UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2020



NBT BANCORP INC.
(Exact name of registrant as specified in its charter)

Delaware
000-14703
16-1268674
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(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

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of class
Trading Symbol
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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐



Item 2.02
Results of Operations and Financial Condition

On July 27, 2020, NBT Bancorp Inc. issued a press release describing its results of operations for the quarter ended June 30, 2020. That press release is furnished as Exhibit 99.1 hereto. A conference call will be held 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.
 
Item 9.01
Financial Statements and Exhibits.
 
(a)
Not applicable.
 
(b)
Not applicable.
 
(c)
Not applicable.
 
(d)
Exhibits.
 
Exhibit No.
 
Description
 
 
 
99.1
 
Press release of NBT Bancorp Inc. dated July 27, 2020
 
 
 
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
NBT BANCORP INC.
     
Date: July 27, 2020
By:
/s/ John V. Moran
   
John V. Moran
   
Executive Vice President
   
and Chief Financial Officer




Exhibit 99.1

1

FOR IMMEDIATE RELEASE
ATTENTION: FINANCIAL AND BUSINESS EDITORS

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. ANNOUNCES SECOND QUARTER NET INCOME OF $24.7 MILLION, OR $0.56 PER DILUTED COMMON SHARE

NORWICH, NY (July 27, 2020) – 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.”


2
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.


3
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.

o
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%.

o
Yields on investment securities declined 9 bps.

o
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%.

o
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.


4
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:

o
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).

o
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.

o
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.

o
FDIC expense was higher as the remaining portion of the FDIC insurance assessment small bank credit was used in the first quarter of 2020.

o
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.

o
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:

o
Higher salaries and benefits primarily driven by the ABG acquisition partly offset by lower medical costs ($0.6 million).

o
Data processing and communication expense down due to lower transaction volumes as a result of the COVID-19 pandemic.

o
Other expenses decreased $0.7 million due to lower travel and training expenses during the pandemic and lower pension costs.


5
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.


6
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.


7
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.


8
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.
 


9
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
%


10
NBT Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited, dollars in thousands)

Assets
 
June 30,
2020
   
December 31,
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
 


11
NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited, dollars in thousands except per share data)

   
Three Months Ended
June 30,
   
Six Months Ended
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
 


12
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
 


13
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
 
Assets
   
Q2 - 2020
     
Q1 - 2020
     
Q4 - 2019
   
Q3 - 2019
   
Q2 - 2019
 
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
%


14
NBT Bancorp Inc. and Subsidiaries
Average Year-to-Date Balance Sheets
(unaudited, dollars in thousands)

   
Average
Balance
   
Interest
   
Yield/
Rates
   
Average
Balance
   
Interest
   
Yield/
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