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DATE

Tuesday, July 29, 2025, at 10 a.m. ET

Call participants

  • Chief Executive Officer — Scott Kingsley
  • President of NBT Bank — Joseph R. Stagliano
  • Chief Financial Officer — Annette L. Burns
  • Treasurer — Joe Andesco

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Takeaways

  • Operating return on assets: Operating return on assets was 1.19% for Q2 2025, representing improved operating leverage both sequentially and year over year.
  • Return on equity: Return on equity was 10.5% for Q2 2025, up from both the prior quarter and prior year periods.
  • Return on tangible common equity (ROTCE): ROTCE was 15.25% for Q2 2025, reflecting ongoing capital generation.
  • Tangible book value per share: Tangible book value per share was $24.57 at the end of Q2 2025, up 9% year over year as of June 30, 2025.
  • Dividend: An 8.8% improvement to the dividend was announced, marking the thirteenth consecutive year of increases.
  • Evans Bancorp merger: Closed May 2, adding approximately $1.7 billion in loans from the Evans Bancorp merger completed in Q2 2025, $1.9 billion in deposits added from the Evans Bancorp merger, 5.1 million shares ($222 million value) issued as consideration for the Evans Bancorp merger, valued as of the May 2, 2025 closing date, and over 100,000 accounts were added as a result of the Evans Bancorp merger completed in May 2025.
  • Synergies: The vast majority of the targeted 25% in cost synergies have been realized, with the remainder expected by the end of 2025.
  • Net income: Net income was $22.5 million for Q2 2025, or $0.44 per diluted share; operating earnings per share were $0.88, up $0.08 sequentially in operating earnings per share.
  • Revenue: Revenues grew approximately 10.5% from the prior quarter and 22% from the second quarter of the prior year, driven by higher net interest income and Evans merger impacts.
  • Net interest income: Net interest income was $124.2 million for Q2 2025, up $17 million over the prior quarter. Net interest income for the second quarter was $124.2 million, an increase of $17 million above the prior quarter and $27 million above 2024.
  • Net interest margin: Net interest margin increased 15 basis points sequentially to 3.59% in Q2 2025.
  • Total loans: Total loan portfolio was $12 billion as of Q2 2025, with new Evans loans and fair value marks included.
  • Loan portfolio mix: 56% of the portfolio consisted of commercial relationships as of Q2 2025, 44% consumer loans, showing broad diversification.
  • Total deposits: Total deposits were $13.5 billion for Q2 2025, rising almost $2 billion from December 2024; core deposit mix improved, excluding Evans deposit inflow.
  • Noninterest income: Noninterest income was $46.8 million (ex-securities gains) for Q2 2025, down 1.5% sequentially due to seasonality. Noninterest income was $46.8 million, an increase of 8% from 2024; now 27% of total revenues versus 31% in the prior quarter.
  • Operating expenses: Operating expenses were $105.4 million for Q2 2025, a 6.3% sequential increase in total operating expenses (excluding acquisition expenses), mainly reflecting Evans-related expense growth.
  • Provision for loan losses: Provision for loan losses was $17.8 million for Q2 2025, primarily reflecting $13 million in acquisition-related provision and a modest worsening in economic forecasts.
  • Allowance for loan losses: Allowance for loan losses was 1.21% of total loans for Q2 2025, covering three times non-performing loans; $21 million related to the Evans acquisition.
  • Core deposit intangible: A $33.2 million core deposit intangible was recorded with the Evans merger in Q2 2025, amortized over ten years on an accelerated basis.
  • Subordinated debt redemption: $118 million of subordinated debt was repaid in Q2 2025, avoiding a rate reset to nearly 9% on $118 million of subordinated debt, which was scheduled to increase from a weighted average rate of approximately 5.45% to nearly 9% upon variable rate reset, replaced with liquidity sources in the 4.25%-4.40% range.
  • Liquidity: The sale of a $255 million Evans securities portfolio in Q2 2025 increased near-term liquidity and created optionality for future loan growth.
  • Guidance on net interest margin: CFO Annette L. Burns projected a couple of basis points improvement in NIM in Q3 2025, aided by the full quarter contribution from Evans accretion and moderating asset repricing benefits.
  • Loan pipeline: The loan pipeline reached the highest level ever experienced, though project completion is seeing delays due to client uncertainty.

Summary

The majority of targeted cost synergies from the Evans Bancorp merger have already been realized, contributing to a double-digit year-over-year increase in both revenue and net interest income for Q2 2025. Noninterest income growth was partly offset by mix changes from Evans. Excess liquidity generated through Evans asset sales and deposit inflows was used to redeem high-cost subordinated debt, materially reducing future interest expense. Management guided to further, though moderating, net interest margin expansion in Q3 2025 due to one final month of Evans accretion and residual asset repricing. The loan pipeline reached historic highs, but management reported a recent slowdown in client project execution tied to broader uncertainty. The deposit mix improved, supporting lower funding costs alongside stable reserve coverage and loan diversification.

  • CEO Scott Kingsley stated, "We're at a higher level of tangible equity ratio than we were when we announced the transaction," referring to the period following the Evans Bancorp merger. He highlighted capital position improvement post-merger, with tangible book value per share of $24.57 at June 30, 2025, and a tangible equity ratio above pre-merger levels.
  • 59% of deposits were in no- and low-cost checking and savings accounts as of Q2 2025.
  • Leadership reiterated appetite for expanding wealth management and insurance businesses both organically and through M&A, noting, "diversified revenue stream is a net positive will remain in our strategic focus forever."
  • CFO Annette L. Burns clarified that a 25 basis point rate cut would have limited immediate impact on NIM, given loan and deposit repricing neutrality.
  • Direct company engagement continued in related projects, including new Micron developments.
  • Management confirmed a planned operating expense run-rate for Q3 2025, exclusive of merger costs, near $105 million plus an additional Evans monthly increment.
  • Future charge-offs are projected to normalize in the $3 million-$5 million range per quarter, up from the particularly low outcome reported for the quarter.

Industry glossary

  • Core deposit intangible: An accounting asset representing the value assigned to stable, low-cost funding from acquired deposits, amortized over time following a merger.
  • ROTCE: Return on tangible common equity; a measure of profitability relative to common equity minus intangible assets.
  • Net interest margin (NIM): The ratio of net interest income to average earning assets, indicating the spread between lending and funding costs.
  • Accretion: The gradual recognition of purchase accounting adjustments in net interest income following an acquisition.

Full Conference Call Transcript

Scott Kingsley: Good morning. Thank you for joining us for this earnings call covering NBT Bancorp's second quarter 2025 results. I would like to extend a special welcome today to our newest investors, who joined us in May with the Evans Bancorp merger. With me today are Annette Burns, NBT's Chief Financial Officer, Joseph R. Stagliano, President of NBT Bank, and Joe Andesco, our Treasurer. Our operating performance for the second 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 recently completed merger with Evans Bancorp.

Operating return on assets was 1.19% for the second quarter with a return on equity of 10.5% and ROTCE of 15.25%. 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 $24.57 at June 30 is 9% higher than a year ago and our tangible equity ratio is already back above the level it was when we announced the Evans merger ten months ago. This continued capital strength has us very well positioned to support all of our strategic growth initiatives.

Continued remix of earning assets and diligent management of funding costs combined with the addition of the Evans balance sheet, resulted in an improvement in net interest margin for the fifth consecutive quarter. Growth in non-interest income continues to be a highlight with each of our nonbanking 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 marking our thirteenth consecutive year of increases. This reflects our strong capital position and our generation of consistent and improving operating earnings.

Continue to see activity across Upstate New York semiconductor chip corridor including progress on-site specific milestones related to Micron's planned complex outside of Syracuse as well as the enhanced partnership announced between Micron and the federal government that notably included additions to Micron's previous capital commitments. Team members at NBT are engaged in supporting our customers and communities and participating in the growing ecosystem around semiconductors and advanced electronics manufacturing in several of our markets. Before turning the meeting over to Annette to review our second quarter results with you in detail, Joseph R. Stagliano will provide some additional commentary around the completion of the Evans merger. Joe?

Joseph R. Stagliano: Thank you, Scott. We closed our merger with Evans Bancorp on Friday, May 2 and successfully converted all Evans customer accounts to the NBT core operating systems over the weekend. Following Monday, we opened 18 Evans Bank branches as NBT Bank locations including 14 in and around Buffalo, and four in Greater Rochester. We believe the approach of closing and simultaneously completing the systems conversion enhances both the employee and customer experience, It reduces execution risk and it expedites the integration process. Through this transaction, we added approximately $1.7 billion of loans, $1.9 billion of deposits, and issued 5.1 million additional shares as consideration. Valued at $222 million as of the closing date.

So far, we have realized the vast majority of our targeted 25% in cost synergies, with the remainder expected by the end of 2025. We achieved a smooth transition made possible by our dedicated integration team with over 100 members from both organizations. They work tirelessly with the shared vision of delivering a positive experience to over 40,000 Evans Bank customers. As a result of the conversion, we added more than 100,000 accounts and over 25,000 digital banking and debit card users also welcomed 200 Evans employees to the NBT team and three seasoned executives. Evans assumed leadership positions with NBT Bank.

Ken Pollock as President of the Western Region Of New York, Buffalo Regional President, Tim Brown as Rochester Regional President, and Audrey Myers as Senior Territory Manager for Retail Banking in the Buffalo and Rochester markets. I personally want to thank everyone who joined NBT for their professionalism, their enthusiasm, and their partnership. Response from our customers and communities has been overwhelmingly positive. They have embraced our enhanced suite of products and technology offerings, and they've shared their appreciation for the care and attention we've shown throughout this process. In the days and weeks following the merger, members of our leadership team had visited branches and met with customers and employees. The reception has been warm, and the conversation's encouraging.

Are continuing to work together toward a common goal. To serve our customers better, support our communities more deeply, provide enhanced shareholder value, and grow stronger together. Now I will turn it over to Annette to review our second quarter results with you in detail. Annette?

Annette L. Burns: Thank you, Joe, and good morning. Turning to the results overview page of our earnings presentation, In the second quarter, we reported net income of $22.5 million or $0.44 per diluted common share. Excluding acquisition expenses, acquisition-related provision for credit losses and securities gains, our operating earnings per share were $0.88. An increase of $0.08 per share compared to the prior quarter. Revenues grew approximately 10.5% from the prior quarter and 22% from the second quarter of the prior year. Driven by improvements in net interest income, including the impact of the Evans merger. The next page shows trends in outstanding loans.

As Joe mentioned, we added $1.7 billion of loans from Evans and recorded fair value marks on loans totaling $95.2 million, net of a $7.7 million reclassification to loan loss reserves for purchased credit deteriorated loans. Excluding consumer loans and a planned contractual runoff status, and the loans acquired from Evans, loans grew nearly 1% from December 2024. Growth in commercial and industrial, indirect auto, home equity were partly offset by decreases in residential mortgage, and commercial real estate. Which experienced higher level of payoffs during the quarter. Our total loan portfolio of nearly $12 billion remains very well diversified. And is comprised of 56% commercial relationships and 44% consumer loans.

I should also mention that we completed the sale of the $255 million Evan Securities portfolio in May which contributed to the increase in short-term interest-bearing accounts at the end of the second quarter and leaves us some near-term liquidity optionality. On page seven, total deposits of $13.5 billion were up almost $2 billion from December 2024. Excluding the deposits acquired from Evans, deposits increased $104 million from the 2024. Deposit mix characteristics also improved, with an increase in demand deposits savings, interest-bearing checking, and money market accounts, offset by a decrease in time deposits. 59% of our deposit portfolio consists of no and low-cost checking and savings accounts, 41% 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 second quarter increased 15 basis points to 3.59% from the prior quarter. Primarily driven by the increase in earning asset yields and acquisition-related net accretion. Net interest income for the second quarter was $124.2 million an increase of $17 million above the prior quarter and $27 million above the 2024. The increase in net interest income from the prior quarter was primarily driven by the Evans acquisition, as well as higher earning asset yields, partially offset by a two basis point increase in the cost of deposits.

Evan's higher cost of deposits primarily in interest-bearing checking and savings accounts, was partly offset by a decrease in the cost of time deposits. The trends in noninterest income are outlined on page nine. Excluding securities gains, our fee income was $46.8 million, an expected seasonal decrease of 1.5%. Compared to the previous quarter, an increase 8% from the 2024. The decrease from the prior quarter was primarily attributable to the first quarter's $1.2 million bank-owned life insurance gain and lower seasonal insurance revenues. Partially offset by incremental Evans activity. Noninterest income represented 27% of total revenues in the second quarter, reflecting the strength of our diversified revenue base.

But down from 31% in the prior quarter reflective of the Evans mix. Total operating expenses, excluding acquisition expenses, were $105.4 million for the quarter, a 6.3% increase from the prior quarter. Salaries and employee benefit costs were $64.2 million an increase of $3.5 million from the prior quarter. This increase was primarily driven by the impact of the Evans acquisition a full quarter of merit pay increases, and higher medical costs. These increases were partially offset by lower payroll taxes and stock-based compensation which are historically higher in the first quarter of each year.

The quarter over quarter increase in technology and data services occupancy and all other expenses were driven primarily by the Evans acquisition as well as timing of planned initiatives and continued investment in digital platform solutions. Amortization of intangible assets included $1 million related to Evans in the second quarter. We recorded a $33.2 million core deposit intangible related to the Evans core funding base. We are expecting to amortize that intangible over the next ten years on an accelerated basis. Slide 11 provides an overview of key asset quality metrics. Provision expense for the three months ended 06/30/2025 was $17.8 million. Compared to $7.6 million for the 2025.

The increase in the provision for loan losses during the quarter was due to $13 million of acquisition-related provision for loan losses, and a modest deterioration in the economic forecast, partially offset by a decrease in net charge-offs from the prior quarter. Reserve coverage was 1.21% of total loans, and covered three times the level of non-performing loans. The increase in the allowance for loan losses in the 2025 included $21 million of allowance for acquired Evans loans. In closing, the successful completion of the Evans merger was a significant mile for the quarter and the impact on our financial position is aligned with our expectations.

Continued growth in both net interest income and fee-based income drove the generation of the sequential year sequential and year over year positive operating leverage, and contributed to our solid operating performance in the 2025. Thank you for your continued support. At this time, we'll continue we will welcome any questions you may have.

Operator: Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press 11. Our first question comes from the line of Mark Fitzgibbon from Piper Sandler. Your question, please.

Mark Thomas Fitzgibbon: Guys. Good morning. Hey. Good morning, Mark. Hey, Mark. Question I had, maybe, Annette, what does a 25 basis point rate cut mean for your margin, assuming the you know, the short end comes down? And the rest of the curveballs? Happy to answer that, Mark. The

Annette L. Burns: the impact of rate cuts on our balance sheet, we're fairly neutrally positioned. So we have about $2.5 billion in loans that almost reprice immediately with a downward change in rates. And then on the funding side, we have about 40% of our deposit base somewhere around $5.5 billion that we can actively reprice downward as well. There might be a little bit of lag because that takes some active management on our part, but, you know, we feel like that's not going to have a significant impact on us because we're so neutrally positioned, but there might be a little bit of lag on the funding side.

Mark Thomas Fitzgibbon: Okay. And then as you look at, like, the third quarter with all the moving parts with Evans and sort of the purchase accounting impact, how are you thinking about the net interest margin for, say, 3Q? Assuming no Fed rate cut.

Annette L. Burns: Okay. You know, there was a lot of noise in the second quarter. When we think about net interest margin going forward, we know that there is one additional month of accretion related to Evans that to have a full quarter impact, and that's somewhere between 1 and 1 and a half million. So that'll have a couple of basis points improvement on our net interest margin. And then just thinking about the rest of our book, we probably continue to see a few basis points in improvement as it relates to our earning asset yields repricing. That's probably gonna get a little bit more less impactful over time as our book continues to fully reprice.

For example, our indirect auto book is already fully repriced, but there's a little bit more room in the C and I and resi mortgage book. That happens a little bit slower. And we think our funding costs are pretty well stabilized. We might get a few basis points, but certainly not the same level of impact that we experienced the last two quarters.

Scott Kingsley: And Mark, this is Scott. Thanks for the question. I think we both know at some point in an improving NIM cycle, it's likely that some of that benefit from a repricing standpoint gets competed away. So we're we're not, you know, not gonna be immune to that either.

Mark Thomas Fitzgibbon: Okay. Great. And then when deals are announced, nobody really wants to talk or give credit for sort of potential revenue synergies. particularly on wealth management insurance going forward.

Scott Kingsley: So great question and thanks for thanks for asking that one. For us, Evan said a very, very modest participation in wealth management like us. They had a handful of advisers that are on the platform. So great opportunity for us not only to expand the base of advisers in Western New York, but to have the synergistic outcomes of bringing them into a larger program like ours. It's kind of a similar thought on the insurance side. You know, Evans had an insurance business several years ago and, you know, sold that business before you know, we got together with them transactionally.

With that in mind, lot of customers that can utilize our services on a more broad basis on the insurance side. Probably takes a little bit longer to get going, you know, because those tend to be in annual renewal cycles. But, opportunistically, we think we'll grow in both attributes.

Mark Thomas Fitzgibbon: Okay. Great. And then from a credit perspective, any types of lending that, you know, give you concern or areas where maybe you're sort of easing off the throttle a little bit? Any particular types of particularly on the commercial side?

Scott Kingsley: I can frame it this way. From an asset quality standpoint, really, nothing. From a holistic desire to have more banking relationships on both the C and I front or the owner-occupied CRE front where the opportunity presents itself to be able to deliver multiple services as opposed to just the loan, we do have a focus there. It does not mean that we aren't interested in commercial real estate transactions across our geography. The sheer size of our geography makes natural diversification inherent for us anyways. But I'm kinda framing, Mark, that we're spending more time focusing on those relationships. Where we can provide multiple services as opposed to just close a transaction.

You know, on the on the commercial real estate side.

Mark Thomas Fitzgibbon: Okay. And then last one was non-interest expenses. Can you help us think about sort of what a good run rate might be for the third quarter?

Annette L. Burns: Sure. So excluding merger costs and expenses, I think we came in somewhere around $105 million for the quarter. Evans probably adds somewhere in the $11 million to $12 million a quarter. So know, there's probably a little bit of seasonality quarter over quarter with the fourth quarter probably being a little bit heavier. But I think if you of one additional month of Evans, added to the third quarter's run rate, that's probably a good place to be. Right.

Mark Thomas Fitzgibbon: Thank you.

Operator: Appreciate it, Barb. Thank you. And our next question comes from the line

Stephen M. Moss: Good morning.

Annette L. Burns: Good morning, Steve.

Scott Kingsley: Good morning, Steve. Congratulations on the family edition.

Stephen M. Moss: With regard to, you know, the loan pipeline, just kinda curious you know, how your sense of business activity is there and what you guys are thinking about the second half?

Scott Kingsley: Yes. Thanks for that Teeup, for that one. So the pipeline is very good. Know, we're actually at the highest level in pipeline that we've ever experienced. Now a portion of that, obviously, came with the with the addition of Evans. But what we noticed in the second quarter or, you know, late in the first quarter, into the second quarter, that speed to completion has experienced hesitation. So, you know, you know, one of my favorite quotes now is, uncertainty does not inspire action. And we saw that during the second quarter. It doesn't mean that our customers are not interested in the initiatives that they had planned to do.

They've just taken a little bit of a pause and re Where does that position them, not only the 2025, but longer term? Generally, see people who had projects in place from a capital expansion you know, or a capacity adding are moving forward with most them. We've heard of a couple that decided to slow down because the machine they're ordering from Germany suddenly became 28% more expensive. But that's a more episodic than systematic But what we have seen is that people are having some hesitation about adding people because they don't wanna be in a position where they have to hire now and send some people home in and around the end of the year.

So, generally, feel pretty strong about we are where we are from the activities on the pipeline side. But, you know, probably will not experience a real meaningful change in the growth rate that we had in the first half of the year and the second half of the year.

Stephen M. Moss: Okay.

Scott Kingsley: Got you. And then in terms of low pricing, you mentioned you know, the ability to reprice, the benefit from asset repricing or loan repricing is moderating. Where are you seeing, more competition these days?

Scott Kingsley: So I'll start with that and if Joe and Annette have you're welcome to chime in on this. But competitively kind of across the board. You know, certainly we saw competition in second quarter in the indirect auto space. And quite frankly, you know, we were participating and growing still in the second quarter. But by the time we reached the end of the quarter, competition had changed pricing to the point where we're probably just trying to replace cash flows in that portfolio. And why is that? Is remember, the inversion in the belly of the curve actually got worse in the quarter.

So for competitive standpoint, you know, a you know, that creates an issue for us relative to pricing. We are holding the line relative to spread dynamics. And as I mentioned before, we're really focused on supporting those customers and those activities that allow us to, you know, gain some funding and some deposit growth, and at the same time, you know, build out our holistic delivery.

Stephen M. Moss: Okay. And maybe on the commercial side, you know, are you just seeing more competition these days from the larger guys coming back into the market?

Scott Kingsley: Just kinda curious dynamics there. Yeah. Not so much on the you know, not so much the larger firms backing into where we are. You know, some of the smaller people we compete with, everyone's best customer has a different definition. Mhmm. So in certain of our markets, we're seeing a little bit more defending, you know, from the smaller banks. But I won't say that the competition has generally changed radically. And I don't think the discipline in pricing from most of the competition has really changed dramatically. Either.

Stephen M. Moss: Okay. Great. Well, I appreciate all the color here. I'll step back. Thank you.

Operator: Appreciate it. Thank you. And our next question comes from the line of Matthew M. Breese from Stephens Inc. Your question please.

Matthew M. Breese: Hey, good morning.

Annette L. Burns: Good morning.

Scott Kingsley: I was hoping we could touch on liquidity. Annette, you had talked a little bit about that in your comments. Just curious what the plans are there in terms of deployment over what time frame and into what And then along with that, the last couple of years, the third quarter has been kind of a high watermark for cash. And just curious how that plays out this year. Yeah. I'll start and let Annette chime in with some of the details. But so not unexpectedly, you know, we ended up with more liquidity post the Evans transaction because we had opted to liquidate their portfolio.

Remember if we you know, when we talked about this six months ago or for the last six months, we said, we were lagging in somewhere between 25 and $30 million of investment purchases So we were at a point that more than covered collateral requirements that Evans had for their municipal funding base. So that was on purpose. Why we why'd we end the quarter with a little bit more liquidity in fairness loan growth was fairly modest for the second quarter. So we, you know, we ended up a little bit more. And deposit growth in a second quarter that normally for us is actually negatively impacted by municipal flows was very positive.

So and I think that's a holistic effort by our people across all lines of business to say, you know, let's secure the additional funding because that's where the core value of the franchise is. So, Matt, when we think about that, you know, just in terms of from a funding standpoint, we did clearly have some known redemption outcomes because we did liquidate or redeem the trust the trust preferred I'm sorry. The sub debt security that we in that we initiated five years ago during the pandemic. And so we did keep ourselves in a position to be able to be that liquid. That said, balance sheet still has ample liquidity to support all of our growth attributes.

And probably also almost importantly here in the near term is holding company liquidity is still very strong. Above one times our annual requirements. So really like where we're positioned.

Annette L. Burns: And I would just add, you know, as we think about the quarter, the following quarter, Scott mentioned the sub debt repayment but we also expect to have some muni outflows And then, you know, the remaining liquidity is probably gonna support some loan growth

Scott Kingsley: Securities assets sit at just over 16%. You know, the last couple years has been more like 17 to 18 and a half. Do we get back there, or is this kind of a new good level for securities assets? Great question. I think we're reinvesting cash flows that are coming off. The portfolio. And if an opportunity presents itself you know, for a slightly above average yield, you know, I think we're of analyzing that opportunity.

Matthew M. Breese: Got it. Okay. Scott, maybe just updates on the Chips Act. It seems like we're still on by year end and despite some, you know, bluster from the current administration about the CHIPS Act earlier this year, I think I read today that Mike Bonds, in fact, got a figure tax break And so I just wanted to hear the latest and greatest on that aspect.

Scott Kingsley: Great. Great update. Thank you for asking. So to your point, you're right that, you know, not only you know, did Micron recommit to the expansion in Central New York, but they have a secondary program that I think they're already underway with for a second ship fab in Boise, Idaho. And my impression is that's underway. Probably a lot easier to get started with something that's an add to an existing facility than something that's coming from the ground up. So probably not a surprise that's where they went with that outcome. To your question on additional tax breaks, that's our understanding as well.

That the, you know, that the approval of the of the BBB gave them some additional opportunities from an investment tax credit standpoint. How large that is? Not a 100% sure because I'm not the expert on the DACS Act. But that being said, it looks like it's a net positive for them. If you remember, Matt, and you've been engaged with this before, they've been very specific about this that without the tax and incentives, you know, and without the governmental support that they were receiving, that landing in The United States with incremental production would have been more difficult for them. Thank you. Appreciate it.

Last one is just Scott, would love to get your take on m and a in this environment. With the Evansville behind you. I think in the past, you've you've made the comment that, you know, we need to be 100% focused on integration and getting the culture right. I'm curious what your updated thoughts are there. That's all I can think. Yeah. You're you're spot on. We are completely focused from an integration standpoint. You know, the team in Western New York is doing a fabulous job out of the gates.

We are getting the opportunity as senior leadership to meet a lot of their customers, spend a lot of the time with their people, You know, they've been very patient and willing to learn some of our systems and the protocol about getting things through our system. So really appreciate that effort by them. But in general, I would say we feel really good about where we are from capital position post acquisition. You know, we always talk to, you know, every transaction today with purchase accounting It's gonna have some dilution characteristics. But in the meantime, along the way to the closing, you're still running your and, hopefully, you're accreting capital every single day. Definitely the case with us.

We're at a higher level of tangible equity ratio than we were we announced the transaction. So to the extent that there was any concern about dilution and the you know, longer term dilution and payback. I think we've answered that question spot on. So feel really good about that. That said, I think that there are opportunities from an m and a standpoint. Well, I think we continue to very methodically evaluate those. If you think about the franchise we have right now from Buffalo to Portland, and Wilkes Barre, Pennsylvania to Burlington, Filling in opportunistically is probably our prime focus.

And whether we do that organically, you know, with the branch fill ins and teams that are serving the market, or we find a like-minded cultures culture consistent smaller community bank to partner with. Looking at both for sure.

Matthew M. Breese: Thank you. Appreciate that.

Scott Kingsley: Thanks, man.

Operator: Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press Our next question comes from the line of Manuel Navas from D. A. Davidson. Your question please. Hey. Just stepping back to the NIM for a moment.

Manuel Antonio Navas: Do you have, like, a quarter end NIM spot rate Hopefully, that's, like, a good proxy to the third quarter.

Annette L. Burns: Manuel, I don't have a spot rate for you, but I would say that you know, June's margin included, you know, the full impact of the accretion for the quarter. So and we only had two months of the Evans accretion in the second quarter. We'll have a full will have a full impact in the third quarter. That's gonna increase the margin in and of itself a couple of basis points. From three fifty nine.

Manuel Antonio Navas: I appreciate that. And just wanted to confirm one of the key Earlier, you talked about there might be a few basis points improvement from asset yield repricing higher and just new yields. Was that few basis point NIM improvement or just loan yield improvement?

Annette L. Burns: I would say overall NIM improvement.

Manuel Antonio Navas: And with funding costs kinda stabilized? Correct.

Annette L. Burns: Correct.

Manuel Antonio Navas: Okay. I appreciate the reiteration of that guidance. I just wanted to clarify whether it was asset yields or NIM. So that's a good trajectory.

Scott Kingsley: And, Emmanuel, as we said before too, that, you know, this would also presume that at some point in time, we get out of the current inversion that we have into that very important belly of the curve because that's where we're pricing most of our assets up. So there was pressure on that in the second quarter. If some of that pressure could relieve, I think our opportunities would be even better.

Manuel Antonio Navas: Alright. Shifting over the fee income ratio to revenues is ticked lower because you added a spread heavy bank. Does that increase your kind of appetite on the fee side? For either additions or lift outs or just is that something that you have extra focus on, or is it just are you being opportunistic in general?

Scott Kingsley: I'm gonna frame it this way is we love all three of those businesses. And so we are motivated to organically grow them or opportunistically to our base via m and a via m and a. Remember that, you know, what we like about those businesses that generally over time, if you can grow them organically yourself, they're the gift that keeps on giving because they don't take regulatory capital. If you decide to engage in an m and a transaction, yeah, for a period of time, you're using some capital. But usually, the return characteristics are so positive on those that, you know, we're very interested in that.

That being said, you know, to your point, acquiring Evans that had a mix than us makes that a little bit more difficult. But I think, again, finding a balance and continuing to focus on the fact that having a diversified revenue stream is a net positive will remain in our strategic focus forever.

Manuel Antonio Navas: I appreciate the commentary. Thank you. Thanks.

Operator: Thank you. And our next question comes from the line of Freddie Strickland from Hov Group. Your question please. Hey, good morning.

Scott Kingsley: I was just wondering if we could talk about the impact of the sub debt redemption in terms of interest cost differential there? I mean, I know you said there was other liquidity sources you used to repay that. Were those kind of similar 5.45% rate?

Annette L. Burns: That's correct. So $118 million of sub debt was right around $545 million on a weighted average basis. That was going to tick up to close to 9% as we turn to a variable rate. So we're you know, we paid that debt off using our liquidity. And, you know, we have to borrow, which is somewhere in the you know, four and a quarter, $4.40. So, you know, kind the differential between the 9 and the $4.40 is kind of what our savings would be on a on a go forward basis.

Scott Kingsley: Understood. And it sounds like you even had savings versus the pre reset rate as well.

Annette L. Burns: A little bit using overnight.

Scott Kingsley: Yep. And I just wanted to switch gears to credit. I mean, do you think charge offs can stay at this sort of lower level you had this quarter? Do we see them tick back up a little bit, given you still have some more runoff in consumer and solar?

Annette L. Burns: It's a great question. We think that the second quarter was a great quarter from a performance perspective on net charge offs. We don't think that's going to recur. Our average net charge offs are probably more in the $3 million to $5 million range a quarter, so that's probably more likely.

Freddie Strickland: Alright. Great. For taking my questions.

Operator: Appreciate it. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Scott Kingsley for any further remarks.

Scott Kingsley: Thank you. In closing, I want to thank everyone on the call for participating with us today and for your continued interest in NBT. We look forward to catching you up late October our third quarter results, and go Bills.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.