NBT chief says strong bench gave him confidence to retire now
John Watt, who has led the $13.3 billion-asset NBT Bancorp in Norwich, New York, as president and CEO since 2016, announced plans Monday to step down in May, though he will continue to serve on the board as vice chairman.
News of Watt's pending retirement comes a little more than 13 months after NBT agreed to acquire the Lakeville, Connecticut-based Salisbury Bancorp in a $204 million, all-stock transaction. That deal, NBT's first since 2013, closed in August.
Watt made it clear Wednesday the decision had nothing to do with burnout.
"I love my job," the 65-year-old Watt said in an interview. "I love getting out of the bed at 5 in the morning, putting my feet on the floor and saying, 'I'm going to work with the team.'" The company has doubled in size under Watt's leadership, from $8.6 billion of assets midway through 2016 to its current $13.3 billion size. The company announced financial results for the fourth quarter and all of 2023 Monday. Full-year earnings totaled $118.8 million, down 21% from 2022. Much of the decline was attributable to the sharp drop in net interest income that has impacted most of the industry.
Ironically, it's one of the things Watt counts among his biggest achievements that moved him to approach the board and suggest they begin succession planning. "Right at the top of the list of things I'm most proud of is the strong bench of highly aligned, highly performing executives and managers and team members at NBT," said Watt, adding that the time had come to give them more responsibility.
"Going back about a year, it was very clear to me we had come out of the pandemic and had a very stable and aligned senior executive management team," Watt said. "It was important to be able to provide opportunities to that team, give them more responsibility and let them take care of more parts of the business."
NBT's board ultimately agreed. Following a 10-month, behind-the-scenes process, it appointed Chief Financial Officer Scott Kingsley to succeed Watt. Chief Accounting Officer Annette Burns will step into the CFO role, while Joseph Stagliano, president of retail banking and chief information officer, will be promoted to president of NBT's bank subsidiary, NBT Bank.
"Investors should view the news as a net positive," Jake Civiello, an analyst for Janney, wrote Monday in a research note. "The orderly, well-communicated transition of leadership should provide confidence that all parties are on the same page."
"Most importantly, we believe Kingsley is a well-respected, great choice for the role with all the tools to succeed," Civiello added.
For Watt, it was important that the board give full consideration to in-house candidates.
"One of the early things we did was share literature with them on success rates of internal versus external promotion into the CEO role," Watt said. "The academic literature is pretty clear. If we're able to achieve an internal succession, the likelihood of success there, of growth and high performance of the company, is much higher. They took that into consideration."
The board and management team opted not to announce Watt's intent to step down in order to keep distraction to a minimum. "We're cognizant that any succession process may slow things down a little bit and cause more chatter around the water cooler than is necessary," Watt said. "We didn't want to put that burden on our employees of having to speculate too long."
With his remaining tenure as CEO now measured in months, ensuring a smooth transition will be his No. 1 goal, according to Watt. "One of my most important responsibilities is to ensure a successful transition and handoff to Scott and Joe and Annette," Watt said. "I want to be as helpful to them as I can possibly be."
Second on the list is continuing to support NBT's efforts to benefit from the economic opportunities offered by Micron Technology's decision to invest as much as $100 billion building a semiconductor manufacturing facility in the Syracuse region. Watt called Micron's plans "transformational."
"It will bring population growth," Watt said. "It will stimulate housing. It will stimulate retail and commercial economies in very, very significant ways. NBT has a footprint that sits right on top of that chip corridor."
Finally, Watt expects to assist Kingsley in implementing the budget and annual strategic plan for 2024.
"If I can do all those things, the next [four months] are going to go in a flash," Watt said.
