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NBT Bancorp Inc. Announces Reported Net Income of $10.9 Million and Record Core Net Income of $19.8 Million for the Third Quarter of 2014; Declares Cash Dividend

10/27/14

NORWICH, N.Y., Oct. 27, 2014 (GLOBE NEWSWIRE) -- NBT Bancorp Inc. (NBT) (Nasdaq:NBTB) reported net income for the three months ended September 30, 2014 was $10.9 million, down from $27.6 million for the previous quarter, and down from $19.3 million for the same period last year. Reported net income for the three months ended September 30, 2014 included prepayment penalties totaling $8.8 million (after taxes) related to our previously reported long-term debt restructure strategy. Reported net income for the previous quarter ended June 30, 2014 included an $11.2 million net gain (after taxes and related incentive compensation) on the sale of our ownership interest in Springstone LLC ("Springstone"), partially offset by prepayment penalties totaling $2.9 million (after taxes) related to our long-term debt restructure strategy. Reported earnings per diluted share for the three months ended September 30, 2014 was $0.25 as compared to $0.62 for the previous quarter and $0.44 for the same period in 2013.

Core net income for the three months ended September 30, 2014 was $19.8 million, up 3.8% from $19.1 million for the previous quarter and up 2.3% from $19.4 million for the same period in 2013. Core diluted earnings per share for the three months ended September 30, 2014 was $0.45, up from $0.43 for the previous quarter and up from $0.44 for the same period in 2013.

Reported net income for the nine months ended September 30, 2014 was $56.6 million, up from $43.8 million for the same period last year, which included the aforementioned net Springstone gain and long-term prepayment penalties in 2014 and approximately $12.3 million in merger-related expenses in 2013. Reported earnings per diluted share for the nine months ended September 30, 2014 was $1.28 as compared to $1.05 for the same period in 2013.

Core net income for the nine months ended September 30, 2014 was $57.3 million, up 11.3% from $51.5 million for the same period in 2013. Core diluted earnings per share for the nine months ended September 30, 2014 was $1.29, up from $1.23 for the same period in 2013.

The reported results for the third quarter and first nine months of 2014 and 2013 both contained items which the Company considers non-core, such as gain on the sale of the Springstone equity investment, long-term debt restructure prepayment penalties, merger expenses, securities gains, and other items not considered core to our operations.

Third Quarter 2014 Highlights:

  • Core net income of $19.8 million for the third quarter of 2014 is the highest in the Company's history
     
  • Net interest margin was 3.61% for the third quarter of 2014, up 1 basis point from the linked quarter as we began to realize the benefit of the debt restructure strategy completed during the third quarter
     
  • Completed previously disclosed long-term borrowings restructure strategy, resulting in $13.3 million in gross prepayment penalties (non-core) recognized in the third quarter of 2014 and lowered the cost of the restructured long-term funding by approximately 200 basis points
     
  • 9% average year to date organic retail demand deposit growth

"We are extremely pleased to report that we achieved record core net income during the third quarter of 2014," said NBT President and CEO Martin Dietrich. "We remain focused on our customers and our opportunities to promote organic growth as we continue to expand in new markets like New Hampshire and enhance the service we provide across our footprint as we deploy new technology like enhanced deposit functionality at our ATMs and through mobile deposit services. Our efforts to manage our balance sheet strategically and with a long-term focus are also essential to our efforts to continue to create long-term value for our shareholders."

Net interest income was $63.8 million for the third quarter of 2014, up 1.9% from the previous quarter, and up 2.5% from the same period last year. Fully taxable equivalent ("FTE") net interest margin was 3.61% for the three months ended September 30, 2014, up from 3.60% from the prior quarter, and down from 3.65% for the third quarter of 2013. Average interest earning assets were up $44.0 million, or 0.6%, for the third quarter of 2014 as compared to the prior quarter, driven primarily by organic loan production. The increase in average interest earning assets was partially offset by slight rate compression on earning assets, which decreased from 3.94% during the second quarter of 2014 to 3.91% for the third quarter of 2014. This rate compression was driven primarily by decreasing loan yields from 4.42% for the second quarter of 2014 to 4.38% for the third quarter of 2014. As a result of the increase in average earning assets, interest income was up 1.0% for the third quarter of 2014 as compared to the prior quarter. Average interest bearing liabilities decreased $32.9 million, or 0.6%, from the second quarter of 2014 to the third quarter of 2014. The rates paid on interest bearing liabilities decreased by 4 basis points from the second quarter of 2014 to the third quarter of 2014. This decrease was primarily driven by a 46 basis point decrease in the rate paid on long-term debt resulting from the aforementioned debt restructuring completed in the third quarter of 2014. The decrease in average balances combined with the decrease in the rates paid on interest bearing liabilities resulted in an 8.7% decrease in interest expense for the third quarter of 2014 as compared to the prior quarter.       

Net interest income was $187.9 million for the nine months ended September 30, 2014, up 6.7% from the same period in 2013. FTE net interest margin was 3.61% for the nine months ended September 30, 2014, down from 3.67% from the nine months ended September 30, 2013. Average interest earning assets were up $535.2 million, or 8.2%, for the nine months ended September 30, 2014 as compared to the same period in 2013. This increase was driven primarily by the acquisition of Alliance Financial Corporation ("Alliance") in March 2013 as well as organic loan production during the past several quarters. The increase in average interest earning assets was partially offset by rate compression on earning assets, as their yield decreased from 4.16% during the nine months ended September 30, 2013 to 3.95% for the nine months ended September 30, 2014. This rate compression was driven primarily by decreasing loan yields from 4.75% for the nine months ended 2013 to 4.43% for the nine months ended September 30, 2014. As a result of the increase in average earning assets, interest income was up 3.1% for the nine months ended September 30, 2014 as compared to the same period in 2013. Average interest bearing liabilities increased $282.3 million, or 5.8%, for the first nine months of 2014 as compared to the same period in 2013. This increase was due primarily to an increase in deposits resulting from organic deposit growth as well as the aforementioned acquisition of Alliance. The rates paid on interest bearing liabilities for the first nine months of 2014 decreased by 18 basis points from the first nine months of 2013. This decrease was primarily driven by a decrease of 10 basis points in rates paid on deposits from improved funding mix as well as a 55 basis point decrease in the rate paid on long-term debt due primarily to maturity of long-term debt in the prior year, as well as the aforementioned debt restructuring in the second and third quarters of 2014.

Noninterest income for the three months ended September 30, 2014 was $26.7 million, down $19.4 million from the previous quarter, and down $0.5 million from the same period in 2013. The decrease from the prior quarter was primarily driven by a $19.4 million gain from the previously disclosed sale of our ownership interest in Springstone recorded in the second quarter of 2014. Excluding this gain, noninterest income for the three months ended September 30, 2014 was up $0.1 million from the previous quarter.      

Noninterest income for the nine months ended September 30, 2014 was $99.0 million, up $21.1 million, or 27.0%, from the same period in 2013. The increase from 2013 was primarily driven by the aforementioned $19.4 million gain recorded in the second quarter of 2014. Excluding this gain, noninterest income for the nine months ended September 30, 2014 was $79.6 million, up $1.7 million, or 2.1%, from the same period in 2013. This increase from 2013 was due primarily to increases in trust and ATM and debit card fees, due in large part to the full impact from Alliance in 2014. These increases were partially offset by decreases in service charges on deposit accounts and net securities gains for the first nine months of 2014 as compared with the same period in 2013. The decrease in service charges on deposit accounts from the prior year was due primarily to lower nonsufficient funds fees recorded during the first nine months of 2014 due to changes in customer behavior, improving macroeconomic conditions, and continued customer outreach and education.  

Noninterest expense for the three months ended September 30, 2014 was $69.1 million, up $6.3 million from the previous quarter, and up $12.8 million from the same period in 2013. This increase from the prior quarter and 2013 was due primarily to $13.3 million of prepayment penalties from the aforementioned strategic long-term debt restructuring in the third quarter of 2014 as compared with $4.6 million in prepayment penalties recorded during the second quarter of 2014. Excluding these prepayment penalties, noninterest expense for the three months ended September 30, 2014 was $55.7 million, down $2.5 million, or 4.2% from the previous quarter, and down $0.6 million, or 1.0%, from the same period in 2013. The decrease from the previous quarter was due primarily to a $2.2 million decrease in salaries and employee benefits driven by $2.5 million increase in incentive compensation related to the Springstone transaction recorded in the second quarter of 2014.   

Noninterest expense for the nine months ended September 30, 2014 was $189.3 million, up $15.9 million from the same period in 2013. Excluding the $17.9 million prepayment penalties in 2014 and the merger related expenses totaling $12.3 million in the first nine months of 2013, noninterest expense for the nine months ended September 30, 2014 was $171.4 million, up $10.3 million, or 6.4% from the same period in 2013. This increase from the nine months ended September 30, 2013 was due primarily to 2014 including the full nine months of Alliance expenses including occupancy, salaries and employee benefits, data processing, professional fees, and equipment. In addition, the increase in salaries and benefits in 2014 included incremental incentive compensation related to the Springstone transaction, partially offset by lower retirement plan expenses due mainly to plan asset performance and a previous plan amendment.

The effective tax rate was 33.8% for the third quarter of 2014, 33.7% for the second quarter of 2014, and 31.0% for the third quarter of 2013. The effective tax rate was 33.4% for the nine months ended September 30, 2014, as compared to 30.7% for the first nine months of 2013. The increases in the effective tax rate for the three and nine month periods ending September 30, 2014 were primarily due to a higher level of taxable income as a percentage of total income as compared to the same periods in 2013.

Asset Quality

Net charge-offs were $5.1 million for the third quarter of 2014, up from $4.1 million for the second quarter of 2014, and down from $6.2 million for the third quarter of 2013. Net charge-offs to average loans for the third quarter of 2014 was 0.36%, compared to 0.30% for the previous quarter and 0.46% for the same period in 2013. NBT recorded a provision for loan losses of $4.9 million for the three months ended September 30, 2014, compared with $4.2 million for the previous quarter, and $5.2 million for the same period in 2013.   

Nonperforming loans to total loans was 0.98% at September 30, 2014, up from 0.96% at June 30, 2014 and down from 0.99% at December 31, 2013. For the originated portfolio, nonperforming loans to loans was 0.83% at September 30, 2014, up slightly from 0.81% for the prior quarter, and down from 0.84% at December 31, 2013. Past due loans as a percentage of total loans was 0.65% for the third quarter of 2014, up from 0.57% for the second quarter of 2014, and down from 0.77% as of December 31, 2013.   For the originated portfolio, past due loans as a percentage of loans was 0.70% for the third quarter of 2014, up from 0.59% for the second quarter of 2014, and down from 0.83% as of December 31, 2013.  

The allowance for loan losses totaled $69.3 million at September 30, 2014, down slightly from $69.5 million at June 30, 2014 and $69.4 million at December 31, 2013. The allowance for loan losses as a percentage of loans was 1.24% (1.38% excluding acquired loans) at September 30, 2014, compared to 1.25% (1.44% excluding acquired loans) at June 30, 2014 and 1.28% (1.55% excluding acquired loans) at December 31, 2013.     

Balance Sheet

Total assets were $7.9 billion at September 30, 2014, up $214.9 million or 2.8% from December 31, 2013. Loans were $5.6 billion at September 30, 2014, up $180.3 million (4.5% annualized growth) from December 31, 2013 primarily due to increases in our indirect, residential and commercial real estate portfolios. During the third quarter of 2014, the Company transferred approximately $340 million in securities from the available for sale portfolio to the held to maturity portfolio. Total deposits were $6.3 billion at September 30, 2014, up $427.7 million from December 31, 2013. Stockholders' equity was $857.4 million, representing a total equity-to-total assets ratio of 10.90% at September 30, 2014, compared with $816.6 million or a total equity-to-total assets ratio of 10.67% at December 31, 2013.

Stock Repurchase Program

The Company purchased 3,288 shares of its common stock during the nine months ended September 30, 2014 at an average price of $22.02 per share under a previously announced plan. As of September 30, 2014, there were 996,712 shares available for repurchase under this plan, which expires on December 31, 2014.  On October 27, 2014, the NBT Board of Directors authorized a new repurchase program for NBT to repurchase up to an additional 1,000,000 shares of its outstanding common stock. This plan expires on December 31, 2016.

Dividend

The NBT Board of Directors declared a 2014 fourth-quarter cash dividend of $0.21 per share at a meeting held today. The dividend will be paid on December 15, 2014 to shareholders of record as of December 1, 2014.

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, N.Y., with total assets of $7.9 billion at September 30, 2014.  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 over 155 banking locations with offices in upstate New York, northeastern Pennsylvania, northwestern Vermont, western Massachusetts, southern New Hampshire, and southern Maine. EPIC Advisors, Inc., based in Rochester, N.Y., is a full-service 401(k) plan recordkeeping firm. NBT-Mang Insurance Agency, based in Norwich, N.Y., is a full-service insurance agency. More information about NBT and its divisions can be found on the Internet at: www.nbtbancorp.com, www.nbtbank.com, www.epic1st.com and www.nbtmang.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 Bancorp 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, that 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, the following possibilities: (1) competitive pressures among depository and other financial institutions may increase significantly; (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 the businesses in which NBT is engaged; (6) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than NBT; and (7) adverse changes may occur in the securities markets or with respect to inflation.  Forward-looking statements speak only as of the date they are made. Except as required by law, NBT does not update forward-looking statements to reflect subsequent circumstances or events.

Non-GAAP Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). These measures adjust GAAP measures to exclude the effects of sales of securities and certain non-recurring and merger-related expenses. Where non-GAAP disclosures are used in this press release, the comparable GAAP measure, as well as a reconciliation to the comparable GAAP measure, is provided in the accompanying tables. Management believes that these non-GAAP measures provided useful information that is important to an understanding of the operating results of NBT's core business (due to the non-recurring nature of the excluded items). 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)
           
     
  2014 2013
  3rd Q 2nd Q 1st Q 4th Q 3rd Q
Reconciliation of Non-GAAP Financial Measures:          
Reported net income (GAAP) $10,912 $27,640 $18,009 $17,925 $19,257
Adj: (Gain) / Loss on sale of securities, net (net of tax)  (25)  (9)  (5)  (9)  (228)
Adj: Other adjustments (net of tax) (1)  83  (315)  430  402  110
Adj: Gain on sale of Springstone (net of tax and related incentive compensation)  --  (11,168)  --  --  --
Adj: Prepayment penalties related to debt restructuring (net of tax)  8,833  2,925  --  --  --
Plus: Merger related expenses (net of tax)  --  --  --  59  224
Total Adjustments  8,891  (8,567)  425  452  106
Core net income $19,803 $19,073 $18,434 $18,377 $19,363
           
Profitability:          
Core Diluted Earnings Per Share $0.45 $0.43 $0.42 $0.42 $0.44
Diluted Earnings Per Share $0.25 $0.62 $0.41 $0.41 $0.44
Weighted Average Diluted          
Common Shares Outstanding 44,405,357 44,363,787 44,296,445 44,121,102 44,135,114
Core Return on Average Assets (2) 1.01% 0.99% 0.98% 0.96% 1.02%
Return on Average Assets (2) 0.55% 1.43% 0.95% 0.94% 1.01%
Core Return on Average Equity (2) 9.19% 9.06% 9.02% 9.04% 9.67%
Return on Average Equity (2) 5.06% 13.12% 8.81% 8.81% 9.62%
Core Return on Average Tangible Common Equity (2)(4) 14.35% 14.27% 14.48% 14.77% 15.95%
Return on Average Tangible Common Equity (2)(4) 8.15% 20.43% 14.16% 14.42% 15.86%
Net Interest Margin (2)(3) 3.61% 3.60% 3.63% 3.61% 3.65%
           
Nine Months Ended September 30,          
           
           
Reconciliation of Non-GAAP Financial Measures: 2014 2013      
Reported net income (GAAP) $56,561 $43,822      
Adj: Gain on sale of securities, net (net of tax)  (39)  (981)      
Adj: Other adjustments (net of tax) (6)  198  110      
Adj: Gain on sale of Springstone (net of tax and related incentive compensation)  (11,168)  --      
Adj: Prepayment penalties related to debt restructuring (net of tax)  11,758  --      
Plus: Merger related expenses (net of tax)  --  8,529      
Total Adjustments  749  7,658      
Core net income $57,310 $51,480      
           
Profitability:          
Core Diluted Earnings Per Share $1.29 $1.23      
Diluted Earnings Per Share $1.28 $1.05      
Weighted Average Diluted          
Common Shares Outstanding 44,353,318 41,768,796      
Core Return on Average Assets (2) 0.99% 0.96%      
Return on Average Assets (2) 0.98% 0.82%      
Core Return on Average Equity (2) 9.09% 9.20%      
Return on Average Equity (2) 8.97% 7.83%      
Core Return on Average Tangible Common Equity (2)(5) 14.36% 14.75%      
Return on Average Tangible Common Equity (2)(5) 14.18% 12.64%      
Net Interest Margin (2)(3) 3.61% 3.67%      
           
(1) Primarily net gain on settlement of litigation and reorganization expenses for 2014 and reorganization expenses for 2013
(2) Annualized
(3) Calculated on a Fully Tax Equivalent ("FTE") basis
(4) Excludes amortization of intangible assets (net of tax) from net income and average tangible common equity is calculated as follows:
           
           
     
  2014 2013
  3rd Q 2nd Q 1st Q 4th Q 3rd Q
Average stockholders' equity  $ 855,164  $ 844,707  $ 828,588  $ 806,791  $ 794,273
Less: average goodwill and other intangibles  285,993  287,366  290,019  291,659  292,271
Average tangible common equity  $ 569,171  $ 557,341  $ 538,569  $ 515,132  $ 502,002
           
(5) Excludes amortization of intangible assets (net of tax) from net income and average tangible common equity is calculated as follows:
           
         
  9 Months ended September 30,      
  2014 2013      
Average stockholders' equity  $ 843,005  $ 748,277      
Less: average goodwill and other intangibles  287,778  262,277      
Average tangible common equity  $ 555,227  $ 486,000      
           
(6) Primarily net gain on settlement of litigation and reorganization expenses for 2014 and reorganization expenses for 2013.
 
NBT Bancorp Inc. and Subsidiaries
SELECTED FINANCIAL DATA
(unaudited, dollars in thousands except per share data)
           
     
  2014 2013
  3rd Q 2nd Q 1st Q 4th Q 3rd Q
Balance Sheet Data:          
Securities Available for Sale $1,044,502 $1,378,799 $1,377,585 $1,364,881 $1,385,734
Securities Held to Maturity  459,620  125,965  117,896  117,283  118,259
Net Loans  5,517,757  5,504,954  5,412,591  5,337,361  5,297,047
Total Assets  7,867,031  7,869,512  7,753,129  7,652,175  7,668,903
Total Deposits  6,314,939  6,042,588  6,068,898  5,890,224  6,003,138
Total Borrowings  607,889  886,799  766,753  866,061  783,439
Total Liabilities  7,009,591  7,012,371  6,920,927  6,835,606  6,873,344
Stockholders' Equity  857,440  857,141  832,202  816,569  795,559
           
Asset Quality:          
Nonaccrual Loans $50,531 $51,234 $51,464 $49,965 $41,418
90 Days Past Due and Still Accruing  4,022  2,186  2,700  3,737  3,286
Total Nonperforming Loans  54,553  53,420  54,164  53,702  44,704
Other Real Estate Owned  1,497  1,953  2,564  2,904  3,626
Total Nonperforming Assets  56,050  55,373  56,728  56,606  48,330
Allowance for Loan Losses  69,334  69,534  69,434  69,434  70,184
           
Asset Quality Ratios (Total):          
Allowance for Loan Losses to Total Loans 1.24% 1.25% 1.27% 1.28% 1.31%
Total Nonperforming Loans to Total Loans 0.98% 0.96% 0.99% 0.99% 0.83%
Total Nonperforming Assets to Total Assets 0.71% 0.70% 0.73% 0.74% 0.63%
Allowance for Loan Losses to Total Nonperforming Loans 127.09% 130.16% 128.19% 129.29% 157.00%
Past Due Loans to Total Loans 0.65% 0.57% 0.57% 0.77% 0.70%
Net Charge-Offs to Average Loans (3) 0.36% 0.30% 0.27% 0.44% 0.46%
           
Asset Quality Ratios (Originated) (1):          
Allowance for Loan Losses to Loans 1.38% 1.44% 1.51% 1.55% 1.60%
Nonperforming Loans to Loans 0.83% 0.81% 0.82% 0.84% 0.85%
Allowance for Loan Losses to Nonperforming Loans 166.69% 177.01% 183.29% 184.96% 188.66%
Past Due Loans to Loans 0.70% 0.59% 0.62% 0.83% 0.74%
           
Capital:          
Equity to Assets 10.90% 10.89% 10.73% 10.67% 10.37%
Book Value Per Share $19.62 $19.61 $19.09 $18.77 $18.38
Tangible Book Value Per Share (2) $13.09 $13.06 $12.48 $12.09 $11.64
Tier 1 Leverage Ratio 9.20% 9.23% 9.05% 8.93% 8.79%
Tier 1 Capital Ratio 12.03% 11.95% 11.81% 11.74% 11.46%
Total Risk-Based Capital Ratio 13.26% 13.20% 13.06% 12.99% 12.71%
Common Stock Price (End of Period) $22.52 $24.02 $24.46 $25.90 $22.98
           
(1) Excludes acquired loans
(2) Stockholders' equity less goodwill and intangible assets divided by common shares outstanding
(3) Annualized
           
Note: Year-to-date (YTD) EPS may not equal sum of quarters due to share count differences.
 
NBT Bancorp Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(unaudited, dollars in thousands)
     
  September 30, December 31,
ASSETS 2014 2013
Cash and due from banks  $ 169,905  $ 157,625
Short term interest bearing accounts  4,630  1,301
Securities available for sale, at fair value  1,044,502  1,364,881
Securities held to maturity (fair value of $454,787 and $113,276 at September 30, 2014 and December 31, 2013, respectively)  459,620  117,283
Trading securities  7,622  5,779
Federal Reserve and Federal Home Loan Bank stock  34,652  46,864
Loans  5,587,091  5,406,795
Less allowance for loan losses  69,334  69,434
Net loans 5,517,757 5,337,361
Premises and equipment, net  89,023  88,327
Goodwill  263,634  264,997
Intangible assets, net  21,543  25,557
Bank owned life insurance  117,102  114,966
Other assets  137,041  127,234
TOTAL ASSETS  $ 7,867,031  $ 7,652,175
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Deposits:    
Demand (noninterest bearing)  $ 1,724,134  $ 1,645,641
Savings, NOW, and money market  3,514,155  3,223,441
Time  1,076,650  1,021,142
Total deposits 6,314,939 5,890,224
Short-term borrowings  375,637  456,042
Long-term debt  131,056  308,823
Junior subordinated debt  101,196  101,196
Other liabilities  86,763  79,321
Total liabilities 7,009,591 6,835,606
     
Total stockholders' equity  857,440  816,569
     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 7,867,031  $ 7,652,175
 
NBT Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, dollars in thousands except per share data)
     
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2014 2013 2014 2013
Interest, fee and dividend income:        
Loans  $ 61,173  $ 61,773  $ 181,747  $ 177,499
Securities available for sale 6,095  6,520  19,464  18,803
Securities held to maturity 1,353  804  2,904  1,877
Other 513  472  1,552  1,363
Total interest, fee and dividend income  69,134  69,569  205,667  199,542
Interest expense:        
Deposits 3,498  3,999  9,782  12,445
Short-term borrowings 262  232  702  341
Long-term debt 1,067  2,561  5,709  9,196
Junior subordinated debt 544  551  1,620  1,539
Total interest expense  5,371  7,343  17,813  23,521
Net interest income  63,763  62,226  187,854  176,021
Provision for loan losses 4,885  5,198  12,647  17,258
Net interest income after provision for loan losses  58,878  57,028  175,207  158,763
Noninterest income:        
Insurance and other financial services revenue 6,179  6,038  18,510  18,686
Service charges on deposit accounts 4,519  5,055  13,285  14,311
ATM and debit card fees 4,440  4,276  12,869  11,562
Retirement plan administration fees 3,272  3,062  9,167  8,701
Trust 4,758  4,345  14,157  11,957
Bank owned life insurance income 1,095  913  3,455  2,648
Net securities gains 38  329  59  1,413
Gain on the sale of Springstone investment  --  --  19,401  --
Other 2,376  3,129  8,078  8,635
Total noninterest income  26,677  27,147  98,981  77,913
Noninterest expense:        
Salaries and employee benefits 28,933  29,267  89,609  85,474
Occupancy 5,211  5,262  16,872  15,458
Data processing and communications 4,029  4,059  12,045  11,368
Professional fees and outside services 3,695  3,202  10,862  9,340
Equipment 3,199  2,988  9,447  8,480
Office supplies and postage 1,733  1,640  5,221  4,886
FDIC expenses  1,135  1,285  3,642  3,688
Advertising 403  722  1,868  2,445
Amortization of intangible assets 1,275  1,346  3,821  3,548
Loan collection and other real estate owned 705  886  2,546  2,025
Merger related  --  326  --  12,276
Prepayment penalties on long term debt  13,348  --  17,902  --
Other operating 5,401  5,303  15,485  14,453
Total noninterest expense 69,067 56,286 189,320 173,441
Income before income taxes 16,488 27,889 84,868 63,235
Income taxes 5,576  8,632  28,307  19,413
Net income  $ 10,912  $ 19,257  $ 56,561  $ 43,822
Earnings Per Share:        
Basic  $ 0.25  $ 0.44  $ 1.29  $ 1.06
Diluted  $ 0.25  $ 0.44  $ 1.28  $ 1.05
 
NBT Bancorp Inc. and Subsidiaries
QUARTERLY CONSOLIDATED STATEMENTS OF INCOME
(unaudited, dollars in thousands except per share data)
     
  2014 2013
  3rd Q 2nd Q 1st Q 4th Q 3rd Q
Interest, fee and dividend income:          
Loans  $ 61,173  $ 60,559  $ 60,015  $ 61,173  $ 61,773
Securities available for sale 6,095 6,612 6,757 6,707 6,520
Securities held to maturity 1,353 783 768 783 804
Other 513 502 537 518 472
Total interest, fee and dividend income 69,134 68,456 68,077 69,181 69,569
Interest expense:          
Deposits 3,498 3,000 3,284 3,845 3,999
Short-term borrowings 262 209 231 174 232
Long-term debt 1,067 2,135 2,507 2,559 2,561
Junior subordinated debt 544 538 538 545 551
Total interest expense 5,371 5,882 6,560 7,123 7,343
Net interest income 63,763 62,574 61,517 62,058 62,226
Provision for loan losses 4,885 4,166 3,596 5,166 5,198
Net interest income after provision for loan losses 58,878 58,408 57,921 56,892 57,028
Noninterest income:          
Insurance and other financial services revenue 6,179 5,594 6,737 5,761 6,038
Service charges on deposit accounts 4,519 4,397 4,369 4,996 5,055
ATM and debit card fees 4,440 4,357 4,072 3,996 4,276
Retirement plan administration fees 3,272 2,977 2,918 2,796 3,062
Trust 4,758 4,953 4,446 4,725 4,345
Bank owned life insurance income 1,095 978 1,382 1,145 913
Net securities gains 38 14 7 13 329
Gain on the sale of Springstone investment  -- 19,401  --  --  --
Other 2,376 3,356 2,346 1,870 3,129
Total noninterest income 26,677 46,027 26,277 25,302 27,147
Noninterest expense:          
Salaries and employee benefits 28,933 31,142 29,534 28,106 29,267
Occupancy 5,211 5,435 6,226 5,262 5,262
Data processing and communications 4,029 4,015 4,001 3,985 4,059
Professional fees and outside services 3,695 3,752 3,415 3,969 3,202
Equipment 3,199 3,132 3,116 3,013 2,988
Office supplies and postage 1,733 1,803 1,685 1,677 1,640
FDIC expenses 1,135 1,229 1,278 1,272 1,285
Advertising 403 726 739 759 722
Amortization of intangible assets 1,275 1,236 1,310 1,324 1,346
Loan collection and other real estate owned 705 801 1,040 594 886
Merger  --  --  -- 88 326
Prepayment penalties on long term debt  13,348  4,554  --  --  --
Other operating 5,401 4,911 5,173 5,437 5,303
Total noninterest expense 69,067 62,736 57,517 55,486 56,286
Income before income taxes 16,488 41,699 26,681 26,708 27,889
Income taxes 5,576 14,059 8,672 8,783 8,632
Net income  $ 10,912  $ 27,640  $ 18,009  $ 17,925  $ 19,257
Earnings per share:          
Basic  $ 0.25  $ 0.63  $ 0.41  $ 0.41  $ 0.44
Diluted  $ 0.25  $ 0.62  $ 0.41  $ 0.41  $ 0.44
 
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
  Q3 - 2014 Q2 - 2014 Q1 - 2014 Q4 - 2013  Q3 - 2013
ASSETS:                    
Short-term interest bearing accounts  $ 4,791 0.54%  $ 3,915 0.76%  $ 2,733 1.02%  $ 4,798 0.81%  $ 1,955 1.73%
Securities available for sale (1)(2)  1,263,375 2.01%  1,376,314 2.05%  1,381,744 2.11%  1,383,273 2.05%  1,387,714 2.00%
Securities held to maturity (1)  234,403 2.84%  121,042 3.43%  116,613 3.52%  117,574 3.47%  118,781 3.54%
Investment in FRB and FHLB Banks  39,459 5.06%  42,965 4.63%  43,596 4.94%  41,115 4.92%  43,895 4.20%
Loans (3)  5,563,206 4.38%  5,517,315 4.42%  5,425,938 4.50%  5,369,474 4.54%  5,309,446 4.63%
Total interest earning assets  $ 7,105,234 3.91%  $ 7,061,551 3.94%  $ 6,970,624 4.01%  $ 6,916,234 4.02%  $ 6,861,791 4.08%
Other assets  697,814    680,059    679,246    680,435    671,482  
Total assets  $ 7,803,048    $ 7,741,610    $ 7,649,870    $ 7,596,669    $ 7,533,273  
                     
LIABILITIES AND STOCKHOLDERS' EQUITY:                    
Money market deposit accounts $1,452,287 0.19% $1,441,284 0.15% $1,411,444 0.15% $1,419,458 0.15% $1,360,067 0.15%
NOW deposit accounts  927,026 0.05%  960,698 0.06%  932,528 0.05%  925,544 0.13%  877,387 0.13%
Savings deposits  1,025,795 0.07%  1,040,528 0.07%  1,000,029 0.07%  973,650 0.08%  984,093 0.09%
Time deposits  1,032,370 0.96%  971,595 0.88%  999,579 0.99%  1,042,710 1.07%  1,081,549 1.09%
Total interest bearing deposits  $ 4,437,478 0.31%  $ 4,414,105 0.27%  $ 4,343,580 0.31%  $ 4,361,362 0.35%  $ 4,303,096 0.37%
Short-term borrowings  447,761 0.23%  383,480 0.22%  398,951 0.24%  338,476 0.20%  383,238 0.24%
Junior subordinated debentures  101,196 2.13%  101,196 2.13%  101,196 2.16%  101,196 2.14%  101,196 2.16%
Long-term debt  170,223 2.49%  290,791 2.95%  308,760 3.29%  308,969 3.29%  309,069 3.29%
Total interest bearing liabilities  $ 5,156,658 0.41%  $ 5,189,572 0.45%  $ 5,152,487 0.52%  $ 5,110,003 0.55%  $ 5,096,599 0.57%
Demand deposits  1,708,632    1,620,488    1,589,865    1,595,145    1,559,506  
Other liabilities  82,594    86,843    78,930    84,730    82,896  
Stockholders' equity  855,164    844,707    828,588    806,791    794,272  
Total liabilities and stockholders' equity  $ 7,803,048    $ 7,741,610    $ 7,649,870    $ 7,596,669    $ 7,533,273  
                     
Interest rate spread   3.50%   3.49%   3.49%   3.47%   3.51%
Net interest margin   3.61%   3.60%   3.63%   3.61%   3.65%
                     
(1) Securities are shown at average amortized cost
(2) Excluding unrealized gains or losses
(3) For purposes of these computations, nonaccrual loans are included in the average loan balances outstanding
 
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
Nine Months ended September 30, 2014 2013
ASSETS:            
Short-term interest bearing accounts $3,821 $21 0.73% $39,191 $107 0.36%
Securities available for sale (1)(2)  1,340,044  20,614 2.06%  1,338,637  20,207 2.02%
Securities held to maturity (1)  157,784  3,727 3.16%  78,291  2,665 4.55%
Investment in FRB and FHLB Banks  41,992  1,531 4.88%  36,947  1,261 4.56%
Loans and leases (3)  5,502,656  182,383 4.43%  5,018,022  178,177 4.75%
Total interest earning assets  $ 7,046,297  $ 208,276 3.95%  $ 6,511,088  $ 202,417 4.16%
Other assets  685,861      644,332    
Total assets  $ 7,732,158      $ 7,155,420    
             
LIABILITIES AND STOCKHOLDERS' EQUITY:            
Money market deposit accounts $1,435,155  1,748 0.16% $1,318,304  $ 1,462 0.15%
NOW deposit accounts  940,064  384 0.05%  868,167  1,174 0.18%
Savings deposits  1,022,212  551 0.07%  914,255  581 0.08%
Time deposits  1,001,301  7,099 0.95%  1,078,165  9,228 1.14%
Total interest bearing deposits  $ 4,398,732  $ 9,782 0.30%  $ 4,178,891  $ 12,445 0.40%
Short-term borrowings  410,242  702 0.23%  261,428  341 0.17%
Trust preferred debentures  101,196  1,620 2.14%  94,965  1,539 2.17%
Long-term debt  256,084  5,709 2.98%  348,715  9,196 3.53%
Total interest bearing liabilities  $ 5,166,254  $ 17,813 0.46%  $ 4,883,999  $ 23,521 0.64%
Demand deposits  1,640,097      1,446,802    
Other liabilities  82,802      76,342    
Stockholders' equity  843,005      748,277    
Total liabilities and stockholders' equity  $ 7,732,158      $ 7,155,420    
Net interest income (FTE)    190,463      178,896  
Interest rate spread     3.49%     3.52%
Net interest margin     3.61%     3.67%
Taxable equivalent adjustment    2,609      2,875  
Net interest income    $ 187,854      $ 176,021  
             
(1) Securities are shown at average amortized cost
(2) Excluding unrealized gains or losses
(3) For purposes of these computations, nonaccrual loans are included in the average loan balances outstanding
 
NBT Bancorp Inc. and Subsidiaries
CONSOLIDATED LOAN BALANCES
(unaudited, dollars in thousands)
           
     
  2014 2013
  3rd Q 2nd Q 1st Q 4th Q 3rd Q
Residential real estate mortgages  $ 1,100,139  $ 1,073,207  $ 1,056,793  $1,041,637  $1,028,158
Commercial  862,098  895,128  878,152  859,026  849,095
Commercial real estate mortgages  1,411,689  1,378,065  1,347,940  1,328,313  1,302,978
Real estate construction and development  75,874  94,019  99,295  93,247  116,662
Agricultural and agricultural real estate mortgages  108,246  109,035  110,815  112,035  110,113
Consumer  1,447,918  1,435,643  1,387,221  1,352,638  1,327,203
Home equity  581,127  589,391  601,809  619,899  633,022
Total loans  $ 5,587,091  $ 5,574,488  $ 5,482,025  $5,406,795  $5,367,231
CONTACT: Martin A. Dietrich, CEO
         Michael J. Chewens, CFO
         NBT Bancorp Inc.52 South Broad StreetNorwich, NY 13815
         607-337-6119
NBT Bancorp Inc.
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