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 September 30, 2020.

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 October 30, 2020, there were 43,625,286 shares outstanding of the Registrant’s Common Stock, $0.01 par value per share.




NBT BANCORP INC.
FORM 10-Q-Quarter Ended September 30, 2020

TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION

Item 1
Financial Statements
 
     
 
3
     
 
4
     
 
5
     
 
6
     
 
7
     
 
9
     
Item 2
40
     
Item 3
56
     
Item 4
56
     
PART II
OTHER INFORMATION
 
     
Item 1
57
Item 1A
57
Item 2
58
Item 3
58
Item 4
58
Item 5
58
Item 6
59
     
 
60


2


Item 1 – FINANCIAL STATEMENTS

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

 
September 30,
   
December 31,
 
   
2020
   
2019
 
(In thousands, except share and per share data)
           
Assets
           
Cash and due from banks
 
$
167,169
   
$
170,595
 
Short-term interest-bearing accounts
   
450,291
     
46,248
 
Equity securities, at fair value
   
30,758
     
27,771
 
Securities available for sale, at fair value
   
1,197,925
     
975,340
 
Securities held to maturity (fair value $684,862 and $641,262, respectively)
   
663,088
     
630,074
 
Federal Reserve and Federal Home Loan Bank stock
   
28,484
     
44,620
 
Loans held for sale
   
1,823
     
11,731
 
Loans
   
7,560,643
     
7,136,098
 
Less allowance for loan losses (1)
   
114,500
     
72,965
 
Net loans
 
$
7,446,143
   
$
7,063,133
 
Premises and equipment, net
   
73,055
     
75,631
 
Goodwill
   
280,541
     
274,769
 
Intangible assets, net
   
12,557
     
12,020
 
Bank owned life insurance
   
185,227
     
181,748
 
Other assets
   
313,151
     
202,245
 
Total assets
 
$
10,850,212
   
$
9,715,925
 
Liabilities
               
Demand (noninterest bearing)
 
$
3,163,717
   
$
2,414,383
 
Savings, NOW and money market
   
5,134,495
     
4,312,244
 
Time
   
659,971
     
861,193
 
Total deposits
 
$
8,958,183
   
$
7,587,820
 
Short-term borrowings
   
183,472
     
655,275
 
Long-term debt
   
64,126
     
64,211
 
Subordinated debt, net
   
97,943
     
-
 
Junior subordinated debt
   
101,196
     
101,196
 
Other liabilities
   
279,181
     
187,026
 
Total liabilities
 
$
9,684,101
   
$
8,595,528
 
Stockholders’ equity
               
Preferred stock, $0.01 par value. Authorized 2,500,000 shares at September 30, 2020 and December 31, 2019
 
$
-
   
$
-
 
Common stock, $0.01 par value. Authorized 100,000,000 shares at September 30, 2020 and December 31, 2019; issued 49,651,493 at September 30, 2020 and December 31, 2019
   
497
     
497
 
Additional paid-in-capital
   
577,737
     
576,708
 
Retained earnings
   
726,650
     
696,214
 
Accumulated other comprehensive income (loss)
   
2,021
     
(19,026
)
Common stock in treasury, at cost, 6,040,113 and 5,854,882 shares at September 30, 2020 and December 31, 2019, respectively
   
(140,794
)
   
(133,996
)
Total stockholders’ equity
 
$
1,166,111
   
$
1,120,397
 
Total liabilities and stockholders’ equity
 
$
10,850,212
   
$
9,715,925
 

(1) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.

See accompanying notes to unaudited interim consolidated financial statements.

3


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

 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2020
   
2019
   
2020
   
2019
 
(In thousands, except per share data)
                       
Interest, fee and dividend income
                       
Interest and fees on loans
 
$
74,998
   
$
81,082
   
$
230,996
   
$
241,674
 
Securities available for sale
   
5,603
     
5,711
     
16,956
     
17,664
 
Securities held to maturity
   
3,734
     
4,586
     
11,751
     
14,892
 
Other
   
659
     
1,002
     
2,138
     
2,728
 
Total interest, fee and dividend income
 
$
84,994
   
$
92,381
   
$
261,841
   
$
276,958
 
Interest expense
                               
Deposits
 
$
4,267
   
$
10,745
   
$
18,183
   
$
29,805
 
Short-term borrowings
   
446
     
1,989
     
3,215
     
7,986
 
Long-term debt
   
398
     
498
     
1,184
     
1,391
 
Subordinated debt
   
1,375
     
-
     
1,503
     
-
 
Junior subordinated debt
   
565
     
1,095
     
2,186
     
3,404
 
Total interest expense
 
$
7,051
   
$
14,327
   
$
26,271
   
$
42,586
 
Net interest income
 
$
77,943
   
$
78,054
   
$
235,570
   
$
234,372
 
Provision for loan losses (1)
   
3,261
     
6,324
     
51,741
     
19,408
 
Net interest income after provision for loan losses
 
$
74,682
   
$
71,730
   
$
183,829
   
$
214,964
 
Noninterest income
                               
Service charges on deposit accounts
 
$
3,087
   
$
4,330
   
$
9,613
   
$
12,790
 
ATM and debit card fees
   
7,194
     
6,277
     
19,184
     
17,958
 
Retirement plan administration fees
   
9,685
     
7,600
     
26,840
     
23,170
 
Wealth management
   
7,695
     
7,630
     
21,791
     
21,315
 
Insurance
   
3,742
     
4,000
     
11,303
     
12,291
 
Bank owned life insurance income
   
1,255
     
1,556
     
4,010
     
4,119
 
Net securities gains (losses)
   
84
     
4,036
     
(548
)
   
4,024
 
Other
   
4,985
     
4,291
     
15,968
     
12,115
 
Total noninterest income
 
$
37,727
   
$
39,720
   
$
108,161
   
$
107,782
 
Noninterest expense
                               
Salaries and employee benefits
 
$
40,451
   
$
39,352
   
$
120,918
   
$
117,275
 
Occupancy
   
5,294
     
5,335
     
16,354
     
17,053
 
Data processing and communications
   
4,058
     
4,492
     
12,370
     
13,599
 
Professional fees and outside services
   
3,394
     
3,535
     
10,694
     
10,562
 
Equipment
   
5,073
     
4,487
     
14,494
     
13,762
 
Office supplies and postage
   
1,530
     
1,667
     
4,621
     
4,835
 
FDIC expense (credit)
   
645
     
(20
)
   
1,949
     
1,946
 
Advertising
   
530
     
677
     
1,461
     
1,821
 
Amortization of intangible assets
   
856
     
874
     
2,573
     
2,735
 
Loan collection and other real estate owned, net
   
620
     
976
     
2,365
     
2,722
 
Other
   
3,857
     
8,374
     
14,730
     
18,130
 
Total noninterest expense
 
$
66,308
   
$
69,749
   
$
202,529
   
$
204,440
 
Income before income tax expense
 
$
46,101
   
$
41,701
   
$
89,461
   
$
118,306
 
Income tax expense
   
10,988
     
9,322
     
19,267
     
26,245
 
Net income
 
$
35,113
   
$
32,379
   
$
70,194
   
$
92,061
 
Earnings per share
                               
Basic
 
$
0.80
   
$
0.74
   
$
1.61
   
$
2.10
 
Diluted
 
$
0.80
   
$
0.73
   
$
1.60
   
$
2.09
 

(1) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.

See accompanying notes to unaudited interim consolidated financial statements.

4


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

 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2020
   
2019
   
2020
   
2019
 
(In thousands)
                       
Net income
 
$
35,113
   
$
32,379
   
$
70,194
   
$
92,061
 
Other comprehensive income (loss), net of tax:
                               
                                 
Securities available for sale:
                               
Unrealized net holding (losses) gains arising during the period, gross
 
$
(1,263
)
 
$
2,360
   
$
26,509
   
$
26,787
 
Tax effect
   
316
     
(590
)
   
(6,627
)
   
(6,697
)
Unrealized net holding (losses) gains arising during the period, net
 
$
(947
)
 
$
1,770
   
$
19,882
   
$
20,090
 
                                 
Reclassification adjustment for net (gains) losses in net income, gross
 
$
-
   
$
(20
)
 
$
(3
)
 
$
79
 
Tax effect
   
-
     
5
     
1
     
(20
)
Reclassification adjustment for net (gains) losses in net income, net
 
$
-
   
$
(15
)
 
$
(2
)
 
$
59
 
                                 
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, gross
 
$
157
   
$
190
   
$
495
   
$
556
 
Tax effect
   
(39
)
   
(47
)
   
(124
)
   
(139
)
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, net
 
$
118
   
$
143
   
$
371
   
$
417
 
                                 
Total securities available for sale, net
 
$
(829
)
 
$
1,898
   
$
20,251
   
$
20,566
 
                                 
Cash flow hedges:
                               
Unrealized gains (losses) on derivatives (cash flow hedges), gross
 
$
-
   
$
9
   
$
(274
)
 
$
(475
)
Tax effect
   
-
     
(2
)
   
69
     
119
 
Unrealized gains (losses) on derivatives (cash flow hedges), net
 
$
-
   
$
7
   
$
(205
)
 
$
(356
)
                                 
Reclassification of net unrealized losses (gains) on cash flow hedges to interest (income), gross
 
$
101
   
$
(395
)
 
$
192
   
$
(1,932
)
Tax effect
   
(25
)
   
98
     
(48
)
   
483
 
Reclassification of net unrealized losses (gains) on cash flow hedges to interest (income), net
 
$
76
   
$
(297
)
 
$
144
   
$
(1,449
)
                                 
Total cash flow hedges, net
 
$
76
   
$
(290
)
 
$
(61
)
 
$
(1,805
)
                                 
Pension and other benefits:
                               
Amortization of prior service cost and actuarial losses, gross
 
$
381
   
$
672
   
$
1,143
   
$
1,985
 
Tax effect
   
(95
)
   
(168
)
   
(286
)
   
(496
)
Amortization of prior service cost and actuarial losses, net
 
$
286
   
$
504
   
$
857
   
$
1,489
 
                                 
Total pension and other benefits, net
 
$
286
   
$
504
   
$
857
   
$
1,489
 
                                 
Total other comprehensive income
 
$
(467
)
 
$
2,112
   
$
21,047
   
$
20,250
 
Comprehensive income
 
$
34,646
   
$
34,491
   
$
91,241
   
$
112,311
 

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 June 30, 2020
 
$
497
   
$
577,197
   
$
703,322
   
$
2,488
   
$
(140,852
)
 
$
1,142,652
 
Net income
   
-
     
-
     
35,113
     
-
     
-
     
35,113
 
Cash dividends - $0.27 per share
   
-
     
-
     
(11,785
)
   
-
     
-
     
(11,785
)
Net issuance of 3,030 shares to employee and other stock plans
   
-
     
(108
)
   
-
     
-
     
58
     
(50
)
Stock-based compensation
   
-
     
648
     
-
     
-
     
-
     
648
 
Other comprehensive (loss)
   
-
     
-
     
-
     
(467
)
   
-
     
(467
)
Balance at September 30, 2020
 
$
497
   
$
577,737
   
$
726,650
   
$
2,021
   
$
(140,794
)
 
$
1,166,111
 
                                                 
Balance at June 30, 2019
 
$
497
   
$
575,794
   
$
658,107
   
$
(25,036
)
 
$
(134,539
)
 
$
1,074,823
 
Net income
   
-
     
-
     
32,379
     
-
     
-
     
32,379
 
Cash dividends - $0.26 per share
   
-
     
-
     
(11,396
)
   
-
     
-
     
(11,396
)
Net issuance of 17,234 shares to employee and other stock plans
   
-
     
(104
)
   
-
     
-
     
331
     
227
 
Stock-based compensation
   
-
     
456
     
-
     
-
     
-
     
456
 
Other comprehensive income
   
-
     
-
     
-
     
2,112
     
-
     
2,112
 
Balance at September 30, 2019
 
$
497
   
$
576,146
   
$
679,090
   
$
(22,924
)
 
$
(134,208
)
 
$
1,098,601
 

 
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, 2019
 
$
497
   
$
576,708
   
$
696,214
   
$
(19,026
)
 
$
(133,996
)
 
$
1,120,397
 
Net income
   
-
     
-
     
70,194
     
-
     
-
     
70,194
 
Cumulative effect adjustment for ASU 2016-13 implementation
   
-
     
-
     
(4,339
)
   
-
     
-
     
(4,339
)
Cash dividends - $0.81 per share
   
-
     
-
     
(35,419
)
   
-
     
-
     
(35,419
)
Purchase of 263,507 treasury shares
   
-
     
-
     
-
     
-
     
(7,980
)
   
(7,980
)
Net issuance of 78,276 shares to employee and other stock plans
   
-
     
(2,928
)
   
-
     
-
     
1,182
     
(1,746
)
Stock-based compensation
   
-
     
3,957
     
-
     
-
     
-
     
3,957
 
Other comprehensive income
   
-
     
-
     
-
     
21,047
     
-
     
21,047
 
Balance at September 30, 2020
 
$
497
   
$
577,737
   
$
726,650
   
$
2,021
   
$
(140,794
)
 
$
1,166,111
 
                                                 
Balance at December 31, 2018
 
$
497
   
$
575,466
   
$
621,203
   
$
(43,174
)
 
$
(136,083
)
 
$
1,017,909
 
Net income
   
-
     
-
     
92,061
     
-
     
-
     
92,061
 
Cash dividends - $0.78 per share
   
-
     
-
     
(34,174
)
   
-
     
-
     
(34,174
)
Net issuance of 113,679 shares to employee and other stock plans
   
-
     
(2,916
)
   
-
     
-
     
1,875
     
(1,041
)
Stock-based compensation
   
-
     
3,596
     
-
     
-
     
-
     
3,596
 
Other comprehensive income
   
-
     
-
     
-
     
20,250
     
-
     
20,250
 
Balance at September 30, 2019
 
$
497
   
$
576,146
   
$
679,090
   
$
(22,924
)
 
$
(134,208
)
 
$
1,098,601
 

See accompanying notes to unaudited interim consolidated financial statements.

6


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

 
Nine Months Ended
September 30,
 
   
2020
   
2019
 
(In thousands)
           
Operating activities
           
Net income
 
$
70,194
   
$
92,061
 
Adjustments to reconcile net income to net cash provided by operating activities
               
Provision for loan losses
   
51,741
     
19,408
 
Depreciation and amortization of premises and equipment
   
7,378
     
7,106
 
Net amortization on securities
   
2,812
     
2,495
 
Amortization of intangible assets
   
2,573
     
2,735
 
Amortization of operating lease right-of-use assets
   
5,549
     
5,396
 
Excess tax benefit on stock-based compensation
   
(