NBT 뱅코프(NBTB) 2026년 3분기 실적 발표회: 사상 최대 이익, NIM 확대 및 대출 성장

핵심 요약

• NBT 뱅코프는 재무상태표의 성장과 사상 최대의 순이자이익, 수수료 수익 증가에 힘입어 2026년 3분기 순이익이 사상 최대치인 5,800만 달러(희석 주당순이익 $1.11)를 기록했다고 발표했습니다.
• 순이자이익은 전분기 대비 500만 달러, 전년 동기 대비 5% 이상 증가한 1억 4,300만 달러를 기록했습니다. 순이자마진(NIM)은 2분기 대비 5bp 상승한 3.78%를 기록했습니다.
• 분기 말 총대출 잔액은 119억 달러를 기록했습니다. 소비자 이탈(runoff) 포트폴리오를 제외한 대출은 2026년 첫 9개월 동안 4억 2,700만 달러(4%) 증가했습니다.
• 핵심 예금은 연초 대비 2.6% 성장했습니다. 전체 예금의 약 60%가 무이자 및 저비용 당좌·보통예금으로 구성되었으며, 가중평균 조달비용은 38bp를 기록했습니다.
• 증권 처분이익을 제외한 수수료 이익은 전년 동기 대비 2.9% 증가한 5,290만 달러를 기록했습니다. 퇴직연금 서비스, 자산관리, 보험 부문은 합산 기준 분기 사상 최대치인 약 3,400만 달러를 창출했습니다.
• 경영진은 4분기 대출 성장이 3분기 수준을 유지할 것으로 예상하며, 반도체 관련 개발로 인한 잠재적 성장 가속화를 반영하기 전 2027년 대출 성장률을 3%~5%로 전망했습니다.

핵심 재무 데이터

사업 및 영업 실적

상업용 대출은 조기 상환 증가에도 불구하고 2026년 첫 9개월 동안 2억 3,400만 달러 증가했으며, 가계 대출은 1억 1,600만 달러 증가했습니다. 상업용 대출과 가계 대출은 전체 대출의 각각 56%와 44%를 차지했습니다. 3분기 신규 상업용 대출 취급 건의 평균 수익률은 6.41%를 기록했습니다.

NBT는 조달 포트폴리오를 고비용 정기예금에서 당좌·보통예금 및 단기금융상품(MMDA)으로 전환하는 작업을 지속했습니다. 2026년 중 9,900만 달러 규모의 브로커 예금증서(CD) 만기가 도래했으며, 회사채 형태의 후순위채 2,500만 달러를 상환했습니다.

퇴직연금 수탁·관리 수익은 전년 동기 대비 8.7% 증가했습니다. 퇴직연금 서비스, 자산관리, 보험 부문의 기여에 힘입어 비이자이익은 3분기 총수익의 약 27%를 차지했습니다.

경영진은 센트럴 뉴욕, 모호크 밸리, 수도권(Capital Region), 버몬트에 걸친 반도체 투자에 대한 NBT 은행의 노출(익스포저)을 강조했습니다. NBT 은행은 해당 뉴욕 회랑(corridor) 전역에 약 70개 지점을 보유하고 있으며, 2027년 상반기 마이크론의 클레이 캠퍼스에서 약 1마일 떨어진 곳에 추가 지점을 개설할 계획입니다.

경영진은 마이크론 및 글로벌파운드리스와 연계된 건설 활동으로 인해 시공업체 및 관련 기업의 자금 조달 수요가 먼저 증가할 수 있다고 설명했습니다. 이후 주택 공급과 인력 개발이 확대됨에 따라 가계 및 예금 성장이 뒤따를 것으로 보입니다.

경영진 전망(가이던스)

경영진은 4분기 대출 성장이 3분기와 유사할 것으로 예상합니다. 2027년의 경우 특정 가계 포트폴리오의 예상 조기 상환 및 이탈을 고려한 후 초기 성장률 범위를 3%~5%로 설정했습니다. 만약 반도체 관련 활동이 이례적인 기회를 창출할 경우 성장률이 5%~7% 수준으로 확대될 가능성이 있다고 언급했습니다.

매수회계 관련 상각액(accretion)은 상환 활동에 따라 분기당 약 600만 달러에서 650만 달러 수준으로 정상화될 것으로 예상됩니다.

NBT는 자사의 재무상태표가 금리 변동에 대해 비교적 중립적이라고 설명했습니다. 경영진은 자산의 지속적인 금리 재산정이 순이자마진(NIM)을 수 베이시스 포인트 추가 개선하는 데 기여할 것으로 기대하지만, 결과는 수익률 곡선과 조달 비용에 따라 달라질 것입니다.

4분기 영업비용은 약 1억 1,400만 달러에서 1억 1,500만 달러로 3분기 수준을 유지할 전망입니다. 2027년의 경우 경영진은 직원 임금 인상률을 3%~3.5%로 예상하며, 기타 영업비용도 전반적으로 비슷한 속도로 증가할 것으로 예상합니다. 계획된 지점 확장으로 약 0.5%포인트가 추가될 수 있는 반면, 직원 의료비 비용은 두 자릿수 비율로 증가할 것으로 예상됩니다.

퇴직연금 사업 수익은 통상 4분기에 계절적으로 감소합니다. 경영진은 해당 사업의 전년 대비 성장률이 2026년 8%~9%에서 2027년 약 5%~7%로 둔화될 것으로 예상합니다.

리스크 및 주요 관전 포인트

고금리로 인해 일부 상업용 부동산 및 주택 담보 대출 활동이 둔화되기 시작했습니다. 경영진은 아직 그 영향이 심각하지는 않지만, 일부 프로젝트는 시장 금리가 약 75bp 낮았을 때 초기 모델링이 이루어졌다고 언급했습니다.

예금 금리 경쟁은 여전히 우려 사항으로 남아 있습니다. 경영진은 고객들이 더 높은 금리에서 출발하고 예금 거래 관계 유치를 위한 경쟁이 심화됨에 따라 현 주기의 예금 베타(deposit beta)가 이전 주기와 비슷하거나 잠재적으로 더 높을 것으로 예상하고 있습니다.

고객들이 유동성을 활용해 고금리 부채를 상환하고, 견조한 자산 가치가 매각을 촉진하며, 건설 대출의 대환(takeout)이 예정된 데다 정부 금융 대출 기관들과의 공격적인 경쟁이 이어짐에 따라 대출 상환액은 높은 수준을 유지하고 있습니다.

부실대출(NPL)이 소폭 증가했으나, 경영진은 이러한 변화가 특정 업종이나 지역에 집중된 것이 아니라 개별 차주의 요인에 따른 것이라고 설명했습니다. 요주의(criticized) 및 고정이하(classified) 여신은 전분기 대비 감소했으며 전년 동기 수준을 크게 하회했습니다.

애널리스트 Q&A 주요 내용

• 유가증권 포트폴리오: 연간 현금 흐름은 약 3억 달러, 또는 분기당 6,500만~7,500만 달러 수준입니다. 재투자는 주로 듀레이션 4~6년의 주택담보증권(MBS) 계열 상품에 집중되고 있습니다.
• 예금 수수료: 계좌 수준의 수수료 변경 조치가 3분기 초에 시행되었습니다. 경영진은 4분기 서비스 수수료 수익이 비슷한 수준을 유지할 것으로 예상합니다.
• 자동차 대출: 신규 자동차 대출 금리는 5%대 중반 수준에서 책정되었으며, 포트폴리오 듀레이션은 대체로 30개월에서 36개월입니다. 경영진은 상각률과 연체율이 여전히 양호한 수준을 유지하고 있다고 밝혔습니다.
• 자산 건전성: 회사는 부실대출의 소폭 증가를 개별 차주의 단발성 요인 때문으로 돌렸습니다. 경영진은 해당 여신에 대한 충당금 적립 수준이 적절하다고 말했습니다.
• 자본 활용: NBT는 레버리지 비율 약 10%, 보통주자본(CET1) 비율 12.5%, 총위험기준 자본비율 14% 이상으로 분기를 마감했습니다. 경영진은 이것이 자체 성장, 배당금 지급, 신중한 자사주 매입 및 전략적 기회 검토를 뒷받침한다고 밝혔습니다.
• M&A: 경영진은 금리 환경이 자체 접근 방식에 실질적인 변화를 주지 않았다고 말했습니다. 잠재적 거래는 소규모 지역 은행과의 관계 구축 및 기존 영업망 전반에서 NBT의 입지를 강화할 기회에 계속 집중되고 있습니다.

실적발표 콘퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good day, everyone, and welcome to the conference call covering NBT Bancorp's Third 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's management would like to remind listeners that as noted on Slide 2, 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. [Operator Instructions]

As a reminder, this call is being recorded. And now I'd like to turn the call over to NBT Bancorp's President and CEO, Scott Kingsley, for his opening remarks. Mr. Kingsley, please begin.

Scott Kingsley

Thank you, Jonathan. Good morning, and welcome to this earnings call covering NBT Bancorp's Third Quarter 2026 results. With me today are Annette Burns, NBT's Chief Financial Officer; Joe Stagliano, President of NBT Bank; and Joe Ondesko, our Treasurer.

We are pleased with our solid third quarter operating performance, which demonstrates the strength and momentum of NBT's diversified financial services franchise. We generated noticeably stronger earnings than in both the third quarter of last year and the second quarter of this year. Productive loan growth across our markets contributed to record net interest income for the quarter. We also remained very disciplined in our cost of funds management while focusing on net new account growth. We are very pleased with the engaged and consistent approach of our teams across the company.

Operating return on assets was 1.41% for the third quarter, while operating return on tangible equity was 16.53%. Tangible book value per share ended the quarter at $27.75, an increase of 8.8% from a year ago. Our capital utilization priorities remain focused on supporting organic growth while maintaining our long-standing commitment to annual dividend increases. At $0.40 per share, NBT's quarterly dividend is 8.1% higher than the prior year and affirms our continued commitment to providing favorable long-term returns to our shareholders.

Our strong capital levels also allow us to continue to evaluate a variety of strategic opportunities as well as enable measured share repurchases. We remain encouraged by the opportunities we see across our 7-state footprint. Through NBT's support of economic development projects, customer expansion activity and investments in new bank locations in several of our markets, we continue to position NBT for sustainable growth while supporting the communities we serve.

Since 2019, the company has been able to successfully grow earnings at a 6% compounded annual growth rate while maintaining our conservative risk profile. And looking forward, we believe we are well positioned for the remainder of 2026 and beyond to continue executing on our diversified operating strategies.

Before Annette reviews our third quarter results in greater detail, I'll ask Joe Stagliano to provide a brief update on semiconductor-related activities in our markets. Joe?

Joseph Stagliano

Thank you, Scott, and good morning. As we've discussed on prior calls, NBT Bank maintains a significant presence across many of the markets benefiting from New York's growing semiconductor and advanced manufacturing industry. With about 70 branches located across this corridor, we are already serving many of the businesses and communities connected to these developments.

What stands out this quarter is the progress being made on several major projects and the growing evidence that their impact is extending beyond the project sites themselves. In Central New York, activity surrounding Micron continues to accelerate. Following the project's groundbreaking in January of 2026, construction in Clay has advanced from site preparation into more visible phases of development. Infrastructure investments are moving forward, crews began driving pilings for the first fabrication facility earlier this month and on-site concrete batch plant will support construction throughout the winter.

While the first chip production is not expected until about 2030, we are already seeing increased focus on workforce housing and related development to support long-term growth. Central New York businesses, including many NBT Bank customers, are participating in site development, engineering, environmental construction, and other support activities related to the project. While many of these projects are still taking shape, the pace and scale of activity support our positive outlook for Central New York. We are also excited to expand our presence in the area with a new branch expected to open in the first half of 2027, about 1 mile from the Micron campus.

More broadly, Micron is one part of a larger semiconductor story unfolding across Upstate New York. The Mohawk Valley remains an important component of that story, supported by ongoing activity around the Marcy site near Utica and continued interest in the region's manufacturing future. In the Capital Region, New York Creates, a leading semiconductor research and innovation organization supports research and development that strengthens New York's position within the industry. We were also encouraged by GlobalFoundries' recent announcement of plans to expand its campus in Saratoga County through the addition of 2 new semiconductor fabrication facilities, further highlighting the scale of investment taking place across the state.

Taken together, these developments highlight the breadth of activity occurring across a well-established semiconductor corridor that spans Central New York, the Mohawk Valley and the Capital Region. For NBT, the significance of these investments extends beyond manufacturing. Projects of this scale can support housing and workforce development, infrastructure improvements, professional services, small business growth and local investment. We are well positioned to support that growth as these opportunities continue to evolve.

What we are seeing across these regions reinforce our confidence in the long-term outlook for the markets we serve. Importantly, this opportunity extends beyond New York through semiconductor-related activity across our broader footprint, including GlobalFoundries' facility in Burlington, Vermont, where CHIPS Act supported investments are advancing next-generation semiconductor technologies and strengthening domestic manufacturing capabilities.

With that overview, I'll turn the call over to Annette Burns to discuss our third quarter financial results in greater detail. Annette?

Annette Burns

Thank you, Joe, and good morning. Starting on the results overview page of our earnings presentation, we reported third quarter net income of $58 million or $1.11 per diluted common share. Earnings benefited from continued balance sheet growth, record net interest income, net interest margin expansion and solid contributions from our diversified fee-based businesses. We generated record quarterly earnings and maintained strong capital levels.

Turning to loans on the next page. Total loans ended the quarter at $11.9 billion, increasing $427 million or 4% from December 31, 2025, excluding our consumer runoff portfolios. All business lines experienced growth with commercial loans increasing $234 million despite payoffs remaining elevated from last year's levels and consumer loans increasing $116 million during the first 9 months of the year. Commercial and consumer portfolios remain well balanced at 56% and 44% of total loans, respectively. The increase in commercial loans reflects continued customer activity across our footprint and a disciplined approach to growth. We continue to maintain a diversified C&I and CRE portfolio with balanced exposure across industries and property types while preserving strong credit quality standards. New commercial originations during the quarter carried a yield of 6.41%, providing for continued repricing opportunities.

On Page 6, total deposits were $13.6 billion at quarter end and increased modestly from year-end levels. Core deposits grew 2.6% in the first 9 months of 2026. We 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 38 basis points. Total deposit costs declined by 1 basis point during the quarter to 1.32%, while the total cost of funds increased by 1 basis point to 1.42%. 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. During the year, $99 million of brokered CDs matured and $25 million of subordinated debt was also redeemed. We continue to tactically manage funding strategies to grow relationships while maintaining better than peer cost of funds.

Net interest income and margin trends are highlighted on the next slide. Our net interest income increased to a record $143 million, up $5 million from the second quarter and more than 5% above the third quarter of 2025. The increase from the second quarter was driven by organic loan growth, higher earning asset yields, including increased purchase accounting accretion and the benefit of 1 additional calendar day in the quarter. Net interest margin increased 5 basis points to 3.78% compared with the prior quarter. Our balance sheet remains well positioned across a variety of interest rate environments and continues to demonstrate 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 noninterest income are outlined on Page 8. Excluding securities gains, our fee income was $52.9 million, seasonally higher than the prior quarter with an increase of $3.3 million and increased 2.9% from the third quarter of 2025. Growth was led by retirement plan administration revenues, which increased 8.7% from the prior year. Combined revenues from retirement plan services, wealth management and insurance services generated approximately $34 million in quarterly revenues, a new high. Noninterest income represented approximately 27% of total revenues in the third quarter and reflects the strength of our diversified revenue base.

As a reminder, consistent with historical trends, the fourth quarter is typically the lowest revenue-generating quarter for these fee businesses, reflecting the seasonal decline in activity-based fees. Total operating expenses increased 3% from the prior quarter. Salaries and employee benefit costs were $70 million, a modest increase from the prior quarter. This increase was primarily driven by 1 additional payroll day and higher incentive compensation expenses, which were partially offset by lower employee benefit costs. The quarter-over-quarter increase in other operating expenses was primarily due to activity-based costs and a higher reserve for unfunded loan commitments.

Slide 10 provides an overview of key asset quality metrics. Provision expense for the 3 months ended September 30, 2026, was $3.8 million compared to $6.1 million for the second quarter of 2026. The decrease in the provision for loan losses during the quarter was primarily due to a lower level of loan growth compared to the prior quarter and a decrease in the allowance for loan losses due to a modest improvement in the economic forecast and portfolio mix changes. Reserves were 1.17% of total loans and covered 2x the level of nonperforming loans.

We delivered record third quarter earnings, driven by broad-based business activity and continued momentum across the franchise. Our diversified balance sheet, meaningful fee income, disciplined balance sheet management and strong capital position continue to support consistent performance and position us well for sustainable growth.

Thank you for your interest in our results. At this time, we welcome any questions you may have.

Operator

[Operator Instructions] Our first question comes from the line of Feddie Strickland from Hovde Group.

질의응답

Feddie Strickland

Just wanted to ask kind of thoughts about loan growth going into the fourth quarter. I mean I know the residential solar and other consumer, I guess, deceleration has been pretty consistent there. I know you've had some payoffs, but just could we see loan growth potentially tick up a little bit into the fourth quarter? Or do we expect something similar to what you saw in the third?

Scott Kingsley

Thanks for the question. I think we're thinking a consistent outcome going into the fourth quarter. We like where we are from a pipeline standpoint, and we have a lot of really productive new construction projects in place across our markets. The fourth quarter is usually not the quarter of massive draws on construction projects because of where we sit from a weather standpoint. But I think you've hit it on the head. We've demonstrated a 4% growth rate for the first 9 months of the year, excluding those consumer portfolios, but 3% including them. So I think consistent for the fourth quarter is our expectations.

Feddie Strickland

I appreciate that, Scott. And just in that, should we expect loan discount accretion to step back down from here after the little bit of an increase this quarter?

Annette Burns

I would expect that our accretion related to purchase accounting kind of runs somewhere between $6 million and $6.5 million on average. It was a little bit higher this quarter. So it's all dependent on different levels of payoffs and things like that, but I would expect it to probably normalize again next quarter.

Feddie Strickland

And just one last one for me on the margin. I appreciate that the shape of the yield curve is kind of going to determine what happens there. But let's say we have a couple more rate hikes here through early next year and the 5-year sort of holds up where it is. I mean, in that scenario, does the back book repricing and pretty low-cost deposits mean you'll continue to see the margin rise in that scenario?

Annette Burns

So we speak to us being fairly neutrally positioned. So in the rising rate environment scenario, we see our $3 billion about of earning assets reprice almost immediately. I think we have some ability to lag on the funding side where, obviously, borrowings are repricing almost immediately while we can lag a little bit on our deposit costs. But we expect to probably respond to some deposit pricing pressures.

So I think fairly neutrally positioned as it relates to rising interest rates, where we really see the benefit on our net interest margin is the repricing of our assets, both investment securities and loans continuing to see a favorable rate environment, especially where we price our loans in that 2- to 5-year spot. So that's where we see a few basis points of margin improvement continue as a trend.

Scott Kingsley

I'd agree. I think Annette hit it on the head there. We've got a big portfolio of mortgage products, residential mortgage products that we would love to have inflect a little bit faster from a repricing standpoint. But at current rates, and I don't think our geographies are dissimilar to much in the country, at current rates that are hovering around 7%, activity is just at muted levels today.

Operator

And our next question comes from the line of David Konrad from KBW.

David Konrad

Annette, I just had a follow-up question on kind of the asset yields, specifically on the securities book. You had about 6 bps improvement there, but still relatively low yield at 2.76%. So just wondering what you're currently investing in, the yields there? And would you expect -- if the 5-year kind of 10-year stays in this range, is kind of 6 bps a good progression going forward? Or how do you think the securities portfolio will reprice?

Scott Kingsley

Yes. I don't think it's wildly out of line, David. What I think is we're at $300 million of cash flows on an annual basis. So you're probably in the $65 million to $75 million a quarter. We have a little bit of our portfolio that's in a variable rate status, and we got probably a little tiny bump in September for that. Maybe that continues a little bit into the fourth quarter relative to inflection. But we're probably targeting stuff that's in the 4- to 6-year duration when we replace, and it's typically mortgage-backed instruments of some fashion or form. So very consistent and really consistent with what our pledging requirements are for our municipal deposit base.

So like where that's headed. I think I've said this before, I think we're the lone person in our peer group that didn't do a portfolio reconstruction or restructuring. And I'll say this out loud, if we would have been one of those people considering or doing that in the first 6 months of the year, we probably wouldn't feel good about the assets we bought then. They would argue we'd probably be underwater already. So I think we can stay the course on that. We know that it's probably holding back total asset yields a little bit, but that's all coming back to us over time.

David Konrad

Great. And then one follow-up, just the expenses were a little bit higher than what I was looking for. Maybe any commentary on your expectations next quarter for expenses?

Annette Burns

Sure. Expenses ticked up in the third quarter. For us, typically, the first half of the year is a little bit lighter for us, and we typically see a little bit higher expenses in the back half of the year. That's really activity-related timing of some initiatives -- so I think we'll continue to see probably a similar level in the fourth quarter. That's about a 3% increase over where we were this time last year. So that's kind of in line with our expectations. And it might not be all the same expense lines, but there's probably some different activities we're expensing related to occupancy, maybe professional and marketing, and that might offset lower OpEx. So similar levels we're expecting.

Operator

And our next question comes from the line of Manuel Navas from Piper Sandler.

Manuel Navas

I appreciate the update on kind of the CHIPS Act momentum. It seems like you're trying to make sure you have branches in the right places. On the other side of that, I mean, that will help you with deposit growth. On the other side of that, at some point, would there be an expectation of loan growth acceleration? And do you have the talent in place for that? Or is that something you will add as needed?

Scott Kingsley

So a really good question. I think from a team standpoint, we really like where we're positioned today. And if you think of where that momentum is, it's Central New York into the Mohawk Valley and the Capital Region. And in fairness, we have really strong teams in those areas, arguably the strongest teams in the market. And so I think we're really well positioned to take advantage of those from an opportunity standpoint. I think what we'll see first through the construction phase of Micron and the second fab build-out at GlobalFoundries is honestly, might be a need for more lending opportunities for some of our customers who are in the contracting side of the world, maybe before we see household growth that we would expect to generate deposit growth.

So I feel good about that. We've said this for a long time, and it's really hard to sort of prognosticate when this actually happens. But if you've heard from us that in our marketplaces and the kind of the way we think about disciplined sustainable growth, it's kind of in that 3% to 5% or 4% to 6% growth. If we get some outsized activities in the markets we just described, might that move us to 5% to 6% -- 5% to 7%? I think that would be our hope. I think the activity sort of lifts all boats, but we are really, really well positioned to get our requisite share of that activity.

Manuel Navas

I appreciate that. With that kind of in mind, do you have a sense of early thoughts from 2027? It seems like that's the 3% to 5%, 4% to 6% growth pace seems consistent. You talked a little bit about NIM, OpEx. Next quarter is about 3% year-over-year increase. Is that a similar pace into 2027? Any kind of broad items you can offer on those metrics in 2027?

Scott Kingsley

Yes. So let's start those and sort of back in order of the ask. I think we think 2027 from a loan growth standpoint, knowing where we are with expected early payoffs and the runoff of some of our consumer portfolios, I think 3% to 5% is a really good starting point for that. And Annette may have some other color on this. But I think as we think about going forward into '27, broadly speaking, we think that merit changes for our people are probably in the 3% to 3.5% range.

I think we think other operating expenses don't probably are not radically different from that. We do have some branch expansion activities in our plan, and so that may push that up a little bit 0.5% or something. And I think the only other thing that seems outsized for us, and we've now weathered this for 3 or 4 years in a row, probably like most people, is we kind of expect medical costs for our people to be double-digit increase again. And so we're doing lots of things to try to mitigate that outcome. But in fairness, we need our people to be healthy, and we need to have a robust program for them in order for them to be successful. So for today, we continue to look at solutions for that, but we think that's the expectation going forward.

Operator

[Operator Instructions] Our next question comes from the line of Steve Moss from Raymond James.

Stephen Moss

Scott, maybe just starting off on the retirement plan income. That was up about 9% year-over-year. Just kind of curious if you guys are thinking that's probably a good year-over-year run rate growth rate for that in the fourth quarter?

Scott Kingsley

Yes. I don't -- I think in the fourth quarter, remember that the fourth quarter for us in that business is generally lower than the third quarter. There's a bunch of activity-based necessary outcomes, tax filings and other related things that we do on behalf of our customers. So typically, we see a $0.01 or $0.02 down in revenue in the fourth quarter in that business. And that's been pretty consistent for the last several years. I think if you were to think about that on a going-forward basis because I think our 8% or 9% growth was a year-over-year outcome.

We'd probably be a little bit more tempered for that into '27, probably think that, that's more in the sort of the 5% to 7% range going forward next year. We had a really great year this year of onboarding some larger plans and some books of business that certain of our adviser partners moved to us early in the year. We would expect some of that for 2027, but we don't have sight lines on some of that, that we might have had a year ago today.

Stephen Moss

Okay. Appreciate that. And then in terms of just curious on the driver of payoffs here with regard to loans. Is it higher coupon stuff that's paying off? Or is it just expected maturities and things go in the current market? Any color you can give on the payoffs you guys are seeing?

Scott Kingsley

Yes. Steve, we'd like to tell you that there's something that's really running the front of that. But I'll tell you, just from our perspective, as we've tried to work through that, there's a handful of things, which is as rates have inflected up a little bit, we certainly have customers that have decided to use their liquidity to take away maybe a high 6% or 7% yielding instrument on the debt side. The second thing is the asset values have remained very, very high. So we have a number of customers probably in advance of maybe their planning have monetized themselves out of certain assets, whether that be on the real estate side or even on the operating business side.

And that continues to be -- I think there's a lot of investable dollars chasing return. And I think those businesses have been an example of that. And from a logical standpoint, we do a fair amount of construction financing. We're essentially at the end of the project or at some general term after the end of the project, we expect to be taken out as well. And maybe the last thing I'd say, and maybe it's just a couple of recent transactions is some of the people we compete with on the government finance side, on the agency side have been very, very assertive. We've had a couple of instances of being displaced by Farm Credit in the last quarter with terms and conditions that may make sense for them from their entity, but we can't validate as carrying them on the balance sheet of the bank.

So kind of a combination of a lot of things. And I think good for us. I don't -- I think we thought if it was more systematic and directed at one particular cause, we may have a little bit more concern on future growth.

Stephen Moss

Okay. Appreciate that. And then I guess the other thing I'm curious on here is the auto loan originations at about 5.5%, pretty tight relative to the treasury. Just kind of curious, what are your thoughts on that book of business going forward? And how should we think about the pricing there in terms?

Scott Kingsley

So I'll start with that, Annette, and feel free to jump in. I think how we look at that portfolio is in our markets across our 7 states, it's an asset our customer needs. And so the financing of something that they use every day is still paramount to meeting our customer needs. From a pricing standpoint, to your point, think about that having to price at a spread somewhere above the 2-year point of the curve. From a duration standpoint, we're starting to see that portfolio be sort of in the 30- to 36-month duration on a consistent basis.

So early paydowns and accelerated return of principal is noticeable in that portfolio. I think about what we like about that is it really lines up well for us from an ALCO standpoint. So if you're going to make those commitments, to your point, in the mid-5 range, you better expect the duration to be a little bit lower than something you might make a commitment on for 5 to 7 or 10. So still very happy with that from a performance standpoint. We still have a charge-off and a delinquency level in that portfolio. It's very attractive for us. And we continue to move forward. We have aspirations to make sure that we're banking that customer on both sides of the balance sheet. And that's not the easiest thing to do from a systematic standpoint. But we're dedicated to making sure that holistically, it's more than a car loan.

Stephen Moss

Right. Okay. Appreciate that there. And then just on deposit costs, good to see them basically stable here, plus or minus. Just kind of curious, like, how are you guys thinking, like, is there going to be a lower deposit beta this cycle? Or just given that we're at a 4% Fed funds rate, maybe we go to 4.25%, 4.5%, a higher beta?

Annette Burns

I think it's going to be similar to potentially higher. Just our customers are starting off at a much higher level than they were this last interest rate increase cycle. So they're already used to getting some yield for their excess cash. And I think the competition out there is probably a little bit stronger for good deposit relationships. For us, I think, we'll be actively managing that and continuing to focus on full relationships. But, I think, it should be similar and has a potential to be maybe just a little bit higher beta this cycle.

Scott Kingsley

Yes. And I'd probably argue that this is probably the right time that if we're going to allow for some inflection in deposit increases as we have $3 billion of variable rate assets that are actually getting a boost with changes in Fed funds rates. So this is actually probably the time to allow a little bit to that to happen and make sure we've got a product suite that our customers -- or that our people and our branches and our people on the commercial team can actually deliver solutions that make sense for the customer. We have resisted that and done a great job with that for the last 9 to 10 to 11 quarters. But given the fact that we're getting a little bit of push and a little bit of benefit of the asset inflection, this might be the right time to consider that.

Operator

And our next question comes from the line of Matthew Breese from Stephens Inc.

Matthew Breese

A few questions from me. Maybe start with Slide 5. Annette, I really appreciate the new origination yields. The footnote states that it's for the third quarter. So I'm curious, how did those origination yields change by the end of the quarter versus for the averages, given some of the rate movement we had? And are you starting to see more deals not pencil out because of higher rates? Are there instances where you or the borrower are starting to walk away?

Annette Burns

So that's a great observation, Matt, especially when you think about residential mortgage and maybe some of our commercial loans. The average for the quarter based -- compared to our new origination yields today, we probably moved up as the yield curve also moved up. So you're probably seeing some additional positive repricing opportunities there. I would say we probably are seeing a little bit of tightening in spreads given just where the overall higher level of rates are. So it's probably not a one-for-one with the movement of the curve. And then your question around...

Scott Kingsley

Yes. In terms of your question around is this slowing volume and demand? Absolutely. Is it profound? Not yet. But there are certainly projects and maybe more of the things that on the real estate side that have strained some of these things that -- and it's not because the project can't handle another 25 basis points. It'd be because when the project was penciled out, maybe rates were actually 75 basis lower than they are today from a standpoint of a similar spot on the curve.

So you're exactly right on that. I think really solid projects because in most of our marketplaces, housing demand is still necessary. And what we haven't seen in our markets is a return back to single-family housing in any significant way. So multifamily housing projects have led the way. And as I'm sort of fond of saying, our people in our markets have to live somewhere. So I still think there's demand. But to your point, the rates are putting that at an outcome that means rents are having to go up. And there probably is a ceiling there.

Matthew Breese

Got it. Okay. And then I was hoping for a little bit more detail. Service charges on deposit accounts this quarter took a really nice step higher. The earnings release talks about maybe some account level fee-based changes. Curious when that was implemented, if there's -- if we might see some continuation in the fourth quarter growth-wise for that line item? Yes, maybe just start there.

Annette Burns

Sure. Most of that was put in place right at the beginning of the quarter. So from a trajectory, you probably would see similar levels in the fourth quarter and moving forward. And it was really a result of some comparison to market and responding to being in line with market rates on those fronts.

Matthew Breese

Got it. Okay. Last one from me, and I asked another Upstate New York Bank this question, but it applies to you as well. We're fielding a lot more questions around risk to deposit bases like yours because of agentic AI and products like Muse more efficiently moving dollars around. Now I'm just curious how you'd respond to that and if you feel like franchise like yours are more or less at risk and why?

Scott Kingsley

Well, let's start with that on 2 fronts, which is as much as there might be additional tools out there that would allow for better optics for the consumer, we have those similar products today. So if a customer has reached a point where their short-term balances have got to a level above their utilization and an emergency base sitting in their checking or small money market account, they can make that change. And truthfully, we have instruments out there in our suite of products that can bring them a more significant yield than they might be enjoying on the base today. So 1, we think we can do some of that stuff.

Number 2, given our granularity, I think there's less of that with our current base. But clearly, we have long term, have had a lower funding cost and probably our peers in Upstate New York have had a similar outcome. So is the difference between an acceptable yield and where we're priced today different than maybe in certain other markets, so that beta might look a little bit larger. But I think we've been through multiple cycles on this, and we've been able to actually be very consistent and sustain those type of movements. But are we focused on the fact that, hey, listen, our customer needs to know that they've got choices inside our products that are on the balance sheet? Absolutely. And we continue to think about the profile and the suite of products to make sure that they're happy with where they are.

Operator

And our next question comes from the line of Jacob Civiello from D.A. Davidson.

Jacob Civiello

I apologize if I missed this, but did you have an exit NIM for the month of September?

Annette Burns

We did not share that. I would say it's not dissimilar from what you saw for the quarter. And just think [ X ], the accretion impact, which is about 3 basis points.

Jacob Civiello

Yes. Okay. Okay. Then is there on -- make sure I get the right page of the deck. So on Page 6 of the deck on deposits, is there any particular reason for the sequential decline in the absolute number of consumer deposit accounts in the quarter?

Scott Kingsley

It's an interesting question. I think as we've looked at across the level of what our product mix is in terms of the types of accounts that we offer, there may have been some selection out of certain of our accounts. And I think as Annette mentioned earlier, we did add some fee structures to some of our accounts and maybe that allowed the customer to consolidate in some of that. And I think those accounts that we -- that probably had the fee changes on were low balance in nature.

Operator

And our next question comes from the line of Daniel Cardenas from Brean Capital.

Daniel Cardenas

So just a quick question on non-performings. I mean levels seem to be normalizing here over the last 3 quarters or so. Just kind of wondering if there's any trends emerging as it relates maybe to specific industries? Or is this kind of just a broad-based type of increase that we're seeing?

Annette Burns

Yes. We had a slight uptick in our nonperforming loans. We were able to kind of resolve some and maybe 1 or 2 came back in on the commercial loan portfolio front. We're not seeing any specific trends, industry regions. It's really more tied to some very borrower-specific events, and we're able to kind of manage through those, and we think we have the right reserve levels against those credits as well.

Daniel Cardenas

Okay. And then maybe thoughts on criticized and classified levels. How are those looking coming out of the third quarter?

Annette Burns

Criticized and classified levels are ticking down a little bit from where we were last quarter and significantly lower from where we were about a year ago. We had a little bit of uptick in criticized and classifieds related to when we onboarded Evans, and we've been very successful in managing through some of those credits and some upgrades, some strategic exits. So we're kind of feeling good about where we are as far as the management of those levels and a little bit down from where they were last quarter.

Daniel Cardenas

Great. And then last question for me is tax rate came in a little bit higher than what I was looking for this quarter. I mean, how should we be thinking about that coming into Q4?

Annette Burns

I think we're kind of in a good spot, especially if you look at where we are from a year-to-date basis, we probably had a little bit of true-up and it's just really around our overall revenue expectations versus taxable income-based expectations. So just really just our overall level of growth and truing it up for the quarter.

Operator

[Operator Instructions] Our next question is a follow-up from the line of Feddie Strickland from Hovde Group.

Feddie Strickland

Just 2 quick follow-ups. One on the expenses. Annette, were you saying that the overall expense number of that $115 million or so is flat linked quarter? Or are you saying we'd see a repeat of the roughly 3% growth in the expense line?

Annette Burns

I think you can expect to see relatively similar levels, so right around that $114 million to $115 million in the fourth quarter that you saw in the third.

Scott Kingsley

Yes. And I think Annette's other comment, Feddie, just for clarification, was that those levels represented a 3% or 3.5% increase over where we were at the same time last year, which is in line with our expectations.

Feddie Strickland

Got it. I just want to ask pace of M&A conversations. Has the rate environment changed those at all from potential partners? Just anything there?

Scott Kingsley

So I don't think the rate environment has changed anything. And you know our approach to M&A, which is it's relationship building. We spend a lot of time in the field with like-minded smaller community banks. And typically, maybe much like the industry in general, the current shape of the yield curve and where demand is, is that most smaller banks feel pretty good about where they are today. And I think they believe that with the yield curve with some shape to it that they're capable of sustaining there.

I think for us, a lot of times, whether it's succession planning, whether it's technology initiatives or just the need for some liquidity in their shareholder base, those tend to be the items that typically drive decision timing for the people that we're probably interested in partnering with. But I would say our conversations are always productive. I think people are really interested in understanding our strategies. And when the time comes where independence might not be for them, we want them to understand the value proposition of partnering with NBT Bank. So that's our general thought generally in the market today.

We believe we have -- whether that's through organic growth characteristics or that's through some M&A, we've got some spots that we can fill in our franchise. Buffalo, New York to Portland, Maine is a long ride. So don't travel behind Joe in the winter months, you're not going to enjoy it. But that being said, there's lots of spots in that franchise for us to fill in. Our concentration in several places could be improved, and we're working on that, and we're working on that with different sites organically and build out of some of our teams. And we're always on the know with who's in the markets that would help us do that a little more quickly.

Operator

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

Thanks, Jonathan, and I appreciate everyone's attendance here. I think we talked about this in our comments, but we want to make sure everybody has the takeaway that we are in a really, really great spot from a capital standpoint. Capital levels at almost 10% from a leverage standpoint, 12.5% for CET1, and north of 14% for risk-based capital gives us so much flexibility. And I think we'll be able to use that flexibility in our markets over the coming years and really for the net benefit of the shareholder. So look forward to future conversations. Thanks, everyone, for participating today. And again, we appreciate your continued interest in NBT. Thanks.

Operator

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