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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 27, 2014

 

NBT BANCORP INC.

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(Exact name of registrant as specified in its charter)

 

 

52 SOUTH BROAD STREET, NORWICH, NEW YORK 13815

(Address of principal executive offices)

Registrant's telephone number, including area code: (607) 337-2265

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o

Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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On January 27, 2014, NBT Bancorp Inc. issued a press release describing its results of operations for the quarter and twelve months ended December 31, 2013 and announcing a quarterly cash dividend to be paid on March 14, 2014 to shareholders of record on March 1, 2014.  That press release is furnished as Exhibit 99.1 hereto.

 

 ITEM 9.01 Financial Statements and Exhibits

(d) The following is being furnished herewith:

Exhibit No.

Exhibit Description

99.1	Press release text of NBT Bancorp Inc. dated January 27, 2014

 SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Date: January 29, 2014

 

 

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Exhibit 99.1

 

FOR IMMEDIATE RELEASE

ATTENTION: FINANCIAL AND BUSINESS EDITORS

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NBT BANCORP INC. ANNOUNCES RECORD NET INCOME OF $61.7 MILLION AND ORGANIC LOAN GROWTH OF 5.3% IN 2013; DECLARES CASH DIVIDEND

 

NORWICH, NY (January 27, 2014) – NBT Bancorp Inc. (NBT) (NASDAQ: NBTB) reported net income for the year ended December 31, 2013 of $61.7 million, up from $54.6 million from the prior year.  2013 results included the impact of the acquisition of Alliance Financial Corporation (“Alliance”) in March 2013, including approximately $12.4 million in merger related expenses.  Reported earnings per diluted share for the year ended December 31, 2013 was $1.46 as compared to $1.62 for 2012.

Core net income (excluding merger related expenses, net securities gains, and other items not considered core) for the year ended December 31, 2013 was $69.9 million, up 27.5% from $54.8 million for 2012.  Core diluted earnings per share for the year ended December 31, 2013 was $1.65, up from $1.63 for the prior year.

Reported net income for the three months ended December 31, 2013 was $17.9 million, up from $13.1 million for the same period last year.  2013 results included the impact of the aforementioned acquisition of Alliance.  Reported diluted earnings per share for the three months ended December 31, 2013 was $0.41, as compared to $0.39 for the same period in 2012.

Core net income (excluding merger related expenses, net securities gains, and other items not considered core) for the three months ended December 31, 2013 was $18.4 million, up 35.2% from $13.6 million for the same period in 2012, due primarily to the impact of the Alliance acquisition.  Core diluted earnings per share for the three months ended December 31, 2013 was $0.42, as compared to $0.40 for the same period last year.

2013 Highlights:

·	Significant strategic expansion during 2013:

o	Acquired Alliance Financial Corporation, a $1.4 billion financial holding company headquartered in Syracuse, N.Y. on March 8, 2013

·	2013 organic loan growth of 5.3%

o	Consumer loan growth of 4.8%

o	Commercial loan growth of 5.5%

·	Net charge-offs to average loans was 0.44% for 2013, down from 0.55% for 2012

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“We are extremely proud of the results generated by our team in 2013. We achieved record core earnings and realized strong organic loan growth while maintaining stable asset quality. Strategic initiatives—including the successful acquisition and integration of Alliance, investments in training and technology, and expense control—all contributed to our strong financial results and have our company well-positioned for 2014 and beyond. Ultimately, the engine that drives our success is the talented group of financial professionals we cultivate. While the regulatory and economic environment continues to present challenges, we remain confident in our team and their ability to continue to enhance the long-term value of our company for our shareholders.”

Net interest income was $238.1 million for the year ended December 31, 2013, up 16.6% from 2012.  This increase from the prior year was due primarily to the 22.7% increase in average earning assets for the year ended December 31, 2013 over the prior year.  The acquisition of Alliance in March 2013 as well as the sustained organic loan growth in 2013 contributed to the growth in average earning assets.

NBT’s fully tax equivalent (“FTE”) net interest margin was 3.66% for the year ended December 31, 2013, down from 3.86% for 2012.  Rate compression on earning assets continued to negatively impact net interest margin in 2013 as evidenced by decreasing loan yields from 5.17% for the year ended December 31, 2012 to 4.69% for 2013.  In addition, yields on available for sale securities declined 42 bps for the year ended December 31, 2013 as compared to 2012.  The rate compression on earning assets was partially offset by the 24 bp decrease in the rates paid on interest bearing liabilities, driven by a more favorable deposit mix and a decrease in deposit rates, in 2013 as compared to the same period in 2012.  Further contributing to net interest margin compression during 2013 was the incorporation of Alliance’s interest earning assets and interest bearing liabilities into NBT.

Net interest income was $62.1 million for the fourth quarter of 2013, down marginally from the prior quarter, and up $9.6 million from the fourth quarter of 2012 primarily due to the acquisition of Alliance.  Average interest earning assets were up $54.4 million, or 0.8%, for the fourth quarter of 2013 as compared to the prior quarter, driven primarily by organic loan production during the fourth quarter.  This increase was offset by a decrease in the yields on interest earning assets from 4.08% for the third quarter of 2013 to 4.02% for the fourth quarter, driven primarily by the 9 bp decrease in loan yields.  Average interest bearing liabilities increased slightly from the third quarter of 2013 to the fourth quarter.  Rates paid on interest bearing liabilities decreased 2 bps during the same period resulting in a 3.0% decrease in interest expense from the third quarter of 2013 to the fourth quarter.

NBT’s FTE net interest margin was 3.61% for the three months ended December 31, 2013, down from 3.65% from the prior quarter, and down from 3.83% for the fourth quarter of 2012.  Rate compression on earning assets continued to negatively impact net interest margin in the fourth quarter of 2013 as evidenced by decreasing loan yields from 4.63% for the third quarter of 2013 to 4.54% for the fourth quarter of 2013.  The rate compression on earning assets was partially offset by the 2 bp decrease in the rates paid on interest bearing liabilities in the fourth quarter of 2013 versus the prior quarter.  This decrease was primarily driven by the 2 bp decrease in rates paid on deposits.

Noninterest income for the year ended December 31, 2013 was $103.2 million, up 18.2% from 2012, with the primary drivers being increases in trust revenue and ATM and debit card fees driven primarily by the acquisition of Alliance.  In addition, NBT experienced a 9.2% increase in insurance and financial services revenue for the year ended December 31, 2013 as compared to 2012, due primarily to a $1.0 million, or 6.0%, increase in insurance revenue as well as a $1.0 million, or 19.5%, increase in financial services revenue.  Retirement plan administration fees were also up $1.4 million, or 13.9% for the year ended December 31, 2013 as compared to 2012 due to growth in new business during 2013.

 

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Noninterest income for the three months ended December 31, 2013 was $25.3 million, down 6.8% from the prior quarter, and up 15.2% from the fourth quarter of 2012 which was due primarily to the acquisition of Alliance.  The decrease from the prior quarter was driven primarily by other noninterest income, which decreased $1.3 million from the prior quarter.  Decreases in loan fees collected and swap fees recognized during the fourth quarter were the main drivers.  In addition, NBT recorded $0.3 million in securities gains during the third quarter, as compared to nominal securities gains recorded for the fourth quarter of 2013.

Noninterest expense for the year ended December 31, 2013 was $228.9 million, up $35.0 million or 18.1%, from 2012.  Excluding merger expenses totaling $12.4 million and $2.6 million for the years ended December 31, 2013 and 2012, respectively, noninterest expense was up $25.3 million, or 13.2%, for 2013 as compared to 2012.  Several noninterest expense categories were affected by the acquisition of Alliance in March 2013 and the full year impact of the June 2012 acquisition of Hampshire First Bank, with salaries and employee benefits and occupancy expenses being the primary drivers of the increase.  Income tax expense for the year ended December 31, 2013 was $28.2 million, up from $22.8 million from 2012 due primarily to the increase in pre-tax income for 2013 and an increase in the effective tax rate to 31.3% for the year ended December 31, 2013 as compared with 29.5% for 2012.

Noninterest expense for the three months ended December 31, 2013 was $55.5 million, down 1.4% from the prior quarter, and up 14.2% from the fourth quarter of 2012 primarily due to the acquisition of Alliance.  Excluding merger expenses totaling $0.1 million and $0.3 million during the fourth quarter and third quarter of 2013, respectively, noninterest expense was down $0.6 million, or 1.0%, for the fourth quarter of 2013 as compared to the prior quarter.  Income tax expense for the three month period ended December 31, 2013 was $8.8 million, up slightly from $8.6 million from the prior quarter, and up from $5.8 million for the fourth quarter of 2012.  The increase from the fourth quarter of 2012 is due primarily to the increase in pre-tax income during the fourth quarter of 2013 over the fourth quarter of 2012.  The effective tax rate was 32.9% for the fourth quarter and 31.0% for the third quarter of 2013.

Asset Quality

Net charge-offs were $22.3 million for the year ended December 31, 2013, equivalent to the year ended December 31, 2012.  Net charge-offs to average loans for the year ended December 31, 2013 was 0.44%, compared to 0.55% for last year.  NBT recorded a provision for loan losses of $22.4 million for the year ended December 31, 2013, compared with $20.3 million for 2012.  This increase was due primarily to strong organic loan growth during 2013.

Net charge-offs were $5.9 million for the three months ended December 31, 2013, down from $6.2 million for the prior quarter, and down from $8.3 million from the three months ended December 31, 2012.  NBT recorded a provision for loan losses of $5.2 million for the three months ended December 31, 2013, equivalent to the prior quarter, and $6.9 million for the fourth quarter of 2012.

Nonperforming loans to total loans was 0.99% at December 31, 2013, up 16 bps from the prior quarter, and up from 0.98% at December 31, 2012.  The increase from the prior quarter was due to an increase in commercial nonaccrual loans, driven primarily by one commercial relationship.  Past due loans as a percentage of total loans were 0.77% for the fourth quarter as compared to 0.70% for the third quarter of 2013, and 0.71% as of December 31, 2012.

 

The allowance for loan losses totaled $69.4 million at December 31, 2013, compared to $70.2 million at September 30, 2013 and $69.3 million at December 31, 2012.  The allowance for loan losses as a percentage of loans was 1.28% (1.55% excluding acquired loans with no related allowance recorded) at December 31, 2013, compared to 1.31% (1.60% excluding acquired loans with no related allowance recorded) at September 30, 2013 and 1.62% (1.72% excluding acquired loans with no related allowance recorded) at December 31, 2012.

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Balance Sheet

Total assets were $7.7 billion at December 31, 2013, up $1.6 billion (approximately $1.4 billion from Alliance acquisition) or 26.6% from December 31, 2012.  Loans were $5.4 billion at December 31, 2013, up $1.1 billion from December 31, 2012, primarily due to approximately $904 million from the Alliance acquisition coupled with strong organic loan growth during 2013.  Total deposits were $5.9 billion at December 31, 2013, up $1.1 billion from December 31, 2012, primarily due to the Alliance acquisition.  Stockholders’ equity was $816.6 million, representing a total equity-to-total assets ratio of 10.67% at December 31, 2013, compared with $582.3 million or a total equity-to-total assets ratio of 9.64% at December 31, 2012.

Stock Repurchase Program

Under a previously disclosed stock repurchase plan which expired on December 31, 2013, NBT purchased 584,925 shares of its common stock during the twelve month period ended December 31, 2013, for a total of $12.5 million at an average price of $21.30 per share.  At December 31, 2013, there were 1,000,000 shares available for repurchase under a previously announced plan, which expires on December 31, 2014.

Dividend

The NBT Board of Directors declared a 2014 first-quarter cash dividend of $0.21 per share at a meeting held today.  The dividend will be paid on March 14, 2014 to shareholders of record as of March 1, 2014.

Corporate Overview

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.

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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.

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(1)	Primarily reorganization expenses for 2013 and a write-down of an other asset for 2012

(2)	Annualized

(3)	Calculated on a Fully Tax Equivalent (“FTE”)

(4)	Excludes amortization of intangible assets (net of tax) from net income and average tangible common equity is calculated as follows:

(5)	Excludes amortization of intangible assets (net of tax) from net income and average tangible common equity is calculated as follows:

(6)	Reorganization expenses for 2013; prepayment penalty income and flood insurance recoveries, partially offset by an other asset write-down for 2012

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(1)	Excludes acquired loans with no related allowance recorded

(2)	Stockholders' equity less goodwill and intangible assets divided by common shares outstanding

(3)	The Tier 1 Leverage Ratio for the first quarter of 2013 was impacted by timing of the acquisition of Alliance on March 8, 2013

(4)	Annualized

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NBT Bancorp Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(unaudited, dollars in thousands)

		December 31,				December 31,
ASSETS		2013				2012
Cash and due from banks		$	157,625			$	157,094
Short term interest bearing accounts			1,301				6,574
Securities available for sale, at fair value			1,364,881				1,147,999
Securities held to maturity (fair value of $113,276 and $61,535 at December 31, 2013 and 2012, respectively)			117,283				60,563
Trading securities			5,779				3,918
Federal Reserve and Federal Home Loan Bank stock			46,864				29,920
Loans			5,406,795				4,277,616
Less allowance for loan losses			69,434				69,334
Net loans			5,337,361				4,208,282
Premises and equipment, net			88,327				77,875
Goodwill			264,997				152,373
Intangible assets, net			25,557				16,962
Bank owned life insurance			114,966				80,702
Other assets			127,234				99,997
TOTAL ASSETS		$	7,652,175			$	6,042,259
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand (noninterest bearing)		$	1,645,641			$	1,242,712
Savings, NOW, and money market			3,223,441				2,558,376
Time			1,021,142				983,261
Total deposits			5,890,224				4,784,349
Short-term borrowings			456,042				162,941
Long-term debt			308,823				367,492
Junior subordinated debt			101,196				75,422
Other liabilities			79,321				69,782
Total liabilities			6,835,606				5,459,986
Total stockholders' equity			816,569				582,273
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	7,652,175			$	6,042,259

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,
		2013				2012				2013				2012
Interest, fee and dividend income:
Loans		$	61,173			$	53,924			$	238,672			$	208,458
Securities available for sale			6,707				5,981				25,510				27,005
Securities held to maturity			783				549				2,660				2,378
Other			518				403				1,881				1,556
Total interest, fee and dividend income			69,181				60,857				268,723				239,397
Interest expense:
Deposits			3,845				4,327				16,290				18,848
Short-term borrowings			174				39				515				188
Long-term debt			2,559				3,627				11,755				14,428
Trust preferred debt			545				411				2,084				1,730
Total interest expense			7,123				8,404				30,644				35,194
Net interest income			62,058				52,453				238,079				204,203
Provision for loan losses			5,166				6,940				22,424				20,269
Net interest income after provision for loan losses			56,892				45,513				215,655				183,934
Noninterest income:
Insurance and other financial services revenue			5,761				5,363				24,447				22,387
Service charges on deposit accounts			4,996				4,687				19,307				18,225
ATM and debit card fees			3,996				2,955				15,558				12,358
Retirement plan administration fees			2,796				2,635				11,497				10,097
Trust			4,725				2,489				16,682				9,172
Bank owned life insurance income			1,145				849				3,793				3,077
Net securities gains			13				21				1,426				599
Other			1,870				2,963				10,505				11,412
Total noninterest income			25,302				21,962				103,215				87,327
Noninterest expense:
Salaries and employee benefits			28,106				26,457				113,580				104,815
Occupancy			5,262				4,265				20,720				17,415
Data processing and communications			3,985				3,396				15,353				13,437
Professional fees and outside services			3,969				2,615				13,309				10,463
Equipment			3,013				2,403				11,493				9,627
Office supplies and postage			1,677				1,647				6,563				6,489
FDIC expenses			1,272				1,020				4,960				3,832
Advertising			759				581				3,204				2,889
Amortization of intangible assets			1,324				864				4,872				3,394
Loan collection and other real estate owned			594				509				2,619				2,560
Merger related			88				713				12,364				2,608
Other operating			5,437				4,122				19,890				16,358
Total noninterest expense			55,486				48,592				228,927				193,887
Income before income taxes			26,708				18,883				89,943				77,374
Income taxes			8,783				5,767				28,196				22,816
Net income		$	17,925			$	13,116			$	61,747			$	54,558
Earnings Per Share:
Basic		$	0.41			$	0.39			$	1.47			$	1.63
Diluted		$	0.41			$	0.39			$	1.46			$	1.62