Good day, everyone. Welcome to the NBT Bancorp second quarter 2021 financial results conference call. This call is being recorded and has been made accessible to the public in accordance with the SEC's 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 two, today's presentation may contain forward-looking statements as defined by the Securities and Exchange Commission. Actual results may differ materially 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. At this time, all participants are on a listen-only mode. Later, we will conduct a question and answer session. Instructions will follow at that time. As a reminder, this call is being recorded. I would like to turn the conference over to NBT Bancorp President and CEO, John H. Watt Jr. for his opening remarks. Mr. Watt, please begin. Good morning, and thank you for joining us today for NBT's earnings call covering our second quarter 2021 results. Here with me today are NBT's Chief Financial Officer, Scott Kingsley, our Chief Accounting Officer, Annette Burns, and our Treasurer, Joe Ondesko. I'd like to first welcome Scott as he joins me in hosting the first of what will be many NBT earnings calls. As you all know, he is a proven and successful leader in the small and mid-sized bank space, and based on the reception to our announcement that he is joining our team earlier this month, he needs no further introduction. Many thanks to Annette for serving in the role of Interim Chief Financial Officer. Her consistent leadership and depth of experience will support a seamless transition for Scott. Across the markets we serve, we are seeing building momentum and strengthening local economies. Our team is driving loan growth. Although there is volatility in the churn, the commercial pipeline is strong, with commercial loans growing at an annualized rate of 4%. Several of our consumer pipelines are also strong, including mortgage and solar. We expect to benefit from pent-up demand over the balance of the year. In our wealth business, AUM and AUA ended the quarter at a record level of $9.8 billion, driving higher fee-based revenue. Our capital continues to build with tangible book value up 4% for the quarter and up 10% from the prior year. Our strong capital base allows for optionality to fund dividends, further our organic growth in New England, and to engage in other strategic activities. On the subject of capital allocation, our board of directors voted to approve an increase in the quarterly dividend to $0.28 per share in support of our commitment to enhancing long-term shareholder value. Since our last call, we welcomed Dave Brown, President and CEO of the Capital District YMCA, as our newest director. We look forward to having Dave add his perspective to the discussions at our board table. As we start to put time and distance between the worst of the pandemic and our return to the office, I want to extend thanks to the entire NBT team for their unwavering commitment and many sacrifices throughout the crisis that impacted every aspect of their life. The team has pivoted quickly from supporting our customers and communities through the worst of this period to full-on execution of our strategic growth plans in the second half of 2021. To talk in greater detail about our second quarter financial performance, I will turn the call over to Scott. Following his remarks, we will take your questions. Scott, it's all yours. Thank you, John. I'm feeling great. Happy to be rejoining the fray and very pleased to be part of the team at NBT. Turning to slide four, our second quarter earnings per share were $0.92. These results were driven by favorable credit results and strong fee income. We had a negative provision of $5.2 million. Charge-offs remained very low at 7 basis points. Our reserve coverage decreased slightly to 1.38%, excluding PPP loans, from 1.48% at the end of the first quarter. Outside of credit, we continue to be pleased with our underlying operating performance. Pre-provision net revenue was up 3% as compared to the first quarter of 2021. Slide five shows trends in outstanding loans. On a core basis, excluding PPP, loans were up approximately $61 million for the quarter. As John suggested earlier, commercial activity has steadily improved, and we continue to have good momentum in several of our businesses. Line utilization remains a headwind, but new originations have been fairly brisk. As a reminder, we have additional information on PPP lending on slide 13 in the appendix of today's presentation. Our total PPP balances are currently at $360 million. With forgiveness well underway for the 2020 vintage loans, we have recognized $19.1 million in fees associated with PPP lending, and we have $12.6 million in unamortized fees remaining. We expect the bulk of these to be recognized in the second half of this year. Moving to slide six, deposits were down $31 million for the quarter, as seasonally expected, with our demand deposits up $87 million. Customer balances remain elevated from liquidity associated with various government support programs. Next, on slide seven, you'll see the detailed changes in our net interest income and margin. As we suggested last quarter, net interest income dollars remained consistent as compared to the first quarter. The NIM was down 17 basis points, with compression in asset yields partially offset by lower funding costs. Excess liquidity, net of PPP activity, continued to be a drag on our margin, but we again remind ourselves that low-cost core funding should always be viewed as a long-term value driver. Looking forward, as assets continue to reprice in a low-rate environment, we would expect to continue to see some additional core margin pressure. As such, as we deploy liquidity into more productive earning assets over the next several quarters, we would generally expect continued stability in net interest income results. Slide eight shows trends in non-interest income. Excluding security gains and losses, our fee income was up linked quarter at $39 million. More broadly, non-spread revenue was 33% of our total revenue, which remains a key strength for NBT, and we like each of the non-banking businesses we're in and continue to believe that they are all investable. Retail banking fees were up linked quarter, due mostly to higher card-related activities. Wealth had another strong quarter on new business wins and market appreciation. Insurance services and retirement plan administration fees were consistent and additive to our mix. Turning to the non-interest expense slide, page nine, our total operating expenses were $71 million for the quarter, and we continued to demonstrate effective cost awareness. We did incur $1.9 million, or $0.03 a share, of non-recurring costs in the quarter, including an estimated legal settlement. We'd expect core operating expense to drift modestly upward over the course of the year, especially as our footprint continues to reopen more fully and the operating environment normalizes. On slide 10, we provide an overview of key asset quality metrics. Excluding the impact of PPP, net charge-offs remained lower than historical norms at 7 basis points. Both NPLs and NPAs declined this quarter. We are continuing to benefit from our conservative underwriting and thus far, observed credit metrics have been much better than what would've been suggested by the CECL models this time last year. On slide 11, we provide a walk forward of our reserve. Clearly, the economic outlook continues to improve, but uncertainty remains elevated. Excluding PPP, our allowance to loans ratio was 138 basis points, an appropriately conservative estimate of the credit risk in our portfolio today. We continue to believe that the path of charge-off activity will return to more historical norms, and along with expected balance sheet growth, will likely be the drivers of future provisioning needs. As I wrap up prepared remarks, some closing thoughts. We started 2021 on strong footing, and we are pleased with the fundamental results of the first half of the year. Stable net interest income, good results from our recurring fee income lines, and sustained expense discipline are the clear highlights. Moreover, our credit quality metrics continue to exceed expectations. With that, we're happy to answer any questions you may have at this time. Thank you. Anyone with a question at this time can press star and then one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. One moment for questions. Our first question comes from Alex Twerdahl with Piper Sandler. Your line is open. Hey, good morning, guys. Morning, Alex. Welcome, Scott. First question actually is for John. I think if you backed up a couple of quarters as we kind of stared down Durbin, there would've been maybe some pressure on you guys to kind of do something a little bit more strategic to kind of overcome the Durbin impact or the revenue loss. Kind of as we sit today, certainly the entire industry is going to be facing pressure on 2022, just given all the sort of non-repeatable revenue items from 2021. Does that potential pullback in EPS for 2022 for the industry, does that take pressure off of the need to do something strategic to kind of fill in the Durbin impact, or does it add additional pressure? Thanks for that question, Alex. The long-term strategy here remains the same, and the answer to your question is much the same as I gave at the end of Q1, which is, obviously, we recognize that there is a need to mitigate over a reasonable period of time the loss of Durbin in July 2022, but this company is not going to engage in financial engineering and do a transaction that is not otherwise going to support its strategic growth plans in New England or in its core regions. With that said, I think you asked in the last Q, what was the level of dialogue and conversation around strategic activities. As we exit the worst part of the pandemic, Like many other companies, that level of conversation has risen, and we'll see where it takes us. We're very aware that 2022 is going to have all kinds of pressures that you identified. We run this company for the long term, and we'll get ourselves through 2022, and into a better environment. If we do it with a strategic action between now and July, that's great, but only if it fits our long-term growth plans and is easily integratable and culturally aligned and geographically contiguous from a whole bank perspective. From a line of business, fee-based M&A perspective, sure, we're always looking to add to the platform on the retirement services side, on the wealth side. It's frothy in the insurance world right now. Private equity driving up valuations. If we're able to find an appropriately valued potential partner there, we'll consider allocation of capital to one of those deals as well. As I said in my comments, we have lots of optionality given this capital base, liquidity, low credit challenges. With that optionality, we'll find the right thing to do. Great. Switching over to the reserve. If I remember correctly, your CECL day one reserve was around, I think, 106. Correct me if I'm wrong. You're sitting today at kind of 131. Charge-offs actually have been a lot better over the last couple of quarters than even your historic charge-off run rate. Just kind of curious, if you see that sort of 106 as the endpoint for the reserve, how quickly you get there, or if actually, based on what you're seeing today, the reserve actually should head lower than that. Great question, Alex. I think generally, the consensus is that it starts to go back towards that day one base over time. I don't think we're looking at that as being a sprint. That'll be a measured return back to that, just given some of the uncertainties that still are out there from a market standpoint. Again, from an underlying standpoint, better improved results from a net charge-off standpoint, as well as improvements in each of these economic factors lead you down to that over time. I wouldn't expect you to get back to those in just the next couple of quarters. Okay. Last question for me, the legal settlement reserve that you guys set aside, is that related to your indirect auto business? No. Okay. That's it for me. Thanks for taking my questions. Thank you, Alex. It's good to talk to you, Alex. Thank you. Our next question comes from Matthew Breese with Stephens Inc. Your line is open. Good morning. Hey. Good morning. How are you, Matt? I'm doing great. Glad to hear from you both. Couple questions for me. First, really nice to see continued core loan growth, and certainly feels like there is increased optimism on that front. Can you just give us a sense for where the commercial and consumer loan pipelines kind of stand today? Maybe perhaps some anecdote, either what's working, is it a certain geography or business line, or where are things most active? Happy to do that. First of all, let me talk about the commercial pipeline. In the category of in the process and negotiation approval categories five and six, if you're a Salesforce user. We have about $250 million, which is about 50% higher than where we were last year. When you put on top of that proposals under development and loans that we have bid on, there's another $330 million. That's up 130% from the prior year as well. We see it across the platform. The originations in the last quarter, it was just shy of 30% in New England, and the balance was here in our core regions. We see it in not only CRE, but in C&I. We see a really relatively robust pipeline in our Hartford and Central Connecticut market. That's a function of the great bankers that we're able to recruit to our team. It's a function of all of the disruption that's going on, as we've discussed in the past. We expect more traction out of that effort that we have underway to identify opportunities that are the result of that disruption. We feel pretty good about that. We see churn in the portfolio. Clearly in this rate environment, people are still considering refinancing down. For a good customer, we'll do the right thing and retain, but sometimes we see competitors doing long-term on-balance sheet offers that we're not going to match. Unfortunate, but we see that. We go up against government agencies who offer products and services that would make your head spin in terms of their terms and conditions and tenor and pricing. We let those go as well. With that said, the team is really focused in each one of our regions. We're actively out there going head-to-head, and clearly pricing is the challenge with all of our competitors sitting on excess liquidity like we are. The quality of what we have to offer, the speed to market, the ability to turn around and get to the closing table quickly helps differentiate us against some of the smaller competitors. Obviously, our balance sheet allows us to do more and be more flexible. In those markets we serve, that has also allowed us to be successful. I hope that's responsive. Kind of a high fly over commercial in particular. Mortgage pipeline's still strong. In our specialty lending business, the demand for residential solar is still very strong and growing, so we feel good about that as well. Great. Then you mentioned competitive conditions. Could you give us some insight into what new loan yields are coming on the books today versus what's existing? Then, just as a follow-up, maybe give us some color on the core margin outlook. Obviously, there's a lot of liquidity. The core NII outlook, because it feels like at least in the immediate term, those two items could be on diverging paths. Let me take a shot at that, Matt. See if I can give you enough to kind of work with. In the quarter, new commercial originations were very close to where the portfolio actually sits from a yield standpoint within 10 or 12 basis points, generally speaking. I'm not sure that necessarily is a trend, because as you know, sometimes commercial activity tends to be episodic. Do we feel good about the fact that during the quarter we actually originated the bulk of our originations slightly above the blended yields of the combined CRE and C&I portfolio? We feel okay about that. I don't think that that's necessarily a sign that times are out there where spread widening is underway. We'll probably actually take stability in that line at the current time and think that's pretty good. Indirect auto for the quarter, the originations were in the $335 million range. The blended portfolio is a little bit over 4%. Yes, some compression still happening there. We're not going to chase longer terms. That seems to be what's happening with robust used car valuations. I think we're finding a lot of our dealers are sitting across from customers and terms are into the 70 and 80-month levels. That's not our sweet spot. Quite frankly, if that's the case, quote net of dealer compensation, we're probably not winning on some of those. I think you can turn the volume on in that line of business if you want to back up a little bit relative to net yielded or net yields, which is fine. That's a good asset class from a duration standpoint. We're being judicious on that. You could see growth in that portfolio next quarter, or you might see a retraction again. I think either one could happen. On the resi mortgage side, rates are clearly lower than the blended yield in the portfolio today. Probably more like a 2.90% being portfolioed as opposed to a 3.50%, 3.60% blend in the portfolio. Still think it's the right thing to do given loss characteristics and just general track record relative to success on that core product. From a general standpoint, still compression expected net of that. On the specialty lending side, yields are pretty consistent on a blended mix standpoint. We are very mix dependent relative to that specialty lending side. Are our rates a little bit lower than where the blend is? Yeah, they are in terms of the portfolio mix. I would say on a core basis, if you sort of push the PPP noise out of the way, and heaven forbid you have to push the liquidity noise out of the way a little bit, probably a good time for just a quick reminder. The net liquidity doesn't cost us anything from net interest income generation. It just makes the margin look a little ugly. It's not a net negative. It's an opportunity cost. We're not likely to jump into an extended duration outcome to get $900 million deployed. It's just not practical. It's just not comfortable for us relative to the right asset classes. Are we completely on the sidelines? Probably not completely, but I think we're just trying to be very practical. Treasury folks are really earning their money right now. If you can find good one-year, two-year type blended duration assets and change the Fed funds rate from 10 or 15 basis points into something between 50 and 100, we're probably doing some of that stuff. I would guess sort of a 3-5 basis point type compression risk associated with the third and fourth quarter as we currently sit. I think we're generally pretty bullish that the volume generation possibilities are enough to keep net interest income kind of consistent with where we were in the second quarter. Perfect. I appreciate that. The other one I had was, we are talking a little bit more about Fed hikes at some point here. Could you just remind us what percentage of the book is floating rate and unencumbered by floors? Yes. Let's kind of talk about that, [Breese]. In no particular order, the C&I book is about 50% floating or adjustable. In CRE, about 54% is floating, 24% is adjustable. In what we would call business banking, so small business lending, lower amount of floating, 13%, 45% adjustable. I would kind of look at indirect auto, given how fast that turns and say you get to reprice your cash flows there over about a 36- 40 month period, maybe even a little sooner given sort of the demand today. With the one caveat that dealers are still having a hard time finding used cars. There's no doubt about that. Would I say that people are financing at aggressive terms? I don't know if I would so much as say that. Loans and values on used cars today are clearly above 100% in terms of where loans are being closed. I think in the total portfolio, I kind of look at it this way, Matt, maybe around 40% of the portfolio floats or adjusts with expected cash flows still pretty significant for the institution. In the event you actually get a rate hike, which, as you know, we're in that long line of cheerleaders for that probably, over longer term, I think we would have some opportunity from a repricing. None of our forecasts right now indicate that we're going to get some kind of repricing optionality before 2023. Essentially, if I've been prognosticating in the past, I've probably been wrong more than I've been right. Take that for what it's worth. Perfect. Last one for me is just, can I get an update on where you expect the tax rate to come in? Yeah, I think that's sort of the mid-2022s with a handful of mixed changes. Could it be as low as 2022? Could it be as high as 2023 given sort of the state complement of where we do business? I think you're safe in that range. Perfect. That's all I had. Thank you for taking my questions. Scott, great to hear from you again. Great, Matt, appreciate it. Thanks so much. Again, if you have a question, please press star and then the one key on your touchtone telephone. Our next question comes from Erik Zwick with Boenning & Scattergood. Your line is open. Hi, good morning, everyone. Morning, Erik. Can you hear? Just one question remaining for me today. Within the press release, you talk about the continued expansion in the New England region and the new branch in Connecticut. John, I think in one of your responses to the loan growth question, mentioned some opportunities to maybe capitalize on some disruption in Connecticut as well. Just curious, as you look at the rest of your New England states and markets, where you see opportunities potentially to add branches or new lenders or from that perspective? Great question, Erik. Recognizing the competitive dynamics, I'll stay high level, but acknowledge that we have opportunity in Vermont. We have opportunity in mid and southern New Hampshire. We have opportunity in Western Mass and clearly in central Connecticut. That involves not only the recruitment of high-performing bankers, but also the conversion of customers who, in evaluating what's important to them, determine that affiliating with a several hundred-billion-dollar bank perhaps is not in alignment with how they want to run their business. Clearly, we've identified, in each of those markets, opportunities where that might be the case. We have the balance sheet, we have the technology and treasury management platform to serve 99% of all of those potential prospects. We're driving hard to position ourselves when the time is right over the next and this is a long-term focus here, over the next several years to take advantage of that disruption. We have been successful doing it in the past. In this case, we feel really good about where we are now. All of those states we have a focus. I guess in Southern Coastal Maine as well, add that to the list. There's clearly opportunity there on the fee-based side and on the loan side. We've got that identified, prioritized, and we're executing there as well. Thanks. I appreciate the detail there. That's it for me today. Thanks for taking my question. Hey, good to talk to you. Thanks, Erik. I'm not showing any further questions. I will now turn the call back to John Watt for his closing remarks. Well, thank you. Again, thank you all for participating in today's call, for welcoming Scott to our team. We look forward to catching up to you either one-on-one or in the next quarter. Be well and be safe. Thank you. Thank you, Mr. Watt. This concludes our program. You may disconnect. Have a great day.