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 ...

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(Unaudited)) Unaudited statements show total assets at $11.89 billion, with Q2 net income falling to $30.1 million [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $11.89 billion, driven by a rise in net loans to $8.26 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $11,890,497 | $11,739,296 | $151,201 | | Net Loans | $8,257,724 | $8,049,347 | $208,377 | | Securities (AFS & HTM) | $2,366,802 | $2,446,742 | ($79,940) | | Total Deposits | $9,529,919 | $9,495,933 | $33,986 | | Total Liabilities | $10,680,004 | $10,565,742 | $114,262 | | Total Stockholders' Equity | $1,210,493 | $1,173,554 | $36,939 | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2023 net income fell 20.4% to $30.1 million due to higher interest expense and securities losses Key Income Statement Data (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | 6 Months 2023 | 6 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $89,085 | $87,585 | $184,151 | $167,933 | | Provision for Loan Losses | $3,606 | $4,390 | $7,515 | $4,986 | | Total Noninterest Income | $32,045 | $41,656 | $63,454 | $84,315 | | Total Noninterest Expense | $78,794 | $76,119 | $158,116 | $148,262 | | Net Income | $30,072 | $37,775 | $63,730 | $76,901 | | Diluted EPS | $0.70 | $0.88 | $1.48 | $1.78 | - Card services income decreased significantly to **$5.1 million in Q2 2023** from $9.8 million in Q2 2022[9](index=9&type=chunk) - Net securities losses widened to **$(4.6) million in Q2 2023** and **$(9.6) million for the first six months of 2023**[9](index=9&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income recovered to $63.7 million for the first half of 2023 from a loss in 2022 Comprehensive Income (Loss) Summary (in thousands) | Metric | Q2 2023 | Q2 2022 | 6 Months 2023 | 6 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $30,072 | $37,775 | $63,730 | $76,901 | | Other Comprehensive (Loss) | $(16,182) | $(33,406) | $(66) | $(101,437) | | Comprehensive Income (Loss) | $13,890 | $4,369 | $63,664 | $(24,536) | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity increased to $1.21 billion, driven by net income offset by dividends and buybacks - For the six months ended June 30, 2023, the company declared cash dividends of **$0.60 per share**, totaling $25.7 million[13](index=13&type=chunk) - The company purchased **87,000 treasury shares for $2.8 million** during the first six months of 2023[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased while financing activities provided cash, reversing the prior year's trend Cash Flow Summary (in thousands) | Activity | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $67,171 | $104,096 | | Net Cash from Investing Activities | $(158,958) | $(557,815) | | Net Cash from Financing Activities | $96,325 | $(291,736) | | Net (Decrease) in Cash | $4,538 | $(745,455) | | Cash at End of Period | $201,888 | $523,616 | [Notes to Unaudited Interim Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Interim%20Consolidated%20Financial%20Statements) Notes detail accounting policies, including the adoption of new TDR guidance and credit loss allowances - The company adopted ASU 2022-02, eliminating Troubled Debt Restructuring accounting and increasing retained earnings by **$0.5 million**[20](index=20&type=chunk)[33](index=33&type=chunk)[60](index=60&type=chunk) - The company's business consists of providing commercial banking, retail banking, and wealth management services[16](index=16&type=chunk)[17](index=17&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Net income fell to $30.1 million in Q2 2023 due to funding costs, while the Salisbury acquisition proceeds [Overview and Key Performance Metrics](index=31&type=section&id=Overview%20and%20Key%20Performance%20Metrics) Q2 2023 net income was $30.1 million, impacted by securities losses and acquisition expenses Q2 2023 Performance Highlights | Metric | Q2 2023 | Q2 2022 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Income (in millions) | $30.1 | $37.8 | $33.7 | | Diluted EPS | $0.70 | $0.88 | $0.78 | | Return on Average Assets | 1.02% | 1.28% | 1.16% | | Return on Average Equity | 9.91% | 12.73% | 11.47% | | Tangible Book Value/Share | $21.55 | $20.99 | $21.52 | - The company received regulatory approvals for its acquisition of Salisbury Bancorp, Inc, expected to close on **August 11, 2023**[114](index=114&type=chunk) - The company incurred a **$4.5 million securities loss** and **$1.2 million in acquisition expenses** in Q2 2023[117](index=117&type=chunk) [Net Interest Income](index=33&type=section&id=Net%20Interest%20Income) Q2 2023 net interest margin compressed to 3.27% due to a rapid increase in funding costs Net Interest Margin Analysis | Period | Net Interest Income (FTE, in millions) | Net Interest Margin (FTE) | | :--- | :--- | :--- | | Q2 2023 | $89.5 | 3.27% | | Q1 2023 | $95.5 | 3.55% | | Q2 2022 | $87.9 | 3.21% | - A sharp rise in interest expense to **$31.5 million in Q2 2023** from $3.9 million in Q2 2022 was the primary driver of margin compression[122](index=122&type=chunk)[133](index=133&type=chunk) [Noninterest Income](index=37&type=section&id=Noninterest%20Income) Noninterest income fell 23.1% in Q2 2023, driven by securities losses and lower card services income Noninterest Income Breakdown (in thousands) | Category | Q2 2023 | Q2 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Card services income | $5,121 | $9,751 | (47.5%) | | Retirement plan admin fees | $11,735 | $12,676 | (7.4%) | | Net securities (losses) | $(4,641) | $(587) | (690.6%) | | **Total Noninterest Income** | **$32,045** | **$41,656** | **(23.1%)** | - For the first six months of 2023, noninterest income declined due to an **$8.0 million impact from the Durbin Amendment** on card services income[135](index=135&type=chunk) [Noninterest Expense](index=38&type=section&id=Noninterest%20Expense) Noninterest expense rose 3.5% year-over-year, driven by technology costs and higher FDIC assessments Noninterest Expense Breakdown (in thousands) | Category | Q2 2023 | Q2 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $46,834 | $46,716 | 0.3% | | Technology and data services | $9,305 | $8,945 | 4.0% | | FDIC assessment | $1,344 | $810 | 65.9% | | Acquisition expenses | $1,189 | $0 | N/A | | **Total Noninterest Expense** | **$78,794** | **$76,119** | **3.5%** | [Income Taxes](index=39&type=section&id=Income%20Taxes) The effective tax rate remained stable at 22.4% for Q2 2023 and 22.3% for the first half of the year - The effective tax rate was **22.4% for Q2 2023**, compared to 22.5% for Q2 2022[140](index=140&type=chunk) - For the six months ended June 30, 2023, the effective tax rate was **22.3%**, identical to the prior-year period[141](index=141&type=chunk) [Analysis of Financial Condition](index=39&type=section&id=Analysis%20of%20Financial%20Condition) Financial condition remains solid with 5.1% annualized loan growth and strong capital ratios - Total loans increased by **$208.0 million (5.1% annualized)** since year-end 2022[145](index=145&type=chunk) - The allowance for credit losses was **$100.4 million**, or 1.20% of total loans[154](index=154&type=chunk) - Nonperforming assets decreased to **$19.9 million (0.17% of total assets)** from $21.2 million at year-end 2022[159](index=159&type=chunk) - Total deposits increased slightly, with a shift to higher-cost time deposits including **$242.0 million in brokered deposits**[161](index=161&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company manages interest rate risk and maintains robust liquidity with a surplus of $1.66 billion Interest Rate Sensitivity Analysis (as of June 30, 2023) | Change in Interest Rates (bps) | Percent Change in Net Interest Income | | :--- | :--- | | +200 | 1.57% | | +100 | 1.06% | | -200 | (2.11%) | - The company's 'Basic Surplus' liquidity was **$1.66 billion (13.9% of total assets)**, well above the 5% policy minimum[181](index=181&type=chunk) - The company had additional borrowing capacity of approximately **$924.5 million from the FHLB** and **$1.02 billion from unpledged securities**[182](index=182&type=chunk) [Controls and Procedures](index=46&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of June 30, 2023 - The CEO and CFO concluded that as of June 30, 2023, the company's **disclosure controls and procedures were effective**[188](index=188&type=chunk) [PART II OTHER INFORMATION](index=47&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=47&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not a party to any material legal proceedings outside of ordinary routine litigation - There are **no material legal proceedings** against the company[190](index=190&type=chunk) [Risk Factors](index=47&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to previously disclosed risk factors were reported during the quarter - **No material changes** to risk factors were reported for the quarter[191](index=191&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company repurchased 87,000 shares in Q2 2023, with 1.51 million shares remaining under the plan Share Repurchase Activity (Q2 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2023 | - | $ - | | May 2023 | - | $ - | | June 2023 | 87,000 | $31.94 | | **Total** | **87,000** | **$31.94** | - As of June 30, 2023, **1,513,000 shares** were available for repurchase under the existing plan expiring December 31, 2023[192](index=192&type=chunk) [Other Information](index=47&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans this quarter - **No Rule 10b5-1 plans** were adopted, modified, or terminated by any director or officer during the quarter[193](index=193&type=chunk)

NBT Bancorp Inc. (NASDAQ:NBTB) Q2 2023 Earnings Conference Call August 1, 2023 8:30 AM ET Company Participants John H. Watt, Jr. - President & Chief Executive Officer Scott Kingsley - Chief Financial Officer Conference Call Participants Alex Twerdahl - PSC Steve Moss - Raymond James Chris O’Connell - KBW Matthew Breese - Stephens Inc. Operator Good day, everyone. Welcome to the NBT Bancorp's Second Quarter 2023 Financial Results Conference Call. This call is being recorded and has been made accessible to th ...

PART I FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS (Unaudited)](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(Unaudited)) Presents unaudited interim consolidated financial statements for Q1 2023, with balance sheets, income, cash flows, and detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Metric (In thousands) | Metric (In thousands) | March 31, 2023 | December 31, 2022 | Change | % Change | | :-------------------- | :------------- | :---------------- | :----- | :------- | | Total assets | $11,839,730 | $11,739,296 | $100,434 | 0.86% | | Total liabilities | $10,628,071 | $10,565,742 | $62,329 | 0.59% | | Total stockholders' equity | $1,211,659 | $1,173,554 | $38,105 | 3.25% | | Loans, net | $8,164,328 | $8,049,347 | $114,981 | 1.43% | | Total deposits | $9,681,205 | $9,495,933 | $185,272 | 1.95% | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Metric (In thousands, except per share data) | Metric (In thousands, except per share data) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | % Change | | :------------------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Total interest, fee and dividend income | $114,192 | $84,201 | $29,991 | 35.62% | | Total interest expense | $19,126 | $3,853 | $15,273 | 396.39% | | Net interest income | $95,066 | $80,348 | $14,718 | 18.32% | | Provision for loan losses | $3,909 | $596 | $3,313 | 555.87% | | Total noninterest income | $31,409 | $42,659 | $(11,250)| -26.37% | | Total noninterest expense | $79,322 | $72,143 | $7,179 | 9.95% | | Net income | $33,658 | $39,126 | $(5,468) | -13.98% | | Basic EPS | $0.78 | $0.91 | $(0.13) | -14.29% | | Diluted EPS | $0.78 | $0.90 | $(0.12) | -13.33% | [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Metric (In thousands) | Metric (In thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net income | $33,658 | $39,126 | $(5,468) | | Total other comprehensive income (loss) | $16,116 | $(68,031) | $84,147 | | Comprehensive income (loss) | $49,774 | $(28,905) | $78,679 | - Total other comprehensive income (loss) significantly improved, moving from a loss of **$68.0 million** in Q1 2022 to a gain of **$16.1 million** in Q1 2023, primarily due to unrealized net holding gains on available-for-sale securities[11](index=11&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Metric (In thousands) | Metric (In thousands) | Balance at December 31, 2022 | Balance at March 31, 2023 | Change | | :-------------------- | :--------------------------- | :------------------------ | :----- | | Total stockholders' equity | $1,173,554 | $1,211,659 | $38,105 | | Retained earnings | $958,433 | $979,722 | $21,289 | | Accumulated other comprehensive loss | $(190,034) | $(173,918) | $16,116 | | Cash dividends | - | $(12,871) | $(12,871)| - Stockholders' equity increased by **$38.1 million** from December 31, 2022, primarily driven by net income and a significant increase in accumulated other comprehensive income, partially offset by cash dividends[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Activity (In thousands) | Cash Flow Activity (In thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net cash provided by operating activities | $21,847 | $35,404 | $(13,557)| | Net cash used in investing activities | $(75,560) | $(383,207) | $307,647 | | Net cash provided by financing activities | $86,158 | $172,912 | $(86,754)| | Net increase (decrease) in cash and cash equivalents | $32,445 | $(174,891) | $207,336 | | Cash and cash equivalents at end of period | $229,795 | $1,094,180 | $(864,385)| - Net cash used in investing activities significantly decreased from **$383.2 million** in Q1 2022 to **$75.6 million** in Q1 2023, primarily due to reduced purchases of securities held to maturity and available for sale[14](index=14&type=chunk) - Cash and cash equivalents at the end of the period decreased substantially from **$1.09 billion** in Q1 2022 to **$229.8 million** in Q1 2023[14](index=14&type=chunk) [Notes to Unaudited Interim Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Interim%20Consolidated%20Financial%20Statements) [1. Description of Business](index=9&type=section&id=1.%20Description%20of%20Business) - NBT Bancorp Inc. is a Delaware-incorporated financial holding company, primarily operating through NBT Bank, National Association, offering commercial banking, retail banking, and wealth management services in central and upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine, and central Connecticut[18](index=18&type=chunk)[19](index=19&type=chunk) [2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - The interim consolidated financial statements are unaudited and include NBT Bancorp Inc. and its wholly-owned subsidiaries, prepared in accordance with GAAP and SEC instructions, with all material intercompany transactions eliminated[20](index=20&type=chunk) - The preparation of financial statements requires management to make estimates and assumptions, which may differ from actual results[21](index=21&type=chunk) [3. Recent Accounting Pronouncements](index=9&type=section&id=3.%20Recent%20Accounting%20Pronouncements) - The Company adopted ASU 2022-02 (Financial Instruments - CECL Losses) on January 1, 2023, using the modified retrospective method, which eliminated Troubled Debt Restructuring (TDR) guidance and resulted in a net increase to retained earnings of **$0.5 million**[22](index=22&type=chunk) [4. Securities](index=10&type=section&id=4.%20Securities) Available for Sale (AFS) Securities (In thousands) | Metric | March 31, 2023 | December 31, 2022 | Change | % Change | | :-------------------- | :------------- | :---------------- | :----- | :------- | | Amortized Cost | $1,707,940 | $1,743,882 | $(35,942)| -2.06% | | Estimated Fair Value | $1,512,008 | $1,527,225 | $(15,217)| -0.99% | | Total Unrealized Losses | $(195,991) | $(216,695) | $20,704 | -9.55% | Held to Maturity (HTM) Securities (In thousands) | Metric | March 31, 2023 | December 31, 2022 | Change | % Change | | :-------------------- | :------------- | :---------------- | :----- | :------- | | Amortized Cost | $906,824 | $919,517 | $(12,693)| -1.38% | | Estimated Fair Value | $812,664 | $812,647 | $17 | 0.00% | | Total Unrealized Losses | $(94,584) | $(107,079) | $12,495 | -11.67% | - During Q1 2023, the Company incurred a **$5.0 million** loss on the write-off of an AFS corporate debt security from a failed bank, reclassified from AOCI into net securities losses[25](index=25&type=chunk) - The majority of AFS and HTM securities in an unrealized loss position are issued by U.S. government agencies or government-sponsored enterprises, considered 'risk-free' with zero credit losses, and the losses are primarily due to interest rate changes, not credit quality[35](index=35&type=chunk)[37](index=37&type=chunk) [5. Allowance for Credit Losses and Credit Quality of Loans](index=14&type=section&id=5.%20Allowance%20for%20Credit%20Losses%20and%20Credit%20Quality%20of%20Loans) Allowance for Credit Losses (In thousands) | Metric | March 31, 2023 | December 31, 2022 | Change | % Change | | :-------------------- | :------------- | :---------------- | :----- | :------- | | Total allowance for credit losses | $100,250 | $100,800 | $(550) | -0.55% | | Allowance for credit losses as % of loans | 1.21% | 1.24% | -0.03% | -2.42% | Allowance for Credit Losses Activity (In thousands) | Metric | Q1 2023 | Q1 2022 | | :-------------------- | :------ | :------ | | Provision for loan losses | $3,909 | $596 | | Charge-offs | $(5,850)| $(4,491)| | Recoveries | $2,039 | $1,895 | | Net Charge-offs | $(3,811)| $(2,596)| - The Company adopted ASU 2022-02 on January 1, 2023, eliminating TDR guidance and resulting in a **$0.6 million** decrease in the allowance for credit loss on TDR loans[38](index=38&type=chunk) - The allowance for credit losses decreased slightly due to reduced expected losses in residential solar portfolios, improved economic forecasts, and the ASU 2022-02 adoption, partially offset by increased loan balances and declining prepayment speeds[45](index=45&type=chunk) - The quantitative model for credit losses as of March 31, 2023, equally weights a baseline economic outlook (unemployment below pre-COVID-19 levels, Northeast GDP growth) and an alternative downside scenario (Northeast unemployment rising to **7.1%** by Q2 2024)[41](index=41&type=chunk) [6. Defined Benefit Post-Retirement Plans](index=21&type=section&id=6.%20Defined%20Benefit%20Post-Retirement%20Plans) - The Company offers a qualified, noncontributory defined benefit pension plan and supplemental retirement plans for executives, along with post-retirement health care benefits for employees hired on or before January 1, 2000[71](index=71&type=chunk) Components of Net Periodic Cost (Benefit) (In thousands) | Metric | Pension Benefits (Q1 2023) | Pension Benefits (Q1 2022) | Other Benefits (Q1 2023) | Other Benefits (Q1 2022) | | :-------------------- | :------------------------- | :------------------------- | :----------------------- | :----------------------- | | Service cost | $482 | $534 | $1 | $2 | | Interest cost | $1,010 | $694 | $56 | $41 | | Expected return on plan assets | $(1,853) | $(2,228) | - | - | | Net amortization | $670 | $185 | $(21) | $1 | | Total net periodic cost (benefit) | $309 | $(815) | $36 | $44 | [7. Earnings Per Share](index=22&type=section&id=7.%20Earnings%20Per%20Share) Earnings Per Share (In thousands, except per share data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income available to common stockholders | $33,658 | $39,126 | | Basic EPS | $0.78 | $0.91 | | Diluted EPS | $0.78 | $0.90 | | Weighted average common shares outstanding | 42,894 | 43,141 | | Dilutive effect of common stock options and restricted stock | 232 | 244 | [8. Reclassification Adjustments Out of Other Comprehensive Income (Loss)](index=22&type=section&id=8.%20Reclassification%20Adjustments%20Out%20of%20Other%20Comprehensive%20Income%20(Loss)) Total Reclassifications from AOCI, Net of Tax (In thousands) | Period | Amount | | :-------------------- | :----- | | Three Months Ended March 31, 2023 | $4,322 | | Three Months Ended March 31, 2022 | $241 | - Reclassification adjustments out of AOCI significantly increased from **$241 thousand** in Q1 2022 to **$4.3 million** in Q1 2023, primarily driven by **$5.0 million** in losses on AFS securities (pre-tax) in Q1 2023[77](index=77&type=chunk) [9. Derivative Instruments and Hedging Activities](index=23&type=section&id=9.%20Derivative%20Instruments%20and%20Hedging%20Activities) - The Company uses interest rate derivatives, primarily interest rate swaps, to facilitate customer transactions and manage economic risks, but these are not designated as hedging instruments[78](index=78&type=chunk)[79](index=79&type=chunk) Derivatives Not Designated as Hedging Instruments (In thousands) | Metric | March 31, 2023 | December 31, 2022 | | :-------------------- | :------------- | :---------------- | | Total derivatives not designated as hedging instruments (Fair Value) | $94,228 | $117,294 | | Net derivatives in the balance sheet (Fair Value) | $74,246 | $93,185 | | Notional Amount (Interest rate derivatives) | $1,295,719 | $1,275,708 | - The Company manages a matched book for derivatives to minimize net risk exposure and clears certain transactions through the CME, requiring initial and variation margin payments[78](index=78&type=chunk)[80](index=80&type=chunk) [10. Fair Value Measurements and Fair Value of Financial Instruments](index=24&type=section&id=10.%20Fair%20Value%20Measurements%20and%20Fair%20Value%20of%20Financial%20Instruments) - Fair value measurements are categorized into a three-level hierarchy based on input observability: Level 1 (quoted prices in active markets), Level 2 (quoted prices for similar assets/liabilities or observable inputs), and Level 3 (unobservable inputs)[86](index=86&type=chunk)[87](index=87&type=chunk) Financial Assets Measured at Fair Value (In thousands) | Asset Type | Level 1 (March 31, 2023) | Level 2 (March 31, 2023) | Level 3 (March 31, 2023) | Total (March 31, 2023) | | :-------------------- | :----------------------- | :----------------------- | :----------------------- | :--------------------- | | AFS securities | $123,579 | $1,388,429 | - | $1,512,008 | | Equity securities | $31,807 | $1,000 | - | $32,807 | | Derivatives | - | $94,228 | - | $94,228 | | **Total Assets** | **$155,386** | **$1,483,657** | **-** | **$1,639,043** | Financial Liabilities Measured at Fair Value (In thousands) | Liability Type | Level 1 (March 31, 2023) | Level 2 (March 31, 2023) | Level 3 (March 31, 2023) | Total (March 31, 2023) | | :-------------------- | :----------------------- | :----------------------- | :----------------------- | :--------------------- | | Derivatives | - | $94,184 | - | $94,184 | | **Total Liabilities** | **-** | **$94,184** | **-** | **$94,184** | - Non-recurring fair value measurements for collateral-dependent loans individually evaluated for expected credit losses were **$1.0 million** at March 31, 2023, classified as Level 3[92](index=92&type=chunk) [11. Commitments and Contingencies](index=28&type=section&id=11.%20Commitments%20and%20Contingencies) Commitments and Contingencies (In millions) | Metric | March 31, 2023 | December 31, 2022 | | :-------------------- | :------------- | :---------------- | | Commitments to extend credit and unused lines of credit | $2,430 | $2,420 | | Standby letters of credit | $40.9 | $53.3 | - The Company is exposed to off-balance sheet risk through financial instruments like loan commitments and standby letters of credit, with credit risk managed similarly to direct loans[103](index=103&type=chunk) [12. Subsequent Event](index=28&type=section&id=12.%20Subsequent%20Event) - On May 4, 2023, the Company sold two subordinated debt securities from its AFS portfolio for a **$4.5 million** pre-tax loss, following downgrades and significant declines in equity market capitalizations of the issuing regional financial institutions[106](index=106&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=29&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management's analysis of NBT Bancorp Inc.'s Q1 2023 financial condition and results, focusing on key indicators and critical estimates [Forward-Looking Statements](index=29&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements, subject to various factors beyond the Company's control that could cause actual results to differ materially, including economic conditions, interest rate policies, and regulatory changes[109](index=109&type=chunk) [Non-GAAP Measures](index=30&type=section&id=Non-GAAP%20Measures) - The report includes non-GAAP financial measures, which management believes provide useful information for understanding core business results and industry standards, with reconciliations to comparable GAAP measures provided[113](index=113&type=chunk) [Critical Accounting Estimates](index=30&type=section&id=Critical%20Accounting%20Estimates) - The allowance for credit losses (ACL) is identified as a critical accounting estimate due to significant estimation uncertainty and its material impact on financial results, requiring judgment on expected credit losses over the loan portfolio's life[114](index=114&type=chunk)[116](index=116&type=chunk) - The CECL approach estimates credit losses over the life of an exposure, based on past events, current conditions, and reasonable forecasts, with historical loss experience as a starting point[115](index=115&type=chunk) - A **10%** increase in the downside scenario weighting (to **60%**) for macroeconomic forecasts would result in a **3%** increase in the overall estimated allowance for credit losses, while a **100%** downside weighting would increase it by **17%**[118](index=118&type=chunk) [Overview](index=31&type=section&id=Overview) Key Financial Highlights (Q1 2023 vs. Q4 2022 & Q1 2022) | Metric | Q1 2023 | Q4 2022 | Q1 2022 | | :-------------------- | :------ | :------ | :------ | | Net income (millions) | $33.7 | $36.1 | $39.1 | | Diluted EPS | $0.78 | $0.84 | $0.90 | | Net interest income (millions) | $95.1 | $99.8 | $80.3 | | Noninterest income (excl. securities losses) (millions) | $36.4 | $34.3 | $42.8 | | Noninterest expense (excl. acquisition expenses) (millions) | $78.7 | $78.5 | $72.1 | | Period end loans (billions) | $8.26 | $8.15 | $7.65 | | Period end deposits (billions) | $9.68 | $9.50 | $9.50 | | Book value per share | $28.24 | $27.38 | $27.96 | | Tangible book value per share | $21.52 | $20.65 | $21.25 | - Net income for Q1 2023 was **$33.7 million** (**$0.78** diluted EPS), down from **$36.1 million** in Q4 2022 and **$39.1 million** in Q1 2022[121](index=121&type=chunk) - The Company incurred a **$5.0 million** securities loss in Q1 2023 due to the write-off of a subordinated debt security from a failed bank[122](index=122&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) [Net Interest Income](index=33&type=section&id=Net%20Interest%20Income) Net Interest Income & Margin Trends | Metric | Q1 2023 | Q4 2022 | Q1 2022 | | :-------------------- | :------ | :------ | :------ | | Net interest income (millions) | $95.1 | $99.8 | $80.3 | | FTE Net interest margin | 3.55% | 3.68% | 2.95% | | Yield on average interest-earning assets | 4.26% | 4.02% | 3.09% | | Cost of interest-bearing liabilities | 1.14% | 0.57% | 0.23% | - Net interest income decreased by **$4.7 million** (**4.7%**) QoQ but increased by **$14.7 million** (**18.3%**) YoY, driven by higher yields on earning assets partially offset by increased cost of interest-bearing liabilities[127](index=127&type=chunk)[128](index=128&type=chunk) - The FTE net interest margin decreased **13 bps** QoQ to **3.55%** but increased **60 bps** YoY, reflecting a significant rise in interest expense (up **396.4%** YoY) due to higher deposit costs and short-term borrowings[127](index=127&type=chunk)[128](index=128&type=chunk) [Noninterest Income](index=35&type=section&id=Noninterest%20Income) Noninterest Income (In thousands) | Category | Q1 2023 | Q1 2022 | Change | % Change | | :-------------------- | :------ | :------ | :----- | :------- | | Service charges on deposit accounts | $3,548 | $3,688 | $(140) | -3.80% | | Card services income | $4,845 | $8,695 | $(3,850)| -44.28% | | Retirement plan administration fees | $11,462 | $13,279 | $(1,817)| -13.68% | | Wealth management | $8,087 | $8,640 | $(553) | -6.40% | | Insurance services | $3,931 | $3,788 | $143 | 3.78% | | Bank owned life insurance income | $1,878 | $1,654 | $224 | 13.54% | | Net securities (losses) | $(4,998)| $(179) | $(4,819)| 2691.90% | | Other | $2,656 | $3,094 | $(438) | -14.16% | | **Total noninterest income** | **$31,409** | **$42,659** | **$(11,250)**| **-26.37%**| - Total noninterest income decreased by **$11.3 million** (**26.4%**) YoY, primarily due to a **$5.0 million** securities loss and lower card services income (down **$4.0 million** due to Durbin Amendment impact)[136](index=136&type=chunk) - Excluding net securities losses, noninterest income was **$36.4 million** in Q1 2023, up **6.1%** QoQ due to seasonal retirement plan administration fees, but down **15.0%** YoY[136](index=136&type=chunk) [Noninterest Expense](index=36&type=section&id=Noninterest%20Expense) Noninterest Expense (In thousands) | Category | Q1 2023 | Q1 2022 | Change | % Change | | :-------------------- | :------ | :------ | :----- | :------- | | Salaries and employee benefits | $48,155 | $45,508 | $2,647 | 5.82% | | Technology and data services | $9,007 | $8,547 | $460 | 5.38% | | Occupancy | $7,220 | $6,793 | $427 | 6.29% | | FDIC assessment | $1,396 | $802 | $594 | 74.06% | | Acquisition expenses | $618 | - | $618 | N/A | | Other | $5,080 | $3,119 | $1,961 | 62.88% | | **Total noninterest expense** | **$79,322** | **$72,143** | **$7,179** | **9.95%** | - Total noninterest expense increased by **$7.2 million** (**10.0%**) YoY, driven by higher salaries and employee benefits, technology investments, increased occupancy costs, and a statutory increase in FDIC assessment rates[138](index=138&type=chunk) - Excluding acquisition expenses, noninterest expense was **$78.7 million** in Q1 2023, comparable QoQ but up **9.1%** YoY[138](index=138&type=chunk) [Income Taxes](index=36&type=section&id=Income%20Taxes) Income Tax Expense & Effective Tax Rate | Metric | Q1 2023 | Q4 2022 | Q1 2022 | | :-------------------- | :------ | :------ | :------ | | Income tax expense (millions) | $9.6 | $10.6 | $11.1 | | Effective tax rate | 22.2% | 22.6% | 22.2% | - Income tax expense decreased by **$1.0 million** QoQ and **$1.6 million** YoY, with the effective tax rate remaining stable at **22.2%** in Q1 2023[139](index=139&type=chunk) [ANALYSIS OF FINANCIAL CONDITION](index=37&type=section&id=ANALYSIS%20OF%20FINANCIAL%20CONDITION) [Securities](index=37&type=section&id=Securities) - Total securities decreased by **$25.9 million** (**1.0%**) from December 31, 2022, representing **20.7%** of total assets at March 31, 2023[141](index=141&type=chunk) Securities Portfolio Composition (March 31, 2023) | Category | % of Total | | :-------------------- | :--------- | | Mortgage-backed securities (15 years or less) | 13% | | Mortgage-backed securities (greater than 15 years) | 11% | | Collateral mortgage obligations | 37% | | Municipal securities | 15% | | U.S. agency notes | 21% | | Corporate | 2% | | Equity securities | 1% | [Loans](index=37&type=section&id=Loans) Loan Portfolio Composition (In thousands) | Category | March 31, 2023 | December 31, 2022 | Change | % Change | | :-------------------- | :------------- | :---------------- | :----- | :------- | | Commercial & industrial | $1,278,291 | $1,266,031 | $12,260 | 0.97% | | Commercial real estate | $2,845,631 | $2,807,941 | $37,690 | 1.34% | | Residential real estate | $1,651,918 | $1,649,870 | $2,048 | 0.12% | | Indirect auto | $1,031,315 | $989,587 | $41,728 | 4.22% | | Residential solar | $920,084 | $856,798 | $63,286 | 7.39% | | Home equity | $308,219 | $314,124 | $(5,905) | -1.88% | | Other consumer | $229,120 | $265,796 | $(36,676)| -13.80% | | **Total loans** | **$8,264,578** | **$8,150,147** | **$114,431**| **1.40%** | - Total loans increased by **$114.4 million** (**5.7%** annualized) from December 31, 2022, with significant growth in residential solar and indirect auto loans[144](index=144&type=chunk) [Allowance for Credit Losses, Provision for Loan Losses and Nonperforming Assets](index=37&type=section&id=Allowance%20for%20Credit%20Losses,%20Provision%20for%20Loan%20Losses%20and%20Nonperforming%20Assets) Allowance for Credit Losses & Nonperforming Assets | Metric | March 31, 2023 | December 31, 2022 | March 31, 2022 | | :-------------------- | :------------- | :---------------- | :------------- | | Allowance for credit losses (millions) | $100.3 | $100.8 | $90.0 | | Allowance for credit losses as % of loans | 1.21% | 1.24% | 1.18% | | Allowance for credit losses as % of nonperforming loans | 538.63% | 478.72% | 324.25% | | Total nonperforming assets (millions) | $18.7 | $21.2 | $27.8 | | Total nonperforming loans (millions) | $18.6 | $21.1 | $27.8 | | Total nonaccrual loans (millions) | $16.3 | $17.2 | $25.8 | | Provision for loan losses (millions) | $3.9 | $7.7 | $0.6 | | Net charge-offs (millions) | $3.8 | $3.7 | $2.6 | | Net charge-offs to average loans (annualized) | 0.19% | 0.18% | 0.14% | - Nonperforming assets decreased to **$18.7 million** at March 31, 2023, from **$21.2 million** at December 31, 2022, and **$27.8 million** at March 31, 2022, driven by reductions in consumer past due loans and commercial nonaccrual loans[159](index=159&type=chunk) - Provision for loan losses decreased QoQ to **$3.9 million** but increased significantly YoY from **$0.6 million**, reflecting higher net charge-offs and stable economic conditions compared to improved conditions in the prior year's forecast[155](index=155&type=chunk) - Potential problem loans (substandard grade) increased to **$55.9 million** at March 31, 2023, from **$52.0 million** at December 31, 2022, but decreased from **$66.7 million** at March 31, 2022, with **8.4%** of outstanding loans in higher-risk industries[160](index=160&type=chunk) [Deposits](index=39&type=section&id=Deposits) Total Deposits (In billions) | Metric | March 31, 2023 | December 31, 2022 | Change | % Change | | :-------------------- | :------------- | :---------------- | :----- | :------- | | Total deposits | $9.68 | $9.50 | $0.185 | 1.95% | - Total deposits increased by **$185.3 million** (**2.0%**) from December 31, 2022, primarily in time and money market accounts due to seasonal municipal deposit inflows[161](index=161&type=chunk) - Total average deposits decreased by **$0.70 billion** (**6.8%**) YoY, driven by larger commercial customers seeking higher-yielding investment opportunities[161](index=161&type=chunk) - Estimated uninsured deposits were **$3.7 billion** at March 31, 2023, up from **$3.6 billion** at December 31, 2022[161](index=161&type=chunk) [Borrowed Funds](index=40&type=section&id=Borrowed%20Funds) Borrowed Funds (In millions) | Metric | March 31, 2023 | December 31, 2022 | Change | % Change | | :-------------------- | :------------- | :---------------- | :----- | :------- | | Short-term borrowings | $475.2 | $585.0 | $(109.8)| -18.77% | | Long-term debt | $29.8 | $4.8 | $25.0 | 520.83% | [Subordinated Debt](index=40&type=section&id=Subordinated%20Debt) - The Company has **$100.0 million** of **5.00%** fixed-to-floating rate subordinated notes due 2030, qualifying as Tier 2 capital, with interest payable semi-annually until October 1, 2025, then quarterly at SOFR plus **4.85%**[164](index=164&type=chunk) [Capital Resources](index=40&type=section&id=Capital%20Resources) Capital Ratios & Metrics | Metric | March 31, 2023 | December 31, 2022 | | :-------------------- | :------------- | :---------------- | | Stockholders' equity to total assets | 10.23% | 10.00% | | Tier 1 leverage ratio | 10.43% | 10.32% | | Common equity tier 1 capital ratio | 12.28% | 12.12% | | Tier 1 capital ratio | 13.34% | 13.19% | | Total risk-based capital ratio | 15.53% | 15.38% | | Book value per share | $28.24 | $27.38 | | Tangible book value per share | $21.52 | $20.65 | - Stockholders' equity increased by **$38.1 million** from December 31, 2022, driven by net income and a **$16.1 million** increase in accumulated other comprehensive income, partially offset by dividends[165](index=165&type=chunk) - The Company remained 'well capitalized' at March 31, 2023, with all capital ratios exceeding regulatory minimum guidelines[167](index=167&type=chunk) - The Company adopted the CECL capital transition relief over a five-year period, phasing in the regulatory capital impact of the allowance for credit losses[170](index=170&type=chunk) [Liquidity and Interest Rate Sensitivity Management](index=41&type=section&id=Liquidity%20and%20Interest%20Rate%20Sensitivity%20Management) [Market Risk](index=41&type=section&id=Market%20Risk) - Interest rate risk is the most significant market risk, managed by the ALCO through monitoring asset/liability positions, loan/deposit pricing, and securities portfolio, aiming to minimize net interest margin compression[172](index=172&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - The primary tool for managing interest rate risk is earnings at risk modeling, simulating net interest income changes under various rate scenarios (**+200 bps**, **+100 bps**, **-200 bps**) over a 12-month period[176](index=176&type=chunk) Interest Rate Sensitivity Analysis (12-month period) | Change in interest rates (in bps) | Percent change in net interest income | | :-------------------------------- | :------------------------------------ | | +200 | 2.08% | | +100 | 1.31% | | -200 | (2.86%) | [Liquidity Risk](index=42&type=section&id=Liquidity%20Risk) - The Company's primary liquidity measurement, 'Basic Surplus,' was **14.6%** of total assets (**$1.73 billion**) at March 31, 2023, exceeding the minimum policy level of **5%**[180](index=180&type=chunk) - Available borrowing capacity includes **$1.16 billion** from FHLB, **$835.7 million** from unpledged securities, **$1.87 billion** from brokered time deposits/other bank facilities, and **$654.2 million** from the FRB's Borrower-in-Custody program[181](index=181&type=chunk) - Potential adverse impacts on liquidity include deposit declines due to higher interest rates, increased asset growth from line of credit draws, and heightened competition for deposits in wholesale funding markets[182](index=182&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=43&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Refers to the detailed discussion on market risk, primarily interest rate risk, within the MD&A - Information regarding quantitative and qualitative disclosures about market risk is contained within the 'Liquidity and Interest Rate Sensitivity Management' section of the MD&A[186](index=186&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=43&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including CEO and CFO, confirmed effective disclosure controls and procedures as of March 31, 2023 - As of March 31, 2023, the Company's disclosure controls and procedures were evaluated and deemed effective by management, with participation from the CEO and CFO[187](index=187&type=chunk) PART II OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=44&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) No material legal proceedings, beyond routine litigation, are reported for the Company or its subsidiaries - The Company is not a party to any material legal proceedings other than routine litigation incidental to its business[189](index=189&type=chunk) [ITEM 1A. RISK FACTORS](index=44&type=section&id=ITEM%201A.%20RISK%20FACTORS) Highlights new risks from banking industry developments, including customer confidence, HTM securities value, and regulatory scrutiny - Recent high-profile bank failures have negatively impacted customer confidence in regional banks, potentially affecting the Company's liquidity, loan funding capacity, net interest margin, and capital[191](index=191&type=chunk) - Rising interest rates have decreased the value of the Company's held-to-maturity securities portfolio, and forced sales to meet liquidity needs could result in losses and impair capital[192](index=192&type=chunk) - Increased regulatory scrutiny and new regulations following recent banking industry events could raise the Company's operating costs and reduce profitability, with a focus on deposit composition and uninsured deposits[193](index=193&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=44&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) No applicable disclosures regarding unregistered sales of equity securities and use of proceeds - This item is not applicable[194](index=194&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=44&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) No defaults upon senior securities are reported - There are no defaults upon senior securities[194](index=194&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=44&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) No mine safety disclosures are reported - There are no mine safety disclosures[194](index=194&type=chunk) [ITEM 5. OTHER INFORMATION](index=44&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information is reported - There is no other information to report[194](index=194&type=chunk) [ITEM 6. EXHIBITS](index=45&type=section&id=ITEM%206.%20EXHIBITS) Lists exhibits filed with Form 10-Q, including organizational documents, executive certifications, and Inline XBRL - Exhibits include Restated Certificate of Incorporation, Amended and Restated Bylaws, Certificate of Designation, and certifications by the CEO and CFO[195](index=195&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) are also filed[195](index=195&type=chunk) [SIGNATURES](index=46&type=section&id=SIGNATURES) Contains required signatures for the Form 10-Q, confirming submission by the Chief Financial Officer - The report was signed on May 10, 2023, by Scott A. Kingsley, Chief Financial Officer of NBT Bancorp Inc[196](index=196&type=chunk)[197](index=197&type=chunk)

NBT Bancorp Inc. (NASDAQ:NBTB) Q1 2023 Earnings Conference Call April 25, 2023 8:30 AM ET Company Participants John H. Watt, Jr. – President and Chief Executive Officer Scott Kingsley – Chief Financial Officer Conference Call Participants Alex Twerdahl – Piper Sandler & Co Steve Moss – Raymond James Chris O’Connell – KBW Matt Breese – Stephens Inc. Operator Good day, everyone. Welcome to the NBT Bancorp’s First Quarter 2023 Financial Results Conference Call. This call is being recorded and has been made acc ...

PART I [Business](index=4&type=section&id=Item%201.%20Business) NBT Bancorp Inc. is a financial holding company with **$11.74 billion** in assets, offering commercial, retail, and wealth management services, and has a pending merger with **Salisbury Bancorp** Company Overview (as of Dec 31, 2022) | Metric | Value | | :--- | :--- | | Total Assets | **$11.74 billion** | | Stockholders' Equity | **$1.17 billion** | | Full-time Equivalent Employees | **1,861** | - The company's business consists of providing commercial banking, retail banking, and wealth management services primarily in central and upstate New York, northeastern Pennsylvania, and parts of New England[14](index=14&type=chunk) - On December **5**, **2022**, the Company entered into an agreement to acquire **Salisbury Bancorp, Inc**. Under the terms, each share of Salisbury common stock will be converted into **0.7450** shares of the Company's common stock. Salisbury had assets of **$1.54 billion** at year-end **2022**[22](index=22&type=chunk) - The company faces strong competition from other financial institutions. It competes by emphasizing its community banking nature, local market knowledge, and specialized services like agricultural lending[23](index=23&type=chunk)[27](index=27&type=chunk) - The company is subject to extensive regulation by federal and state authorities, including the **Federal Reserve Board (FRB)**, the **Office of the Comptroller of the Currency (OCC)**, and the **Consumer Financial Protection Bureau (CFPB)**, particularly after crossing the **$10 billion** asset threshold[53](index=53&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks from adverse economic conditions, interest rate volatility, heightened regulatory scrutiny, cybersecurity threats, and its pending merger - The Company's financial performance is highly dependent on the economic conditions in its primary markets, including central/upstate New York and northeastern Pennsylvania. A downturn in these local economies could significantly increase nonperforming loans[110](index=110&type=chunk)[111](index=111&type=chunk) - Changes in interest rates could adversely affect net interest income. The **Federal Reserve's** rate hikes in **2022** to combat inflation present both opportunities and risks, potentially impacting loan demand and funding costs[113](index=113&type=chunk) - As of December **31**, **2022**, approximately **50%** of the loan portfolio consisted of commercial loans, which generally carry greater risk of non-payment and loss compared to residential real estate loans[115](index=115&type=chunk) - Having exceeded **$10 billion** in total assets, the Company is subject to heightened regulatory requirements, including limits on debit card interchange fees (**Durbin Amendment**), examinations by the **CFPB**, and applicability of the **Volcker Rule**, which increase compliance costs[126](index=126&type=chunk)[128](index=128&type=chunk) - The transition from **LIBOR** to alternative rates like **SOFR** by June **30**, **2023**, creates considerable costs and risks for a significant number of the Company's loans, derivatives, and other financial instruments[129](index=129&type=chunk)[130](index=130&type=chunk) - The pending merger with **Salisbury Bancorp** is subject to regulatory and shareholder approvals and presents significant integration challenges that could divert management focus and result in unanticipated costs, potentially failing to achieve the expected benefits[145](index=145&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[154](index=154&type=chunk) [Properties](index=29&type=section&id=Item%202.%20Properties) The company owns its headquarters and operates 140 branch locations, with 61 leased, deemed sufficient for current operations - The Company owns its headquarters and operates **140** branch locations, with **61** of these branches being leased properties[156](index=156&type=chunk) [Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) The company is not a party to any material legal proceedings beyond ordinary business litigation - There are no material legal proceedings against the Company, apart from ordinary litigation incidental to its business[158](index=158&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - None[159](index=159&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) NBT Bancorp's common stock trades on NASDAQ, with dividend capacity from its subsidiary and recent share repurchases - The Company's common stock is traded on the **NASDAQ Global Select Market** under the symbol "**NBTB**"[160](index=160&type=chunk) - At December **31**, **2022**, **NBT Bank** had the ability to pay dividends of **$145.3 million** to the parent company without prior approval from the **OCC**[164](index=164&type=chunk) - The Company purchased **400,000** shares of its common stock in **2022** at an average price of **$36.78** per share. As of December **31**, **2022**, **1,600,000** shares were available for repurchase under the plan expiring December **31**, **2023**[166](index=166&type=chunk) [[Reserved]](index=30&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income slightly decreased in **2022** to **$152.0 million**, driven by increased net interest income and loan growth, offset by higher loan loss provisions and **Durbin Amendment** impact Key Performance Metrics (2022 vs. 2021) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Income | **$152.0 million** | **$154.9 million** | | Diluted EPS | **$3.52** | **$3.54** | | Return on Average Assets | **1.29%** | **1.33%** | | Return on Average Equity | **12.67%** | **12.71%** | | Net Interest Margin (FTE) | **3.34%** | **3.03%** | - Net interest income increased by **$41.1 million** (**12.8%**) to **$362.2 million** in **2022**, primarily due to higher yields on earning assets from rising interest rates, which offset a **$17.6 million** year-over-year decrease in income from PPP loans[189](index=189&type=chunk) - The Company recorded a provision for loan losses of **$17.1 million** in **2022**, a significant shift from the **$8.3 million** net benefit recorded in **2021**, reflecting a deteriorating economic forecast and loan growth[243](index=243&type=chunk) - Noninterest income decreased **1.4%** to **$155.6 million**, largely due to an approximate **$8 million** negative impact on card services income from the **Durbin Amendment**. This was partially offset by growth in retirement plan administration fees[214](index=214&type=chunk) - Noninterest expense increased **6.0%** to **$304.5 million**, driven by higher salaries and employee benefits, technology investments, and **$1.0 million** in merger-related expenses[217](index=217&type=chunk) - Total loans grew to **$8.15 billion** at year-end **2022**, an increase of **8.7%** from **2021**. Excluding PPP loans, loan growth was **10.2%**[192](index=192&type=chunk) - Credit quality remained strong, with nonperforming loans decreasing to **0.26%** of total loans at year-end **2022** from **0.44%** at year-end **2021**. Net charge-offs were low at **0.11%** of average loans[227](index=227&type=chunk)[243](index=243&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company's primary market risk is interest rate risk, managed by **ALCO**, with modeling showing asset sensitivity and projected net interest income changes under rate shifts - The company's most significant market risk is interest rate risk, managed by the **Asset Liability Committee (ALCO)** primarily through earnings at risk modeling[270](index=270&type=chunk)[272](index=272&type=chunk)[274](index=274&type=chunk) Interest Rate Sensitivity Analysis (as of Dec 31, 2022) | Change in Interest Rates (bps) | Percent Change in Net Interest Income | | :--- | :--- | | **+200** | **2.83%** | | **+100** | **1.60%** | | **-200** | (**3.99%**) | - The company's focus in the current rising rate environment is on managing deposit expenses while allowing assets to reprice upward[276](index=276&type=chunk) [Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited financial statements with an unqualified auditor's opinion, highlighting the **Allowance for Credit Losses** as a critical audit matter - The independent auditor, **KPMG LLP**, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December **31**, **2022**[278](index=278&type=chunk)[536](index=536&type=chunk) - The auditor identified the **Allowance for Credit Losses (ACL)** for loans evaluated on a collective basis as a critical audit matter due to the high degree of subjective and complex judgment required in its estimation[282](index=282&type=chunk)[285](index=285&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | **$11,739,296** | **$12,012,111** | | Net Loans | **$8,049,347** | **$7,406,459** | | Total Deposits | **$9,495,933** | **$10,234,469** | | Total Liabilities | **$10,565,742** | **$10,761,658** | | Total Stockholders' Equity | **$1,173,554** | **$1,250,453** | Consolidated Income Statement Highlights (in thousands) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net Interest Income | **$362,190** | **$321,088** | **$315,678** | | Provision for Loan Losses | **$17,147** | (**$8,257**) | **$51,134** | | Noninterest Income | **$155,578** | **$157,794** | **$146,276** | | Noninterest Expense | **$304,465** | **$287,281** | **$277,733** | | Net Income | **$151,995** | **$154,885** | **$104,388** | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=108&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 on accounting and financial disclosure - None[530](index=530&type=chunk) [Controls and Procedures](index=108&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective, with **KPMG LLP** issuing an unqualified opinion - Based on an evaluation as of December **31**, **2022**, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective[530](index=530&type=chunk) - Management concluded that the Company's internal control over financial reporting was effective as of December **31**, **2022**, based on the criteria established in the **COSO framework**[532](index=532&type=chunk) - **KPMG LLP**, the independent auditor, issued an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December **31**, **2022**[533](index=533&type=chunk)[536](index=536&type=chunk) [Other Information](index=110&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[543](index=543&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=110&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - None[544](index=544&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=110&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's definitive Proxy Statement - The required information is incorporated by reference from the Company's definitive Proxy Statement[545](index=545&type=chunk) [Executive Compensation](index=110&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's definitive Proxy Statement - The required information is incorporated by reference from the Company's definitive Proxy Statement[546](index=546&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=110&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference, with details on equity compensation plan issuances and available securities Equity Compensation Plan Information | Plan Category | Securities to be issued upon exercise | Securities remaining available for future issuance | | :--- | :--- | :--- | | Equity compensation plans approved by stockholders | **9,100** | **384,182** | [Certain Relationships and Related Transactions, and Director Independence](index=110&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's definitive Proxy Statement - The required information is incorporated by reference from the Company's definitive Proxy Statement[548](index=548&type=chunk) [Principal Accountant Fees and Services](index=110&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) **KPMG LLP** is the independent auditor, with fee and service information incorporated by reference from the Proxy Statement - The Company's independent registered public accounting firm is **KPMG LLP**. Other required information is incorporated by reference from the Company's definitive Proxy Statement[549](index=549&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=111&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements and provides an index of exhibits, including the merger agreement with **Salisbury Bancorp** - This section lists the financial statements filed with the report and provides an index of exhibits, including the merger agreement with **Salisbury Bancorp, Inc**[550](index=550&type=chunk)[557](index=557&type=chunk) [Form 10-K Summary](index=113&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for this item - None[560](index=560&type=chunk)

− Approximately 51% of deposits come from MSAs where NBTB holds a top 5 rank − Approximately 92% of deposits come from counties where NBTB holds a top 10 rank − Approximately 72% of deposits come from counties where NBTB holds a top 5 rank Retail, Commercial and Municipal deposits generated from long-duration relationships One of only a few $10+ billion banks in New England (most are either much larger or smaller) Vermont − Market share dominated by larger banks. Opportunity for locally-focused bank − $704 ...

NBT Bancorp Inc. (NASDAQ:NBTB) Q4 2022 Earnings Conference Call January 24, 2023 8:30 AM ET Company Participants John H. Watt, Jr. - President & Chief Executive Officer Scott Kingsley - Chief Financial Officer Conference Call Participants Steve Moss - Raymond James Alex Twerdahl - Piper Sandler & Company Chris O'Connell - KBW Matthew Breese - Stephens Inc. Operator Good day, everyone. Welcome to the conference call covering NBT Bancorp's Fourth Quarter and Full Year 2022 Financial Results. This call is bein ...

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, 2022. 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 ...