NBT Bancorp Inc.

Good day, everyone. Welcome to the conference call covering NBT Bancorp's second quarter 2026 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 Management would like to remind listeners that, as noted on slide 2, today's presentation may contain forward-looking statements as defined in 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. Currently, 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 conference over to NBT Bancorp President and CEO, Scott Kingsley, for his opening remarks. Mr. Kingsley, please begin.

Thank you, Cherie. Good morning, and welcome to this earnings call covering NBT Bancorp's second quarter 2026 results. With me today are Annette Burns, NBT's Chief Financial Officer, Joe Stagliano, President of NBT Bank, and Joe Ondesco, our Treasurer. We are pleased with our solid operating performance for the second quarter, which demonstrated the strength and momentum of NBT's diversified financial services franchise. We generated significantly stronger earnings than in the prior year quarter, grew loans across every business line, and expanded our net interest margin to 3.73%. An increase of 14 basis points from one year ago. More than a year after completing the acquisition of Evans Bancorp, we continue to benefit from the talented team members, strong customer relationships, and established market presence. The acquisition created a strong foundation for our franchise in Buffalo and Rochester, and we have continued to build on that momentum by expanding opportunities for our customers through NVT's broader capabilities and ongoing growth initiatives. During the second quarter, the Buffalo region generated the highest loan origination volume across our franchise. As we mentioned in our first quarter conference call, the difficult winter conditions impacted loan activity across our markets and we experienced a higher than expected level of commercial real estate payoffs in the first quarter. Since then, activity levels have been quite good and we have achieved growth of 2.4% in total loans for the first half of 2026. Operating return on assets was 1.32% for the second quarter with operating return on tangible equity of 15.61%. These metrics represent continued meaningful improvement over the prior year and have provided incremental capital flexibility. Our tangible book value per share of $27.71 at quarter end was 12.8% higher than a year ago. Our capital utilization priorities remain focused on supporting organic growth while continuing our longstanding commitment to annual dividend improvement. Accordingly, we are pleased to announce that we have increased our quarterly cash dividend for the 14th consecutive year. At $0.40 per share for the third quarter of 2026, This increase of 8.1% over the prior year quarter affirms our continued commitment to providing favorable long-term returns to our shareholders. In addition, our strong capital levels continue to allow us to evaluate a variety of strategic opportunities, as well as opportunistic share repurchases, including 318,000 shares purchased in the first half of 2026. Momentum across upstate New York's semiconductor corridor continues to build. Construction activity at the Micron site near Syracuse has advanced meaningfully, and we are beginning to see related opportunities materialize across infrastructure, construction, and professional services sectors throughout the region. In addition to activity at the site itself, there is increasing focus on housing and community development initiatives designed to support workforce needs. Taken together, these investments reinforce our positive outlook for long-term economic growth across Central New York. More broadly, we remain encouraged by the opportunities we see across our seven-state footprint. Through support of economic development projects, customer expansion activity, and our own recently announced investments in new locations in the Rochester and Southern Maine markets, We continue to position NBT for sustainable growth while supporting the communities we serve. With strong balance sheet fundamentals, healthy loan growth, and continued momentum across our franchise, we are well positioned going into the second half of 2026. I will now turn the meeting over to Annette to review our second quarter results with you in detail. Annette?

Thank you, Scott, and good morning. Turning to the results overview page of our earnings presentation, We reported second quarter net income of $53 million, or $1.02 per diluted common share. Compared to the second quarter of 2025, we have improved operating earnings by 15%. Earnings benefited from record revenues driven by net interest margin expansion, loan growth, and strong contributions from our non-interest income sources. We continue to generate year-over-year positive operating leverage during the quarter, with revenue growth of 9% outpacing expense growth of 6%. Turning to loans on the next page, total loans ended the quarter at $11.9 billion, increasing $276 million, or 2.4%, from December 31, 2025. All business lines experienced growth with commercial loans increasing $178 million and consumer loans increasing $98 million during the first six months of the year. The increase in commercial loans was well balanced between CNI and CRE relationships with all markets across our footprint experiencing positive customer activity and contributing to the growth. Commercial loan payoffs remained elevated compared to last year but decreased from the prior quarter. On page six, total deposits were $13.5 billion at quarter end and increased modestly from year end levels. Deposits declined $205.7 million from March 31st, 2026, primarily due to expected seasonal municipal outflows. Municipal deposit balances typically build during the first and third quarters with tax collection activity and decline as those funds are dispersed resulting in seasonal fluctuations throughout the year. We have maintained a strong funding profile with almost 60% of total deposits in no and low cost checking and savings accounts at a blended cost of just under 40 basis points. Total deposit costs declined by one basis point during the quarter to 1.33% while the total cost of funds declined to 1.41%. From year end levels, we have experienced a favorable change in our mix of deposits out of higher cost time deposits and into checking, savings, and money market products. We continue to tactically manage funding strategies to grow relationships while still maintaining better than peer cost of funds. The next slide highlights changes in net interest income and margin. Our net interest margin increased to a record, excuse me, our net interest income increased to a record $137 million up $3 million from the first quarter and more than 10% above the second quarter of 2025. The increase from the first quarter was driven by organic growth in interest earning assets and a decrease in funding costs, along with the benefit of one additional calendar day in the quarter. Net interest margin increased one basis point to 3.73% compared with the prior quarter. Our balance sheet remains well positioned across a variety of interest rate environments and continues to demonstrate relatively low sensitivity to rate changes. The opportunity for further upward movement in earning asset yields and net interest margin will largely depend on the shape of the yield curve with the reinvestment of 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, consistent with the prior quarter, and increased 5.8% from the second quarter of 2025. Growth was led by retirement plan administration revenue, which increased 7.8% from the prior year. Combined revenues from the retirement plan services, wealth management, and insurance services generated more than $32 million in quarterly revenues. Non-interest income represented approximately 27% of total revenues in the second quarter and reflects the strength of our diversified revenue base. Total operating expenses declined 0.7% from the prior quarter. Salaries and employee benefit costs were $69 million, a modest increase from the prior quarter. This increase was primarily driven by the full quarter impact of merit increases implemented in March, one additional payroll day, and higher medical costs, partially offset by lower payroll taxes and stock-based compensation costs, which are seasonally higher in the first quarter. The quarter-over-quarter decrease in occupancy expenses was expected, driven by the decline in seasonal costs, primarily maintenance and utilities. Slide 10 provides an overview of key asset quality metrics. Provision expense for the three months ended June 30, 2026, was $6.1 million compared to $5.6 million for the first quarter of 2026. The increase in the provision for loan losses during the quarter was primarily due to providing for the second quarter's loan growth. Reserves were 1.18% of total loans and covered more than two times the level of non-performing loans. Our second quarter results continued our positive momentum over the last several quarters with quality earnings and strong activity levels across all our markets and business lines. We continue to benefit from a diversified balance sheet, strong fee-based businesses, disciplined risk management, and ample capital levels. We remain well positioned to support our customers, invest in our franchise, and create long-term value for our shareholders. Thank you for our interest in our results. At this time, we welcome any questions you may have.