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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): July 27, 2015

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:

 

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ITEM 2.02 Results of Operations and Financial Condition

On July 27, 2015, NBT Bancorp Inc. issued a press release describing its results of operations for the quarter and six months ended June 30, 2015 and announcing a quarterly cash dividend to be paid on September 15, 2015 to shareholders of record on September 1, 2015.  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 July 27, 2015

 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: July 28, 2015

 

 

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 Exhibit 99.1

 

FOR IMMEDIATE RELEASE

ATTENTION: FINANCIAL AND BUSINESS EDITORS

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NBT BANCORP INC. ANNOUNCES NET INCOME OF $19.3 MILLION FOR THE SECOND QUARTER OF 2015, SECOND HIGHEST IN THE COMPANY’S HISTORY; DECLARES CASH DIVIDEND

NORWICH, NY (July 27, 2015) – NBT Bancorp Inc. (NBT) (NASDAQ: NBTB) announced reported net income for the three months ended June 30, 2015 was $19.3 million, up from $18.2 million for the first quarter of 2015, and down from $27.6 million for the second quarter of 2014.  Reported net income for the second quarter of 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 $2.9 million in prepayment penalties, net of tax, related to our long-term debt restructuring strategy.  Reported diluted earnings per share for the three months ended June 30, 2015 was $0.43, as compared with $0.41 for the prior quarter, and $0.62 per share for the second quarter of 2014.

Core net income for the three months ended June 30, 2015 was $19.6 million, up from $18.2 million in the previous quarter, and up from $19.1 million from the same period last year.  Core earnings per diluted share for the three months ended June 30, 2015 was $0.44, up from $0.41 for the first quarter of 2015, and up from $0.43 for the second quarter of 2014.

Reported net income for the six months ended June 30, 2015 was $37.4 million, down from $45.6 million for the same period last year.  Reported net income for the six months ended June 30, 2014 included the aforementioned gain on the sale of our ownership interest in Springstone, partially offset by the aforementioned prepayment penalties related to our long-term debt restructuring strategy.  Reported diluted earnings per share for the six months ended June 30, 2015 was $0.84, as compared with $1.03 for the same period in 2014.

Core net income for the six months ended June 30, 2015 was $37.7 million, up from $37.5 million for the same period last year.  Core earnings per diluted share for the six months ended June 30, 2015 was $0.85, equivalent to the same period last year.

The second quarter and year to date reported results for 2015 and 2014 contained items which the Company considers non-core, such as the gain on the sale of an equity investment and long-term debt restructuring prepayment penalties in 2014, and other items not considered core to our operations in both years.

Second Quarter 2015 Highlights:

·	Core net income for the second quarter of 2015 was second highest in the Company’s history

·	Strong second quarter organic loan growth (annualized) of 10.5% driven by:

 

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o	Commercial – 13.1%

o	Residential mortgage – 10.2%

o	Consumer – 11.9%

·	Continued positive trends in asset quality indicators:

o	Nonperforming loans to total loans improved to 0.77% at June 30, 2015 from 0.85% at March 31, 2015 and 0.96% at June 30, 2014

o	Annualized net charge-offs to average loans improved to 0.30% for the second quarter of 2015, down from 0.34% for the first quarter of 2015 and 0.41% for the 2014 full year

“For the second quarter of 2015, we’re pleased to report strong earnings with both our reported and core net income at the second highest level in NBT’s history,” said NBT President and CEO Martin Dietrich. “Our bankers are contributing to these results with robust organic loan growth for the second quarter of 10.5% annualized. All sectors are performing well, particularly the commercial portfolio where growth in our established markets is being augmented by lending in our new markets in New England.”

Net interest income was $62.7 million for the second quarter of 2015, up $0.5 million from the previous quarter, and up $0.1 million from the second quarter of 2014.  FTE net interest margin was 3.51% for the three months ended June 30, 2015, down from 3.60% for the previous quarter and the second quarter of 2014.  Average interest earning assets were up $149.3 million, or 2.1%, for the second quarter of 2015 as compared to the prior quarter, and up $188.6 million, or 2.7%, from the same period in 2014.  The increase from the first quarter of 2015 was driven primarily by organic loan production.  Annualized organic loan growth of 10.5% during the second quarter of 2015 was driven by growth in most portfolios.  Yields on earning assets decreased by 10 basis points (“bps”) from 3.89% during the first quarter of 2015 to 3.79% for the second quarter of 2015, which was more than offset by the growth in earning assets during the second quarter of 2015, and resulted in modest growth in net interest income.  The yield compression was driven by a 9 bp decrease in loan yields from the first quarter of 2015 to the second quarter of 2015.  Average interest bearing liabilities increased $88.5 million, or 1.7%, from the first quarter of 2015 to the second quarter of 2015, which was driven by a 1.1% increase in interest bearing deposits for the second quarter of 2015.  We continued to experience migration of time deposits to lower cost transaction accounts and the rate paid on money market deposit accounts decreased slightly during the second quarter of 2015, which contributed to a 1 bp decrease in the rate paid on interest bearing liabilities for the three months ended June 30, 2015 as compared to the prior period.  The decrease on the rate paid on interest bearing liabilities partially offset the aforementioned rate compression on earning assets.

Net interest income was $124.9 million for the six months ended June 30, 2015, up $0.8 million from the same period in 2014.  FTE net interest margin was 3.55% for the six months ended June 30, 2015, down from 3.62% for the six months ended June 30, 2014.  Average interest earning assets were up $159.6 million, or 2.3%, for the six months ended June 30, 2015 as compared to the same period in 2014.  This increase from last year was driven primarily by 6.3% annualized organic loan growth during the first six months of 2015.  Yields on earning assets decreased from 3.98% during the first six months of 2014 to 3.84% for the first six months of 2015, and offset the growth in earning assets resulting in a 1.2% decrease in interest income for the six months ended June 30, 2015 as compared to the same period in 2014.  The yield compression was driven by an 18 bp decrease in loan yields from the first six months of 2014 to the first six months of 2015.  Average interest bearing liabilities decreased $57.4 million, or 1.1%, from the six months ended June 30, 2014 to the six months ended June 30, 2015, which was driven by a $168.9 million decrease in average long-term borrowings due to the debt restructuring strategy completed during the third quarter of 2014.  In addition, average short-term borrowings decreased $107.0 million for the six months ended June 30, 2015 as compared to the same period last year.  These decreases were partially offset by a $218.5 million, or 5.0%, increase in interest bearing deposits for the first six months of 2015 as compared to the same period in 2014.  This deposit growth was driven by increases in money market deposit accounts as well as savings deposits in the first six months of 2015.  The rates paid on interest bearing liabilities decreased by 9 bps for the six months ended June 30, 2015 as compared to the same period in 2014.  This decrease resulted primarily from the aforementioned debt restructuring and partially offset the rate compression on earning assets.

 

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Noninterest income for the three months ended June 30, 2015 was $28.2 million, up $1.7 million, or 6.3% from the prior quarter, and up $1.6 million, or 6.0%, from the second quarter of 2014 when adjusted for the sale of Springstone.  The increase from the prior quarter was driven primarily by increases in trust income, ATM and debit card fees, retirement plan administration fees, and other noninterest income.  Trust revenue was up $0.7 million, or 16.8%, for the second quarter of 2015 as compared with the first quarter of 2015 due primarily to seasonality of trust revenue.  ATM and debit card fees were up $0.4 million, or 10.1%, for the second quarter of 2015 as compared to the first quarter of 2015 due primarily to increases in debit card transactions and number of accounts.  Retirement plan administration fees were up $0.4 million, or 11.6%, for the second quarter of 2015 as compared to the first quarter of 2015 due primarily to new business generation.  Other noninterest income was up $1.1 million, or 41.1%, for the second quarter of 2015 as compared to the first quarter of 2015 due primarily to an acquired loan charge-off recovery during the second quarter.  These increases were partially offset by a $0.6 million, or 40.5%, decrease in bank owned life insurance due to benefit payments received during the first quarter of 2015.  In addition, insurance and other financial services revenue decreased $0.5 million, or 8.4%, in the second quarter of 2015 as compared with the first quarter of 2015 due primarily to seasonality of insurance revenue.

Noninterest income for the six months ended June 30, 2015 was $54.7 million, up $1.8 million, or 3.5% from the same period last year when adjusted for the sale of Springstone.  The increase from the prior year was driven primarily by increases in retirement plan administration fees, ATM and debit card fees, and other noninterest income.  Retirement plan administration fees were up $0.9 million, or 14.7%, for the first half of 2015 as compared to the same period in 2014 due primarily to new business generation.  ATM and debit card fees were up $0.5 million, or 5.9%, for the first half of 2015 as compared to the same period last year due primarily to an increase in debit card activity.    Other noninterest income was up $0.6 million, or 10.8%, for the first half of 2015 as compared to the first half of 2014.

Noninterest expense for the three months ended June 30, 2015 was $58.0 million, up $0.3 million or 0.5% from the prior quarter and down $0.2 million from the second quarter of 2014, after adjusting for the $4.6 million in prepayment penalties incurred as a result of the debt restructuring in 2014.  The increase from the prior quarter was due primarily to a $1.0 million or 19.5%, increase in other operating expenses driven by branch reorganization expenses incurred in the second quarter of 2015.  In addition, salaries and employee benefits increased $0.6 million, or 2.2%, from the first quarter of 2015 to the second quarter of 2015.  These increases were partially offset by a decrease in occupancy expenses for the second quarter of 2015 from the first quarter of 2015 due to seasonal expenses.  Loan collection and other real estate owned expenses decreased $0.9 million from the first quarter of 2015 to the second quarter of 2015 due to gains on sales of other real estate owned recorded in the second quarter of 2015 which offset expenses during the period.  Income tax expense for the three month period ended June 30, 2015 was $9.8 million, up $0.6 million from the prior quarter, and down $4.3 million from the second quarter of 2014, which included the impact of the aforementioned non-core items.  The increase from the prior period was due primarily to a higher level of taxable income for the second quarter of 2015.  The effective tax rate was 33.6% for the first and second quarters of 2015, and 33.7% for the second quarter of 2014.

 

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Noninterest expense for the six months ended June 30, 2015 was $115.7 million, down $4.6 million or 3.8% from the same period in 2014, due primarily to the $4.6 million in prepayment penalties incurred in the second quarter of 2014.  Excluding this non-core prepayment penalty, noninterest expense was flat for the first six months of 2015 as compared to the same period last year.  Loan collection and other real estate owned expenses decreased $0.9 million in the first six months of 2015 as compared to the same period in 2014 due to gains on sales of real estate recorded in the second quarter of 2015, which offset expenses during the period.  This decrease was offset by a $0.7 million increase in other operating expenses for the first six months of 2015 as compared to the same period in 2014, driven by the aforementioned branch reorganization expenses incurred in the second quarter of 2015.  Income tax expense for the six month period ended June 30, 2015 was $18.9 million, down $3.8 million from the six month period ended June 30, 2014.  The decrease from 2014 was due to a lower level of taxable income in 2015 primarily due to the non-core items recorded in 2014.  The effective tax rate was 33.6% for the first six months of 2015 as compared to 33.2% for the first six months of 2014.

Asset Quality

Net charge-offs were $4.3 million for the three months ended June 30, 2015, down from $4.6 million for the prior quarter, and up slightly from $4.1 million for the second quarter of 2014.  Provision expense was $3.9 million for the three months ended June 30, 2015, as compared with $3.6 million for the prior quarter, and $4.2 million for the second quarter of 2014.  Provision expense for the second quarter of 2015 was less than charge-offs due to the continued improvement in asset quality metrics.  Annualized net charge-offs to average loans for the second quarter of 2015 was 0.30%, compared with 0.34% for the first quarter of 2015 and 0.30% for the second quarter of 2014.

Nonperforming loans to total loans was 0.77% at June 30, 2015, down 8 bps from the prior quarter, and down 19 bps from June 30, 2014.  Past due loans as a percentage of total loans were 0.61% at June 30, 2015 as compared to 0.69% at December 31, 2014.

The allowance for loan losses totaled $65.0 million at June 30, 2015, compared to $65.4 million at March 31, 2015, and $69.5 million at June 30, 2014.  The allowance for loan losses as a percentage of loans was 1.13% (1.24% excluding acquired loans with no related allowance recorded) at June 30, 2015, compared to 1.16% (1.29% excluding acquired loans with no related allowance recorded) at March 31, 2015 and 1.25% (1.44% excluding acquired loans with no related allowance recorded) at June 30, 2014.  The decrease in the allowance for loan losses as a percentage of loans from prior periods was due primarily to continued positive trends in asset quality metrics of the originated loan portfolio.

Balance Sheet

Total assets were $8.1 billion at June 30, 2015, up $274.6 million, or 3.5% from December 31, 2014.  Loans were $5.8 billion at June 30, 2015, up $175.6 million, or 3.1%, from December 31, 2014.  Total deposits were $6.4 billion at June 30, 2015, up $71.9 million, or 1.1%, from December 31, 2014.  Stockholders’ equity was $876.0 million, representing a total equity-to-total assets ratio of 10.85% at June 30, 2015, compared with $864.2 million or a total equity-to-total assets ratio of 11.08% at December 31, 2014.

Stock Repurchase Program

The Company purchased 433,351 shares of its common stock during the six months ended June 30, 2015 at an average price of $24.63 per share under a previously announced plan.  As of June 30, 2015, there were 566,649 shares available for repurchase under this plan, which expires on December 31, 2016.  On July 27, 2015, 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.

 

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Page 5 of 13

Dividend

The NBT Board of Directors approved a 2015 third-quarter cash dividend of $0.22 per share at a meeting held today.  The dividend will be paid on September 15, 2015 to shareholders of record as of September 1, 2015.

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, N.Y., with total assets of $8.1 billion at June 30, 2015.  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 New York, Pennsylvania, Vermont, Massachusetts, New Hampshire and 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.

 

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NBT Bancorp Inc. and Subsidiaries

SELECTED FINANCIAL DATA

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(unaudited, dollars in thousands except per share data)

 

 

(1)	Primarily net gain on settlement of litigation and reorganization expenses for 2014 and reorganization expenses in 2015.

(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:

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

(6)	Primarily net gain on settlement of litigation and reorganization expenses for 2014 and reorganization expenses for 2015.

Note:  Year-to-date (YTD) EPS may not equal sum of quarters due to share count differences.

 

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NBT Bancorp Inc. and Subsidiaries

SELECTED FINANCIAL DATA

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(unaudited, dollars in thousands except per share data)

(1)	Excludes acquired loans

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

(3)	Annualized

 

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NBT Bancorp Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

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(unaudited, dollars in thousands)

 

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NBT Bancorp Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

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(unaudited, dollars in thousands except per share data)

 

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NBT Bancorp Inc. and Subsidiaries

QUARTERLY CONSOLIDATED STATEMENTS OF INCOME

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(unaudited, dollars in thousands except per share data)

Note:  Year-to-date (YTD) EPS may not equal sum of quarters due to share count differences.

 

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NBT Bancorp Inc. and Subsidiaries

AVERAGE QUARTERLY BALANCE SHEETS

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(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 - 2015								Q1 - 2015								Q4 - 2014							Q3 - 2014								Q2 - 2014
ASSETS:
Short-term interest bearing accounts		$	9,854				0.36	%		$	9,156				0.30	%		$	5,895				0.51	%		$	4,791				0.54	%		$	3,915				0.76	%
Securities available for sale (1)(2)			1,067,619				1.98	%			1,018,880				2.02	%			1,018,505				2.00	%			1,263,375				2.01	%			1,376,314				2.05	%
Securities held to maturity (1)			452,948				2.49	%			454,957				2.47	%			458,038				2.45	%			234,403				2.84	%			121,042				3.43	%
Investment in FRB and FHLB Banks			31,564				4.90	%			30,931				6.20	%			31,274				6.01	%			39,459				5.06	%			42,965				4.63	%
Loans (3)			5,688,159				4.24	%			5,586,942				4.33	%			5,603,268				4.37	%			5,563,206				4.38	%			5,517,315				4.42	%
Total interest earning assets		$	7,250,144				3.79	%		$	7,100,866				3.89	%		$	7,116,980				3.92	%		$	7,105,234				3.91	%		$	7,061,551				3.94	%
Other assets			685,523								696,091								709,955								697,814								680,059
Total assets		$	7,935,667							$	7,796,957							$	7,826,935							$	7,803,048							$	7,741,610
LIABILITIES AND STOCKHOLDERS' EQUITY:
Money market deposit accounts		$	1,598,898				0.20%			$	1,544,488				0.21	%		$	1,524,881				0.20	%		$	1,452,287				0.19	%		$	1,441,284				0.15	%
NOW deposit accounts			974,504				0.05%				972,263				0.05	%			978,527				0.05	%			927,026				0.05	%			960,698				0.06	%
Savings deposits			1,080,954				0.06%				1,040,031				0.06	%			1,017,300				0.08	%			1,025,795				0.07	%			1,040,528				0.07	%
Time deposits			968,714				1.00%				1,014,904				1.00	%			1,058,615				1.03	%			1,032,370				0.96	%			971,595				0.88	%
Total interest bearing deposits		$	4,623,070				0.31%			$	4,571,686				0.32	%		$	4,579,323				0.33	%		$	4,437,478				0.31	%		$	4,414,105				0.27	%
Short-term borrowings			302,693				0.19%				265,420				0.19	%			299,981				0.19	%			447,761				0.23	%			383,480				0.22	%
Junior subordinated debentures			101,196				2.16%				101,196				2.16	%			101,196				2.13	%			101,196				2.13	%			101,196				2.13	%
Long-term debt			130,743				2.56%				130,879				2.56	%			131,000				2.56	%			170,223				2.49	%			290,791				2.95	%
Total interest bearing liabilities		$	5,157,702				0.39%			$	5,069,181				0.40	%		$	5,111,500				0.42	%		$	5,156,658				0.41	%		$	5,189,572				0.45	%
Demand deposits			1,815,705								1,770,703								1,759,482								1,708,632								1,620,488
Other liabilities			84,096								85,999								87,319								82,594								86,843
Stockholders' equity			878,164								871,074								868,634								855,164								844,707
Total liabilities and stockholders' equity		$	7,935,667							$	7,796,957							$	7,826,935							$	7,803,048							$	7,741,610
Interest rate spread							3.40	%							3.49	%							3.50	%							3.50	%							3.49	%
Net interest margin							3.51	%							3.60	%							3.61	%							3.61	%							3.60	%

(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

 

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NBT Bancorp Inc. and Subsidiaries

AVERAGE YEAR-TO-DATE BALANCE SHEETS

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(unaudited, dollars in thousands)