NBT Bancorp (NBTB) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (Unaudited) This section presents NBT Bancorp Inc.'s unaudited interim consolidated financial statements for Q2 2025, including balance sheets, income statements, and detailed notes on key accounting areas Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific dates Consolidated Balance Sheets (in billions) | Metric | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Total assets | $16.01 | $13.79 | | Total liabilities | $14.21 | $12.26 | | Total stockholders' equity | $1.81 | $1.53 | - Total assets increased by $2.23 billion (16.1%) from December 31, 2024, to June 30, 2025, primarily due to the Evans acquisition[11] - Total deposits increased by $1.97 billion (17.1%) from December 31, 2024, to June 30, 2025[11] Consolidated Statements of Income This section details the company's financial performance over specific periods, outlining revenues, expenses, and net income Consolidated Statements of Income (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $177.6 | $150.8 | $332.0 | $297.7 | | Total interest expense| $53.4 | $53.6 | $100.5 | $105.4 | | Net interest income | $124.2 | $97.2 | $231.4 | $192.3 | | Provision for loan losses | $17.8 | $8.9 | $25.4 | $14.5 | | Total noninterest income | $46.9 | $43.2 | $94.4 | $88.6 | | Total noninterest expense | $122.6 | $89.6 | $222.5 | $181.4 | | Net income | $22.5 | $32.7 | $59.3 | $66.5 | | Basic EPS | $0.45 | $0.69 | $1.21 | $1.41 | | Diluted EPS | $0.44 | $0.69 | $1.21 | $1.40 | - Net income for Q2 2025 decreased by $10.2 million (31.2%) YoY, while diluted EPS decreased by $0.25 (36.2%) YoY[13] - Net interest income for Q2 2025 increased by $27.0 million (27.8%) YoY[13] Consolidated Statements of Comprehensive Income (Loss) This section presents the total comprehensive income, including net income and other comprehensive income (loss) components Consolidated Statements of Comprehensive Income (Loss) (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $22.5 | $32.7 | $59.3 | $66.5 | | Total other comprehensive income (loss) | $12.3 | $1.6 | $32.6 | $(2.0) | | Comprehensive income | $34.8 | $34.3 | $91.9 | $64.6 | - Total other comprehensive income significantly increased to $12.3 million in Q2 2025 from $1.6 million in Q2 2024, primarily due to unrealized net holding gains on available-for-sale securities[15] Consolidated Statements of Changes in Stockholders' Equity This section outlines changes in the company's equity, reflecting common stock, retained earnings, and other comprehensive income Consolidated Statements of Changes in Stockholders' Equity (in millions) | Metric | Balance at March 31, 2025 | Balance at June 30, 2025 | Balance at December 31, 2024 | Balance at June 30, 2024 | | :-------------------- | :------------------------ | :----------------------- | :--------------------------- | :----------------------- | | Common Stock | $0.5 | $0.6 | $0.5 | $0.5 | | Additional Paid-in Capital | $740.9 | $962.9 | $742.8 | $741.9 | | Retained Earnings | $1.12 billion | $1.13 billion | $1.10 billion | $1.06 billion | | Accumulated Other Comprehensive (Loss) Income | $(121.8) | $(109.5) | $(142.1) | $(162.9) | | Common Stock in Treasury | $(174.7) | $(174.4) | $(175.3) | $(175.8) | | Total Stockholders' Equity | $1.57 billion | $1.81 billion | $1.53 billion | $1.46 billion | - Total stockholders' equity increased by $279.0 million from December 31, 2024, to June 30, 2025, primarily due to the Evans acquisition ($221.8 million in common stock issuance) and net income generation, partially offset by dividends[17][208] Consolidated Statements of Cash Flows This section details the cash inflows and outflows from operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $88.5 | $87.3 | | Net cash provided by (used in) investing activities | $218.7 | $(193.6) | | Net cash (used in) provided by financing activities | $(49.7) | $108.6 | | Net increase in cash and cash equivalents | $257.5 | $2.3 | | Cash and cash equivalents at end of period | $541.6 | $207.5 | - Net cash provided by investing activities significantly increased to $218.7 million for the six months ended June 30, 2025, compared to a net outflow of $193.6 million in the prior year, largely influenced by acquisitions and securities activities[18] - Cash and cash equivalents at period end more than doubled to $541.6 million as of June 30, 2025, from $207.5 million in the prior year[18] Notes to Unaudited Interim Consolidated Financial Statements This section provides detailed explanations and additional information supporting the interim consolidated financial statements 1. Description of Business This note outlines NBT Bancorp Inc.'s core operations as a financial holding company and its recent strategic acquisition - NBT Bancorp Inc. is a Delaware-incorporated financial holding company, primarily providing commercial banking, retail banking, and wealth management services through its subsidiary NBT Bank, National Association[20][21] - The Company completed the acquisition of Evans Bancorp, Inc. on May 2, 2025, expanding its presence in Western New York[21] 2. Summary of Significant Accounting Policies This note summarizes the significant accounting policies used in preparing the interim consolidated financial statements - The interim consolidated financial statements are unaudited and include normal recurring adjustments, prepared in accordance with GAAP and SEC regulations[22] - Preparation of financial statements requires management estimates and assumptions, particularly for the allowance for credit losses, which are susceptible to material change[23] 3. Recent Accounting Pronouncements This note discusses recent accounting pronouncements and their anticipated impact on the company's financial statements - ASU 2023-09 (Improvements to Income Tax Disclosures) is effective for annual periods after December 15, 2024, requiring enhanced disclosures but not expected to materially impact financial statements[24] - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for annual periods after December 15, 2026, requiring tabular disaggregation of certain income statement expenses, not expected to materially impact financial statements[25] 4. Acquisitions This note details the financial impact and key terms of the Evans Bancorp, Inc. acquisition completed in May 2025 - On May 2, 2025, NBT Bancorp Inc. completed the acquisition of Evans Bancorp, Inc. for $221.8 million in common stock, acquiring $2.19 billion in assets and recognizing $91.4 million in preliminary goodwill[26] Evans Bancorp, Inc. Acquisition (May 2, 2025) (in millions) | Item | Amount | | :-------------------------------------------------- | :----- | | Total net consideration | $221.8 | | Total identifiable assets acquired | $2.13 billion | | Total liabilities assumed | $(2.00) billion | | Total identifiable assets, net | $130.4 | | Goodwill | $91.4 | - Acquisition expenses related to the merger totaled $17.2 million for the three months and $18.4 million for the six months ended June 30, 2025[37] 5. Securities This note provides details on the company's investment securities portfolio, including available-for-sale and held-to-maturity categories Available for Sale (AFS) Securities (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Amortized Cost | $1.85 billion | $1.74 billion | | Estimated Fair Value | $1.73 billion | $1.57 billion | | Unrealized Gains | $2.5 | $0.3 | | Unrealized Losses | $(125.4) | $(164.9) | Held to Maturity (HTM) Securities (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Amortized Cost | $809.7 | $842.9 | | Estimated Fair Value | $735.4 | $749.9 | | Unrealized Gains | $0.1 | $0.04 | | Unrealized Losses | $(74.4) | $(93.0) | - The Company does not believe AFS securities in an unrealized loss position represent a credit loss impairment, as losses are primarily due to interest rate changes, not credit quality, and the Company does not intend to sell them before recovery[53] 6. Loans This note details the composition and growth of the company's loan portfolio, including commercial, real estate, and consumer loans Loan Portfolio Summary (in billions) | Category | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Commercial & industrial | $1.69 | $1.43 | | Commercial real estate | $4.80 | $3.88 | | Residential real estate | $2.53 | $2.14 | | Home equity | $0.42 | $0.33 | | Indirect auto | $1.32 | $1.27 | | Residential solar | $0.78 | $0.82 | | Other consumer | $0.08 | $0.10 | | Total loans | $11.62 | $9.97 | - Total loans increased by $1.65 billion (16.5%) from December 31, 2024, to June 30, 2025, including $1.67 billion of loans acquired from Evans[55][178] 7. Allowance for Credit Losses and Credit Quality of Loans This note details the allowance for credit losses, credit quality trends, and the CECL model's impact on loan loss provisioning Allowance for Credit Losses (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Allowance for credit losses | $140.2 | $116.0 | | Allowance for credit losses as % of loans | 1.21% | 1.16% | - The allowance for credit losses increased by $24.2 million (20.9%) from December 31, 2024, to June 30, 2025, primarily due to $20.7 million for acquired Evans loans and a modest deterioration in economic forecasts[57][65][189] - The Company's CECL model for June 30, 2025, incorporated a baseline (70%), upside (5%), and two equally weighted downside scenarios (25% total) including recessionary and stagflation conditions, reflecting management's expectations and emerging risks[59][142] Allowance for Credit Losses Activity (Q2 2025 vs Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | | :------------------------------------ | :------ | :------ | | Provision for loan losses | $17.8 | $8.9 | | Charge-offs | $(4.4) | $(5.6) | | Recoveries | $2.1 | $1.9 | 8. Short-Term Borrowings This note provides a summary of the company's short-term borrowing activities and outstanding balances Short-Term Borrowings (in millions) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Securities sold under repurchase agreements | $113.0 | $146.9 | | Other short-term borrowings | $- | $16.0 | | Total short-term borrowings | $113.0 | $162.9 | - Total short-term borrowings decreased by $49.9 million (30.6%) from December 31, 2024, to June 30, 2025[86][198] 9. Defined Benefit Post-Retirement Plans This note details the company's pension and post-retirement health care plans, including the impact of the Evans plan merger - The Company maintains a qualified, noncontributory defined benefit pension plan and supplemental employee retirement plans, along with post-retirement health care benefits for eligible employees[87] - The Evans defined benefit pension plan was merged into the Company's plan on May 2, 2025, resulting in a $0.9 million adjustment to AOCI but no significant impact on financial statements[87] Total Net Periodic Cost (Benefit) (in millions) | Plan Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | | Pension Benefits| $0.03 | $1.0 | | Other Benefits | $0.06 | $0.06 | 10. Earnings Per Share This note presents the basic and diluted earnings per share for various reporting periods Earnings Per Share (EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.45 | $0.69 | $1.21 | $1.41 | | Diluted EPS | $0.44 | $0.69 | $1.21 | $1.40 | - Diluted EPS for Q2 2025 decreased to $0.44 from $0.69 in Q2 2024, and for the six months ended June 30, 2025, decreased to $1.21 from $1.40 in the prior year[92] 11. Reclassification Adjustments Out of Other Comprehensive Income (Loss) This note details reclassification adjustments from other comprehensive income, net of tax, for various periods Total Reclassifications, Net of Tax (in millions) | Period | Amount | | :-------------------- | :----- | | Three Months Ended June 30, 2025 | $0.3 | | Three Months Ended June 30, 2024 | $1.2 | | Six Months Ended June 30, 2025 | $0.6 | | Six Months Ended June 30, 2024 | $1.6 | - Reclassification adjustments out of AOCI, net of tax, decreased significantly for both the three-month and six-month periods ended June 30, 2025, compared to the prior year, primarily driven by lower amortization of net losses from pension and other benefits[93] 12. Derivative Instruments and Hedging Activities This note describes the company's use of derivative instruments, primarily interest rate swaps, and their fair value measurements - The Company uses interest rate swaps to facilitate customer transactions, not for hedging its own interest rate risk, and manages a matched book to minimize net risk exposure[94][95] Derivatives Not Designated as Hedging Instruments (in millions) | Metric (Assets) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Notional Amount (Interest rate derivatives) | $1.38 billion | $1.37 billion | | Fair Value (Interest rate derivatives) | $76.7 | $104.4 | | Notional Amount (Risk participation agreements) | $98.2 | $90.7 | | Fair Value (Risk participation agreements) | $0.09 | $0.06 | - The fair value of interest rate derivative assets decreased from $104.4 million at December 31, 2024, to $76.7 million at June 30, 2025[98] 13. Fair Value Measurements and Fair Value of Financial Instruments This note explains the fair value hierarchy and provides a breakdown of financial assets measured at fair value - The Company classifies financial instruments into a fair value hierarchy (Level 1, 2, or 3) based on the observability of inputs used in valuation techniques[100][101] Financial Assets Measured at Fair Value (in millions) | Category | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 3 (June 30, 2025) | Total (June 30, 2025) | | :------- | :---------------------- | :---------------------- | :---------------------- | :-------------------- | | AFS securities | $100.2 | $1.63 billion | $- | $1.73 billion | | Equity securities | $45.7 | $1.0 | $- | $46.7 | | Derivatives | $- | $59.4 | $- | $59.4 | | Total Assets | $145.9 | $1.69 billion | $- | $1.84 billion | - Loans with a fair value of $14.3 million as of June 30, 2025, were individually evaluated for expected credit losses, with fair value measurements classified as Level 3[106] 14. Commitments and Contingencies This note outlines the company's commitments to extend credit, standby letters of credit, and legal contingencies - Commitments to extend credit and unused lines of credit totaled $3.41 billion at June 30, 2025, up from $2.84 billion at December 31, 2024[117] - Standby letters of credit increased to $58.6 million at June 30, 2025, from $50.8 million at December 31, 2024[119] - The Company accrues for material estimated losses from legal contingencies when probable and reasonably estimable[120] 15. Segment Reporting This note presents financial performance by the company's two reportable segments: Banking and Retirement Plan Administration - In accordance with ASU 2023-07, the Company now operates through two reportable segments: Banking and Retirement Plan Administration, to enhance transparency in financial performance evaluation[121][122] Net Income by Segment (Three Months Ended June 30, 2025, in millions) | Segment | Net Income | | :--------------------------- | :--------- | | Banking | $16.6 | | Retirement Plan Administration | $4.8 | | All Other | $1.1 | | Consolidated | $22.5 | Net Income by Segment (Six Months Ended June 30, 2025, in millions) | Segment | Net Income | | :--------------------------- | :--------- | | Banking | $46.5 | | Retirement Plan Administration | $10.1 | | All Other | $2.6 | | Consolidated | $59.3 | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section analyzes NBT Bancorp Inc.'s financial condition and results, focusing on key performance indicators, critical estimates, and the Evans acquisition impact Forward-Looking Statements This section highlights forward-looking statements, emphasizing inherent risks and the potential for actual results to differ materially - The report contains forward-looking statements subject to various factors beyond the Company's control, including economic conditions, interest rates, regulatory changes, and acquisition integration, which could cause actual results to differ materially[135] - The Company advises readers not to place undue reliance on these statements and disclaims any obligation to publicly release revisions unless required by law[136][137] Non-GAAP Measures This section explains the use of non-GAAP financial measures, their reconciliation to GAAP, and their purpose for management insights - The report includes non-GAAP financial information, which management believes provides useful insights into the Company's core business and is standard in the financial institution industry[138] - Non-GAAP measures are reconciled to comparable GAAP measures and should not be considered a substitute for GAAP-compliant financial statements[138] Critical Accounting Estimates This section identifies critical accounting estimates, such as the allowance for credit losses, and discusses their inherent uncertainties - The allowance for credit losses and unfunded commitments are identified as critical accounting estimates due to significant estimation uncertainty and potential material impact on financial results[139][140] - The CECL methodology requires estimating lifetime credit losses based on past events, current conditions, and reasonable forecasts, with management judgment heavily influencing the allowance level[140][141] - Sensitivity analysis shows that a 10% increase in downside scenario weighting for macroeconomic forecasts could lead to a 4% increase in the overall estimated allowance for credit losses[143] Evans Bancorp, Inc. Merger This section details the strategic acquisition of Evans Bancorp, Inc., outlining its financial impact and integration - The acquisition of Evans Bancorp, Inc. was completed on May 2, 2025, for $221.8 million in stock, significantly enhancing the Company's presence in Western New York[145] - The merger resulted in the acquisition of $1.67 billion of loans, $255.5 million in AFS investment securities, $33.2 million of core deposit intangibles, and $1.86 billion in deposits[145] - Acquisition expenses totaled $17.2 million and $18.4 million for the three and six months ended June 30, 2025, respectively[146] Executive Summary This summary highlights key financial performance metrics and strategic developments for the reporting period Key Performance Highlights (Q2 2025 vs Q2 2024) (in millions) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :------------------------------------ | :------ | :------ | :----------- | | Net income | $22.5 | $32.7 | $(10.2) | | Diluted EPS | $0.44 | $0.69 | $(0.25) | | Operating net income (non-GAAP) | $44.9 | $32.8 | $12.1 | | Operating diluted EPS (non-GAAP) | $0.88 | $0.69 | $0.19 | - Net interest income for Q2 2025 increased by $27.0 million (27.8%) YoY to $124.2 million[152] - Period-end total loans increased by $1.65 billion, and total deposits increased by $1.97 billion from December 31, 2024, largely due to the Evans acquisition[152] Results of Operations This section analyzes the company's financial performance, including net interest income, noninterest income, and expenses Net Interest Income This section analyzes the components and trends of net interest income and net interest margin Net Interest Income (in millions) | Period | Net Interest Income | | :-------------------- | :------------------ | | Three Months Ended June 30, 2025 | $124.2 | | Three Months Ended March 31, 2025 | $107.2 | | Three Months Ended June 30, 2024 | $97.2 | | Six Months Ended June 30, 2025 | $231.4 | | Six Months Ended June 30, 2024 | $192.3 | - Net interest income for Q2 2025 increased by $17.0 million (15.9%) QoQ and $27.0 million (27.8%) YoY, driven by higher interest-earning assets from the Evans acquisition and organic growth[152][155][156] FTE Net Interest Margin (NIM) | Period | FTE NIM | | :-------------------- | :------ | | Three Months Ended June 30, 2025 | 3.59% | | Three Months Ended March 31, 2025 | 3.44% | | Three Months Ended June 30, 2024 | 3.18% | | Six Months Ended June 30, 2025 | 3.52% | | Six Months Ended June 30, 2024 | 3.16% | - FTE NIM increased by 15 bps QoQ and 41 bps YoY for Q2 2025, reaching 3.59%[155][156] Noninterest Income This section analyzes the various sources and trends of the company's noninterest income Total Noninterest Income (in millions) | Period | Total Noninterest Income | | :-------------------- | :----------------------- | | Three Months Ended June 30, 2025 | $46.9 | | Three Months Ended March 31, 2025 | $47.5 | | Three Months Ended June 30, 2024 | $43.2 | | Six Months Ended June 30, 2025 | $94.4 | | Six Months Ended June 30, 2024 | $88.6 | - Noninterest income for Q2 2025 decreased by $0.5 million (1.1%) QoQ but increased by $3.7 million (8.6%) YoY[166] - The YoY increase was driven by higher card services income (due to Evans acquisition and increased volumes), retirement plan administration fees (higher market values and TPA acquisition), and wealth management fees (market performance and new accounts)[166][167] Noninterest Expense This section analyzes the various components and trends of the company's noninterest expenses Total Noninterest Expense (in millions) | Period | Total Noninterest Expense | | :-------------------- | :------------------------ | | Three Months Ended June 30, 2025 | $122.6 | | Three Months Ended March 31, 2025 | $99.9 | | Three Months Ended June 30, 2024 | $89.6 | | Six Months Ended June 30, 2025 | $222.5 | | Six Months Ended June 30, 2024 | $181.4 | - Total noninterest expense for Q2 2025 increased by $22.7 million (22.7%) QoQ and $33.0 million (36.9%) YoY, primarily due to the Evans acquisition and related expenses[169] - Excluding acquisition expenses, noninterest expense increased by $6.8 million (6.8%) QoQ and $15.8 million (17.7%) YoY, driven by higher salaries and benefits, technology and data services, occupancy, and amortization of intangible assets[169][170] Income Taxes This section analyzes the company's income tax expense and effective tax rate for various periods Income Tax Expense (in millions) | Period | Income Tax Expense | | :-------------------- | :----------------- | | Three Months Ended June 30, 2025 | $8.2 | | Three Months Ended March 31, 2025 | $10.5 | | Three Months Ended June 30, 2024 | $9.2 | | Six Months Ended June 30, 2025 | $18.7 | | Six Months Ended June 30, 2024 | $18.6 | Effective Tax Rate | Period | Effective Tax Rate | | :-------------------- | :----------------- | | Three Months Ended June 30, 2025 | 26.7% | | Three Months Ended March 31, 2025 | 22.2% | | Three Months Ended June 30, 2024 | 22.0% | | Six Months Ended June 30, 2025 | 24.0% | | Six Months Ended June 30, 2024 | 21.8% | - The effective tax rate increased to 26.7% in Q2 2025 from 22.0% in Q2 2024, primarily due to the estimated impact of acquisition expenses related to the Evans acquisition and a lower percentage of tax-exempt income[172][173] Analysis of Financial Condition This section provides an in-depth analysis of the company's balance sheet components, including securities, loans, deposits, and capital Securities This section analyzes the composition and changes in the company's investment securities portfolio - Total securities increased by $125.8 million (5.1%) from December 31, 2024, to June 30, 2025, but represented a smaller percentage of total assets (16.1% vs. 17.8%)[175] Securities Portfolio Composition | Category | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Mortgage-backed securities (15 years or less) | 16% | 14% | | Mortgage-backed securities (greater than 15 years) | 7% | 9% | | Collateral mortgage obligations | 40% | 39% | | Municipal securities | 14% | 15% | | U.S. agency notes | 20% | 20% | | Corporate | 1% | 2% | | Equity securities | 2% | 2% | Loans This section analyzes the growth and composition of the company's loan portfolio by category - Total loans increased by $1.65 billion to $11.62 billion at June 30, 2025, from $9.97 billion at December 31, 2024, with $1.67 billion attributed to the Evans acquisition[178] - Commercial & Industrial (C&I) loans increased by $265.9 million, Commercial Real Estate (CRE) loans increased by $923.8 million, and total consumer loans increased by $465.1 million[178] - CRE construction and development loans amounted to $423.3 million at June 30, 2025, up from $314.8 million at December 31, 2024[180] Allowance for Credit Losses, Provision for Loan Losses and Nonperforming Assets This section analyzes the allowance for credit losses, provision for loan losses, and trends in nonperforming assets Allowance for Credit Losses and Nonperforming Loans (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Allowance for credit losses | $140.2 | $116.0 | | Allowance for credit losses as % of loans | 1.21% | 1.16% | | Total nonperforming loans | $46.4 | $51.6 | | Total nonperforming loans as % of total loans | 0.40% | 0.52% | | Allowance for loan losses to total nonperforming loans | 302.21% | 224.73% | - The allowance for credit losses increased to $140.2 million at June 30, 2025, from $117.0 million at March 31, 2025, primarily due to $20.7 million for acquired Evans loans and a modest deterioration in economic forecasts[189] - Total nonperforming assets decreased to $46.7 million at June 30, 2025, from $51.8 million at December 31, 2024, mainly due to payoffs of nonaccrual loans, partially offset by acquired nonperforming loans from Evans[195] - Potential problem loans increased to $195.3 million at June 30, 2025, from $116.1 million at December 31, 2024, largely due to $60.5 million in acquired commercial loans from Evans and migration of commercial loan balances to substandard[196] Deposits This section analyzes the growth, composition, and uninsured status of the company's deposit base - Total deposits reached $13.52 billion at June 30, 2025, an increase of $1.97 billion (17.0%) from December 31, 2024, including $1.86 billion from the Evans acquisition[197] - Excluding acquired deposits, deposits increased by $104.4 million, with an improved deposit mix showing increases in demand, interest-bearing checking, and money market accounts, offset by a decrease in time deposits[197] - Estimated uninsured deposits were $5.80 billion at June 30, 2025, compared to $4.73 billion at December 31, 2024[197] Borrowed Funds This section details the company's short-term and long-term borrowing activities and balances Borrowed Funds (in millions) | Category | June 30, 2025 | December 31, 2024 | | :------------------ | :------------ | :---------------- | | Short-term borrowings | $113.0 | $162.9 | | Long-term debt | $44.8 | $29.6 | - Short-term borrowings decreased by $49.9 million, while long-term debt increased by $15.2 million, primarily due to a $40.0 million borrowing acquired in the Evans acquisition, partially offset by a $25.0 million maturity[198] Subordinated Debt This section details the company's subordinated debt, including acquired notes and recent redemptions - Subordinated debt, net of unamortized issuance costs and fair value discount, was $141.9 million at June 30, 2025, up from $121.2 million at December 31, 2024[203] - The Company assumed $20.0 million of 6.00% fixed-to-floating rate subordinated notes due 2030 in the Evans acquisition, which were subsequently redeemed on July 15, 2025[202] - The Company redeemed $100.0 million of 5.00% fixed-to-floating rate subordinated notes due 2030 on July 1, 2025[200] Junior Subordinated Debt This section discusses junior subordinated debt, including acquired trusts and their regulatory capital treatment - In connection with the Evans acquisition, the Company assumed Evans Capital Trust I, which issued $11.0 million in floating rate preferred capital securities[204] - As of June 30, 2025, with the Company exceeding $15 billion in assets, the Trusts (including Evans Capital Trust I) are now included in Tier 2 capital for regulatory purposes, having previously been grandfathered into Tier 1[207] Capital Resources This section analyzes the company's capital measurements, including stockholders' equity and regulatory capital ratios Capital Measurements | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Stockholders' equity (in millions) | $1.81 billion | $1.53 billion | | Equity to assets | 11.27% | 11.07% | | Tier 1 leverage ratio | 9.55% | 10.24% | | Common equity tier 1 capital ratio | 11.37% | 11.93% | | Tier 1 capital ratio | 11.37% | 12.83% | | Total risk-based capital ratio | 14.48% | 15.03% | - Stockholders' equity increased by $279.0 million from December 31, 2024, driven by the Evans acquisition ($221.8 million), net income, and a decrease in accumulated other comprehensive loss[208] - The Company remained 'well capitalized' at June 30, 2025, with capital ratios well in excess of regulatory minimums[210] Liquidity and Interest Rate Sensitivity Management This section discusses the company's strategies for managing liquidity risk and interest rate sensitivity Market Risk This section addresses interest rate risk as the primary market risk and its management through ALCO strategies - Interest rate risk is the most significant market risk, managed by the Asset Liability Committee (ALCO) through monitoring interest rate positions, profitability, and recommending strategies to the Board[214][215] - The Company's Interest Rate Sensitivity remained in a near neutral position, with projected modest decreases in net interest income in declining rate scenarios and modest increases in rising rate scenarios[218] Interest Rate Sensitivity Analysis (12-month period) | Change in interest rates (in bps) | Percent change in net interest income | | :-------------------------------- | :------------------------------------ | | +300 | 0.69% | | +200 | 0.84% | | +100 | 0.72% | | -100 | (0.74)% | | -200 | (0.94)% | | -300 | (1.02)% | Liquidity Risk This section evaluates the company's liquidity position, including basic surplus and additional borrowing capacity - The Company's primary liquidity measurement, 'Basic Surplus,' was 16.4% of total assets ($2.63 billion) at June 30, 2025, exceeding the minimum policy level of 5%[221] - The Bank had additional borrowing capacity of approximately $1.83 billion from the FHLB and $1.17 billion from the FRB's 'Borrower-in-Custody' program at June 30, 2025[222] - Despite a strong Basic Surplus, the Company acknowledges potential adverse impacts on liquidity in 2025 due to elevated interest rates, deposit declines, and increased competition for deposits[223] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section refers to the 'Liquidity and Interest Rate Sensitivity Management' section for detailed market risk disclosures - Information on quantitative and qualitative disclosures about market risk is provided in the 'Liquidity and Interest Rate Sensitivity Management' section of the MD&A[228] ITEM 4. CONTROLS AND PROCEDURES Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[229] PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company is not involved in any material legal proceedings beyond routine litigation incidental to its business - There are no material legal proceedings against the Company or its subsidiaries, beyond ordinary routine litigation[230] ITEM 1A. RISK FACTORS No material changes to the risk factors have occurred since the 2024 Annual Report on Form 10-K - No material changes to risk factors have occurred since the 2024 Annual Report on Form 10-K[231] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section reports no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities or use of proceeds to report[232] ITEM 3. DEFAULTS UPON SENIOR SECURITIES This section reports no defaults upon senior securities for the period - No defaults upon senior securities to report[232] ITEM 4. MINE SAFETY DISCLOSURES This section reports no mine safety disclosures for the period - No mine safety disclosures to report[232] ITEM 5. OTHER INFORMATION No Rule 10b5-1 plans or trading arrangements were adopted, modified, or terminated by directors or officers in Q2 2025 - No Rule 10b5-1 plans or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or officers during Q2 2025[232] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including organizational documents and certifications - The exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, Certificate of Designation, and certifications by the CEO and CFO[233] SIGNATURES - The report was signed on August 8, 2025, by Annette L. Burns, Chief Financial Officer of NBT Bancorp Inc.[235]