NBT Bancorp (NASDAQ:NBTB) executives said fourth-quarter and full-year 2025 performance reflected stronger fixed-rate asset repricing, diversified fee income, disciplined balance sheet growth, and the impact of the company’s merger with Evans Bancorp, which closed in the second quarter.
Quarterly results and profitability metrics
For the fourth quarter, NBT reported net income of $55.5 million, or $1.06 per diluted share. On a core operating basis excluding acquisition-related expenses and securities gains, operating earnings were $1.05 per share, consistent with the prior quarter, Chief Financial Officer Annette Burns said.
Balance sheet: loan and deposit trends
NBT said total loans rose $1.63 billion, or 16.3%, for the year including acquired loans from Evans, bringing the loan portfolio to $11.6 billion. Burns said commercial production remained strong during 2025, though the company saw higher commercial real estate (CRE) payoffs. The loan mix remained diversified, with 56% commercial relationships and 44% consumer loans.
On deposits, Burns said balances were up $2.0 billion from December 2024, also reflecting the Evans transaction. Management highlighted a shift away from higher-cost time deposits and into checking, savings and money market accounts. Burns said 58% of deposits, or $7.8 billion, consisted of no- and low-cost checking and savings accounts at a cost of 80 basis points.
Net interest margin and rate dynamics
Burns said net interest margin (NIM) was 3.65% in the fourth quarter, down 1 basis point from the prior quarter. Lower earning-asset yields were largely offset by reduced funding costs, while a higher level of lower-yielding short-term interest-bearing balances reduced the quarter’s NIM by about 1 basis point compared to the third quarter.
Net interest income totaled $135.4 million, up $1 million sequentially and up $29 million from the fourth quarter of 2024. Burns attributed the sequential increase to lower interest expense more than offsetting lower interest income, as declining short-term rates affected both earning asset yields and funding costs. She also noted approximately $3 billion of earning assets reprice almost immediately with changes in the federal funds rate, while around $6 billion of deposits—principally money market and CD accounts—remain price sensitive.
In Q&A, management described its NIM positioning as “neutral” and said margin expansion expectations were modest, around 2 to 3 basis points per quarter, with results dependent on reinvestment opportunities and the yield curve. They pointed to potential repricing opportunity in residential mortgages (described as having 125 to 130 basis points of “room”), as well as in the investment securities portfolio, which management said generates about $25 million in monthly cash flows for reinvestment. On deposit repricing, management said CDs were a key area, noting about 77% of the CD book reprices over the next two quarters.
Fee income, expenses, and tax rate
NBT continued to emphasize growth in non-interest income. Burns said fee income (excluding securities gains) was $49.6 million, down $1.8 million from the seasonally strong third quarter but up 17.4% from the fourth quarter of 2024. Burns said combined quarterly revenues from retirement plan services, wealth management, and insurance services exceeded $30 million, and non-interest income represented 27% of total revenues in the quarter.
During a later exchange, Burns said roughly $300,000 to $400,000 of wealth-related revenue in the quarter was seasonal activity-based fees. She also said fee income can include items that are harder to predict, such as $1.0 million to $1.5 million of bank-owned life insurance (BOLI) gains and other securities gains, and characterized a “normal run rate” for BOLI at about $2.4 million.
On expenses, Burns said fourth-quarter operating expenses excluding acquisition costs were $112 million, up 1.5% sequentially, reflecting higher technology costs, year-end charitable contributions, and marketing costs. Kingsley added that the company typically experiences seasonally higher operating costs in the first quarter—citing higher costs for plowing and heating, along with higher payroll and stock-based compensation expense tied to the timing of award grants—suggesting a $0.04 to $0.05 per share headwind from first-quarter seasonality versus other quarters.
The effective tax rate was 20.3% for the fourth quarter, lower than the prior quarter, which Burns attributed to finalizing the assessment of deductibility of merger-related expenses and the impact on the full-year effective tax rate of 23%.
Credit quality, payoffs, and outlook topics raised in Q&A
Burns said provision expense was $3.8 million for the quarter, compared to $3.1 million in the third quarter, reflecting slightly higher net charge-offs. Allowance for credit losses stood at 1.19% of total loans and covered 2.5 times non-performing loans, which management characterized as stable asset quality.
Executives discussed several portfolio-specific items during the analyst Q&A:
- CRE payoffs: Management estimated $150 million to $175 million of unscheduled CRE payoffs in 2025, driven in part by agency financing and private funding in certain markets, and said they were planning for continued payoff risk in 2026.
- Loan growth expectations: Kingsley said mid- to lower-single-digit loan growth in 2026 “is” a reasonable expectation, while noting the company still has a solar loan portfolio just under $800 million that is running off by roughly $100 million per year.
- Solar portfolio reserves and strategy: Kingsley said a higher allowance against the solar book reflected “recalibration” of coverage as the portfolio runs off, not a fundamental negative change. On potential sale of the solar portfolio, he said rates on those assets are low and that management is waiting for customers to pay down the loans and redeploy proceeds rather than selling at an unfavorable outcome.
- Normalized charge-offs: Management said charge-off expectations have shifted lower as higher-loss unsecured consumer portfolios have wound down, with a more normalized range described as roughly 15 to 20 basis points.
- Share repurchases: Kingsley said the fourth-quarter buyback—described as a little over $10 million—was driven by valuation and the company’s capacity to “self-fund” repurchases without impacting capital ratios, adding that NBT believes it could self-fund that level on a quarterly basis.
Separately, Kingsley said integration of the Evans team over the prior eight months had been “highly successful,” and he highlighted continued activity across Upstate New York’s “semiconductor chip corridor,” including Micron’s official groundbreaking outside Syracuse. Kingsley said site development and construction of the first fabrication facility is expected to commence immediately, with completion targeted in 2030.
Management also discussed expanding the franchise through hiring and branch investments, including adding bankers with C&I backgrounds in Maine and committing to a retail branch site near Portland’s wharf area, along with additional site planning in markets including Scarborough, Maine, the greater Manchester area, and Rochester.
In closing remarks, Burns said the combination of net interest income and fee-based revenues produced “meaningful positive operating leverage” as the company navigated three federal funds rate cuts late in 2025, and she said the company’s capital position supports pursuing growth opportunities across its markets.
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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