Matthew Breese: I appreciate all the color there. And then on the provision, you had mentioned that going forward, maybe we could expect a kind of more normalized provision. Certainly, there are some moving parts this quarter. How would you frame that 15 to 20 bps of loans? Is that a reasonable starting point? Or said another way, do you feel like the current reserve is probably a good place to keep it for the near term?
Scott Kingsley: Yes. I think unless you get a meaningful change in some of the economic expectations, where we are currently from a coverage ratio on our current mix is probably a fair starting point. I think for us, and I’m sure we’ll budget this way, will budget that net charge-offs, again, start to maybe look a little bit more like pre-pandemic levels, but maybe not all the way back to 2019 net charge-off levels. We always think that provision-wise, we cover those, and then we cover whatever incremental loan growth we experienced in the quarter at that blended coverage ratio. In the third quarter, we had some things that actually were net positive for us that didn’t force us into quite that outcome, but maybe $0.01 or $0.02 from that outcome. It wasn’t like it was $0.08 or $0.09 of that outcome. It was a couple of cents.
Matthew Breese: Okay. And then, John, I had a few questions just based on recent events and then the upstate New York activity. It feels like every quarter, you’re now announcing another contract, another company. This quarter, you’re talking about New York creates the Albany complex being granted at the center for workforce training. First of all, what is the significance of that? Secondly, do you expect to see the region as a whole becoming more of a point of gravity much like Silicon Valley was for companies similar to Micron, similar to GlobalFoundries to go to Upstate New York? Is this going to be a slow moving or growing snowball effect as more and more companies enter the area and could you remind everybody what’s already existing up there?
John Watt: So I appreciate the opportunity to have that discussion. You know how important we believe it is at NBT for the economic transformation of our core markets in Upstate New York that on and GlobalFoundries and Wolfspeed and now Micron for $100 million in Central New York, which are the chip corridor Lower Hudson Valley to Central New York are going to drive a transformation of our economy unlike one we have seen in many, many years in upstate New York. So it has been below the radar. We believe at NBT that one of the things we can be doing is to raise visibility around it, thus this discussion. Am I going to go as far and say that Ana Daga County and Central New York is going to be the new Silicon Valley No, I’m not going to say that.
But what I am going to suggest is we’re going to use words like population growth, like job growth, like the increase in average salary and increase in the retention of students who graduate from all of the colleges and universities in Upstate New York because the job opportunities are going to be plentiful. And that’s the momentum that we have here, the application filed by Micron to the Commerce Department in July, for the allocation of the CHIPS Act is likely to be acted on by year-end. It has the support politically from Senator Schumer and there is a lot of optimism inside of Micron. We’re aware of this that it will happen. There’s a lot of work going on, on the planning and preliminary site work side for Micron in Clay New York. So the momentum there is positive.
Every quarter, you’re absolutely right. There is a global semiconductor company or supplier or related research company who is being drawn into this corridor and into this market to support Micron, Wolfspeed, GlobalFoundries on semi and other semiconductor initiatives in upstate New York. And that I like your word snowball in upstate New York in this season, good analogy. That is likely to be a snowball that continues to roll down hill and grow. And again, the NBT footprint sits directly on top of that and we have insight into what’s going on in each one of those regions, and we would expect in our retail businesses, in our commercial lending business, in our wealth business, insurance business that there is big opportunity. It has been demonstrated already in Central New York with the growth of — I’m sorry, in the Capital District with the growth of GlobalFoundries over the last 12 years.
Population growth in Greater Saratoga, an increase in business activity, we have many customers who support that industry who are enjoying additional contract bookings and I would expect more for many years as the expansion continues. So I’ll stop there. But I hope that you have a flavor of why we believe it’s a key organic growth strategy for the long run and will transform the economy and drive significant growth at NBT.
Matthew Breese: Well, I appreciate all that color. Just moving on to a different topic. More recently, we’ve seen a bank strategy of parting ways with fee income businesses, insurance companies to be specific. I think I know the answer to this, but I just wanted to hear two cents on this strategy and whether or not we might see you follow suit or continue a path of building these lines of businesses?
Scott Kingsley: Yes. Matt, you and I have had this discussion. So we’re about organically growing these businesses and to the extent that we get opportunistic periods of time where we can bolt on small revenue generation activities or small other firms in that same space. that’s still our bias for sure. It’s difficult to sell stuff. You end up unwinding stuff that you’ve worked on for several years relative to cross-selling opportunities. I’ll admit that the last couple that have been announced for these really large agencies, revenues in the $100 million level it’s hard not to look at those multiple levels and say, I understand why those institutions potentially talked about that. I think for us to kind of think about this strategy, if we can continue to organically grow the businesses that we’re in, we think we can create productive and profitable scale going forward.
The beauty for us today is all — we have scale in each of those businesses today. So it’s just incumbent upon us to find the right folks and the right opportunities from a product standpoint to continue to organically grow because we really, really like the cash flow that comes off those businesses, and they’re huge obviously generating capital for the rest of the institution. So our bias today is continue to improve and grow. And our businesses are a touch smaller than those big headline deals you’ve seen announced lately. I’m not so sure the Arthur Gallagher’s of the world and people on their side are interested in what we have.
Matthew Breese: I appreciate that. And then just a follow-up. From my seat, I just kind of events happen, the knee-jerk reaction is obviously, one, to look horizontally and figure out who else has these businesses, doing some of the parts analysis. Frankly, from my years in the seat, you very rarely actually get a multiple on a fee income business with any sort of press release. So for the first time, we have an insurance multiple, it feels like. What we don’t have are multiples necessarily on wealth management or in your case, the retirement plan admit business. I’m not asking for a specific multiple on a recent field, but can you give us a flavor for what those types of businesses, wealth and retirement plan admin. What type of multiple those go for in today’s market or in a normal market?
Scott Kingsley: Yes. Well, I’m going to — I’ll give you maybe some historical perspective on this as well. But I think that typically, those businesses that have recurring cash flows and they are in more in the processing space, have demanded multiples of revenue that have been two, two and a half or three times depending on their size because, again, they’re repetitive transactions. I’ve always thought that there was from the private equity side or the hedge fund side that there was a fascination with the firms who accumulate assets, because I think there was always this sense that you could be involved in the management or the administrative activities of just those assets. I think what we find in our businesses is we’re good at processing and we’re fine with that.
