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NBT Bancorp Inc. Announces Net Income of $104.4 Million ($2.37 Per Diluted Common Share); Approves Dividend and Increase to Shares Available Under Share Repurchase Program

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NBT Bancorp Inc.
·39 min read
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NORWICH, N.Y., Jan. 27, 2021 (GLOBE NEWSWIRE) -- NBT Bancorp Inc. (“NBT” or the “Company”) (NASDAQ: NBTB) reported net income and diluted earnings per share for both the quarter and year ended December 31, 2020.

Net income for the year ended December 31, 2020 was $104.4 million, down 13.7% from $121.0 million for the prior year due primarily to higher provision for loan losses after the adoption of the Current Expected Credit Losses (“CECL”) accounting methodology and related to the deterioration of economic conditions caused by the COVID-19 pandemic. Diluted earnings per share for the year ended December 31, 2020 was $2.37, as compared with $2.74 for the prior year, a decrease of 13.5%. Excluding full year branch optimization charges of $4.8 million, net income and earnings per diluted share were $108.1 million and $2.46, respectively.

Pre-provision net revenue (“PPNR”)1 for the year ended December 31, 2020 was $193.4 million compared to $182.1 million in the prior year. The 6% increase in PPNR from the prior year reflected higher net interest income, higher noninterest income and lower noninterest expense.

Net income for the three months ended December 31, 2020 was $34.2 million, or $0.78 per diluted common share. Net income was down $0.9 million from the previous quarter primarily due to branch optimization charges for the quarter of $4.1 million and up $5.2 million from the fourth quarter of 2019 due to higher net interest income and lower provision for loan losses, partly offset by the branch optimization charges. Excluding branch optimization charges for the quarter of $4.1 million, net income and earnings per diluted share were $37.4 million and $0.85, respectively.

PPNR1 for the fourth quarter of 2020 was $48.2 million compared to $49.6 million in the previous quarter and $43.3 million in the fourth quarter of 2019. The 3% decline in PPNR from the previous quarter reflected higher operating expenses related to timing of initiatives, partly offset by higher net interest income.

CEO Comments

“NBT ended the year with active pipelines and building momentum. Our strong capital base provides us with the optionality we need to drive our growth in 2021,” said NBT President and CEO John H. Watt, Jr. “The strength of NBT’s pre-provision net revenue and our outsized noninterest income is reflected in our results for the full year and the fourth quarter of 2020. As we continue to navigate these challenging times and look to the future, our team is customer focused and committed to executing the critical strategies that will carry us forward.”

Fourth Quarter Financial Highlights

Net Income

Net Interest Income / NIM

PPNR

Loans and Credit Quality

Capital

Loans

  • Period end total loans were $7.5 billion at December 31, 2020 and $7.6 billion at September 30, compared to $7.1 billion at December 31, 2019.

  • Total PPP loans as of December 31, 2020 were $431 million (net of unamortized fees), with $548 million originated at an average loan size of $184 thousand and an average annual fee of 3.2%.

  • Excluding PPP loans, period end loans increased $22.0 million from September 30, 2020. Commercial and industrial loans decreased $29.7 million to $1.3 billion; commercial real estate loans increased $98.5 million to $2.4 billion; and total consumer loans decreased $46.8 million to $3.4 billion.

  • Commercial line of credit utilization rate was 22% at December 31, 2020 compared to 25% at September 30, 2020 and 32% at December 31, 2019.

Deposits

  • Average total deposits in the fourth quarter of 2020 were $9.1 billion, compared to $8.8 billion in the third quarter of 2020, primarily due to increases in non-interest bearing demand deposit accounts.

  • Loan to deposit ratio was 82.6% at December 31, 2020, compared to 94.0% at December 31, 2019 and 84.4% at September 30, 2020.

Net Interest Income and Net Interest Margin

  • Net interest income for the fourth quarter of 2020 was $80.1 million, up $2.2 million or 2.8% from the third quarter of 2020 and up $2.9 million or 3.8% from the fourth quarter of 2019.

  • The net interest margin on a fully taxable equivalent (“FTE”) basis for the fourth quarter of 2020 was 3.20%, up 3 basis points (“bps”) from the third quarter of 2020 and down 32 bps from the fourth quarter of 2019. The net impact of PPP loans and excess liquidity negatively impacted the NIM by 8 bps in the fourth quarter versus a negative impact of 10 bps in the third quarter of 2020. Excluding the impact of PPP lending and excess liquidity from each quarter, NIM increased 1 bp from the prior quarter primarily due to a 5 bps decline in the cost of interest bearing liabilities and minimal reduction in asset yields during the quarter.

  • Earning asset yields for the three months ended December 31, 2020 were up 1 bp from the prior quarter and down 67 bps from the same quarter in the prior year. Earning assets grew $159.3 million or 1.6% from the prior quarter and grew $1.2 billion or 14.3% from the same quarter in the prior year.

    • Excess liquidity resulted in a $74.9 million increase in the average balances of short-term interest bearing accounts.

    • The average balance of investment securities increased $111.4 million while yields declined 20 bps.

    • Loan yields increased 11 bps to 4.06% due primarily to the fees recognized due to $73 million in PPP loans forgiven during the quarter (7 bps) combined with a $45 million increase in the average balance of higher yielding consumer loans (9 bps).

  • Total cost of deposits was 0.17% for the fourth quarter of 2020, down 2 bps from the prior quarter and down 36 bps from the same period in the prior year.

  • The cost of interest-bearing liabilities for the three months ended December 31, 2020 was 0.40%, down as compared to the prior quarter of 0.45% and down 50 bps from the fourth quarter of 2019 of 0.90%.

    • Cost of interest-bearing deposits decreased 4 bps from the prior quarter and decreased 51 bps from the same quarter in 2019.

Credit Quality and Allowance for Credit Losses

  • Net charge-offs to average loans were low due to COVID-19 pandemic relief programs for the quarter and 2020. Net charge-offs to total average loans were 23 bps for 2020 compared to 36 bps for 2019.

  • Net charge-offs to total average loans of 21 bps (22 bps excluding PPP loans) compared to 12 bps (13 bps excluding PPP loans) in the prior quarter and 30 bps in the fourth quarter of 2019. The increase in charge-offs during the fourth quarter of 2020 was primarily due to higher charge-offs in commercial, indirect auto and specialty lending, but continue to be at lower levels due to pandemic relief programs.

  • Nonperforming assets to total assets was 0.45% (0.47% excluding PPP loans) compared to 0.37% (0.39% excluding PPP loans) at September 30, 2020 and 0.31% at December 31, 2019. The change in nonperforming assets was primarily related to an increase in nonperforming commercial and residential real estate loans.

  • Provision expense for the three months ended December 31, 2020 was ($0.6) million while net charge-offs of $3.9 million were up compared with the prior quarter. Provision expense decreased $3.9 million from the third quarter of 2020 and decreased $6.6 million from the fourth quarter of 2019. The decrease in provision expense from the prior quarter and fourth quarter of 2019 was primarily due to the $4.5 million reduction in the level of allowance for loan losses resulting from an improved economic forecast.

  • The allowance for loan losses was $110.0 million or 1.47% (1.56% excluding PPP loans and related allowance) of total loans compared to 1.51% (1.62% excluding PPP loans and related allowance) at September 30, 2020 and 1.02% December 31, 2019. The allowance for loans losses was calculated under the CECL accounting method in 2020 and the incurred loss accounting method in 2019.

  • As of January 19, 2021, 1.5% of loans (loans outstanding as of December 31, 2020; excluding PPP balances) are in payment deferral programs which is down from the second quarter 2020 peak of 14.9%.

  • The reserve for unfunded loan commitments increased to $6.4 million at December 31, 2020 compared to the prior quarter at $5.5 million.

Noninterest Income

  • Total noninterest income, excluding securities gains (losses), was $38.0 million for the three months ended December 31, 2020, up $0.3 million from the prior quarter and up $1.9 million from the prior year quarter.

  • Service charges on deposit accounts were higher than the prior quarter but lower than the fourth quarter of 2019. Overdraft charges have been lower during the COVID-19 pandemic, recovering from the third quarter of 2020 but continue to run lower than prior year levels.

  • ATM and debit card fees were lower compared to the prior quarter due to seasonality and higher compared to the fourth quarter of 2019 due to increased volume and higher per transaction rates.

  • Retirement plan administration fees were lower than the prior quarter, as third quarter fees were higher due to seasonal revenues, and higher than the fourth quarter of 2019 due to the April 1, 2020 acquisition of Alliance Benefit Group of Illinois, Inc. (“ABG”) contributing $1.5 million in revenues during the fourth quarter and $1.7 million during the third quarter.

  • The increase in other noninterest income from the prior quarter was driven by higher loan swap fee income partially offset by lower mortgage banking income. The decrease from the fourth quarter of 2019 was driven by lower loan swap fee income and lower mortgage banking income.

Noninterest Expense

  • Total noninterest expense for the fourth quarter of 2020 was up 13.4% from the previous quarter and up 7.0% from the fourth quarter of 2019, primarily due to $4.1 million in branch optimization costs incurred during the fourth quarter of 2020. The branch optimization strategies charged in 2020 are expected to improve future operating expenses by about $2.5 million annually once fully implemented.

  • Salaries and benefits increased from the prior quarter due to the timing of medical expenses and increased from the fourth quarter of 2019 driven by the addition of ABG’s salaries and benefits.

  • Data processing and communication expense were down compared to the fourth quarter of 2019 due to lower transaction volumes as a result of the COVID-19 pandemic.

  • Professional fees and outside services were up $1.0 million compared to the prior quarter primarily due to the timing of expenses.

  • Equipment expense was higher than both the prior quarter and the fourth quarter of 2019 due to higher technology costs associated with several digital upgrades.

  • FDIC expense was higher than the fourth quarter of 2019 due to the benefit of the FDIC insurance assessment small bank credit in the fourth quarter of 2019.

  • Other expenses increased compared to both the prior quarter and the fourth quarter of 2019 due to $4.1 million in branch optimization charges and a $0.9 million increase in the reserve for unfunded commitments.

Income Taxes

  • The effective tax rate was 21.6% for the fourth quarter of 2020 compared to 23.8% for the third quarter of 2020 and 22.0% for the fourth quarter of 2019. The full year effective tax rate for 2020 was 21.6% compared to 22.1% for the full year in 2019.

Capital

  • Capital ratios remain strong with tangible common equity to tangible assets1 at 8.41%. Tangible book value per share2 grew 2% from the prior quarter and 8% from the prior year quarter to $20.52.

  • December 31, 2020 CET1 capital ratio of 11.84%, leverage ratio of 9.56% and total risk-based capital ratio of 15.62%.

Stock Repurchase Program

  • At a meeting held today, the Board of Directors approved an increase to the total number of shares authorized under the current stock repurchase program to 2 million shares from 1 million shares, previously. There have been 263,507 shares repurchased under the plan. The stock repurchase plan expires on December 31, 2021.

Dividend

  • The Board of Directors approved a first-quarter cash dividend of $0.27 per share at a meeting held today. The dividend will be paid on March 15, 2021 to shareholders of record as of March 1, 2021.

Conference Call and Webcast

The Company will host a conference call at 8:30 a.m. Eastern Time on Thursday, January 28, 2021, to review fourth 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 $10.9 billion at December 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 141 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, 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 September 30, 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.

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.

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. and Subsidiaries

Selected Financial Data

(unaudited, dollars in thousands except per share data)

2020

2019

4th Q

3rd Q

2nd Q

1st Q

4th Q

Profitability:

Diluted earnings per share

$

0.78

$

0.80

$

0.56

$

0.23

$

0.66

Weighted average diluted common shares outstanding

43,973,971

43,941,953

43,928,344

44,130,324

44,174,201

Return on average assets3

1.24

%

1.29

%

0.94

%

0.43

%

1.20

%

Return on average equity3

11.59

%

12.09

%

8.76

%

3.69

%

10.36

%

Return on average tangible common equity1 3

15.71

%

16.51

%

12.14

%

5.24

%

14.28

%

Net interest margin1 3

3.20

%

3.17

%

3.38

%

3.52

%

3.52

%

12 Months ended December 31,

2020

2019

Profitability:

Diluted earnings per share

$

2.37

$

2.74

Weighted average diluted common shares outstanding

43,988,623

44,123,698

Return on average assets

0.99

%

1.26

%

Return on average equity

9.09

%

11.32

%

Return on average tangible common equity1

12.48

%

15.85

%

Net interest margin1

3.31

%

3.58

%

2020

2019

4th Q

3rd Q

2nd Q

1st Q

4th Q

Balance sheet data:

Securities available for sale

$

1,348,698

$

1,197,925

$

1,108,443

$

1,000,980

$

975,340

Securities held to maturity

616,560

663,088

599,164

621,359

630,074

Net loans

7,388,885

7,446,143

7,514,491

7,147,383

7,063,133

Total assets

10,932,906

10,850,212

10,847,184

9,953,543

9,715,925

Total deposits

9,081,692

8,958,183

8,815,891

7,864,638

7,587,820

Total borrowings

406,731

446,737

602,988

714,283

820,682

Total liabilities

9,745,288

9,684,101

9,704,532

8,841,364

8,595,528

Stockholders' equity

1,187,618

1,166,111

1,142,652

1,112,179

1,120,397

Capital:

Equity to assets

10.86

%

10.75

%

10.53

%

11.17

%

11.53

%

Tangible equity ratio1

8.41

%

8.27

%

8.04

%

8.55

%

8.84

%

Book value per share

$

27.22

$

26.74

$

26.20

$

25.52

$

25.58

Tangible book value per share2

$

20.52

$

20.02

$

19.46

$

18.96

$

19.03

Leverage ratio

9.56

%

9.48

%

9.44

%

10.02

%

10.33

%

Common equity tier 1 capital ratio

11.84

%

11.63

%

11.34

%

10.90

%

11.29

%

Tier 1 capital ratio

13.09

%

12.88

%

12.60

%

12.14

%

12.56

%

Total risk-based capital ratio

15.62

%

15.43

%

15.15

%

13.36

%

13.52

%

Common stock price (end of period)

$

32.10

$

26.82

$

30.06

$

32.39

$

40.56

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)

2020

2019

4th Q

3rd Q

2nd Q

1st Q

4th Q

Asset quality:

Nonaccrual loans

$

44,647

$

35,896

$

25,567

$

29,972

$

25,174

90 days past due and still accruing

3,149

2,579

2,057

2,280

3,717

Total nonperforming loans

47,796

38,475

27,624

32,252

28,891

Other real estate owned

1,458

1,605

1,783

2,384

1,458

Total nonperforming assets

49,254

40,080

29,407

34,636

30,349

Allowance for loan losses

110,000

114,500

113,500

100,000

72,965

Asset quality ratios (total):

Allowance for loan losses to total loans

1.47

%

1.51

%

1.49

%

1.38

%

1.02

%

Total nonperforming loans to total loans

0.64

%

0.51

%

0.36

%

0.45

%

0.40

%

Total nonperforming assets to total assets

0.45

%

0.37

%

0.27

%

0.35

%

0.31

%

Allowance for loan losses to total nonperforming loans

230.14

%

297.60

%

410.87

%

310.06

%

252.55

%

Past due loans to total loans

0.37

%

0.26

%

0.30

%

0.51

%

0.49

%

Net charge-offs to average loans3

0.21

%

0.12

%

0.28

%

0.32

%

0.30

%

Asset quality ratios (excluding paycheck protection program):

Allowance for loan losses to total loans

1.56

%

1.62

%

1.59

%

1.38

%

1.02

%

Total nonperforming loans to total loans

0.68

%

0.55

%

0.39

%

0.45

%

0.40

%

Total nonperforming assets to total assets

0.47

%

0.39

%

0.28

%

0.35

%

0.31

%

Allowance for loan losses to total nonperforming loans

230.10

%

297.53

%

410.78

%

310.06

%

252.55

%

Past due loans to total loans

0.39

%

0.28

%

0.32

%

0.51

%

0.49

%

Net charge-offs to average loans3

0.22

%

0.13

%

0.30

%

0.32

%

0.30

%


NBT Bancorp Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited, dollars in thousands)

December 31,

December 31,

Assets

2020

2019

Cash and due from banks

$

159,995

$

170,595

Short-term interest bearing accounts

512,686

46,248

Equity securities, at fair value

30,737

27,771

Securities available for sale, at fair value

1,348,698

975,340

Securities held to maturity (fair value $636,827 and $641,262, respectively)

616,560

630,074

Federal Reserve and Federal Home Loan Bank stock

27,353

44,620

Loans held for sale

1,119

11,731

Loans

7,498,885

7,136,098

Less allowance for loan losses

110,000

72,965

Net loans

$

7,388,885

$

7,063,133

Premises and equipment, net

74,206

75,631

Goodwill

280,541

274,769

Intangible assets, net

11,735

12,020

Bank owned life insurance

186,434

181,748

Other assets

293,957

202,245

Total assets

$

10,932,906

$

9,715,925

Liabilities and stockholders' equity

Demand (noninterest bearing)

$

3,241,123

$

2,414,383

Savings, NOW and money market

5,207,090

4,312,244

Time

633,479

861,193

Total deposits

$

9,081,692

$

7,587,820

Short-term borrowings

168,386

655,275

Long-term debt

39,097

64,211

Subordinated debt, net

98,052

-

Junior subordinated debt

101,196

101,196

Other liabilities

256,865

187,026

Total liabilities

$

9,745,288

$

8,595,528

Total stockholders' equity

$

1,187,618

$

1,120,397

Total liabilities and stockholders' equity

$

10,932,906

$

9,715,925

NBT Bancorp Inc. and Subsidiaries

Consolidated Statements of Income

(unaudited, dollars in thousands except per share data)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2020

2019

2020

2019

Interest, fee and dividend income

Interest and fees on loans

$

76,863

$

79,800

$

307,859

$

321,474

Securities available for sale

5,478

5,639

22,434

23,303

Securities held to maturity

3,532

4,213

15,283

19,105

Other

568

924

2,706

3,652

Total interest, fee and dividend income

$

86,441

$

90,576

$

348,282

$

367,534

Interest expense

Deposits

$

3,887

$

10,181

$

22,070

$

39,986

Short-term borrowings

193

1,707

3,408

9,693

Long-term debt

369

484

1,553

1,875

Subordinated debt

1,339

-

2,842

-

Junior subordinated debt

545

1,021

2,731

4,425

Total interest expense

$

6,333

$

13,393

$

32,604

$

55,979

Net interest income

$

80,108

$

77,183

$

315,678

$

311,555

Provision for loan losses

(607

)

6,004

51,134

25,412

Net interest income after provision for loan losses

$

80,715

$

71,179

$

264,544

$

286,143

Noninterest income

Service charges on deposit accounts

$

3,588

$

4,361

$

13,201

$

17,151

ATM and debit card fees

6,776

5,935

25,960

23,893

Retirement plan administration fees

9,011

7,218

35,851

30,388

Wealth management4

7,456

7,085

29,247

28,400

Insurance4

3,454

3,479

14,757

15,770

Bank owned life insurance income

1,733

1,236

5,743

5,355

Net securities gains (losses)

160

189

(388

)

4,213

Other

5,937

6,738

21,905

18,853

Total noninterest income

$

38,115

$

36,241

$

146,276

$

144,023

Noninterest expense

Salaries and employee benefits

$

41,016

$

39,592

$

161,934

$

156,867

Occupancy

5,280

5,653

21,634

22,706

Data processing and communications

4,157

4,719

16,527

18,318

Professional fees and outside services

4,388

4,223

15,082

14,785

Equipment

5,395

4,821

19,889

18,583

Office supplies and postage

1,517

1,744

6,138

6,579

FDIC expense

739

-

2,688

1,946

Advertising

827

952

2,288

2,773

Amortization of intangible assets

822

844

3,395

3,579

Loan collection and other real estate owned, net

930

1,436

3,295

4,158

Other

10,133

6,310

24,863

24,440

Total noninterest expense

$

75,204

$

70,294

$

277,733

$

274,734

Income before income tax expense

$

43,626

$

37,126

$

133,087

$

155,432

Income tax expense

9,432

8,166

28,699

34,411

Net income

$

34,194

$

28,960

$

104,388

$

121,021

Earnings Per Share

Basic

$

0.78

$

0.66

$

2.39

$

2.76

Diluted

$

0.78

$

0.66

$

2.37

$

2.74

NBT Bancorp Inc. and Subsidiaries

Quarterly Consolidated Statements of Income

(unaudited, dollars in thousands except per share data)

2020

2019

4th Q

3rd Q

2nd Q

1st Q

4th Q

Interest, fee and dividend income

Interest and fees on loans

$

76,863

$

74,998

$

77,270

$

78,728

$

79,800

Securities available for sale

5,478

5,603

5,600

5,753

5,639

Securities held to maturity

3,532

3,734

3,926

4,091

4,213

Other

568

659

650

829

924

Total interest, fee and dividend income

$

86,441

$

84,994

$

87,446

$

89,401

$

90,576

Interest expense

Deposits

$

3,887

$

4,267

$

4,812

$

9,104

$

10,181

Short-term borrowings

193

446

972

1,797

1,707

Long-term debt

369

398

393

393

484

Subordinated debt

1,339

1,375

128

-

-

Junior subordinated debt

545

565

695

926

1,021

Total interest expense

$

6,333

$

7,051

$

7,000

$

12,220

$

13,393

Net interest income

$

80,108

$

77,943

$

80,446

$

77,181

$

77,183

Provision for loan losses

(607

)

3,261

18,840

29,640

6,004

Net interest income after provision for loan losses

$

80,715

$

74,682

$

61,606

$

47,541

$

71,179

Noninterest income

Service charges on deposit accounts

$

3,588

$

3,087

$

2,529

$

3,997

$

4,361

ATM and debit card fees

6,776

7,194

6,136

5,854

5,935

Retirement plan administration fees

9,011

9,685

9,214

7,941

7,218

Wealth management4

7,456

7,695

6,823

7,273

7,085

Insurance4

3,454

3,742

3,292

4,269

3,479

Bank owned life insurance income

1,733

1,255

1,381

1,374

1,236

Net securities gains (losses)

160

84

180

(812

)

189

Other

5,937

4,985

5,456

5,527

6,738

Total noninterest income

$

38,115

$

37,727

$

35,011

$

35,423

$

36,241

Noninterest expense

Salaries and employee benefits

$

41,016

$

40,451

$

39,717

$

40,750

$

39,592

Occupancy

5,280

5,294

5,065

5,995

5,653

Data processing and communications

4,157

4,058

4,079

4,233

4,719

Professional fees and outside services

4,388

3,394

3,403

3,897

4,223

Equipment

5,395

5,073

4,779

4,642

4,821

Office supplies and postage

1,517

1,530

1,455

1,636

1,744

FDIC expense

739

645

993

311

-

Advertising

827

530

322

609

952

Amortization of intangible assets

822

856

883

834

844

Loan collection and other real estate owned, net

930

620

728

1,017

1,436

Other

10,133

3,857

3,916

6,957

6,310

Total noninterest expense

$

75,204

$

66,308

$

65,340

$

70,881

$

70,294

Income before income tax expense

$

43,626

$

46,101

$

31,277

$

12,083

$

37,126

Income tax expense

9,432

10,988

6,564

1,715

8,166

Net income

$

34,194

$

35,113

$

24,713

$

10,368

$

28,960

Earnings Per Share

Basic

$

0.78

$

0.80

$

0.57

$

0.24

$

0.66

Diluted

$

0.78

$

0.80

$

0.56

$

0.23

$

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

Q4 - 2020

Q3 - 2020

Q2 - 2020

Q1 - 2020

Q4 - 2019

Assets

Short-term interest bearing accounts

$

552,529

0.11

%

$

477,946

0.11

%

$

380,260

0.10

%

$

74,695

1.28

%

$

51,613

2.43

%

Securities available for sale1 5

1,230,411

1.77

%

1,137,604

1.96

%

985,561

2.29

%

962,527

2.40

%

942,302

2.37

%

Securities held to maturity1 5

640,422

2.36

%

621,812

2.56

%

613,899

2.75

%

622,398

2.81

%

651,305

2.73

%

Investment in FRB and FHLB Banks

28,275

5.94

%

29,720

7.08

%

36,604

6.09

%

39,784

5.97

%

37,842

6.37

%

Loans1 6

7,533,953

4.06

%

7,559,218

3.95

%

7,589,032

4.10

%

7,163,114

4.42

%

7,055,288

4.49

%

Total interest earning assets

$

9,985,590

3.46

%

$

9,826,300

3.45

%

$

9,605,356

3.68

%

$

8,862,518

4.07

%

$

8,738,350

4.13

%

Other assets

954,123

967,194

961,807

885,570

861,909

Total assets

$

10,939,713

$

10,793,494

$

10,567,163

$

9,748,088

$

9,600,259

Liabilities and stockholders' equity

Money market deposit accounts

$

2,455,510

0.27

%

$

2,364,606

0.28

%

$

2,360,407

0.29

%

$

2,101,306

1.00

%

$

2,057,678

1.16

%

NOW deposit accounts

1,315,370

0.05

%

1,207,064

0.05

%

1,167,486

0.04

%

1,086,205

0.10

%

1,064,193

0.13

%

Savings deposits

1,465,562

0.05

%

1,447,021

0.05

%

1,383,495

0.05

%

1,276,285

0.06

%

1,251,432

0.06

%

Time deposits

645,288

1.15

%

684,708

1.31

%

760,803

1.48

%

842,989

1.62

%

853,353

1.69

%

Total interest bearing deposits

$

5,881,730

0.26

%

$

5,703,399

0.30

%

$

5,672,191

0.34

%

$

5,306,785

0.69

%

$

5,226,656

0.77

%

Short-term borrowings

175,597

0.44

%

277,890

0.64

%

427,004

0.92

%

533,516

1.35

%

475,332

1.42

%

Long-term debt

59,488

2.47

%

64,137

2.47

%

64,165

2.46

%

64,194

2.46

%

81,613

2.35

%

Subordinated debt, net

97,984

5.44

%

97,934

5.59

%

8,633

5.96

%

-

-

-

-

Junior subordinated debt

101,196

2.14

%

101,196

2.22

%

101,196

2.76

%

101,196

3.68

%

101,196

4.00

%

Total interest bearing liabilities

$

6,315,995

0.40

%

$

6,244,556

0.45

%

$

6,273,189

0.45

%

$

6,005,691

0.82

%

$

5,884,797

0.90

%

Demand deposits

3,178,410

3,111,617

2,887,545

2,398,307

2,406,563

Other liabilities

271,206

282,265

271,635

214,495

199,674

Stockholders' equity

1,174,102

1,155,056

1,134,794

1,129,595

1,109,225

Total liabilities and stockholders' equity

$

10,939,713

$

10,793,494

$

10,567,163

$

9,748,088

$

9,600,259

Interest rate spread

3.06

%

3.00

%

3.23

%

3.25

%

3.23

%

Net interest margin (FTE)1

3.20

%

3.17

%

3.38

%

3.52

%

3.52

%


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

Twelve Months Ended December 31,

2020

2019

Assets

Short-term interest bearing accounts

$

372,144

$

610

0.16

%

$

36,174

$

773

2.14

%

Securities available for sale1 5

1,079,600

22,434

2.08

%

961,909

23,334

2.43

%

Securities held to maturity1 5

624,668

16,363

2.62

%

725,352

20,410

2.81

%

Investment in FRB and FHLB Banks

33,570

2,096

6.24

%

43,385

2,879

6.64

%

Loans1 6

7,461,795

308,080

4.13

%

6,972,438

321,805

4.62

%

Total interest earning assets

$

9,571,777

$

349,583

3.65

%

$

8,739,258

$

369,201

4.22

%

Other assets

942,274

831,954

Total assets

$

10,514,051

$

9,571,212

Liabilities and stockholders' equity

Money market deposit accounts

$

2,320,947

$

10,313

0.44

%

$

1,949,147

$

22,257

1.14

%

NOW deposit accounts

1,194,398

716

0.06

%

1,095,402

1,518

0.14

%

Savings deposits

1,393,436

745

0.05

%

1,265,112

733

0.06

%

Time deposits

733,073

10,296

1.40

%

910,546

15,478

1.70

%

Total interest bearing deposits

$

5,641,854

$

22,070

0.39

%

$

5,220,207

$

39,986

0.77

%

Short-term borrowings

352,809

3,408

0.97

%

573,927

9,693

1.69

%

Long-term debt

62,990

1,553

2.47

%

80,528

1,875

2.33

%

Subordinated debt, net

51,394

2,842

5.53

%

-

-

-

Junior subordinated debt

101,196

2,731

2.70

%

101,196

4,425

4.37

%

Total interest bearing liabilities

$

6,210,243

$

32,604

0.53

%

$

5,975,858

$

55,979

0.94

%

Demand deposits

2,895,341

2,351,515

Other liabilities

259,992

174,891

Stockholders' equity

1,148,475

1,068,948

Total liabilities and stockholders' equity

$

10,514,051

$

9,571,212

Net interest income (FTE)1

$

316,979

$

313,222

Interest rate spread

3.12

%

3.28

%

Net interest margin (FTE)1

3.31

%

3.58

%

Taxable equivalent adjustment

$

1,301

$

1,667

Net interest income

$

315,678

$

311,555

NBT Bancorp Inc. and Subsidiaries

Consolidated Loan Balances

(unaudited, dollars in thousands)

The following table presents loans by line of business, paycheck protection program loans includes $6.9 million, $11.3 million and $14.6 million in unamortized fees as of December 31, 2020 September 30, 2020 and June 30, 2020 respectively.

2020

2019

4th Q

3rd Q

2nd Q

1st Q

4th Q

Commercial

$

1,267,679

$

1,297,408

$

1,318,806

$

1,338,609

$

1,302,209

Commercial real estate

2,380,358

2,281,843

2,256,580

2,242,139

2,142,057

Paycheck protection program

430,810

514,558

510,097

-

-

Residential real estate mortgages

1,466,662

1,448,530

1,460,058

1,446,676

1,445,156

Indirect auto

931,286

989,369

1,091,889

1,184,888

1,193,635

Specialty lending

579,644

566,973

515,618

539,378

542,063

Home equity

387,974

404,346

415,528

431,536

444,082

Other consumer

54,472

57,616

59,415

64,157

66,896

Total loans

$

7,498,885

$

7,560,643

$

7,627,991

$

7,247,383

$

7,136,098

The following table provide loans as a percentage of total loans in industries vulnerable to the COVID-19 pandemic as of December 31, 2020:

Industry

% of Total
Loans

Accommodations

2.5%

Healthcare services and practices

2.2%

Restaurants and entertainment

1.8%

Retailers

1.7%

Automotive

1.3%

Total

9.5%

Allowance for Loan Losses as a Percentage of Loans by Segment7:

Incurred

CECL

12/31/2019

1/1/2020

3/31/2020

6/30/2020*

9/30/2020*

12/31/2020*

Commercial & industrial

0.96%

0.98%

1.43%

1.25%

1.34%

1.47%

Commercial real estate

1.02%

0.74%

1.10%

1.56%

1.57%

1.43%

Paycheck protection program

0.00%

0.00%

0.00%

0.01%

0.01%

0.01%

Residential real estate

0.27%

0.83%

0.99%

1.13%

1.21%

1.07%

Auto

0.83%

0.78%

1.08%

0.99%

0.92%

0.93%

Other consumer

3.74%

3.66%

4.00%

5.01%

4.66%

4.55%

Total

1.02%

1.07%

1.38%

1.49%

1.51%

1.47%

* Excluding PPP loans and related allowance, total allowance to loans was 1.59%, 1.62% and 1.56% as of June 30, 2020, September 30, 2020 and December 31, 2020 respectively.


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

4th Q

3rd Q

2nd Q

1st Q

4th Q

Income before income tax expense

$

43,626

$

46,101

$

31,277

$

12,083

$

37,126

FTE adjustment

318

325

329

329

349

Provision for loan losses

(607

)

3,261

18,840

29,640

6,004

Net securities (gains) losses

(160

)

(84

)

(180

)

812

(189

)

Nonrecurring expense

4,100

-

650

-

-

Unfunded loan commitments reserve

900

-

(200

)

2,000

-

PPNR

$

48,177

$

49,603

$

50,716

$

44,864

$

43,290

Average Assets

$

10,939,713

$

10,793,494

$

10,567,163

$

9,748,088

$

9,600,259

Return on Average Assets3

1.24

%

1.29

%

0.94

%

0.43

%

1.20

%

PPNR Return on Average Assets3

1.75

%

1.83

%

1.93

%

1.85

%

1.79

%

12 Months ended December 31,

2020

2019

Income before income tax expense

$

133,087

$

155,432

FTE adjustment

1,301

1,667

Provision for loan losses

51,134

25,412

Net securities (gains) losses

388

(4,213

)

Nonrecurring expense

4,750

3,800

Unfunded loan commitments reserve

2,700

-

PPNR

$

193,360

$

182,098

Average Assets

$

10,514,051

$

9,571,212

Return on Average Assets

0.99

%

1.26

%

PPNR Return on Average Assets

1.84

%

1.90

%

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, net securities gains (losses) and non-recurring income and/or expense.

FTE Adjustment

2020

2019

4th Q

3rd Q

2nd Q

1st Q

4th Q

Net interest income

$

80,108

$

77,943

$

80,446

$

77,181

$

77,183

Add: FTE adjustment

318

325

329

329

349

Net interest income (FTE)

$

80,426

$

78,268

$

80,775

$

77,510

$

77,532

Average earning assets

$

9,985,590

$

9,826,300

$

9,605,356

$

8,862,518

$

8,738,350

Net interest margin (FTE)3

3.20

%

3.17

%

3.38

%

3.52

%

3.52

%

12 Months ended December 31,

2020

2019

Net interest income

$

315,678

$

311,555

Add: FTE adjustment

1,301

1,667

Net interest income (FTE)

$

316,979

$

313,222

Average earning assets

$

9,571,777

$

8,739,258

Net interest margin (FTE)

3.31

%

3.58

%

Interest income for tax-exempt securities and loans have been adjusted to a FTE basis using the statutory Federal income tax rate of 21%.


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)

Tangible equity to tangible assets

2020

2019

4th Q

3rd Q

2nd Q

1st Q

4th Q

Total equity

$

1,187,618

$

1,166,111

$

1,142,652

$

1,112,179

$

1,120,397

Intangible assets

292,276

293,098

293,954

285,955

286,789

Total assets

$

10,932,906

$

10,850,212

$

10,847,184

$

9,953,543

$

9,715,925

Tangible equity to tangible assets

8.41

%

8.27

%

8.04

%

8.55

%

8.84

%

Return on average tangible common equity

2020

2019

4th Q

3rd Q

2nd Q

1st Q

4th Q

Net income

$

34,194

$

35,113

$

24,713

$

10,368

$

28,960

Amortization of intangible assets (net of tax)

617

642

662

626

633

Net income, excluding intangibles amortization

$

34,811

$

35,755

$

25,375

$

10,994

$

29,593

Average stockholders' equity

$

1,174,102

$

1,155,056

$

1,134,794

$

1,129,595

$

1,109,225

Less: average goodwill and other intangibles

292,725

293,572

294,423

286,400

287,268

Average tangible common equity

$

881,377

$

861,484

$

840,371

$

843,195

$

821,957

Return on average tangible common equity3

15.71

%

16.51

%

12.14

%

5.24

%

14.28

%

12 Months ended December 31,

2020

2019

Net income

$

104,388

$

121,021

Amortization of intangible assets (net of tax)

2,546

2,684

Net income, excluding intangibles amortization

$

106,934

$

123,705

Average stockholders' equity

$

1,148,475

$

1,068,948

Less: average goodwill and other intangibles

291,787

288,539

Average tangible common equity

$

856,688

$

780,409

Return on average tangible common equity

12.48

%

15.85

%

2

Non-GAAP measure - Stockholders' equity less goodwill and intangible assets divided by common shares outstanding.

3

Annualized.

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.