NORWICH, N.Y., May 21, 2024 (GLOBE NEWSWIRE) -- The Board of Directors of NBT Bancorp Inc. ("NBT" or the "Company") (NASDAQ: NBTB) approved a second-quarter cash dividend of $0.32 per share at a meeting held today. The dividend will be paid on June 17, 2024 to shareholders of record as of June 3, 2024. Corporate Overview NBT Bancorp Inc. is a financial holding company headquartered in Norwich, NY, with total assets of $13.44 billion at March 31, 2024. The Company primarily operates through NBT Bank, N.A., a ...

Kingsley joined NBT in 2021 as Executive Vice President and Chief Financial Officer. He has more than 35 years of experience, including 16 years as a member of the management team at Community Bank System, Inc., where he served as Chief Operating Officer and, prior to that, as Chief Financial Officer. Kingsley started his career with PricewaterhouseCoopers, LLP before joining the Carlisle Companies, Inc., a publicly traded global manufacturer and distributor, where he served in financial and operational lea ...

Financial Performance - Net income for Q1 2024 was $33.8 million, or $0.71 per diluted share, an increase of $3.4 million from Q4 2023 and a slight increase from $33.7 million in Q1 2023[116] - Net income for Q1 2024 was $33.8 million, comparable to Q1 2023, and up $3.4 million from Q4 2023[118] - Diluted earnings per share for Q1 2024 were $0.71, down $0.07 from Q1 2023, and up $0.07 from Q4 2023[118] - Operating net income for Q1 2024 was $32.1 million, or $0.68 per diluted share, compared to $0.88 in Q1 2023 and $0.72 in Q4 2023[120] - Noninterest income for Q1 2024 was $43.2 million, up $5.2 million, or 13.8%, from Q4 2023, and up $6.8 million, or 18.7%, from Q1 2023[118] - Total noninterest income for Q1 2024 was $45.4 million, an increase of $6.9 million, or 17.9%, from the prior quarter and up $14.0 million, or 44.5%, from Q1 2023[130] Asset and Liability Management - Total loans at the end of Q1 2024 were $9.69 billion, up $37.4 million, or 1.6%, annualized from December 31, 2023[118] - Total deposits at the end of Q1 2024 were $11.20 billion, up $226.3 million, or 2.1%, from December 31, 2023[118] - Total assets as of March 31, 2024, were $13.329 billion, down from $13.616 billion at the end of 2023[125] - The Company’s stockholders' equity increased to $1.430 billion as of March 31, 2024, from $1.374 billion at the end of 2023[125] - Average deposits rose by $1.44 billion, or 15.0%, from the same period last year, largely due to $1.31 billion in deposits acquired from Salisbury in Q3 2023[156] Capital Ratios and Equity - The common equity tier 1 capital ratio stood at 11.68% in Q1 2024, compared to 11.57% in Q4 2023[117] - The tangible equity ratio was reported at 7.98% in Q1 2024, up from 7.93% in Q4 2023[117] - The total risk-based capital ratio was 14.87% as of March 31, 2024, compared to 14.75% in the previous quarter and 15.52% a year ago[119] - Stockholders' equity increased by $15.7 million to $1.44 billion at March 31, 2024, representing 10.73% of total assets[162] - The Tier 1 leverage ratio was 10.09% at March 31, 2024, compared to 9.71% at December 31, 2023[165] Credit Quality and Allowance for Losses - The allowance for credit losses totaled $115.3 million at March 31, 2024, compared to $100.3 million at March 31, 2023, reflecting an increase due to acquired Salisbury loans[148] - The provision for loan losses in Q1 2024 was $5.6 million, compared to $3.9 million in Q1 2023 and $5.1 million in Q4 2023[118] - The allowance for credit losses as a percentage of loans was 1.19% at March 31, 2024, compared to 1.21% at March 31, 2023[148] - Net charge-offs totaled $4.7 million during Q1 2024, compared to $3.8 million in Q1 2023[150] - Total nonperforming assets were $37.8 million at March 31, 2024, compared to $37.9 million at December 31, 2023, and $18.7 million at March 31, 2023[153] Interest Income and Margin - The net interest margin (FTE) for Q1 2024 was 3.14%, slightly down from 3.15% in Q4 2023[117] - Net interest income for Q1 2024 was $95.2 million, down $4.0 million, or 4.0%, from Q4 2023, and up $0.1 million, or 0.1%, from Q1 2023[122] - The interest rate spread for Q1 2024 was 2.32%, compared to 2.34% in Q4 2023 and 3.12% in Q1 2023[125] - The Company recognized a gain of $2.3 million from the sale of a previously written-off subordinated debt security in Q1 2024[130] Economic Outlook and Projections - The Company anticipates a Northeast GDP annualized growth starting at approximately 3.3% in Q2 2024, decreasing to 2.8% before increasing to 3.4% by the end of the forecast period[111] - The Company has a downside scenario where national unemployment could peak at 7.7% by Q2 2025, impacting the allowance for credit losses significantly[111] - The effective tax rate for Q1 2024 was 21.7%, down from 22.2% in Q1 2023, due to a higher level of tax-exempt income[132] - The trajectory of net interest income is significantly influenced by inflationary pressures and FOMC monetary policy, with a total increase of 425 bps in 2022 and an additional 100 bps in 2023[174] Liquidity Management - The Company has a remaining available borrowing capacity of $3.13 billion as of March 31, 2024, compared to $2.99 billion at December 31, 2023[178] - The Company continues to monitor liquidity closely due to potential adverse impacts from rising interest rates and increased competition for deposits[179] - The Company has the ability to issue brokered time deposits and borrow against established facilities, providing additional liquidity of $2.03 billion as of March 31, 2024[178] - Approximately $77.1 million of the Bank's total stockholders' equity is available for payment of dividends to the Company without OCC approval as of March 31, 2024[182]

For the quarter ended March 2024, NBT Bancorp (NBTB) reported revenue of $140.57 million, up 11.1% over the same period last year. EPS came in at $0.68, compared to $0.88 in the year-ago quarter.The reported revenue represents a surprise of +4.12% over the Zacks Consensus Estimate of $135.01 million. With the consensus EPS estimate being $0.67, the EPS surprise was +1.49%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street e ...

NBT Bancorp (NBTB) came out with quarterly earnings of $0.68 per share, beating the Zacks Consensus Estimate of $0.67 per share. This compares to earnings of $0.88 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 1.49%. A quarter ago, it was expected that this financial holding company would post earnings of $0.74 per share when it actually produced earnings of $0.72, delivering a surprise of -2.70%.Over the last four quarters, ...

Exhibit 99.1 FOR IMMEDIATE RELEASE ATTENTION: FINANCIAL AND BUSINESS EDITORS Contact: John H. Watt, Jr., President and CEO Scott A. Kingsley, Executive Vice President and CFO NBT Bancorp Inc. 52 South Broad Street Norwich, NY 13815 607-337-6589 NBT BANCORP INC. ANNOUNCES FIRST QUARTER 2024 RESULTS NORWICH, NY (April 22, 2024) – NBT Bancorp Inc. ("NBT" or the "Company") (NASDAQ: NBTB) reported net income and diluted earnings per share for the three months ended March 31, 2024. Net income for the three months ...

PART I [ITEM 1. BUSINESS](index=4&type=section&id=ITEM%201.%20BUSINESS) NBT Bancorp Inc. is a Delaware-incorporated financial holding company offering commercial, retail, and wealth management services primarily in upstate New York and surrounding regions, expanding through the August 2023 Salisbury Bancorp acquisition Company Structure & Financials (December 31, 2023) | Metric | Value | | :----------------------- | :----------------- | | Total Assets | $13.31 billion | | Stockholders' Equity | $1.43 billion | | Incorporation State | Delaware | | Headquarters | Norwich, New York | | Primary Revenue Sources | Management fees and dividends from subsidiaries (Bank, NBT Financial, NBT Holdings) | | Employees (December 31, 2023) | 2,034 full-time equivalent | | Common Stock Trading | NASDAQ Global Select Market (NBTB) | | Stockholders of Record (January 31, 2024) | 5,634 | | Market Value of Voting Stock (June 30, 2023) | $1,320,195,613 | | Shares Outstanding (January 31, 2024) | 47,152,137 | - On August 11, 2023, the Company completed the acquisition of Salisbury Bancorp, Inc. for **$161.7 million** in stock, issuing **4.32 million** shares. This acquisition added approximately **$1.46 billion** of identifiable assets, including **$1.18 billion** of loans and **$1.31 billion** in deposits, expanding the Company's footprint into new markets[18](index=18&type=chunk)[181](index=18&type=chunk) - The Company's business is primarily conducted through NBT Bank, National Association, offering commercial banking, retail banking, and wealth management services. Other key subsidiaries include NBT Financial Services, Inc. (operating EPIC Advisors, Inc. for retirement plan administration) and NBT Holdings, Inc. (operating NBT Insurance Agency, LLC)[11](index=11&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) - NBT Bancorp Inc. is subject to extensive regulation as a registered bank holding company and financial holding company under the BHC Act (supervised by the FRB) and its subsidiary bank (NBT Bank, N.A.) is supervised by the OCC. Having exceeded **$10 billion** in assets, the Company is also subject to CFPB examination authority and the Volcker Rule[50](index=50&type=chunk)[51](index=51&type=chunk)[53](index=53&type=chunk)[68](index=68&type=chunk)[82](index=82&type=chunk) - In 2023, the Company contributed over **$2.0 million** to communities and over **$355,000** to United Way chapters. The NBT CEI-Boulos Impact Fund, a **$10 million** real estate equity investment fund, made its first **$3.84 million** equity investment in the Flanigan Square Transformation Project for affordable housing and a grocery store in Troy, NY[38](index=38&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - The Company offers customer-focused products, including the NBT iSelect Account (certified by Bank On National Account Standards, with over **11,000** accounts opened, featuring no monthly charges or overdraft fees) and a suite of home lending products (FHA, USDA, VA, and in-house programs)[43](index=43&type=chunk)[44](index=44&type=chunk) [ITEM 1A. RISK FACTORS](index=16&type=section&id=ITEM%201A.%20RISK%20FACTORS) NBT Bancorp faces significant risks from macroeconomic downturns, interest rate fluctuations, commercial lending defaults, intense competition, heightened regulatory requirements, operational and cybersecurity threats, and acquisition integration challenges - The Company's financial performance is highly susceptible to adverse macroeconomic conditions (e.g., economic growth declines, inflation, interest rate increases) and specific local economic downturns in its primary market areas, which can impact loan demand, credit quality, and asset values[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) - Variations in interest rates, particularly rapid increases by the Federal Reserve, can negatively affect net interest income by narrowing interest rate spreads and increasing funding costs, potentially leading to customer attrition and reduced loan originations[102](index=102&type=chunk)[103](index=103&type=chunk) - A significant portion of the loan portfolio (approximately **52%** as of December 31, 2023) consists of commercial loans, which carry higher risks of non-payment and loss compared to residential loans. The allowance for loan losses, determined with high subjectivity, may prove insufficient, leading to decreased net income and capital[104](index=104&type=chunk)[106](index=106&type=chunk) - The financial services industry is highly competitive, with many larger competitors possessing greater resources and broader product offerings. Failure to compete effectively on service, market position, product relevance, and technology could adversely affect growth and profitability[107](index=107&type=chunk)[108](index=108&type=chunk) - The Company faces heightened regulatory requirements due to exceeding **$10 billion** in total consolidated assets, including applicability of the Volcker Rule, increased capital/liquidity standards, CFPB examinations, and limits on debit card interchange fees, which may increase compliance costs and impact operations[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - Operational and cybersecurity risks are significant, with potential for disruptions, financial harm, data breaches, and reputational damage from increasingly sophisticated cyber-attacks. The Company also relies on third-party vendors, whose failures could adversely affect operations[112](index=112&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - The recent merger with Salisbury Bancorp, Inc. presents inherent integration challenges related to operations, technology, and corporate cultures, alongside risks of key personnel loss, customer attrition, and increased regulatory scrutiny, which could adversely affect future business and financial results[134](index=134&type=chunk)[135](index=135&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=24&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The Company has no unresolved staff comments from the SEC [ITEM 1C. CYBERSECURITY](index=24&type=section&id=ITEM%201C.%20CYBERSECURITY) NBT Bancorp maintains a robust cyber risk management program, adhering to the NIST Cybersecurity Framework, with continuous investment, staff training, third-party audits, and Board oversight - The Company's cyber risk management program employs a defense-in-depth strategy, combining physical and logical controls, and is built around six foundational control areas: program oversight, safeguards, security awareness, service provider oversight, incident response, and business continuity[24](index=24&type=chunk) - The program is based on recognized best practices and standards, including the National Institute of Standards and Technology (NIST) Cybersecurity Framework, which organizes risks into five categories: identify, protect, detect, respond, and recover[139](index=139&type=chunk) - Cybersecurity governance is overseen by the Risk Management Committee (RMC) of the Board, which receives quarterly reports. The Senior Director of Information Security (DISO) leads the program and the Incident Response Team (IRT), which includes high-ranking executive personnel for cross-functional response[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) - The Company continuously invests in IT security, including end-user training, layered defenses, critical asset protection, and enhanced monitoring. It also engages third-party experts for periodic audits, penetration testing, and assessments to maintain a robust program[141](index=141&type=chunk)[142](index=142&type=chunk) [ITEM 2. PROPERTIES](index=25&type=section&id=ITEM%202.%20PROPERTIES) NBT Bancorp Inc. owns its Norwich, New York headquarters and operates 153 branch locations, with 66 leased, deeming all properties sufficient and adequately insured - The Company owns its headquarters at 52 South Broad Street, Norwich, New York[148](index=148&type=chunk) - As of December 31, 2023, the Company has **153** branch locations, with **66** being leased from third parties and the remainder owned[148](index=148&type=chunk) - The Company believes its offices are sufficient for present operations and all properties are adequately covered by insurance[149](index=149&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=25&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) NBT Bancorp Inc. is not currently involved in any material legal proceedings beyond ordinary business litigation - There are no material legal proceedings, other than ordinary litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of their property is subject[150](index=150&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=25&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) NBT Bancorp Inc. has no mine safety disclosures to report - No mine safety disclosures are applicable[151](index=151&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=26&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) NBT Bancorp Inc. common stock trades on NASDAQ under "NBTB," with 5,634 stockholders as of January 31, 2024, and the Company repurchased 155,500 shares in 2023, authorizing a new program for up to 2,000,000 shares - The common stock of NBT Bancorp Inc. is quoted on the NASDAQ Global Select Market under the symbol "NBTB". The closing price on January 31, 2024, was **$35.57**, with **5,634** stockholders of record[152](index=152&type=chunk) - The Company's ability to pay dividends to stockholders depends primarily on dividends received from its subsidiaries, which are subject to OCC regulatory restrictions. As of December 31, 2023, the Bank had **$106.6 million** available for dividend payments to the Company without prior OCC approval[155](index=155&type=chunk) Stock Repurchase Program Activity (Year Ended December 31, 2023) | Metric | Value | | :-------------------------------- | :------------------- | | Shares Purchased | 155,500 | | Average Price Per Share | $31.79 | | Total Value of Repurchases | $4.9 million | | New Program Authorization (December 18, 2023) | Up to 2,000,000 shares | | New Program Expiration | December 31, 2025 | | Q4 2023 Purchases | None | Cumulative Total Stockholder Return (December 31, 2018 = $100) | Index | 12/31/18 | 12/31/19 | 12/31/20 | 12/31/21 | 12/31/22 | 12/31/23 | | :----------------------- | :------- | :------- | :------- | :------- | :------- | :------- | | NBT Bancorp | $100.00 | $120.59 | $98.73 | $122.06 | $141.64 | $141.51 | | KBW Regional Bank Index | $100.00 | $123.87 | $113.11 | $154.57 | $143.87 | $143.30 | | NASDAQ Composite Index | $100.00 | $136.73 | $198.33 | $242.38 | $163.58 | $236.70 | [ITEM 6. [RESERVED]](index=27&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved and contains no information [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=28&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) NBT Bancorp Inc. reported 2023 net income of **$118.8 million** ($2.65 diluted EPS), a decrease from 2022, driven by acquisition expenses and securities losses, while net interest income increased by **$16.0 million** and total loans grew **18.4%** to **$9.65 billion** Key Financial Highlights (Years Ended December 31) | Metric | 2023 | 2022 | 2021 | | :------------------------------------------------- | :----------- | :----------- | :----------- | | Net Income (in thousands) | $118,782 | $151,995 | $154,885 | | Diluted Earnings Per Share (EPS) | $2.65 | $3.52 | $3.54 | | Operating Net Income (Non-GAAP, in thousands) | $144,747 | $153,618 | $157,739 | | Operating Diluted EPS (Non-GAAP) | $3.23 | $3.56 | $3.61 | | Return on Average Assets | 0.95% | 1.29% | 1.33% | | Return on Average Equity | 9.34% | 12.67% | 12.71% | | Net Interest Margin (FTE) | 3.29% | 3.34% | 3.03% | | Equity to Assets | 10.71% | 10.00% | 10.41% | | Tangible Equity Ratio (Non-GAAP) | 7.93% | 7.73% | 8.20% | | Book Value Per Share | $30.26 | $27.38 | $28.97 | | Tangible Book Value Per Share (Non-GAAP) | $21.72 | $20.65 | $22.26 | - Net interest income for 2023 increased by **$16.0 million** (**4.4%**) to **$378.2 million** compared to 2022, primarily driven by the Salisbury acquisition and organic loan growth. However, the FTE net interest margin decreased by **5 basis points** to **3.29%** due to a significant increase in interest expense on deposits and borrowings (up **560.7%** YoY) outpacing the increase in interest income[194](index=194&type=chunk)[195](index=195&type=chunk) Loan Portfolio Composition (December 31, 2023 vs. 2022) | Loan Category | 2023 (in thousands) | 2022 (in thousands) | YoY Change (in thousands) | | :------------------------ | :-------------------- | :-------------------- | :------------------------ | | Commercial & Industrial | $1,353,725 | $1,265,082 | Up $88,643 | | Commercial Real Estate | $3,626,910 | $2,807,941 | Up $818,969 | | Residential Real Estate | $2,125,804 | $1,649,870 | Up $475,934 | | Indirect Auto | $1,130,132 | $989,587 | Up $140,545 | | Residential Solar | $917,755 | $856,798 | Up $60,957 | | Home Equity | $337,214 | $314,124 | Up $23,090 | | Other Consumer | $158,650 | $265,796 | Down $107,146 | | **Total Loans** | **$9,650,713** | **$8,150,147** | **Up $1,500,566 (18.4%)** | Noninterest Income (Years Ended December 31, in thousands) | Category | 2023 | 2022 | YoY Change | | :-------------------------------- | :----------- | :----------- | :----------- | | Service charges on deposit accounts | $15,425 | $14,630 | Up $795 | | Card services income | $20,829 | $29,058 | Down $8,229 | | Retirement plan administration fees | $47,221 | $48,112 | Down $891 | | Wealth management | $34,763 | $33,311 | Up $1,452 | | Insurance services | $15,667 | $14,696 | Up $971 | | Bank owned life insurance income | $6,750 | $6,044 | Up $706 | | Net securities (losses) gains | $(9,315) | $(1,131) | Down $8,184 | | Other | $10,838 | $10,858 | Down $20 | | **Total Noninterest Income** | **$142,178** | **$155,578** | **Down $13,400 (8.6%)** | Noninterest Expense (Years Ended December 31, in thousands) | Category | 2023 | 2022 | YoY Change | | :-------------------------------- | :----------- | :----------- | :----------- | | Salaries and employee benefits | $194,250 | $187,830 | Up $6,420 | | Technology and data services | $38,163 | $35,712 | Up $2,451 | | Occupancy | $28,408 | $26,282 | Up $2,126 | | Professional fees and outside services | $17,601 | $16,810 | Up $791 | | Office supplies and postage | $6,917 | $6,140 | Up $777 | | FDIC assessment | $6,257 | $3,197 | Up $3,060 | | Advertising | $3,054 | $2,822 | Up $232 | | Amortization of intangible assets | $4,734 | $2,263 | Up $2,471 | | Loan collection and OREO, net | $2,618 | $2,647 | Down $29 | | Acquisition expenses | $9,978 | $967 | Up $9,011 | | Other | $29,684 | $19,795 | Up $9,889 | | **Total Noninterest Expense** | **$341,664** | **$304,465** | **Up $37,199 (12.2%)** | Credit Quality Metrics (as of December 31) | Metric | 2023 | 2022 | | :--------------------------------------- | :----------- | :----------- | | Total Nonperforming Assets | $37.9 million | $21.2 million | | Total Nonperforming Loans | $37.9 million | $21.1 million | | Nonperforming Loans to Total Loans | 0.39% | 0.26% | | Allowance for Loan Losses (ACL) | $114.4 million | $100.8 million | | ACL to Total Loans | 1.19% | 1.24% | | Net Charge-offs to Average Loans | 0.19% | 0.11% | | Provision for Loan Losses | $25.3 million | $17.1 million | - The Company's 2024 outlook anticipates potential Federal Funds rate reductions, supporting a view of reduced recession risk. Strategic focus includes continued growth in New England markets, diversification of revenue sources, improving operating efficiencies, and investing in technology, with the Salisbury merger expected to provide incremental growth[187](index=187&type=chunk)[189](index=189&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK](index=53&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK) NBT Bancorp Inc. identifies interest rate risk as its most significant market risk, managed by ALCO through investment and funding strategies, with current interest rate sensitivity near neutral and projected net interest income changes within policy limits - Interest rate risk is the most significant market risk, affecting net interest income based on how interest-bearing liabilities and earning assets mature or reprice[278](index=278&type=chunk)[279](index=279&type=chunk) - The Company's Asset Liability Committee (ALCO) manages interest rate risk through monthly reviews, loan and deposit pricing strategies, and investment/funding strategies, aiming to minimize net interest margin compression[280](index=280&type=chunk)[281](index=281&type=chunk) - The primary tool for managing interest rate risk is earnings at risk modeling (interest rate sensitivity analysis), which simulates changes in net interest income under various interest rate scenarios (e.g., **+200 bps**, **+100 bps**, **-200 bps**)[282](index=282&type=chunk)[283](index=283&type=chunk) Interest Rate Sensitivity Analysis (December 31, 2023 Balance Sheet, 12-month period) | Change in Interest Rates (bps) | Percent Change in Net Interest Income | | :----------------------------- | :---------------------------------- | | +200 | (0.06%) | | +100 | 0.27% | | -200 | (0.36%) | - The Company's interest rate sensitivity has migrated to a near neutral position, with projected net interest income changes within the internal policy risk limit of not more than a **7.5%** reduction[283](index=283&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=54&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the Company's audited consolidated financial statements for 2021-2023, with an unqualified opinion from KPMG LLP, and detailed notes on accounting policies, acquisitions, securities, loans, credit quality, and regulatory capital - KPMG LLP issued an unqualified opinion on the Company's consolidated financial statements for the three-year period ended December 31, 2023, and on the effectiveness of its internal control over financial reporting as of December 31, 2023[286](index=286&type=chunk)[287](index=287&type=chunk) - Critical audit matters identified include the assessment of the allowance for credit losses on loans evaluated on a collective basis and the fair value measurement of acquired loans in the Salisbury Bancorp, Inc. business combination, both involving significant measurement uncertainty and complex auditor judgment[291](index=291&type=chunk)[295](index=295&type=chunk) Consolidated Balance Sheet Highlights (as of December 31, in thousands) | Metric | 2023 | 2022 | | :------------------------------------ | :----------- | :----------- | | Total Assets | $13,309,040 | $11,739,296 | | Net Loans | $9,536,313 | $8,049,347 | | Total Deposits | $10,968,994 | $9,495,933 | | Total Liabilities | $11,883,349 | $10,565,742 | | Total Stockholders' Equity | $1,425,691 | $1,173,554 | Consolidated Statements of Income Highlights (Years Ended December 31, in thousands) | Metric | 2023 | 2022 | 2021 | | :------------------------------------ | :----------- | :----------- | :----------- | | Net Interest Income | $378,219 | $362,190 | $321,088 | | Provision for Loan Losses | $25,274 | $17,147 | $(8,257) | | Total Noninterest Income | $142,178 | $155,578 | $157,794 | | Total Noninterest Expense | $341,664 | $304,465 | $287,281 | | Net Income | $118,782 | $151,995 | $154,885 | | Diluted EPS | $2.65 | $3.52 | $3.54 | - The Company adopted ASU 2022-02 (eliminating TDR recognition) on January 1, 2023, resulting in a **$0.5 million** net increase to retained earnings. New ASUs on disclosure improvements and income tax disclosures are issued but not yet adopted[390](index=390&type=chunk)[391](index=391&type=chunk)[392](index=392&type=chunk) - As of December 31, 2023, the Company's total AFS securities (fair value) were **$1.43 billion** with **$184.3 million** in gross unrealized losses, and HTM securities (amortized cost) were **$905.3 million** with **$91.0 million** in gross unrealized losses. No allowance for credit losses was recorded on securities, as unrealized losses were primarily due to interest rate changes, not credit quality[410](index=410&type=chunk)[413](index=413&type=chunk)[419](index=419&type=chunk)[420](index=420&type=chunk)[421](index=421&type=chunk) - The Company and NBT Bank both meet all regulatory capital adequacy requirements as of December 31, 2023, qualifying as "well-capitalized" under the regulatory framework, with capital ratios (Tier 1 Leverage, CET1, Tier 1 Risk-Based, Total Capital) exceeding minimum thresholds and the capital conservation buffer[513](index=513&type=chunk)[514](index=514&type=chunk)[516](index=516&type=chunk) [1. Summary of Significant Accounting Policies](index=63&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the Company's critical accounting estimates, consolidation principles, security classifications, loan nonaccrual policies, goodwill impairment testing, and revenue recognition from customer contracts - The Company's accounting policies conform to GAAP, with critical accounting estimates including the allowance for credit losses (ACL) and the determination of fair values for acquired assets and assumed liabilities in business combinations[164](index=164&type=chunk)[165](index=165&type=chunk)[309](index=309&type=chunk) - The Company consolidates its wholly-owned subsidiaries, but certain variable interest entities (VIEs) like the Trusts (CNBF Capital Trust I, NBT Statutory Trust I & II, Alliance Financial Capital Trust I & II) are not included in consolidated financial statements as the Company is not the primary beneficiary[312](index=312&type=chunk)[313](index=313&type=chunk) - Securities are classified as held to maturity (HTM) at amortized cost, available for sale (AFS) at fair value (unrealized gains/losses in AOCI), or equity securities at fair value (unrealized gains/losses in income) or cost for non-marketable ones[316](index=316&type=chunk) - Loans are generally placed on nonaccrual status when principal or interest payments are **90 days** past due or collectability is in doubt. With the adoption of ASU 2022-02, the recognition of troubled debt restructurings (TDRs) was eliminated, and loan modifications to borrowers experiencing financial difficulties are now evaluated[325](index=325&type=chunk)[327](index=327&type=chunk) - Goodwill is not amortized but tested annually for impairment (June 30 for insurance/retirement services, December 31 for the Bank). Other intangible assets with finite lives are amortized over their useful lives (**1 to 20 years**)[354](index=354&type=chunk)[356](index=356&type=chunk) - Revenue from contracts with customers (ASC 606) applies to service charges on deposit accounts, card services income, retirement plan administration fees, wealth management, insurance services, and other miscellaneous revenue streams, with recognition typically at a point in time as services are rendered[378](index=378&type=chunk)[379](index=379&type=chunk)[380](index=380&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk)[383](index=383&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk) [2. Recent Accounting Pronouncements](index=73&type=section&id=2.%20Recent%20Accounting%20Pronouncements) The Company adopted ASU 2022-02 on January 1, 2023, and notes new accounting standards issued but not yet adopted, which are not expected to have a material financial impact - The Company adopted ASU 2022-02, "Financial Instruments - CECL Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures," on January 1, 2023, using the modified retrospective method, resulting in a net increase to retained earnings of **$0.5 million**[390](index=390&type=chunk) - New accounting standards issued but not yet adopted include ASU 2023-06 (Disclosure Improvements) and ASU 2023-09 (Improvements to Income Tax Disclosures), effective for the Company on the earlier of SEC removal of disclosure requirements or June 30, 2027, and January 1, 2025, respectively. Neither is expected to have a material financial impact beyond disclosure requirements[391](index=391&type=chunk)[392](index=392&type=chunk) [3. Acquisitions](index=74&type=section&id=3.%20Acquisitions) NBT Bancorp Inc. completed the acquisition of Salisbury Bancorp, Inc. for **$161.7 million** in stock on August 11, 2023, recognizing **$79.7 million** in goodwill and establishing a **$14.5 million** allowance for acquired loans - On August 11, 2023, NBT Bancorp Inc. completed the acquisition of Salisbury Bancorp, Inc. for **$161.7 million** in stock, issuing **4.32 million** shares. This merger expanded the Company's presence in Massachusetts, New York, and Connecticut[393](index=393&type=chunk)[395](index=395&type=chunk) Salisbury Bancorp, Inc. Acquisition - Fair Value of Assets Acquired and Liabilities Assumed (August 11, 2023, in thousands) | Category | Amount | | :---------------------------------------------------------- | :----------- | | **Consideration:** | | | Cash paid to shareholders (fractional shares) | $15 | | Common stock issuance | $161,723 | | **Total Net Consideration** | **$161,738** | | **Identifiable Assets Acquired:** | | | Cash and cash equivalents | $48,665 | | Securities available for sale | $122,667 | | Loans, net of allowance for credit losses on PCD loans | $1,174,237 | | Premises and equipment, net | $13,026 | | Core deposit intangibles | $31,188 | | Wealth management customer intangible | $4,654 | | Bank owned life insurance | $30,315 | | Other assets | $37,631 | | **Total Identifiable Assets Acquired** | **$1,462,383** | | **Liabilities Assumed:** | | | Deposits | $(1,308,976) | | Borrowings | $(55,461) | | Other liabilities | $(15,949) | | **Total Liabilities Assumed** | **$(1,380,386)** | | **Total Identifiable Assets, Net** | **$81,997** | | **Goodwill** | **$79,741** | - Goodwill of **$79.7 million** was recognized from the Salisbury acquisition, largely representing expected synergies and economies of scale. Acquisition-related expenses totaled **$10.0 million** in 2023 and **$1.0 million** in 2022[393](index=393&type=chunk)[405](index=405&type=chunk) - The fair value of acquired loans was determined using a discounted cash flow methodology, with a **$14.5 million** allowance established for acquired Salisbury loans, including **$5.8 million** for purchase credit deteriorated (PCD) loans and **$8.8 million** for non-PCD loans recognized through the provision for loan losses[181](index=181&type=chunk)[404](index=404&type=chunk) - In July 2023, the Company also acquired certain assets of Retirement Direct, LLC for **$2.8 million**, recognizing **$0.9 million** in goodwill[408](index=408&type=chunk) [4. Securities](index=77&type=section&id=4.%20Securities) This section details the Company's available-for-sale and held-to-maturity securities portfolios, including unrealized gains and losses, and discusses the absence of credit loss allowances on these securities Available for Sale (AFS) Securities (as of December 31, 2023, in thousands) | Category | Amortized Cost | Fair Value | Unrealized Gains | Unrealized Losses | | :------------------------------------ | :--------------- | :----------- | :--------------- | :---------------- | | U.S. treasury | $133,302 | $125,024 | $- | $(8,278) | | Federal agency | $248,384 | $214,740 | $- | $(33,644) | | State & municipal | $96,251 | $86,306 | $11 | $(9,956) | | Mortgage-backed | $473,813 | $422,268 | $21 | $(51,565) | | Collateralized mortgage obligations | $614,886 | $541,544 | $15 | $(73,357) | | Corporate | $48,442 | $40,976 | $- | $(7,466) | | **Total AFS securities** | **$1,615,078** | **$1,430,858** | **$47** | **$(184,267)** | Held to Maturity (HTM) Securities (as of December 31, 2023, in thousands) | Category | Amortized Cost | Fair Value | Unrealized Gains | Unrealized Losses | | :------------------------------------ | :--------------- | :----------- | :--------------- | :---------------- | | Federal agency | $100,000 | $82,216 | $- | $(17,784) | | Mortgage-backed | $245,806 | $213,630 | $3 | $(32,179) | | Collateralized mortgage obligations | $251,335 | $228,463 | $57 | $(22,929) | | State & municipal | $308,126 | $290,215 | $211 | $(18,122) | | **Total HTM securities** | **$905,267** | **$814,524** | **$271** | **$(91,014)** | - No allowance for credit losses was recorded on AFS or HTM securities as of December 31, 2023 and 2022, as unrealized losses were primarily due to changes in interest rates rather than credit quality, and the Company does not intend or expect to be required to sell these securities before recovery of their amortized cost basis[411](index=411&type=chunk)[420](index=420&type=chunk)[421](index=421&type=chunk) - During 2023, the Company incurred **$4.5 million** in gross realized losses from the sale of two subordinated debt securities held in the AFS portfolio and a **$5.0 million** loss from the write-off of a subordinated debt security of a failed financial institution[412](index=412&type=chunk) - AFS and HTM securities with amortized costs totaling **$2.03 billion** at December 31, 2023, were pledged to secure public deposits and for other legal purposes[415](index=415&type=chunk) [5. Loans](index=80&type=section&id=5.%20Loans) This section provides a summary of the Company's loan portfolio by category, including commercial, real estate, and consumer loans, and details loans serviced for third parties and related parties Summary of Loans by Category (as of December 31, in thousands) | Category | 2023 | 2022 | | :------------------------ | :----------- | :----------- | | Commercial & industrial | $1,354,248 | $1,266,031 | | Commercial real estate | $3,626,910 | $2,807,941 | | Residential real estate | $2,125,804 | $1,649,870 | | Indirect auto | $1,130,132 | $989,587 | | Residential solar | $917,755 | $856,798 | | Home equity | $337,214 | $314,124 | | Other consumer | $158,650 | $265,796 | | **Total loans** | **$9,650,713** | **$8,150,147** | - The total amount of loans serviced by the Company for unrelated third parties was approximately **$856.9 million** at December 31, 2023, up from **$592.7 million** in 2022[423](index=423&type=chunk) - As of December 31, 2023, the Company serviced **$26.4 million** of agricultural loans sold with recourse, for which no reserve is considered necessary due to sufficient collateral and government guarantees[424](index=424&type=chunk) Loans to Related Parties (in thousands) | Metric | 2023 | 2022 | | :------------------------------------ | :----------- | :----------- | | Balance at January 1 | $2,516 | $3,292 | | New loans | $705 | $576 | | Repayments | $(2,134) | $(1,315) | | **Balance at December 31** | **$1,087** | **$2,516** | [6. Allowance for Credit Losses and Credit Quality of Loans](index=81&type=section&id=6.%20Allowance%20for%20Credit%20Losses%20and%20Credit%20Quality%20of%20Loans) The allowance for credit losses totaled **$114.4 million** at December 31, 2023, representing **1.19%** of total loans, with the increase primarily due to the Salisbury acquisition and CECL methodology - The allowance for credit losses (ACL) totaled **$114.4 million** at December 31, 2023, representing **1.19%** of total loans, compared to **$100.8 million** (**1.24%** of total loans) at December 31, 2022[427](index=427&type=chunk)[247](index=247&type=chunk) - The increase in ACL from 2022 to 2023 was primarily due to the **$14.5 million** allowance for acquired Salisbury loans, which included **$8.8 million** for non-PCD loans recognized through the provision for loan losses and **$5.8 million** for PCD loans reclassified from loans[247](index=247&type=chunk)[435](index=435&type=chunk) - The CECL methodology for estimating ACL incorporates a **6-quarter** forecast period with probabilistically weighted economic outlooks (**70%** baseline, **30%** downside at Dec 31, 2023) and a **4-quarter** reversion to long-term averages, along with qualitative adjustments for factors not captured by the model[175](index=175&type=chunk)[428](index=428&type=chunk)[429](index=429&type=chunk) Allowance for Credit Losses Activity (Years Ended December 31, in thousands) | Metric | 2023 | 2022 | 2021 | | :------------------------------------ | :----------- | :----------- | :----------- | | Balance at January 1 (adjusted) | $100,152 | $92,000 | $110,000 | | Allowance for credit loss on PCD acquired loans | $5,772 | $- | $- | | Loans charged-off | $(26,778) | $(18,643) | $(20,106) | | Recoveries | $9,980 | $10,296 | $10,363 | | Net loans charged-off | $(16,798) | $(8,347) | $(9,743) | | Provision for loan losses | $25,274 | $17,147 | $(8,257) | | **Balance at December 31** | **$114,400** | **$100,800** | **$92,000** | Nonperforming Loans (as of December 31, in thousands) | Category | 2023 | 2022 | | :------------------------------------ | :----------- | :----------- | | Total Nonaccrual Loans | $34,213 | $17,233 | | Loans over 90 days past due and still accruing | $3,661 | $3,823 | | **Total Nonperforming Loans** | **$37,874** | **$21,056** | | OREO | $- | $105 | | **Total Nonperforming Assets** | **$37,874** | **$21,161** | - The Company's internal loan grading system for Commercial & Industrial (C&I) and Commercial Real Estate (CRE) loans includes categories such as Doubtful, Substandard, Special Mention, and Pass, based on financial strength, repayment sources, and economic factors. Consumer and Residential loans are graded as Nonperforming or Performing[439](index=439&type=chunk)[440](index=440&type=chunk)[441](index=441&type=chunk)[442](index=442&type=chunk)[443](index=443&type=chunk)[444](index=444&type=chunk)[445](index=445&type=chunk)[446](index=446&type=chunk)[447](index=447&type=chunk)[448](index=448&type=chunk) Loan Modifications to Borrowers Experiencing Financial Difficulties (Year Ended December 31, 2023) | Loan Type | Type of Concession | Amortized Cost (in thousands) | | :---------------- | :------------------------------------ | :---------------------------- | | Residential | Interest Rate Reduction | $174 | | Residential | Term Extension | $311 | | Residential | Combination - Term Extension and Interest Rate Reduction | $160 | [7. Premises, Equipment and Leases](index=90&type=section&id=7.%20Premises,%20Equipment%20and%20Leases) This section details the Company's net premises and equipment, totaling **$80.7 million** at December 31, 2023, and outlines operating lease assets and liabilities, including future minimum rental commitments Premises and Equipment, Net (as of December 31, in thousands) | Category | 2023 | 2022 | | :------------------------------------ | :----------- | :----------- | | Land, buildings and improvements | $146,564 | $121,156 | | Furniture and equipment | $96,928 | $68,653 | | Premises and equipment before accumulated depreciation | $243,492 | $189,809 | | Less: Accumulated depreciation | $(162,817) | $(120,762) | | **Total premises and equipment, net** | **$80,675** | **$69,047** | - As of December 31, 2023, operating lease Right-of-Use (ROU) assets were **$26.7 million** and operating lease liabilities were **$28.2 million**. The total operating lease cost for 2023 was **$9.4 million**[465](index=465&type=chunk)[466](index=466&type=chunk) Future Minimum Rental Commitments for Non-Cancelable Operating Leases (as of December 31, 2023, in thousands) | Year | Amount | | :-------------------- | :----------- | | 2024 | $7,102 | | 2025 | $5,778 | | 2026 | $4,856 | | 2027 | $4,065 | | 2028 | $2,739 | | Thereafter | $7,528 | | **Total Lease Payments** | **$32,068** | | Less: interest | $(3,842) | | **Present Value of Lease Liabilities** | **$28,226** | [8. Goodwill and Other Intangible Assets](index=91&type=section&id=8.%20Goodwill%20and%20Other%20Intangible%20Assets) Goodwill increased to **$361.9 million** at December 31, 2023, primarily due to acquisitions, while core deposit and other intangible assets totaled **$40.4 million** net of amortization Goodwill (in thousands) | Metric | Amount | | :-------------------- | :----------- | | January 1, 2023 | $281,204 | | Goodwill acquired | $80,647 | | **December 31, 2023** | **$361,851** | Core Deposit and Other Intangible Assets (as of December 31, 2023, in thousands) | Category | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | | :------------------------------------ | :-------------------- | :----------------------- | :------------------ | | Core deposit intangibles | $31,188 | $2,363 | $28,825 | | Identified intangible assets | $31,826 | $20,208 | $11,618 | | **Total intangibles** | **$63,014** | **$22,571** | **$40,443** | - Amortization expense on intangible assets with definite useful lives totaled **$4.7 million** for 2023, **$2.3 million** for 2022, and **$2.8 million** for 2021. No impairment of goodwill or intangible assets was recorded during these periods[471](index=471&type=chunk)[472](index=472&type=chunk) [9. Deposits](index=92&type=section&id=9.%20Deposits) This section provides the maturity distribution of time deposits, which totaled **$1.32 billion** at December 31, 2023, with a significant increase in large time deposits Maturity Distribution of Time Deposits (as of December 31, 2023, in thousands) | Maturity | Amount | | :-------------------------- | :----------- | | Within one year | $1,206,689 | | After one but within two years | $57,989 | | After two but within three years | $32,950 | | After three but within four years | $19,217 | | After four but within five years | $7,209 | | After five years | $655 | | **Total** | **$1,324,709** | - Time deposits of **$250,000** or more aggregated **$263.1 million** at December 31, 2023, a significant increase from **$48.4 million** at December 31, 2022[473](index=473&type=chunk) [10. Borrowings](index=92&type=section&id=10.%20Borrowings) The Company's short-term borrowings totaled **$386.7 million** at December 31, 2023, with long-term debt of **$29.8 million**, and subordinated and junior subordinated debt totaling **$119.7 million** and **$101.2 million**, respectively Short-Term Borrowings (as of December 31, in thousands) | Metric | 2023 | 2022 | | :------------------------------------ | :----------- | :----------- | | Federal funds purchased (year-end balance) | $- | $60,000 | | Securities sold under repurchase agreements (year-end balance) | $93,651 | $86,012 | | Other short-term borrowings (year-end balance) | $293,000 | $439,000 | | **Total Short-Term Borrowings** | **$386,651** | **$585,012** | - The Company had unused lines of credit with the FHLB and access to brokered deposits totaling approximately **$2.87 billion** at December 31, 2023, available for short-term financing[476](index=476&type=chunk) Long-Term Debt (as of December 31, in thousands) | Maturity | Amount | Weighted Average Rate | | :-------------------- | :----------- | :-------------------- | | 2025 | $26,603 | 4.35% | | 2031 | $3,193 | 2.45% | | **Total** | **$29,796** | | - Subordinated debt, net, totaled **$119.7 million** at December 31, 2023. This includes **$100.0 million** of **5.00%** fixed-to-floating rate notes due 2030 (issued June 2020) and **$25.0 million** of **3.50%** fixed-to-floating rate notes due 2031 (acquired from Salisbury acquisition)[479](index=479&type=chunk)[481](index=481&type=chunk)[482](index=482&type=chunk) - Junior subordinated debt totaled **$101.2 million** at December 31, 2023, held by five business trusts. **$97 million** of these trust preferred securities are included in the Company's Tier 1 capital for regulatory purposes, grandfathered under the Dodd-Frank Act[483](index=483&type=chunk)[485](index=485&type=chunk)[488](index=488&type=chunk) [11. Income Taxes](index=95&type=section&id=11.%20Income%20Taxes) Total income tax expense was **$34.7 million** in 2023, with an effective tax rate of **22.6%**, and the net deferred tax asset increased to **$103.2 million** Income Tax Expense (Years Ended December 31, in thousands) | Category | 2023 | 2022 | 2021 | | :-------------------- | :----------- | :----------- | :----------- | | Current Federal | $22,829 | $51,077 | $35,483 | | Current State | $5,890 | $12,934 | $8,626 | | Deferred Federal | $4,593 | $(15,862) | $507 | | Deferred State | $1,365 | $(3,988) | $357 | | **Total income tax expense** | **$34,677** | **$44,161** | **$44,973** | Net Deferred Tax Asset (as of December 31, in thousands) | Metric | 2023 | 2022 | | :-------------------- | :----------- | :----------- | | Total deferred tax assets | $151,769 | $136,147 | | Total deferred tax liabilities | $48,558 | $38,827 | | **Net deferred tax asset** | **$103,211** | **$97,320** | - The effective tax rate was **22.6%** in 2023, compared to **22.5%** in 2022. The Company does not expect the Inflation Reduction Act (IRA) to have a material impact[227](index=227&type=chunk)[228](index=228&type=chunk) - As of December 31, 2023, the Company's gross unrecognized tax benefits (UTBs) totaled **$2.88 million**. The Company is no longer subject to U.S. Federal tax examination for years prior to 2020, but New York State is auditing tax years 2017 to 2019[491](index=491&type=chunk)[492](index=492&type=chunk) [12. Employee Benefit Plans](index=96&type=section&id=12.%20Employee%20Benefit%20Plans) The Company's defined benefit pension plan was overfunded by **$44.2 million** at December 31, 2023, while other post-retirement benefits were underfunded by **$4.7 million** - The Company maintains a qualified, noncontributory defined benefit pension plan and provides supplemental employee retirement plans and post-retirement healthcare benefits. The pension plan was overfunded by **$44.2 million** at December 31, 2023, while other post-retirement benefits were underfunded by **$4.7 million**[493](index=493&type=chunk)[495](index=495&type=chunk)[496](index=496&type=chunk) Pension Plan Asset Allocation (as a percentage of assets) | Category | Target 2023 | Actual 2023 | Actual 2022 | | :-------------------- | :---------- | :---------- | :---------- | | Cash and cash equivalents | 0 - 15% | 2% | 3% | | Fixed income securities | 30 - 60% | 38% | 38% | | Equities | 40 - 70% | 60% | 59% | | **Total** | | **100%** | **100%** | - The expected long-term rate-of-return on plan assets was **6.7%** for both 2023 and 2022. Employer contributions to the 401(k) Plan were **$4.4 million** in 2023[504](index=504&type=chunk)[505](index=505&type=chunk) [13. Stock-Based Compensation](index=100&type=section&id=13.%20Stock-Based%20Compensation) The Company recognized **$5.1 million** in stock-based compensation expense in 2023, with **$5.4 million** in unrecognized costs related to restricted stock units - The Company recognized **$5.1 million** in stock-based compensation expense for the year ended December 31, 2023, related to equity-based awards granted under the NBT Bancorp Inc. 2018 Omnibus Incentive Plan[507](index=507&type=chunk)[508](index=508&type=chunk) - Unrecognized compensation cost related to restricted stock units totaled **$5.4 million** at December 31, 2023, to be recognized over a weighted average period of **1.4 years**[508](index=508&type=chunk) Unvested Restricted Stock Units (as of December 31, 2023) | Metric | Number of Shares | Weighted Average Grant Date Fair Value | | :-------------------------- | :--------------- | :----------------------------------- | | Unvested at January 1, 2023 | 532,372 | $32.15 | | Forfeited | (4,597) | $33.85 | | Vested | (126,312) | $31.41 | | Granted | 139,187 | $33.73 | | **Unvested at December 31, 2023** | **540,650** | **$32.72** | - As of December 31, 2023, there were **5,350** stock options outstanding with a weighted average exercise price of **$33.24** and a remaining contractual term of **2.50 years**. No stock-based compensation expense was recognized for stock option awards in 2023, 2022, or 2021[508](index=508&type=chunk) - The Company has **182,418** securities remaining available to be granted under the Stock Plan at December 31, 2023[509](index=509&type=chunk) [14. Stockholders' Equity](index=101&type=section&id=14.%20Stockholders'%20Equity) Total accumulated other comprehensive loss was **$(160.9 million)** at December 31, 2023, and the Company repurchased **155,500** shares for **$4.9 million** in 2023 Components of Accumulated Other Comprehensive Income (Loss) (AOCI, as of December 31, in thousands) | Component | 2023 | 2022 | | :---------------------------------------------------------- | :----------- | :----------- | | Unrecognized prior service cost and net actuarial (losses) on pension plans | $(21,983) | $(26,435) | | Unrealized net holding (losses) on AFS securities | $(138,951) | $(163,599) | | **Total AOCI** | **$(160,934)** | **$(190,034)** | - As of December 31, 2023, approximately **$106.6 million** of the Bank's total stockholders' equity was available for dividend payments to the Company without prior OCC approval[510](index=510&type=chunk) - The Company repurchased **155,500** shares of its common stock in 2023 for **$4.9 million** at an average price of **$31.79**. An amended share repurchase program, authorized on December 18, 2023, allows for the repurchase of up to **2,000,000** shares by December 31, 2025[511](index=511&type=chunk) [15. Regulatory Capital Requirements](index=101&type=section&id=15.%20Regulatory%20Capital%20Requirements) Both NBT Bancorp Inc. and NBT Bank met all regulatory capital adequacy requirements as of December 31, 2023, and were categorized as "well-capitalized" - Both NBT Bancorp Inc. (Company) and NBT Bank, National Association (Bank) met all regulatory capital adequacy requirements as of December 31, 2023 and 2022, and were categorized as "well-capitalized" under the prompt corrective action framework[513](index=513&type=chunk)[514](index=514&type=chunk) Regulatory Capital Ratios (as of December 31, 2023) | Capital Ratio | Company Actual | Company Minimum | Company Minimum + Buffer | Company Well Capitalized | | :------------------------------------ | :------------- | :-------------- | :----------------------- | :----------------------- | | Tier 1 Capital (to average assets) | 9.71% | 4.00% | | 5.00% | | Common Equity Tier 1 Capital | 11.57% | 4.50% | 7.00% | 6.50% | | Tier 1 Capital (to risk-weighted assets) | 12.50% | 6.00% | 8.50% | 8.00% | | Total Capital (to risk-weighted assets) | 14.75% | 8.00% | 10.50% | 10.00% | Regulatory Capital Ratios (as of December 31, 2023) | Capital Ratio | NBT Bank Actual | NBT Bank Minimum | NBT Bank Minimum + Buffer | NBT Bank Well Capitalized | | :------------------------------------ | :-------------- | :--------------- | :------------------------ | :------------------------ | | Tier 1 Capital (to average assets) | 9.16% | 4.00% | | 5.00% | | Common Equity Tier 1 Capital | 11.84% | 4.50% | 7.00% | 6.50% | | Tier 1 Capital (to risk-weighted assets) | 11.84% | 6.00% | 8.50% | 8.00% | | Total Capital (to risk-weighted assets) | 12.91% | 8.00% | 10.50% | 10.00% | - The Company adopted the CECL transition relief, phasing in the regulatory capital impact of the allowance for credit losses over a permissible **five-year** period, commencing January 1, 2022[516](index=516&type=chunk) [16. Earnings Per Share](index=102&type=section&id=16.%20Earnings%20Per%20Share) Diluted EPS for 2023 was **$2.65**, based on net income of **$118.8 million** and **44.77 million** average diluted shares outstanding Earnings Per Share Reconciliation (Years Ended December 31, in thousands except per share data) | Metric | 2023 Net Income | 2023 Avg Shares | 2023 Per Share Amount | 2022 Net Income | 2022 Avg Shares | 2022 Per Share Amount | 2021 Net Income | 2021 Avg Shares | 2021 Per Share Amount | | :-------------------- | :-------------- | :-------------- | :-------------------- | :-------------- | :-------------- | :-------------------- | :-------------- | :-------------- | :-------------------- | | Basic EPS | $118,782 | 44,528 | $2.67 | $151,995 | 42,917 | $3.54 | $154,885 | 43,421 | $3.57 | | Effect of dilutive securities: Stock-based compensation | | 242 | | | 264 | | | 298 | | | **Diluted EPS** | **$118,782** | **44,770** | **$2.65** | **$151,995** | **43,181** | **$3.52** | **$154,885** | **43,719** | **$3.54** | [17. Reclassification Adjustments Out of Other Comprehensive Income (Loss)](index=103&type=section&id=17.%20Reclassification%20Adjustments%20Out%20of%20Other%20Comprehensive%20Income%20(Loss)) Total reclassification adjustments out of AOCI, net of tax, were **$9.4 million** in 2023, primarily from AFS securities and pension benefits Reclassification Adjustments Out of AOCI (Years Ended December 31, in thousands, net of tax) | AOCI Component | 2023 | 2022 | 2021 | | :---------------------------------------------------------- | :----------- | :----------- | :----------- | | AFS securities (losses on AFS securities, amortization of unrealized gains) | $7,407 | $385 | $432 | | Cash flow hedges (net unrealized losses reclassified to interest expense) | $- | $- | $16 | | Pension and other benefits (amortization of net losses and prior service costs) | $1,980 | $553 | $1,030 | | **Total reclassifications, net of tax** | **$9,387** | **$938** | **$1,478** | [18. Commitments and Contingent Liabilities](index=103&type=section&id=18.%20Commitments%20and%20Contingent%20Liabilities) The Company's credit risk is concentrated in real estate loans within its market areas, with off-balance sheet credit exposures including **$2.25 billion** in commitments to extend credit - Approximately **63%** of the Company's loans at December 31, 2023, were secured by real estate in its market areas, indicating a concentration of credit risk susceptible to local market conditions[519](index=519&type=chunk) Off-Balance Sheet Credit Exposures (as of December 31, in thousands) | Instrument | 2023 | 2022 | | :------------------------------------ | :----------- | :----------- | | Unused lines of credit | $429,430 | $384,370 | | Commitments to extend credits | $2,254,841 | $2,033,549 | | Standby letters of credit | $44,735 | $53,307 | | Loans sold with recourse | $26,423 | $31,021 | - All commitments to extend credit in the form of loans, including unused lines of credit, expire within **one year**[265](index=265&type=chunk) [19. Derivative Instruments and Hedging Activities](index=104&type=section&id=19.%20Derivative%20Instruments%20and%20Hedging%20Activities) The Company uses interest rate swaps to facilitate customer transactions, with a net fair value of **$75.1 million** in derivatives on the balance sheet as of December 31, 2023 - The Company enters into interest rate swaps to facilitate customer transactions, which are not designated as hedging instruments. To mitigate interest rate risk, offsetting swaps are entered into with counterparties[526](index=526&type=chunk) Derivatives Outstanding (as of December 31, 2023, in thousands) | Category | Notional Amount | Balance Sheet Location | Fair Value | | :------------------------------------ | :-------------- | :--------------------- | :----------- | | Interest rate derivatives (assets) | $1,303,711 | Other assets | $95,972 | | Interest rate derivatives (liabilities) | $1,303,711 | Other liabilities | $95,869 | | Risk participation agreements (assets) | $62,112 | Other assets | $19 | | Risk participation agreements (liabilities) | $16,146 | Other liabilities | $6 | | **Net derivatives in the balance sheet** | | | **$75,142** | - All of the Company's financial instruments have transitioned from LIBOR to an alternative benchmark rate, such as SOFR, as of December 31, 2023[528](index=528&type=chunk) [20. Fair Value Measurements and Fair Values of Financial Instruments](index=106&type=section&id=20.%20Fair%20Value%20Measurements%20and%20Fair%20Values%20of%20Financial%20Instruments) The Company classifies financial instruments measured at fair value into a three-level hierarchy, with total financial assets measured at fair value on a recurring basis reaching **$1.54 billion** at December 31, 2023 - The Company classifies financial instruments measured at fair value into a three-level hierarchy: Level 1 (unadjusted quoted prices in active markets), Level 2 (observable inputs other than Level 1 quoted prices), and Level 3 (unobservable inputs)[370](index=370&type=chunk)[71](index=71&type=chunk)[533](index=533&type=chunk) Financial Assets Measured at Fair Value on a Recurring Basis (as of December 31, 2023, in thousands) | Category | Level 1 | Level 2 | Level 3 | Total | | :------------------------------------ | :----------- | :----------- | :----------- | :----------- | | AFS securities | $125,024 | $1,305,834 | $- | $1,430,858 | | Equity securities | $36,591 | $1,000 | $- | $37,591 | | Derivatives | $- | $75,142 | $- | $75,142 | | **Total Assets** | **$161,615** | **$1,381,976** | **$-** | **$1,543,591** | Financial Liabilities Measured at Fair Value on a Recurring Basis (as of December 31, 2023, in thousands) | Category | Level 1 | Level 2 | Level 3 | Total | | :-------------------- | :----------- | :----------- | :----------- | :----------- | | Derivatives | $- | $95,875 | $- | $95,875 | Estimated Fair Values of Other Financial Instruments (as of December 31, 2023, in thousands) | Instrument | Fair Value Hierarchy | Carrying Amount | Estimated Fair Value | | :-------------------- | :------------------- | :-------------- | :------------------- | | HTM securities | 2 | $905,267 | $814,524 | | Net loans | 3 | $9,539,684 | $9,216,162 | | Time deposits | 2 | $1,324,709 | $1,285,999 | | Long-term debt | 2 | $29,796 | $29,416 | | Subordinated debt | 1 | $120,380 | $113,757 | | Junior subordinated debt | 2 | $101,196 | $102,337 | [21. Parent Company Financial Information](index=109&type=section&id=21.%20Parent%20Company%20Financial%20Information) The Parent Company's total assets were **$1.70 billion** and stockholders' equity was **$1.43 billion** at December 31, 2023, with **$116.3 million** in dividends from subsidiaries in 2023 Parent Company Condensed Balance Sheets (as of December 31, in thousands) | Metric | 2023 | 2022 | | :------------------------------------ | :----------- | :----------- | | Total Assets | $1,698,518 | $1,425,426 | | Total Liabilities | $272,827 | $251,872 | | Stockholders' Equity | $1,425,691 | $1,173,554 | Parent Company Condensed Statements of Income (Years Ended December 31, in thousands) | Metric | 2023 | 2022 | 2021 | | :------------------------------------ | :----------- | :----------- | :----------- | | Dividends from subsidiaries | $116,250 | $119,000 | $118,900 | | Management fee from subsidiaries | $7,093 | $2,005 | $2,653 | | Total revenue | $123,976 | $121,025 | $122,660 | | Operating expenses | $22,930 | $14,035 | $11,956 | | Net income | $118,782 | $151,995 | $154,885 | Parent Company Condensed Statements of Cash Flows (Years Ended December 31, in thousands) | Metric | 2023 | 2022 | 2021 | | :------------------------------------ | :----------- | :----------- | :----------- | | Net cash provided by operating activities | $105,309 | $107,176 | $110,538 | | Net cash provided by investing activities | $3,542 | $- | $1,000 | | Net cash (used in) financing activities | $(62,616) | $(68,229) | $(72,271) | | Cash and cash equivalents at end of year | $162,364 | $116,129 | $77,182 | [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=101&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The Company reports no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - There were no changes in or disagreements with accountants on accounting and financial disclosure[555](index=555&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=101&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) NBT Bancorp Inc.'s management, including the CEO and CFO, concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, a conclusion affirmed by KPMG LLP's unqualified opinion - The Company's management, with participation from the CEO and CFO, concluded that disclosure controls and procedures were effective as of December 31, 2023[555](index=555&type=chunk) - Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2023, based on COSO criteria, and determined it was effective at the reasonable assurance level[557](index=557&type=chunk) - KPMG LLP, the independent registered public accounting firm, issued an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2023[558](index=558&type=chunk)[561](index=561&type=chunk) [ITEM 9B. OTHER INFORMATION](index=113&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) No directors or executive officers of NBT Bancorp Inc. adopted, modified, or terminated any Rule 10b5-1(c) trading arrangements during the fourth quarter of 2023 - During the three months ended December 31, 2023, none of NBT's directors or executive officers adopted, modified, or terminated any contract, instruction, or written plan for the purchase or sale of NBT securities intended to satisfy Rule 10b5-1(c) conditions[568](index=568&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=113&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) The Company has no disclosures regarding foreign jurisdictions that prevent inspections - There are no disclosures regarding foreign jurisdictions that prevent inspections[569](index=569&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=113&type=section&id=ITEM%2010.%20DIRECTORS,%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information for this item is incorporated by reference from the Company's definitive Proxy Statement for the Annual Meeting of Stockholders on May 21, 2024 [ITEM 11. EXECUTIVE COMPENSATION](index=113&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Information for this item is incorporated by reference from the Company's definitive Proxy Statement [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=113&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) This section details securities available for future issuance under equity compensation plans, with other related information incorporated by reference from the Proxy Statement Equity Compensation Plans (as of December 31, 2023) | Plan Category | Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance | | :-------------------------------------- | :---------------------------------------------------------------------- | :-------------------------------------------------------- | :--------------------------------------------------------- | | Equity compensation plans approved by stockholders | 5,350 | $33.24 | 182,418 | | Equity compensation plans not approved by stockholders | None | None | None | [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=113&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS,%20AND%20DIRECTOR%20INDEPENDENCE) Information for this item is incorporated by reference from the Company's definitive Proxy Statement [ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=113&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) KPMG, LLP, Albany, NY, is the Company's independent registered public accounting firm, with fee and service information incorporated by reference from the Proxy Statement - KPMG, LLP, Albany, NY, Auditor Firm ID: **185**, is the Company's independent registered public accounting firm[574](index=574&type=chunk) PART IV [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](index=114&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This item lists all financial statements included in Part II, Item 8, and provides a comprehensive index of exhibits filed with the Form 10-K, including merger agreements and corporate governance documents - The following consolidated financial statements are included in Part II, Item 8: Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Changes in Stockholders' Equity, Consolidated Statements of Cash Flows, and Notes to the Consolidated Financial Statements[575](index=575&type=chunk)[576](index=576&type=chunk)[577](index=577&type=chunk)[578](index=578&type=chunk)[579](index=579&type=chunk)[580](index=580&type=chunk)[581](index=581&type=chunk) - Key exhibits filed include the Agreement and Plan of Merger for the Salisbury acquisition, Restated Certificate of Incorporation, Amended and Restated Bylaws, Subordinated Indenture, NBT Bancorp Inc. 2018 Omnibus Incentive Plan, and various employment agreements and certifications[583](index=583&type=chunk)[584](index=584&type=chunk) [ITEM 16. FORM 10-K SUMMARY](index=116&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This item is marked as "None," indicating no summary is provided within the report for this section SIGNATURES [SIGNATURES](index=117&type=section&id=SIGNATURES) This section contains the required signatures of NBT Bancorp Inc.'s Chief Executive Officer and other directors and officers, certifying the filing of the annual report on Form 10-K

Financial Data and Key Metrics Changes - The fourth quarter earnings per share were $0.64, with operating earnings per share at $0.72, excluding acquisition expenses and impairment charges [80] - Return on tangible equity was 15.78% for the full year, and the year-end tangible equity ratio grew 11% to 7.93% [76] - Tangible book value per share increased to $21.72, up $1.33 from the third quarter and $1.07 from the fourth quarter of 2022 [8] Business Line Data and Key Metrics Changes - Total loans increased by $1.5 billion from the fourth quarter of 2022, including $1.18 billion from the Salisbury acquisition [95] - Revenues from retirement plan administration decreased by $1.6 million from the third quarter, reflecting seasonal trends [12] - Non-interest income was $38 million, up 11% year-over-year but down 6% from the linked third quarter [84] Market Data and Key Metrics Changes - Total deposits reached $11 billion, up $1.5 billion in 2023, including $1.3 billion from the Salisbury acquisition [9] - Municipal deposits declined by $225 million from the seasonally high third quarter [96] - The cost of total deposits increased by 251 basis points compared to the linked third quarter [10] Company Strategy and Development Direction - The successful integration of the Salisbury acquisition positions the company for growth in adjacent markets and future strategic growth [91] - The company aims for mid-single-digit loan growth in 2024, with expectations of a stronger performance in business banking [18] - The company is focused on maintaining strong liquidity and capital levels while managing funding costs effectively [83] Management's Comments on Operating Environment and Future Outlook - Management noted that market volatility and uncertainty have pressured funding costs, impacting net interest margins [14] - The company expects modest additional funding pressures to persist in 2024, but remains optimistic about organic growth [83] - Management highlighted a resilient consumer and business environment, with continued investment in small businesses [91] Other Important Information - The company declared a $0.32 dividend, representing a 6.7% increase over the previous quarter, marking 11 consecutive years of annual dividend increases [6] - The company recorded a loan loss provision expense of $5.1 million in the fourth quarter, higher than the previous quarter [39] Q&A Session Summary Question: What are the expectations for funding costs in the first half of the year? - Management indicated that total deposit costs ended the quarter at approximately $155 million, with stability expected in funding costs moving forward [16] Question: How does the company view the loan pipeline and growth outlook? - Management expressed confidence in mid-single-digit growth for 2024, despite a slight decrease in year-over-year pipelines entering the first quarter [18] Question: What is the outlook for charge-offs as the Springstone portfolio winds down? - Management anticipates that charge-offs will decrease as the portfolio reduces, maintaining a range of $2.5 million to $3 million per quarter [122]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________. COMMISSION FILE NUMBER 0-14703 NBT BANCORP INC. (Exact name of registrant as specified in its charter) Delaware 16-1268674 (State o ...

NBT Bancorp Inc. (NASDAQ:NBTB) Q3 2023 Earnings Conference Call October 25, 2023 8:30 AM ET Company Participants John Watt - President & Chief Executive Officer Scott Kingsley - Chief Financial Officer Annette Burns - Chief Accounting Officer Joseph Ondesko - Treasurer Joseph Stagliano - Chief Information Officer and President of Retail Banking Conference Call Participants Alexander Twerdahl - Piper Sandler Companies Steve Moss - Raymond James Chris O'Connell - KBW Matthew Breese - Stephens Inc. Operator Go ...