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NBT Bancorp Inc. Announces Second Quarter Net Income of $24.7 Million, or $0.56 Per Diluted Common Share

·37 min read

NORWICH, N.Y., July 27, 2020 (GLOBE NEWSWIRE) -- NBT Bancorp Inc. (“NBT” or the “Company”) (NASDAQ: NBTB) reported net income and diluted earnings per share for both the three and six months ended June 30, 2020.

Net income for the three months ended June 30, 2020 was $24.7 million, or $0.56 per diluted common share. Net income was up $14.3 million from the previous quarter primarily due to lower loan loss provision and lower noninterest expense and down $5.8 million from the second quarter of 2019 primarily due to higher provision for loan losses related to the deterioration of economic conditions caused by the COVID-19 pandemic. Excluding real estate repositioning charges of $0.7 million, net income and earnings per diluted share were $25.2 million and $0.57, respectively.

Pre-provision net revenue (“PPNR”)1 for the second quarter of 2020 was $50.7 million compared to $44.9 million in the previous quarter and $47.2 million in the second quarter of 2019 reflecting higher net interest income and lower noninterest expense than the previous quarter.

CEO Comments

“NBT was able to grow pre-provision net revenue. Asset quality remained stable during this extraordinary quarter despite the significant challenges presented by the pandemic. Our team has demonstrated an unwavering commitment to provide superior service to our customers and participate in initiatives to support our communities during these difficult times,” said NBT President and CEO, John H. Watt, Jr. “Notable during the quarter was our participation in the SBA’s Paycheck Protection Program to secure approval for approximately 3,000 loans and $547 million in relief to help retain more than 61,000 jobs at businesses and organizations in communities we serve. NBT's disciplined approach to risk management and credit practices, strong and recently enhanced capital position and liquidity continue to provide a strong foundation that will help us to meet the current challenges and to be opportunistic building our franchise.”

Second Quarter Financial Highlights

Net Income

  • Net income of $24.7 million

  • Diluted earnings per share of $0.56

Net Interest Income / NIM

  • Net interest income on a fully taxable equivalent basis was $80.8 million1

  • Net interest margin (“NIM”) on a fully taxable equivalent basis was 3.38%1

PPNR

  • PPNR1 was $50.7 million compared to $44.9 million in the first quarter of 2020 and $47.2 million in the second quarter 2019

Loans and Credit Quality

  • Period end loans were $7.6 billion, up 13.9%, annualized, from December 31, 2019

  • Excluding Paycheck Protection Plan (“PPP”) loans of $510 million at June 30, 2020, period end loans contracted $130 million or 2% from March 31, 2020

  • Originated $547 million in PPP loans

  • Allowance for loan losses to total loans of 1.49% (1.59% excluding PPP loans and related allowance)

  • Net charge-offs to average loans was 0.28%, annualized (0.30% excluding PPP loans)

  • Nonperforming assets to total assets was 0.27% (0.28% excluding PPP loans)

Capital

  • Completed public offering of $100 million 5.00% fixed-to-floating rate subordinated notes

  • Tangible book value per share3 grew 3% for the quarter and 8% from prior year to $19.46 at June 30, 2020

  • Tangible equity to assets of 8.04%1

  • CET1 ratio of 11.34%; Total leverage ratio of 9.44%

Loans

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

  • Total PPP loans as of June 30, 2020 were $510 million (net of unamortized fees); originated $547 million with an average loan size of $185,000 and an average fee of 3.2%.

  • Excluding PPP loans, period end loans decreased $130 million from March 31, 2020. Commercial and industrial loans decreased $19.8 million to $1.3 billion; commercial real estate loans increased $14.4 million to $2.3 billion; and total consumer loans decreased $124.1 million to $3.5 billion, driven by managed run-off of indirect auto loans.

  • Commercial line of credit utilization rate was 26% at June 30, 2020 compared to 32% at March 31, 2020 and 36% at June 30, 2019.

Deposits

  • Average total deposits in the second quarter of 2020 were $8.6 billion, compared to $7.7 billion in the first quarter of 2020, primarily due to increases in non-interest bearing demand and money market deposit accounts.

  • Loan to deposit ratio of 86.5% at June 30, 2020, compared to 94.0% at December 31, 2019.

Net Interest Income and Net Interest Margin

  • Net interest income for the second quarter of 2020 was $80.4 million, up $3.3 million from $77.2 million the first quarter of 2020 and up $1.8 million from $78.6 million for the second quarter of 2019.

  • The net interest margin on a fully taxable equivalent (“FTE”) basis for the second quarter of 2020 was 3.38%, down 14 basis points (“bps”) from the first quarter of 2020 and down 23 bps from the second quarter of 2019. The net impact of PPP loans and excess liquidity, both of which the Company expects to be transitory, negatively impacted the NIM by 7 bps. Excluding the impact of PPP lending and excess liquidity, NIM declined 7 bps from the prior quarter primarily due to the impact of asset repricing, partly offset by lower funding costs.

  • Earning asset yields for the three months ended June 30, 2020 were down 39 bps from the prior quarter and down 60 bps from the same quarter in the prior year. Earning assets grew $742.8 million or 8.4% from the prior quarter and grew $823.4 million or 9.4% from the same quarter in the prior year.
    ° Excess liquidity resulted in a $306 million increase in the average balances of short-term interest bearing accounts with yields declining 118 bps to 0.10%.
    ° Yields on investment securities declined 9 bps.
    ° Loan yields decreased 32 bps to 4.10%.

  • Total cost of total deposits was 0.23% for the second quarter of 2020, down 25 bps from the prior quarter and down 32 bps from the same period in the prior year.

  • The cost of interest-bearing liabilities for the three months ended June 30, 2020 was 0.45%, down 37 bps from the prior quarter of 0.82% and down 51 bps from the second quarter of 2019 of 0.96%.
    ° Cost of interest-bearing deposits decreased 35 bps from the prior quarter and decreased 44 bps from the same quarter in 2019.

Credit Quality and CECL

  • Asset quality metrics remained stable in the second quarter of 2020.

  • Net charge-offs to total average loans of 28 bps (30 bps excluding PPP loans) compared to 32 bps in the prior quarter and 38 bps in the second quarter of 2019.

  • Nonperforming assets to total assets was 0.27% (0.28% excluding PPP loans) compared to 0.35% at March 31, 2020 and 0.30% at June 30, 2019.

  • Provision expense for the three months ended June 30, 2020 was $18.8 million as the economic deterioration due to COVID-19 and the related impact to expected losses continued in the second quarter while net charge-offs of $5.3 million were relatively consistent with the prior quarter. Provision expense decreased $10.8 million from the first quarter of 2020 and increased $11.6 million from the second quarter of 2019.

  • The allowance for loan losses was $113.5 million or 1.49% (1.59% excluding PPP loans and related allowance) of total loans compared to 1.38% at March 31, 2020 and 1.04% June 30, 2019.

  • As of July 23, 2020, 8.7% of loans (excluding PPP loans) are in payment deferral programs which is down from the second quarter 2020 peak of 14.9%.

  • The reserve for unfunded loan commitments decreased $0.2 million to $5.4 million at June 30, 2020 as the increase in the allowance due to the deterioration in the economic forecast was offset by a decrease in the level of unfunded commitments.

Noninterest Income

  • Total noninterest income, excluding securities gains (losses), was $34.8 million for the three months ended June 30, 2020, down $1.4 million from the prior quarter and up $0.5 million from the prior year quarter.

  • Service charges on deposit accounts were lower than both prior quarter and the second quarter of 2019 due to lower overdraft charges during the COVID-19 pandemic.

  • Retirement plan administration fees were higher than both prior quarter and the second quarter of 2019 due to the April 1, 2020 acquisition of Alliance Benefit Group of Illinois, Inc. (“ABG”) contributing $1.8 million in revenues during the quarter.

  • Wealth management fees were down $0.5 million due to market conditions, partly offset by $0.3 million in ABG fees during the quarter.

  • Insurance revenues were down compared to the prior quarter due to seasonally higher insurance revenues in the first quarter.

  • The increase in other noninterest income from the prior year second quarter was driven by higher swap fees.

Noninterest Expense

  • Total noninterest expense for the second quarter of 2020 was down 7.8% from the previous quarter and down 1.3% from the second quarter of 2019.

  • Significant variances to the prior quarter:
    ° Salaries and benefits declined due to decreased medical expenses during the COVID-19 pandemic ($1.1 million) and lower stock-based compensation expenses ($1.0 million), partly offset by increased salaries due to the ABG acquisition ($0.9 million).
    ° Occupancy expense was $0.9 million lower due to seasonal maintenance in the prior quarter and lower expenses during the COVID-19 pandemic due to limited on-site personnel.
    ° Professional fees and outside services were down $0.5 million primarily due to the timing of expenses as a result of the COVID-19 pandemic.
    ° FDIC expense was higher as the remaining portion of the FDIC insurance assessment small bank credit was used in the first quarter of 2020.
    ° Other noninterest expense was lower in the second quarter of 2020 due primarily to a $2.0 million expense in the first quarter for the allowance for unfunded loan commitments, along with lower travel and training expenses during the pandemic. The Company recorded a $0.2 million provision credit in the second quarter of 2020 to reduce the reserve for unfunded commitments.
    ° Other noninterest expense included $0.7 million in non-recurring real estate repositioning charges for the second quarter.

  • Significant variances to the second quarter of 2019:
    ° Higher salaries and benefits primarily driven by the ABG acquisition partly offset by lower medical costs ($0.6 million).
    ° Data processing and communication expense down due to lower transaction volumes as a result of the COVID-19 pandemic.
    ° Other expenses decreased $0.7 million due to lower travel and training expenses during the pandemic and lower pension costs.

Income Taxes

  • Effective tax rate was 21.0% for the second quarter of 2020 compared to 14.2% in the first quarter of 2020 and 22.4% in the second quarter 2019. The higher effective tax rate compared to the first quarter of 2020 was due to higher level of taxable income relative to total income and included a true-up of tax expense to bring the full year estimated effective tax rate to 19.5%. The lower effective tax rate compared to the second quarter of 2019 was due to a lower level of taxable income relative to total income.

Capital

  • Capital ratios remain strong with tangible common equity to tangible assets1 at 8.04%. Tangible book value per share3 grew 3% from the prior quarter and 8% from the prior year quarter to $19.46.

  • June 30, 2020 CET1 capital ratio of 11.34%, total leverage ratio of 9.44% and total risk-based capital ratio of 15.15%.

  • On June 23, 2020, the Company completed its public offering of $100 million 5.00% fixed-to-floating rate subordinated notes due 2030. The net proceeds were $98 million. The notes are intended to qualify as Tier 2 capital for regulatory purposes.

Dividend

  • The Board of Directors approved a third-quarter cash dividend of $0.27 per share at their regularly scheduled meeting held today. The dividend will be paid on September 15, 2020 to shareholders of record as of September 1, 2020.

Conference Call and Webcast

The Company will host a conference call at 8:30 a.m. Eastern Time on Tuesday, July 28, 2020, to review second quarter 2020 financial results. The audio webcast link, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at https://stockholderinfo.nbtbancorp.com/events-calendar/upcoming-events and will be archived for twelve months.

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, NY, with total assets of $10.8 billion at June 30, 2020. The Company primarily operates through NBT Bank, N.A., a full-service community bank, and through two financial services companies. NBT Bank, N.A. has 146 banking locations in New York, Pennsylvania, Vermont, Massachusetts, New Hampshire and Maine, and is currently entering Connecticut. EPIC Retirement Plan Services, based in Rochester, NY, is a full-service 401(k) plan recordkeeping firm. NBT Insurance Agency, LLC, based in Norwich, NY, is a full-service insurance agency. More information about NBT and its divisions is available online at: www.nbtbancorp.com, www.nbtbank.com, www.epicrps.com and www.nbtinsurance.com.

Forward-Looking Statements

This news release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of phrases such as “anticipate,” “believe,” “expect,” “forecasts,” “projects,” “will,” “can,” “would,” “should,” “could,” “may,” or other similar terms. There are a number of factors, many of which are beyond the Company’s control that could cause actual results to differ materially from those contemplated by the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) local, regional, national and international economic conditions and the impact they may have on the Company and its customers and the Company’s assessment of that impact; (2) changes in the level of nonperforming assets and charge-offs; (3) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (4) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board (“FRB”); (5) inflation, interest rate, securities market and monetary fluctuations; (6) political instability; (7) acts of war or terrorism; (8) the timely development and acceptance of new products and services and perceived overall value of these products and services by users; (9) changes in consumer spending, borrowings and savings habits; (10) changes in the financial performance and/or condition of the Company’s borrowers; (11) technological changes; (12) acquisitions and integration of acquired businesses; (13) the ability to increase market share and control expenses; (14) changes in the competitive environment among financial holding companies; (15) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company and its subsidiaries must comply, including those under the Dodd-Frank Act, Economic Growth, Regulatory Relief, Consumer Protection Act of 2018, Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), and regulatory pronouncements around CARES Act; (16) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board (“FASB”) and other accounting standard setters; (17) changes in the Company’s organization, compensation and benefit plans; (18) the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; (19) greater than expected costs or difficulties related to the integration of new products and lines of business; (20) the adverse impact on the U.S. economy, including the markets in which we operate, of the novel coronavirus, which causes the Coronavirus disease 2019 (“COVID-19”), global pandemic; (21) the impact of a slowing U.S. economy and increased unemployment on the performance of our loan portfolio, the market value of our investment securities, the availability of sources of funding and the demand for our products; and (22) the Company’s success at managing the risks involved in the foregoing items.

Currently, one of the most significant factors that could cause actual outcomes to differ materially from the Company’s forward-looking statements is the potential adverse effect of the current COVID-19 pandemic on the financial condition, results of operations, cash flows and performance of the Company, its customers and the global economy and financial markets. The extent to which the COVID-19 pandemic impacts the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic and its impact on the Company’s customers and demand for financial services, the actions governments, businesses and individuals take in response to the pandemic, the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies, national and local economic activity, and the pace of recovery when the COVID-19 pandemic subsides, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section entitled “Risk Factors” in our Form 10-K for the year ended December 31, 2019 and in our Form 10-Q for the quarter ended March 31, 2020 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. You should not place undue reliance on any forward-looking statements, which speak only as of the date made, and you are advised that various factors including, but not limited to, those described above and other factors discussed in the Company’s annual and quarterly reports previously filed with the SEC, could affect the Company’s financial performance and could cause the Company’s actual results or circumstances for future periods to differ materially from those anticipated or projected. Unless required by law, the Company does not undertake, and specifically disclaims any obligations to, publicly release any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

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

2nd Q

1st Q

4th Q

3rd Q

2nd Q

Profitability:

Diluted earnings per share

$

0.56

$

0.23

$

0.66

$

0.73

$

0.69

Weighted average diluted common shares outstanding

43,928,344

44,130,324

44,174,201

44,138,495

44,120,377

Return on average assets2

0.94

%

0.43

%

1.20

%

1.34

%

1.28

%

Return on average equity2

8.76

%

3.69

%

10.36

%

11.83

%

11.63

%

Return on average tangible common equity1 2

12.14

%

5.24

%

14.28

%

16.43

%

16.38

%

Net interest margin1 2

3.38

%

3.52

%

3.52

%

3.57

%

3.61

%

6 Months ended June 30,

2020

2019

Profitability:

Diluted earnings per share

$

0.80

$

1.35

Weighted average diluted common shares outstanding

44,026,420

44,096,681

Return on average assets2

0.69

%

1.26

%

Return on average equity2

6.23

%

11.57

%

Return on average tangible common equity1 2

8.69

%

16.41

%

Net interest margin1 2

3.45

%

3.63

%

2020

2019

2nd Q

1st Q

4th Q

3rd Q

2nd Q

Balance sheet data:

Securities available for sale

$

1,108,443

$

1,000,980

$

975,340

$

932,173

$

979,696

Securities held to maturity

599,164

621,359

630,074

678,435

744,601

Net loans

7,514,491

7,147,383

7,063,133

6,941,444

6,891,108

Total assets

10,847,184

9,953,543

9,715,925

9,661,386

9,635,718

Total deposits

8,815,891

7,864,638

7,587,820

7,743,166

7,593,706

Total borrowings

602,988

714,283

820,682

628,701

794,829

Total liabilities

9,704,532

8,841,364

8,595,528

8,562,785

8,560,895

Stockholders' equity

1,142,652

1,112,179

1,120,397

1,098,601

1,074,823

Capital:

Equity to assets

10.53

%

11.17

%

11.53

%

11.37

%

11.15

%

Tangible equity ratio1

8.04

%

8.55

%

8.84

%

8.65

%

8.41

%

Book value per share

$

26.20

$

25.52

$

25.58

$

25.09

$

24.56

Tangible book value per share3

$

19.46

$

18.96

$

19.03

$

18.52

$

17.97

Tier 1 leverage ratio

9.44

%

10.02

%

10.33

%

10.15

%

9.88

%

Common equity tier 1 capital ratio

11.34

%

10.90

%

11.29

%

11.14

%

10.95

%

Tier 1 capital ratio

12.60

%

12.14

%

12.56

%

12.42

%

12.24

%

Total risk-based capital ratio

15.15

%

13.36

%

13.52

%

13.38

%

13.21

%

Common stock price (end of period)

$

30.06

$

32.39

$

40.56

$

36.59

$

37.51

Note: Year-to-date EPS may not equal sum of quarters due to differences in outstanding shares.


NBT Bancorp Inc. and Subsidiaries

Selected Financial Data

(unaudited, dollars in thousands except per share data)

2020

2019

2nd Q

1st Q

4th Q

3rd Q

2nd Q

Asset quality:

Nonaccrual loans

$

25,567

$

29,972

$

25,174

$

24,623

$

24,669

90 days past due and still accruing

2,057

2,280

3,717

8,342

2,387

Total nonperforming loans

27,624

32,252

28,891

32,965

27,056

Other real estate owned

1,783

2,384

1,458

2,144

2,203

Total nonperforming assets

29,407

34,636

30,349

35,109

29,259

Allowance for loan losses

113,500

100,000

72,965

72,365

72,165

Asset quality ratios (total):

Allowance for loan losses to total loans

1.49

%

1.38

%

1.02

%

1.03

%

1.04

%

Total nonperforming loans to total loans

0.36

%

0.45

%

0.40

%

0.47

%

0.39

%

Total nonperforming assets to total assets

0.27

%

0.35

%

0.31

%

0.36

%

0.30

%

Allowance for loan losses to total nonperforming loans

410.87

%

310.06

%

252.55

%

219.52

%

266.72

%

Past due loans to total loans

0.30

%

0.51

%

0.49

%

0.57

%

0.52

%

Net charge-offs to average loans2

0.28

%

0.32

%

0.30

%

0.35

%

0.38

%

Asset quality ratios (excluding paycheck protection plan):

Allowance for loan losses to total loans

1.59

%

1.38

%

1.02

%

1.03

%

1.04

%

Total nonperforming loans to total loans

0.39

%

0.45

%

0.40

%

0.47

%

0.39

%

Total nonperforming assets to total assets

0.28

%

0.35

%

0.31

%

0.36

%

0.30

%

Allowance for loan losses to total nonperforming loans

410.78

%

310.06

%

252.55

%

219.52

%

266.72

%

Past due loans to total loans

0.32

%

0.51

%

0.49

%

0.57

%

0.52

%

Net charge-offs to average loans2

0.30

%

0.32

%

0.30

%

0.35

%

0.38

%


NBT Bancorp Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited, dollars in thousands)

June 30,

December 31,

Assets

2020

2019

Cash and due from banks

$

171,264

$

170,595

Short-term interest bearing accounts

528,228

46,248

Equity securities, at fair value

29,223

27,771

Securities available for sale, at fair value

1,108,443

975,340

Securities held to maturity (fair value $623,022 and $641,262, respectively)

599,164

630,074

Federal Reserve and Federal Home Loan Bank stock

32,536

44,620

Loans held for sale

16,147

11,731

Loans

7,627,991

7,136,098

Less allowance for loan losses

113,500

72,965

Net loans

$

7,514,491

$

7,063,133

Premises and equipment, net

74,558

75,631

Goodwill

280,541

274,769

Intangible assets, net

13,413

12,020

Bank owned life insurance

183,976

181,748

Other assets

295,200

202,245

Total assets

$

10,847,184

$

9,715,925

Liabilities and stockholders' equity

Demand (noninterest bearing)

$

3,107,528

$

2,414,383

Savings, NOW and money market

5,000,504

4,312,244

Time

707,859

861,193

Total deposits

$

8,815,891

$

7,587,820

Short-term borrowings

339,656

655,275

Long-term debt

64,154

64,211

Subordinated debt, net

97,982

-

Junior subordinated debt

101,196

101,196

Other liabilities

285,653

187,026

Total liabilities

$

9,704,532

$

8,595,528

Total stockholders' equity

$

1,142,652

$

1,120,397

Total liabilities and stockholders' equity

$

10,847,184

$

9,715,925


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,

2020

2019

2020

2019

Interest, fee and dividend income

Interest and fees on loans

$

77,270

$

81,271

$

155,998

$

160,592

Securities available for sale

5,600

6,031

11,353

11,953

Securities held to maturity

3,926

5,089

8,017

10,306

Other

650

842

1,479

1,726

Total interest, fee and dividend income

$

87,446

$

93,233

$

176,847

$

184,577

Interest expense

Deposits

$

4,812

$

10,234

$

13,916

$

19,060

Short-term borrowings

972

2,760

2,769

5,997

Long-term debt

393

471

786

893

Subordinated debt

128

-

128

-

Junior subordinated debt

695

1,141

1,621

2,309

Total interest expense

$

7,000

$

14,606

$

19,220

$

28,259

Net interest income

$

80,446

$

78,627

$

157,627

$

156,318

Provision for loan losses

18,840

7,277

48,480

13,084

Net interest income after provision for loan losses

$

61,606

$

71,350

$

109,147

$

143,234

Noninterest income

Service charges on deposit accounts

$

2,529

$

4,224

$

6,526

$

8,460

ATM and debit card fees

6,136

6,156

11,990

11,681

Retirement plan administration fees

9,214

7,836

17,155

15,570

Wealth management4

6,823

7,122

14,096

13,685

Insurance4

3,292

3,547

7,561

8,291

Bank owned life insurance income

1,381

1,186

2,755

2,563

Net securities gains (losses)

180

(69

)

(632

)

(12

)

Other

5,456

4,239

10,983

7,824

Total noninterest income

$

35,011

$

34,241

$

70,434

$

68,062

Noninterest expense

Salaries and employee benefits

$

39,717

$

38,567

$

80,467

$

77,923

Occupancy

5,065

5,443

11,060

11,718

Data processing and communications

4,079

4,693

8,312

9,107

Professional fees and outside services

3,403

3,359

7,300

7,027

Equipment

4,779

4,518

9,421

9,275

Office supplies and postage

1,455

1,577

3,091

3,168

FDIC expense

993

949

1,304

1,966

Advertising

322

641

931

1,144

Amortization of intangible assets

883

893

1,717

1,861

Loan collection and other real estate owned, net

728

961

1,745

1,746

Other

3,916

4,630

10,873

9,756

Total noninterest expense

$

65,340

$

66,231

$

136,221

$

134,691

Income before income tax expense

$

31,277

$

39,360

$

43,360

$

76,605

Income tax expense

6,564

8,805

8,279

16,923

Net income

$

24,713

$

30,555

$

35,081

$

59,682

Earnings Per Share

Basic

$

0.57

$

0.70

$

0.80

$

1.36

Diluted

$

0.56

$

0.69

$

0.80

$

1.35


NBT Bancorp Inc. and Subsidiaries

Quarterly Consolidated Statements of Income

(unaudited, dollars in thousands except per share data)

2020

2019

2nd Q

1st Q

4th Q

3rd Q

2nd Q

Interest, fee and dividend income

Interest and fees on loans

$

77,270

$

78,728

$

79,800

$

81,082

$

81,271

Securities available for sale

5,600

5,753

5,639

5,711

6,031

Securities held to maturity

3,926

4,091

4,213

4,586

5,089

Other

650

829

924

1,002

842

Total interest, fee and dividend income

$

87,446

$

89,401

$

90,576

$

92,381

$

93,233

Interest expense

Deposits

$

4,812

$

9,104

$

10,181

$

10,745

$

10,234

Short-term borrowings

972

1,797

1,707

1,989

2,760

Long-term debt

393

393

484

498

471

Subordinated debt

128

-

-

-

-

Junior subordinated debt

695

926

1,021

1,095

1,141

Total interest expense

$

7,000

$

12,220

$

13,393

$

14,327

$

14,606

Net interest income

$

80,446

$

77,181

$

77,183

$

78,054

$

78,627

Provision for loan losses

18,840

29,640

6,004

6,324

7,277

Net interest income after provision for loan losses

$

61,606

$

47,541

$

71,179

$

71,730

$

71,350

Noninterest income

Service charges on deposit accounts

$

2,529

$

3,997

$

4,361

$

4,330

$

4,224

ATM and debit card fees

6,136

5,854

5,935

6,277

6,156

Retirement plan administration fees

9,214

7,941

7,218

7,600

7,836

Wealth management4

6,823

7,273

7,085

7,630

7,122

Insurance4

3,292

4,269

3,479

4,000

3,547

Bank owned life insurance income

1,381

1,374

1,236

1,556

1,186

Net securities gains (losses)

180

(812

)

189

4,036

(69

)

Other

5,456

5,527

6,738

4,291

4,239

Total noninterest income

$

35,011

$

35,423

$

36,241

$

39,720

$

34,241

Noninterest expense

Salaries and employee benefits

$

39,717

$

40,750

$

39,592

$

39,352

$

38,567

Occupancy

5,065

5,995

5,653

5,335

5,443

Data processing and communications

4,079

4,233

4,719

4,492

4,693

Professional fees and outside services

3,403

3,897

4,223

3,535

3,359

Equipment

4,779

4,642

4,821

4,487

4,518

Office supplies and postage

1,455

1,636

1,744

1,667

1,577

FDIC expense (credit)

993

311

-

(20

)

949

Advertising

322

609

952

677

641

Amortization of intangible assets

883

834

844

874

893

Loan collection and other real estate owned, net

728

1,017

1,436

976

961

Other

3,916

6,957

6,310

8,374

4,630

Total noninterest expense

$

65,340

$

70,881

$

70,294

$

69,749

$

66,231

Income before income tax expense

$

31,277

$

12,083

$

37,126

$

41,701

$

39,360

Income tax expense

6,564

1,715

8,166

9,322

8,805

Net income

$

24,713

$

10,368

$

28,960

$

32,379

$

30,555

Earnings Per Share

Basic

$

0.57

$

0.24

$

0.66

$

0.74

$

0.70

Diluted

$

0.56

$

0.23

$

0.66

$

0.73

$

0.69


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

Q2 - 2020

Q1 - 2020

Q4 - 2019

Q3 - 2019

Q2 - 2019

Assets

Short-term interest bearing accounts

$

380,260

0.10

%

$

74,695

1.28

%

$

51,613

2.43

%

$

57,530

1.95

%

$

25,783

1.28

%

Securities available for sale1 5

985,561

2.29

%

962,527

2.40

%

942,302

2.37

%

940,256

2.41

%

981,079

2.47

%

Securities held to maturity1 5

613,899

2.75

%

622,398

2.81

%

651,305

2.73

%

698,617

2.77

%

770,651

2.83

%

Investment in FRB and FHLB Banks

36,604

6.09

%

39,784

5.97

%

37,842

6.37

%

40,525

7.04

%

46,179

6.60

%

Loans1 6

7,589,032

4.10

%

7,163,114

4.42

%

7,055,288

4.49

%

6,987,476

4.61

%

6,958,299

4.69

%

Total interest earning assets

$

9,605,356

3.68

%

$

8,862,518

4.07

%

$

8,738,350

4.13

%

$

8,724,404

4.22

%

$

8,781,991

4.28

%

Other assets

961,807

885,570

861,909

852,616

816,748

Total assets

$

10,567,163

$

9,748,088

$

9,600,259

$

9,577,020

$

9,598,739

Liabilities and stockholders' equity

Money market deposit accounts

$

2,360,407

0.29

%

$

2,101,306

1.00

%

$

2,057,678

1.16

%

$

2,015,297

1.24

%

$

1,916,045

1.16

%

NOW deposit accounts

1,167,486

0.04

%

1,086,205

0.10

%

1,064,193

0.13

%

1,056,001

0.13

%

1,127,413

0.13

%

Savings deposits

1,383,495

0.05

%

1,276,285

0.06

%

1,251,432

0.06

%

1,274,793

0.06

%

1,282,084

0.06

%

Time deposits

760,803

1.48

%

842,989

1.62

%

853,353

1.69

%

893,837

1.75

%

953,698

1.73

%

Total interest bearing deposits

$

5,672,191

0.34

%

$

5,306,785

0.69

%

$

5,226,656

0.77

%

$

5,239,928

0.81

%

$

5,279,240

0.78

%

Short-term borrowings

427,004

0.92

%

533,516

1.35

%

475,332

1.42

%

490,694

1.61

%

620,898

1.78

%

Long-term debt

64,165

2.46

%

64,194

2.46

%

81,613

2.35

%

84,250

2.35

%

82,414

2.29

%

Subordinated debt, net

8,633

5.96

%

-

-

-

-

-

-

-

-

Junior subordinated debt

101,196

2.76

%

101,196

3.68

%

101,196

4.00

%

101,196

4.29

%

101,196

4.52

%

Total interest bearing liabilities

$

6,273,189

0.45

%

$

6,005,691

0.82

%

$

5,884,797

0.90

%

$

5,916,068

0.96

%

$

6,083,748

0.96

%

Demand deposits

2,887,545

2,398,307

2,406,563

2,389,617

2,298,867

Other liabilities

271,635

214,495

199,674

185,374

162,374

Stockholders' equity

1,134,794

1,129,595

1,109,225

1,085,961

1,053,750

Total liabilities and stockholders' equity

$

10,567,163

$

9,748,088

$

9,600,259

$

9,577,020

$

9,598,739

Interest rate spread

3.23

%

3.25

%

3.23

%

3.26

%

3.32

%

Net interest margin (FTE)1

3.38

%

3.52

%

3.52

%

3.57

%

3.61

%


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,

2020

2019

Assets

Short-term interest bearing accounts

$

227,478

$

335

0.30

%

$

17,471

$

174

2.01

%

Securities available for sale1 5

974,044

11,353

2.34

%

982,881

11,984

2.46

%

Securities held to maturity1 5

618,149

8,554

2.78

%

776,577

11,043

2.87

%

Investment in FRB and FHLB Banks

38,194

1,144

6.02

%

47,657

1,552

6.57

%

Loans1 6

7,376,072

156,119

4.26

%

6,922,684

160,768

4.68

%

Total interest earning assets

$

9,233,937

$

177,505

3.87

%

$

8,747,270

$

185,521

4.28

%

Other assets

923,689

806,225

Total assets

$

10,157,626

$

9,553,495

Liabilities and stockholders' equity

Money market deposit accounts

$

2,230,857

$

6,965

0.63

%

$

1,860,358

$

9,974

1.08

%

NOW deposit accounts

1,126,845

404

0.07

%

1,131,291

817

0.15

%

Savings deposits

1,329,890

360

0.05

%

1,267,146

362

0.06

%

Time deposits

801,896

6,187

1.55

%

948,109

7,907

1.68

%

Total interest bearing deposits

$

5,489,488

$

13,916

0.51

%

$

5,206,904

$

19,060

0.74

%

Short-term borrowings

480,261

2,769

1.16

%

666,349

5,997

1.81

%

Long-term debt

64,179

786

2.46

%

78,085

893

2.31

%

Subordinated debt, net

4,316

128

5.96

%

-

-

-

Junior subordinated debt

101,196

1,621

3.22

%

101,196

2,309

4.60

%

Total interest bearing liabilities

$

6,139,440

$

19,220

0.63

%

$

6,052,534

$

28,259

0.94

%

Demand deposits

2,642,926

2,304,169

Other liabilities

243,066

156,963

Stockholders' equity

1,132,194

1,039,829

Total liabilities and stockholders' equity

$

10,157,626

$

9,553,495

Net interest income (FTE)1

$

158,285

$

157,262

Interest rate spread

3.24

%

3.34

%

Net interest margin (FTE)1

3.45

%

3.63

%

Taxable equivalent adjustment

$

658

$

944

Net interest income

$

157,627

$

156,318


NBT Bancorp Inc. and Subsidiaries

Consolidated Loan Balances

(unaudited, dollars in thousands)

The following table presents loans by line of business, paycheck protection plans loans includes $14.6 million in unamortized fees.

2020

2019

2nd Q

1st Q

4th Q

3rd Q

2nd Q

Commercial

$

1,318,806

$

1,338,609

$

1,302,209

$

1,317,649

$

1,299,784

Commercial real estate

2,256,580

2,242,139

2,142,057

2,033,552

2,025,280

Paycheck protection plan

510,097

-

-

-

-

Residential real estate mortgages

1,460,058

1,446,676

1,445,156

1,416,920

1,404,079

Indirect auto

1,091,889

1,184,888

1,193,635

1,195,783

1,189,670

Specialty lending

515,618

539,378

542,063

528,505

519,974

Home equity

415,528

431,536

444,082

452,535

456,754

Other consumer

59,415

64,157

66,896

68,865

67,732

Total loans

$

7,627,991

$

7,247,383

$

7,136,098

$

7,013,809

$

6,963,273

The following table provide loans as a percentage of total loans in industries vulnerable to the COVID-19 pandemic as of June 30, 2020:

Industry

% of Total Loans

Accommodations

2.6

%

Healthcare services and practices

2.0

%

Restaurants and entertainment

1.9

%

Retailers

1.6

%

Automotive

1.5

%

Total

9.6

%

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*

Commercial & industrial

0.96

%

0.98

%

1.43

%

1.25

%

Commercial real estate

1.02

%

0.74

%

1.10

%

1.56

%

Paycheck protection plan

0.00

%

0.00

%

0.00

%

0.01

%

Residential real estate

0.27

%

0.83

%

0.99

%

1.13

%

Auto

0.83

%

0.78

%

1.08

%

0.99

%

Other consumer

3.74

%

3.66

%

4.00

%

5.01

%

Total

1.02

%

1.07

%

1.38

%

1.49

%

* Excluding PPP loans and related allowance, total allowance to loans was 1.59%


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

2nd Q

1st Q

4th Q

3rd Q

2nd Q

Income before income tax expense

$

31,277

$

12,083

$

37,126

$

41,701

$

39,360

FTE adjustment

329

329

349

374

445

Provision for loan losses

18,840

29,640

6,004

6,324

7,277

Net securities (gains) losses

(180

)

812

(189

)

(4,036

)

69

Nonrecurring expense

650

-

-

3,800

-

Unfunded loan commitments reserve

(200

)

2,000

-

-

-

PPNR

$

50,716

$

44,864

$

43,290

$

48,163

$

47,151

Average Assets

$

10,567,163

$

9,748,088

$

9,600,259

$

9,577,020

$

9,598,739

Return on Average Assets

0.94

%

0.43

%

1.20

%

1.34

%

1.28

%

PPNR Return on Average Assets

1.93

%

1.85

%

1.79

%

2.00

%

1.97

%

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

2nd Q

1st Q

4th Q

3rd Q

2nd Q

Net interest income

$

80,446

$

77,181

$

77,183

$

78,054

$

78,627

Add: FTE adjustment

329

329

349

374

445

Net interest income (FTE)

$

80,775

$

77,510

$

77,532

$

78,428

$

79,072

Average earning assets

$

9,605,356

$

8,862,518

$

8,738,350

$

8,724,404

$

8,781,991

Net interest margin (FTE)

3.38

%

3.52

%

3.52

%

3.57

%

3.61

%

6 Months ended June 30,

2020

2019

Net interest income

$

157,627

$

156,318

Add: FTE adjustment

658

944

Net interest income (FTE)

$

158,285

$

157,262

Average earning assets

$

9,233,937

$

8,747,270

Net interest margin (FTE)

3.45

%

3.63

%

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

2nd Q

1st Q

4th Q

3rd Q

2nd Q

Total equity

$

1,142,652

$

1,112,179

$

1,120,397

$

1,098,601

$

1,074,823

Intangible assets

293,954

285,955

286,789

287,633

288,507

Total assets

$

10,847,184

$

9,953,543

$

9,715,925

$

9,661,386

$

9,635,718

Tangible equity to tangible assets

8.04

%

8.55

%

8.84

%

8.65

%

8.41

%


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)

Return on average tangible common equity

2020

2019

2nd Q

1st Q

4th Q

3rd Q

2nd Q

Net income

$

24,713

$

10,368

$

28,960

$

32,379

$

30,555

Amortization of intangible assets (net of tax)

662

626

633

656

670

Net income, excluding intangibles amortization

$

25,375

$

10,994

$

29,593

$

33,035

$

31,225

Average stockholders' equity

$

1,134,794

$

1,129,595

$

1,109,225

$

1,085,961

$

1,053,750

Less: average goodwill and other intangibles

294,423

286,400

287,268

288,077

288,930

Average tangible common equity

$

840,371

$

843,195

$

821,957

$

797,884

$

764,820

Return on average tangible common equity

12.14

%

5.24

%

14.28

%

16.43

%

16.38

%

6 Months ended June 30,

2020

2019

Net income

$

35,081

$

59,682

Amortization of intangible assets (net of tax)

1,288

1,396

Net income, excluding intangibles amortization

$

36,369

$

61,078

Average stockholders' equity

$

1,132,194

$

1,039,829

Less: average goodwill and other intangibles

290,411

289,419

Average tangible common equity

$

841,783

$

750,410

Return on average tangible common equity

8.69

%

16.41

%

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.