NBT Bancorp Inc. Announces Third Quarter Net Income of $35.1 Million, or $0.80 Per Diluted Common Share; Announces Dividend

About this update from Nbt Bancorp Inc.

NORWICH, N.Y. , Oct. 26, 2020 (GLOBE NEWSWIRE) -- NBT Bancorp Inc. (“NBT” or the “Company”) (NASDAQ: NBTB) reported net income and diluted earnings per share for both the three and nine months ended September 30, 2020 . Net income for the three months ended September 30, 2020 was $35.1 million , or $0.80 per diluted common share. Net income was up $10.4 million from the previous quarter primarily due to lower loan loss provision and up $2.7 million from the third quarter of 2019. Pre-provision net revenue (“PPNR”)1 for the third quarter of 2020 was $49.6 million compared to $50.7 million in the previous quarter and $48.2 million in the third quarter of 2019. The 2% decline in PPNR from the previous quarter reflected lower net interest income and slightly higher operating expenses, partly offset by higher noninterest income. CEO Comments “The continued strength of NBT’s pre-provision net revenue is reflected in our third quarter 2020 results,” said NBT President and CEO John H. Watt , Jr. “Strong fee-based income, including higher income from our retirement plan administration businesses driven by an acquisition completed in April, and focused expense management were key contributors. As we continue to work closely with our customers through the impacts of the pandemic, we are encouraged that total loan deferrals dropped to 2% in October from a peak of approximately 15% in May. Adoption of digital banking services and functionality by our customers continued to accelerate in the third quarter and, with our well-established technology roadmap, we are positioned to scale up.” Third Quarter Financial Highlights Net Income Net income of $35.1 million Diluted earnings per share of $0.80 Net Interest Income / NIM Net interest income on a fully taxable equivalent basis was $78.3 million 1 Net interest margin (“NIM”) on a fully taxable equivalent basis was 3.17%1 PPNR PPNR1 was $49.6 million compared to $50.7 million in the second quarter of 2020 and $48.2 million in the third quarter of 2019 Loans and Credit Quality Period end loans were $7.6 billion , up 8%, annualized, from December 31, 2019 and consistent with June 30, 2020 Excluding Paycheck Protection Program (“PPP”) loans of $515 million at September 30, 2020 , period end loans contracted $72 million or 1% from June 30, 2020 Allowance for loan losses to total loans of 1.51% (1.62% excluding PPP loans and related allowance) Net charge-offs to average loans was 0.12%, annualized (0.13% excluding PPP loans) Nonperforming assets to total assets was 0.37% (0.39% excluding PPP loans) Capital Tangible book value per share2 grew 3% for the quarter and 8% from prior year to $20.02 at September 30, 2020 Tangible equity to assets of 8.27%1 CET1 ratio of 11.63%; Total leverage ratio of 9.48% Loans Period end total loans were $7.6 billion at September 30 and June 30, 2020 , compared to $7.1 billion at December 31, 2019 . Total PPP loans as of September 30, 2020 were $515 million (net of unamortized fees), with $548 million originated at an average loan size of $184 thousand and an average annual fee of 3.2%. Excluding PPP loans, period end loans decreased $71.8 million from June 30, 2020 . Commercial and industrial loans decreased $21.4 million to $1.3 billion ; commercial real estate loans increased $25.3 million to $2.3 billion ; and total consumer loans decreased $75.7 million to $3.5 billion , driven by run-off of indirect auto loans. Commercial line of credit utilization rate was 25% at September 30, 2020 compared to 26% at June 30, 2020 and 33% at September 30, 2019 . Deposits Average total deposits in the third quarter of 2020 were $8.8 billion , compared to $8.6 billion in the second quarter of 2020, primarily due to increases in non-interest bearing demand deposit accounts. Loan to deposit ratio was 84.4% at September 30, 2020 , compared to 94.0% at December 31, 2019 and 86.5% at June 30, 2020 . Net Interest Income and Net Interest Margin Net interest income for the third quarter of 2020 was $77.9 million , down $2.5 million or 3.1% from the second quarter of 2020 and consistent with the third quarter of 2019. The net interest margin on a fully taxable equivalent (“FTE”) basis for the third quarter of 2020 was 3.17%, down 21 basis points (“bps”) from the second quarter of 2020 and down 40 bps from the third quarter of 2019. The net impact of PPP loans and excess liquidity, both of which the Company expects to be transitory, negatively impacted the NIM by 10 bps in the third quarter versus a negative 7 bps in the second quarter of 2020. Excluding the impact of PPP lending and excess liquidity from each quarter, NIM declined 18 bps from the prior quarter primarily due to the impact of asset repricing while funding costs remained stable during the quarter. Earning asset yields for the three months ended September 30, 2020 were down 23 bps from the prior quarter and down 77 bps from the same quarter in the prior year. Earning assets grew $220.9 million or 2.3% from the prior quarter and grew $1.1 billion or 12.6% from the same quarter in the prior year. Excess liquidity resulted in a $97.7 million increase in the average balances of short-term interest bearing accounts. The average balance of investment securities increased $160.0 million while yields declined 29 bps. Loan yields decreased 15 bps to 3.95%. Total cost of deposits was 0.19% for the third quarter of 2020, down 4 bps from the prior quarter and down 37 bps from the same period in the prior year. The cost of interest-bearing liabilities for the three months ended September 30, 2020 was 0.45%, flat as compared to the prior quarter of 0.45% and down 51 bps from the third quarter of 2019 of 0.96%. Cost of interest-bearing deposits decreased 4 bps from the prior quarter and decreased 51 bps from the same quarter in 2019. Credit Quality and CECL Net charge-offs to average loans were very low due to COVID-19 pandemic relief programs. Net charge-offs to total average loans of 12 bps (13 bps excluding PPP loans) compared to 28 bps (30 bps excluding PPP loans) in the prior quarter and 35 bps in the third quarter of 2019. Nonperforming assets to total assets was 0.37% (0.39% excluding PPP loans) compared to 0.27% (0.28% excluding PPP loans) at June 30, 2020 and 0.36% at September 30, 2019 . The increase in nonperforming assets was primarily due to two COVID-19 impacted commercial relationships totaling $10.9 million moving to non-accrual for the quarter. Provision expense for the three months ended September 30, 2020 was $3.3 million with an increase in allowance coverage levels due to specific reserves for the two nonperforming commercial relationships and a change in loan mix while net charge-offs of $2.3 million were down compared with the prior quarter. Provision expense decreased $15.6 million from the second quarter of 2020 and decreased $3.1 million from the third quarter of 2019. The allowance for loan losses was $114.5 million or 1.51% (1.62% excluding PPP loans and related allowance) of total loans compared to 1.49% (1.59% excluding PPP loans and related allowance) at June 30, 2020 and 1.03% September 30, 2019 . As of October 19, 2020 , 2.0% of loans (loans outstanding as of 9/30/2020; excluding PPP balances) are in payment deferral programs which is down from the second quarter 2020 peak of 14.9%. The reserve for unfunded loan commitments remained consistent with the prior quarter at $5.5 million at September 30, 2020 . Noninterest Income Total noninterest income, excluding securities gains (losses), was $37.6 million for the three months ended September 30, 2020 , up $2.8 million from the prior quarter and up $2.0 million from the prior year quarter. Service charges on deposit accounts were higher than the prior quarter but lower than the third quarter of 2019 due to lower overdraft charges during the COVID-19 pandemic that recovered but continue to run lower than prior year levels. ATM and debit card fees were higher than both prior quarter and the third quarter of 2019 due to increased volume and higher per transaction rates. Retirement plan administration fees were higher than both prior quarter and the third quarter of 2019 due to the April 1, 2020 acquisition of Alliance Benefit Group of Illinois, Inc. (“ABG”) contributing $1.7 million in revenues during the quarter. Wealth management fees were higher than the prior quarter due to seasonality of tax revenue and market conditions. The increase in other noninterest income from the prior year third quarter was driven by higher mortgage banking income, while the decrease from the second quarter of 2020 was driven by lower loan swap fee income. Noninterest Expense Total noninterest expense for the third quarter of 2020 was up 1.5% from the previous quarter and down 4.9% from the third quarter of 2019. Salaries and benefits increased from the prior quarter due to timing of medical expenses during the COVID-19 pandemic ( $0.6 million ) and increased from the third quarter of 2019 driven by the addition of ABG’s salaries and benefits. Equipment expense was higher than both the prior quarter and the third quarter of 2019 due to higher technology costs associated with several digital upgrades. FDIC expense was higher than the third quarter of 2019 due to the benefit of the FDIC insurance assessment small bank credit in the third quarter of 2019. Other expenses decreased $4.5 million from the third quarter of 2019 due to lower travel and training expenses during the pandemic, lower pension costs and $3.1 million in reorganization expenses incurred during the third quarter of 2019 primarily related to branch optimization strategies to improve future operating efficiencies. Income Taxes Effective tax rate was 23.8% for the third quarter of 2020 compared to 21.0% in the second quarter of 2020 and 22.4% in the third quarter of 2019. The higher effective tax rate compared to the second quarter of 2020 was due to a higher level of taxable income relative to total income and included a true-up of tax expense to bring the full year estimated effective tax rate to 21.75%. The higher effective tax rate compared to the third quarter of 2019 was due to a higher level of taxable income relative to total income. Capital Capital ratios remain strong with tangible common equity to tangible assets1 at 8.27%. Tangible book value per share2 grew 3% from the prior quarter and 8% from the prior year quarter to $20.02 . September 30, 2020 CET1 capital ratio of 11.63%, total leverage ratio of 9.48% and total risk-based capital ratio of 15.43%. Dividend The Board of Directors approved a fourth-quarter cash dividend of $0.27 per share at their meeting held today. The dividend will be paid on December 15, 2020 to shareholders of record as of December 1, 2020 . Conference C all and Webcast The Company will host a conference call at 8:30 a.m. Eastern Time on Tuesday, October 27, 2020 , to review third quarter 2020 financial results. The audio webcast link, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at https://stockholderinfo.nbtbancorp.com/events-calendar/upcoming-events and will be archived for twelve months. Corporate Overview NBT Bancorp Inc. is a financial holding company headquartered in Norwich, NY , with total assets of $10.8 billion at September 30, 2020 . 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 140 banking locations in New York , Pennsylvania , Vermont , Massachusetts , New Hampshire and Maine , and is currently entering Connecticut . EPIC Retirement Plan Services, based in Rochester, NY , is a full-service 401(k) plan recordkeeping firm. NBT Insurance Agency, LLC , based in Norwich, NY , is a full-service insurance agency. More information about NBT and its divisions is available online at: www.nbtbancorp.com , www.nbtbank.com , www.epicrps.com and www.nbtinsurance.com . Forward-Looking Statements This news release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of phrases such as “anticipate,” “believe,” “expect,” “forecasts,” “projects,” “will,” “can,” “would,” “should,” “could,” “may,” or other similar terms. There are a number of factors, many of which are beyond the Company’s control that could cause actual results to differ materially from those contemplated by 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) local, regional, national and international economic conditions and the impact they may have on the Company and its customers and the Company’s assessment of that impact; (2) changes in the level of nonperforming assets and charge-offs; (3) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (4) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board (“FRB”); (5) inflation, interest rate, securities market and monetary fluctuations; (6) political instability; (7) acts of war or terrorism; (8) the timely development and acceptance of new products and services and perceived overall value of these products and services by users; (9) changes in consumer spending, borrowings and savings habits; (10) changes in the financial performance and/or condition of the Company’s borrowers; (11) technological changes; (12) acquisitions and integration of acquired businesses; (13) the ability to increase market share and control expenses; (14) changes in the competitive environment among financial holding companies; (15) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company and its subsidiaries must comply, including those under the Dodd-Frank Act, Economic Growth, Regulatory Relief, Consumer Protection Act of 2018, Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), and regulatory pronouncements around CARES Act; (16) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board , the Financial Accounting Standards Board (“FASB”) and other accounting standard setters; (17) changes in the Company’s organization, compensation and benefit plans; (18) the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; (19) greater than expected costs or difficulties related to the integration of new products and lines of business; (20) the adverse impact on the U.S. economy, including the markets in which we operate, of the novel coronavirus, which causes the Coronavirus disease 2019 (“COVID-19”), global pandemic; (21) the impact of a slowing U.S. economy and increased unemployment on the performance of our loan portfolio, the market value of our investment securities, the availability of sources of funding and the demand for our products; and (22) the Company’s success at managing the risks involved in the foregoing items. Currently, one of the most significant factors that could cause actual outcomes to differ materially from the Company’s forward-looking statements is the potential adverse effect of the current COVID-19 pandemic on the financial condition, results of operations, cash flows and performance of the Company, its customers and the global economy and financial markets. The extent to which the COVID-19 pandemic impacts the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic and its impact on the Company’s customers and demand for financial services, the actions governments, businesses and individuals take in response to the pandemic, the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies, national and local economic activity, and the pace of recovery when the COVID-19 pandemic subsides, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section entitled “Risk Factors” in our Form 10-K for the year ended December 31, 2019 and in our Form 10-Q for the quarter ended June 30, 2020 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. You should not place undue reliance on any forward-looking statements, which speak only as of the date made, and you are advised that various factors including, but not limited to, those described above and other factors discussed in the Company’s annual and quarterly reports previously filed with the SEC , could affect the Company’s financial performance and could cause the Company’s actual results or circumstances for future periods to differ materially from those anticipated or projected. Unless required by law, the Company does not undertake, and specifically disclaims any obligations to, publicly release any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. 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”). 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 provide useful information that is important to an understanding of the financial 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. Contact: John H. Watt , Jr., President and CEO John V. Moran , Executive Vice President and CFO NBT Bancorp Inc. 52 South Broad Street Norwich, NY 13815 607-337-6589 NBT Bancorp Inc. and Subsidiaries Selected Financial Data (unaudited, dollars in thousands except per share data) 2020 2019 3rd Q 2nd Q 1st Q 4th Q 3rd Q Profitability: Diluted earnings per share $ 0.80 $ 0.56 $ 0.23 $ 0.66 $ 0.73 Weighted average diluted common shares outstanding 43,941,953 43,928,344 44,130,324 44,174,201 44,138,495 Return on average assets3 1.29 % 0.94% 0.43% 1.20% 1.34% Return on average equity3 12.09 % 8.76% 3.69% 10.36% 11.83% Return on average tangible common equity1 3 16.51 % 12.14% 5.24% 14.28% 16.43% Net interest margin1 3 3.17 % 3.38% 3.52% 3.52% 3.57% 9 Months ended September 30 , 2020 2019 Profitability: Diluted earnings per share $ 1.60 $ 2.09 Weighted average diluted common shares outstanding 43,996,637 44,108,467 Return on average assets3 0.90 % 1.29% Return on average equity3 8.23 % 11.66% Return on average tangible common equity1 3 11.36 % 16.42% Net interest margin1 3 3.35 % 3.61% 2020 2019 3rd Q 2nd Q 1st Q 4th Q 3rd Q Balance sheet data: Securities available for sale $ 1,197,925 $ 1,108,443 $ 1,000,980 $ 975,340 $ 932,173 Securities held to maturity 663,088 599,164 621,359 630,074 678,435 Net loans 7,446,143 7,514,491 7,147,383 7,063,133 6,941,444 Total assets 10,850,212 10,847,184 9,953,543 9,715,925 9,661,386 Total deposits 8,958,183 8,815,891 7,864,638 7,587,820 7,743,166 Total borrowings 446,737 602,988 714,283 820,682 628,701 Total liabilities 9,684,101 9,704,532 8,841,364 8,595,528 8,562,785 Stockholders' equity 1,166,111 1,142,652 1,112,179 1,120,397 1,098,601 Capital: Equity to assets 10.75 % 10.53% 11.17% 11.53% 11.37% Tangible equity ratio1 8.27 % 8.04% 8.55% 8.84% 8.65% Book value per share $ 26.74 $ 26.20 $ 25.52 $ 25.58 $ 25.09 Tangible book value per share2 $ 20.02 $ 19.46 $ 18.96 $ 19.03 $ 18.52 Tier 1 leverage ratio 9.48 % 9.44% 10.02% 10.33% 10.15% Common equity tier 1 capital ratio 11.63 % 11.34% 10.90% 11.29% 11.14% Tier 1 capital ratio 12.88 % 12.60% 12.14% 12.56% 12.42% Total risk-based capital ratio 15.43 % 15.15% 13.36% 13.52% 13.38% Common stock price (end of period) $ 26.82 $ 30.06 $ 32.39 $ 40.56 $ 36.59 Note: Year-to-date EPS may not equal sum of quarters due to differences in outstanding shares. NBT Bancorp Inc. and Subsidiaries Selected Financial Data (unaudited, dollars in thousands except per share data) 2020 2019 3rd Q 2nd Q 1st Q 4th Q 3rd Q Asset quality: Nonaccrual loans $ 35,896 $ 25,567 $ 29,972 $ 25,174 $ 24,623 90 days past due and still accruing 2,579 2,057 2,280 3,717 8,342 Total nonperforming loans 38,475 27,624 32,252 28,891 32,965 Other real estate owned 1,605 1,783 2,384 1,458 2,144 Total nonperforming assets 40,080 29,407 34,636 30,349 35,109 Allowance for loan losses 114,500 113,500 100,000 72,965 72,365 Asset quality ratios (total): Allowance for loan losses to total loans 1.51 % 1.49% 1.38% 1.02% 1.03% Total nonperforming loans to total loans 0.51 % 0.36% 0.45% 0.40% 0.47% Total nonperforming assets to total assets 0.37 % 0.27% 0.35% 0.31% 0.36% Allowance for loan losses to total nonperforming loans 297.60 % 410.87% 310.06% 252.55% 219.52% Past due loans to total loans 0.26 % 0.30% 0.51% 0.49% 0.57% Net charge-offs to average loans3 0.12 % 0.28% 0.32% 0.30% 0.35% Asset quality ratios (excluding paycheck protection program): Allowance for loan losses to total loans 1.62 % 1.59% 1.38% 1.02% 1.03% Total nonperforming loans to total loans 0.55 % 0.39% 0.45% 0.40% 0.47% Total nonperforming assets to total assets 0.39 % 0.28% 0.35% 0.31% 0.36% Allowance for loan losses to total nonperforming loans 297.53 % 410.78% 310.06% 252.55% 219.52% Past due loans to total loans 0.28 % 0.32% 0.51% 0.49% 0.57% Net charge-offs to average loans3 0.13 % 0.30% 0.32% 0.30% 0.35% NBT Bancorp Inc. and Subsidiaries Consolidated Balance Sheets (unaudited, dollars in thousands) September 30 , December 31 , Assets 2020 2019 Cash and due from banks $ 167,169 $ 170,595 Short-term interest bearing accounts 450,291 46,248 Equity securities, at fair value 30,758 27,771 Securities available for sale, at fair value 1,197,925 975,340 Securities held to maturity (fair value $684,862 and $641,262 , respectively) 663,088 630,074 Federal Reserve and Federal Home Loan Bank stock 28,484 44,620 Loans held for sale 1,823 11,731 Loans 7,560,643 7,136,098 Less allowance for loan losses 114,500 72,965 Net loans $ 7,446,143 $ 7,063,133 Premises and equipment, net 73,055 75,631 Goodwill 280,541 274,769 Intangible assets, net 12,557 12,020 Bank owned life insurance 185,227 181,748 Other assets 313,151 202,245 Total assets $ 10,850,212 $ 9,715,925 Liabilities and stockholders' equity Demand (noninterest bearing) $ 3,163,717 $ 2,414,383 Savings, NOW and money market 5,134,495 4,312,244 Time 659,971 861,193 Total deposits $ 8,958,183 $ 7,587,820 Short-term borrowings 183,472 655,275 Long-term debt 64,126 64,211 Subordinated debt, net 97,943 - Junior subordinated debt 101,196 101,196 Other liabilities 279,181 187,026 Total liabilities $ 9,684,101 $ 8,595,528 Total stockholders' equity $ 1,166,111 $ 1,120,397 Total liabilities and stockholders' equity $ 10,850,212 $ 9,715,925 NBT Bancorp Inc. and Subsidiaries Consolidated Statements of Income (unaudited, dollars in thousands except per share data) Three Months Ended Nine Months Ended September 30 , September 30 , 2020 2019 2020 2019 Interest, fee and dividend income Interest and fees on loans $ 74,998 $ 81,082 $ 230,996 $ 241,674 Securities available for sale 5,603 5,711 16,956 17,664 Securities held to maturity 3,734 4,586 11,751 14,892 Other 659 1,002 2,138 2,728 Total interest, fee and dividend income $ 84,994 $ 92,381 $ 261,841 $ 276,958 Interest expense Deposits $ 4,267 $ 10,745 $ 18,183 $ 29,805 Short-term borrowings 446 1,989 3,215 7,986 Long-term debt 398 498 1,184 1,391 Subordinated debt 1,375 - 1,503 - Junior subordinated debt 565 1,095 2,186 3,404 Total interest expense $ 7,051 $ 14,327 $ 26,271 $ 42,586 Net interest income $ 77,943 $ 78,054 $ 235,570 $ 234,372 Provision for loan losses 3,261 6,324 51,741 19,408 Net interest income after provision for loan losses $ 74,682 $ 71,730 $ 183,829 $ 214,964 Noninterest income Service charges on deposit accounts $ 3,087 $ 4,330 $ 9,613 $ 12,790 ATM and debit card fees 7,194 6,277 19,184 17,958 Retirement plan administration fees 9,685 7,600 26,840 23,170 Wealth management4 7,695 7,630 21,791 21,315 Insurance4 3,742 4,000 11,303 12,291 Bank owned life insurance income 1,255 1,556 4,010 4,119 Net securities gains (losses) 84 4,036 (548 ) 4,024 Other 4,985 4,291 15,968 12,115 Total noninterest income $ 37,727 $ 39,720 $ 108,161 $ 107,782 Noninterest expense Salaries and employee benefits $ 40,451 $ 39,352 $ 120,918 $ 117,275 Occupancy 5,294 5,335 16,354 17,053 Data processing and communications 4,058 4,492 12,370 13,599 Professional fees and outside services 3,394 3,535 10,694 10,562 Equipment 5,073 4,487 14,494 13,762 Office supplies and postage 1,530 1,667 4,621 4,835 FDIC expense (credit) 645 (20 ) 1,949 1,946 Advertising 530 677 1,461 1,821 Amortization of intangible assets 856 874 2,573 2,735 Loan collection and other real estate owned, net 620 976 2,365 2,722 Other 3,857 8,374 14,730 18,130 Total noninterest expense $ 66,308 $ 69,749 $ 202,529 $ 204,440 Income before income tax expense $ 46,101 $ 41,701 $ 89,461 $ 118,306 Income tax expense 10,988 9,322 19,267 26,245 Net income $ 35,113 $ 32,379 $ 70,194 $ 92,061 Earnings Per Share Basic $ 0.80 $ 0.74 $ 1.61 $ 2.10 Diluted $ 0.80 $ 0.73 $ 1.60 $ 2.09 NBT Bancorp Inc. and Subsidiaries Quarterly Consolidated Statements of Income (unaudited, dollars in thousands except per share data) 2020 2019 3rd Q 2nd Q 1st Q 4th Q 3rd Q Interest, fee and dividend income Interest and fees on loans $ 74,998 $ 77,270 $ 78,728 $ 79,800 $ 81,082 Securities available for sale 5,603 5,600 5,753 5,639 5,711 Securities held to maturity 3,734 3,926 4,091 4,213 4,586 Other 659 650 829 924 1,002 Total interest, fee and dividend income $ 84,994 $ 87,446 $ 89,401 $ 90,576 $ 92,381 Interest expense Deposits $ 4,267 $ 4,812 $ 9,104 $ 10,181 $ 10,745 Short-term borrowings 446 972 1,797 1,707 1,989 Long-term debt 398 393 393 484 498 Subordinated debt 1,375 128 - - - Junior subordinated debt 565 695 926 1,021 1,095 Total interest expense $ 7,051 $ 7,000 $ 12,220 $ 13,393 $ 14,327 Net interest income $ 77,943 $ 80,446 $ 77,181 $ 77,183 $ 78,054 Provision for loan losses 3,261 18,840 29,640 6,004 6,324 Net interest income after provision for loan losses $ 74,682 $ 61,606 $ 47,541 $ 71,179 $ 71,730 Noninterest income Service charges on deposit accounts $ 3,087 $ 2,529 $ 3,997 $ 4,361 $ 4,330 ATM and debit card fees 7,194 6,136 5,854 5,935 6,277 Retirement plan administration fees 9,685 9,214 7,941 7,218 7,600 Wealth management4 7,695 6,823 7,273 7,085 7,630 Insurance4 3,742 3,292 4,269 3,479 4,000 Bank owned life insurance income 1,255 1,381 1,374 1,236 1,556 Net securities gains (losses) 84 180 (812 ) 189 4,036 Other 4,985 5,456 5,527 6,738 4,291 Total noninterest income $ 37,727 $ 35,011 $ 35,423 $ 36,241 $ 39,720 Noninterest expense Salaries and employee benefits $ 40,451 $ 39,717 $ 40,750 $ 39,592 $ 39,352 Occupancy 5,294 5,065 5,995 5,653 5,335 Data processing and communications 4,058 4,079 4,233 4,719 4,492 Professional fees and outside services 3,394 3,403 3,897 4,223 3,535 Equipment 5,073 4,779 4,642 4,821 4,487 Office supplies and postage 1,530 1,455 1,636 1,744 1,667 FDIC expense (credit) 645 993 311 - (20 ) Advertising 530 322 609 952 677 Amortization of intangible assets 856 883 834 844 874 Loan collection and other real estate owned, net 620 728 1,017 1,436 976 Other 3,857 3,916 6,957 6,310 8,374 Total noninterest expense $ 66,308 $ 65,340 $ 70,881 $ 70,294 $ 69,749 Income before income tax expense $ 46,101 $ 31,277 $ 12,083 $ 37,126 $ 41,701 Income tax expense 10,988 6,564 1,715 8,166 9,322 Net income $ 35,113 $ 24,713 $ 10,368 $ 28,960 $ 32,379 Earnings Per Share Basic $ 0.80 $ 0.57 $ 0.24 $ 0.66 $ 0.74 Diluted $ 0.80 $ 0.56 $ 0.23 $ 0.66 $ 0.73 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 Q3 - 2020 Q2 - 2020 Q1 - 2020 Q4 - 2019 Q3 - 2019 Assets Short-term interest bearing accounts $ 477,946 0.11 % $ 380,260 0.10 % $ 74,695 1.28 % $ 51,613 2.43 % $ 57,530 1.95 % Securities available for sale1 5 1,137,604 1.96 % 985,561 2.29 % 962,527 2.40 % 942,302 2.37 % 940,256 2.41 % Securities held to maturity1 5 621,812 2.56 % 613,899 2.75 % 622,398 2.81 % 651,305 2.73 % 698,617 2.77 % Investment in FRB and FHLB Banks 29,720 7.08 % 36,604 6.09 % 39,784 5.97 % 37,842 6.37 % 40,525 7.04 % Loans1 6 7,559,218 3.95 % 7,589,032 4.10 % 7,163,114 4.42 % 7,055,288 4.49 % 6,987,476 4.61 % Total interest earning assets $ 9,826,300 3.45 % $ 9,605,356 3.68 % $ 8,862,518 4.07 % $ 8,738,350 4.13 % $ 8,724,404 4.22 % Other assets 967,194 961,807 885,570 861,909 852,616 Total assets $ 10,793,494 $ 10,567,163 $ 9,748,088 $ 9,600,259 $ 9,577,020 Liabilities and stockholders' equity Money market deposit accounts $ 2,364,606 0.28 % $ 2,360,407 0.29 % $ 2,101,306 1.00 % $ 2,057,678 1.16 % $ 2,015,297 1.24 % NOW deposit accounts 1,207,064 0.05 % 1,167,486 0.04 % 1,086,205 0.10 % 1,064,193 0.13 % 1,056,001 0.13 % Savings deposits 1,447,021 0.05 % 1,383,495 0.05 % 1,276,285 0.06 % 1,251,432 0.06 % 1,274,793 0.06 % Time deposits 684,708 1.31 % 760,803 1.48 % 842,989 1.62 % 853,353 1.69 % 893,837 1.75 % Total interest bearing deposits $ 5,703,399 0.30 % $ 5,672,191 0.34 % $ 5,306,785 0.69 % $ 5,226,656 0.77 % $ 5,239,928 0.81 % Short-term borrowings 277,890 0.64 % 427,004 0.92 % 533,516 1.35 % 475,332 1.42 % 490,694 1.61 % Long-term debt 64,137 2.47 % 64,165 2.46 % 64,194 2.46 % 81,613 2.35 % 84,250 2.35 % Subordinated debt, net 97,934 5.59 % 8,633 5.96 % - - - - - - Junior subordinated debt 101,196 2.22 % 101,196 2.76 % 101,196 3.68 % 101,196 4.00 % 101,196 4.29 % Total interest bearing liabilities $ 6,244,556 0.45 % $ 6,273,189 0.45 % $ 6,005,691 0.82 % $ 5,884,797 0.90 % $ 5,916,068 0.96 % Demand deposits 3,111,617 2,887,545 2,398,307 2,406,563 2,389,617 Other liabilities 282,265 271,635 214,495 199,674 185,374 Stockholders' equity 1,155,056 1,134,794 1,129,595 1,109,225 1,085,961 Total liabilities and stockholders' equity $ 10,793,494 $ 10,567,163 $ 9,748,088 $ 9,600,259 $ 9,577,020 Interest rate spread 3.00 % 3.23 % 3.25 % 3.23 % 3.26 % Net interest margin (FTE)1 3.17 % 3.38 % 3.52 % 3.52 % 3.57 % NBT Bancorp Inc. and Subsidiaries Average Year-to-Date Balance Sheets (unaudited, dollars in thousands) Average Yield/ Average Yield/ Balance Interest Rates Balance Interest Rates Nine Months Ended September 30 , 2020 2019 Assets Short-term interest bearing accounts $ 311,577 $ 464 0.20 % $ 30,970 $ 457 1.97 % Securities available for sale1 5 1,028,962 16,956 2.20 % 968,517 17,695 2.44 % Securities held to maturity1 5 619,379 12,562 2.71 % 750,305 15,921 2.84 % Investment in FRB and FHLB Banks 35,349 1,674 6.33 % 45,254 2,271 6.71 % Loans1 6 7,437,566 231,168 4.15 % 6,944,518 241,932 4.66 % Total interest earning assets $ 9,432,833 $ 262,824 3.72 % $ 8,739,564 $ 278,276 4.26 % Other assets 938,296 821,859 Total assets $ 10,371,129 $ 9,561,423 Liabilities and stockholders' equity Money market deposit accounts $ 2,275,765 $ 8,646 0.51 % $ 1,912,572 $ 16,255 1.14 % NOW deposit accounts 1,153,780 548 0.06 % 1,105,919 1,157 0.14 % Savings deposits 1,369,219 553 0.05 % 1,269,723 550 0.06 % Time deposits 762,548 8,436 1.48 % 929,819 11,843 1.70 % Total interest bearing deposits $ 5,561,312 $ 18,183 0.44 % $ 5,218,033 $ 29,805 0.76 % Short-term borrowings 412,312 3,215 1.04 % 607,155 7,986 1.76 % Long-term debt 64,165 1,184 2.46 % 80,162 1,391 2.32 % Subordinated debt, net 35,750 1,503 5.62 % - - - Junior subordinated debt 101,196 2,186 2.89 % 101,196 3,404 4.50 % Total interest bearing liabilities $ 6,174,735 $ 26,271 0.57 % $ 6,006,546 $ 42,586 0.95 % Demand deposits 2,800,297 2,332,965 Other liabilities 256,226 166,537 Stockholders' equity 1,139,871 1,055,375 Total liabilities and stockholders' equity $ 10,371,129 $ 9,561,423 Net interest income (FTE)1 $ 236,553 $ 235,690 Interest rate spread 3.15 % 3.31 % Net interest margin (FTE)1 3.35 % 3.61 % Taxable equivalent adjustment $ 983 $ 1,318 Net interest income $ 235,570 $ 234,372 NBT Bancorp Inc. and Subsidiaries Consolidated Loan Balances (unaudited, dollars in thousands) The following table presents loans by line of business, paycheck protection program loans includes $11.3 million and $14.6 million in unamortized fees as of September 30, 2020 and June 30, 2020 respectively. 2020 2019 3rd Q 2nd Q 1st Q 4th Q 3rd Q Commercial $ 1,297,408 $ 1,318,806 $ 1,338,609 $ 1,302,209 $ 1,317,649 Commercial real estate 2,281,843 2,256,580 2,242,139 2,142,057 2,033,552 Paycheck protection program 514,558 510,097 - - - Residential real estate mortgages 1,448,530 1,460,058 1,446,676 1,445,156 1,416,920 Indirect auto 989,369 1,091,889 1,184,888 1,193,635 1,195,783 Specialty lending 566,973 515,618 539,378 542,063 528,505 Home equity 404,346 415,528 431,536 444,082 452,535 Other consumer 57,616 59,415 64,157 66,896 68,865 Total loans $ 7,560,643 $ 7,627,991 $ 7,247,383 $ 7,136,098 $ 7,013,809 The following table provide loans as a percentage of total loans in industries vulnerable to the COVID-19 pandemic as of September 30, 2020 : Industry % of Total Loans Accommodations 2.5 % Healthcare services and practices 2.1 % Restaurants and entertainment 1.9 % Retailers 1.7 % Automotive 1.3 % Total 9.5 % Allowance for Loan Losses as a Percentage of Loans by Segment7: Incurred CECL 12/31/2019 1/1/2020 3/31/2020 6/30/2020* 9/30/2020* Commercial & industrial 0.96 % 0.98 % 1.43 % 1.25 % 1.34 % Commercial real estate 1.02 % 0.74 % 1.10 % 1.56 % 1.57 % Paycheck protection program 0.00 % 0.00 % 0.00 % 0.01 % 0.01 % Residential real estate 0.27 % 0.83 % 0.99 % 1.13 % 1.21 % Auto 0.83 % 0.78 % 1.08 % 0.99 % 0.92 % Other consumer 3.74 % 3.66 % 4.00 % 5.01 % 4.66 % Total 1.02 % 1.07 % 1.38 % 1.49 % 1.51 % * Excluding PPP loans and related allowance, total allowance to loans was 1.59% and 1.62% as of June 30, 2020 and September 30, 2020 respectively. 1 The following tables provide the Non-GAAP reconciliations for the Non-GAAP measures contained in this release: Non-GAAP measures (unaudited, dollars in thousands) Pre-provision net revenue ("PPNR") 2020 2019 3rd Q 2nd Q 1st Q 4th Q 3rd Q Income before income tax expense $ 46,101 $ 31,277 $ 12,083 $ 37,126 $ 41,701 FTE adjustment 325 329 329 349 374 Provision for loan losses 3,261 18,840 29,640 6,004 6,324 Net securities (gains) losses (84 ) (180 ) 812 (189 ) (4,036 ) Nonrecurring expense - 650 - - 3,800 Unfunded loan commitments reserve - (200 ) 2,000 - - PPNR $ 49,603 $ 50,716 $ 44,864 $ 43,290 $ 48,163 Average Assets $ 10,793,494 $ 10,567,163 $ 9,748,088 $ 9,600,259 $ 9,577,020 Return on Average Assets3 1.29 % 0.94% 0.43% 1.20% 1.34% PPNR Return on Average Assets3 1.83 % 1.93% 1.85% 1.79% 2.00% PPNR is a Non-GAAP financial measure that management believes is useful in evaluating the underlying operating results of the Company excluding the volatility in loan loss provision due to CECL adoption and the impact of the COVID-19 pandemic, net securities gains (losses) and non-recurring income and/or expense. FTE Adjustment 2020 2019 3rd Q 2nd Q 1st Q 4th Q 3rd Q Net interest income $ 77,943 $ 80,446 $ 77,181 $ 77,183 $ 78,054 Add: FTE adjustment 325 329 329 349 374 Net interest income (FTE) $ 78,268 $ 80,775 $ 77,510 $ 77,532 $ 78,428 Average earning assets $ 9,826,300 $ 9,605,356 $ 8,862,518 $ 8,738,350 $ 8,724,404 Net interest margin (FTE)3 3.17 % 3.38% 3.52% 3.52% 3.57% 9 Months ended September 30 , 2020 2019 Net interest income $ 235,570 $ 234,372 Add: FTE adjustment 983 1,318 Net interest income (FTE) $ 236,553 $ 235,690 Average earning assets $ 9,432,833 $ 8,739,564 Net interest margin (FTE)3 3.35 % 3.61% Interest income for tax-exempt securities and loans have been adjusted to a FTE basis using the statutory Federal income tax rate of 21%. Tangible equity to tangible assets 2020 2019 3rd Q 2nd Q 1st Q 4th Q 3rd Q Total equity $ 1,166,111 $ 1,142,652 $ 1,112,179 $ 1,120,397 $ 1,098,601 Intangible assets 293,098 293,954 285,955 286,789 287,633 Total assets $ 10,850,212 $ 10,847,184 $ 9,953,543 $ 9,715,925 $ 9,661,386 Tangible equity to tangible assets 8.27 % 8.04% 8.55% 8.84% 8.65% 1 The following tables provide the Non-GAAP reconciliations for the Non-GAAP measures contained in this release: Non-GAAP measures (unaudited, dollars in thousands) Return on average tangible common equity 2020 2019 3rd Q 2nd Q 1st Q 4th Q 3rd Q Net income $ 35,113 $ 24,713 $ 10,368 $ 28,960 $ 32,379 Amortization of intangible assets (net of tax) 642 662 626 633 656 Net income, excluding intangibles amortization $ 35,755 $ 25,375 $ 10,994 $ 29,593 $ 33,035 Average stockholders' equity $ 1,155,056 $ 1,134,794 $ 1,129,595 $ 1,109,225 $ 1,085,961 Less: average goodwill and other intangibles 293,572 294,423 286,400 287,268 288,077 Average tangible common equity $ 861,484 $ 840,371 $ 843,195 $ 821,957 $ 797,884 Return on average tangible common equity3 16.51 % 12.14% 5.24% 14.28% 16.43% 9 Months ended September 30 , 2020 2019 Net income $ 70,194 $ 92,061 Amortization of intangible assets (net of tax) 1,930 2,051 Net income, excluding intangibles amortization $ 72,124 $ 94,112 Average stockholders' equity $ 1,139,871 $ 1,055,375 Less: average goodwill and other intangibles 291,472 288,967 Average tangible common equity $ 848,399 $ 766,408 Return on average tangible common equity3 11.36 % 16.42% 2 Non-GAAP measure - Stockholders' equity less goodwill and intangible assets divided by common shares outstanding. 3 Annualized. 4 Other financial services revenue previously disclosed and included with Insurance income has been reclassified and combined with Trust income and is disclosed as Wealth management income. 5 Securities are shown at average amortized cost. 6 For purposes of these computations, nonaccrual loans and loans held for sale are included in the average loan balances outstanding. 7 The allowance for loan losses for December 31, 2019 was calculated based on the incurred losses methodology and beginning January 1, 2020 , it was based on the CECL methodology. The risk-based pooling of loans (segments) for incurred and CECL are not consistent. For illustrative purposes only, the loans and related incurred allowance at December 31, 2019 were grouped to conform with the CECL methodology. Source: NBT Bancorp Inc.

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