NBT Bancorp, Inc. (NASDAQ:NBTB) Q4 2020 Earnings Conference Call January 28, 2020 8:30 AM ET Company Participants John Watt - President, CEO & Director John Moran - EVP & CFO Amy Wiles - EVP and Chief Credit & Risk Officer Conference Call Participants Alex Twerdahl - Piper Sandler & Co. Matthew Breese - Stephens Inc. Operator Good day, everyone. Welcome to the NBT Bancorp Fourth Quarter 2020 Financial Results Conference Call. This call is being recorded and has been made accessible to the public in accordan ...

[PART I FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1 Financial Statements](index=3&type=section&id=Item%201%20Financial%20Statements) This section presents NBT Bancorp Inc.'s unaudited interim consolidated financial statements, including core financial statements and detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets%20at%20September%2030%2C%202020%20and%20December%2031%2C%202019) Consolidated Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2020 | Dec 31, 2019 | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | | Total Assets | $10,850,212 | $9,715,925 | 11.68% | | Net Loans | $7,446,143 | $7,063,133 | 5.42% | | Allowance for Loan Losses | $114,500 | $72,965 | 56.92% | | Total Deposits | $8,958,183 | $7,587,820 | 18.06% | | Total Liabilities | $9,684,101 | $8,595,528 | 12.66% | | Total Stockholders' Equity | $1,166,111 | $1,120,397 | 4.08% | - Allowance for loan losses calculation changed from incurred loss methodology to **current expected loss (CECL) methodology** starting January 1, 2020[8](index=8&type=chunk) [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20for%20the%20three%20and%20nine%20month%20periods%20ended%20September%2030%2C%202020%20and%202019) Consolidated Statements of Income Highlights (in thousands, except per share data) | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change (%) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Total Interest, Fee and Dividend Income | $84,994 | $92,381 | -7.99% | $261,841 | $276,958 | -5.46% | | Total Interest Expense | $7,051 | $14,327 | -50.80% | $26,271 | $42,586 | -38.31% | | Net Interest Income | $77,943 | $78,054 | -0.14% | $235,570 | $234,372 | 0.51% | | Provision for Loan Losses | $3,261 | $6,324 | -48.44% | $51,741 | $19,408 | 166.61% | | Net Interest Income after Provision | $74,682 | $71,730 | 4.12% | $183,829 | $214,964 | -14.48% | | Total Noninterest Income | $37,727 | $39,720 | -5.02% | $108,161 | $107,782 | 0.35% | | Total Noninterest Expense | $66,308 | $69,749 | -4.93% | $202,529 | $204,440 | -0.93% | | Net Income | $35,113 | $32,379 | 8.44% | $70,194 | $92,061 | -23.75% | | Basic EPS | $0.80 | $0.74 | 8.11% | $1.61 | $2.10 | -23.33% | | Diluted EPS | $0.80 | $0.73 | 9.59% | $1.60 | $2.09 | -23.57% | - Provision for loan losses calculation changed from incurred loss methodology to **current expected loss (CECL) methodology** starting January 1, 2020[10](index=10&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20three%20and%20nine%20month%20periods%20ended%20September%2030%2C%202020%20and%202019) Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change (%) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Net Income | $35,113 | $32,379 | 8.44% | $70,194 | $92,061 | -23.75% | | Total Other Comprehensive Income | $(467) | $2,112 | -122.11% | $21,047 | $20,250 | 3.94% | | Comprehensive Income | $34,646 | $34,491 | 0.45% | $91,241 | $112,311 | -18.76% | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20three%20and%20nine%20month%20periods%20ended%20September%2030%2C%202020%20and%202019) Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | Balance at Sep 30, 2020 | Balance at Dec 31, 2019 | Change (%) | | :-------------------------------- | :---------------------- | :---------------------- | :--------- | | Common Stock | $497 | $497 | 0.00% | | Additional Paid-in Capital | $577,737 | $576,708 | 0.18% | | Retained Earnings | $726,650 | $696,214 | 4.37% | | Accumulated Other Comprehensive Income (Loss) | $2,021 | $(19,026) | -110.62% | | Common Stock in Treasury | $(140,794) | $(133,996) | 5.07% | | Total Stockholders' Equity | $1,166,111 | $1,120,397 | 4.08% | - The cumulative effect adjustment for ASU 2016-13 (CECL) implementation resulted in a **$4.339 million decrease in retained earnings** as of January 1, 2020[13](index=13&type=chunk) - Cash dividends of **$0.81 per share** were paid for the nine months ended September 30, 2020, totaling **$35.419 million**[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20nine%20month%20periods%20ended%20September%2030%2C%202020%20and%202019) Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Net Cash Provided by Operating Activities | $107,407 | $103,959 | 3.32% | | Net Cash (Used in) Provided by Investing Activities | $(658,654) | $67,369 | -1078.20% | | Net Cash Provided by (Used in) Financing Activities | $951,864 | $(78,187) | -1317.90% | | Net Increase in Cash and Cash Equivalents | $400,617 | $93,141 | 330.14% | | Cash and Cash Equivalents at End of Period | $617,460 | $274,096 | 125.28% | - Significant increase in cash from financing activities in 2020 primarily due to a **$1.37 billion net increase in deposits** and **$100 million from issuance of subordinated debt**, partially offset by a **$471.8 million decrease in short-term borrowings**[14](index=14&type=chunk) - Net cash used in investing activities significantly increased in 2020, primarily due to a **$436.6 million net increase in loans** and **$437.8 million in purchases of securities available for sale**[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 financial holding company providing commercial banking, retail banking, and wealth management services primarily across New York, Pennsylvania, New Hampshire, Massachusetts, Vermont, Maine, and Connecticut[16](index=16&type=chunk)[17](index=17&type=chunk) - The Company's principal subsidiaries include NBT Bank, National Association, NBT Financial Services, Inc., and NBT Holdings, Inc[16](index=16&type=chunk) [2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - The Company adopted **ASU 2016-13 (CECL)** on January 1, 2020, requiring estimation of credit losses over the life of a loan, replacing the incurred loss approach[20](index=20&type=chunk) - Loan portfolio segments for estimating loss are Commercial Loans (Commercial & Industrial, Paycheck Protection Program, Commercial Real Estate), Consumer Loans (Auto, Other Consumer), and Residential Loans[22](index=22&type=chunk)[23](index=23&type=chunk) - The Paycheck Protection Program (PPP) loans, fully guaranteed by the SBA, totaled over **$548 million** across approximately **3,000 loans** as of September 30, 2020[26](index=26&type=chunk) - For Held-to-Maturity (HTM) debt securities, expected credit losses are measured collectively by major security types, with no credit loss recorded for U.S. government agency/sponsored securities due to guarantees, and de minimis expected credit loss for municipal bonds[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - For Available-for-Sale (AFS) debt securities, impairment is assessed based on intent/requirement to sell or credit loss existence, with no credit loss recorded as of September 30, 2020, as unrealized losses were due to interest rate changes, not credit quality[43](index=43&type=chunk)[45](index=45&type=chunk) [3. Recent Accounting Pronouncements](index=14&type=section&id=3.%20Recent%20Accounting%20Pronouncements) - The Company adopted **ASU 2016-13 (CECL)** on January 1, 2020, resulting in a net decrease to retained earnings of **$4.3 million**, including a **$3.0 million** impact on loan allowance and **$2.8 million** on off-balance sheet credit exposure allowance[48](index=48&type=chunk)[49](index=49&type=chunk) - The Company adopted the **five-year capital transition relief option** for CECL's impact on regulatory capital, as provided by banking regulators[50](index=50&type=chunk) - As of September 30, 2020, **$233 million in loans** were in COVID-19 related modification programs, which are exempt from Troubled Debt Restructuring (TDR) classification under the CARES Act[51](index=51&type=chunk) - The Company is evaluating the impact of **ASU 2020-04 (Reference Rate Reform)** and **ASU 2019-12 (Simplifying Income Taxes)**, both effective for the Company on January 1, 2021[54](index=54&type=chunk)[55](index=55&type=chunk) [4. Securities](index=16&type=section&id=4.%20Securities) Available-for-Sale (AFS) Securities (in thousands) | Metric | Sep 30, 2020 | Dec 31, 2019 | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | | Amortized Cost | $1,164,633 | $968,554 | 20.24% | | Estimated Fair Value | $1,197,925 | $975,340 | 22.82% | | Unrealized Gains | $33,850 | $8,319 | 306.93% | | Unrealized Losses | $558 | $1,533 | -63.59% | Held-to-Maturity (HTM) Securities (in thousands) | Metric | Sep 30, 2020 | Dec 31, 2019 | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | | Amortized Cost | $663,088 | $630,074 | 5.24% | | Estimated Fair Value | $684,862 | $641,262 | 6.80% | | Unrealized Gains | $22,622 | $11,817 | 91.44% | | Unrealized Losses | $848 | $629 | 34.82% | - No allowance for credit losses was recorded for AFS or HTM securities as of September 30, 2020, as unrealized losses were primarily due to interest rate changes and credit risk was deemed minimal, especially for government-backed securities[58](index=58&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - During the nine months ended September 30, 2020, the Company sold **$1.0 million of HTM securities** due to significant deterioration in the issuer's creditworthiness, resulting in a **$1 thousand realized loss**[64](index=64&type=chunk) [5. Allowance for Credit Losses and Credit Quality of Loans](index=20&type=section&id=5.%20Allowance%20for%20Credit%20Losses%20and%20Credit%20Quality%20of%20Loans) - The allowance for credit losses on loans increased by **$3.0 million** on January 1, 2020, due to the adoption of CECL[74](index=74&type=chunk) Allowance for Credit Losses by Portfolio Segment (in thousands) | Segment | Balance as of Sep 30, 2020 | Balance as of Jan 1, 2020 (after ASC 326 adoption) | Change (%) | | :---------------- | :------------------------- | :------------------------------------------------ | :--------- | | Commercial Loans | $51,746 | $27,156 | 90.55% | | Consumer Loans | $38,562 | $32,122 | 20.05% | | Residential | $24,192 | $16,721 | 44.68% | | Total | $114,500 | $75,999 | 50.66% | - The increase in allowance for credit losses from Day 1 to September 30, 2020, was primarily due to the deterioration of macroeconomic factors related to the COVID-19 pandemic[80](index=80&type=chunk) Past Due and Nonperforming Loans by Segment (in thousands) as of September 30, 2020 | Segment | 31-60 Days Past Due Accruing | 61-90 Days Past Due Accruing | >90 Days Past Due Accruing | Nonaccrual | Total Loans | | :---------------- | :--------------------------- | :--------------------------- | :------------------------- | :--------- | :---------- | | Commercial Loans | $1,070 | $130 | $12 | $21,414 | $3,978,188 | | Consumer Loans | $11,012 | $2,981 | $1,947 | $3,271 | $1,591,655 | | Residential | $1,505 | $256 | $620 | $11,211 | $1,990,800 | | Total Loans | $13,587 | $3,367 | $2,579 | $35,896 | $7,560,643 | - The Company's internal loan grading system for Commercial Loans (C&I, PPP, CRE) includes Pass, Special Mention, Substandard, and Doubtful grades, with an increase in non-pass credits due to proactive downgrades for COVID-19 impacted loans in higher-risk industries[83](index=83&type=chunk)[84](index=84&type=chunk) - Consumer and Residential loans are graded as Nonperforming (over 90 days past due or on nonaccrual) or Performing[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) Troubled Debt Restructurings (TDRs) (in thousands) | Metric | 3 Months Ended Sep 30, 2020 (Post-Modification Outstanding Investment) | 9 Months Ended Sep 30, 2020 (Post-Modification Outstanding Investment) | | :-------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | | Consumer Loans | $0 | $44 | | Residential | $715 | $1,745 | | Total TDRs | $715 | $1,789 | - Loan modifications made in response to COVID-19 are generally not accounted for as TDRs due to CARES Act guidance[94](index=94&type=chunk) [6. Subordinated Debt](index=30&type=section&id=6.%20Subordinated%20Debt) - On June 23, 2020, the Company issued **$100.0 million of 5.00% fixed-to-floating rate subordinated notes due 2030**, qualifying as Tier 2 capital[104](index=104&type=chunk) - The notes bear a fixed annual interest rate of **5.00%** until July 1, 2025, then a floating rate of three-month SOFR plus **4.85%**[104](index=104&type=chunk) Subordinated Debt (in thousands) as of September 30, 2020 | Metric | Amount | | :-------------------------------- | :----- | | Subordinated notes issued June 2020 | $100,000 | | Unamortized debt issuance costs | $(2,057) | | Total subordinated debt, net | $97,943 | [7. Defined Benefit Post-Retirement Plans](index=31&type=section&id=7.%20Defined%20Benefit%20Post-Retirement%20Plans) - The Company sponsors a qualified, noncontributory defined benefit pension plan and supplemental employee retirement plans for executives, collectively referred to as 'Pension Benefits'[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - The Company also provides post-retirement health care benefits ('Other Benefits') for employees hired on or before January 1, 2000, and assumed benefits from the Alliance acquisition[111](index=111&type=chunk) Total Net Periodic (Benefit) Cost (in thousands) | Plan Type | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Pension Benefits | $(482) | $206 | $(1,446) | $570 | | Other Benefits | $70 | $82 | $210 | $283 | | Total | $(412) | $288 | $(1,236) | $853 | [8. Earnings Per Share](index=32&type=section&id=8.%20Earnings%20Per%20Share) Earnings Per Share (EPS) Reconciliation | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic EPS | $0.80 | $0.74 | $1.61 | $2.10 | | Diluted EPS | $0.80 | $0.73 | $1.60 | $2.09 | | Weighted Average Common Shares Outstanding (Basic) | 43,643 | 43,825 | 43,704 | 43,806 | | Weighted Average Common Shares and Equivalents (Diluted) | 43,942 | 44,138 | 43,997 | 44,108 | - **3,250 stock options** for the three and nine months ended September 30, 2020, were not included in diluted EPS calculation as their exercise price exceeded the average market price[117](index=117&type=chunk) [9. Reclassification Adjustments Out of Other Comprehensive Income (Loss)](index=33&type=section&id=9.%20Reclassification%20Adjustments%20Out%20of%20Other%20Comprehensive%20Income%20(Loss)) Total Reclassifications from AOCI, Net of Tax (in thousands) | Period | Amount | | :-------------------------- | :----- | | Three Months Ended Sep 30, 2020 | $480 | | Three Months Ended Sep 30, 2019 | $335 | | Nine Months Ended Sep 30, 2020 | $1,370 | | Nine Months Ended Sep 30, 2019 | $516 | - Reclassification adjustments from AOCI primarily relate to AFS securities (gains/amortization), cash flow hedges (unrealized losses/gains reclassified to interest expense), and pension and other benefits (amortization of net losses and prior service costs)[119](index=119&type=chunk) [10. Derivative Instruments and Hedging Activities](index=34&type=section&id=10.%20Derivative%20Instruments%20and%20Hedging%20Activities) - The Company uses derivative financial instruments, primarily interest rate swaps, to manage interest rate risk and facilitate customer transactions[120](index=120&type=chunk)[121](index=121&type=chunk) Derivative Instruments Notional Amounts (in thousands) | Type | Sep 30, 2020 | Dec 31, 2019 | | :-------------------------------- | :----------- | :----------- | | Interest Rate Derivatives (Not Designated as Hedging) | $2,265,651 | $963,209 | | Risk Participation Agreements | $109,311 | $97,614 | | Interest Rate Derivatives (Designated as Hedging) | $25,000 | $50,000 | - For cash flow hedges, gains or losses are recorded in AOCI and reclassified to interest expense as hedged transactions affect earnings; an estimated **$124 thousand** will be reclassified as a reduction to interest expense in the next twelve months[125](index=125&type=chunk) [11. Fair Value Measurements and Fair Value of Financial Instruments](index=36&type=section&id=11.%20Fair%20Value%20Measurements%20and%20Fair%20Value%20of%20Financial%20Instruments) - Fair value measurements are categorized into a three-level hierarchy based on the observability of inputs: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[127](index=127&type=chunk) Financial Assets Measured at Fair Value on a Recurring Basis (in thousands) as of September 30, 2020 | Asset Type | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :-------- | :------ | :-------- | | AFS Securities | $0 | $1,197,925 | $0 | $1,197,925 | | Equity Securities | $26,758 | $4,000 | $0 | $30,758 | | Derivatives | $0 | $122,896 | $0 | $122,896 | | Total Assets | $26,758 | $1,324,821 | $0 | $1,351,579 | Financial Liabilities Measured at Fair Value on a Recurring Basis (in thousands) as of September 30, 2020 | Liability Type | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :-------- | :------ | :-------- | | Derivatives | $0 | $122,834 | $0 | $122,834 | | Total Liabilities | $0 | $122,834 | $0 | $122,834 | - As of September 30, 2020, the Company had **$10.9 million** in collateral-dependent individually evaluated loans with an estimated allowance for credit loss of **$3.0 million**, classified as Level 3 fair value measurements[134](index=134&type=chunk) [12. Commitments and Contingencies](index=39&type=section&id=12.%20Commitments%20and%20Contingencies) - Commitments to extend credit and unused lines of credit totaled **$2.1 billion** at September 30, 2020, up from **$1.9 billion** at December 31, 2019[145](index=145&type=chunk) - Standby letters of credit totaled **$52.3 million** at September 30, 2020, an increase from **$34.5 million** at December 31, 2019[147](index=147&type=chunk) - The Company's exposure to credit loss from these off-balance sheet instruments is represented by their contractual amount, and credit risk is managed with normal credit policies[145](index=145&type=chunk) [Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes NBT Bancorp Inc.'s financial condition and operating results, covering key performance indicators, COVID-19 impact, and risk management [Forward-looking Statements](index=40&type=section&id=Forward-looking%20Statements) - The report contains forward-looking statements, identified by terms like 'anticipate,' 'believe,' 'expect,' and 'forecasts,' which are subject to various factors that could cause actual results to differ materially[150](index=150&type=chunk) - The COVID-19 pandemic is identified as one of the most significant factors that could adversely affect the Company's financial condition, results of operations, and cash flows[151](index=151&type=chunk) [Non-GAAP Measures](index=41&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 are standard in the financial institution industry[154](index=154&type=chunk) - Non-GAAP measures should be considered in conjunction with GAAP measures and other relevant information[154](index=154&type=chunk) [Critical Accounting Policies](index=41&type=section&id=Critical%20Accounting%20Policies) - Critical accounting policies include the allowance for credit losses, pension accounting, and provision for income taxes, which require significant management judgment and are subject to inherent uncertainties[155](index=155&type=chunk) - The adoption of **CECL** on January 1, 2020, significantly changed the methodology for estimating credit losses, requiring an 'expected loss' approach over the life of an exposure, which may lead to greater volatility in reported earnings[156](index=156&type=chunk)[157](index=157&type=chunk) [Overview](index=42&type=section&id=Overview) - The Company's operating results in the first nine months of 2020 were significantly impacted by the COVID-19 pandemic and the CECL accounting methodology[161](index=161&type=chunk) Pre-Provision Net Revenue (PPNR) (in thousands) | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | PPNR | $49,603 | $48,163 | $145,183 | $138,808 | - PPNR for Q3 2020 was **$49.6 million**, a **2% decline** from the previous quarter due to lower net interest income and slightly higher operating expenses, partly offset by higher noninterest income[164](index=164&type=chunk) - Tangible book value per share grew **3%** for the quarter and **8%** from prior year to **$20.02** at September 30, 2020[164](index=164&type=chunk) [COVID-19 Pandemic and Company Response](index=43&type=section&id=COVID-19%20Pandemic%20and%20Company%20Response) - The Company implemented a comprehensive pandemic response plan, including payment relief for customers (180 days or less, waiving late fees, not reporting late payments for current customers), special lending programs, and participation in government relief programs[166](index=166&type=chunk) - The Company processed approximately **3,000 Paycheck Protection Program (PPP) loans** totaling over **$548 million**, with an online forgiveness solution launched in Q3 2020[167](index=167&type=chunk) - Employee safety measures included remote work for **90% of non-branch staff** (45% returned to worksite), health and safety precautions in branches, additional benefits, and cross-training/redeployment programs[168](index=168&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Key Performance Indicators | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change (%) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Net Income | $35,113 | $32,379 | 8.44% | $70,194 | $92,061 | -23.75% | | Diluted EPS | $0.80 | $0.73 | 9.59% | $1.60 | $2.09 | -23.57% | | Return on Average Assets (annualized) | 1.29% | 1.34% | -3.73% | 0.90% | 1.29% | -30.23% | | Return on Average Equity (annualized) | 12.09% | 11.83% | 2.20% | 8.23% | 11.66% | -29.42% | | Return on Average Tangible Common Equity (annualized) | 16.51% | 16.43% | 0.49% | 11.36% | 16.42% | -30.82% | - Net income for Q3 2020 increased by **$10.4 million** from Q2 2020 and **$2.7 million** from Q3 2019[169](index=169&type=chunk) - Net income for the nine months ended September 30, 2020, decreased by **$21.9 million** compared to the same period in 2019, primarily due to higher provision for loan losses[170](index=170&type=chunk) [Net Interest Income](index=44&type=section&id=Net%20Interest%20Income) Net Interest Income and Margin (FTE) | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change (bps) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change (bps) | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Net Interest Income (FTE) | $78,268 | $78,428 | -160 | $236,553 | $235,690 | 863 | | Net Interest Margin (FTE) | 3.17% | 3.57% | -40 | 3.35% | 3.61% | -26 | - Net interest income for Q3 2020 was **$77.9 million**, down **3.1%** from the prior quarter, with FTE net interest margin decreasing **21 bps** to **3.17%**[173](index=173&type=chunk) - For the nine months ended September 30, 2020, net interest income increased **0.5%** to **$235.6 million**, while FTE net interest margin decreased **26 bps** to **3.35%** compared to the same period in 2019[175](index=175&type=chunk)[181](index=181&type=chunk) - The decrease in net interest margin was driven by a **77 bps decrease** in the yield on average interest-earning assets, partly offset by a **51 bps decrease** in the cost of interest-bearing liabilities, influenced by Federal Reserve rate cuts[174](index=174&type=chunk) [Noninterest Income](index=48&type=section&id=Noninterest%20Income) Noninterest Income (in thousands) | Category | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change (%) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Service charges on deposit accounts | $3,087 | $4,330 | -28.77% | $9,613 | $12,790 | -24.84% | | ATM and debit card fees | $7,194 | $6,277 | 14.61% | $19,184 | $17,958 | 6.83% | | Retirement plan administration fees | $9,685 | $7,600 | 27.43% | $26,840 | $23,170 | 15.88% | | Wealth management | $7,695 | $7,630 | 0.85% | $21,791 | $21,315 | 2.23% | | Insurance | $3,742 | $4,000 | -6.45% | $11,303 | $12,291 | -8.04% | | Bank owned life insurance | $1,255 | $1,556 | -19.34% | $4,010 | $4,119 | -2.65% | | Net securities gains (losses) | $84 | $4,036 | -97.92% | $(548) | $4,024 | -113.62% | | Other | $4,985 | $4,291 | 16.17% | $15,968 | $12,115 | 31.80% | | Total Noninterest Income | $37,727 | $39,720 | -5.02% | $108,161 | $107,782 | 0.35% | - Noninterest income for Q3 2020 increased **7.8%** from the prior quarter, driven by higher service charges on deposit accounts, ATM/debit card fees, retirement plan administration fees (due to ABG acquisition), and wealth management fees[186](index=186&type=chunk) - For the nine months ended September 30, 2020, noninterest income increased **0.4%** from the prior year, primarily due to the ABG acquisition, higher swap fee income, mortgage banking income, and ATM/debit card fees, partly offset by lower service charges on deposit accounts due to COVID-19[187](index=187&type=chunk) [Noninterest Expense](index=48&type=section&id=Noninterest%20Expense) Noninterest Expense (in thousands) | Category | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change (%) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Salaries and employee benefits | $40,451 | $39,352 | 2.79% | $120,918 | $117,275 | 3.11% | | Occupancy | $5,294 | $5,335 | -0.77% | $16,354 | $17,053 | -4.10% | | Data processing and communications | $4,058 | $4,492 | -9.66% | $12,370 | $13,599 | -9.04% | | Professional fees and outside services | $3,394 | $3,535 | -3.99% | $10,694 | $10,562 | 1.25% | | Equipment | $5,073 | $4,487 | 13.06% | $14,494 | $13,762 | 5.32% | | FDIC expense (credit) | $645 | $(20) | -3325.00% | $1,949 | $1,946 | 0.15% | | Amortization of intangible assets | $856 | $874 | -2.06% | $2,573 | $2,735 | -5.92% | | Other | $3,857 | $8,374 | -53.94% | $14,730 | $18,130 | -18.76% | | Total Noninterest Expense | $66,308 | $69,749 | -4.93% | $202,529 | $204,440 | -0.93% | - Noninterest expense for Q3 2020 increased **1.5%** from the prior quarter due to higher salaries/employee benefits and equipment costs, but decreased **4.9%** from Q3 2019 due to lower travel/training, pension costs, and **$3.1 million** in 2019 reorganization expenses[189](index=189&type=chunk) - For the nine months ended September 30, 2020, noninterest expense decreased **0.9%** from the prior year, driven by 2019 reorganization expenses and lower data processing/occupancy costs, partly offset by higher salaries/employee benefits (ABG acquisition) and equipment costs[190](index=190&type=chunk) [Income Taxes](index=49&type=section&id=Income%20Taxes) Income Tax Expense and Effective Tax Rate | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change (%) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Income Tax Expense | $10,988 | $9,322 | 17.87% | $19,267 | $26,245 | -26.67% | | Effective Tax Rate | 23.8% | 22.4% | 1.4% | 21.5% | 22.2% | -0.7% | - The effective tax rate for Q3 2020 was **23.8%**, higher than the prior quarter (**21.0%**) and Q3 2019 (**22.4%**), due to a higher level of taxable income relative to total income and a true-up to the full-year estimated effective tax rate of **21.8%**[191](index=191&type=chunk) - Income tax expense for the nine months ended September 30, 2020, decreased by **$7.0 million** from the prior year, with an effective tax rate of **21.5%**, due to lower taxable income from the COVID-19 pandemic and increased loan loss provisions[192](index=192&type=chunk) [ANALYSIS OF FINANCIAL CONDITION](index=50&type=section&id=ANALYSIS%20OF%20FINANCIAL%20CONDITION) [Securities](index=50&type=section&id=Securities) - Total securities increased by **$258.6 million (15.8%)** from December 31, 2019, to September 30, 2020, representing **17.4% of total assets**[194](index=194&type=chunk) Securities Portfolio Composition | Category | Sep 30, 2020 | Dec 31, 2019 | | :-------------------------------- | :----------- | :----------- | | Mortgage-backed securities (15 years or less) | 19% | 25% | | Mortgage-backed securities (greater than 15 years) | 10% | 12% | | Collateralized mortgage obligations | 38% | 45% | | Municipal securities | 12% | 10% | | U.S. agency notes | 19% | 6% | | Corporate | 1% | - | | Equity securities | 1% | 2% | | Total | 100% | 100% | - All mortgage-backed securities, U.S. agency notes, and collateralized mortgage obligations are guaranteed by Fannie Mae, Freddie Mac, FHLB, Federal Farm Credit Banks, or GNMA[194](index=194&type=chunk) [Loans](index=50&type=section&id=Loans) Loan Portfolio by Type (in thousands) | Loan Type | Sep 30, 2020 | Dec 31, 2019 | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | | Commercial | $1,297,408 | $1,302,209 | -0.37% | | Commercial real estate | $2,281,843 | $2,142,057 | 6.53% | | Paycheck protection program | $514,558 | $0 | - | | Residential real estate mortgages | $1,448,530 | $1,445,156 | 0.23% | | Indirect auto | $989,369 | $1,193,635 | -17.12% | | Specialty lending | $566,973 | $542,063 | 4.60% | | Home equity | $404,346 | $444,082 | -8.95% | | Other consumer | $57,616 | $66,896 | -13.87% | | Total Loans | $7,560,643 | $7,136,098 | 5.95% | - Total loans increased by **$424.5 million** from December 31, 2019, to September 30, 2020; excluding PPP loans, total loans decreased by **$90.0 million**[196](index=196&type=chunk) - The decrease in total consumer loans (**$225.0 million**) was driven by managed run-off of indirect auto loans[196](index=196&type=chunk) [Allowance for Loan Losses, Provision for Loan Losses and Nonperforming Assets](index=50&type=section&id=Allowance%20for%20Loan%20Losses%2C%20Provision%20for%20Loan%20Losses%20and%20Nonperforming%20Assets) - The allowance for credit losses totaled **$114.5 million** at September 30, 2020, up from **$72.4 million** at September 30, 2019, primarily due to CECL implementation and a deteriorated economic forecast from COVID-19[199](index=199&type=chunk) - The allowance for credit losses as a percentage of loans was **1.51%** (**1.62%** excluding PPP loans) at September 30, 2020, compared to **1.03%** at September 30, 2019[199](index=199&type=chunk) Nonperforming Assets (in thousands) | Category | Sep 30, 2020 Amount | Sep 30, 2020 % | Dec 31, 2019 Amount | Dec 31, 2019 % | | :-------------------------------- | :------------------ | :------------- | :------------------ | :------------- | | Total Nonaccrual Loans | $35,896 | 100% | $25,174 | 100% | | Loans 90+ Days Past Due & Accruing | $2,579 | 100% | $3,717 | 100% | | Total Nonperforming Loans | $38,475 | - | $28,891 | - | | OREO | $1,605 | - | $1,458 | - | | Total Nonperforming Assets | $40,080 | - | $30,349 | - | | Total Nonperforming Loans to Total Loans | 0.51% | - | 0.40% | - | | Total Nonperforming Assets to Total Assets | 0.37% | - | 0.31% | - | - Nonperforming loans to total loans increased to **0.51%** at September 30, 2020 (**0.55%** excluding PPP loans), primarily due to two COVID-19 impacted commercial relationships totaling **$10.9 million** moving to non-accrual[205](index=205&type=chunk) - Potential problem loans increased to **$134.1 million** at September 30, 2020, from **$84.1 million** at December 31, 2019, due to proactive risk rating adjustments for higher-risk industries impacted by COVID-19[207](index=207&type=chunk) [Deposits](index=53&type=section&id=Deposits) - Total deposits reached **$9.0 billion** at September 30, 2020, an **18.1% increase** from December 31, 2019[208](index=208&type=chunk) - Deposit growth was primarily driven by a **20.0% increase in demand deposits** and a **6.6% increase in interest-bearing deposits** (mainly money market accounts), largely attributed to PPP loan funding and government support programs[208](index=208&type=chunk) [Borrowed Funds](index=53&type=section&id=Borrowed%20Funds) - Short-term borrowings decreased significantly to **$183.5 million** at September 30, 2020, from **$655.3 million** at December 31, 2019[209](index=209&type=chunk) - Long-term debt remained stable at **$64.1 million** at September 30, 2020[209](index=209&type=chunk) [Subordinated Debt](index=53&type=section&id=Subordinated%20Debt) - The Company issued **$100.0 million of 5.00% fixed-to-floating rate subordinated notes due 2030** on June 23, 2020, which qualify as Tier 2 capital[211](index=211&type=chunk) - Net subordinated debt, after unamortized issuance costs, was **$97.9 million** as of September 30, 2020[211](index=211&type=chunk) [Capital Resources](index=53&type=section&id=Capital%20Resources) - Stockholders' equity increased to **$1.2 billion (10.75% of total assets)** at September 30, 2020, from **$1.1 billion (11.53% of total assets)** at December 31, 2019[212](index=212&type=chunk) - The increase in equity was driven by net income of **$70.2 million** and a **$21.0 million increase in AOCI**, partially offset by **$35.4 million in dividends**, **$8.0 million in common stock repurchases**, and a **$4.3 million negative adjustment** from CECL adoption[212](index=212&type=chunk) Capital Measurements | Metric | Sep 30, 2020 | Dec 31, 2019 | | :-------------------------------- | :----------- | :----------- | | Tier 1 leverage ratio | 9.48% | 10.33% | | Common equity tier 1 capital ratio | 11.63% | 11.29% | | Tier 1 capital ratio | 12.88% | 12.56% | | Total risk-based capital ratio | 15.43% | 13.52% | | Cash dividends as % of net income | 50.46% | 38.02% | | Book value per common share | $26.74 | $25.58 | | Tangible book value per common share | $20.02 | $19.03 | | Tangible equity ratio | 8.27% | 8.84% | - The Company remained 'well capitalized' at September 30, 2020, with all capital ratios exceeding regulatory minimums[215](index=215&type=chunk) - The Company adopted the **five-year capital transition relief** for CECL's impact on regulatory capital, deferring the initial adjustment and phasing in ongoing impacts[218](index=218&type=chunk) [Liquidity and Interest Rate Sensitivity Management](index=55&type=section&id=Liquidity%20and%20Interest%20Rate%20Sensitivity%20Management) [Market Risk](index=55&type=section&id=Market%20Risk) - Interest rate risk is the most significant market risk, managed by the Asset Liability Committee (ALCO) through monitoring asset/liability duration, loan/deposit pricing, and investment/funding strategies[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) - ALCO uses earnings at risk modeling (interest rate sensitivity analysis) to project net interest income changes under various interest rate scenarios (**+200 bps, +100 bps, -50 bps**)[224](index=224&type=chunk) Interest Rate Sensitivity Analysis (Percentage Change in Net Interest Income over 12 months) | Change in Interest Rates (bps) | Percent Change in Net Interest Income | | :----------------------------- | :------------------------------------ | | +200 | 0.89% | | +100 | 1.37% | | -50 | (0.26%) | - In declining rate scenarios, net interest income is projected to decrease as earning assets reprice lower while liabilities remain near their floors. In rising rate scenarios, a modest increase is projected, subject to deposit repricing[225](index=225&type=chunk) [Liquidity Risk](index=56&type=section&id=Liquidity%20Risk) - The Company's primary liquidity measure, 'Basic Surplus,' was **25.5% of total assets ($2.8 billion)** at September 30, 2020, well above the minimum policy level of **5%**[228](index=228&type=chunk) - Available borrowing capacity from FHLB was approximately **$1.5 billion**, with an additional **$720.8 million** from unpledged securities, and **$1.8 billion** from other bank facilities at September 30, 2020[229](index=229&type=chunk) - The Bank also had capacity to borrow **$713.6 million** from the FRB's 'Borrower-in-Custody' program by pledging automobile loans[229](index=229&type=chunk) - Potential liquidity risks include deposit outflows, increased draws on lines of credit, and disruptions in wholesale funding markets, though significant monetary and fiscal policy actions have helped mitigate these[230](index=230&type=chunk) [Item 3 Quantitative and Qualitative Disclosures about Market Risk](index=57&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section incorporates detailed market risk disclosures, primarily interest rate risk, from the Management's Discussion and Analysis - Information regarding quantitative and qualitative disclosures about market risk is incorporated by reference from the 'Liquidity and Interest Rate Sensitivity Management' section[233](index=233&type=chunk) [Item 4 Controls and Procedures](index=57&type=section&id=Item%204%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures, noting internal control modifications for CECL adoption - The Company's disclosure controls and procedures were evaluated and deemed effective as of September 30, 2020[234](index=234&type=chunk) - New and modified internal controls over financial reporting were implemented as part of the CECL accounting standard adoption, covering model creation, governance, assumptions, and loan-level data[235](index=235&type=chunk) - No other material changes to internal control over financial reporting occurred during the period[235](index=235&type=chunk) [PART II OTHER INFORMATION](index=58&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1 Legal Proceedings](index=58&type=section&id=Item%201%20Legal%20Proceedings) This section reports no material legal proceedings beyond routine litigation, consistent with prior disclosures - No material legal proceedings exist other than routine litigation incidental to the business, as described in the 2019 Annual Report on Form 10-K[237](index=237&type=chunk) [Item 1A Risk Factors](index=58&type=section&id=Item%201A%20Risk%20Factors) This section reports no material changes to risk factors previously disclosed in the 2019 Annual Report and prior quarterly reports - No material changes to risk factors have occurred since the 2019 Annual Report on Form 10-K and previous quarterly reports[238](index=238&type=chunk) [Item 2 Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities or use of proceeds for the period - Not applicable for this reporting period[240](index=240&type=chunk) [Item 3 Defaults Upon Senior Securities](index=59&type=section&id=Item%203%20Defaults%20Upon%20Senior%20Securities) This section reports no defaults upon senior securities during the period - None reported for this period[240](index=240&type=chunk) [Item 4 Mine Safety Disclosures](index=59&type=section&id=Item%204%20Mine%20Safety%20Disclosures) This section reports no mine safety disclosures required for the period - None reported for this period[240](index=240&type=chunk) [Item 5 Other Information](index=59&type=section&id=Item%205%20Other%20Information) This section reports no other information for the period - None reported for this period[240](index=240&type=chunk) [Item 6 Exhibits](index=60&type=section&id=Item%206%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, executive certifications, and XBRL files - Exhibits include Restated Certificate of Incorporation, Amended and Restated Bylaws, Certificate of Designation of Preferred Stock, CEO and CFO certifications (Rules 13(a)-14(a)/15(d)-14(e) and 18 U.S.C. 1350), and Inline XBRL documents[241](index=241&type=chunk) [SIGNATURES](index=61&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q, certifying its submission by the Chief Financial Officer - The report was duly signed on November 6, 2020, by John V. Moran, Executive Vice President and Chief Financial Officer of NBT Bancorp Inc[242](index=242&type=chunk)[243](index=243&type=chunk)

Financial Data and Key Metrics Changes - NBT achieved earnings of $0.80 per share, supported by lower provisions, focused expense control, and strong fee-based income [9][12] - The provision for loan losses was down to $3.3 million, significantly lower than the previous quarter and the same quarter last year [12][28] - Pre-provision net revenue (PPNR) was nearly $50 million, down about $1 million from the previous quarter but higher compared to the year-ago period [14] - Tangible book value per share increased approximately 3%, and the Common Equity Tier 1 (CET1) ratio improved by about 30 basis points compared to the second quarter [14] Business Line Data and Key Metrics Changes - Core loans, excluding PPP loans, decreased by about 1% for the quarter, with commercial activity resetting lower compared to previous robust levels [15] - New England commercial loans increased approximately 35% year-over-year, driven by strong commercial real estate activity [16] - Deposits rose over $140 million for the quarter, with core deposits up an even stronger $190 million [17] - Non-interest income increased by $2.8 million from the previous quarter, up just over 5% from last year, with retail banking fees rebounding from depressed levels [23] Market Data and Key Metrics Changes - Customer cash remains elevated due to increased liquidity from government support programs, leading to stickier deposits than expected [17] - The cost of total deposits was low at 19 basis points, reflecting effective management of funding costs [18] Company Strategy and Development Direction - The company is focused on long-term growth, expanding in New England, and acquiring new customers in its operational states [6][7] - NBT has implemented a new digital banking platform and launched a market-leading mortgage origination system to enhance customer experience [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about loan growth as commercial activity rebuilds, particularly in New England [47] - The environment remains fluid with uncertainty around the economy and pandemic, but management believes charge-off activity will be a significant factor in future provisioning needs [29][60] Other Important Information - The Board approved a $0.27 dividend payable on December 15 and reaffirmed the dividend strategy for upcoming quarters [10] - The company announced the consolidation of seven branches, expected to result in approximately $1 million in annual savings starting next year [26] Q&A Session Summary Question: NII and Margin Outlook - Management indicated that liquidity redeployment will be crucial for reversing NII in coming quarters, with cautious optimism for loan growth [46][47] Question: Operating Expenses - Other operating expenses were flat, with a slight decrease in travel and entertainment costs due to COVID-19 [53] Question: Fee Income Outlook - Fee income is expected to trend slightly down in Q4 due to seasonality, but optimism remains for growth in 2021 driven by strong business pipelines [55] Question: Charge-Off Expectations - Full-year net charge-offs are expected to be higher than year-to-date levels, with some loans potentially moving to charge-off status in Q4 [58][60] Question: M&A Pipeline - Management sees improved visibility into credit portfolios in early 2021, with M&A being a significant growth tool alongside organic growth [61][62] Question: New Loan Yields - Loan yields are under pressure, with new loans expected to be lower than existing costs, impacting overall profitability [68][70]

NBT Bancorp Inc. Q3 2020 Earnings Presentation Forward-Looking Statements This presentation contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of phrases such as "anticipate," "believe," "expect," "forecasts," "projects," "will," "can," "would," "should," "could," "may," or other similar terms. There are a number of factors, many of which are beyond the Company's control that could cause actual results to dif ...

Financial Performance - Net income for the second quarter of 2020 was $31.3 million, a decrease of $5.8 million compared to the second quarter of 2019[166]. - Net income for Q2 2020 was $24.7 million, up 37.5% from $10.4 million in Q1 2020, but down 19% from $30.6 million in Q2 2019[172]. - Diluted earnings per share increased by $0.33 from the first quarter of 2020, but decreased by $0.13 from the second quarter of 2019[166]. - Diluted earnings per share for Q2 2020 was $0.56, compared to $0.23 in Q1 2020 and $0.69 in Q2 2019[172]. - Return on average assets (annualized) was 0.94% for Q2 2020, up from 0.43% in Q1 2020 but down from 1.28% in Q2 2019[172]. - Return on average equity (annualized) was 8.76% for Q2 2020, compared to 3.69% in Q1 2020 and 11.63% in Q2 2019[172]. Loan and Credit Quality - Provision for loan losses for the three months ended June 30, 2020, was $18.8 million, reflecting an increase of $11.6 million from the second quarter of 2019[166]. - The provision for loan losses was $48.5 million for the six months ended June 30, 2020, compared to $13.1 million for the same period in 2019[201]. - The allowance for credit losses totaled $113.5 million at June 30, 2020, representing 1.49% of total loans, up from 1.04% at June 30, 2019[201]. - Nonperforming loans to total loans was 0.36% at June 30, 2020, down from 0.40% at December 31, 2019[203]. - Approximately $115.3 million in potential problem loans were identified at June 30, 2020, up from $84.1 million at December 31, 2019[205]. - 13% of total loans outstanding were in payment deferral programs as of June 30, 2020, with 80% being commercial borrowers[204]. Interest Income and Expenses - Net interest income for Q2 2020 was $80.4 million, an increase of $3.3 million or 4.2% from the previous quarter[176]. - Average interest-earning assets increased by $742.8 million to $9.6 billion in Q2 2020, primarily due to an increase in short-term interest-bearing accounts[176]. - Interest expense decreased by $5.2 million or 42.7% in Q2 2020, with the cost of interest-bearing liabilities down to 0.45%[176]. - The interest rate spread decreased to 3.24% for the six months ended June 30, 2020, compared to 3.34% for the same period in 2019[186]. - The average yield on loans was 4.26% for the six months ended June 30, 2020, down from 4.68% in the same period of 2019[183]. Assets and Deposits - Total assets increased to $10,157.6 million as of June 30, 2020, compared to $9,553.5 million in the same period of 2019, reflecting a growth of 6.3%[183]. - Total loans increased by $491.9 million to $7.6 billion at June 30, 2020 from December 31, 2019, with commercial real estate loans increasing $114.5 million to $2.3 billion[198]. - Total deposits were $8.8 billion at June 30, 2020, up $1.2 billion, or 16.2%, from December 31, 2019[206]. - The Company reported a total interest-earning assets of $9,233.9 million for the six months ended June 30, 2020, compared to $8,747.3 million in the same period of 2019, indicating a growth of 5.6%[183]. Noninterest Income and Expenses - Noninterest income for the three months ended June 30, 2020, was $35.0 million, a decrease of $0.4 million, or 1.2%, from the prior quarter, but an increase of $0.8 million, or 2.2%, from the second quarter of 2019[188]. - Noninterest income for the six months ended June 30, 2020, was $70.4 million, up $2.4 million, or 3.5%, from the same period in 2019[189]. - Total noninterest expense for the six months ended June 30, 2020, was $136.2 million, an increase from $134.7 million in the same period of 2019, reflecting a rise of 1.1%[190]. - Noninterest expense for the three months ended June 30, 2020 was $65.3 million, down $5.5 million, or 7.8%, from the prior quarter[191]. Capital and Liquidity - Stockholders' equity was $1.1 billion, representing 10.53% of total assets, down from 11.53% as of December 31, 2019, with net income of $35.1 million for the six months ending June 30, 2020[210]. - The Company maintained a Tier 1 leverage ratio of 9.44% and a total risk-based capital ratio of 15.15% as of June 30, 2020, both exceeding regulatory minimums[214]. - The Basic Surplus measurement for liquidity was 24.1% of total assets, approximately $2.6 billion, up from 15.8% or $1.5 billion at December 31, 2019[226]. - Federal Home Loan Bank advances were $328.3 million as of June 30, 2020, with additional borrowing capacity of approximately $1.4 billion[227]. - The Company has implemented enhanced liquidity monitoring in response to the COVID-19 pandemic, focusing on maintaining a strong liquidity position[228]. COVID-19 Impact - The COVID-19 pandemic has significantly impacted the company's operations and financial condition, with ongoing uncertainty regarding its effects[167]. - The company adopted the CECL accounting methodology, which has influenced the estimated impact of the COVID-19 pandemic on expected credit losses[163]. - The company enhanced digital communication channels significantly, including dedicated webpages and social media content[173]. - 90% of non-branch employees were working remotely, with a transition back to onsite work beginning on July 13[173]. Shareholder Actions - The Company issued $100.0 million of subordinated notes with a fixed interest rate of 5.00% and a floating rate starting in 2025, netting $98.0 million after issuance costs[209]. - The Company repurchased 263,507 shares at an average price of $30.25, with 736,493 shares remaining available for repurchase under the current plan[211]. - The Board approved a cash dividend of $0.27 per share for Q3 2020, to be paid on September 15, 2020[212].

Financial Data and Key Metrics Changes - Net income for the second quarter was $24.7 million, or $0.56 per share, after a CECL provision and charge-offs [8] - Pre-provision net revenue (PPNR) was nearly $51 million, up 13% linked quarter and 8% year-over-year, with a PPNR return on average assets at just over 190 basis points [12] - Tangible book value per share increased by 2.6%, and the CET1 ratio improved by 44 basis points compared to the first quarter [13] Business Line Data and Key Metrics Changes - End of period loans increased by over $380 million, driven by $510 million in net PPP loans; excluding PPP, core loans decreased by $130 million or 2% [14] - Non-interest income decreased by $1.4 million from the previous quarter but remained stable year-over-year, with non-spread revenue constituting 30% of total revenue [23] Market Data and Key Metrics Changes - Deposits stood at $8.8 billion, up nearly $1 billion for the quarter, with non-interest bearing deposits growing by approximately $685 million [18] - The cost of interest-bearing deposits decreased by 50% from first quarter levels to 34 basis points [19] Company Strategy and Development Direction - The company plans to deploy excess cash into more productive earning assets over the next year and evaluate fee-based acquisition opportunities [34] - The management expressed optimism about organic growth opportunities in consumer and commercial lending, particularly in New England [51] Management Comments on Operating Environment and Future Outlook - Management noted that while the current economic environment is challenging, they are cautiously optimistic about a return to normal business operations [16] - The company expects some increase in charge-offs in the second half of the year, particularly as deferrals come to an end [71] Other Important Information - The company raised $100 million in subordinated debt to enhance capital flexibility [8] - Total deferrals stood at $622 million, or 8.8% of total loans, down from close to 15% [35] Q&A Session Summary Question: Discussion on the $10 billion threshold and loan growth strategies - Management acknowledged that crossing the $10 billion threshold allows for more aggressive loan growth strategies, particularly in consumer and commercial lending [50][51] Question: Concerns about due diligence in the current environment for M&A - Management indicated that while it is early to fully understand potential partners, they are focused on relationship building and smaller acquisition opportunities [54][55] Question: Insights on operating expenses and future trends - Management noted that while there was a reduction in operating expenses, they expect some normalization as branches reopen fully [62][63] Question: Liquidity deployment and organic loan growth expectations - Management highlighted that they have seen significant deposit inflows and are considering securities as a redeployment option, while also managing loan growth cautiously [66][67] Question: Projections for net charge-offs and deferral trends - Management expects an increase in charge-offs in the second half of the year, particularly as deferrals end, but noted strong return-to-pay rates among deferrals [71][72]

NBT Bancorp Inc. Q2 2020 Earnings Presentation Forward-Looking Statements This presentation contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of phrases such as "anticipate," "believe," "expect," "forecasts," "projects," "will," "can," "would," "should," "could," "may," or other similar terms. There are a number of factors, many of which are beyond the Company's control that could cause actual results to dif ...

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 March 31, 2020. 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 of I ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (MARK ONE) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019 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) Indicate by check mark if the registran ...

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, 2019. 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 ...