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NBT Bancorp Inc. Announces Record Net Income of $112.6 Million and Diluted Earnings per Share of $2.56; Declares Cash Dividend

01/28/19

NORWICH, N.Y., Jan. 28, 2019 (GLOBE NEWSWIRE) -- NBT Bancorp Inc. (“NBT” or the “Company”) (NASDAQ: NBTB) reported record net income and diluted earnings per share for the year ended December 31, 2018.

Net income for the year ended December 31, 2018 was $112.6 million, up 37.0% from $82.2 million for the prior year driven by net interest margin expansion, loan growth, strong asset quality and a reduction in tax expense due to tax reform. Diluted earnings per share for the year ended December 31, 2018 was $2.56, as compared with $1.87 for the prior year, an increase of 37%.

Net income for the three months ended December 31, 2018 was $28.7 million, down 3.9% from $29.8 million for the third quarter of 2018 and up 62.5% from $17.6 million for the fourth quarter of 2017. Diluted earnings per share for the three months ended December 31, 2018 was $0.65, as compared with $0.68 for the prior quarter, a decrease of 4.4%, and $0.40 for the fourth quarter of 2017, an increase of 63%.

Highlights:

  • Diluted earnings per share up 37% from prior year
  • Earnings in excess of $100 million for the first time in the 163 year history of the Company
  • Loan growth for the year ended December 31, 2018 of 4.6%
  • Average demand deposits for the year ended December 31, 2018 up 4.7% over 2017
  • FTE net interest margin of 3.58% for year ended December 31, 2018 up 11 bps from 2017
  • Recognized a one-time $5.5 million tax benefit in the fourth quarter
  • Recorded a $6.6 million loss on securities sold in the fourth quarter related to the restructuring of the investment portfolio
  • Full cycle deposit beta of 6.9% through the quarter ending December 31, 20181

“As our 2018 results demonstrate, NBT had a strong year. We achieved record net income for the sixth consecutive year and a new annual EPS record,” said NBT President and CEO John H. Watt, Jr. “This strong performance was delivered by a focused and aligned team across all lines of business. They concentrate on the fundamentals of our business, including low-cost deposit gathering, loan growth and strong asset quality, while continuing to grow our fee-based business, including the RPS acquisition in the second quarter. At the same time we continued to invest in enhancing the customer experience and digitizing our offerings. As we continue to grow the Company and build shareholder value, we were pleased to increase the cash dividend paid to shareholders on two occasions in 2018 for a combined increase of 13%.”

Net interest income for the year ended 2018 was $305.6 million, up $22.1 million, or 7.8%, from 2017. The fully taxable equivalent (“FTE”) net interest margin of 3.58% for the year ended December 31, 2018, was up from 3.47% for the year ended December 31, 2017 primarily due to asset yields increasing 24 basis points (“bps”), more than offsetting the 20 bp rise in the cost of interest bearing liabilities. Average interest earning assets were up $320.1 million, or 3.9%, for the year ended December 31, 2018, as compared to the same period in 2017, driven by a $406.3 million increase in loans that was partially offset by a $81.4 million decrease in securities. Interest income increased $34.8 million, or 11.3%, due to the increase in earning assets combined with a 24 bp improvement in loan yields. Interest expense was up $12.7 million, or 49.1%, for the year ended December 31, 2018 as compared to the same period in 2017 resulting primarily from a 20 bp increase in rates on interest bearing liabilities driven by higher borrowing costs and a 14 bp increase in the cost of interest bearing deposits, combined with an increase in average interest bearing liabilities of $173.0 million. The Federal Reserve has raised its target fed funds rate nine times from December 2015 through December 2018 for a total of 225 bps. During this same cycle of increasing rates, the Company’s deposit rates have increased by 15 bps, resulting in a full cycle deposit beta of 6.9%.

Net interest income was $78.9 million for the fourth quarter of 2018, up $1.3 million, or 1.7%, from the previous quarter. The FTE net interest margin was 3.61% for the three months ended December 31, 2018, up 4 bps from the previous quarter, as higher rates on average earning assets were partially offset by higher funding costs. Interest income increased $2.3 million, or 2.6%, as the yield on average earning assets increased 9 bps from the prior quarter to 4.14%, combined with an increase in average interest earning assets of $38.7 million, or 0.4%, driven by the increase in average loans of $36.8 million. Interest expense was up $1.0 million, or 9.1%, as the cost of interest bearing liabilities increased 6 bps to 0.77% for the quarter ended December 31, 2018, driven by interest-bearing deposit costs increasing 6 bps with increased short-term borrowings cost.

Net interest income was $78.9 million for the fourth quarter of 2018, up $5.4 million, or 7.4%, from the fourth quarter of 2017. The FTE net interest margin of 3.61% was up 9 bps from the fourth quarter of 2017. Interest income increased $10.3 million, or 12.8%, as the yield on average earning assets increased 30 bps from the same period in 2017, and average interest earning assets increased $338.2 million, or 4.0%, primarily due to the $347.9 million increase in average loans. Interest expense increased $4.9 million, or 71.8%, as the cost of interest bearing liabilities increased 31 bps, driven by interest-bearing deposit costs increasing 23 bps combined with the increase in short-term borrowing costs.

Noninterest income for the year ended December 31, 2018 was $124.8 million, up $3.5 million, or 2.9%, from the same period in 2017. The increase from the prior year was driven by higher retirement plan administration fees and an increase in other noninterest income that was partially offset by net securities losses in 2018. Retirement plan administration fees increased due to the acquisitions of Retirement Plan Services, LLC (“RPS”) in the second quarter of 2018 and of Downeast Pension Services in the second quarter of 2017. In the fourth quarter of 2018, the Company restructured the investment portfolio by selling $109 million lower yielding bonds and reinvesting the proceeds in higher yielding bonds, which resulted in a $6.6 million loss on securities sold. Other noninterest income in 2018 increased compared to the same period of 2017 due to non-recurring gains recognized in 2018. Excluding net securities (losses) gains, noninterest income for the year ended December 31, 2018 would have been $131.1 million, up $11.7 million, or 9.8%, from the same period in 2017.

Noninterest income for the three months ended December 31, 2018 was $25.9 million, down $7.4 million, or 22.3%, from the prior quarter and down $5.5 million, or 17.6%, from the fourth quarter of 2017. Excluding net securities (losses) gains, noninterest income for the three months ended December 31, 2018 would have been $32.9 million, comparable to the prior quarter and up $3.3 million, or 11.0% from the fourth quarter of 2017. The increase from the fourth quarter of 2017 was primarily due to higher retirement plan administration fees resulting from the acquisition of RPS in the second quarter of 2018 and higher other noninterest income due primarily to swap fees.

Noninterest expense for the year ended December 31, 2018 was $264.6 million, up $18.9 million, or 7.7%, from the same period in 2017. The increase from the prior year was driven by higher salaries and employee benefits due to the retirement plan services acquisitions in 2018 and 2017, higher incentive compensation and wage increases for over 60% of our employees from the Company’s commitment to invest a portion of the tax reform benefit in our employees.

Noninterest expense for the three months ended December 31, 2018 was $68.9 million, up $2.4 million, or 3.6%, from the prior quarter and up $5.5 million, or 8.6%, from the fourth quarter of 2017. The increase from the fourth quarter of 2017 was driven by an increase in salaries and employee benefits expenses primarily due to the RPS acquisition, wage increases related to tax reform initiatives and higher incentive compensation associated with business growth. The increase from the prior quarter was primarily due to increases in salaries and employee benefits due to an increase in medical costs, an increase in professional fees and advertising expense due to timing of initiatives and an increase in other noninterest expense. The increase in other noninterest expense was primarily due to the timing of contributions and $0.5 million in non-recurring items.

Income tax expense for the year ended December 31, 2018 was $24.4 million, down $21.6 million, or 46.9%, from the same period of 2017. The effective tax rate of 17.8% in 2018 was down from 35.9% for the same period in the prior year. The decrease in income tax expense from the prior year was due to the lower effective tax rate resulting from the Tax Cuts and Jobs Act (“TCJA”), a $5.5 million tax benefit recorded in the fourth quarter of 2018 primarily related to one-time income tax return accounting method changes during the fourth quarter of 2018, combined with the $4.4 million estimated non-cash charge related to the enactment of the TCJA in 2017 for the Company’s deferred tax assets due to the tax rate reduction. This was partially offset by a higher level of taxable income and lower tax benefit from equity-based transactions. Excluding the tax benefit from equity-based transactions, the tax benefit in the fourth quarter of 2018 and the TCJA charge in 2017, the effective tax rate was 22.2% and 33.8% for the years ending December 31, 2018 and 2017, respectively.

Income tax expense for the three months ended December 31, 2018 was $0.7 million, down $7.8 million, or 91.4%, from the prior quarter and down $15.0 million, or 95.3%, from the fourth quarter of 2017. The effective tax rate of 2.5% for the fourth quarter of 2018 was down from 22.3% for the third quarter of 2018 and down from 47.1% for the fourth quarter of 2017. The decrease in income tax expense from the prior quarter was primarily due to one-time income tax return accounting method changes during the fourth quarter of 2018. The decrease in income tax expense from the fourth quarter of 2017 was due to the lower effective tax rate resulting from the TCJA, and the income tax return accounting method changes during the fourth quarter of 2018, combined with the $4.4 million estimated non-cash charge related to the enactment of the TCJA in 2017 for the revaluation of the Company’s deferred tax assets due to the tax rate reduction. This was partially offset by a higher level of taxable income.

Asset Quality

Net charge-offs of $25.8 million for the year ended December 31, 2018 were down as compared to $26.7 million for the same period of 2017. Provision expense was $28.8 million for the year ended December 31, 2018, as compared with $31.0 million for the same period of 2017. Annualized net charge-offs to average loans for the year ended December 31, 2018 was 0.38% as compared with 0.42% for the same period of 2017.

Net charge-offs of $6.8 million for the three months ended December 31, 2018 were up as compared to $5.7 million for the prior quarter and comparable to the $7.0 million for the fourth quarter of 2017. Provision expense was higher at $6.5 million for the three months ended December 31, 2018, as compared with $6.0 million for the prior quarter and lower compared with $8.2 million for the fourth quarter of 2017. Annualized net charge-offs to average loans for the fourth quarter of 2018 was 0.39%, up from 0.33% for the prior quarter and down from 0.43% for the fourth quarter of 2017.

Nonperforming loans to total loans was 0.44% at December 31, 2018, up 3 bps from 0.41% for the prior quarter and down 3 bps from 0.47% at December 31, 2017. Past due loans as a percentage of total loans were 0.55% at December 31, 2018, up from 0.53% at September 30, 2018 and down from 0.63% at December 31, 2017.

The allowance for loan losses totaled $72.5 million at December 31, 2018, compared to $72.8 million at September 30, 2018 and $69.5 million at December 31, 2017. The allowance for loan losses as a percentage of loans was 1.05% (1.10% excluding acquired loans) at December 31, 2018, compared to 1.06% (1.11% excluding acquired loans) at September 30, 2018 and 1.06% (1.12% excluding acquired loans) at December 31, 2017.

Balance Sheet

Total assets were $9.6 billion at December 31, 2018, up $419.6 million, or 4.6%, from December 31, 2017. Loans were $6.9 billion at December 31, 2018, up $304.1 million, or 4.6%, from December 31, 2017. Total deposits were $7.4 billion at December 31, 2018, up $197.6 million, or 2.8%, from December 31, 2017, reflecting growth in core and municipal deposits. Stockholders’ equity was $1.0 billion, representing a total equity-to-total assets ratio of 10.65% at December 31, 2018, compared with $958.2 million or a total equity-to-total assets ratio of 10.49% at December 31, 2017.

Dividend

The Board of Directors approved a first-quarter 2019 cash dividend of $0.26 per share at a meeting held today. The dividend will be paid on March 15, 2019 to shareholders of record as of March 1, 2019.

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, N.Y., with total assets of $9.6 billion at December 31, 2018. The Company primarily operates through NBT Bank, N.A., a full-service community bank and through two financial services companies. NBT Bank, N.A. has 151 banking locations in New York, Pennsylvania, Vermont, Massachusetts, New Hampshire and Maine. EPIC Retirement Plan Services, based in Rochester, N.Y., is a full-service 401(k) plan recordkeeping firm. NBT Insurance Agency, LLC, based in Norwich, N.Y., is a full-service insurance agency. More information about NBT and its divisions is available online at: www.nbtbancorp.com, www.nbtbank.com, www.epic1st.com and www.nbtinsurance.com.

Forward-Looking Statements

This news release contains forward-looking statements. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of NBT and its subsidiaries and on the information available to management at the time that these statements were made. There are a number of factors, many of which are beyond NBT’s control, which could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others: (1) competitive pressures among depository and other financial institutions may increase significantly, including as a result of competitors having greater financial resources than NBT; (2) revenues may be lower than expected; (3) changes in the interest rate environment may reduce interest margins; (4) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit; (5) legislative or regulatory changes, including changes in accounting standards and tax laws, may adversely affect business and results; (6) NBT’s ability to successfully integrate acquired businesses and employees; and (7) adverse changes may occur in the securities markets or with respect to inflation. Forward-looking statements speak only as of the date they are made. Except as required by law, NBT does not update forward-looking statements to reflect subsequent circumstances or events.

Non-GAAP Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These measures adjust GAAP measures to exclude the effects of acquisition related intangible amortization expense on earnings and equity as well as providing a FTE yield on securities and loans. Where non-GAAP disclosures are used in this press release, a reconciliation to the comparable GAAP measure, is provided in the accompanying tables. Management believes that these non-GAAP measures provide useful information that is important to an understanding of the results of NBT’s core business as well as provide information standard in the financial institution industry. Non-GAAP measures should not be considered a substitute for financial measures determined in accordance with GAAP and investors should consider NBT’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of NBT.

1 The change in the Company’s quarterly deposit costs from December 31, 2015 to December 31, 2018 of 0.15% divided by the change in Federal Reserve’s target fed funds rate from December 2015 to December 2018 of 2.25%

Contact:
John H. Watt, Jr., President and CEO
Michael J. Chewens, CFO
NBT Bancorp Inc.
52 South Broad Street
Norwich, NY 13815
607-337-6119

NBT Bancorp Inc. and Subsidiaries  
Selected Financial Data  
(unaudited, dollars in thousands except per share data)  
             
    2018     2017    
Profitability: 4th Q 3rd Q 2nd Q 1st Q 4th Q  
Diluted earnings per share $   0.65   $   0.68   $   0.64   $   0.59   $   0.40    
Weighted average diluted common shares outstanding   44,059,796     44,050,557     44,016,940     43,975,248     43,957,571    
Return on average assets (1)   1.20%     1.25%     1.21%     1.15%     0.77%    
Return on average equity (1)   11.34%     11.96%     11.64%     10.99%     7.27%    
Return on average tangible common equity (1)(3)   16.37%     17.42%     17.08%     15.95%     10.65%    
Net interest margin (1)(2)   3.61%     3.57%     3.57%     3.57%     3.52%    
             
  12 Months ended December 31,        
Profitability:   2018     2017          
Diluted earnings per share $   2.56   $   1.87          
Weighted average diluted common shares outstanding   44,019,698     43,904,520          
Return on average assets   1.20%     0.91%          
Return on average equity   11.49%     8.71%          
Return on average tangible common equity (4)   16.71%     12.82%          
Net interest margin (2)   3.58%     3.47%          
             
(1) Annualized.  
(2) Calculated on a FTE basis.  
(3) Non-GAAP measure - excludes amortization of intangible assets (net of tax) from net income and average tangible common equity is calculated as follows:  
                                 
             
    2018     2017    
  4th Q 3rd Q 2nd Q 1st Q 4th Q  
Net income $   28,652   $   29,807   $   28,121   $   25,986   $   17,637    
Amortization of intangible assets (net of tax)     734       791       822       686       594    
Net income, excluding intangibles amortization $   29,386   $   30,598   $   28,943   $   26,672   $   18,231    
             
Average stockholders' equity $   1,002,822   $   988,551   $   969,029   $   959,044   $   962,660    
Less: average goodwill and other intangibles     290,854       291,814       289,250       281,027       283,554    
Average tangible common equity $   711,968   $   696,737   $   679,779   $   678,017   $   679,106    
             
(4) Non-GAAP measure - excludes amortization of intangible assets (net of tax) from net income and average tangible common equity is calculated as follows:  
                                 
             
  12 Months ended December 31,        
    2018     2017          
Net income $   112,566   $   82,151          
Amortization of intangible assets (net of tax)     3,032       2,446          
Net income, excluding intangibles amortization $   115,598   $   84,597          
             
Average stockholders' equity $   980,005   $   943,676          
Less: average goodwill and other intangibles     288,273       283,573          
Average tangible common equity $   691,732   $   660,103          
             
Note: Year-to-date EPS may not equal sum of quarters due to differences in outstanding shares.  


NBT Bancorp Inc. and Subsidiaries
Selected Financial Data
(unaudited, dollars in thousands except per share data)
           
    2018     2017  
  4th Q 3rd Q 2nd Q 1st Q 4th Q
Balance sheet data:          
Securities available for sale $   998,496   $  1,101,074   $  1,192,939   $  1,265,912   $  1,255,925  
Securities held to maturity     783,599       659,949       544,163       487,126       484,073  
Net loans     6,815,204       6,814,457       6,785,721       6,575,522       6,514,139  
Total assets     9,556,363       9,547,284       9,467,138       9,230,834       9,136,812  
Total deposits     7,368,211       7,441,290       7,344,449       7,393,928       7,170,636  
Total borrowings     1,046,616       986,656       1,028,971       776,032       909,188  
Total liabilities     8,538,454       8,553,129       8,488,209       8,278,104       8,178,635  
Stockholders' equity     1,017,909       994,155       978,929       952,730       958,177  
           
Asset quality:          
Nonaccrual loans $   25,487   $   23,301   $   24,006   $   25,426   $   25,708  
90 days past due and still accruing     5,085       4,734       2,209       2,934       5,410  
Total nonperforming loans     30,572       28,035       26,215       28,360       31,118  
Other real estate owned     2,441       3,271       4,349       4,949       4,529  
Total nonperforming assets     33,013       31,306       30,564       33,309       35,647  
Allowance for loan losses     72,505       72,805       72,450       70,200       69,500  
           
Asset quality ratios (total):          
Allowance for loan losses to total loans   1.05%     1.06%     1.06%     1.06%     1.06%  
Total nonperforming loans to total loans   0.44%     0.41%     0.38%     0.43%     0.47%  
Total nonperforming assets to total assets   0.35%     0.33%     0.32%     0.36%     0.39%  
Allowance for loan losses to total nonperforming loans   237.16%     259.69%     276.37%     247.53%     223.34%  
Past due loans to total loans   0.55%     0.53%     0.50%     0.53%     0.63%  
Net charge-offs to average loans (1)   0.39%     0.33%     0.39%     0.42%     0.43%  
           
Asset quality ratios (originated) (2):          
Allowance for loan losses to loans   1.10%     1.11%     1.11%     1.12%     1.12%  
Nonperforming loans to loans   0.43%     0.39%     0.36%     0.41%     0.46%  
Allowance for loan losses to nonperforming loans   254.92%     285.86%     306.08%     273.54%     243.85%  
Past due loans to loans   0.56%     0.53%     0.50%     0.53%     0.65%  
           
Capital:          
Equity to assets   10.65%     10.41%     10.34%     10.32%     10.49%  
Book value per share $   23.31   $   22.77   $   22.43   $   21.84   $   22.01  
Tangible book value per share (3) $   16.66   $   16.10   $   15.73   $   15.41   $   15.54  
Tier 1 leverage ratio   9.52%     9.36%     9.25%     9.26%     9.14%  
Common equity tier 1 capital ratio   10.49%     10.28%     10.04%     10.12%     10.06%  
Tier 1 capital ratio   11.79%     11.58%     11.35%     11.48%     11.42%  
Total risk-based capital ratio   12.78%     12.58%     12.34%     12.47%     12.42%  
Common stock price (end of period) $   34.59   $   38.38   $   38.15   $   35.48   $   36.80  
           
(1)  Annualized.
(2)  Non-GAAP measure - Excludes acquired loans.
(3)  Non-GAAP measure - Stockholders' equity less goodwill and intangible assets divided by common shares outstanding.


NBT Bancorp Inc. and Subsidiaries  
Consolidated Balance Sheets  
(unaudited, dollars in thousands)  
       
  December 31, December 31,  
Assets:   2018   2017  
Cash and due from banks $   175,550 $   156,852  
Short-term interest bearing accounts     5,405     2,812  
Equity securities, at fair value (1)     23,053     -   
Securities available for sale, at fair value (1)     998,496     1,255,925  
Securities held to maturity (fair value $778,675 and $481,871)     783,599     484,073  
Trading securities (1)     -      11,467  
Federal Reserve Bank and Federal Home Loan Bank stock     53,229     46,706  
Loans held for sale     6,943     1,134  
Loans     6,887,709     6,583,639  
Less allowance for loan losses     72,505     69,500  
Net loans $   6,815,204 $   6,514,139  
Premises and equipment, net     78,970     81,305  
Goodwill     274,769     268,043  
Intangible assets, net     15,599     13,420  
Bank owned life insurance     177,479     172,388  
Other assets     148,067     128,548  
Total assets $   9,556,363 $   9,136,812  
       
Liabilities and stockholders' equity:      
Demand (noninterest bearing) $   2,361,099 $   2,286,892  
Savings, NOW and money market     4,076,434     4,076,978  
Time     930,678     806,766  
Total deposits $   7,368,211 $   7,170,636  
Short-term borrowings     871,696     719,123  
Long-term debt     73,724     88,869  
Junior subordinated debt     101,196     101,196  
Other liabilities     123,627     98,811  
Total liabilities $   8,538,454 $   8,178,635  
       
Total stockholders' equity $   1,017,909 $   958,177  
       
Total liabilities and stockholders' equity $   9,556,363 $   9,136,812  
       
(1) Available for sale and trading equity securities amounts reclassified from securities available for sale and trading securities to equity securities for the current period, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.  


NBT Bancorp Inc. and Subsidiaries  
Consolidated Statements of Income  
(unaudited, dollars in thousands except per share data)  
           
  Three Months Ended Twelve Months Ended  
  December 31, December 31,  
    2018     2017   2018     2017  
Interest, fee and dividend income:          
Interest and fees on loans $ 78,963   $ 69,697 $ 300,827   $ 267,096  
Securities available for sale (1)   6,332     7,059   26,920     28,564  
Securities held to maturity   4,344     2,671   13,242     10,934  
Other   885     803   3,266     2,813  
Total interest, fee and dividend income $ 90,524   $ 80,230 $ 344,255   $ 309,407  
Interest expense:          
Deposits $ 6,977   $ 3,817 $ 22,144   $ 14,475  
Short-term borrowings   3,131     1,621   10,552     5,996  
Long-term debt   431     505   1,790     2,299  
Junior subordinated debt   1,110     836   4,140     3,144  
Total interest expense $ 11,649   $ 6,779 $ 38,626   $ 25,914  
Net interest income $ 78,875   $ 73,451 $ 305,629   $ 283,493  
Provision for loan losses   6,528     8,153   28,828     30,988  
Net interest income after provision for loan losses $ 72,347   $ 65,298 $ 276,801   $ 252,505  
Noninterest income:          
Insurance and other financial services revenue $ 5,843   $ 5,605 $ 24,345   $ 23,532  
Service charges on deposit accounts   4,503     4,351   17,224     16,750  
ATM and debit card fees   5,704     5,347   22,699     21,372  
Retirement plan administration fees   7,113     5,332   26,992     20,213  
Trust   4,573     4,966   19,524     19,586  
Bank owned life insurance income   1,239     1,262   5,091     5,175  
Net securities (losses) gains   (6,916 )   1,869   (6,341 )   1,867  
Other (1)   3,887     2,740   15,228     12,809  
Total noninterest income $ 25,946   $ 31,472 $ 124,762   $ 121,304  
Noninterest expense:          
Salaries and employee benefits (2) $ 38,998   $ 33,812 $ 151,685   $ 135,222  
Occupancy   5,284     5,280   22,318     21,808  
Data processing and communications   4,431     4,242   17,652     17,068  
Professional fees and outside services   3,968     3,751   14,376     13,499  
Equipment   4,529     4,001   17,037     15,225  
Office supplies and postage   1,564     1,604   6,204     6,284  
FDIC expense   1,135     1,196   4,651     4,767  
Advertising   1,006     1,033   2,782     2,744  
Amortization of intangible assets   978     961   4,042     3,960  
Loan collection and other real estate owned, net   738     1,136   4,217     4,763  
Other (2)   6,273     6,428   19,597     20,308  
Total noninterest expense $ 68,904   $ 63,444 $ 264,561   $ 245,648  
Income before income tax expense $ 29,389   $ 33,326 $ 137,002   $ 128,161  
Income tax expense   737     15,689   24,436     46,010  
Net income $ 28,652   $ 17,637 $ 112,566   $ 82,151  
Earnings Per Share:          
Basic $ 0.66   $ 0.40 $ 2.58   $ 1.89  
Diluted $ 0.65   $ 0.40 $ 2.56   $ 1.87  
           
Note: Year-to-date EPS may not equal sum of quarters due to differences in outstanding shares.      
           
(1) Income on available for sale and trading equity securities amounts reclassified from interest, fee and dividend income on securities available for sale to other noninterest income for the current periods, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.  
(2) Amounts reclassified for the prior periods from salaries and employee benefits to other expenses related to the adoption of Accounting Standard Update No. 2017-07, Compensation – Retirement Benefits (Topic 715), in the first quarter of 2018.  
                       


NBT Bancorp Inc. and Subsidiaries   
Quarterly Consolidated Statements of Income   
(unaudited, dollars in thousands except per share data)  
           
    2018   2017  
  4th Q 3rd Q 2nd Q 1st Q 4th Q  
Interest, fee and dividend income:            
Interest and fees on loans $ 78,963   $   77,249 $   74,172 $   70,443 $   69,697  
Securities available for sale (1)   6,332       6,659     7,003     6,926   7,059  
Securities held to maturity   4,344       3,462     2,811     2,625   2,671  
Other   885       834     781     766   803  
Total interest, fee and dividend income $ 90,524   $   88,204 $   84,767 $   80,760 $   80,230  
Interest expense:            
Deposits $ 6,977   $   6,157 $   5,079 $   3,931 $   3,817  
Short-term borrowings   3,131       3,000     2,455     1,966   1,621  
Long-term debt   431       431     452     476   505  
Junior subordinated debt   1,110       1,089     1,040     901   836  
Total interest expense $ 11,649   $   10,677 $   9,026 $   7,274 $   6,779  
Net interest income $ 78,875   $   77,527 $   75,741 $   73,486 $   73,451  
Provision for loan losses   6,528       6,026     8,778     7,496   8,153  
Net interest income after provision for loan losses $ 72,347   $   71,501 $   66,963 $   65,990 $   65,298  
Noninterest income:            
Insurance and other financial services revenue $ 5,843   $   6,172 $   5,826 $   6,504 $   5,605  
Service charges on deposit accounts   4,503       4,503     4,246     3,972   4,351  
ATM and debit card fees   5,704       5,906     5,816     5,273   5,347  
Retirement plan administration fees   7,113       7,244     7,296     5,339   5,332  
Trust   4,573       4,808     5,265     4,878   4,966  
Bank owned life insurance income   1,239       1,288     1,217     1,347   1,262  
Net securities (losses) gains   (6,916 )     412     91     72     1,869  
Other (1)   3,887       3,048     4,401     3,892   2,740  
Total noninterest income $ 25,946   $   33,381 $   34,158 $   31,277 $   31,472  
Noninterest expense:            
Salaries and employee benefits (2) $ 38,998   $   38,394 $   37,726 $   36,567 $   33,812  
Occupancy   5,284       5,380     5,535     6,119   5,280  
Data processing and communications   4,431       4,434     4,508     4,279   4,242  
Professional fees and outside services   3,968       3,580     3,336     3,492   3,751  
Equipment   4,529       4,319     4,151     4,038   4,001  
Office supplies and postage   1,564       1,563     1,504     1,573   1,604  
FDIC expense   1,135       1,223     1,092     1,201   1,196  
Advertising   1,006       739     700     337   1,033  
Amortization of intangible assets   978       1,054     1,096     914   961  
Loan collection and other real estate owned, net   738       1,234     908     1,337   1,136  
Other (2)   6,273       4,577     4,332     4,415   6,428  
Total noninterest expense $ 68,904   $   66,497 $   64,888 $   64,272 $   63,444  
Income before income tax expense $ 29,389   $   38,385 $   36,233 $   32,995 $   33,326  
Income tax expense   737       8,578     8,112     7,009   15,689  
Net income $ 28,652   $   29,807 $   28,121 $   25,986 $   17,637  
Earnings Per Share:            
Basic $ 0.66   $   0.68 $   0.64 $   0.60 $   0.40  
Diluted $ 0.65   $   0.68 $   0.64 $   0.59 $   0.40  
             
(1) Income on available for sale and trading equity securities amounts reclassified from interest, fee and dividend income on securities available for sale to other noninterest income for the current periods, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.  
(2) Amounts reclassified for the prior periods from salaries and employee benefits to other expenses related to the adoption of Accounting Standard Update No. 2017-07, Compensation – Retirement Benefits (Topic 715), in the first quarter of 2018.  
                         


 

NBT Bancorp Inc. and Subsidiaries  
Average Quarterly Balance Sheets  
(unaudited, dollars in thousands)  
                       
  Average
Balance
Yield /
Rates
Average
Balance
Yield /
Rates
Average
Balance
Yield /
Rates
Average
Balance
Yield /
Rates
Average
Balance
Yield /
Rates
 
Three Months ended, Q4 - 2018 Q3 - 2018 Q2 - 2018 Q1 - 2018 Q4 - 2017  
Assets:                      
Short-term interest bearing accounts $   3,780 5.25 % $ 3,328 6.08 % $ 3,574 5.16 % $ 2,818 5.18 % $ 5,804 2.39 %  
Securities available for sale (1)(3)     1,104,198 2.29 %   1,197,910 2.22 %   1,266,304 2.23 %   1,273,634 2.22 %   1,313,870 2.16 %  
Securities held to maturity (1)     688,840 2.73 %   591,220 2.58 %   503,501 2.50 %   482,375 2.48 %   490,182 2.68 %  
Investment in FRB and FHLB Banks     47,689 6.95 %   50,107 6.20 %   48,184 6.12 %   46,844 6.32 %   44,320 6.87 %  
Loans (2)     6,876,341 4.56 %   6,839,565 4.49 %   6,750,710 4.41 %   6,592,447 4.34 %   6,528,449 4.25 %  
Total interest earning assets $   8,720,848 4.14 % $ 8,682,130 4.05 % $ 8,572,273 3.99 % $ 8,398,118 3.92 % $ 8,382,625 3.84 %  
Other assets (3)     769,302     776,219     766,604     746,172     747,468    
Total assets $   9,490,150   $ 9,458,349   $ 9,338,877   $ 9,144,290   $ 9,130,093    
                       
Liabilities and stockholders' equity:                      
Money market deposit accounts $   1,745,980 0.65 % $ 1,724,853 0.58 % $ 1,699,956 0.43 % $ 1,655,308 0.27 % $ 1,725,242 0.25 %  
NOW deposit accounts     1,166,383 0.18 %   1,164,513 0.17 %   1,222,889 0.16 %   1,211,029 0.13 %   1,200,651 0.12 %  
Savings deposits     1,250,703 0.06 %   1,279,520 0.06 %   1,289,062 0.06 %   1,248,432 0.06 %   1,215,932 0.06 %  
Time deposits     921,252 1.47 %   881,792 1.33 %   858,080 1.22 %   802,959 1.13 %   792,969 1.10 %  
Total interest bearing deposits $   5,084,318 0.54 % $ 5,050,678 0.48 % $ 5,069,987 0.40 % $ 4,917,728 0.32 % $ 4,934,794 0.31 %  
Short-term borrowings     724,693 1.71 %   766,372 1.55 %   706,694 1.39 %   712,220 1.12 %   684,447 0.94 %  
Long-term debt     73,735 2.32 %   73,762 2.32 %   84,676 2.14 %   88,844 2.17 %   81,010 2.47 %  
Junior subordinated debt     101,196 4.35 %   101,196 4.27 %   101,196 4.12 %   101,196 3.61 %   101,196 3.28 %  
Total interest bearing liabilities $   5,983,942 0.77 % $ 5,992,008 0.71 % $ 5,962,553 0.61 % $ 5,819,988 0.51 % $ 5,801,447 0.46 %  
Demand deposits     2,373,235     2,356,216     2,294,023     2,259,955     2,266,672    
Other liabilities     130,151     121,574     113,272     105,303     99,314    
Stockholders' equity     1,002,822     988,551     969,029     959,044     962,660    
Total liabilities and stockholders' equity $   9,490,150   $ 9,458,349   $ 9,338,877   $ 9,144,290   $ 9,130,093    
                       
Interest rate spread   3.37 %   3.34 %   3.38 %   3.41 %   3.38 %  
Net interest margin (FTE)   3.61 %   3.57 %   3.57 %   3.57 %   3.52 %  
                       
(1) Securities are shown at average amortized cost.  
(2) For purposes of these computations, nonaccrual loans and loans held for sale are included in the average loan balances outstanding.  
(3) For purposes of the average balance sheet presentation, equity securities amounts reclassified for the current periods from securities available for sale to other assets, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.  
                       
Note: Interest income for tax-exempt securities and loans has been adjusted to a FTE basis using the statutory Federal income tax rate of 21% for 2018 and 35% for 2017.  
                                           


NBT Bancorp Inc. and Subsidiaries  
Average Year-to-Date Balance Sheets  
(unaudited, dollars in thousands)  
               
  Average   Yield/ Average   Yield/  
  Balance Interest Rates Balance Interest Rates  
Twelve Months ended December 31,   2018     2017    
Assets:              
Short-term interest bearing accounts $   3,377 $   183 5.42 % $ 9,636 $ 179 1.86 %  
Securities available for sale (1)(3)     1,210,013     27,081 2.24 %   1,350,995   28,969 2.14 %  
Securities held to maturity (1)     567,117     14,657 2.58 %   507,583   13,490 2.66 %  
Investment in FRB and FHLB Banks     48,214     3,083 6.39 %   46,673   2,634 5.64 %  
Loans (2)     6,765,748     301,258 4.45 %   6,359,447   267,934 4.21 %  
Total interest earning assets $   8,594,469 $   346,262 4.03 % $ 8,274,334 $ 313,206 3.79 %  
Other assets (3)     764,670       752,258      
Total assets $   9,359,139     $ 9,026,592      
               
Liabilities and stockholders' equity:              
Money market deposit accounts $   1,706,823 $   8,314 0.49 % $ 1,697,386 $ 3,864 0.23 %  
NOW deposit accounts     1,191,008     1,894 0.16 %   1,153,361   1,051 0.09 %  
Savings deposits     1,266,970     725 0.06 %   1,214,480   683 0.06 %  
Time deposits     866,388     11,211 1.29 %   817,370   8,877 1.09 %  
Total interest bearing deposits $   5,031,189 $   22,144 0.44 % $ 4,882,597 $ 14,475 0.30 %  
Short-term borrowings     727,635     10,552 1.45 %   690,036   5,996 0.87 %  
Long-term debt     80,195     1,790 2.23 %   93,389   2,299 2.46 %  
Junior subordinated debt     101,196     4,140 4.09 %   101,196   3,144 3.11 %  
Total interest bearing liabilities $   5,940,215 $   38,626 0.65 % $ 5,767,218 $ 25,914 0.45 %  
Demand deposits     2,321,264       2,217,785      
Other liabilities     117,655       97,913      
Stockholders' equity     980,005       943,676      
Total liabilities and stockholders' equity $   9,359,139     $ 9,026,592      
Net interest income (FTE)   $   307,636     $ 287,292    
Interest rate spread     3.38 %     3.34 %  
Net interest margin (FTE)     3.58 %     3.47 %  
Taxable equivalent adjustment   $   2,007     $ 3,799    
Net interest income   $   305,629     $ 283,493    
               
(1) Securities are shown at average amortized cost.  
(2) For purposes of these computations, nonaccrual loans and loans held for sale are included in the average loan balances outstanding.  
(3) For purposes of the average balance sheet presentation, equity securities amounts reclassified for the current period from securities available for sale to other assets, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.  
   
Note: Interest income for tax-exempt securities and loans has been adjusted to a FTE basis using the statutory Federal income tax rate of 21% for 2018 and 35% for 2017.  


NBT Bancorp Inc. and Subsidiaries
Consolidated Loan Balances
(unaudited, dollars in thousands)
           
    2018   2017
  4th Q 3rd Q 2nd Q 1st Q 4th Q
Commercial $   1,291,568 $ 1,310,262 $ 1,299,437 $ 1,252,729 $ 1,258,212
Commercial real estate     1,930,742   1,902,315   1,891,119   1,795,101   1,769,620
Residential real estate mortgages     1,380,836   1,373,487   1,350,336   1,331,587   1,320,370
Dealer finance     1,216,144   1,229,700   1,252,843   1,238,051   1,227,870
Specialty lending     524,928   521,396   507,151   469,268   438,866
Home equity     474,566   480,761   488,493   491,807   498,179
Other consumer     68,925   69,341   68,792   67,179   70,522
Total loans $   6,887,709 $ 6,887,262 $ 6,858,171 $ 6,645,722 $ 6,583,639
             


Source: NBT Bancorp Inc.

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