---

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 25, 2016

 

NBT BANCORP INC.

(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:

☐

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

☐

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

☐

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

☐

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

 

---

ITEM 2.02 Results of Operations and Financial Condition

On July 25, 2016, NBT Bancorp Inc. issued a press release describing its results of operations for the quarter ended June 30, 2016.  That press release is furnished as Exhibit 99.1 hereto.

 ITEM 9.01 Financial Statements and Exhibits

(d)	The following is being furnished herewith:

 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 26, 2016

 

 

---

---

 

 

FOR IMMEDIATE RELEASE

ATTENTION: FINANCIAL AND BUSINESS EDITORS

---

NBT BANCORP INC. ANNOUNCES NET INCOME OF $19.9 MILLION FOR THE SECOND QUARTER OF 2016; ANNOUNCES 4.5% DIVIDEND INCREASE

NORWICH, NY (July 25, 2016) – NBT Bancorp Inc. (NBT) (NASDAQ: NBTB) reported net income for the three months ended June 30, 2016 was $19.9 million, up from $18.9 million for the first quarter of 2016, and up from $19.3 million for the second quarter of 2015.  Diluted earnings per share for the three months ended June 30, 2016 was $0.46, as compared with $0.43 for the prior quarter, and $0.43 per share for the second quarter of 2015.

Net income for the six months ended June 30, 2016 was $38.8 million, up from $37.4 million for the same period last year.  Reported diluted earnings per share for the six months ended June 30, 2016 was $0.89, as compared with $0.84 for the same period in 2015.

Second Quarter 2016 Highlights:

·

Net income for the second quarter of 2016 is up 5.4% compared to the first quarter of 2016 and up 3.3% compared to the second quarter of 2015

·

Year to date loan growth was 5.3% (annualized)

·

Average demand deposits for the six months ended June 30, 2016 were up 10.5% from the same period in 2015

“We’re pleased to report on our continued strong performance through the second quarter of 2016, particularly in the areas of income generation, loan growth and asset quality,” said NBT Chairman, President and CEO Martin Dietrich. “We remain focused on taking care of our customers, making strategic investments in the future while managing our overall cost structure, and creating opportunities to continue to grow organically across our footprint in markets like New York’s Thruway Corridor and New England. We also continue to find opportunities to engage in relationships with new customers who have been impacted by the disruption caused by mergers and acquisitions among other financial institutions.”

Net interest income was $65.8 million for the second quarter of 2016, up $1.2 million from the previous quarter, and up $3.1 million from the second quarter of 2015.  FTE net interest margin was 3.44% for the three months ended June 30, 2016, down from 3.47% for the previous quarter and down from 3.51% for the second quarter of 2015.  Average interest earning assets were up $203.0 million, or 2.7%, for the second quarter of 2016 as compared to the prior quarter, and up $538.4 million, or 7.4%, from the same period in 2015.  The increase from the first quarter of 2016 was driven primarily by loan production.  Annualized loan growth of 4.8% during the second quarter of 2016 was driven by growth in the commercial loan portfolio.  Yields on earning assets decreased by 2 basis points (“bps”) from 3.75% during the first quarter of 2016 to 3.73% for the second quarter of 2016.  Average interest bearing liabilities increased $209.9 million, or 3.9%, from the first quarter of 2016 to the second quarter of 2016, which was driven by a 2.1% increase in interest bearing deposits for the second quarter of 2016.  The rate paid on interest bearing liabilities of 0.41% during the second quarter of 2016 was unchanged from the first quarter of 2016 but slightly higher than the 0.39% paid during the second quarter of 2015 due primarily to an increase in borrowing costs.

 

Net interest income was $130.4 million for the six months ended June 30, 2016, up $5.5 million from the same period in 2015.  FTE net interest margin was 3.46% for the six months ended June 30, 2016, down from 3.55% for the six months ended June 30, 2015.  Average interest earning assets were up $511.1 million, or 7.1%, for the six months ended June 30, 2016 as compared to the same period in 2015.  This increase from last year was driven primarily by 5.3% annualized loan growth during the first six months of 2016.  Yields on earning assets decreased from 3.84% during the first six months of 2015 to 3.74% for the first six months of 2016, but the decrease was more than offset by growth in earning assets resulting in a 4.4% increase in interest income for the six months ended June 30, 2016 as compared to the same period in 2015.  The yield compression was driven by a 9 bp decrease in loan yields from the first six months of 2015 to the first six months of 2016.  Average interest bearing liabilities increased $325.4 million, or 6.4%, from the six months ended June 30, 2015 to the six months ended June 30, 2016.  Total average deposits increased $374.9 million, or 5.9%, for the six months ended June 30, 2016 as compared to the same period last year driven primarily by growth in non-interest bearing demand deposits of 10.5%, combined with a $185.8 million increase in interest bearing deposits due to growth in money market deposit accounts, NOW accounts and savings accounts.  In addition, average short-term borrowings increased $142.9 million for the six months ended June 30, 2016 as compared to the same period last year.  The rates paid on interest bearing liabilities increased by 1 bp for the six months ended June 30, 2016 to 0.41% as compared to the 0.40% paid in the same period in 2015.  This increase resulted primarily from slightly higher rates paid on short-term borrowings and a change in the mix of interest bearing deposits.

Noninterest income for the three months ended June 30, 2016 was $29.6 million, up $1.2 million, or 4.4% from the prior quarter, and up $1.4 million, or 5.0%, from the second quarter of 2015.  The increase from the prior quarter was driven primarily by increases in other noninterest income, trust income, ATM and debit card fees, retirement plan administration fees, and service charges on deposit accounts.  Other noninterest income was up $1.2 million, or 34.1%, for the second quarter of 2016 as compared to the first quarter of 2016 due primarily to the gain recognized on the sale of equity investments of $0.8 million during the second quarter.  The liquidation of these investments made by the Company in order to comply with provisions contained within the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Trust revenue was up $0.6 million, or 12.8%, for the second quarter of 2016 as compared with the first quarter of 2016 due primarily to seasonality of trust revenue.  ATM and debit card fees were up $0.4 million, or 7.7%, for the second quarter of 2016 as compared to the first quarter of 2016 due primarily to increases in debit card transactions and number of accounts.  Retirement plan administration fees were up $0.3 million, or 8.0%, for the second quarter of 2016 as compared to the first quarter of 2016 due primarily to a downturn in market conditions in the first quarter of 2016 and subsequent recovery in the second quarter.  These increases were partially offset by a $1.3 million, or 19.0%, decrease in insurance revenue in the second quarter of 2016 as compared with the first quarter of 2016 due primarily to seasonality of insurance revenue.

 

Noninterest income for the six months ended June 30, 2016 was $58.0 million, up $3.2 million, or 5.9% from the same period last year.  The increase from the prior year was driven primarily by increases in other noninterest income, retirement plan administration fees, ATM and debit card fees, and insurance revenue.  Other noninterest income was up $1.8 million, or 27.8%, for the first half of 2016 as compared to the first half of 2015 due primarily to the above mentioned gain on the sale of equity investments and fee income from customer interest rate swaps.  Retirement plan administration fees were up $1.0 million, or 15.5%, for the first half of 2016 as compared to the same period in 2015 due primarily to the 2015 fourth quarter acquisition of Third Party Administrators, Inc. (“TPA, Inc.”).  ATM and debit card fees were up $0.6 million, or 6.6%, for the first half of 2016 as compared to the same period last year due primarily to increases in debit card activity and number of accounts.

 

Noninterest expense for the three months ended June 30, 2016 was $60.4 million, up $2.2 million or 3.8% from the prior quarter and up $2.5 million from the second quarter of 2015.  The increase from the prior quarter was due primarily to increases in other operating expenses which increased $1.5 million or 33.4% from the first quarter of 2016 to the second quarter of 2016 due primarily to higher loan initiation fees due to the timing of loan originations and an increase in fraud losses.  In addition, salaries and employee benefits increased $0.5 million, or 1.5%, from the first quarter of 2016 to the second quarter of 2016 as contract terminations costs of $1.2 million were partly offset by $0.5 million in lower medical costs. These increases were partially offset by a decrease in occupancy expenses for the second quarter of 2016 from the first quarter of 2016 due to seasonal expenses.  Income tax expense for the three month period ended June 30, 2016 was $10.3 million, up $0.5 million from both the prior quarter and the second quarter of 2015.  The increase from the prior period was due primarily to a higher level of taxable income for the second quarter of 2016.  The effective tax rate was 34.0% for the first and second quarters of 2016, and 33.6% for the second quarter of 2015.

Noninterest expense for the six months ended June 30, 2016 was $118.7 million, up $3.0 million or 2.6% from the same period in 2015.  The increase is due primarily to an increase in salaries and benefit expense of $4.4 million or 7.1% due to increases in salaries, medical insurance costs, retirement plan costs and contract termination costs accrued in the second quarter of 2016.  Loan collection and other real estate owned expenses increased $0.7 million in the first six months of 2016 as compared to the same period in 2015 due to a higher level of gains on sales of real estate recorded in first half of 2015.  These increases were partially offset by a $0.7 million decrease in occupancy expenses for the first six months of 2016 as compared to the same period in 2015, driven by lower seasonal maintenance and utilities costs due to the mild winter conditions this year.  Income tax expense for the six month period ended June 30, 2016 was $20.0 million, up $1.0 million from the six month period ended June 30, 2015.  The increase from 2015 was due to a higher level of taxable income in 2016 compared to the first half of 2015.  The effective tax rate was 34.0% for the first six months of 2016 as compared to 33.6% for the first six months of 2015.

Asset Quality

Net charge-offs were $4.5 million for the three months ended June 30, 2016, down from $4.8 million for the prior quarter, but up slightly from $4.3 million for the second quarter of 2015.  Provision expense was $4.8 million for the three months ended June 30, 2016, as compared with $6.1 million for the prior quarter, and $3.9 million for the second quarter of 2015.  Annualized net charge-offs to average loans for the second quarter of 2016 was 0.30%, compared with 0.33% for the first quarter of 2016 and 0.30% for the second quarter of 2015.

Nonperforming loans to total loans was 0.65% at June 30, 2016, down 4 bps from the prior quarter, and down 12 bps from June 30, 2015.  Past due loans as a percentage of total loans were 0.60% at June 30, 2016 as compared to 0.61% at June 30, 2015.

 

The allowance for loan losses totaled $64.6 million at June 30, 2016, compared to $64.3 million at March 31, 2016, and $65.0 million at June 30, 2015.  The allowance for loan losses as a percentage of loans was 1.07% (1.16% excluding acquired loans with no related allowance recorded) at June 30, 2016, compared to 1.08% (1.18% excluding acquired loans with no related allowance recorded) at March 31, 2016 and 1.13% (1.24% excluding acquired loans with no related allowance recorded) at June 30, 2015.  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 $8.6 billion at June 30, 2016, up $362.1 million, or 4.4% from December 31, 2015.  Loans were $6.0 billion at June 30, 2016, up $156.3 million, or 2.7%, from December 31, 2015.  Total deposits were $6.7 billion at June 30, 2016, up $135.6 million, or 2.1%, from December 31, 2015.  Stockholders’ equity was $896.4 million, representing a total equity-to-total assets ratio of 10.39% at June 30, 2016, compared with $882.0 million or a total equity-to-total assets ratio of 10.67% at December 31, 2015.

Stock Repurchase Program

The Company purchased 675,535 shares of its common stock during the six months ended June 30, 2016 at an average price of $25.45 per share under a previously announced plan.  As of June 30, 2016, there were 277,313 shares available for repurchase under this plan, which expires on December 31, 2016.  On March 28, 2016, 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, 2017.

Dividend

The NBT Board of Directors approved a 2016 third-quarter cash dividend of $0.23 per share at a meeting held today.  The dividend, which represents a 4.5% increase, will be paid on September 15, 2016 to shareholders of record as of September 1, 2016.

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, N.Y., with total assets of $8.6 billion at June 30, 2016.  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 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.

 

 

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 acquisition related intangible amortization expense on earnings and equity as well as providing a fully taxable equivalent yield on securities and loans.  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 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.

 

NBT Bancorp Inc. and Subsidiaries SELECTED FINANCIAL DATA

(unaudited, dollars in thousands except per share data)

 

 

 

(2)	Non-GAAP measure - excludes amortization of intangible assets (net of tax) from net income and average tangible common equity is calculated as follows:

(3)	Calculated on a Fully Tax Equivalent ("FTE") basis

(4)	Non-GAAP measure - excludes amortization of intangible assets (net of tax) from net income and average tangible common equity is calculated as follows:

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

 

NBT Bancorp Inc. and Subsidiaries SELECTED FINANCIAL DATA

(unaudited, dollars in thousands except per share data)

(1)	Annualized

(2)	Excludes acquired loans

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

 

NBT Bancorp Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS

(unaudited, dollars in thousands)

 

 

NBT Bancorp Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME

(unaudited, dollars in thousands except per share data)

 

NBT Bancorp Inc. and Subsidiaries QUARTERLY CONSOLIDATED STATEMENTS OF INCOME

(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.

 

NBT Bancorp Inc. and Subsidiaries AVERAGE QUARTERLY BALANCE SHEETS

(unaudited, dollars in thousands)

 

(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

Note:  Interest income for tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory Federal income tax rate of 35%

 

NBT Bancorp Inc. and Subsidiaries AVERAGE YEAR-TO-DATE BALANCE SHEETS

(unaudited, dollars in thousands)

 

(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

Note:  Interest income for tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory Federal income tax rate of 35%

 

NBT Bancorp Inc. and Subsidiaries CONSOLIDATED LOAN BALANCES

(unaudited, dollars in thousands)

 

 

---