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NBT Bancorp Inc. Announces First Quarter Net Income of $10.4 Million, or $0.23 per Diluted Common Share

NORWICH, N.Y., April 27, 2020 (GLOBE NEWSWIRE) -- NBT Bancorp Inc. (“NBT” or the “Company”) (NBTB) reported net income of $10.4 million, or $0.23 per diluted common share, for the three months ended March 31, 2020. NBT’s results in the first quarter of 2020 reflect the Current Expected Credit Losses (“CECL”) accounting methodology, including the estimated impact of the COVID-19 pandemic on expected credit losses. Net income was down 64% from the previous quarter and from the first quarter of 2019 primarily due to higher provision for loan losses related to the deterioration of economic conditions caused by the COVID-19 pandemic.

Pre-provision net revenue (“PPNR”)1, excluding securities gains (losses), for the first quarter was $42.5 million compared to $42.9 million from the previous quarter and $43.0 million in the first quarter of 2019.

CEO Comments

“In the face of the rapidly changing economic conditions brought on by the COVID-19 pandemic, we have been aggressive in our response to deliver support and solutions to our customers in distress while providing for the health and safety of our employees,” said John H. Watt, Jr. “We are extremely proud of our team members who have been able to process high volumes of loans through the SBA’s Paycheck Protection Program that are helping businesses in the communities we serve to retain tens of thousands of workers.”

Watt continued, “Our earnings for the first quarter were significantly impacted by the COVID-19 pandemic and the resulting increase to our provision for expected losses under CECL accounting. The quarter was marked by strong loan growth and consistent underlying operating financial performance even in the face of a 150-basis-point drop in the federal funds rate. Our strong balance sheet and capital position, disciplined approach to credit and risk management, technology investments and diversified fee business are attributes that provide NBT with resources and flexibility to navigate these difficult times. We moved forward to complete the acquisition of Alliance Benefit Group of Illinois, Inc. as planned on April 1, 2020 by our EPIC Retirement Plan Services business unit. Our experienced and seasoned management team and knowledgeable local bankers across 7 states will maintain focus on the fundamentals of our business while supporting our customers, communities and shareholders to ensure we all emerge from the current challenges stronger together.”

First Quarter Highlights

Net Income
  • Net income of $10.4 million
  • Diluted earnings per share of $0.23
Net Interest
Income / NIM
  • Net interest income on a fully taxable equivalent basis was $77.5 million1
  • Net interest margin (“NIM”) on a fully taxable equivalent basis was 3.52%1 and flat from the fourth quarter of 2019
PPNR
  • Pre-provision net revenue (“PPNR”)1 was $41.7 million
  • Excluding securities gains (losses), PPNR was $42.5 million compared to $42.9 million in the fourth quarter of 2019 and $43.0 million in the first quarter 2019
Loans and Credit
Quality
  • Period end loans were $7.2 billion, up 6.3%, annualized, from December 31, 2019
  • Allowance for loans losses to total loans of 1.38%
  • Net charge-offs to average loans were 0.32%, annualized
  • Nonperforming assets to total assets were 0.35%
Capital
  • Tangible equity to assets of 8.55%1
  • CET1 ratio of 10.90%; Total leverage ratio of 10.02%

Company Response to Pandemic

The COVID-19 pandemic has significantly disrupted the global and local economy and the customers and communities served by NBT. In response, the Company immediately formed an Executive Task Force and engaged its established Incident Response Team to execute a comprehensive pandemic response plan. Actions taken to address the safety of employees and the needs of customers are highlighted below.

  • Employees
    • 90% of non-branch employees quickly deployed to work remotely.
    • New scheduling protocols implemented to optimize social distancing for branch staff, including drive-up/ATM and appointment-only banking.
    • Additional paid time off provided to address health and childcare needs.
    • Cross-training and redeployment programs directing staff resources to areas of greatest need.
    • Internal and external communication increased to address rapidly changing business environment and personal impact to employees.
  • Customers
    • 82% of branches remain open for drive-up service and remaining branch staff redeployed to assist in other areas.
    • Leveraged technology tools such as robotic process automation for payment extension requests and onboarding loans; increased use of electronic signatures.
    • Digital communication channels significantly enhanced with dedicated webpages and social media content.
    • Increased use of self-service with a 60% increase in mobile deposits and over 50% increase in mobile and online banking enrollment.
    • As of April 17, 2020, 11.6% of loans are in payment deferral programs:
      • 74% are commercial and 26% are consumer borrowers.
    • Over $385 million in Paycheck Protection Plan (“PPP”) loans processed through April 16; will actively participate in second PPP appropriation.

Loans

  • Period-end total loans were $7.2 billion at March 31, 2020 compared to $7.1 billion at December 31, 2019.
  • Commercial real estate increased $100.0 million to $2.2 billion; commercial and industrial loans increased $36.4 million to $1.3 billion; total consumer loans decreased $25.2 million to $3.7 billion.
  • Commercial line of credit utilization rate of 32% at March 31, 2020 remained consistent with December 31, 2019 of 32% and compared to 36% at March 31, 2019.

Deposits

  • Average total deposits in the first quarter of 2020 were $7.7 billion, compared to $7.6 billion in the fourth quarter 2019, with annualized growth of 3.8%.
  • Seasonal inflow of municipal deposits resulted in increases of $37 million on a period-average basis and $182 million on a period-end basis.

Net Interest Income and Margin

  • Net interest income for the first quarter was comparable to the fourth quarter of 2019 at $77.2 million and down slightly from the first quarter of 2019 of $77.7 million.
  • The net interest margin on a fully taxable equivalent (“FTE”) basis of 3.52% was flat from the fourth quarter of 2019 and down 12 basis points (“bps”) from the first quarter of 2019.
  • Earning asset yields were down 6 bps from the prior quarter and down 21 bps from the same quarter in the prior year. Earnings assets grew $124.2 million or 1.4% from the prior quarter.
  • The cost of interest-bearing liabilities decreased 8 bps from the prior quarter to 0.82% at March 31, 2020 and compared to 0.92% for the first quarter of 2019.
    • Cost of interest-bearing deposits decreased 8 bps from the prior quarter and were 61 bps for the month of March.
  • Total cost of deposits was 48 bps for the first quarter of 2020, down 6 bps from the prior quarter and flat with the same period in the prior year.

Credit Quality and CECL

  • Asset quality metrics remained stable in the first quarter of 2020.
  • Net charge-offs to total average loans of 32 bps compared to 30 bps in the prior quarter and 41 bps in the first quarter of 2019.
  • Nonperforming assets to total assets were 0.35% compared to 0.31% at December 31, 2019 and 0.33% at March 31, 2019, driven primarily by one commercial credit of $4.2 million.
  • Provision expense increased $23.6 million from the fourth quarter of 2019 primarily due to an increase in expected losses resulting from deterioration of the economic forecast due to the COVID-19 pandemic.
  • The allowance for loan losses was $100.0 million, or 1.38%, of total loans compared to 1.02% at December 31, 2019 and 1.07% Day 1 CECL (January 1, 2020).
  • Day 1 CECL impact resulted in a $3.0 million increase to the allowance for loan losses and a $2.8 million increase to the unfunded loan commitment reserve; retained earnings decreased $4.3 million (after-tax) compared to year-end 2019.

Noninterest Income

  • Total noninterest income, excluding securities gains (losses), was consistent with the prior quarter at $36.2 million and up $2.5 million from the prior year quarter.
  • As compared to the prior quarter, seasonally higher insurance revenues and retirement plan fees in the first quarter of 2020 were offset by lower levels of swap fees.
  • Increase from the prior year first quarter was driven by higher swap fees in other noninterest income and higher wealth management income partly reduced by lower insurance agency seasonal revenues.
  • Securities losses of $0.8 million were driven by mark-to-market adjustments on equities securities.

Noninterest Expense

  • Total noninterest expense for the first quarter was up 0.8% from the previous quarter and up 3.5% from the first quarter of 2019.
  • Significant variances to the prior quarter:
    • Salaries and benefits seasonally higher due to higher payroll taxes and stock-based compensation expenses ($1.5 million).
    • Other noninterest expense was higher in the first quarter of 2020 due to a $2.0 million increase in reserves for unfunded loan commitments due primarily to CECL adoption and COVID-19 pandemic expected losses and was partly offset by $0.7 million lower pension costs.
  • Significant variances to the first quarter of 2019:
    • Higher salaries and benefits primarily due to merit increases, higher number of employees, one additional business day and higher medical costs.
    • Other expenses increased $1.8 million due to an increase to the unfunded loan commitments reserve, partly offset by lower pension costs.
  • Remaining portion of FDIC insurance assessment credit was used in the first quarter of 2020.

Income Taxes

  • Effective tax rate was 14.2% for the first quarter of 2020 compared to 22.0% in the fourth quarter of 2019 and 21.8% in the first quarter 2019 due to lower level of taxable income relative to total income.

Capital

  • Capital ratios remain strong with tangible common equity to tangible assets increasing 49 bps since first quarter of 2019.
  • March 31, 2020 CET1 capital ratio of 10.90%, total leverage ratio of 10.02% and total risk-based capital ratio of 13.36%.
  • Tangible common equity to tangible assets1 was 8.55% at the end of the first quarter compared to 8.84% at December 31, 2019 and 8.06% at March 31, 2019.
  • The Company repurchased 263,507 shares of common stock during the first quarter of 2020 at a weighted average price of $30.25 excluding commissions. The Company suspended repurchases during the quarter and does not expect to repurchase additional shares at this time.
  • On March 23, 2020, the Company announced a second quarter dividend of $0.27 per share, payable on June 15, 2020 to shareholders of record as of June 1, 2020.

Other Events

  • On April 1, 2020, the Company completed the acquisition of Alliance Benefit Group of Illinois, Inc. (“ABG”) based in Peoria, Illinois.
    • ABG provides retirement plan solutions for over 600 qualified retirement plans with over 40,000 plan participants and accumulated assets of $3.5 billion.
    • ABG brings 70 new team members to EPIC Retirement Plan Services (“EPIC RPS”).
    • ABG further diversifies the EPIC RPS customer base and supports its mission of “Helping America Retire.”

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, NY, with total assets of $9.95 billion at March 31, 2020. The Company primarily operates through NBT Bank, N.A., a full-service community bank, and through two financial services companies. NBT Bank, N.A. has 146 banking locations in New York, Pennsylvania, Vermont, Massachusetts, New Hampshire and Maine, and is currently entering Connecticut. EPIC Retirement Plan Services, based in Rochester, NY, is a full-service 401(k) plan recordkeeping firm. NBT Insurance Agency, LLC, based in Norwich, NY, is a full-service insurance agency. More information about NBT and its divisions is available online at: www.nbtbancorp.com, www.nbtbank.com, www.epicrps.com and www.nbtinsurance.com.

Forward-Looking Statements

This news release contains forward-looking statements. 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 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; (7) adverse changes may occur in the securities markets or with respect to inflation; and (8) 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, and 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. 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”). 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.



           
NBT Bancorp Inc. and Subsidiaries 
Selected Financial Data
(unaudited, dollars in thousands except per share data)
           
    2020     2019  
Profitability: 1st Q 4th Q 3rd Q 2nd Q 1st Q
Diluted earnings per share $ 0.23   $ 0.66   $ 0.73   $ 0.69   $ 0.66  
Weighted average diluted common shares outstanding   44,130,324     44,174,201     44,138,495     44,120,377     44,081,086  
Return on average assets (2)   0.43 %   1.20 %   1.34 %   1.28 %   1.24 %
Return on average equity (2)   3.69 %   10.36 %   11.83 %   11.63 %   11.52 %
Return on average tangible common equity (1)(2)   5.24 %   14.28 %   16.43 %   16.38 %   16.45 %
Net interest margin (1)(2)   3.52 %   3.52 %   3.57 %   3.61 %   3.64 %
           
Balance sheet data:          
Securities available for sale $ 1,000,980   $ 975,340   $ 932,173   $ 979,696   $ 951,859  
Securities held to maturity   621,359     630,074     678,435     744,601     780,565  
Net loans   7,147,383     7,063,133     6,941,444     6,891,108     6,818,907  
Total assets   9,953,543     9,715,925     9,661,386     9,635,718     9,533,510  
Total deposits   7,864,638     7,587,820     7,743,166     7,593,706     7,617,659  
Total borrowings   714,283     820,682     628,701     794,829     719,775  
Total liabilities   8,841,364     8,595,528     8,562,785     8,560,895     8,499,455  
Stockholders' equity   1,112,179     1,120,397     1,098,601     1,074,823     1,034,055  
           
Asset quality:          
Nonaccrual loans $ 29,972   $ 25,174   $ 24,623   $ 24,669   $ 25,632  
90 days past due and still accruing   2,280     3,717     8,342     2,387     3,335  
Total nonperforming loans   32,252     28,891     32,965     27,056     28,967  
Other real estate owned   2,384     1,458     2,144     2,203     2,222  
Total nonperforming assets   34,636     30,349     35,109     29,259     31,189  
Allowance for loan losses   100,000     72,965     72,365     72,165     71,405  
           
Asset quality ratios:          
Allowance for loan losses to total loans   1.38 %   1.02 %   1.03 %   1.04 %   1.04 %
Total nonperforming loans to total loans   0.45 %   0.40 %   0.47 %   0.39 %   0.42 %
Total nonperforming assets to total assets   0.35 %   0.31 %   0.36 %   0.30 %   0.33 %
Allowance for loan losses to total nonperforming loans   310.06 %   252.55 %   219.52 %   266.72 %   246.50 %
Past due loans to total loans   0.51 %   0.49 %   0.57 %   0.52 %   0.52 %
Net charge-offs to average loans (2)   0.32 %   0.30 %   0.35 %   0.38 %   0.41 %
           
Capital:          
Equity to assets   11.17 %   11.53 %   11.37 %   11.15 %   10.85 %
Tangible equity ratio (1)   8.55 %   8.84 %   8.65 %   8.41 %   8.06 %
Book value per share $ 25.52   $ 25.58   $ 25.09   $ 24.56   $ 23.64  
Tangible book value per share (3) $ 18.96   $ 19.03   $ 18.52   $ 17.97   $ 17.02  
Tier 1 leverage ratio   10.02 %   10.33 %   10.15 %   9.88 %   9.62 %
Common equity tier 1 capital ratio   10.90 %   11.29 %   11.14 %   10.95 %   10.69 %
Tier 1 capital ratio   12.14 %   12.56 %   12.42 %   12.24 %   11.99 %
Total risk-based capital ratio   13.36 %   13.52 %   13.38 %   13.21 %   12.98 %
Common stock price (end of period) $ 32.39   $ 40.56   $ 36.59   $ 37.51   $ 36.01  
           


   
NBT Bancorp Inc. and Subsidiaries  
Consolidated Balance Sheets  
(unaudited, dollars in thousands)  
       
  March 31, December 31,
Assets   2020     2019  
Cash and due from banks $ 160,106   $ 170,595  
Short-term interest bearing accounts   123,254     46,248  
Equity securities, at fair value   26,378     27,771  
Securities available for sale, at fair value   1,000,980     975,340  
Securities held to maturity (fair value $642,325 and $641,262, respectively)   621,359     630,074  
Federal Reserve and Federal Home Loan Bank stock   41,018     44,620  
Loans held for sale   6,475     11,731  
Loans   7,247,383     7,136,098  
Less allowance for loan losses   100,000     72,965  
Net loans $ 7,147,383   $ 7,063,133  
Premises and equipment, net   76,502     75,631  
Goodwill   274,769     274,769  
Intangible assets, net   11,186     12,020  
Bank owned life insurance   183,122     181,748  
Other assets   281,011     202,245  
Total assets $ 9,953,543   $ 9,715,925  
       
Liabilities and stockholders' equity      
Demand (noninterest bearing) $ 2,423,077   $ 2,414,383  
Savings, NOW and money market   4,598,282     4,312,244  
Time   843,279     861,193  
Total deposits $ 7,864,638   $ 7,587,820  
Short-term borrowings   548,904     655,275  
Long-term debt   64,183     64,211  
Junior subordinated debt   101,196     101,196  
Other liabilities   262,443     187,026  
Total liabilities $ 8,841,364   $ 8,595,528  
       
Total stockholders' equity $ 1,112,179   $ 1,120,397  
       
Total liabilities and stockholders' equity $ 9,953,543   $ 9,715,925  
       


   
NBT Bancorp Inc. and Subsidiaries  
Quarterly Consolidated Statements of Income  
(unaudited, dollars in thousands except per share data)  
             
    2020     2019  
  1st Q 4th Q 3rd Q 2nd Q 1st Q
Interest, fee and dividend income            
Interest and fees on loans $ 78,728   $ 79,800   $ 81,082   $ 81,271   $ 79,321  
Securities available for sale   5,753     5,639     5,711     6,031     5,922  
Securities held to maturity   4,091     4,213     4,586     5,089     5,217  
Other   829     924     1,002     842     884  
Total interest, fee and dividend income $ 89,401   $ 90,576   $ 92,381   $ 93,233   $ 91,344  
Interest expense            
Deposits $ 9,104   $ 10,181   $ 10,745   $ 10,234   $ 8,826  
Short-term borrowings   1,797     1,707     1,989     2,760     3,237  
Long-term debt   393     484     498     471     422  
Junior subordinated debt   926     1,021     1,095     1,141     1,168  
Total interest expense $ 12,220   $ 13,393   $ 14,327   $ 14,606   $ 13,653  
Net interest income $ 77,181   $ 77,183   $ 78,054   $ 78,627   $ 77,691  
Provision for loan losses   29,640     6,004     6,324     7,277     5,807  
Net interest income after provision for loan losses $ 47,541   $ 71,179   $ 71,730   $ 71,350   $ 71,884  
Noninterest income            
Service charges on deposit accounts $ 3,997   $ 4,361   $ 4,330   $ 4,224   $ 4,236  
ATM and debit card fees   5,854     5,935     6,277     6,156     5,525  
Retirement plan administration fees   7,941     7,218     7,600     7,836     7,734  
Wealth management (4)   7,273     7,085     7,630     7,122     6,563  
Insurance (4)   4,269     3,479     4,000     3,547     4,744  
Bank owned life insurance income   1,374     1,236     1,556     1,186     1,377  
Net securities (losses) gains   (812 )   189     4,036     (69 )   57  
Other   5,527     6,738     4,291     4,239     3,585  
Total noninterest income $ 35,423   $ 36,241   $ 39,720   $ 34,241   $ 33,821  
Noninterest expense            
Salaries and employee benefits $ 40,750   $ 39,592   $ 39,352   $ 38,567   $ 39,356  
Occupancy   5,995     5,653     5,335     5,443     6,275  
Data processing and communications   4,233     4,719     4,492     4,693     4,414  
Professional fees and outside services   3,897     4,223     3,535     3,359     3,668  
Equipment   4,642     4,821     4,487     4,518     4,757  
Office supplies and postage   1,636     1,744     1,667     1,577     1,591  
FDIC expense (credit)   311     -     (20 )   949     1,017  
Advertising   609     952     677     641     503  
Amortization of intangible assets   835     844     874     893     968  
Loan collection and other real estate owned, net   1,017     1,436     976     961     785  
Other   6,956     6,310     8,374     4,630     5,126  
  Total noninterest expense $ 70,881   $ 70,294   $ 69,749   $ 66,231   $ 68,460  
Income before income tax expense $ 12,083   $ 37,126   $ 41,701   $ 39,360   $ 37,245  
Income tax expense   1,715     8,166     9,322     8,805     8,118  
Net income $ 10,368   $ 28,960   $ 32,379   $ 30,555   $ 29,127  
Earnings Per Share            
Basic $ 0.24   $ 0.66   $ 0.74   $ 0.70   $ 0.67  
Diluted $ 0.23   $ 0.66   $ 0.73   $ 0.69   $ 0.66  
             


 
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
    Q1 - 2020 Q4 - 2019 Q3 - 2019 Q2 - 2019 Q1 - 2019
Assets                      
Short-term interest bearing accounts   $ 74,695 1.28% $ 51,613 2.43% $ 57,530 1.95% $ 25,783 1.28% $ 9,065 4.07%
Securities available for sale (1) (5)     962,527 2.40%   942,302 2.37%   940,256 2.41%   981,079 2.47%   984,704 2.45%
Securities held to maturity (1) (5)     622,398 2.81%   651,305 2.73%   698,617 2.77%   770,651 2.83%   782,570 2.90%
Investment in FRB and FHLB Banks     39,784 5.97%   37,842 6.37%   40,525 7.04%   46,179 6.60%   49,152 6.54%
Loans (1) (6)     7,163,114 4.42%   7,055,288 4.49%   6,987,476 4.61%   6,958,299 4.69%   6,886,672 4.68%
Total interest earning assets   $ 8,862,518 4.07% $ 8,738,350 4.13% $ 8,724,404 4.22% $ 8,781,991 4.28% $ 8,712,163 4.28%
Other assets     885,570     861,909     852,616     816,748     795,585  
Total assets   $ 9,748,088   $ 9,600,259   $ 9,577,020   $ 9,598,739   $ 9,507,748  
                       
Liabilities and stockholders' equity                  
Money market deposit accounts   $ 2,101,306 1.00% $ 2,057,678 1.16% $ 2,015,297 1.24% $ 1,916,045 1.16% $ 1,804,053 0.99%
NOW deposit accounts     1,086,205 0.10%   1,064,193 0.13%   1,056,001 0.13%   1,127,413 0.13%   1,135,213 0.16%
Savings deposits     1,276,285 0.06%   1,251,432 0.06%   1,274,793 0.06%   1,282,084 0.06%   1,252,042 0.06%
Time deposits     842,989 1.62%   853,353 1.69%   893,837 1.75%   953,698 1.73%   942,457 1.64%
Total interest bearing deposits   $ 5,306,785 0.69% $ 5,226,656 0.77% $ 5,239,928 0.81% $ 5,279,240 0.78% $ 5,133,765 0.70%
Short-term borrowings     533,516 1.35%   475,332 1.42%   490,694 1.61%   620,898 1.78%   712,306 1.84%
Long-term debt     64,194 2.46%   81,613 2.35%   84,250 2.35%   82,414 2.29%   73,707 2.32%
Junior subordinated debt     101,196 3.68%   101,196 4.00%   101,196 4.29%   101,196 4.52%   101,196 4.68%
Total interest bearing liabilities   $ 6,005,691 0.82% $ 5,884,797 0.90% $ 5,916,068 0.96% $ 6,083,748 0.96% $ 6,020,974 0.92%
Demand deposits     2,398,307     2,406,563     2,389,617     2,298,867     2,309,531  
Other liabilities     214,495     199,674     185,374     162,374     151,490  
Stockholders' equity     1,129,595     1,109,225     1,085,961     1,053,750     1,025,753  
Total liabilities and stockholders' equity   $ 9,748,088   $ 9,600,259   $ 9,577,020   $ 9,598,739   $ 9,507,748  
                       
Interest rate spread     3.25%   3.23%   3.26%   3.32%   3.36%
Net interest margin (FTE) (1)     3.52%   3.52%   3.57%   3.61%   3.64%
                       


 
NBT Bancorp Inc. and Subsidiaries
Consolidated Loan Balances
(unaudited, dollars in thousands)
           
    2020     2019
  1st Q 4th Q 3rd Q 2nd Q 1st Q
Commercial $ 1,338,609   $ 1,302,209   $ 1,317,649   $ 1,299,784   $ 1,306,551  
Commercial real estate   2,242,139     2,142,057     2,033,552     2,025,280     1,943,931  
Residential real estate mortgages   1,446,676     1,445,156     1,416,920     1,404,079     1,390,411  
Indirect auto   1,184,888     1,193,635     1,195,783     1,189,670     1,191,111  
Specialty lending   539,378     542,063     528,505     519,974     529,144  
Home equity   431,536     444,082     452,535     456,754     463,582  
Other consumer   64,157     66,896     68,865     67,732     65,582  
Total loans $ 7,247,383   $ 7,136,098   $ 7,013,809   $ 6,963,273   $ 6,890,312  
 
 
The following table provide loans as a percentage of total loans in industries vulnerable to the COVID-19 pandemic as of March 31, 2020:
           
Industry % of Total
Loans
       
Accommodations   2.4%          
Healthcare services and practices   2.0%          
Restaurants and entertainment   1.9%          
Retailers   1.7%          
Automotive   1.5%          
Total   9.5%          
           
Allowance for Loan Losses as a Percentage of Loans by Segment (7):    
           
  Incurred CECL      
  12/31/2019 1/1/2020 3/31/2020    
Commercial & industrial   0.96%     0.98%     1.43%      
Commercial real estate   1.02%     0.74%     1.10%      
Residential real estate   0.27%     0.83%     0.99%      
Auto   0.83%     0.78%     1.08%      
Other consumer   3.74%     3.66%     4.00%      
Total   1.02%     1.07%     1.38%      
           


             
1 The following tables provide the Non-GAAP reconciliations for the Non-GAAP measures contained in this release:
             
  Non-GAAP measures          
  (unaudited, dollars in thousands)          
             
  Pre-provision net revenue ("PPNR")   2020     2019  
    1st Q 4th Q 3rd Q 2nd Q 1st Q
  Income before income tax expense $ 12,083   $ 37,126   $ 41,701   $ 39,360   $ 37,245  
  Add: Provision for loan losses   29,640     6,004     6,324     7,277     5,807  
  PPNR $ 41,723   $ 43,130   $ 48,025   $ 46,637   $ 43,052  
  Less: Net securities (losses) gains   (812 )   189     4,036     (69 )   57  
  PPNR excluding securities (losses) gains $ 42,535   $ 42,941   $ 43,989   $ 46,706   $ 42,995  
             
  PPNR is a Non-GAAP financial measure that management believes is useful in evaluating the underlying operating results of the Company excluding the volatility in loan loss provision due to CECL adoption and the impact of the COVID-19 pandemic.
 
             
  FTE Adjustment   2020     2019  
    1st Q 4th Q 3rd Q 2nd Q 1st Q
  Net interest income $ 77,181   $ 77,183   $ 78,054   $ 78,627   $ 77,691  
  Add: FTE adjustment   329     349     374     445     500  
  Net interest income (FTE) $ 77,510   $ 77,532   $ 78,428   $ 79,072   $ 78,191  
  Average earning assets $ 8,862,518   $ 8,738,350   $ 8,724,404   $ 8,781,991   $ 8,712,163  
  Net interest margin (FTE)   3.52 %   3.52 %   3.57 %   3.61 %   3.64 %
             
  Interest income for tax-exempt securities and loans have been adjusted to a FTE basis using the statutory Federal income tax rate of 21%.
             
  Tangible equity to tangible assets   2020     2019  
    1st Q 4th Q 3rd Q 2nd Q 1st Q
  Total equity $ 1,112,179   $ 1,120,397   $ 1,098,601   $ 1,074,823   $ 1,034,055  
  Intangible assets   285,955     286,789     287,633     288,507     289,400  
  Total assets $ 9,953,543   $ 9,715,925   $ 9,661,386   $ 9,635,718   $ 9,533,510  
  Tangible equity to tangible assets   8.55 %   8.84 %   8.65 %   8.41 %   8.06 %
             
  Return on average tangible common equity   2020     2019  
    1st Q 4th Q 3rd Q 2nd Q 1st Q
  Net income $ 10,368   $ 28,960   $ 32,379   $ 30,555   $ 29,127  
  Amortization of intangible assets (net of tax)   626     633     656     670     726  
  Net income, excluding intangibles amortization $ 10,994   $ 29,593   $ 33,035   $ 31,225   $ 29,853  
             
  Average stockholders' equity $ 1,129,595   $ 1,109,225   $ 1,085,961   $ 1,053,750   $ 1,025,753  
  Less: average goodwill and other intangibles   286,400     287,268     288,077     288,930     289,913  
  Average tangible common equity $ 843,195   $ 821,957   $ 797,884   $ 764,820   $ 735,840  
  Return on average tangible common equity   5.24 %   14.28 %   16.43 %   16.38 %   16.45 %
             
2 Annualized. 
3 Non-GAAP measure - Stockholders' equity less goodwill and intangible assets divided by common shares outstanding.
4 Other financial services revenue previously disclosed and included with Insurance income has been reclassified and combined with Trust income and is disclosed as Wealth management income.
5 Securities are shown at average amortized cost. 
6 For purposes of these computations, nonaccrual loans and loans held for sale are included in the average loan balances outstanding.
7 The allowance for loan losses for December 31, 2019 was calculated based on the incurred losses methodology and beginning January 1, 2020, it was based on the CECL methodology. The risk-based pooling of loans (segments) for incurred and CECL are not consistent. For illustrative purposes only, the loans and related incurred allowance at December 31, 2019 were grouped to conform with the CECL methodology.
   

 


   
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