UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________.

COMMISSION FILE NUMBER 0-14703

NBT BANCORP INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware
 
16-1268674
(State of Incorporation)
 
(I.R.S. Employer Identification No.)

52 South Broad Street, Norwich, New York 13815
(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (607) 337-2265

None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act: 

Title of class
 
Trading Symbol(s)
 
Name of exchange on which registered
Common Stock, par value $0.01 per share
 
NBTB
 
The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer 
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No

As of July 31, 2019, there were 43,777,233 shares outstanding of the Registrant’s common stock, $0.01 par value per share.





NBT BANCORP INC.
FORM 10-Q-Quarter Ended June 30, 2019

TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION

Item 1
Financial Statements
 
     
 
3
     
 
4
     
 
5
     
 
6
     
 
7
     
 
9
     
Item 2
37
     
Item 3
50
     
Item 4
50
     
PART II
OTHER INFORMATION
 
     
Item 1
51
Item 1A
51
Item 2
51
Item 3
51
Item 4
51
Item 5
51
Item 6
52
     
 
53




Item 1 – FINANCIAL STATEMENTS

NBT Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets (unaudited)

 
June 30,
   
December 31,
 
   
2019
   
2018
 
(In thousands, except share and per share data)
           
Assets
           
Cash and due from banks
 
$
150,154
   
$
175,550
 
Short-term interest bearing accounts
   
39,278
     
5,405
 
Equity securities, at fair value
   
26,298
     
23,053
 
Securities available for sale, at fair value
   
979,696
     
998,496
 
Securities held to maturity (fair value $754,995 and $778,675, respectively)
   
744,601
     
783,599
 
Federal Reserve and Federal Home Loan Bank stock
   
45,996
     
53,229
 
Loans held for sale
   
15,662
     
6,943
 
Loans
   
6,963,273
     
6,887,709
 
Less allowance for loan losses
   
72,165
     
72,505
 
Net loans
 
$
6,891,108
   
$
6,815,204
 
Premises and equipment, net
   
76,652
     
78,970
 
Goodwill
   
274,769
     
274,769
 
Intangible assets, net
   
13,738
     
15,599
 
Bank owned life insurance
   
180,042
     
177,479
 
Other assets
   
197,724
     
148,067
 
Total assets
 
$
9,635,718
   
$
9,556,363
 
Liabilities
               
Demand (noninterest bearing)
 
$
2,336,776
   
$
2,361,099
 
Savings, NOW and money market
   
4,280,363
     
4,076,434
 
Time
   
976,567
     
930,678
 
Total deposits
 
$
7,593,706
   
$
7,368,211
 
Short-term borrowings
   
609,366
     
871,696
 
Long-term debt
   
84,267
     
73,724
 
Junior subordinated debt
   
101,196
     
101,196
 
Other liabilities
   
172,360
     
123,627
 
Total liabilities
 
$
8,560,895
   
$
8,538,454
 
Stockholders’ equity
               
Preferred stock, $0.01 par value. Authorized 2,500,000 shares at June 30, 2019 and December 31, 2018
 
$
-
   
$
-
 
Common stock, $0.01 par value. Authorized 100,000,000 shares at June 30, 2019 and December 31, 2018; issued 49,651,493 at June 30, 2019 and December 31, 2018
   
497
     
497
 
Additional paid-in-capital
   
575,794
     
575,466
 
Retained earnings
   
658,107
     
621,203
 
Accumulated other comprehensive loss
   
(25,036
)
   
(43,174
)
Common stock in treasury, at cost, 5,882,082 and 5,978,527 shares at June 30, 2019 and December 31, 2018, respectively
   
(134,539
)
   
(136,083
)
Total stockholders’ equity
 
$
1,074,823
   
$
1,017,909
 
Total liabilities and stockholders’ equity
 
$
9,635,718
   
$
9,556,363
 

See accompanying notes to unaudited interim consolidated financial statements.

3

NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Income (unaudited)

 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2019
   
2018
   
2019
   
2018
 
(In thousands, except per share data)
                       
Interest, fee and dividend income
                       
Interest and fees on loans
 
$
81,271
   
$
74,172
   
$
160,592
   
$
144,615
 
Securities available for sale
   
6,031
     
7,003
     
11,953
     
13,929
 
Securities held to maturity
   
5,089
     
2,811
     
10,306
     
5,436
 
Other
   
842
     
781
     
1,726
     
1,547
 
Total interest, fee and dividend income
 
$
93,233
   
$
84,767
   
$
184,577
   
$
165,527
 
Interest expense
                               
Deposits
 
$
10,234
   
$
5,079
   
$
19,060
   
$
9,010
 
Short-term borrowings
   
2,760
     
2,455
     
5,997
     
4,421
 
Long-term debt
   
471
     
452
     
893
     
928
 
Junior subordinated debt
   
1,141
     
1,040
     
2,309
     
1,941
 
Total interest expense
 
$
14,606
   
$
9,026
   
$
28,259
   
$
16,300
 
Net interest income
 
$
78,627
   
$
75,741
   
$
156,318
   
$
149,227
 
Provision for loan losses
   
7,277
     
8,778
     
13,084
     
16,274
 
Net interest income after provision for loan losses
 
$
71,350
   
$
66,963
   
$
143,234
   
$
132,953
 
Noninterest income
                               
Insurance and other financial services revenue
 
$
5,938
   
$
5,826
   
$
12,694
   
$
12,330
 
Service charges on deposit accounts
   
4,224
     
4,246
     
8,460
     
8,218
 
ATM and debit card fees
   
6,156
     
5,816
     
11,681
     
11,089
 
Retirement plan administration fees
   
7,836
     
7,296
     
15,570
     
12,635
 
Trust
   
4,731
     
5,265
     
9,282
     
10,143
 
Bank owned life insurance
   
1,186
     
1,217
     
2,563
     
2,564
 
Net securities (losses) gains
   
(69
)
   
91
     
(12
)
   
163
 
Other
   
4,239
     
4,401
     
7,824
     
8,293
 
Total noninterest income
 
$
34,241
   
$
34,158
   
$
68,062
   
$
65,435
 
Noninterest expense
                               
Salaries and employee benefits
 
$
38,567
   
$
37,726
   
$
77,923
   
$
74,293
 
Occupancy
   
5,443
     
5,535
     
11,718
     
11,654
 
Data processing and communications
   
4,693
     
4,508
     
9,107
     
8,787
 
Professional fees and outside services
   
3,359
     
3,336
     
7,027
     
6,828
 
Equipment
   
4,518
     
4,151
     
9,275
     
8,189
 
Office supplies and postage
   
1,577
     
1,504
     
3,168
     
3,077
 
FDIC expenses
   
949
     
1,092
     
1,966
     
2,293
 
Advertising
   
641
     
700
     
1,144
     
1,037
 
Amortization of intangible assets
   
893
     
1,096
     
1,861
     
2,010
 
Loan collection and other real estate owned, net
   
961
     
908
     
1,746
     
2,245
 
Other
   
4,630
     
4,332
     
9,756
     
8,747
 
Total noninterest expense
 
$
66,231
   
$
64,888
   
$
134,691
   
$
129,160
 
Income before income tax expense
 
$
39,360
   
$
36,233
   
$
76,605
   
$
69,228
 
Income tax expense
   
8,805
     
8,112
     
16,923
     
15,121
 
Net income
 
$
30,555
   
$
28,121
   
$
59,682
   
$
54,107
 
Earnings per share
                               
Basic
 
$
0.70
   
$
0.64
   
$
1.36
   
$
1.24
 
Diluted
 
$
0.69
   
$
0.64
   
$
1.35
   
$
1.23
 

See accompanying notes to unaudited interim consolidated financial statements.

4

NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (unaudited)

 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2019
   
2018
   
2019
   
2018
 
(In thousands)
                       
Net income
 
$
30,555
   
$
28,121
   
$
59,682
   
$
54,107
 
Other comprehensive income (loss), net of tax:
                               
                                 
Securities available for sale:
                               
Unrealized net holding gains (losses) arising during the period, gross
 
$
13,391
   
$
(5,353
)
 
$
24,427
   
$
(20,807
)
Tax effect
   
(3,348
)
   
1,338
     
(6,107
)
   
5,202
 
Unrealized net holding gains (losses) arising during the period, net
 
$
10,043
   
$
(4,015
)
 
$
18,320
   
$
(15,605
)
                                 
Reclassification adjustment for net losses in net income, gross
 
$
-
   
$
-
   
$
99
   
$
-
 
Tax effect
   
-
     
-
     
(25
)
   
-
 
Reclassification adjustment for net losses in net income, net
 
$
-
   
$
-
   
$
74
   
$
-
 
                                 
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, gross
 
$
199
   
$
177
   
$
366
   
$
365
 
Tax effect
   
(50
)
   
(44
)
   
(92
)
   
(91
)
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, net
 
$
149
   
$
133
   
$
274
   
$
274
 
                                 
Total securities available for sale, net
 
$
10,192
   
$
(3,882
)
 
$
18,668
   
$
(15,331
)
                                 
Cash flow hedges:
                               
Unrealized (losses) gains on derivatives (cash flow hedges), gross
 
$
(314
)
 
$
424
   
$
(484
)
 
$
1,472
 
Tax effect
   
78
     
(106
)
   
121
     
(368
)
Unrealized (losses) gains on derivatives (cash flow hedges), net
 
$
(236
)
 
$
318
   
$
(363
)
 
$
1,104
 
                                 
Reclassification of net unrealized (gains) on cash flow hedges to interest (income), gross
 
$
(738
)
 
$
(540
)
 
$
(1,537
)
 
$
(899
)
Tax effect
   
185
     
135
     
385
     
225
 
Reclassification of net unrealized (gains) on cash flow hedges to interest (income), net
 
$
(553
)
 
$
(405
)
 
$
(1,152
)
 
$
(674
)
                                 
Total cash flow hedges, net
 
$
(789
)
 
$
(87
)
 
$
(1,515
)
 
$
430
 
                                 
Pension and other benefits:
                               
Amortization of prior service cost and actuarial losses, gross
 
$
657
   
$
295
   
$
1,313
   
$
590
 
Tax effect
   
(164
)
   
(74
)
   
(328
)
   
(148
)
Amortization of prior service cost and actuarial losses, net
 
$
493
   
$
221
   
$
985
   
$
442
 
                                 
Total pension and other benefits, net
 
$
493
   
$
221
   
$
985
   
$
442
 
                                 
Total other comprehensive income (loss)
 
$
9,896
   
$
(3,748
)
 
$
18,138
   
$
(14,459
)
Comprehensive income
 
$
40,451
   
$
24,373
   
$
77,820
   
$
39,648
 

See accompanying notes to unaudited interim consolidated financial statements.


5

NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity (unaudited)

 
Common
Stock
   
Additional
Paid-in-
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
(Loss) Income
   
Common
Stock in
Treasury
   
Total
 
(In thousands, except share and per share data)
                                   
Balance at March 31, 2019
 
$
497
   
$
575,944
   
$
627,556
   
$
(34,932
)
 
$
(135,010
)
 
$
1,034,055
 
Net income
   
-
     
-
     
30,555
     
-
     
-
     
30,555
 
Cash dividends - $0.00 per share
   
-
     
-
     
(4
)
   
-
     
-
     
(4
)
Net issuance of 29,525 shares to employee and other stock plans
   
-
     
(713
)
   
-
     
-
     
471
     
(242
)
Stock-based compensation
   
-
     
563
     
-
     
-
     
-
     
563
 
Other comprehensive income
   
-
     
-
     
-
     
9,896
     
-
     
9,896
 
Balance at June 30, 2019
 
$
497
   
$
575,794
   
$
658,107
   
$
(25,036
)
 
$
(134,539
)
 
$
1,074,823
 
                                                 
Balance at March 31, 2018
 
$
497
   
$
574,626
   
$
555,783
   
$
(40,991
)
 
$
(137,185
)
 
$
952,730
 
Net income
   
-
     
-
     
28,121
     
-
     
-
     
28,121
 
Cumulative effect adjustment for ASU 2016-01 implementation
   
-
     
-
     
1,143
     
(17
)
   
-
     
1,126
 
Cash dividends - $0.00 per share
   
-
     
-
     
(3
)
   
-
     
-
     
(3
)
Net issuance of 31,546 shares to employee and other stock plans
   
-
     
(385
)
   
-
     
-
     
588
     
203
 
Stock-based compensation
   
-
     
500
     
-
     
-
     
-
     
500
 
Other comprehensive (loss)
   
-
     
-
     
-
     
(3,748
)
   
-
     
(3,748
)
Balance at June 30, 2018
 
$
497
   
$
574,741
   
$
585,044
   
$
(44,756
)
 
$
(136,597
)
 
$
978,929
 

 
Common
Stock
   
Additional
Paid-in-
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
(Loss) Income
   
Common
Stock in
Treasury
   
Total
 
(In thousands, except share and per share data)
                                   
Balance at December 31, 2018
 
$
497
   
$
575,466
   
$
621,203
   
$
(43,174
)
 
$
(136,083
)
 
$
1,017,909
 
Net income