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 23, 2017

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:

☐

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)

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

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

 

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ITEM 2.02

Results of Operations and Financial Condition

On January 23, 2017, NBT Bancorp Inc. issued a press release describing its results of operations for the quarter and twelve months ended December 31, 2016 and announcing a quarterly cash dividend to be paid on March 15, 2017 to shareholders of record on March 1, 2017.  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.

 

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Exhibit 99.1

 

Contact:

John H. Watt Jr., President and CEO

Michael J. Chewens, CFO

NBT Bancorp Inc.

52 South Broad Street

Norwich, NY 13815

607-337-6119

NBT BANCORP INC. ANNOUNCES RECORD NET INCOME OF $78.4 MILLION; DECLARES CASH DIVIDEND

NORWICH, NY (January 23, 2017) – NBT Bancorp Inc. (NBT) (NASDAQ: NBTB) reported net income for the year ended December 31, 2016 of $78.4 million, up from $76.4 million from the prior year.  Earnings per diluted share for the year ended December 31, 2016 was $1.80, up from $1.72 for the prior year.

Net income for the three months ended December 31, 2016 was $19.6 million, up from $19.1 million for the same period last year.  Diluted earnings per share for the three months ended December 31, 2016 was $0.45, up from $0.43 for the same period last year.

2016 Highlights:

·

EPS increased 4.7% over prior year

·

Loan growth of 5.4%

·

Average demand deposits up 10.1% from 2015

·

Improved operating efficiencies resulting in flat noninterest expense year over year

“NBT completed an excellent 2016, posting record net income for the fourth consecutive year. This accomplishment was driven by our strong growth in loans, deposits and fee income generation, all of which can be attributed the hard work of our customer-focused team,” said President and CEO John H. Watt Jr. “As we move forward in 2017, we will build on the momentum initiated and led by my predecessor, Marty Dietrich, and we will focus on executing on our defined strategies that are grounded in organic growth as our team continues to collaborate to deliver returns for the benefit of our shareholders.”

Net interest income was $264.4 million for the year ended December 31, 2016, up $11.8 million, or 4.7%, from 2015.  Fully taxable equivalent (“FTE”) net interest margin was 3.43% for the year ended December 31, 2016, down from 3.50% for the year ended December 31, 2015.  Average interest earning assets were up $510.5 million, or 7.0%, for the year ended December 31, 2016 as compared to 2015.  This increase from last year was driven primarily by $314.9, or 5.4%, loan growth and a $220.7 million, or 13.4%, increase in investment securities in 2016.  The benefit of earning asset growth was partially offset by a 6 basis points (“bps”) decrease in earning asset yields, driven by a 5 bp decrease in loan yields from 2015 to 2016.  Average interest bearing liabilities increased $330.7 million, or 6.4%, from the year ended December 31, 2015 to the year ended December 31, 2016.  Total average deposits increased $373.2 million, or 5.8%, for the year ended December 31, 2016 as compared to the prior year, driven primarily by a 10.1% increase in non-interest bearing demand deposits, as well as increases in money market deposit accounts, NOW and savings deposits in 2016.  Average short-term borrowings increased $157.8 million for the year ended December 31, 2016 as compared to the prior year funding earning asset growth.  The rates paid on interest bearing liabilities increased by 1 bp for the year ended December 31, 2016 as compared to 2015.

 

Net interest income was $67.4 million for the fourth quarter of 2016, up $0.8 million, or 1.1%, from the previous quarter and up $3.9 million, or 6.2%, from the fourth quarter of 2015.  FTE net interest margin was 3.41% for the three months ended December 31, 2016, up from 3.40% for the previous quarter and down from 3.42% for the fourth quarter of 2015.  Average interest earning assets were up $71.0 million, or 0.9%, for the fourth quarter of 2016 as compared to the prior quarter and up $521.5 million, or 7.0%, from the same period in 2015.  The increases from the third quarter of 2016 and the fourth quarter of 2015 were driven primarily by growth in both loans and investments.  Yields on earning assets remained consistent in the third and fourth quarters of 2016 at 3.69% and decreased by 1 bp from 3.70% in the fourth quarter of 2015.   Average interest bearing liabilities increased $13.3 million, or 0.2%, from the third quarter of 2016, and $332.5 million, or 6.4%, to the fourth quarter of 2016.  The rate paid on interest bearing liabilities was 0.41% for the fourth quarter of 2016, compared to 0.42% paid in the prior quarter and 0.40% in the fourth quarter of 2015.

Noninterest income for the year ended December 31, 2016 was $115.7 million, down $2.8 million, or 2.3%, from the year ended December 31, 2015. The decrease was primarily due to the gain of $4.2 million recognized in the third quarter of 2015 from the 2014 sale of Springstone LLC. In addition, net securities income was down $3.7 million from 2015 due to a $0.7 million securities loss in 2016 versus a net securities gain for $3.0 million in 2015. The decreases were offset by increases in retirement plan and administration fees, other noninterest income, ATM and debit card fees, bank owned life insurance income and insurance and other financial services revenue. Retirement plan administration fees were up $1.9 million, or 13.6%, from 2015 due primarily to the 2015 fourth quarter acquisition of Third Party Administrators, Inc. and the 2016 third quarter acquisition of Actuarial Designs & Solutions, Inc. Other noninterest income was up $1.8 million, or 12.4%, primarily due to higher swap fee income in 2016 than in 2015, an increase in mortgage banking income and a $0.9 million gain on the sale of equity investments for compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act in the third quarter of 2016.

Noninterest income for the three months ended December 31, 2016 was $28.1 million, down $1.6 million, or 5.2%, from the prior quarter and down $4.4 million, or 13.5%, from the fourth quarter of 2015.  The decrease from the third quarter of 2016 is primarily due to the aforementioned $0.7 million securities loss and decreases in insurance and other financial services revenue in the fourth quarter of 2016. In addition, other noninterest income decreased from the third quarter of 2016 due to lower mortgage banking income and swap fees that were offset by an equity investment dividend. Net securities income was down $3.7 million from 2015 due to the aforementioned $0.7 million securities loss versus a net securities gain of $3.0 million in the fourth quarter of 2015.   Other noninterest income decreased from the fourth quarter of 2015 due to a $1.6 million favorable settlement of an accrual in the fourth quarter of 2015 offset by higher swap fees in the fourth quarter of 2016.

Noninterest expense for the year ended December 31, 2016 was $235.9 million, down $0.3 million, or 0.1%, from 2015.  This decrease was driven by lower other noninterest expense during 2016 than 2015 primarily due to reorganization expenses incurred during the third quarter of 2015, offset by higher salaries and employee benefits expense in 2016.  Salaries and employee benefits expense increased $5.4 million, or 4.3%, from 2015 to 2016, due to higher salaries and medical insurance costs that were partially offset by lower pension credit and contract termination costs. Income tax expense for 2016 was $40.4 million, up $0.2 million, or 0.5%, from the prior year.  The effective tax rate was 34.0% for 2016 down from 34.5% for 2015.

 

Noninterest expense for the three months ended December 31, 2016 was $57.6 million, down $2.0 million, or 3.3%, from the previous quarter and down $3.0 million, or 4.9%, from the same period in 2015.  The decrease from the prior quarter is due to lower other operating expenses, primarily due to a $1.4 million favorable accrual adjustment and lower salaries and employee benefits expenses partially offset by higher professional and outside services in the fourth quarter of 2016. The decrease from the fourth quarter of 2015 is due to lower salaries and employee benefits expenses due primarily to contract termination costs in the fourth quarter of 2015 and lower other operating expenses in the fourth quarter of 2016 due to the aforementioned favorable accrual adjustment.  Income tax expenses for the three month period ended December 31, 2016 was $10.1 million, down $0.2 million, or 2.0%, from the third quarter of 2016, and down $0.4 million, or 3.4%, from the fourth quarter of 2015. The effective tax rate of 34.0% for the fourth quarter of 2016 was consistent with the prior quarter and down from 35.3% for the fourth quarter of 2015.

Asset Quality

Net charge-offs were $23.2 million for the year ended December 31, 2016, up from $21.6 million for the year ended December 31, 2015.  Provision expense was $25.4 million for the year ended December 31, 2016, as compared with $18.3 million for 2015; the increase in provision expense was primarily due to loan growth. Net charge-offs to average loans for 2016 was 0.39%, compared with 0.38% for 2015.

Net charge-offs were $8.6 million for the three months ended December 31, 2016, up from $5.3 million for the prior quarter and up from $7.6 million for the fourth quarter of 2015.  In the prior quarter, higher charge-offs from the commercial and consumer portfolios accounted for the increase.  Commercial loans charge-offs were elevated due to the write-down of an individual credit that was previously identified and provided for which was subsequently transferred into other real estate owned. Charge-offs increased from the fourth quarter of 2015 due to higher consumer loan charge-offs than the same quarter of 2015.Provision expense was $8.2 million for the three months ended December 31, 2016, as compared with $6.4 million for the prior quarter and $5.8 million for the fourth quarter of 2015; the increases in provision expense were primarily due to loan growth and the higher level of charge-offs in 2016 than in 2015.  Annualized net charge-offs to average loans for the fourth quarter of 2016 was 0.56%, compared with 0.35% for the third quarter of 2016 and 0.51% for the fourth quarter of 2015.

Nonperforming loans to total loans was 0.65% at December 31, 2016, down from 0.73% at September 30, 2016 and up from 0.64% at December 31, 2015.  Past due loans as a percentage of total loans were 0.64% at December 31, 2016, up from 0.57% at September 30, 2016 and up from 0.62% at December 31, 2015.

The allowance for loan losses totaled $65.2 million at December 31, 2016, compared to $65.7 million at September 30, 2016 and $63.0 million at December 31, 2015.  The allowance for loan losses as a percentage of loans was 1.05% (1.13% excluding acquired loans with no related allowance recorded) at December 31, 2016, compared to 1.07% (1.15% excluding acquired loans with no related allowance recorded) at September 30, 2016 and 1.07% (1.18% excluding acquired loans with no related allowance recorded) at December 31, 2015.

 

Balance Sheet

Total assets were $8.9 billion at December 31, 2016, up $604.6 million, or 7.3% from December 31, 2015.  Loans were $6.2 billion at December 31, 2016, up $314.9 million, or 5.4% from December 31, 2015.  Total deposits were $7.0 billion at December 31, 2016, up $368.8 million, or 5.6%, from December 31, 2015.  Stockholders’ equity was $913.3 million, representing a total equity-to-total assets ratio of 10.30% at December 31, 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 year ended December 31, 2016 at an average price of $25.45 per share under a previously announced plan that expired on December 31, 2016.  On March 28, 2016, the NBT Board of Directors authorized a new repurchase program for NBT to repurchase up to 1,000,000 shares of its outstanding common stock. This plan expires on December 31, 2017.

Dividend

The NBT Board of Directors declared a 2017 first-quarter cash dividend of $0.23 per share at a meeting held today.  The dividend will be paid on March 15, 2017 to shareholders of record as of March 1, 2017.

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, N.Y., with total assets of $8.9 billion at December 31, 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 154 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 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.

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NBT Bancorp Inc. and Subsidiaries

SELECTED FINANCIAL DATA

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(unaudited, dollars in thousands except per share data)

 

		12 Months ended December 31,
Profitability:		2016				2015
Diluted Earnings Per Share		$	1.80			$	1.72
Weighted Average Diluted Common Shares Outstanding			43,621,848				44,389,356
Return on Average Assets			0.92	%			0.96	%
Return on Average Equity			8.74	%			8.70	%
Return on Average Tangible Common Equity (4)			13.13	%			13.31	%
Net Interest Margin (2)			3.43	%			3.50	%

 

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(1)	Annualized

(2)	Calculated on a Fully Taxable Equivalent ("FTE") basis

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

 

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

 

		12 Months ended December 31,
		2016				2015
Net Income		$	78,409			$	76,425
Amortization of intangible assets (net of tax)			2,400				2,971
		$	80,809			$	79,396
Average stockholders' equity		$	897,230			$	878,110
Less: average goodwill and other intangibles			281,758				281,671
Average tangible common equity		$	615,472			$	596,439

 

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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

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(unaudited, dollars in thousands except per share data)

 

(1)	Annualized

(2)	Non-GAAP measure - Excludes acquired loans

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

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NBT Bancorp Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

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(unaudited, dollars in thousands)

 

 

NBT Bancorp Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

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(unaudited, dollars in thousands except per share data)

 

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.

 

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
Three Months ended,		Q4 - 2016								Q3 - 2016								Q2 - 2016								Q1 - 2016								Q4 - 2015
ASSETS:
Short-term interest bearing accounts		$	14,190				0.64	%		$	21,279				0.54	%		$	16,063				0.53	%		$	13,639				0.63	%		$	13,494				0.34	%
Securities available for sale (1)(2)			1,277,931				1.92	%			1,257,335				1.93	%			1,227,367				1.99	%			1,188,437				2.06	%			1,070,643				1.97	%
Securities held to maturity (1)			492,415				2.54	%			494,400				2.54	%			498,493				2.49	%			465,916				2.48	%			470,027				2.43	%
Investment in FRB and FHLB Banks			39,448				6.09	%			43,552				4.65	%			38,939				4.47	%			33,470				5.14	%			32,263				5.63	%
Loans (3)			6,155,985				4.14	%			6,092,371				4.15	%			6,007,677				4.19	%			5,884,073				4.20	%			5,872,011				4.12	%
Total interest earning assets		$	7,979,969				3.69	%		$	7,908,937				3.69	%		$	7,788,539				3.73	%		$	7,585,535				3.75	%		$	7,458,438				3.70	%
Other assets			760,563								754,813								747,074								699,194								693,981
Total assets		$	8,740,532							$	8,663,750							$	8,535,613							$	8,284,729							$	8,152,419
LIABILITIES AND STOCKHOLDERS' EQUITY:
Money market deposit accounts		$	1,674,119				0.21	%		$	1,636,815				0.22	%		$	1,709,644				0.22	%		$	1,653,930				0.22	%		$	1,626,644				0.22	%
NOW deposit accounts			1,130,578				0.05	%			1,053,590				0.05	%			1,073,881				0.05	%			1,051,959				0.05	%			1,039,563				0.05	%
Savings deposits			1,145,352				0.06	%			1,146,013				0.06	%			1,143,654				0.06	%			1,105,480				0.06	%			1,079,757				0.06	%
Time deposits			890,506				1.06	%			902,185				1.07	%			906,250				1.06	%			921,754				1.04	%			918,875				1.05	%
Total interest bearing deposits		$	4,840,555				0.29	%		$	4,738,603				0.30	%		$	4,833,429				0.30	%		$	4,733,123				0.31	%		$	4,664,839				0.31	%
Short-term borrowings			523,708				0.49	%			611,339				0.50	%			484,590				0.48	%			369,443				0.36	%			332,742				0.26	%
Long-term debt			109,656				2.83	%			110,703				2.94	%			124,851				2.55	%			130,420				2.57	%			130,522				2.58	%
Junior subordinated debt			101,196				2.78	%			101,196				2.59	%			101,196				2.49	%			101,196				2.46	%			101,196				2.26	%
Total interest bearing liabilities		$	5,575,115				0.41	%		$	5,561,841				0.42	%		$	5,544,066				0.41	%		$	5,334,182				0.41	%		$	5,229,299				0.40	%
Demand deposits			2,136,310								2,079,266								1,994,601								1,970,315								1,944,820
Other liabilities			115,258								118,198								106,893								99,921								93,557
Stockholders' equity			913,849								904,445								890,053								880,311								884,743
Total liabilities and stockholders' equity		$	8,740,532							$	8,663,750							$	8,535,613							$	8,284,729							$	8,152,419
Interest rate spread							3.29	%							3.27	%							3.32	%							3.34	%							3.30	%
Net interest margin							3.41	%							3.40	%							3.44	%							3.47	%							3.42	%

 

(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 Fully Taxable-Equivalent ("FTE") basis using the statutory Federal income tax rate of 35%

 

NBT Bancorp Inc. and Subsidiaries

AVERAGE YEAR-TO-DATE BALANCE SHEETS

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(unaudited, dollars in thousands)