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NBT Bancorp Inc. Announces Second Quarter Net Income of $24.7 Million, or $0.56 Per Diluted Common Share

07/27/20

NORWICH, N.Y., July 27, 2020 (GLOBE NEWSWIRE) -- NBT Bancorp Inc. (“NBT” or the “Company”) (NASDAQ: NBTB) reported net income and diluted earnings per share for both the three and six months ended June 30, 2020.

Net income for the three months ended June 30, 2020 was $24.7 million, or $0.56 per diluted common share. Net income was up $14.3 million from the previous quarter primarily due to lower loan loss provision and lower noninterest expense and down $5.8 million from the second quarter of 2019 primarily due to higher provision for loan losses related to the deterioration of economic conditions caused by the COVID-19 pandemic. Excluding real estate repositioning charges of $0.7 million, net income and earnings per diluted share were $25.2 million and $0.57, respectively.

Pre-provision net revenue (“PPNR”)1 for the second quarter of 2020 was $50.7 million compared to $44.9 million in the previous quarter and $47.2 million in the second quarter of 2019 reflecting higher net interest income and lower noninterest expense than the previous quarter.

CEO Comments

“NBT was able to grow pre-provision net revenue. Asset quality remained stable during this extraordinary quarter despite the significant challenges presented by the pandemic. Our team has demonstrated an unwavering commitment to provide superior service to our customers and participate in initiatives to support our communities during these difficult times,” said NBT President and CEO, John H. Watt, Jr. “Notable during the quarter was our participation in the SBA’s Paycheck Protection Program to secure approval for approximately 3,000 loans and $547 million in relief to help retain more than 61,000 jobs at businesses and organizations in communities we serve. NBT's disciplined approach to risk management and credit practices, strong and recently enhanced capital position and liquidity continue to provide a strong foundation that will help us to meet the current challenges and to be opportunistic building our franchise.”

Second Quarter Financial Highlights

Net Income
  • Net income of $24.7 million
  • Diluted earnings per share of $0.56
Net Interest Income / NIM
  • Net interest income on a fully taxable equivalent basis was $80.8 million1
  • Net interest margin (“NIM”) on a fully taxable equivalent basis was 3.38%1
PPNR
  • PPNR1 was $50.7 million compared to $44.9 million in the first quarter of 2020 and $47.2 million in the second quarter 2019
Loans and Credit Quality
  • Period end loans were $7.6 billion, up 13.9%, annualized, from December 31, 2019
  • Excluding Paycheck Protection Plan (“PPP”) loans of $510 million at June 30, 2020, period end loans contracted $130 million or 2% from March 31, 2020
  • Originated $547 million in PPP loans
  • Allowance for loan losses to total loans of 1.49% (1.59% excluding PPP loans and related allowance)
  • Net charge-offs to average loans was 0.28%, annualized (0.30% excluding PPP loans)
  • Nonperforming assets to total assets was 0.27% (0.28% excluding PPP loans)
Capital
  • Completed public offering of $100 million 5.00% fixed-to-floating rate subordinated notes
  • Tangible book value per share3 grew 3% for the quarter and 8% from prior year to $19.46 at June 30, 2020
  • Tangible equity to assets of 8.04%1
  • CET1 ratio of 11.34%; Total leverage ratio of 9.44%

Loans

  • Period end total loans were $7.6 billion at June 30, 2020, compared to $7.1 billion at December 31, 2019.
  • Total PPP loans as of June 30, 2020 were $510 million (net of unamortized fees); originated $547 million with an average loan size of $185,000 and an average fee of 3.2%.
  • Excluding PPP loans, period end loans decreased $130 million from March 31, 2020. Commercial and industrial loans decreased $19.8 million to $1.3 billion; commercial real estate loans increased $14.4 million to $2.3 billion; and total consumer loans decreased $124.1 million to $3.5 billion, driven by managed run-off of indirect auto loans.
  • Commercial line of credit utilization rate was 26% at June 30, 2020 compared to 32% at March 31, 2020 and 36% at June 30, 2019.

Deposits

  • Average total deposits in the second quarter of 2020 were $8.6 billion, compared to $7.7 billion in the first quarter of 2020, primarily due to increases in non-interest bearing demand and money market deposit accounts.
  • Loan to deposit ratio of 86.5% at June 30, 2020, compared to 94.0% at December 31, 2019.

Net Interest Income and Net Interest Margin

  • Net interest income for the second quarter of 2020 was $80.4 million, up $3.3 million from $77.2 million the first quarter of 2020 and up $1.8 million from $78.6 million for the second quarter of 2019.
  • The net interest margin on a fully taxable equivalent (“FTE”) basis for the second quarter of 2020 was 3.38%, down 14 basis points (“bps”) from the first quarter of 2020 and down 23 bps from the second quarter of 2019. The net impact of PPP loans and excess liquidity, both of which the Company expects to be transitory, negatively impacted the NIM by 7 bps. Excluding the impact of PPP lending and excess liquidity, NIM declined 7 bps from the prior quarter primarily due to the impact of asset repricing, partly offset by lower funding costs.
  • Earning asset yields for the three months ended June 30, 2020 were down 39 bps from the prior quarter and down 60 bps from the same quarter in the prior year. Earning assets grew $742.8 million or 8.4% from the prior quarter and grew $823.4 million or 9.4% from the same quarter in the prior year.
    °  Excess liquidity resulted in a $306 million increase in the average balances of short-term interest bearing accounts with yields declining 118 bps to 0.10%.
    °  Yields on investment securities declined 9 bps.
    °  Loan yields decreased 32 bps to 4.10%.
  • Total cost of total deposits was 0.23% for the second quarter of 2020, down 25 bps from the prior quarter and down 32 bps from the same period in the prior year.
  • The cost of interest-bearing liabilities for the three months ended June 30, 2020 was 0.45%, down 37 bps from the prior quarter of 0.82% and down 51 bps from the second quarter of 2019 of 0.96%.
    °  Cost of interest-bearing deposits decreased 35 bps from the prior quarter and decreased 44 bps from the same quarter in 2019.

Credit Quality and CECL

  • Asset quality metrics remained stable in the second quarter of 2020.
  • Net charge-offs to total average loans of 28 bps (30 bps excluding PPP loans) compared to 32 bps in the prior quarter and 38 bps in the second quarter of 2019.
  • Nonperforming assets to total assets was 0.27% (0.28% excluding PPP loans) compared to 0.35% at March 31, 2020 and 0.30% at June 30, 2019.
  • Provision expense for the three months ended June 30, 2020 was $18.8 million as the economic deterioration due to COVID-19 and the related impact to expected losses continued in the second quarter while net charge-offs of $5.3 million were relatively consistent with the prior quarter. Provision expense decreased $10.8 million from the first quarter of 2020 and increased $11.6 million from the second quarter of 2019.
  • The allowance for loan losses was $113.5 million or 1.49% (1.59% excluding PPP loans and related allowance) of total loans compared to 1.38% at March 31, 2020 and 1.04% June 30, 2019.
  • As of July 23, 2020, 8.7% of loans (excluding PPP loans) are in payment deferral programs which is down from the second quarter 2020 peak of 14.9%.
  • The reserve for unfunded loan commitments decreased $0.2 million to $5.4 million at June 30, 2020 as the increase in the allowance due to the deterioration in the economic forecast was offset by a decrease in the level of unfunded commitments.

Noninterest Income

  • Total noninterest income, excluding securities gains (losses), was $34.8 million for the three months ended June 30, 2020, down $1.4 million from the prior quarter and up $0.5 million from the prior year quarter.
  • Service charges on deposit accounts were lower than both prior quarter and the second quarter of 2019 due to lower overdraft charges during the COVID-19 pandemic.
  • Retirement plan administration fees were higher than both prior quarter and the second quarter of 2019 due to the April 1, 2020 acquisition of Alliance Benefit Group of Illinois, Inc. (“ABG”) contributing $1.8 million in revenues during the quarter.
  • Wealth management fees were down $0.5 million due to market conditions, partly offset by $0.3 million in ABG fees during the quarter.
  • Insurance revenues were down compared to the prior quarter due to seasonally higher insurance revenues in the first quarter.
  • The increase in other noninterest income from the prior year second quarter was driven by higher swap fees.

Noninterest Expense

  • Total noninterest expense for the second quarter of 2020 was down 7.8% from the previous quarter and down 1.3% from the second quarter of 2019.
  • Significant variances to the prior quarter:
    °  Salaries and benefits declined due to decreased medical expenses during the COVID-19 pandemic ($1.1 million) and lower stock-based compensation expenses ($1.0 million), partly offset by increased salaries due to the ABG acquisition ($0.9 million).
    °  Occupancy expense was $0.9 million lower due to seasonal maintenance in the prior quarter and lower expenses during the COVID-19 pandemic due to limited on-site personnel.
    °  Professional fees and outside services were down $0.5 million primarily due to the timing of expenses as a result of the COVID-19 pandemic.
    °  FDIC expense was higher as the remaining portion of the FDIC insurance assessment small bank credit was used in the first quarter of 2020.
    °  Other noninterest expense was lower in the second quarter of 2020 due primarily to a $2.0 million expense in the first quarter for the allowance for unfunded loan commitments, along with lower travel and training expenses during the pandemic. The Company recorded a $0.2 million provision credit in the second quarter of 2020 to reduce the reserve for unfunded commitments.
    °  Other noninterest expense included $0.7 million in non-recurring real estate repositioning charges for the second quarter.
  • Significant variances to the second quarter of 2019:
    °  Higher salaries and benefits primarily driven by the ABG acquisition partly offset by lower medical costs ($0.6 million).
    °  Data processing and communication expense down due to lower transaction volumes as a result of the COVID-19 pandemic.
    °  Other expenses decreased $0.7 million due to lower travel and training expenses during the pandemic and lower pension costs.

Income Taxes

  • Effective tax rate was 21.0% for the second quarter of 2020 compared to 14.2% in the first quarter of 2020 and 22.4% in the second quarter 2019. The higher effective tax rate compared to the first quarter of 2020 was due to higher level of taxable income relative to total income and included a true-up of tax expense to bring the full year estimated effective tax rate to 19.5%. The lower effective tax rate compared to the second quarter of 2019 was due to a lower level of taxable income relative to total income.

Capital

  • Capital ratios remain strong with tangible common equity to tangible assets1 at 8.04%. Tangible book value per share3 grew 3% from the prior quarter and 8% from the prior year quarter to $19.46.
  • June 30, 2020 CET1 capital ratio of 11.34%, total leverage ratio of 9.44% and total risk-based capital ratio of 15.15%.
  • On June 23, 2020, the Company completed its public offering of $100 million 5.00% fixed-to-floating rate subordinated notes due 2030. The net proceeds were $98 million. The notes are intended to qualify as Tier 2 capital for regulatory purposes.

Dividend

  • The Board of Directors approved a third-quarter cash dividend of $0.27 per share at their regularly scheduled meeting held today. The dividend will be paid on September 15, 2020 to shareholders of record as of September 1, 2020.

Conference Call and Webcast

The Company will host a conference call at 8:30 a.m. Eastern Time on Tuesday, July 28, 2020, to review second quarter 2020 financial results. The audio webcast link, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at https://stockholderinfo.nbtbancorp.com/events-calendar/upcoming-events and will be archived for twelve months.

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, NY, with total assets of $10.8 billion at June 30, 2020. 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 146 banking locations in New York, Pennsylvania, Vermont, Massachusetts, New Hampshire and Maine, and is currently entering Connecticut. EPIC Retirement Plan Services, based in Rochester, NY, is a full-service 401(k) plan recordkeeping firm. NBT Insurance Agency, LLC, based in Norwich, NY, is a full-service insurance agency. More information about NBT and its divisions is available online at: www.nbtbancorp.com, www.nbtbank.com, www.epicrps.com and www.nbtinsurance.com.

Forward-Looking Statements

This news release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of phrases such as “anticipate,” “believe,” “expect,” “forecasts,” “projects,” “will,” “can,” “would,” “should,” “could,” “may,” or other similar terms. There are a number of factors, many of which are beyond the Company’s control that could cause actual results to differ materially from those contemplated by the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) local, regional, national and international economic conditions and the impact they may have on the Company and its customers and the Company’s assessment of that impact; (2) changes in the level of nonperforming assets and charge-offs; (3) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (4) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board (“FRB”); (5) inflation, interest rate, securities market and monetary fluctuations; (6) political instability; (7) acts of war or terrorism; (8) the timely development and acceptance of new products and services and perceived overall value of these products and services by users; (9) changes in consumer spending, borrowings and savings habits; (10) changes in the financial performance and/or condition of the Company’s borrowers; (11) technological changes; (12) acquisitions and integration of acquired businesses; (13) the ability to increase market share and control expenses; (14) changes in the competitive environment among financial holding companies; (15) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company and its subsidiaries must comply, including those under the Dodd-Frank Act, Economic Growth, Regulatory Relief, Consumer Protection Act of 2018, Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), and regulatory pronouncements around CARES Act; (16) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board (“FASB”) and other accounting standard setters; (17) changes in the Company’s organization, compensation and benefit plans; (18) the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; (19) greater than expected costs or difficulties related to the integration of new products and lines of business; (20) the adverse impact on the U.S. economy, including the markets in which we operate, of the novel coronavirus, which causes the Coronavirus disease 2019 (“COVID-19”), global pandemic; (21) the impact of a slowing U.S. economy and increased unemployment on the performance of our loan portfolio, the market value of our investment securities, the availability of sources of funding and the demand for our products; and (22) the Company’s success at managing the risks involved in the foregoing items.

Currently, one of the most significant factors that could cause actual outcomes to differ materially from the Company’s forward-looking statements is the potential adverse effect of the current COVID-19 pandemic on the financial condition, results of operations, cash flows and performance of the Company, its customers and the global economy and financial markets. The extent to which the COVID-19 pandemic impacts the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic and its impact on the Company’s customers and demand for financial services, the actions governments, businesses and individuals take in response to the pandemic, the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies, national and local economic activity, and the pace of recovery when the COVID-19 pandemic subsides, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section entitled “Risk Factors” in our Form 10-K for the year ended December 31, 2019 and in our Form 10-Q for the quarter ended March 31, 2020 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. You should not place undue reliance on any forward-looking statements, which speak only as of the date made, and you are advised that various factors including, but not limited to, those described above and other factors discussed in the Company’s annual and quarterly reports previously filed with the SEC, could affect the Company’s financial performance and could cause the Company’s actual results or circumstances for future periods to differ materially from those anticipated or projected. Unless required by law, the Company does not undertake, and specifically disclaims any obligations to, publicly release any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

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”). 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 financial 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.

Contact: John H. Watt, Jr., President and CEO
  John V. Moran, Executive Vice President and CFO
  NBT Bancorp Inc.
  52 South Broad Street
  Norwich, NY 13815
  607-337-6589


 
NBT Bancorp Inc. and Subsidiaries
Selected Financial Data
(unaudited, dollars in thousands except per share data)
           
  2020 2019
  2nd Q 1st Q 4th Q 3rd Q 2nd Q
Profitability:          
Diluted earnings per share $ 0.56   $ 0.23   $ 0.66   $ 0.73   $ 0.69  
Weighted average diluted common shares outstanding   43,928,344     44,130,324     44,174,201     44,138,495     44,120,377  
Return on average assets2   0.94 %   0.43 %   1.20 %   1.34 %   1.28 %
Return on average equity2   8.76 %   3.69 %   10.36 %   11.83 %   11.63 %
Return on average tangible common equity1 2   12.14 %   5.24 %   14.28 %   16.43 %   16.38 %
Net interest margin1 2   3.38 %   3.52 %   3.52 %   3.57 %   3.61 %
           
  6 Months ended June 30,      
  2020 2019      
Profitability:          
Diluted earnings per share $ 0.80   $ 1.35        
Weighted average diluted common shares outstanding   44,026,420     44,096,681        
Return on average assets2   0.69 %   1.26 %      
Return on average equity2   6.23 %   11.57 %      
Return on average tangible common equity1 2   8.69 %   16.41 %      
Net interest margin1 2   3.45 %   3.63 %      
           
  2020 2019
  2nd Q 1st Q 4th Q 3rd Q 2nd Q
Balance sheet data:          
Securities available for sale $ 1,108,443   $ 1,000,980   $ 975,340   $ 932,173   $ 979,696  
Securities held to maturity   599,164     621,359     630,074     678,435     744,601  
Net loans   7,514,491     7,147,383     7,063,133     6,941,444     6,891,108  
Total assets   10,847,184     9,953,543     9,715,925     9,661,386     9,635,718  
Total deposits   8,815,891     7,864,638     7,587,820     7,743,166     7,593,706  
Total borrowings   602,988     714,283     820,682     628,701     794,829  
Total liabilities   9,704,532     8,841,364     8,595,528     8,562,785     8,560,895  
Stockholders' equity   1,142,652     1,112,179     1,120,397     1,098,601     1,074,823  
           
Capital:          
Equity to assets   10.53 %   11.17 %   11.53 %   11.37 %   11.15 %
Tangible equity ratio1   8.04 %   8.55 %   8.84 %   8.65 %   8.41 %
Book value per share $ 26.20   $ 25.52   $ 25.58   $ 25.09   $ 24.56  
Tangible book value per share3 $ 19.46   $ 18.96   $ 19.03   $ 18.52   $ 17.97  
Tier 1 leverage ratio   9.44 %   10.02 %   10.33 %   10.15 %   9.88 %
Common equity tier 1 capital ratio   11.34 %   10.90 %   11.29 %   11.14 %   10.95 %
Tier 1 capital ratio   12.60 %   12.14 %   12.56 %   12.42 %   12.24 %
Total risk-based capital ratio   15.15 %   13.36 %   13.52 %   13.38 %   13.21 %
Common stock price (end of period) $ 30.06   $ 32.39   $ 40.56   $ 36.59   $ 37.51  
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)
           
  2020 2019
  2nd Q 1st Q 4th Q 3rd Q 2nd Q
Asset quality:          
Nonaccrual loans $ 25,567   $ 29,972   $ 25,174   $ 24,623   $ 24,669  
90 days past due and still accruing   2,057     2,280     3,717     8,342     2,387  
Total nonperforming loans   27,624     32,252     28,891     32,965     27,056  
Other real estate owned   1,783     2,384     1,458     2,144     2,203  
Total nonperforming assets   29,407     34,636     30,349     35,109     29,259  
Allowance for loan losses   113,500     100,000     72,965     72,365     72,165  
           
Asset quality ratios (total):          
Allowance for loan losses to total loans   1.49 %   1.38 %   1.02 %   1.03 %   1.04 %
Total nonperforming loans to total loans   0.36 %   0.45 %   0.40 %   0.47 %   0.39 %
Total nonperforming assets to total assets   0.27 %   0.35 %   0.31 %   0.36 %   0.30 %
Allowance for loan losses to total nonperforming loans   410.87 %   310.06 %   252.55 %   219.52 %   266.72 %
Past due loans to total loans   0.30 %   0.51 %   0.49 %   0.57 %   0.52 %
Net charge-offs to average loans2   0.28 %   0.32 %   0.30 %   0.35 %   0.38 %
           
Asset quality ratios (excluding paycheck protection plan):      
Allowance for loan losses to total loans   1.59 %   1.38 %   1.02 %   1.03 %   1.04 %
Total nonperforming loans to total loans   0.39 %   0.45 %   0.40 %   0.47 %   0.39 %
Total nonperforming assets to total assets   0.28 %   0.35 %   0.31 %   0.36 %   0.30 %
Allowance for loan losses to total nonperforming loans   410.78 %   310.06 %   252.55 %   219.52 %   266.72 %
Past due loans to total loans   0.32 %   0.51 %   0.49 %   0.57 %   0.52 %
Net charge-offs to average loans2   0.30 %   0.32 %   0.30 %   0.35 %   0.38 %
           


   
NBT Bancorp Inc. and Subsidiaries  
Consolidated Balance Sheets  
(unaudited, dollars in thousands)  
       
  June 30, December 31,
Assets 2020 2019
Cash and due from banks $ 171,264 $ 170,595  
Short-term interest bearing accounts   528,228   46,248  
Equity securities, at fair value   29,223   27,771  
Securities available for sale, at fair value   1,108,443   975,340  
Securities held to maturity (fair value $623,022 and $641,262, respectively)   599,164   630,074  
Federal Reserve and Federal Home Loan Bank stock   32,536   44,620  
Loans held for sale   16,147   11,731  
Loans   7,627,991   7,136,098  
Less allowance for loan losses   113,500   72,965  
Net loans $ 7,514,491 $ 7,063,133  
Premises and equipment, net   74,558   75,631  
Goodwill   280,541   274,769  
Intangible assets, net   13,413   12,020  
Bank owned life insurance   183,976   181,748  
Other assets   295,200   202,245  
Total assets $ 10,847,184 $ 9,715,925  
       
Liabilities and stockholders' equity      
Demand (noninterest bearing) $ 3,107,528 $ 2,414,383  
Savings, NOW and money market   5,000,504   4,312,244  
Time   707,859   861,193  
Total deposits $ 8,815,891 $ 7,587,820  
Short-term borrowings   339,656   655,275  
Long-term debt   64,154   64,211  
Subordinated debt, net   97,982   -  
Junior subordinated debt   101,196   101,196  
Other liabilities   285,653   187,026  
Total liabilities $ 9,704,532 $ 8,595,528  
       
Total stockholders' equity $ 1,142,652 $ 1,120,397  
       
Total liabilities and stockholders' equity $ 10,847,184 $ 9,715,925  
       


 
NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited, dollars in thousands except per share data)
         
  Three Months Ended Six Months Ended
  June 30, June 30,
  2020 2019 2020 2019
Interest, fee and dividend income        
Interest and fees on loans $ 77,270 $ 81,271   $ 155,998   $ 160,592  
Securities available for sale   5,600   6,031     11,353     11,953  
Securities held to maturity   3,926   5,089     8,017     10,306  
Other   650   842     1,479     1,726  
Total interest, fee and dividend income $ 87,446 $ 93,233   $ 176,847   $ 184,577  
Interest expense        
Deposits $ 4,812 $ 10,234   $ 13,916   $ 19,060  
Short-term borrowings   972   2,760     2,769     5,997  
Long-term debt   393   471     786     893  
Subordinated debt   128   -     128     -  
Junior subordinated debt   695   1,141     1,621     2,309  
Total interest expense $ 7,000 $ 14,606   $ 19,220   $ 28,259  
Net interest income $ 80,446 $ 78,627   $ 157,627   $ 156,318  
Provision for loan losses   18,840   7,277     48,480     13,084  
Net interest income after provision for loan losses $ 61,606 $ 71,350   $ 109,147   $ 143,234  
Noninterest income        
Service charges on deposit accounts $ 2,529 $ 4,224   $ 6,526   $ 8,460  
ATM and debit card fees   6,136   6,156     11,990     11,681  
Retirement plan administration fees   9,214   7,836     17,155     15,570  
Wealth management4   6,823   7,122     14,096     13,685  
Insurance4   3,292   3,547     7,561     8,291  
Bank owned life insurance income   1,381   1,186     2,755     2,563  
Net securities gains (losses)   180   (69 )   (632 )   (12 )
Other   5,456   4,239     10,983     7,824  
Total noninterest income $ 35,011 $ 34,241   $ 70,434   $ 68,062  
Noninterest expense        
Salaries and employee benefits $ 39,717 $ 38,567   $ 80,467   $ 77,923  
Occupancy   5,065   5,443     11,060     11,718  
Data processing and communications   4,079   4,693     8,312     9,107  
Professional fees and outside services   3,403   3,359     7,300     7,027  
Equipment   4,779   4,518     9,421     9,275  
Office supplies and postage   1,455   1,577     3,091     3,168  
FDIC expense   993   949     1,304     1,966  
Advertising   322   641     931     1,144  
Amortization of intangible assets   883   893     1,717     1,861  
Loan collection and other real estate owned, net   728   961     1,745     1,746  
Other   3,916   4,630     10,873     9,756  
Total noninterest expense $ 65,340 $ 66,231   $ 136,221   $ 134,691  
Income before income tax expense $ 31,277 $ 39,360   $ 43,360   $ 76,605  
Income tax expense   6,564   8,805     8,279     16,923  
  Net income $ 24,713 $ 30,555   $ 35,081   $ 59,682  
Earnings Per Share        
Basic $ 0.57 $ 0.70   $ 0.80   $ 1.36  
Diluted $ 0.56 $ 0.69   $ 0.80   $ 1.35  
         


 
NBT Bancorp Inc. and Subsidiaries
Quarterly Consolidated Statements of Income
(unaudited, dollars in thousands except per share data)
           
  2020 2019
  2nd Q 1st Q 4th Q 3rd Q 2nd Q
Interest, fee and dividend income          
Interest and fees on loans $ 77,270 $ 78,728   $ 79,800 $ 81,082   $ 81,271  
Securities available for sale   5,600   5,753     5,639   5,711     6,031  
Securities held to maturity   3,926   4,091     4,213   4,586     5,089  
Other   650   829     924   1,002     842  
Total interest, fee and dividend income $ 87,446 $ 89,401   $ 90,576 $ 92,381   $ 93,233  
Interest expense          
Deposits $ 4,812 $ 9,104   $ 10,181 $ 10,745   $ 10,234  
Short-term borrowings   972   1,797     1,707   1,989     2,760  
Long-term debt   393   393     484   498     471  
Subordinated debt   128   -     -   -     -  
Junior subordinated debt   695   926     1,021   1,095     1,141  
Total interest expense $ 7,000 $ 12,220   $ 13,393 $ 14,327   $ 14,606  
Net interest income $ 80,446 $ 77,181   $ 77,183 $ 78,054   $ 78,627  
Provision for loan losses   18,840   29,640     6,004   6,324     7,277  
Net interest income after provision for loan losses $ 61,606 $ 47,541   $ 71,179 $ 71,730   $ 71,350  
Noninterest income          
Service charges on deposit accounts $ 2,529 $ 3,997   $ 4,361 $ 4,330   $ 4,224  
ATM and debit card fees   6,136   5,854     5,935   6,277     6,156  
Retirement plan administration fees   9,214   7,941     7,218   7,600     7,836  
Wealth management4   6,823   7,273     7,085   7,630     7,122  
Insurance4   3,292   4,269     3,479   4,000     3,547  
Bank owned life insurance income   1,381   1,374     1,236   1,556     1,186  
Net securities gains (losses)   180   (812 )   189   4,036     (69 )
Other   5,456   5,527     6,738   4,291     4,239  
Total noninterest income $ 35,011 $ 35,423   $ 36,241 $ 39,720   $ 34,241  
Noninterest expense          
Salaries and employee benefits $ 39,717 $ 40,750   $ 39,592 $ 39,352   $ 38,567  
Occupancy   5,065   5,995     5,653   5,335     5,443  
Data processing and communications   4,079   4,233     4,719   4,492     4,693  
Professional fees and outside services   3,403   3,897     4,223   3,535     3,359  
Equipment   4,779   4,642     4,821   4,487     4,518  
Office supplies and postage   1,455   1,636     1,744   1,667     1,577  
FDIC expense (credit)   993   311     -   (20 )   949  
Advertising   322   609     952   677     641  
Amortization of intangible assets   883   834     844   874     893  
Loan collection and other real estate owned, net   728   1,017     1,436   976     961  
Other   3,916   6,957     6,310   8,374     4,630  
Total noninterest expense $ 65,340 $ 70,881   $ 70,294 $ 69,749   $ 66,231  
Income before income tax expense $ 31,277 $ 12,083   $ 37,126 $ 41,701   $ 39,360  
Income tax expense   6,564   1,715     8,166   9,322     8,805  
  Net income $ 24,713 $ 10,368   $ 28,960 $ 32,379   $ 30,555  
Earnings Per Share          
Basic $ 0.57 $ 0.24   $ 0.66 $ 0.74   $ 0.70  
Diluted $ 0.56 $ 0.23   $ 0.66 $ 0.73   $ 0.69  
           


 
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
    Q2 - 2020 Q1 - 2020 Q4 - 2019 Q3 - 2019 Q2 - 2019
Assets                      
Short-term interest bearing accounts   $ 380,260 0.10 % $ 74,695 1.28 % $ 51,613 2.43 % $ 57,530 1.95 % $ 25,783 1.28 %
Securities available for sale1 5     985,561 2.29 %   962,527 2.40 %   942,302 2.37 %   940,256 2.41 %   981,079 2.47 %
Securities held to maturity1 5     613,899 2.75 %   622,398 2.81 %   651,305 2.73 %   698,617 2.77 %   770,651 2.83 %
Investment in FRB and FHLB Banks     36,604 6.09 %   39,784 5.97 %   37,842 6.37 %   40,525 7.04 %   46,179 6.60 %
Loans1 6     7,589,032 4.10 %   7,163,114 4.42 %   7,055,288 4.49 %   6,987,476 4.61 %   6,958,299 4.69 %
Total interest earning assets   $ 9,605,356 3.68 % $ 8,862,518 4.07 % $ 8,738,350 4.13 % $ 8,724,404 4.22 % $ 8,781,991 4.28 %
Other assets     961,807     885,570     861,909     852,616     816,748  
Total assets   $ 10,567,163   $ 9,748,088   $ 9,600,259   $ 9,577,020   $ 9,598,739  
                       
Liabilities and stockholders' equity                  
Money market deposit accounts   $ 2,360,407 0.29 % $ 2,101,306 1.00 % $ 2,057,678 1.16 % $ 2,015,297 1.24 % $ 1,916,045 1.16 %
NOW deposit accounts     1,167,486 0.04 %   1,086,205 0.10 %   1,064,193 0.13 %   1,056,001 0.13 %   1,127,413 0.13 %
Savings deposits     1,383,495 0.05 %   1,276,285 0.06 %   1,251,432 0.06 %   1,274,793 0.06 %   1,282,084 0.06 %
Time deposits     760,803 1.48 %   842,989 1.62 %   853,353 1.69 %   893,837 1.75 %   953,698 1.73 %
Total interest bearing deposits   $ 5,672,191 0.34 % $ 5,306,785 0.69 % $ 5,226,656 0.77 % $ 5,239,928 0.81 % $ 5,279,240 0.78 %
Short-term borrowings     427,004 0.92 %   533,516 1.35 %   475,332 1.42 %   490,694 1.61 %   620,898 1.78 %
Long-term debt     64,165 2.46 %   64,194 2.46 %   81,613 2.35 %   84,250 2.35 %   82,414 2.29 %
Subordinated debt, net     8,633 5.96 %   - -     - -     - -     - -  
Junior subordinated debt     101,196 2.76 %   101,196 3.68 %   101,196 4.00 %   101,196 4.29 %   101,196 4.52 %
Total interest bearing liabilities   $ 6,273,189 0.45 % $ 6,005,691 0.82 % $ 5,884,797 0.90 % $ 5,916,068 0.96 % $ 6,083,748 0.96 %
Demand deposits     2,887,545     2,398,307     2,406,563     2,389,617     2,298,867  
Other liabilities     271,635     214,495     199,674     185,374     162,374  
Stockholders' equity     1,134,794     1,129,595     1,109,225     1,085,961     1,053,750  
Total liabilities and stockholders' equity   $ 10,567,163   $ 9,748,088   $ 9,600,259   $ 9,577,020   $ 9,598,739  
                       
Interest rate spread     3.23 %   3.25 %   3.23 %   3.26 %   3.32 %
Net interest margin (FTE)1     3.38 %   3.52 %   3.52 %   3.57 %   3.61 %
                       


 
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
Six Months Ended June 30,   2020 2019
Assets              
Short-term interest bearing accounts   $ 227,478 $ 335 0.30 % $ 17,471 $ 174 2.01 %
Securities available for sale1 5     974,044   11,353 2.34 %   982,881   11,984 2.46 %
Securities held to maturity1 5     618,149   8,554 2.78 %   776,577   11,043 2.87 %
Investment in FRB and FHLB Banks     38,194   1,144 6.02 %   47,657   1,552 6.57 %
Loans1 6     7,376,072   156,119 4.26 %   6,922,684   160,768 4.68 %
Total interest earning assets   $ 9,233,937 $ 177,505 3.87 % $ 8,747,270 $ 185,521 4.28 %
Other assets     923,689       806,225    
Total assets   $ 10,157,626     $ 9,553,495    
               
Liabilities and stockholders' equity              
Money market deposit accounts   $ 2,230,857 $ 6,965 0.63 % $ 1,860,358 $ 9,974 1.08 %
NOW deposit accounts     1,126,845   404 0.07 %   1,131,291   817 0.15 %
Savings deposits     1,329,890   360 0.05 %   1,267,146   362 0.06 %
Time deposits     801,896   6,187 1.55 %   948,109   7,907 1.68 %
Total interest bearing deposits   $ 5,489,488 $ 13,916 0.51 % $ 5,206,904 $ 19,060 0.74 %
Short-term borrowings     480,261   2,769 1.16 %   666,349   5,997 1.81 %
Long-term debt     64,179   786 2.46 %   78,085   893 2.31 %
Subordinated debt, net     4,316   128 5.96 %   -   - -  
Junior subordinated debt     101,196   1,621 3.22 %   101,196   2,309 4.60 %
Total interest bearing liabilities   $ 6,139,440 $ 19,220 0.63 % $ 6,052,534 $ 28,259 0.94 %
Demand deposits     2,642,926       2,304,169    
Other liabilities     243,066       156,963    
Stockholders' equity     1,132,194       1,039,829    
Total liabilities and stockholders' equity   $ 10,157,626     $ 9,553,495    
Net interest income (FTE)1     $ 158,285     $ 157,262  
Interest rate spread       3.24 %     3.34 %
Net interest margin (FTE)1       3.45 %     3.63 %
Taxable equivalent adjustment     $ 658     $ 944  
Net interest income     $ 157,627     $ 156,318  
               


 
NBT Bancorp Inc. and Subsidiaries
Consolidated Loan Balances
(unaudited, dollars in thousands)
           
The following table presents loans by line of business, paycheck protection plans loans includes $14.6 million in unamortized fees.
           
  2020 2019
  2nd Q 1st Q 4th Q 3rd Q 2nd Q
Commercial $ 1,318,806   $ 1,338,609   $ 1,302,209   $ 1,317,649   $ 1,299,784
Commercial real estate   2,256,580     2,242,139     2,142,057     2,033,552     2,025,280
Paycheck protection plan   510,097     -     -     -     -
Residential real estate mortgages   1,460,058     1,446,676     1,445,156     1,416,920     1,404,079
Indirect auto   1,091,889     1,184,888     1,193,635     1,195,783     1,189,670
Specialty lending   515,618     539,378     542,063     528,505     519,974
Home equity   415,528     431,536     444,082     452,535     456,754
Other consumer   59,415     64,157     66,896     68,865     67,732
Total loans $ 7,627,991   $ 7,247,383   $ 7,136,098   $ 7,013,809   $ 6,963,273
           
The following table provide loans as a percentage of total loans in industries vulnerable to the COVID-19  pandemic as of June 30, 2020:
           
Industry % of Total Loans        
Accommodations   2.6 %        
Healthcare services and practices   2.0 %        
Restaurants and entertainment   1.9 %        
Retailers   1.6 %        
Automotive   1.5 %        
Total   9.6 %        
           
Allowance for Loan Losses as a Percentage of Loans by Segment7:    
           
  Incurred CECL  
  12/31/2019 1/1/2020 3/31/2020 6/30/2020*  
Commercial & industrial   0.96 %   0.98 %   1.43 %   1.25 %  
Commercial real estate   1.02 %   0.74 %   1.10 %   1.56 %  
Paycheck protection plan   0.00 %   0.00 %   0.00 %   0.01 %  
Residential real estate   0.27 %   0.83 %   0.99 %   1.13 %  
Auto   0.83 %   0.78 %   1.08 %   0.99 %  
Other consumer   3.74 %   3.66 %   4.00 %   5.01 %  
Total   1.02 %   1.07 %   1.38 %   1.49 %  
           
* Excluding PPP loans and related allowance, total allowance to loans was 1.59%  
           


             
1 The following tables provide the Non-GAAP reconciliations for the Non-GAAP measures contained in this release:
             
  Non-GAAP measures          
  (unaudited, dollars in thousands)          
             
  Pre-provision net revenue ("PPNR") 2020 2019
    2nd Q 1st Q 4th Q 3rd Q 2nd Q
  Income before income tax expense $ 31,277   $ 12,083   $ 37,126   $ 41,701   $ 39,360  
  FTE adjustment   329     329     349     374     445  
  Provision for loan losses   18,840     29,640     6,004     6,324     7,277  
  Net securities (gains) losses   (180 )   812     (189 )   (4,036 )   69  
  Nonrecurring expense   650     -     -     3,800     -  
  Unfunded loan commitments reserve   (200 )   2,000     -     -     -  
  PPNR $ 50,716   $ 44,864   $ 43,290   $ 48,163   $ 47,151  
             
  Average Assets $ 10,567,163   $ 9,748,088   $ 9,600,259   $ 9,577,020   $ 9,598,739  
             
  Return on Average Assets   0.94 %   0.43 %   1.20 %   1.34 %   1.28 %
  PPNR Return on Average Assets   1.93 %   1.85 %   1.79 %   2.00 %   1.97 %
             
  PPNR is a Non-GAAP financial measure that management believes is useful in evaluating the underlying operating results of the Company excluding the volatility in loan loss provision due to CECL adoption and the impact of the COVID-19 pandemic, net securities gains (losses) and non-recurring income and/or expense.
             
  FTE Adjustment 2020 2019
    2nd Q 1st Q 4th Q 3rd Q 2nd Q
  Net interest income $ 80,446   $ 77,181   $ 77,183   $ 78,054   $ 78,627  
  Add: FTE adjustment   329     329     349     374     445  
  Net interest income (FTE) $ 80,775   $ 77,510   $ 77,532   $ 78,428   $ 79,072  
  Average earning assets $ 9,605,356   $ 8,862,518   $ 8,738,350   $ 8,724,404   $ 8,781,991  
  Net interest margin (FTE)   3.38 %   3.52 %   3.52 %   3.57 %   3.61 %
             
    6 Months ended June 30,      
    2020 2019      
  Net interest income $ 157,627   $ 156,318        
  Add: FTE adjustment   658     944        
  Net interest income (FTE) $ 158,285   $ 157,262        
  Average earning assets $ 9,233,937   $ 8,747,270        
  Net interest margin (FTE)   3.45 %   3.63 %      
             
  Interest income for tax-exempt securities and loans have been adjusted to a FTE basis using the statutory Federal income tax rate of 21%.
             
  Tangible equity to tangible assets 2020 2019
    2nd Q 1st Q 4th Q 3rd Q 2nd Q
  Total equity $ 1,142,652   $ 1,112,179   $ 1,120,397   $ 1,098,601   $ 1,074,823  
  Intangible assets   293,954     285,955     286,789     287,633     288,507  
  Total assets $ 10,847,184   $ 9,953,543   $ 9,715,925   $ 9,661,386   $ 9,635,718  
  Tangible equity to tangible assets   8.04 %   8.55 %   8.84 %   8.65 %   8.41 %


             
1 The following tables provide the Non-GAAP reconciliations for the Non-GAAP measures contained in this release:
             
  Non-GAAP measures          
  (unaudited, dollars in thousands)          
             
  Return on average tangible common equity 2020 2019
    2nd Q 1st Q 4th Q 3rd Q 2nd Q
  Net income $ 24,713   $ 10,368   $ 28,960   $ 32,379   $ 30,555  
  Amortization of intangible assets (net of tax)   662     626     633     656     670  
  Net income, excluding intangibles amortization $ 25,375   $ 10,994   $ 29,593   $ 33,035   $ 31,225  
             
  Average stockholders' equity $ 1,134,794   $ 1,129,595   $ 1,109,225   $ 1,085,961   $ 1,053,750  
  Less: average goodwill and other intangibles   294,423     286,400     287,268     288,077     288,930  
  Average tangible common equity $ 840,371   $ 843,195   $ 821,957   $ 797,884   $ 764,820  
  Return on average tangible common equity   12.14 %   5.24 %   14.28 %   16.43 %   16.38 %
             
    6 Months ended June 30,      
      2020     2019        
  Net income $ 35,081   $ 59,682        
  Amortization of intangible assets (net of tax)   1,288     1,396        
  Net income, excluding intangibles amortization $ 36,369   $ 61,078        
             
  Average stockholders' equity $ 1,132,194   $ 1,039,829        
  Less: average goodwill and other intangibles   290,411     289,419        
  Average tangible common equity $ 841,783   $ 750,410        
  Return on average tangible common equity   8.69 %   16.41 %      
             
2 Annualized.          
3 Non-GAAP measure - Stockholders' equity less goodwill and intangible assets divided by common shares outstanding.
4 Other financial services revenue previously disclosed and included with Insurance income has been reclassified and combined with Trust income and is disclosed as Wealth management income.
5 Securities are shown at average amortized cost.
6 For purposes of these computations, nonaccrual loans and loans held for sale are included in the average loan balances outstanding.
7 The allowance for loan losses for December 31, 2019 was calculated based on the incurred losses methodology and beginning January 1, 2020, it was based on the CECL methodology. The risk-based pooling of loans (segments) for incurred and CECL are not consistent. For illustrative purposes only, the loans and related incurred allowance at December 31, 2019 were grouped to conform with the CECL methodology.

Source: NBT Bancorp Inc.

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