Market Overview

NBT Bancorp Inc. Announces Record Net Income of $28.1 Million and Diluted Earnings Per Share of $0.64; Declares Cash Dividend

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NORWICH, N.Y., July 23, 2018 (GLOBE NEWSWIRE) -- NBT Bancorp Inc. ("NBT" or the "Company") (NASDAQ:NBTB) reported record net income and diluted earnings per share for both the three and six months ended June 30, 2018.

Net income for the three months ended June 30, 2018 was $28.1 million, up from $26.0 million for the first quarter of 2018 and up from $21.4 million for the second quarter of 2017. Diluted earnings per share for the three months ended June 30, 2018 was $0.64, as compared with $0.59 for the prior quarter and $0.49 for the second quarter of 2017.

Net income for the six months ended June 30, 2018 was $54.1 million, up 29.9% from $41.6 million for the same period last year. Diluted earnings per share for the six months ended June 30, 2018 was $1.23, as compared with $0.95 for the same period in 2017, an increase of 29.5%.

Highlights:

  • Quarter-to-date earnings per share up 8.5% from prior quarter and up 30.6% from prior year
  • Quarter-to-date net income up 8.2% from prior quarter and up 31.7% from prior year
  • Year-to-date loan growth of 8.4% (annualized)
  • Average demand deposits for the six months ended June 30, 2018 up 4.9% from the same period in 2017
  • Full cycle deposit beta of 3.4% through the quarter ending June 30, 20181
  • FTE net interest margin of 3.57% for the six months ended June 30, 2018
  • Nonperforming assets to total assets decreased 4 basis points from prior quarter to 0.32%

"Our focus on recruiting and developing the best team in community banking has propelled our ongoing success and our achievement of record net income and earnings per share for the second quarter and first half of 2018," said NBT President and CEO John H. Watt, Jr. "Healthy organic growth in loans and demand deposits and the growth of our retirement plan services line of business are among the drivers through which we continue to build long-term value for our shareholders," Watt added.

Net interest income was $75.7 million for the second quarter of 2018, up $2.3 million or 3.1%, from the previous quarter. Fully taxable equivalent ("FTE") net interest margin was 3.57% for the three months ended June 30, 2018, comparable to the previous quarter. The yield on average earning assets increased 7 basis points ("bps") from the prior quarter to 3.99%, primarily reflecting higher loan yields. The cost of interest bearing liabilities increased 10 bps to 0.61% for the quarter ended June 30, 2018, driven by increased short-term borrowings costs, with interest-bearing deposit costs increasing 8 bps. Average interest earning assets were up $174.2 million, or 2.1%, as compared to the prior quarter, primarily driven by a $158.3 million increase in loans.

Net interest income was $75.7 million for the second quarter of 2018, up $6.1 million, or 8.8%, from the second quarter of 2017. FTE net interest margin of 3.57% was up 13 bps from the second quarter of 2017 as the improvement in asset yields was partially offset by the increase in cost of interest bearing liabilities. Average interest earning assets were up $345.4 million, or 4.2%, from the same period in 2017, primarily driven by a $456.7 million increase in loans that was partially offset by a $107.4 million decrease in securities.

Net interest income for the first six months of 2018 was $149.2 million, up $11.1 million, or 8.0%, from the same period in 2017. FTE net interest margin of 3.57% for the six months ended June 30, 2018, was up from 3.45% for the same period in 2017 primarily due to increasing asset yields and the Company's deposit costs remaining relatively stable. Average interest earning assets were up $300.0 million, or 3.7% for the six months ended June 30, 2018, as compared to the same period in 2017, which was driven by a $419.2 million increase in loans that was partially offset by a $111.9 million decrease in securities. Interest income increased $14.2 million, or 9.4% due to the increase in earning assets combined with a 20 bp improvement in loan yields. Interest expense was up $4.1 million, or 33.4%, for the six months ended June 30, 2018 as compared to the same period in 2017 and resulted primarily from a 13 bp increase in rates driven by higher borrowing costs and a modest 7 bp increase in the cost of deposits. The Federal Reserve began raising their target fed funds rate in December 2015 and has increased the target fed funds rate by a total of 1.75% through June 30, 2018. During this same cycle of increasing rates, the Company's deposit rates have increased by 0.06%, resulting in a full cycle deposit beta of 3.4%. The favorable deposit beta was influenced by a favorable loan to deposit ratio and deposit mix.

Noninterest income for the three months ended June 30, 2018 was $34.2 million, up $2.9 million, or 9.2%, from the prior quarter and up $3.9 million, or 12.7%, from the second quarter of 2017. The increase from the prior quarter was driven by higher retirement plan administration fees, ATM and debit card fees and other noninterest income that were partially offset by lower insurance and other financial services revenue during the second quarter of 2018. Retirement plan administration fees increased in the second quarter of 2018 as compared to the first quarter of 2018 due to the acquisition of Retirement Plan Services, LLC ("RPS") in the second quarter of 2018. ATM and debit card fees increased from prior quarter due to higher number of accounts and usage. Other noninterest income increased due to higher swap fee income. The increase from the second quarter of 2017 was driven by higher retirement plan administration fees resulting from the RPS acquisition and other noninterest income due primarily to higher swap fees.

Noninterest income for the six months ended June 30, 2018 was $65.4 million, up $6.4 million, or 10.8%, from the same period in 2017. The increase from the prior year was driven by higher retirement plan administration fees due to the acquisitions of RPS in the second quarter of 2018 and of Downeast Pension Services in the second quarter of 2017. Other noninterest income in the first half of 2018 increased compared to the same period of 2017 due primarily to higher swap fee income and non-recurring gains recognized in the first six months of 2018.

Noninterest expense for the three months ended June 30, 2018 was $64.9 million, up $0.6 million, or 1.0%, from the prior quarter and up $4.6 million, or 7.6%, from the second quarter of 2017. The increase from the prior quarter was driven by a $1.2 million increase in salaries and employee benefits primarily due to the acquisition of RPS that were partially offset by a decrease in seasonal occupancy expense. The increase from the second quarter of 2017 was driven by an increase in salaries and employee benefits expenses primarily due to the RPS acquisition, wage increases from tax reform initiatives and higher incentive compensation.

Noninterest expense for the six months ended June 30, 2018 was $129.2 million, up $7.6 million, or 6.2%, from the same period in 2017. The increase from the prior year was driven by higher salaries and employee benefits and equipment expense that were partially offset by lower other noninterest expenses in the first half of 2018 as compared to the same period of 2017 due primarily to lower retirement plan costs. The increase in salaries and employee benefits was primarily due to the RPS acquisition in second quarter of 2018, the acquisition of Downeast Pension Services in the second quarter of 2017, timing of incentive compensation and wage increases from tax reform initiatives.

Income tax expense for the three months ended June 30, 2018 was $8.1 million, up $1.1 million, or 15.7%, from the prior quarter and down $2.6 million, or 24.0%, from the second quarter of 2017. The effective tax rate of 22.4% for the second quarter of 2018 was up from 21.2% for the first quarter of 2018 and down from 33.3% for the second quarter of 2017. The increase in income tax expense from the prior quarter was due to a lower income tax benefit from equity-based transactions and higher level of taxable income. The decrease in income tax expense from the second quarter of 2017 was due to the lower effective tax rate from the Tax Cuts and Jobs Act partially offset by a higher level of taxable income. Excluding the tax benefit from equity-based transactions, the effective tax rate was 22.5% for both the second quarter of 2018 and first quarter of 2018.

Income tax expense for the six months ended June 30, 2018 was $15.1 million, down $3.9 million, or 20.3% from the same period of 2017. The effective tax rate of 21.8% for the first six months of 2018 was down from 31.3% for the same period in the prior year. The decrease in income tax expense from the prior year was due to the lower effective tax rate from the Tax Cuts and Jobs Act partially offset by a higher level of taxable income and lower tax benefit from equity-based transactions. Excluding the tax benefit from equity-based transactions, the effective tax rate was 22.5% and 33.9% for the six months ending June 30, 2018 and 2017, respectively.

Asset Quality

Net charge-offs of $6.5 million for the three months ended June 30, 2018 were down as compared to $6.8 million for the prior quarter and $6.7 million for the second quarter of 2017. Due primarily to loan growth, provision expense was higher at $8.8 million for the three months ended June 30, 2018, as compared with $7.5 million for the prior quarter and $7.6 million for the second quarter of 2017. Annualized net charge-offs to average loans for the second quarter of 2018 was 0.39%, down from 0.42% for the prior quarter and from 0.42% for the second quarter of 2017.

Net charge-offs of $13.3 million for the six months ended June 30, 2018 were down as compared to $13.5 million for the same period of 2017. Provision expense was $16.3 million for the six months ended June 30, 2018, as compared with $14.9 million for the same period of 2017. Provision expense increased compared to the first six months of 2017 primarily due to loan growth. Annualized net charge-offs to average loans for the first six months of 2018 was 0.40% as compared with 0.44% for the first six months of 2017.

Nonperforming loans to total loans was 0.38% at June 30, 2018, down 5 bps from 0.43% for the prior quarter and down 12 bps from 0.50% at June 30, 2017. Past due loans as a percentage of total loans were 0.50% at June 30, 2018, down from 0.53% at March 31, 2018 and 0.59% at June 30, 2017.

The allowance for loan losses totaled $72.5 million at June 30, 2018, compared to $70.2 million at March 31, 2018 and $66.6 million at June 30, 2017. The allowance for loan losses as a percentage of loans was 1.06% (1.11% excluding acquired loans) at June 30, 2018, compared to 1.06% (1.12% excluding acquired loans) at March 31, 2018 and to 1.05% (1.13% excluding acquired loans) at June 30, 2017.

Balance Sheet

Total assets were $9.5 billion at June 30, 2018, up $330.3 million, or 3.6%, from December 31, 2017. Loans were $6.9 billion at June 30, 2018, up $274.3 million, or 4.2%, from December 31, 2017. Total deposits were $7.3 billion at June 30, 2018, up $173.8 million, or 2.4%, from December 31, 2017, reflecting growth in core and municipal deposits. Stockholders' equity was $978.9 million, representing a total equity-to-total assets ratio of 10.34% at June 30, 2018, compared with $958.2 million or a total equity-to-total assets ratio of 10.49% at December 31, 2017.

Dividend

The NBT Board of Directors approved a third-quarter 2018 cash dividend of $0.25 per share at a meeting held today. The dividend will be paid on September 14, 2018 to shareholders of record as of August 31, 2018.

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, N.Y., with total assets of $9.5 billion at June 30, 2018. The Company primarily operates through NBT Bank, N.A., a full-service community bank and through two financial services companies. NBT Bank, N.A. has 152 banking locations in New York, Pennsylvania, Vermont, Massachusetts, New Hampshire and Maine. EPIC Retirement Plan Services, based in Rochester, N.Y., is a full-service 401(k) plan recordkeeping firm. NBT Insurance Agency, LLC, based in Norwich, N.Y., is a full-service insurance agency. More information about NBT and its divisions is available online at: www.nbtbancorp.com, www.nbtbank.com, www.epic1st.com and www.nbtinsurance.com.

Forward-Looking Statements

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

Non-GAAP Measures

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

______________________________

1 The change in the Company's quarterly deposit costs from December 31, 2015 to June 30, 2018 of 0.06% divided by the change in Federal Reserve's target fed funds rate from December 2015 to June 30, 2018 of 1.75%


   
NBT Bancorp Inc. and Subsidiaries  
Selected Financial Data  
(unaudited, dollars in thousands except per share data)  
             
    2018     2017    
Profitability: 2nd Q 1st Q 4th Q 3rd Q 2nd Q  
Diluted earnings per share $    0.64   $ 0.59   $ 0.40   $ 0.52   $ 0.49    
Weighted average diluted common shares outstanding   44,016,940     43,975,248     43,957,571     43,914,536     43,901,207    
Return on average assets (1)   1.21 %   1.15 %   0.77 %   1.00 %   0.95 %  
Return on average equity (1)   11.64 %   10.99 %   7.27 %   9.55 %   9.11 %  
Return on average tangible common equity (1)(3)   17.08 %   15.95 %   10.65 %   13.99 %   13.46 %  
Net interest margin (1)(2)   3.57 %   3.57 %   3.52 %   3.47 %   3.44 %  
             
  6 Months ended June 30,    
Profitability:   2018     2017      
Diluted earnings per share $    1.23   $ 0.95      
Weighted average diluted common shares outstanding   43,991,731     43,886,536      
Return on average assets (1)   1.18 %   0.94 %    
Return on average equity (1)   11.32 %   9.02 %    
Return on average tangible common equity (1)(4)   16.52 %   13.36 %    
Net interest margin (1)(2)   3.57 %   3.45 %    
             
(1) Annualized.  
(2) Calculated on a FTE basis.  
(3) Non-GAAP measure - excludes amortization of intangible assets (net of tax) from net income and average tangible common equity is calculated as follows:  
             
    2018     2017    
  2nd Q 1st Q 4th Q 3rd Q 2nd Q  
Net income $    28,121   $ 25,986   $ 17,637   $ 22,876   $ 21,359    
Amortization of intangible assets (net of tax)     822     686     594     613     642    
Net income, excluding intangibles amortization $    28,943   $ 26,672   $ 18,231   $ 23,489   $ 22,001    
             
Average stockholders' equity $    969,029   $ 959,044   $ 962,660   $ 950,557   $ 940,897    
Less: average goodwill and other intangibles     289,250     281,027     283,554     284,536     285,388    
Average tangible common equity $    679,779   $ 678,017   $ 679,106   $ 666,021   $ 655,509    
             
(4) Non-GAAP measure - excludes amortization of intangible assets (net of tax) from net income and average tangible common equity is calculated as follows:  
             
  6 Months ended June 30,        
    2018     2017      
Net income $    54,107   $ 41,638          
Amortization of intangible assets (net of tax)     1,508     1,239          
Net income, excluding intangibles amortization $    55,615   $ 42,877          
             
Average stockholders' equity $    964,064   $ 930,529          
Less: average goodwill and other intangibles     285,161     283,094          
Average tangible common equity $    678,903   $ 647,435          
             
Note: Year-to-date EPS may not equal sum of quarters due to differences in outstanding shares.  
             

 

   
NBT Bancorp Inc. and Subsidiaries  
Selected Financial Data  
(unaudited, dollars in thousands except per share data)  
             
    2018     2017    
  2nd Q 1st Q 4th Q 3rd Q 2nd Q  
Balance sheet data:            
Securities available for sale $  1,192,939   $ 1,265,912   $ 1,255,925   $ 1,357,614   $ 1,365,521    
Securities held to maturity     544,163     487,126     484,073     494,309     515,628    
Net loans     6,786,613     6,576,924     6,515,273     6,398,584     6,301,311    
Total assets     9,467,138     9,230,834     9,136,812     9,155,396     9,076,418    
Total deposits     7,344,449     7,393,928     7,170,636     7,231,236     7,015,284    
Total borrowings     1,028,971     776,032     909,188     872,060     1,021,339    
Total liabilities     8,488,209     8,278,104     8,178,635     8,200,158     8,136,057    
Stockholders' equity     978,929     952,730     958,177     955,238     940,361    
             
Asset quality:            
Nonaccrual loans $    24,006   $ 25,426   $ 25,708   $ 23,453   $ 29,134    
90 days past due and still accruing     2,209     2,934     5,410     3,388     2,849    
Total nonperforming loans     26,215     28,360     31,118     26,841     31,983    
Other real estate owned     4,349     4,949     4,529     4,230     4,747    
Total nonperforming assets     30,564     33,309     35,647     31,071     36,730    
Allowance for loan losses     72,450     70,200     69,500     68,350     66,600    
             
Asset quality ratios (total):            
Allowance for loan losses to total loans   1.06 %   1.06 %   1.06 %   1.06 %   1.05 %  
Total nonperforming loans to total loans   0.38 %   0.43 %   0.47 %   0.42 %   0.50 %  
Total nonperforming assets to total assets   0.32 %   0.36 %   0.39 %   0.34 %   0.40 %  
Allowance for loan losses to total nonperforming loans   276.37 %   247.53 %   223.34 %   254.65 %   208.24 %  
Past due loans to total loans   0.50 %   0.53 %   0.63 %   0.63 %   0.59 %  
Net charge-offs to average loans (1)   0.39 %   0.42 %   0.43 %   0.38 %   0.42 %  
             
Asset quality ratios (originated) (2):            
Allowance for loan losses to loans   1.11 %   1.12 %   1.12 %   1.13 %   1.13 %  
Nonperforming loans to loans   0.36 %   0.41 %   0.46 %   0.39 %   0.48 %  
Allowance for loan losses to nonperforming loans   306.08 %   273.54 %   243.85 %   289.67 %   235.08 %  
Past due loans to loans   0.50 %   0.53 %   0.65 %   0.65 %   0.61 %  
             
Capital:            
Equity to assets   10.34 %   10.32 %   10.49 %   10.43 %   10.36 %  
Book value per share $    22.43   $ 21.84   $ 22.01   $ 21.94   $ 21.61    
Tangible book value per share (3) $    15.73   $ 15.41   $ 15.54   $ 15.42   $ 15.06    
Tier 1 leverage ratio   9.28 %   9.26 %   9.14 %   9.12 %   9.08 %  
Common equity tier 1 capital ratio   10.04 %   10.12 %   10.06 %   10.08 %   9.96 %  
Tier 1 capital ratio   11.35 %   11.48 %   11.42 %   11.46 %   11.36 %  
Total risk-based capital ratio   12.34 %   12.47 %   12.42 %   12.45 %   12.32 %  
Common stock price (end of period) $    38.15   $ 35.48   $ 36.80   $ 36.72   $ 36.95    
             
(1)  Annualized.  
(2)  Non-GAAP measure - Excludes acquired loans.  
(3)  Non-GAAP measure - Stockholders' equity less goodwill and intangible assets divided by common shares outstanding.  
             

 

   
NBT Bancorp Inc. and Subsidiaries   
Consolidated Balance Sheets  
(unaudited, dollars in thousands)  
       
  June 30, December 31,  
Assets: 2018 2017  
Cash and due from banks $    149,723 $ 156,852  
Short-term interest bearing accounts     2,760   2,812  
Equity securities, at fair value (1)     24,293   -  
Securities available for sale, at fair value (1)     1,192,939   1,255,925  
Securities held to maturity (fair value $532,979 and $481,871)     544,163   484,073  
Trading securities (1)     -    11,467  
Federal Reserve Bank and Federal Home Loan Bank stock     54,223   46,706  
Loans     6,859,063   6,584,773  
Less allowance for loan losses     72,450   69,500  
Net loans $    6,786,613 $ 6,515,273  
Premises and equipment, net     78,578   81,305  
Goodwill     274,769   268,043  
Intangible assets, net     17,630   13,420  
Bank owned life insurance     174,952   172,388  
Other assets     166,495   128,548  
Total assets $    9,467,138 $    9,136,812  
       
Liabilities and stockholders' equity:      
Demand (noninterest bearing) $    2,343,948 $ 2,286,892  
Savings, NOW, and money market     4,136,449   4,076,978  
Time     864,052   806,766  
Total deposits $    7,344,449 $ 7,170,636  
Short-term borrowings     853,997   719,123  
Long-term debt     73,778   88,869  
Junior subordinated debt     101,196   101,196  
Other liabilities     114,789   98,811  
Total liabilities $    8,488,209 $ 8,178,635  
       
Total stockholders' equity $    978,929 $ 958,177  
       
Total liabilities and stockholders' equity $    9,467,138 $ 9,136,812  
       
(1) Available for sale and trading equity securities amounts reclassified from securities available for sale and trading securities to equity securities for the current period, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.  
       

 

   
NBT Bancorp Inc. and Subsidiaries   
Consolidated Statements of Income  
(unaudited, dollars in thousands except per share data)  
           
  Three Months Ended Six Months Ended  
  June 30, June 30,  
    2018   2017   2018   2017  
Interest, fee and dividend income:          
Interest and fees on loans $    74,172 $ 65,286 $    144,615 $ 129,313  
Securities available for sale (1)   7,003   7,218     13,929   14,227  
Securities held to maturity   2,811   2,736     5,436   5,517  
Other   781   654     1,547   1,273  
Total interest, fee and dividend income $    84,767 $ 75,894 $    165,527 $ 150,330  
Interest expense:          
Deposits $    5,079 $ 3,536 $    9,010 $ 7,010  
Short-term borrowings   2,455   1,366     4,421   2,505  
Long-term debt   452   599     928   1,205  
Junior subordinated debt   1,040   772     1,941   1,498  
Total interest expense $    9,026 $ 6,273 $    16,300 $ 12,218  
Net interest income $    75,741 $ 69,621 $    149,227 $ 138,112  
Provision for loan losses   8,778   7,567     16,274   14,946  
Net interest income after provision for loan losses $    66,963 $ 62,054 $    132,953 $ 123,166  
Noninterest income:          
Insurance and other financial services revenue $    5,826 $ 5,621 $    12,330 $ 12,391  
Service charges on deposit accounts   4,246   4,161     8,218   8,138  
ATM and debit card fees   5,816   5,518     11,089   10,468  
Retirement plan administration fees   7,296   5,437     12,635   9,609  
Trust   5,265   5,161     10,143   9,693  
Bank owned life insurance income   1,217   1,218     2,564   2,629  
Net securities gains     91   2     163   2  
Other (1)   4,401   3,186     8,293   6,124  
Total noninterest income $    34,158 $ 30,304 $    65,435 $ 59,054  
Noninterest expense:          
Salaries and employee benefits (2) $    37,726 $ 33,503 $    74,293 $ 67,736  
Occupancy   5,535   5,184     11,654   11,354  
Data processing and communications   4,508   4,229     8,787   8,427  
Professional fees and outside services   3,336   3,609     6,828   6,641  
Equipment   4,151   3,793     8,189   7,491  
Office supplies and postage   1,504   1,640     3,077   3,248  
FDIC expense     1,092   1,136     2,293   2,314  
Advertising   700   656     1,037   1,046  
Amortization of intangible assets   1,096   1,039     2,010   2,006  
Loan collection and other real estate owned, net   908   664     2,245   1,943  
Other (2)   4,332   4,868     8,747   9,397  
Total noninterest expense $    64,888 $ 60,321 $    129,160 $ 121,603  
Income before income tax expense $    36,233 $ 32,037 $    69,228 $ 60,617  
Income tax expense   8,112   10,678     15,121   18,979  
Net income $    28,121 $ 21,359 $    54,107 $ 41,638  
Earnings Per Share:          
Basic $    0.64 $ 0.49 $    1.24 $ 0.96  
Diluted $    0.64 $ 0.49 $    1.23 $ 0.95  
           
Note:  Year-to-date EPS may not equal sum of quarters due to differences in outstanding shares.    
           
(1) Income on available for sale and trading equity securities amounts reclassified from interest, fee and dividend income on securities available for sale to other noninterest income for the current period, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.  
(2) Amounts reclassified for the prior period from salaries and employee benefits to other expenses related to the adoption of Accounting Standard Update No. 2017-07, Compensation – Retirement Benefits (Topic 715), in the first quarter of 2018.  
   


               
NBT Bancorp Inc. and Subsidiaries
Quarterly Consolidated Statements of Income
(unaudited, dollars in thousands except per share data)
                         
  2018
2017
 
  2nd Q 1st Q 4th Q 3rd Q 2nd Q  
Interest, fee and dividend income:                      
Interest and fees on loans $ 74,172 $ 70,443 $ 69,697 $ 68,086 $ 65,286  
Securities available for sale (1)   7,003   6,926   7,059   7,278   7,218  
Securities held to maturity   2,811   2,625   2,671   2,746   2,736  
Other   781   766   803   737   654  
Total interest, fee and dividend income $ 84,767 $ 80,760 $ 80,230 $ 78,847 $ 75,894  
Interest expense:            
Deposits $ 5,079 $ 3,931 $ 3,817 $ 3,648 $ 3,536  
Short-term borrowings   2,455   1,966   1,621   1,870   1,366  
Long-term debt   452   476   505   589   599  
Junior subordinated debt   1,040   901   836   810   772  
Total interest expense $ 9,026 $ 7,274 $ 6,779 $ 6,917 $ 6,273  
Net interest income $ 75,741 $ 73,486 $ 73,451 $ 71,930 $ 69,621  
Provision for loan losses   8,778   7,496   8,153   7,889   7,567  
Net interest income after provision for loan losses $ 66,963 $ 65,990 $ 65,298 $ 64,041 $ 62,054  
Noninterest income:            
Insurance and other financial services revenue $ 5,826 $ 6,504 $ 5,605 $ 5,536 $ 5,621  
Service charges on deposit accounts   4,246   3,972   4,351   4,261   4,161  
ATM and debit card fees   5,816   5,273   5,347   5,557   5,518  
Retirement plan administration fees   7,296   5,339   5,332   5,272   5,437  
Trust   5,265   4,878   4,966   4,927   5,161  
Bank owned life insurance income   1,217   1,347   1,262   1,284   1,218  
Net securities gains (losses)   91   72   1,869   (4)   2  
Other (1)   4,401   3,892   2,740   3,945   3,186  
Total noninterest income $ 34,158 $ 31,277 $ 31,472 $ 30,778 $ 30,304  
Noninterest expense:            
Salaries and employee benefits (2) $ 37,726 $ 36,567 $ 33,812 $ 33,674 $ 33,503  
Occupancy   5,535   6,119   5,280   5,174   5,184  
Data processing and communications   4,508   4,279   4,242   4,399   4,229  
Professional fees and outside services   3,336   3,492   3,751   3,107   3,609  
Equipment   4,151   4,038   4,001   3,733   3,793  
Office supplies and postage   1,504   1,573   1,604   1,432   1,640  
FDIC expense   1,092   1,201   1,196   1,257   1,136  
Advertising   700   337   1,033   665   656  
Amortization of intangible assets   1,096
  914   961   993   1,039  
Loan collection and other real estate owned, net   908   1,337   1,136   1,684   664  
Other (2)   4,332   4,415   6,428   4,483   4,868  
Total noninterest expense $ 64,888 $ 64,272 $ 63,444 $ 60,601 $ 60,321  
Income before income tax expense $ 36,233 $ 32,995 $ 33,326 $ 34,218 $ 32,037  
Income tax expense   8,112   7,009   15,689   11,342   10,678  
Net income $ 28,121 $ 25,986 $ 17,637 $ 22,876 $ 21,359  
Earnings Per Share:                        
Basic $ 0.64 $ 0.60 $ 0.40 $ 0.52 $ 0.49    
Diluted $ 0.64 $ 0.59 $ 0.40 $ 0.52 $ 0.49    
                         
(1) Income on available for sale and trading equity securities amounts reclassified from interest, fee and dividend income on securities available for sale to other noninterest income for the current period, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.
 
(2) Amounts reclassified for the prior periods from salaries and employee benefits to other expenses related to the adoption of Accounting Standard Update No. 2017-07, Compensation – Retirement Benefits (Topic 715), in the first quarter of 2018.
 

 

   
NBT Bancorp Inc. and Subsidiaries  
Average Quarterly Balance Sheets  
(unaudited, dollars in thousands)  
                       
  Average
Balance
Yield /
Rates
Average
Balance
Yield /
Rates
Average
Balance
Yield /
Rates
Average
Balance
Yield /
Rates
Average
Balance
Yield /
Rates
 
Three Months ended,  Q2 - 2018 Q1 - 2018 Q4 - 2017 Q3 - 2017 Q2 - 2017  
Assets:                      
Short-term interest bearing accounts $    3,574 5.16 % $ 2,818 5.18 % $ 5,804 2.39 % $ 9,000 2.42 % $ 9,497 1.82 %  
Securities available for sale (1)(3)     1,266,304 2.23 %   1,273,634 2.22 %   1,313,870 2.16 %   1,374,739 2.13 %   1,363,314 2.15 %  
Securities held to maturity (1)     503,501 2.50 %   482,375 2.48 %   490,182 2.68 %   506,324 2.66 %   513,888 2.63 %  
Investment in FRB and FHLB Banks     48,184 6.12 %   46,844 6.32 %   44,320 6.87 %   49,902 5.42 %   46,132 5.31 %  
Loans (2)     6,750,710 4.41 %   6,592,447 4.34 %   6,528,449 4.25 %   6,400,287 4.23 %   6,294,056 4.17 %  
Total interest earning assets $   8,572,273 3.99 % $ 8,398,118 3.92 % $ 8,382,625 3.84 % $ 8,340,252 3.80 % $ 8,226,887 3.75 %  
Other assets (3)     766,604     746,172     747,468     759,636     753,383    
Total assets $   9,338,877   $ 9,144,290   $ 9,130,093   $ 9,099,888   $ 8,980,270    
                       
Liabilities and stockholders' equity:                      
Money market deposit accounts $   1,699,956 0.43 % $ 1,655,308 0.27 % $ 1,725,242 0.25 % $ 1,652,730 0.23 % $ 1,723,594 0.21 %  
NOW deposit accounts     1,222,889 0.16 %   1,211,029 0.13 %   1,200,651 0.12 %   1,130,940 0.10 %   1,138,237 0.08 %  
Savings deposits     1,289,062 0.06 %   1,248,432 0.06 %   1,215,932 0.06 %   1,232,823 0.06 %   1,232,301 0.06 %  
Time deposits     858,080 1.22 %   802,959 1.13 %   792,969 1.10 %   805,435 1.09 %   824,398 1.08 %  
Total interest bearing deposits $   5,069,987 0.40 % $ 4,917,728 0.32 % $ 4,934,794 0.31 % $ 4,821,928 0.30 % $ 4,918,530 0.29 %  
Short-term borrowings     706,694 1.39 %   712,220 1.12 %   684,447 0.94 %   773,074 0.96 %   643,971 0.85 %  
Long-term debt     84,676 2.14 %   88,844 2.17 %   81,010 2.47 %   88,935 2.63 %   99,865 2.41 %  
Junior subordinated debt     101,196 4.12 %   101,196 3.61 %   101,196 3.28 %   101,196 3.18 %   101,196 3.06 %  
Total interest bearing liabilities $   5,962,553 0.61 % $ 5,819,988 0.51 % $ 5,801,447 0.46 % $ 5,785,133 0.47 % $ 5,763,562 0.44 %  
Demand deposits     2,294,023     2,259,955     2,266,672     2,260,973     2,181,952    
Other liabilities     113,272     105,303     99,314     103,225     93,859    
Stockholders' equity     969,029     959,044     962,660     950,557     940,897    
Total liabilities and stockholders' equity $   9,338,877   $ 9,144,290   $ 9,130,093   $ 9,099,888   $ 8,980,270    
                       
Interest rate spread   3.38 %   3.41 %   3.38 %   3.33 %   3.31 %  
Net interest margin (FTE)   3.57 %   3.57 %   3.52 %   3.47 %   3.44 %  
                       
(1) Securities are shown at average amortized cost.  
(2) For purposes of these computations, nonaccrual loans are included in the average loan balances outstanding.  
(3) For purposes of the average balance sheet presentation, equity securities amounts reclassified for the current period from securities available for sale to other assets, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.  
Note: Interest income for tax-exempt securities and loans has been adjusted to a FTE basis using the statutory Federal income tax rate of 21% for 2018 and 35% for 2017.  

 

   
NBT Bancorp Inc. and Subsidiaries  
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,    2018     2017    
Assets:              
Short-term interest bearing accounts $    3,198 $    82 5.17 % $ 11,906 $ 90 1.52 %  
Securities available for sale (1)(3)     1,269,949     14,017 2.23 %   1,357,797   14,442 2.14 %  
Securities held to maturity (1)     492,996     6,081 2.49 %   517,068   6,782 2.64 %  
Investment in FRB and FHLB Banks     47,518     1,465 6.22 %   46,228   1,183 5.16 %  
Loans (2)     6,672,016     144,825 4.38 %   6,252,786   129,725 4.18 %  
Total interest earning assets $    8,485,677 $    166,470 3.96 % $ 8,185,785 $ 152,222 3.75 %  
Other assets (3)     756,444       750,943      
Total assets $    9,242,121     $ 8,936,728      
               
Liabilities and stockholders' equity:              
Money market deposit accounts $    1,677,755 $    2,933 0.35 % $ 1,705,925 $ 1,814 0.21 %  
NOW deposit accounts     1,216,992     882 0.15 %   1,140,720   410 0.07 %  
Savings deposits     1,268,859     354 0.06 %   1,204,418   329 0.06 %  
Time deposits     830,671     4,841 1.18 %   835,840   4,457 1.08 %  
Total interest bearing deposits $    4,994,277 $    9,010 0.36 % $ 4,886,903 $ 7,010 0.29 %  
Short-term borrowings     709,442     4,421 1.26 %   650,669   2,505 0.78 %  
Long-term debt     86,749     928 2.16 %   101,945   1,205 2.38 %  
Junior subordinated debt     101,196     1,941 3.87 %   101,196   1,498 2.99 %  
Total interest bearing liabilities $    5,891,664 $    16,300 0.56 % $ 5,740,713 $ 12,218 0.43 %  
Demand deposits     2,277,083       2,170,983      
Other liabilities     109,310       94,503      
Stockholders' equity     964,064       930,529      
Total liabilities and stockholders' equity $    9,242,121     $ 8,936,728      
Net interest income (FTE)       150,170       140,004    
Interest rate spread     3.40 %     3.32 %  
Net interest margin (FTE)     3.57 %     3.45 %  
Taxable equivalent adjustment       943       1,892    
Net interest income   $    149,227     $ 138,112    
               
(1) Securities are shown at average amortized cost.  
(2) For purposes of these computations, nonaccrual loans are included in the average loan balances outstanding.  
(3) For purposes of the average balance sheet presentation, equity securities amounts reclassified for the current period from securities available for sale to other assets, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.  
Note: Interest income for tax-exempt securities and loans has been adjusted to a FTE basis using the statutory Federal income tax rate of 21% for 2018 and 35% for 2017.  

 

 
NBT Bancorp Inc. and Subsidiaries
Consolidated Loan Balances
(unaudited, dollars in thousands)
           
  2018
2017
  2nd Q 1st Q 4th Q 3rd Q 2nd Q
Commercial $    1,299,437 $ 1,252,729 $ 1,258,212 $ 1,247,753 $ 1,285,316
Commercial real estate     1,891,119   1,795,101   1,769,620   1,714,420   1,620,998
Residential real estate mortgages     1,350,761   1,331,587   1,321,044   1,301,377   1,274,157
Dealer finance     1,252,843   1,238,051   1,227,870   1,220,107   1,213,625
Specialty lending     507,618   470,670   439,326   408,552   401,073
Home equity     488,493   491,807   498,179   505,213   504,125
Other consumer     68,792   67,179   70,522   69,512   68,617
Total loans $    6,859,063 $ 6,647,124 $ 6,584,773 $ 6,466,934 $ 6,367,911
             

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

 

 

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