NBT Bancorp NASDAQ: NBTB reported first-quarter 2026 net income of $51.1 million, or $0.98 per diluted share, as management pointed to balance sheet discipline, revenue diversification, and continued benefits from its Evans Bancorp merger integration.
President and CEO Scott Kingsley said the company delivered “solid operating performance” driven by “disciplined balance sheet management” and growing diversified revenue streams. Kingsley highlighted operating return on assets of 1.29% and return on tangible equity of 15.50% for the quarter, which he said represented “meaningful improvement” from the prior year period. Tangible book value per share ended the quarter at $27.05, up more than 9% year-over-year, according to management.
Net interest margin rises as funding costs decline
Chief Financial Officer Annette Burns said net interest margin (NIM) improved to 3.72% in the first quarter, up 7 basis points from the prior quarter, as a 9-basis-point decline in the cost of funds more than offset a 2-basis-point decline in earning asset yields.
Burns noted loan yields declined 4 basis points from the prior quarter to 5.66%, largely due to variable-rate loans repricing after federal funds rate decreases. However, she said the company “actively manage[d] our funding costs downward,” including a 10-basis-point drop in total cost of deposits to 1.34%.
Net interest income was $134.3 million, down $1 million from the prior quarter but more than 25% higher than the first quarter of 2025. Burns attributed the quarter-over-quarter decline to two fewer days in the first quarter.
Asked about deposit competition, Burns said funding costs appear “stabilized,” with “a little bit of opportunity” for further improvement that could be offset by deposit growth initiatives. She described deposit pricing competition as generally “fairly disciplined” with “a few pockets” of more aggressive behavior.
Kingsley added that in many of NBT’s markets, deposit gathering has not centered on “additional share grab,” noting that even large bank competitors may view funding costs in NBT’s footprint as lower than in major metropolitan areas.
Loans dip on runoff portfolios and elevated payoffs; deposits rise seasonally
Total loans were $11.5 billion at March 31, down $50.9 million from year-end 2025. Burns said about half of the decline was tied to planned runoff in “other consumer and residential solar portfolios,” alongside an “elevated level of commercial payoffs” similar to the prior two quarters. The loan portfolio was 56% commercial and 44% consumer, she said.
On the runoff portfolio, Kingsley said the planned runoff is “roughly $100 million a year,” which he said matched first-quarter experience at approximately $25 million. He also said reserves are around 4% of that portfolio and that performance is “as expected.”
Management also discussed indirect auto lending, where Kingsley said NBT pulled back due to aggressive market pricing. He told analysts that in the first quarter, some competitors—“probably more dominated by credit unions”—offered rates “barely above federal funds rates.” In a separate exchange, he said competing offerings were “150-200 basis points below ours,” adding that he was already seeing “a little more rationality” in the second quarter.
Total deposits increased $244 million from December 2025, driven primarily by seasonal municipal deposit inflows and higher consumer and commercial balances. Burns said municipal tax collections tend to be concentrated in the first and third quarters in most of NBT’s markets. She also pointed to a “favorable change” in deposit mix out of higher-cost time deposits and into checking, savings, and money market accounts. Burns said 59% of deposits—about $8 billion—were in no- and low-cost checking and savings accounts at a cost of 38 basis points.
When asked whether NBT’s deposit costs had reached a floor, Kingsley said the company’s first-quarter results reflected active management following multiple fed funds changes late in 2025. He noted that expansion into more suburban or “light metro” markets could carry somewhat higher costs to win certain relationships, but said it would be manageable in the context of overall funding costs.
Fee income supported by retirement plan services; expenses guided to 3% to 4% annual growth
Excluding securities gains, fee income was $49.7 million, consistent with the prior quarter and up 4.5% year-over-year, Burns said. She noted combined quarterly revenues from retirement plan services, wealth management, and insurance services exceeded $32 million. Non-interest income represented 27% of total revenue in the quarter.
Kingsley cited a “new all-time high” in quarterly revenue from NBT’s retirement plan administration business. Burns also told analysts the company is “most excited” about retirement plan services, citing “really great wins” in the first quarter and a strong trajectory. For the full year, Burns said management believes mid-single-digit growth rates for fee-based businesses remain achievable, consistent with historical performance.
Operating expenses totaled $112 million, up 0.5% from the prior quarter. Burns said salaries and benefits rose $2.8 million to $68.8 million, mainly due to seasonally higher payroll taxes and stock-based compensation, partially offset by lower medical expenses. She also said annual merit increases occurred in mid-March averaging 3.3%.
On the outlook for expenses, Burns said the first-quarter run rate of about $112 million “will probably be a good place to be in the second quarter” and reiterated that operating expenses typically increase 3% to 4% annually, which she said remains the expectation for 2026. Kingsley added that certain initiatives pushed expenses higher in the third and fourth quarters of 2025, and that “other expense” can be “a little bit lower in the first quarter.”
The effective tax rate increased to 23.3% from the prior quarter. Burns attributed the change primarily to finalizing the deductibility of merger-related expenses and their impact on the 2025 full-year effective tax rate.
Credit metrics: higher provision tied to net charge-offs and non-performing loan increase
Provision expense was $5.6 million in the first quarter, up from $3.8 million in the fourth quarter. Burns said the increase reflected “a slightly higher level of net charge-offs and non-performing loans,” which resulted in a higher allowance level. Reserves were 1.2% of total loans and covered more than twice non-performing loans, she said.
Responding to questions about non-performing loans, Burns said the majority of the increase was tied to a single C&I relationship in Western New York, calling it “a specific customer circumstance.” She said the bank is “actively working through that,” while continuing to manage a handful of other non-performing credits, primarily commercial real estate-related. Burns added that consumer delinquencies were in line with, and in some cases better than, expectations.
Kingsley noted that coming off a low base, “one relationship or a couple of relationships can actually make a difference” in non-performing loan totals, and said the bank has the “stamina to work through” customer difficulties rather than moving quickly to sell assets.
Pipeline commentary, capital priorities, and regional economic activity
Kingsley said NBT started 2026 slowly due to difficult winter weather in January and February and higher-than-expected commercial real estate payoffs, but said activity has since improved and pipeline levels are strong. He told analysts customers generally “are feeling pretty good about themselves” and said NBT has not seen customers delaying capital expenditure plans due to uncertainty, although some construction projects started later than expected and may shift into the second quarter.
On loan growth, Kingsley said first quarter is “not our most robust quarter” historically and said he expects a return to “low- to mid-single-digit% growth rates for the balance of the year.” He also said early payoffs have been elevated—about $125 million in the first quarter—after running around $45 million to $50 million per quarter in early 2025 and rising above $100 million starting in the third quarter. Kingsley said the payoff activity has been “widespread” across geographies and loan types, while growth opportunities also appear broad-based.
On capital, Kingsley said priorities remain focused on organic growth and NBT’s “long-standing commitment to annual dividend growth.” He said the company continues to evaluate M&A opportunities and repurchased 250,000 shares in the first quarter of 2026, consistent with its approach to opportunistic repurchases. Asked about buyback cadence, Kingsley said share repurchases are not the company’s top priority, but NBT will act if it believes the market is not recognizing its value.
Kingsley also discussed market expansion and hiring opportunities stemming from banking industry disruption. He described a build-out strategy in the greater Rochester area and the Finger Lakes, with actions expected over the next 12 to 18 months. In northern New England, he noted a new branch opened in Bayside in Portland during the quarter and said the company plans a commitment in Scarborough in the second half of the year or early next year, along with additional locations in southern New Hampshire to support branding and growth.
On the Evans integration, Kingsley said one year in, it “has gone smoothly” and “validated the strong cultural alignment” management saw at the outset, adding that NBT remains “excited about the opportunities ahead in the western region of New York.”
He also pointed to continued momentum tied to Upstate New York’s semiconductor corridor, referencing Micron’s groundbreaking late last year and the completion of its site acquisition from Onondaga County in the first quarter, which he said helped accelerate development. Kingsley said site development and infrastructure work for the first fabrication facility are underway and that NBT is already seeing benefits, with “more than a dozen” customers securing contracts tied to the project. He added that activity related to advanced manufacturing, infrastructure investment, housing development, and workforce initiatives is evident across NBT’s seven-state footprint, including manufacturing and defense activity in New England.
About NBT Bancorp NASDAQ: NBTB
NBT Bancorp, Inc NASDAQ: NBTB is the bank holding company for NBT Bank, N.A., a full-service commercial bank that serves both individual and corporate clients across the Northeastern United States. Through its branch network and digital channels, the company offers a comprehensive range of commercial banking services, including business lending, treasury management, cash management and specialized industry financing. Its consumer banking platform provides checking and savings accounts, certificates of deposit, home mortgages, home equity lines of credit and other lending solutions tailored to meet personal and household financial needs.
In addition to traditional banking, NBT Bancorp delivers wealth management and fiduciary services through its trust division, offering investment advisory, trust administration, retirement planning and estate settlement.
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