UNITED STATES
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 23, 2018

NBT BANCORP INC.
(Exact name of registrant as specified in its charter)

Delaware
0-14703
16-1268674
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)

52 South Broad Street, Norwich, New York
 
13815
(Address of principal executive offices)
 
(Zip Code)

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

 
(Former name or former address, if changed since last report)

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 communications 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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐



Item 2.02
Results of Operations and Financial Condition

On July 23, 2018, NBT Bancorp Inc. issued a press release describing its results of operations for the quarter ended June 30, 2018. That press release is furnished as Exhibit 99.1 hereto.

Item 9.01
Financial Statements and Exhibits.

(a)
Not applicable.
(b)
Not applicable.
(c)
Not applicable.
(d)
Exhibits.

Exhibit No.
 
Description
     
 
Press release of NBT Bancorp Inc. dated July 23, 2018


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

 
NBT BANCORP INC.
     
Date: July 23, 2018 By:
/s/ Michael J. Chewens
 

Michael J. Chewens
 
Senior Executive Vice President
and Chief Financial Officer




Exhibit 99.1

Page 1 of 13

FOR IMMEDIATE RELEASE
ATTENTION: FINANCIAL AND BUSINESS EDITORS

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 $28.1 MILLION AND DILUTED EARNINGS PER SHARE OF $0.64; DECLARES CASH DIVIDEND

NORWICH, NY (July 23, 2018) – NBT Bancorp Inc. (“NBT” or the “Company”) (NASDAQ: NBTB) reported record net income and diluted earnings per share for both the three and six months ended June 30, 2018.

Net income for the three months ended June 30, 2018 was $28.1 million, up from $26.0 million for the first quarter of 2018 and up from $21.4 million for the second quarter of 2017. Diluted earnings per share for the three months ended June 30, 2018 was $0.64, as compared with $0.59 for the prior quarter and $0.49 for the second quarter of 2017.

Net income for the six months ended June 30, 2018 was $54.1 million, up 29.9% from $41.6 million for the same period last year. Diluted earnings per share for the six months ended June 30, 2018 was $1.23, as compared with $0.95 for the same period in 2017, an increase of 29.5%.

Highlights:


·
Quarter-to-date earnings per share up 8.5% from prior quarter and up 30.6% from prior year


·
Quarter-to-date net income up 8.2% from prior quarter and up 31.7% from prior year


·
Year-to-date loan growth of 8.4% (annualized)


·
Average demand deposits for the six months ended June 30, 2018 up 4.9% from the same period in 2017


·
Full cycle deposit beta of 3.4% through the quarter ending June 30, 20181


·
FTE net interest margin of 3.57% for the six months ended June 30, 2018


·
Nonperforming assets to total assets decreased 4 basis points from prior quarter to 0.32%

“Our focus on recruiting and developing the best team in community banking has propelled our ongoing success and our achievement of record net income and earnings per share for the second quarter and first half of 2018,” said NBT President and CEO John H. Watt, Jr. “Healthy organic growth in loans and demand deposits and the growth of our retirement plan services line of business are among the drivers through which we continue to build long-term value for our shareholders,” Watt added.



1 The change in the Company’s quarterly deposit costs from December 31, 2015 to June 30, 2018 of 0.06% divided by the change in Federal Reserve’s target fed funds rate from December 2015 to June 30, 2018 of 1.75%


Page 2 of 13

Net interest income was $75.7 million for the second quarter of 2018, up $2.3 million or 3.1%, from the previous quarter. Fully taxable equivalent (“FTE”) net interest margin was 3.57% for the three months ended June 30, 2018, comparable to the previous quarter. The yield on average earning assets increased 7 basis points (“bps”) from the prior quarter to 3.99%, primarily reflecting higher loan yields. The cost of interest bearing liabilities increased 10 bps to 0.61% for the quarter ended June 30, 2018, driven by increased short-term borrowings costs, with interest-bearing deposit costs increasing 8 bps. Average interest earning assets were up $174.2 million, or 2.1%, as compared to the prior quarter, primarily driven by a $158.3 million increase in loans.

Net interest income was $75.7 million for the second quarter of 2018, up $6.1 million, or 8.8%, from the second quarter of 2017. FTE net interest margin of 3.57% was up 13 bps from the second quarter of 2017 as the improvement in asset yields was partially offset by the increase in cost of interest bearing liabilities. Average interest earning assets were up $345.4 million, or 4.2%, from the same period in 2017, primarily driven by a $456.7 million increase in loans that was partially offset by a $107.4 million decrease in securities.

Net interest income for the first six months of 2018 was $149.2 million, up $11.1 million, or 8.0%, from the same period in 2017. FTE net interest margin of 3.57% for the six months ended June 30, 2018, was up from 3.45% for the same period in 2017 primarily due to increasing asset yields and the Company’s deposit costs remaining relatively stable. Average interest earning assets were up $300.0 million, or 3.7% for the six months ended June 30, 2018, as compared to the same period in 2017, which was driven by a $419.2 million increase in loans that was partially offset by a $111.9 million decrease in securities. Interest income increased $14.2 million, or 9.4% due to the increase in earning assets combined with a 20 bp improvement in loan yields. Interest expense was up $4.1 million, or 33.4%, for the six months ended June 30, 2018 as compared to the same period in 2017 and resulted primarily from a 13 bp increase in rates driven by higher borrowing costs and a modest 7 bp increase in the cost of deposits. The Federal Reserve began raising their target fed funds rate in December 2015 and has increased the target fed funds rate by a total of 1.75% through June 30, 2018. During this same cycle of increasing rates, the Company’s deposit rates have increased by 0.06%, resulting in a full cycle deposit beta of 3.4%. The favorable deposit beta was influenced by a favorable loan to deposit ratio and deposit mix.

Noninterest income for the three months ended June 30, 2018 was $34.2 million, up $2.9 million, or 9.2%, from the prior quarter and up $3.9 million, or 12.7%, from the second quarter of 2017. The increase from the prior quarter was driven by higher retirement plan administration fees, ATM and debit card fees and other noninterest income that were partially offset by lower insurance and other financial services revenue during the second quarter of 2018. Retirement plan administration fees increased in the second quarter of 2018 as compared to the first quarter of 2018 due to the acquisition of Retirement Plan Services, LLC (“RPS”) in the second quarter of 2018. ATM and debit card fees increased from prior quarter due to higher number of accounts and usage. Other noninterest income increased due to higher swap fee income. The increase from the second quarter of 2017 was driven by higher retirement plan administration fees resulting from the RPS acquisition and other noninterest income due primarily to higher swap fees.

Noninterest income for the six months ended June 30, 2018 was $65.4 million, up $6.4 million, or 10.8%, from the same period in 2017. The increase from the prior year was driven by higher retirement plan administration fees due to the acquisitions of RPS in the second quarter of 2018 and of Downeast Pension Services in the second quarter of 2017. Other noninterest income in the first half of 2018 increased compared to the same period of 2017 due primarily to higher swap fee income and non-recurring gains recognized in the first six months of 2018.


Page 3 of 13

Noninterest expense for the three months ended June 30, 2018 was $64.9 million, up $0.6 million, or 1.0%, from the prior quarter and up $4.6 million, or 7.6%, from the second quarter of 2017. The increase from the prior quarter was driven by a $1.2 million increase in salaries and employee benefits primarily due to the acquisition of RPS that were partially offset by a decrease in seasonal occupancy expense. The increase from the second quarter of 2017 was driven by an increase in salaries and employee benefits expenses primarily due to the RPS acquisition, wage increases from tax reform initiatives and higher incentive compensation.

Noninterest expense for the six months ended June 30, 2018 was $129.2 million, up $7.6 million, or 6.2%, from the same period in 2017. The increase from the prior year was driven by higher salaries and employee benefits and equipment expense that were partially offset by lower other noninterest expenses in the first half of 2018 as compared to the same period of 2017 due primarily to lower retirement plan costs. The increase in salaries and employee benefits was primarily due to the RPS acquisition in second quarter of 2018, the acquisition of Downeast Pension Services in the second quarter of 2017, timing of incentive compensation and wage increases from tax reform initiatives.

Income tax expense for the three months ended June 30, 2018 was $8.1 million, up $1.1 million, or 15.7%, from the prior quarter and down $2.6 million, or 24.0%, from the second quarter of 2017. The effective tax rate of 22.4% for the second quarter of 2018 was up from 21.2% for the first quarter of 2018 and down from 33.3% for the second quarter of 2017. The increase in income tax expense from the prior quarter was due to a lower income tax benefit from equity-based transactions and higher level of taxable income. The decrease in income tax expense from the second quarter of 2017 was due to the lower effective tax rate from the Tax Cuts and Jobs Act partially offset by a higher level of taxable income. Excluding the tax benefit from equity-based transactions, the effective tax rate was 22.5% for both the second quarter of 2018 and first quarter of 2018.

Income tax expense for the six months ended June 30, 2018 was $15.1 million, down $3.9 million, or 20.3% from the same period of 2017. The effective tax rate of 21.8% for the first six months of 2018 was down from 31.3% for the same period in the prior year. The decrease in income tax expense from the prior year was due to the lower effective tax rate from the Tax Cuts and Jobs Act partially offset by a higher level of taxable income and lower tax benefit from equity-based transactions. Excluding the tax benefit from equity-based transactions, the effective tax rate was 22.5% and 33.9% for the six months ending June 30, 2018 and 2017, respectively.

Asset Quality

Net charge-offs of $6.5 million for the three months ended June 30, 2018 were down as compared to $6.8 million for the prior quarter and $6.7 million for the second quarter of 2017. Due primarily to loan growth, provision expense was higher at $8.8 million for the three months ended June 30, 2018, as compared with $7.5 million for the prior quarter and $7.6 million for the second quarter of 2017. Annualized net charge-offs to average loans for the second quarter of 2018 was 0.39%, down from 0.42% for the prior quarter and from 0.42% for the second quarter of 2017.

Net charge-offs of $13.3 million for the six months ended June 30, 2018 were down as compared to $13.5 million for the same period of 2017. Provision expense was $16.3 million for the six months ended June 30, 2018, as compared with $14.9 million for the same period of 2017. Provision expense increased compared to the first six months of 2017 primarily due to loan growth. Annualized net charge-offs to average loans for the first six months of 2018 was 0.40% as compared with 0.44% for the first six months of 2017.


Page 4 of 13

Nonperforming loans to total loans was 0.38% at June 30, 2018, down 5 bps from 0.43% for the prior quarter and down 12 bps from 0.50% at June 30, 2017. Past due loans as a percentage of total loans were 0.50% at June 30, 2018, down from 0.53% at March 31, 2018 and 0.59% at June 30, 2017.

The allowance for loan losses totaled $72.5 million at June 30, 2018, compared to $70.2 million at March 31, 2018 and $66.6 million at June 30, 2017. The allowance for loan losses as a percentage of loans was 1.06% (1.11% excluding acquired loans) at June 30, 2018, compared to 1.06% (1.12% excluding acquired loans) at March 31, 2018 and to 1.05% (1.13% excluding acquired loans) at June 30, 2017.

Balance Sheet

Total assets were $9.5 billion at June 30, 2018, up $330.3 million, or 3.6%, from December 31, 2017. Loans were $6.9 billion at June 30, 2018, up $274.3 million, or 4.2%, from December 31, 2017. Total deposits were $7.3 billion at June 30, 2018, up $173.8 million, or 2.4%, from December 31, 2017, reflecting growth in core and municipal deposits. Stockholders’ equity was $978.9 million, representing a total equity-to-total assets ratio of 10.34% at June 30, 2018, compared with $958.2 million or a total equity-to-total assets ratio of 10.49% at December 31, 2017.

Dividend

The NBT Board of Directors approved a third-quarter 2018 cash dividend of $0.25 per share at a meeting held today. The dividend will be paid on September 14, 2018 to shareholders of record as of August 31, 2018.

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, N.Y., with total assets of $9.5 billion at June 30, 2018. 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 152 banking locations in New York, Pennsylvania, Vermont, Massachusetts, New Hampshire and Maine. EPIC Retirement Plan Services, based in Rochester, N.Y., is a full-service 401(k) plan recordkeeping firm. NBT Insurance Agency, LLC, based in Norwich, N.Y., is a full-service insurance agency. More information about NBT and its divisions is available online at: www.nbtbancorp.com, www.nbtbank.com, www.epic1st.com and www.nbtinsurance.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 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, which 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: (1) competitive pressures among depository and other financial institutions may increase significantly, including as a result of competitors having greater financial resources than NBT; (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 business and results; (6) NBT’s ability to successfully integrate acquired businesses and employees; 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.


Page 5 of 13

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 FTE yield on securities and loans. Where non-GAAP disclosures are used in this press release, 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.


Page 6 of 13

NBT Bancorp Inc. and Subsidiaries
Selected Financial Data
(unaudited, dollars in thousands except per share data)

   
2018
   
2017
 
Profitability:
 
2nd Q
   
1st Q
   
4th Q
   
3rd Q
   
2nd Q
 
Diluted earnings per share
 
$
0.64
   
$
0.59
   
$
0.40
   
$
0.52
   
$
0.49
 
Weighted average diluted common shares outstanding
   
44,016,940
     
43,975,248
     
43,957,571
     
43,914,536
     
43,901,207
 
Return on average assets (1)
   
1.21
%
   
1.15
%
   
0.77
%
   
1.00
%
   
0.95
%
Return on average equity (1)
   
11.64
%
   
10.99
%
   
7.27
%
   
9.55
%
   
9.11
%
Return on average tangible common equity (1)(3)
   
17.08
%
   
15.95
%
   
10.65
%
   
13.99
%
   
13.46
%
Net interest margin (1)(2)
   
3.57
%
   
3.57
%
   
3.52
%
   
3.47
%
   
3.44
%

   
6 Months ended June 30,
 
Profitability:
 
2018
   
2017
 
Diluted earnings per share
 
$
1.23
   
$
0.95
 
Weighted average diluted common shares outstanding
   
43,991,731
     
43,886,536
 
Return on average assets (1)
   
1.18
%
   
0.94
%
Return on average equity (1)
   
11.32
%
   
9.02
%
Return on average tangible common equity (1)(4)
   
16.52
%
   
13.36
%
Net interest margin (1)(2)
   
3.57
%
   
3.45
%

 
(1) Annualized.
(2) Calculated on a 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:

   
2018
   
2017
   
2nd Q
   
1st Q
   
4th Q
   
3rd Q
   
2nd Q
Net income
 
$
28,121
   
$
25,986
   
$
17,637
   
$
22,876
   
$
21,359
Amortization of intangible assets (net of tax)
   
822
     
686
     
594
     
613
     
642
Net income, excluding intangibles amortization
 
$
28,943
   
$
26,672
   
$
18,231
   
$
23,489
   
$
22,001
                                       
Average stockholders' equity
 
$
969,029
   
$
959,044
   
$
962,660
   
$
950,557
   
$
940,897
Less: average goodwill and other intangibles
   
289,250
     
281,027
     
283,554
     
284,536
     
285,388
Average tangible common equity
 
$
679,779
   
$
678,017
   
$
679,106
   
$
666,021
   
$
655,509

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

   
6 Months ended June 30,
   
2018
   
2017
Net income
 
$
54,107
   
$
41,638
Amortization of intangible assets (net of tax)
   
1,508
     
1,239
Net income, excluding intangibles amortization
 
$
55,615
   
$
42,877
               
Average stockholders' equity
 
$
964,064
   
$
930,529
Less: average goodwill and other intangibles
   
285,161
     
283,094
Average tangible common equity
 
$
678,903
   
$
647,435
            
Note: Year-to-date EPS may not equal sum of quarters due to differences in outstanding shares.


Page 7 of 13

NBT Bancorp Inc. and Subsidiaries
Selected Financial Data
(unaudited, dollars in thousands except per share data)

   
2018
   
2017
 
   
2nd Q
   
1st Q
   
4th Q
   
3rd Q
   
2nd Q
 
Balance sheet data:
                             
Securities available for sale
 
$
1,192,939
   
$
1,265,912
   
$
1,255,925
   
$
1,357,614
   
$
1,365,521
 
Securities held to maturity
   
544,163
     
487,126
     
484,073
     
494,309
     
515,628
 
Net loans
   
6,786,613
     
6,576,924
     
6,515,273
     
6,398,584
     
6,301,311
 
Total assets
   
9,467,138
     
9,230,834
     
9,136,812
     
9,155,396
     
9,076,418
 
Total deposits
   
7,344,449
     
7,393,928
     
7,170,636
     
7,231,236
     
7,015,284
 
Total borrowings
   
1,028,971
     
776,032
     
909,188
     
872,060
     
1,021,339
 
Total liabilities
   
8,488,209
     
8,278,104
     
8,178,635
     
8,200,158
     
8,136,057
 
Stockholders' equity
   
978,929
     
952,730
     
958,177
     
955,238
     
940,361
 
                                         
Asset quality:
                                       
Nonaccrual loans
 
$
24,006
   
$
25,426
   
$
25,708
   
$
23,453
   
$
29,134
 
90 days past due and still accruing
   
2,209
     
2,934
     
5,410
     
3,388
     
2,849
 
Total nonperforming loans
   
26,215
     
28,360
     
31,118
     
26,841
     
31,983
 
Other real estate owned
   
4,349
     
4,949
     
4,529
     
4,230
     
4,747
 
Total nonperforming assets
   
30,564
     
33,309
     
35,647
     
31,071
     
36,730
 
Allowance for loan losses
   
72,450
     
70,200
     
69,500
     
68,350
     
66,600
 
                                         
Asset quality ratios (total):
                                       
Allowance for loan losses to total loans
   
1.06
%
   
1.06
%
   
1.06
%
   
1.06
%
   
1.05
%
Total nonperforming loans to total loans
   
0.38
%
   
0.43
%
   
0.47
%
   
0.42
%
   
0.50
%
Total nonperforming assets to total assets
   
0.32
%
   
0.36
%
   
0.39
%
   
0.34
%
   
0.40
%
Allowance for loan losses to total nonperforming loans
   
276.37
%
   
247.53
%
   
223.34
%
   
254.65
%
   
208.24
%
Past due loans to total loans
   
0.50
%
   
0.53
%
   
0.63
%
   
0.63
%
   
0.59
%
Net charge-offs to average loans (1)
   
0.39
%
   
0.42
%
   
0.43
%
   
0.38
%
   
0.42
%
                                         
Asset quality ratios (originated) (2):
                                       
Allowance for loan losses to loans
   
1.11
%
   
1.12
%
   
1.12
%
   
1.13
%
   
1.13
%
Nonperforming loans to loans
   
0.36
%
   
0.41
%
   
0.46
%
   
0.39
%
   
0.48
%
Allowance for loan losses to nonperforming loans
   
306.08
%
   
273.54
%
   
243.85
%
   
289.67
%
   
235.08
%
Past due loans to loans
   
0.50
%
   
0.53
%
   
0.65
%
   
0.65
%
   
0.61
%
                                         
Capital:
                                       
Equity to assets
   
10.34
%
   
10.32
%
   
10.49
%
   
10.43
%
   
10.36
%
Book value per share
 
$
22.43
   
$
21.84
   
$
22.01
   
$
21.94
   
$
21.61
 
Tangible book value per share (3)
 
$
15.73
   
$
15.41
   
$
15.54
   
$
15.42
   
$
15.06
 
Tier 1 leverage ratio
   
9.28
%
   
9.26
%
   
9.14
%
   
9.12
%
   
9.08
%
Common equity tier 1 capital ratio
   
10.04
%
   
10.12
%
   
10.06
%
   
10.08
%
   
9.96
%
Tier 1 capital ratio
   
11.35
%
   
11.48
%
   
11.42
%
   
11.46
%
   
11.36
%
Total risk-based capital ratio
   
12.34
%
   
12.47
%
   
12.42
%
   
12.45
%
   
12.32
%
Common stock price (end of period)
 
$
38.15
   
$
35.48
   
$
36.80
   
$
36.72
   
$
36.95
 

(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.


Page 8 of 13

NBT Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited, dollars in thousands)

   
June 30,
   
December 31,
Assets:
 
2018
   
2017
Cash and due from banks
 
$
149,723
   
$
156,852
Short-term interest bearing accounts
   
2,760
     
2,812
Equity securities, at fair value (1)
   
24,293
     
-
Securities available for sale, at fair value (1)
   
1,192,939
     
1,255,925
Securities held to maturity (fair value $532,979 and $481,871)
   
544,163
     
484,073
Trading securities (1)
   
-
     
11,467
Federal Reserve Bank and Federal Home Loan Bank stock
   
54,223
     
46,706
Loans
   
6,859,063
     
6,584,773
Less allowance for loan losses
   
72,450
     
69,500
Net loans
 
$
6,786,613
   
$
6,515,273
Premises and equipment, net
   
78,578
     
81,305
Goodwill
   
274,769
     
268,043
Intangible assets, net
   
17,630
     
13,420
Bank owned life insurance
   
174,952
     
172,388
Other assets
   
166,495
     
128,548
Total assets
 
$
9,467,138
   
$
9,136,812
               
Liabilities and stockholders' equity:
             
Demand (noninterest bearing)
 
$
2,343,948
   
$
2,286,892
Savings, NOW, and money market
   
4,136,449
     
4,076,978
Time
   
864,052
     
806,766
Total deposits
 
$
7,344,449
   
$
7,170,636
Short-term borrowings
   
853,997
     
719,123
Long-term debt
   
73,778
     
88,869
Junior subordinated debt
   
101,196
     
101,196
Other liabilities
   
114,789
     
98,811
Total liabilities
 
$
8,488,209
   
$
8,178,635
               
Total stockholders' equity
 
$
978,929
   
$
958,177
               
Total liabilities and stockholders' equity
 
$
9,467,138
   
$
9,136,812

(1) Available for sale and trading equity securities amounts reclassified from securities available for sale and trading securities to equity securities for the current period, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.


Page 9 of 13

NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited, dollars in thousands except per share data)

   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
   
2018
   
2017
   
2018
   
2017
Interest, fee and dividend income:
                     
Interest and fees on loans
 
$
74,172
   
$
65,286
   
$
144,615
   
$
129,313
Securities available for sale (1)
   
7,003
     
7,218
     
13,929
     
14,227
Securities held to maturity
   
2,811
     
2,736
     
5,436
     
5,517
Other
   
781
     
654
     
1,547
     
1,273
Total interest, fee and dividend income
 
$
84,767
   
$
75,894
   
$
165,527
   
$
150,330
Interest expense:
                             
Deposits
 
$
5,079
   
$
3,536
   
$
9,010
   
$
7,010
Short-term borrowings
   
2,455
     
1,366
     
4,421
     
2,505
Long-term debt
   
452
     
599
     
928
     
1,205
Junior subordinated debt
   
1,040
     
772
     
1,941
     
1,498
Total interest expense
 
$
9,026
   
$
6,273
   
$
16,300
   
$
12,218
Net interest income
 
$
75,741
   
$
69,621
   
$
149,227
   
$
138,112
Provision for loan losses
   
8,778
     
7,567
     
16,274
     
14,946
Net interest income after provision for loan losses
 
$
66,963
   
$
62,054
   
$
132,953
   
$
123,166
Noninterest income:
                             
Insurance and other financial services revenue
 
$
5,826
   
$
5,621
   
$
12,330
   
$
12,391
Service charges on deposit accounts
   
4,246
     
4,161
     
8,218
     
8,138
ATM and debit card fees
   
5,816
     
5,518
     
11,089
     
10,468
Retirement plan administration fees
   
7,296
     
5,437
     
12,635
     
9,609
Trust
   
5,265
     
5,161
     
10,143
     
9,693
Bank owned life insurance income
   
1,217
     
1,218
     
2,564
     
2,629
Net securities gains
   
91
     
2
     
163
     
2
Other (1)
   
4,401
     
3,186
     
8,293
     
6,124
Total noninterest income
 
$
34,158
   
$
30,304
   
$
65,435
   
$
59,054
Noninterest expense:
                             
Salaries and employee benefits (2)
 
$
37,726
   
$
33,503
   
$
74,293
   
$
67,736
Occupancy
   
5,535
     
5,184
     
11,654
     
11,354
Data processing and communications
   
4,508
     
4,229
     
8,787
     
8,427
Professional fees and outside services
   
3,336
     
3,609
     
6,828
     
6,641
Equipment
   
4,151
     
3,793
     
8,189
     
7,491
Office supplies and postage
   
1,504
     
1,640
     
3,077
     
3,248
FDIC expense
   
1,092
     
1,136
     
2,293
     
2,314
Advertising
   
700
     
656
     
1,037
     
1,046
Amortization of intangible assets
   
1,096
     
1,039
     
2,010
     
2,006
Loan collection and other real estate owned, net
   
908
     
664
     
2,245
     
1,943
Other (2)
   
4,332
     
4,868
     
8,747
     
9,397
Total noninterest expense
 
$
64,888
   
$
60,321
   
$
129,160
   
$
121,603
Income before income tax expense
 
$
36,233
   
$
32,037
   
$
69,228
   
$
60,617
Income tax expense
   
8,112
     
10,678
     
15,121
     
18,979
Net income
 
$
28,121
   
$
21,359
   
$
54,107
   
$
41,638
Earnings Per Share:
                             
Basic
 
$
0.64
   
$
0.49
   
$
1.24
   
$
0.96
Diluted
 
$
0.64
   
$
0.49
   
$
1.23
   
$
0.95

Note:  Year-to-date EPS may not equal sum of quarters due to differences in outstanding shares.

(1) Income on available for sale and trading equity securities amounts reclassified from interest, fee and dividend income on securities available for sale to other noninterest income for the current period, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.
(2) Amounts reclassified for the prior period from salaries and employee benefits to other expenses related to the adoption of Accounting Standard Update No. 2017-07, Compensation – Retirement Benefits (Topic 715), in the first quarter of 2018.


Page 10 of 13

NBT Bancorp Inc. and Subsidiaries
Quarterly Consolidated Statements of Income
(unaudited, dollars in thousands except per share data)

   
2018
   
2017
   
2nd Q
   
1st Q
   
4th Q
   
3rd Q
   
2nd Q
Interest, fee and dividend income:
                           
Interest and fees on loans
 
$
74,172
   
$
70,443
   
$
69,697
   
$
68,086
   
$
65,286
Securities available for sale (1)
   
7,003
     
6,926
     
7,059
     
7,278
     
7,218
Securities held to maturity
   
2,811
     
2,625
     
2,671
     
2,746
     
2,736
Other
   
781
     
766
     
803
     
737
     
654
Total interest, fee and dividend income
 
$
84,767
   
$
80,760
   
$
80,230
   
$
78,847
   
$
75,894
Interest expense:
                                     
Deposits
 
$
5,079
   
$
3,931
   
$
3,817
   
$
3,648
   
$
3,536
Short-term borrowings
   
2,455
     
1,966
     
1,621
     
1,870
     
1,366
Long-term debt
   
452
     
476
     
505
     
589
     
599
Junior subordinated debt
   
1,040
     
901
     
836
     
810
     
772
Total interest expense
 
$
9,026
   
$
7,274
   
$
6,779
   
$
6,917
   
$
6,273
Net interest income
 
$
75,741
   
$
73,486
   
$
73,451
   
$
71,930
   
$
69,621
Provision for loan losses
   
8,778
     
7,496
     
8,153
     
7,889
     
7,567
Net interest income after provision for loan losses
 
$
66,963
   
$
65,990
   
$
65,298
   
$
64,041
   
$
62,054
Noninterest income:
                                     
Insurance and other financial services revenue
 
$
5,826
   
$
6,504
   
$
5,605
   
$
5,536
   
$
5,621
Service charges on deposit accounts
   
4,246
     
3,972
     
4,351
     
4,261
     
4,161
ATM and debit card fees
   
5,816
     
5,273
     
5,347
     
5,557
     
5,518
Retirement plan administration fees
   
7,296
     
5,339
     
5,332
     
5,272
     
5,437
Trust
   
5,265
     
4,878
     
4,966
     
4,927
     
5,161
Bank owned life insurance income
   
1,217
     
1,347
     
1,262
     
1,284
     
1,218
Net securities gains (losses)
   
91
     
72
     
1,869
     
(4
)
   
2
Other (1)
   
4,401
     
3,892
     
2,740
     
3,945
     
3,186
Total noninterest income
 
$
34,158
   
$
31,277
   
$
31,472
   
$
30,778
   
$
30,304
Noninterest expense:
                                     
Salaries and employee benefits (2)
 
$
37,726
   
$
36,567
   
$
33,812
   
$
33,674
   
$
33,503
Occupancy
   
5,535
     
6,119
     
5,280
     
5,174
     
5,184
Data processing and communications
   
4,508
     
4,279
     
4,242
     
4,399
     
4,229
Professional fees and outside services
   
3,336
     
3,492
     
3,751
     
3,107
     
3,609
Equipment
   
4,151
     
4,038
     
4,001
     
3,733
     
3,793
Office supplies and postage
   
1,504
     
1,573
     
1,604
     
1,432
     
1,640
FDIC expense
   
1,092
     
1,201
     
1,196
     
1,257
     
1,136
Advertising
   
700
     
337
     
1,033
     
665
     
656
Amortization of intangible assets
   
1,096
     
914
     
961
     
993
     
1,039
Loan collection and other real estate owned, net
   
908
     
1,337
     
1,136
     
1,684
     
664
Other (2)
   
4,332
     
4,415
     
6,428
     
4,483
     
4,868
Total noninterest expense
 
$
64,888
   
$
64,272
   
$
63,444
   
$
60,601
   
$
60,321
Income before income tax expense
 
$
36,233
   
$
32,995
   
$
33,326
   
$
34,218
   
$
32,037
Income tax expense
   
8,112
     
7,009
     
15,689
     
11,342
     
10,678
Net income
 
$
28,121
   
$
25,986
   
$
17,637
   
$
22,876
   
$
21,359
Earnings Per Share:
                                     
Basic
 
$
0.64
   
$
0.60
   
$
0.40
   
$
0.52
   
$
0.49
Diluted
 
$
0.64
   
$
0.59
   
$
0.40
   
$
0.52
   
$
0.49

(1) Income on available for sale and trading equity securities amounts reclassified from interest, fee and dividend income on securities available for sale to other noninterest income for the current period, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.
(2) Amounts reclassified for the prior periods from salaries and employee benefits to other expenses related to the adoption of Accounting Standard Update No. 2017-07, Compensation – Retirement Benefits (Topic 715), in the first quarter of 2018.


Page 11 of 13

NBT Bancorp Inc. and Subsidiaries
Average Quarterly Balance Sheets
(unaudited, dollars in thousands)

   
Average
Balance
   
Yield /
Rates
   
Average
Balance
   
Yield /
Rates
   
Average
Balance
   
Yield /
Rates
   
Average
Balance
   
Yield /
Rates
   
Average
Balance
   
Yield /
Rates
 
Three Months ended,
 
Q2 - 2018
   
Q1 - 2018
   
Q4 - 2017
   
Q3 - 2017
   
Q2 - 2017
 
Assets:
                                                                     
Short-term interest bearing accounts
 
$
3,574
     
5.16
%
 
$
2,818
     
5.18
%
 
$
5,804
     
2.39
%
 
$
9,000
     
2.42
%
 
$
9,497
     
1.82
%
Securities available for sale (1)(3)
   
1,266,304
     
2.23
%
   
1,273,634
     
2.22
%
   
1,313,870
     
2.16
%
   
1,374,739
     
2.13
%
   
1,363,314
     
2.15
%
Securities held to maturity (1)
   
503,501
     
2.50
%
   
482,375
     
2.48
%
   
490,182
     
2.68
%
   
506,324
     
2.66
%
   
513,888
     
2.63
%
Investment in FRB and FHLB Banks
   
48,184
     
6.12
%
   
46,844
     
6.32
%
   
44,320
     
6.87
%
   
49,902
     
5.42
%
   
46,132
     
5.31
%
Loans (2)
   
6,750,710
     
4.41
%
   
6,592,447
     
4.34
%
   
6,528,449
     
4.25
%
   
6,400,287
     
4.23
%
   
6,294,056
     
4.17
%
Total interest earning assets
 
$
8,572,273
     
3.99
%
 
$
8,398,118
     
3.92
%
 
$
8,382,625
     
3.84
%
 
$
8,340,252
     
3.80
%
 
$
8,226,887
     
3.75
%
Other assets (3)
   
766,604
             
746,172
             
747,468
             
759,636
             
753,383
         
Total assets
 
$
9,338,877
           
$
9,144,290
           
$
9,130,093
           
$
9,099,888
           
$
8,980,270
         
                                                                                 
Liabilities and stockholders' equity:
                                                                               
Money market deposit accounts
 
$
1,699,956
     
0.43
%
 
$
1,655,308
     
0.27
%
 
$
1,725,242
     
0.25
%
 
$
1,652,730
     
0.23
%
 
$
1,723,594
     
0.21
%
NOW deposit accounts
   
1,222,889
     
0.16
%
   
1,211,029
     
0.13
%
   
1,200,651
     
0.12
%
   
1,130,940
     
0.10
%
   
1,138,237
     
0.08
%
Savings deposits
   
1,289,062
     
0.06
%
   
1,248,432
     
0.06
%
   
1,215,932
     
0.06
%
   
1,232,823
     
0.06
%
   
1,232,301
     
0.06
%
Time deposits
   
858,080
     
1.22
%
   
802,959
     
1.13
%
   
792,969
     
1.10
%
   
805,435
     
1.09
%
   
824,398
     
1.08
%
Total interest bearing deposits
 
$
5,069,987
     
0.40
%
 
$
4,917,728
     
0.32
%
 
$
4,934,794
     
0.31
%
 
$
4,821,928
     
0.30
%
 
$
4,918,530
     
0.29
%
Short-term borrowings
   
706,694
     
1.39
%
   
712,220
     
1.12
%
   
684,447
     
0.94
%
   
773,074
     
0.96
%
   
643,971
     
0.85
%
Long-term debt
   
84,676
     
2.14
%
   
88,844
     
2.17
%
   
81,010
     
2.47
%
   
88,935
     
2.63
%
   
99,865
     
2.41
%
Junior subordinated debt
   
101,196
     
4.12
%
   
101,196
     
3.61
%
   
101,196
     
3.28
%
   
101,196
     
3.18
%
   
101,196
     
3.06
%
Total interest bearing liabilities
 
$
5,962,553
     
0.61
%
 
$
5,819,988
     
0.51
%
 
$
5,801,447
     
0.46
%
 
$
5,785,133
     
0.47
%
 
$
5,763,562
     
0.44
%
Demand deposits
   
2,294,023
             
2,259,955
             
2,266,672
             
2,260,973
             
2,181,952
         
Other liabilities
   
113,272
             
105,303
             
99,314
             
103,225
             
93,859
         
Stockholders' equity
   
969,029
             
959,044
             
962,660
             
950,557
             
940,897
         
Total liabilities and stockholders' equity
 
$
9,338,877
           
$
9,144,290
           
$
9,130,093
           
$
9,099,888
           
$
8,980,270
         
                                                                                 
Interest rate spread
           
3.38
%
           
3.41
%
           
3.38
%
           
3.33
%
           
3.31
%
Net interest margin (FTE)
           
3.57
%
           
3.57
%
           
3.52
%
           
3.47
%
           
3.44
%

(1) Securities are shown at average amortized cost.
(2) For purposes of these computations, nonaccrual loans are included in the average loan balances outstanding.
(3) For purposes of the average balance sheet presentation, equity securities amounts reclassified for the current period from securities available for sale to other assets, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.

Note: Interest income for tax-exempt securities and loans has been adjusted to a FTE basis using the statutory Federal income tax rate of 21% for 2018 and 35% for 2017.


Page 12 of 13

NBT Bancorp Inc. and Subsidiaries
Average Year-to-Date Balance Sheets
(unaudited, dollars in thousands)

   
Average
Balance
   
Interest
   
Yield/
Rates
   
Average
Balance
   
Interest
   
Yield/
Rates
 
Six Months ended June 30,
 
2018
   
2017
 
Assets:
                                   
Short-term interest bearing accounts
 
$
3,198
   
$
82
     
5.17
%
 
$
11,906
   
$
90
     
1.52
%
Securities available for sale (1)(3)
   
1,269,949
     
14,017
     
2.23
%
   
1,357,797
     
14,442
     
2.14
%
Securities held to maturity (1)
   
492,996
     
6,081
     
2.49
%
   
517,068
     
6,782
     
2.64
%
Investment in FRB and FHLB Banks
   
47,518
     
1,465
     
6.22
%
   
46,228
     
1,183
     
5.16
%
Loans (2)
   
6,672,016
     
144,825
     
4.38
%
   
6,252,786
     
129,725
     
4.18
%
Total interest earning assets
 
$
8,485,677
   
$
166,470
     
3.96
%
 
$
8,185,785
   
$
152,222
     
3.75
%
Other assets (3)
   
756,444
                     
750,943
                 
Total assets
 
$
9,242,121
                   
$
8,936,728
                 
                                                 
Liabilities and stockholders' equity:
                                               
Money market deposit accounts
 
$
1,677,755
   
$
2,933
     
0.35
%
 
$
1,705,925
   
$
1,814
     
0.21
%
NOW deposit accounts
   
1,216,992
     
882
     
0.15