complex outside of Syracuse. Site development and construction of the first fabrication facility is expected to commence immediately with completions targeted in 2030. I will now turn the meeting over to Annette to review our fourth quarter results with you in detail. Annette?

Thank you, Scott, and good morning. Turning to the results overview page of our earnings presentation, for the fourth quarter we reported net income of $55.5 million, or $1.06 per diluted common share. On a core operating basis, which excludes acquisition-related expenses and securities gains, our operating earnings were $1.05 per share, consistent with the prior quarter. Revenue generation remained favorable and consistent with the prior quarter and grew 25% from the fourth quarter of the prior year, driven by improvements in both net interest income and non-interest income, including the impact of the Evans merger. The next page shows trends in outstanding loans. Including acquired loans from Evans, total loans were up $1.63 billion, or 16.3% for the year. During 2025, commercial production remained strong, but we did experience a higher level of commercial real estate payoffs. We have captured quality C&I opportunities across our markets, which have provided growth in core deposits, consistent with our focus 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 6, total deposits were up $2 billion from December 2024, including deposits from Evans. We experienced a favorable change in our mix of deposits, out of higher-cost time deposits and into checking, savings, and money market products. Fifty-eight percent, or $7.8 billion, of our deposit portfolio consists of no and low-cost checking and savings accounts at a cost of 80 basis points. The next slide highlights the detailed changes in our net interest income and margin. Our net interest margin for the fourth quarter decreased one basis point to 3.65 percent compared with the prior quarter as lower earning asset yields were largely offset by a reduction in funding costs. In addition, a higher level of lower yielding short-term interest-bearing balances in the fourth quarter reduced NIM by one basis point compared to the third quarter. Net interest income for the fourth quarter was $135.4 million, an increase of $1 million above the prior quarter, and $29 million above the fourth quarter of 2024. The increase in net interest income from the prior quarter was driven by the decrease in interest expense more than offsetting the decrease in interest income, as the decline in short-term interest rates impacted both earning asset yields and funding costs. 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 earning asset 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 8. Excluding securities gains, Our fee income was $49.6 million, a decrease of $1.8 million compared to the seasonally high third quarter, and increased 17.4% from the fourth quarter of 2024. Our combined revenues from the retirement plan services, wealth management, and insurance services exceeded $30 million in quarterly revenues. Consistent with historical trends, the fourth quarter is typically our lowest quarter in revenue generation for these businesses, while the third quarter is seasonally higher. Non-interest income represented 27% of total revenues in the fourth quarter and reflects the strength of our diversified revenue base. Total operating expenses, excluding acquisition expenses, were $112 million for the quarter, a 1.5% increase from the prior quarter, including higher technology, year-end charitable contribution, and marketing costs. The effective tax rate for the fourth quarter was lower than the prior quarter at 20.3%, primarily due to the finalization of the assessment of the deductibility of merger-related expenses and the associated impact on the full-year effective tax rate of 23%. Slide 10 provides an overview of key asset quality metrics. Provision expense for the three months ended December 31, 2025, was $3.8 million, compared to $3.1 million for the third quarter of 2025. The increase in the provision for loan losses was primarily due to a slightly higher level of net charge-offs in the fourth quarter of 2025. Reserves were 1.19% of total loans and covered 2.5 times the level of non-performing loans. In closing, the current level of net interest income and fee-based revenues have produced solid results with meaningful positive operating leverage. supported by disciplined balance sheet management as we've navigated three federal fund rate cuts late in 2025. Asset quality remains stable, and with our strong capital position, we are well positioned to pursue growth opportunities across all our markets. Thank you for your continued support. At this time, we welcome any questions you may have.