NBTB NBT Bancorp Inc

NBT Bancorp Inc. (“NBT” or the “Company”) (NASDAQ: NBTB) reported net income and diluted earnings per share for the three and six months ended June 30, 2023.

Net income for the three months ended June 30, 2023 was $30.1 million, or $0.70 per diluted common share, compared to $37.8 million, or $0.88 per diluted share, for the three months ended June 30, 2022, and $33.7 million, or $0.78 per diluted share, in the first quarter of 2023.

• Excluding the impact of securities losses and acquisition expenses, the Company generated $0.80 per diluted share of earnings in the second quarter of 2023, compared to $0.89 per share in the second quarter of 2022 and $0.88 per share in the first quarter of 2023. Net interest income was impacted on a linked quarter basis from the continuation of higher funding costs.
• In the second quarter of 2023, the Company realized $4.5 million ($0.08 per diluted share) in securities losses. In the first quarter of 2023, the Company realized a $5.0 million ($0.09 per diluted share) securities loss.
• The Company incurred acquisition expenses of $1.2 million ($0.02 per diluted share) and $0.6 million ($0.01 per diluted share) related to the pending merger with Salisbury Bancorp, Inc. (“Salisbury”) in the second quarter of 2023 and the first quarter of 2023, respectively.
• Period end total loans increased $208.0 million from December 31, 2022, or 5.1% annualized.

CEO Comments

“We delivered solid operating performance for the second quarter and the first half of 2023. Our results reflect the ongoing focus on our long-term strategies, the strength of our balance sheet and our diversified business model,” said NBT President and CEO John H. Watt, Jr. “We grew loans in all our core portfolios in the second quarter, and our funding sources remained resilient. Our credit performance remained consistent and favorable, and we continued to grow capital. We were also very pleased to have received all the regulatory and shareholder approvals required to proceed with our planned combination with Salisbury Bancorp. We expect the merger to close on August 11, 2023. Our integration team with representatives from NBT and Salisbury has worked diligently to ensure the best possible customer experience upon the conversion of Salisbury customer relationships,” said Watt.

Second Quarter Financial Highlights

Net Income	Net income of $30.1 million Diluted earnings per share of $0.70 Excluding acquisition expenses and securities losses, diluted earnings per share of $0.80
Net Interest Income / NIM	Net interest income on a fully taxable equivalent (“FTE”) basis was $89.5 million1 Net interest margin (“NIM”) on an FTE basis was 3.27%1, down 28 basis points (“bps”) from the prior quarter Earning asset yields of 4.42%, up 16 bps from the prior quarter Total cost of funds of 1.22%, up 47 bps from the prior quarter
Noninterest Income	Excluding securities losses, noninterest income was $36.7 million and was 29.2% of total revenue
Loans and Credit Quality	Period end total loans of $8.36 billion as of June 30, 2023, up $208.0 million, or 5.1%, annualized, from December 31, 2022 Net charge-offs to average loans were 0.17%, annualized Nonperforming loans to total loans was 0.24%, compared to 0.23% in the prior quarter and down from 0.33% in the second quarter of 2022 Allowance for loan losses to total loans of 1.20%
Deposits	Deposits were $9.53 billion as of June 30, 2023, up $34.0 million, or 0.4%, from December 31, 2022 Total cost of deposits was 0.85% for the second quarter of 2023, up 38 bps from the prior quarter Full cycle to-date deposit beta of 17% Deposit composition is diverse and granular with over 523,000 accounts with an average per account balance of $18,202
Capital	Stockholders’ equity was $1.21 billion as of June 30, 2023 Tangible book value per share2 was $21.55 at June 30, 2023, consistent with the first quarter of 2023 and 2.7% higher than the second quarter of 2022 Tangible equity to assets of 7.95%1 CET1 ratio of 12.29%; Leverage ratio of 10.51%

Loans

• Period end total loans were $8.36 billion at June 30, 2023, $8.26 billion at March 31, 2023 and $8.15 billion at December 31, 2022.
• Period end loans increased $208.0 million from December 31, 2022. Commercial and industrial loans increased $53.1 million to $1.32 billion; commercial real estate loans increased $76.3 million to $2.88 billion; and total consumer loans increased $78.6 million to $4.15 billion. Included in total consumer loans is $158 million of a portfolio of loans in a run-off status.
• Commercial line of credit utilization rate was 23% at June 30, 2023, compared to 22% at March 31, 2023 and 23% at June 30, 2022.

Deposits

• Total deposits at June 30, 2023 were $9.53 billion, compared to $9.50 billion at December 31, 2022. The Company continues to experience migration from noninterest bearing and low interest checking and savings accounts into higher cost money market and time deposit instruments.
• Loan to deposit ratio was 87.7% at June 30, 2023, compared to 85.8% at December 31, 2022.

Net Interest Income and Net Interest Margin

• Net interest income for the second quarter of 2023 was $89.1 million, which was down $6.0 million, or 6.3%, from the first quarter of 2023 and up $1.5 million, or 1.7%, from the second quarter of 2022.
• The NIM on an FTE basis for the second quarter of 2023 was 3.27%, down 28 bps from the first quarter of 2023 driven by the increase in the cost of interest-bearing deposits, as well as a $200.6 million increase in the average balance of short-term borrowings and a 31 bp increase on the rates paid on those borrowings. The NIM on an FTE basis was up 6 bps from the second quarter of 2022 due to higher earning asset yields partially offset by the increase in the cost of interest-bearing deposits, as well as higher balances in short-term borrowings and the rates paid on those borrowings.
• Earning asset yields for the three months ended June 30, 2023 were up 16 bps from the prior quarter to 5.17% and up 107 bps from the same quarter in the prior year. Earning assets grew $73.4 million, or 0.7%, from the first quarter of 2023, or 2.7% annualized.
• Total cost of deposits, including noninterest bearing deposits, was 0.85% for the second quarter of 2023, up 38 bps from the prior quarter and up 78 bps from the same period in the prior year.
• Total cost of funds for the three months ended June 30, 2023 was 1.22%, up 47 bps from the prior quarter and up 107 bps from the second quarter of 2022.

Asset Quality and Allowance for Loan Losses

• Net charge-offs to total average loans was 17 bps compared to 19 bps in the prior quarter and 4 bps in the second quarter of 2022. The increase in net charge-offs from the second quarter of 2022 was due to an increase in charge-offs in the Company’s other consumer portfolio, which is in a run-off status. Net charge-offs for the portfolios in a run-off status represented 68% of total net charge-offs.
• Nonperforming assets to total assets were 0.17% at June 30, 2023, compared to 0.16% at March 31, 2023 and 0.22% at June 30, 2022.
• Provision expense for the three months ended June 30, 2023 was $3.6 million, compared to $3.9 million for the first quarter of 2023 and $4.4 million for the second quarter of 2022.
• The allowance for loan losses was $100.4 million, or 1.20% of total loans, at June 30, 2023, compared to 1.21% of total loans at March 31, 2023 and 1.20% of total loans at June 30, 2022. The reserve for unfunded loan commitments decreased to $4.4 million at June 30, 2023 compared to the prior quarter-end at $4.5 million and to $5.1 million at June 30, 2022.

Noninterest Income

• Total noninterest income, excluding securities losses, was $36.7 million for the three months ended June 30, 2023, up $0.3 million from the first quarter and down $5.6 million from the prior year’s second quarter.
• Card services income increased $0.3 million from the prior quarter and decreased $4.6 million from the second quarter of 2022 primarily driven by the impact on debit interchange revenues from the statutory price cap provisions of the Durbin Amendment to the Dodd-Frank Act which the Company became subject to in the third quarter of 2022.
• Retirement plan administration fees were up $0.3 million from the prior quarter and were $0.9 million lower than the second quarter of 2022 driven by a decrease in activity-based fees which were primarily statutory plan document restatements.
• In the second quarter of 2023, the Company incurred a $4.5 million ($0.08 per diluted share) securities loss on the sale of two subordinated debt securities held in the AFS portfolio. In the first quarter of 2023, the Company recorded a $5.0 million ($0.09 per diluted share) securities loss related to the write-off of a subordinated debt security of a failed bank.

Noninterest Expense

• Total noninterest expense, excluding $1.2 million of acquisition expenses in the second quarter of 2023 and $0.6 million in the first quarter of 2023, decreased 1.4% compared to the previous quarter and increased 2.0% from the second quarter of 2022.
• Salaries and benefits decreased 2.7% from the prior quarter driven by seasonally higher payroll taxes and higher stock-based compensation expenses in the first quarter along with a lower level of incentive compensation in the second quarter. These decreases were partially offset by a full quarter of merit pay increases and higher health and welfare benefits.
• Technology and data services expenses increased over the prior quarter and from the second quarter of 2022 due to continued investment in digital platform solutions.
• Occupancy costs decreased from the prior quarter due to lower seasonal maintenance, equipment costs and utilities and increased from the second quarter of 2022 driven by higher utilities, rent and seasonal maintenance costs.
• FDIC assessment expense was comparable to the prior quarter and increased $0.5 million ($0.01 per diluted share) from the second quarter of 2022 driven by the statutory increase in the FDIC assessment rate.

Income Taxes

• The effective tax rate was 22.4% for the second quarter of 2023, compared to 22.2% for the first quarter of 2023 and 22.5% for the second quarter of 2022.

Capital

• Capital ratios are strong with tangible common equity to tangible assets1 at 7.95%. Tangible book value per share2 was $21.55 at June 30, 2023, $21.52 at March 31, 2023 and $20.99 at June 30, 2022.
• Stockholders’ equity increased $36.9 million from December 31, 2022 driven by net income generation of $63.7 million, partially offset by dividends declared of $25.7 million and the repurchase of common stock of $2.8 million.
• June 30, 2023, CET1 capital ratio of 12.29%, leverage ratio of 10.51% and total risk-based capital ratio of 15.50%.

Stock Repurchase

• The Company purchased 87,000 shares of its common stock in the second quarter of 2023 at an average price of $31.94 per share under its previously announced share repurchase program. The Company may repurchase shares of its common stock from time to time to mitigate the potential dilutive effects of stock-based incentive plans and other potential uses of common stock for corporate purposes. As of June 30, 2023, there were 1,513,000 shares available for repurchase under this plan authorized on December 20, 2021 and set to expire on December 31, 2023.

Salisbury Bancorp, Inc. Merger

• On July 10, 2023, NBT announced it has received the requisite regulatory approvals and waivers from the Office of the Comptroller of the Currency, the Connecticut State Banking Department and the Federal Reserve Bank of New York necessary to complete its acquisition of Salisbury. NBT and Salisbury anticipate closing the transaction on August 11, 2023, subject to the satisfaction of customary closing conditions. A weekend systems conversion will follow with locations of Salisbury Bank opening as NBT Bank offices on August 14, 2023. Salisbury is a Connecticut-chartered commercial bank with 13 banking offices in northwestern Connecticut, the Hudson Valley region of New York, and southwestern Massachusetts. Salisbury had assets of $1.56 billion, deposits of $1.36 billion and net loans of $1.24 billion as of June 30, 2023.

Other Events

• On July 1, 2023, the Company’s subsidiary national benefits administration firm, EPIC Retirement Plan Services (“EPIC RPS”), completed an asset purchase of Retirement Direct, LLC, based near Charlotte, NC. Retirement Direct served more than 500 qualified and nonqualified retirement plans and had over $2 billion in client assets under management. EPIC RPS has a client base that spans all 50 states and now supports over 5,000 retirement plans with more than 300,000 plan participants.

Conference Call and Webcast

The Company will host a conference call at 8:30 a.m. (Eastern) Tuesday, August 1, 2023, to review second quarter 2023 financial results. The audio webcast link, along with the corresponding presentation slides, will be available on the Company’s Event Calendar page at https://www.nbtbancorp.com/bn/presentations-events.html#events and will be archived for twelve months.

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, NY, with total assets of $11.89 billion at June 30, 2023. The Company primarily operates through NBT Bank, N.A., a full-service community bank, and through two financial services companies. NBT Bank, N.A. has 140 banking locations in New York, Pennsylvania, Vermont, Massachusetts, New Hampshire, Maine and Connecticut. EPIC Retirement Plan Services, based in Rochester, NY, is a national benefits administration firm. NBT Insurance Agency, LLC, based in Norwich, NY, is a full-service insurance agency. More information about NBT and its divisions is available online at: www.nbtbancorp.com, www.nbtbank.com, www.epicrps.com and www.nbtinsurance.com.

Forward-Looking Statements

This press release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of phrases such as “anticipate,” “believe,” “expect,” “forecasts,” “projects,” “will,” “can,” “would,” “should,” “could,” “may,” or other similar terms. There are a number of factors, many of which are beyond the Company’s control, that could cause actual results to differ materially from those contemplated by the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) local, regional, national and international economic conditions, including actual or potential stress in the banking industry, and the impact they may have on the Company and its customers and the Company’s assessment of that impact; (2) changes in the level of nonperforming assets and charge-offs; (3) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (4) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board (“FRB”); (5) inflation, interest rate, securities market and monetary fluctuations; (6) political instability; (7) acts of war, including international military conflicts, or terrorism; (8) the timely development and acceptance of new products and services and the perceived overall value of these products and services by users; (9) changes in consumer spending, borrowing and saving habits; (10) changes in the financial performance and/or condition of the Company’s borrowers; (11) technological changes; (12) acquisition and integration of acquired businesses; (13) the businesses of NBT and Salisbury may not be combined successfully; (14) the possibility that NBT and Salisbury may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all or to successfully integrate Salisbury’s operations and those of NBT; (15) the ability to increase market share and control expenses; (16) changes in the competitive environment among financial holding companies; (17) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company and its subsidiaries must comply, including those under the Dodd-Frank Act, and the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018; (18) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; (19) changes in the Company’s organization, compensation and benefit plans; (20) the costs and effects of legal and regulatory developments, including the resolution of legal proceedings or regulatory or other governmental inquiries, and the results of regulatory examinations or reviews; (21) greater than expected costs or difficulties related to the integration of new products and lines of business; and (22) the Company’s success at managing the risks involved in the foregoing items.

The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made, and advises readers that various factors, including, but not limited to, those described above and other factors discussed in the Company’s annual and quarterly reports previously filed with the SEC, could affect the Company’s financial performance and could cause the Company’s actual results or circumstances for future periods to differ materially from those anticipated or projected.

Unless required by law, the Company does not undertake, and specifically disclaims any obligations to, publicly release any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Non-GAAP Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Where non-GAAP disclosures are used in this press release, the comparable GAAP measure, as well as a reconciliation to the comparable GAAP measure, is provided in the accompanying tables. Management believes that these non-GAAP measures provide useful information that is important to an understanding of the results of the Company’s core business as well as provide information standard in the financial institution industry. Non-GAAP measures should not be considered a substitute for financial measures determined in accordance with GAAP and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Amounts previously reported in the consolidated financial statements are reclassified whenever necessary to conform to current period presentation.

NBT Bancorp Inc. and Subsidiaries
Selected Financial Data
(unaudited, dollars in thousands except per share data)
		2023						2022
	2nd Q			1st Q			4th Q			3rd Q			2nd Q
Profitability:
Diluted earnings per share	$	0.70		$	0.78		$	0.84		$	0.90		$	0.88
Weighted average diluted common shares outstanding		43,126,498			43,125,986			43,144,666			43,110,932			43,092,851
Return on average assets3		1.02	%		1.16	%		1.23	%		1.33	%		1.28	%
Return on average equity3		9.91	%		11.47	%		12.30	%		12.87	%		12.73	%
Return on average tangible common equity1 3		13.13	%		15.31	%		16.54	%		17.12	%		17.00	%
Net interest margin1 3		3.27	%		3.55	%		3.68	%		3.51	%		3.21	%
	6 Months Ended June 30,
		2023			2022
Profitability:
Diluted earnings per share	$	1.48		$	1.78
Weighted average diluted common shares outstanding		43,129,259			43,238,248
Return on average assets		1.09	%		1.30	%
Return on average equity		10.68	%		12.76	%
Return on average tangible common equity1		14.20	%		16.93	%
Net interest margin1		3.41	%		3.08	%
		2023						2022
	2nd Q			1st Q			4th Q			3rd Q			2nd Q
Balance sheet data:
Short-term interest-bearing accounts	$	31,878		$	68,045		$	30,862		$	97,303		$	328,593
Securities available for sale		1,453,926			1,512,008			1,527,225			1,556,501			1,619,356
Securities held to maturity		912,876			906,824			919,517			929,541			936,512
Net loans		8,257,724			8,164,328			8,049,347			7,807,984			7,684,081
Total assets		11,890,497			11,839,730			11,739,296			11,640,742			11,720,459
Total deposits		9,529,919			9,681,205			9,495,933			9,918,751			10,028,708
Total borrowings		880,518			703,248			787,950			277,889			265,796
Total liabilities		10,680,004			10,628,071			10,565,742			10,484,196			10,531,903
Stockholders' equity		1,210,493			1,211,659			1,173,554			1,156,546			1,188,556
Capital:
Equity to assets		10.18	%		10.23	%		10.00	%		9.94	%		10.14	%
Tangible equity ratio1		7.95	%		7.99	%		7.73	%		7.64	%		7.87	%
Book value per share	$	28.26		$	28.24		$	27.38		$	27.00		$	27.75
Tangible book value per share2	$	21.55		$	21.52		$	20.65		$	20.25		$	20.99
Leverage ratio		10.51	%		10.43	%		10.32	%		10.21	%		9.77	%
Common equity tier 1 capital ratio		12.29	%		12.28	%		12.12	%		12.17	%		12.14	%
Tier 1 capital ratio		13.35	%		13.34	%		13.19	%		13.27	%		13.27	%
Total risk-based capital ratio		15.50	%		15.53	%		15.38	%		15.50	%		15.50	%
Common stock price (end of period)	$	31.85		$	33.71		$	43.42		$	37.95		$	37.59

NBT Bancorp Inc. and Subsidiaries
Asset Quality and Consolidated Loan Balances
(unaudited, dollars in thousands)
		2023						2022
	2nd Q			1st Q			4th Q			3rd Q			2nd Q
Asset quality:
Nonaccrual loans	$	16,931		$	16,284		$	17,233		$	19,098		$	23,673
90 days past due and still accruing		2,755			2,328			3,823			2,732			2,096
Total nonperforming loans		19,686			18,612			21,056			21,830			25,769
Other real estate owned		179			105			105			-			-
Total nonperforming assets		19,865			18,717			21,161			21,830			25,769
Allowance for loan losses		100,400			100,250			100,800			96,800			93,600
Asset quality ratios:
Allowance for loan losses to total loans		1.20	%		1.21	%		1.24	%		1.22	%		1.20	%
Total nonperforming loans to total loans		0.24	%		0.23	%		0.26	%		0.28	%		0.33	%
Total nonperforming assets to total assets		0.17	%		0.16	%		0.18	%		0.19	%		0.22	%
Allowance for loan losses to total nonperforming loans		510.01	%		538.63	%		478.72	%		443.43	%		363.23	%
Past due loans to total loans4		0.45	%		0.30	%		0.33	%		0.30	%		0.40	%
Net charge-offs to average loans3		0.17	%		0.19	%		0.18	%		0.07	%		0.04	%
		2023						2022
	2nd Q			1st Q			4th Q			3rd Q			2nd Q
Loan net charge-offs by line of business:
Commercial & industrial	$	51		$	(294	)	$	(45	)	$	(1,045	)	$	(298	)
Commercial real estate		41			42			8			324			(246	)
Residential real estate and home equity		(43	)		80			(79	)		(56	)		(210	)
Indirect auto		273			423			445			222			163
Residential solar		581			656			596			43			153
Other consumer		2,553			2,904			2,752			1,796			1,228
Total loan net charge-offs	$	3,456		$	3,811		$	3,677		$	1,284		$	790
		2023						2022
	2nd Q			1st Q			4th Q			3rd Q			2nd Q
Allowance for loan losses as a percentage of loans by segment:
Commercial & industrial		0.86%			0.85%			0.82%			0.80%			0.74%
Commercial real estate		0.93%			0.93%			0.91%			0.88%			0.89%
Residential real estate		0.73%			0.73%			0.72%			0.74%			0.79%
Auto		0.80%			0.77%			0.81%			0.78%			0.79%
Residential solar		3.09%			3.04%			3.21%			3.08%			3.00%
Other consumer		5.98%			6.19%			6.27%			6.67%			6.19%
Total		1.20%			1.21%			1.24%			1.22%			1.20%
		2023						2022
	2nd Q			1st Q			4th Q			3rd Q			2nd Q
Loans by line of business:
Commercial & industrial	$	1,318,340		$	1,277,446		$	1,265,082		$	1,258,871		$	1,298,072
Commercial real estate		2,884,264			2,845,631			2,807,941			2,724,728			2,670,633
Paycheck protection program		753			845			949			3,328			17,286
Residential real estate		1,666,204			1,651,918			1,649,870			1,626,528			1,606,188
Indirect auto		1,048,739			1,031,315			989,587			952,757			936,516
Residential solar		926,365			920,084			856,798			728,898			599,565
Home equity		310,897			308,219			314,124			313,557			313,395
Other consumer		202,562			229,120			265,796			296,117			336,026
Total loans	$	8,358,124		$	8,264,578		$	8,150,147		$	7,904,784		$	7,777,681
PPP income recognized	$	5		$	9		$	71		$	320		$	1,301
PPP unamortized fees	$	35		$	38		$	45		$	108		$	414

NBT Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited, dollars in thousands)
	June 30,			December 31,
Assets	2023			2022
Cash and due from banks	$	170,010		$	166,488
Short-term interest-bearing accounts		31,878			30,862
Equity securities, at fair value		33,893			30,784
Securities available for sale, at fair value		1,453,926			1,527,225
Securities held to maturity (fair value $808,641 and $812,647, respectively)		912,876			919,517
Federal Reserve and Federal Home Loan Bank stock		53,076			44,713
Loans held for sale		1,866			562
Loans		8,358,124			8,150,147
Less allowance for loan losses		100,400			100,800
Net loans	$	8,257,724		$	8,049,347
Premises and equipment, net		66,799			69,047
Goodwill		281,204			281,204
Intangible assets, net		6,497			7,341
Bank owned life insurance		233,400			232,409
Other assets		387,348			379,797
Total assets	$	11,890,497		$	11,739,296
Liabilities and stockholders' equity
Demand (noninterest bearing)	$	3,326,685		$	3,617,324
Savings, NOW and money market		5,224,560			5,444,837
Time		978,674			433,772
Total deposits	$	9,529,919		$	9,495,933
Short-term borrowings		652,413			585,012
Long-term debt		29,764			4,815
Subordinated debt, net		97,145			96,927
Junior subordinated debt		101,196			101,196
Other liabilities		269,567			281,859
Total liabilities	$	10,680,004		$	10,565,742
Total stockholders' equity	$	1,210,493		$	1,173,554
Total liabilities and stockholders' equity	$	11,890,497		$	11,739,296

NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited, dollars in thousands except per share data)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2023			2022			2023			2022
Interest, fee and dividend income
Interest and fees on loans	$	106,935		$	78,539		$	207,834		$	151,882
Securities available for sale		7,493			7,317			15,109			14,157
Securities held to maturity		4,991			4,185			10,026			7,678
Other		1,170			1,442			1,812			1,967
Total interest, fee and dividend income	$	120,589		$	91,483		$	234,781		$	175,684
Interest expense
Deposits	$	19,986		$	1,756		$	31,130		$	3,598
Short-term borrowings		8,126			13			13,045			29
Long-term debt		290			33			337			120
Subordinated debt		1,335			1,359			2,669			2,718
Junior subordinated debt		1,767			737			3,449			1,286
Total interest expense	$	31,504		$	3,898		$	50,630		$	7,751
Net interest income	$	89,085		$	87,585		$	184,151		$	167,933
Provision for loan losses		3,606			4,390			7,515			4,986
Net interest income after provision for loan losses	$	85,479		$	83,195		$	176,636		$	162,947
Noninterest income
Service charges on deposit accounts	$	3,733		$	3,763		$	7,281		$	7,451
Card services income		5,121			9,751			9,966			18,446
Retirement plan administration fees		11,735			12,676			23,197			25,955
Wealth management		8,227			8,252			16,314			16,892
Insurance services		3,716			3,578			7,647			7,366
Bank owned life insurance income		1,528			1,411			3,406			3,065
Net securities (losses)		(4,641	)		(587	)		(9,639	)		(766	)
Other		2,626			2,812			5,282			5,906
Total noninterest income	$	32,045		$	41,656		$	63,454		$	84,315
Noninterest expense
Salaries and employee benefits	$	46,834		$	46,716		$	94,989		$	92,224
Technology and data services		9,305			8,945			18,312			17,492
Occupancy		6,923			6,487			14,143			13,280
Professional fees and outside services		4,159			3,906			8,337			8,182
Office supplies and postage		1,676			1,548			3,304			2,972
FDIC assessment		1,344			810			2,740			1,612
Advertising		525			730			1,174			1,384
Amortization of intangible assets		458			545			994			1,181
Loan collection and other real estate owned, net		691			757			1,546			1,141
Acquisition expenses		1,189			-			1,807			-
Other		5,690			5,675			10,770			8,794
Total noninterest expense	$	78,794		$	76,119		$	158,116		$	148,262
Income before income tax expense	$	38,730		$	48,732		$	81,974		$	99,000
Income tax expense		8,658			10,957			18,244			22,099
Net income	$	30,072		$	37,775		$	63,730		$	76,901
Earnings Per Share
Basic	$	0.70		$	0.88		$	1.49		$	1.79
Diluted	$	0.70		$	0.88		$	1.48		$	1.78

NBT Bancorp Inc. and Subsidiaries
Quarterly Consolidated Statements of Income
(unaudited, dollars in thousands except per share data)
		2023						2022
	2nd Q			1st Q			4th Q			3rd Q			2nd Q
Interest, fee and dividend income
Interest and fees on loans	$	106,935		$	100,899		$	95,620		$	85,266		$	78,539
Securities available for sale		7,493			7,616			7,831			7,665			7,317
Securities held to maturity		4,991			5,035			5,050			4,854			4,185
Other		1,170			642			671			1,429			1,442
Total interest, fee and dividend income	$	120,589		$	114,192		$	109,172		$	99,214		$	91,483
Interest expense
Deposits	$	19,986		$	11,144		$	4,092		$	2,233		$	1,756
Short-term borrowings		8,126			4,919			2,510			84			13
Long-term debt		290			47			21			20			33
Subordinated debt		1,335			1,334			1,346			1,360			1,359
Junior subordinated debt		1,767			1,682			1,424			1,039			737
Total interest expense	$	31,504		$	19,126		$	9,393		$	4,736		$	3,898
Net interest income	$	89,085		$	95,066		$	99,779		$	94,478		$	87,585
Provision for loan losses		3,606			3,909			7,677			4,484			4,390
Net interest income after provision for loan losses	$	85,479		$	91,157		$	92,102		$	89,994		$	83,195
Noninterest income
Service charges on deposit accounts	$	3,733		$	3,548		$	3,598		$	3,581		$	3,763
Card services income		5,121			4,845			4,958			5,654			9,751
Retirement plan administration fees		11,735			11,462			10,661			11,496			12,676
Wealth management		8,227			8,087			8,017			8,402			8,252
Insurance services		3,716			3,931			3,438			3,892			3,578
Bank owned life insurance income		1,528			1,878			1,419			1,560			1,411
Net securities (losses)		(4,641	)		(4,998	)		(217	)		(148	)		(587	)
Other		2,626			2,656			2,217			2,735			2,812
Total noninterest income	$	32,045		$	31,409		$	34,091		$	37,172		$	41,656
Noninterest expense
Salaries and employee benefits	$	46,834		$	48,155		$	47,235		$	48,371		$	46,716
Technology and data services		9,305			9,007			9,124			9,096			8,945
Occupancy		6,923			7,220			6,521			6,481			6,487
Professional fees and outside services		4,159			4,178			4,811			3,817			3,906
Office supplies and postage		1,676			1,628			1,699			1,469			1,548
FDIC assessment		1,344			1,396			798			787			810
Advertising		525			649			879			559			730
Amortization of intangible assets		458			536			538			544			545
Loan collection and other real estate owned, net		691			855			957			549			757
Acquisition expenses		1,189			618			967			-			-
Other		5,690			5,080			5,980			5,021			5,675
Total noninterest expense	$	78,794		$	79,322		$	79,509		$	76,694		$	76,119
Income before income tax expense	$	38,730		$	43,244		$	46,684		$	50,472		$	48,732
Income tax expense		8,658			9,586			10,563			11,499			10,957
Net income	$	30,072		$	33,658		$	36,121		$	38,973		$	37,775
Earnings Per Share
Basic	$	0.70		$	0.78		$	0.84		$	0.91		$	0.88
Diluted	$	0.70		$	0.78		$	0.84		$	0.90		$	0.88

NBT Bancorp Inc. and Subsidiaries
Average Quarterly Balance Sheets
(unaudited, dollars in thousands)
		Average Balance		Yield / Rates		Average Balance		Yield / Rates		Average Balance		Yield / Rates		Average Balance		Yield / Rates		Average Balance		Yield / Rates
		Q2 - 2023				Q1 - 2023				Q4 - 2022				Q3 - 2022				Q2 - 2022
Assets
Short-term interest-bearing accounts		$	28,473	3.62	%	$	34,215	2.26	%	$	39,573	3.31	%	$	191,463	2.51	%	$	553,548	0.82	%
Securities taxable1			2,394,027	1.90	%		2,442,732	1.92	%		2,480,959	1.88	%		2,491,315	1.83	%		2,439,960	1.74	%
Securities tax-exempt 1 5			201,499	2.83	%		202,321	2.81	%		208,238	2.68	%		211,306	2.47	%		256,799	1.83	%
FRB and FHLB stock			51,454	7.12	%		41,144	4.45	%		32,903	4.11	%		25,182	3.47	%		24,983	5.03	%
Loans1 6			8,307,894	5.17	%		8,189,520	5.00	%		8,039,442	4.72	%		7,808,025	4.34	%		7,707,730	4.09	%
Total interest-earning assets		$	10,983,347	4.42	%	$	10,909,932	4.26	%	$	10,801,115	4.02	%	$	10,727,291	3.68	%	$	10,983,020	3.35	%
Other assets			835,424				836,879				855,410				887,378				883,498
Total assets		$	11,818,771			$	11,746,811			$	11,656,525			$	11,614,669			$	11,866,518
Liabilities and stockholders' equity
Money market deposit accounts		$	2,113,965	2.30	%	$	2,081,210	1.22	%	$	2,169,192	0.39	%	$	2,332,341	0.15	%	$	2,577,367	0.14	%
NOW deposit accounts			1,463,953	0.38	%		1,598,834	0.36	%		1,604,096	0.33	%		1,548,115	0.21	%		1,580,132	0.07	%
Savings deposits			1,708,874	0.03	%		1,781,465	0.03	%		1,823,056	0.03	%		1,854,122	0.03	%		1,845,128	0.03	%
Time deposits			856,305	2.97	%		639,645	2.10	%		432,110	0.41	%		455,168	0.35	%		478,531	0.37	%
Total interest-bearing deposits		$	6,143,097	1.30	%	$	6,101,154	0.74	%	$	6,028,454	0.27	%	$	6,189,746	0.14	%	$	6,481,158	0.11	%
Federal funds purchased			48,407	5.35	%		44,334	4.92	%		56,576	4.03	%		1,522	3.39	%		-	-
Repurchase agreements			55,627	1.08	%		71,340	0.08	%		76,334	0.11	%		69,048	0.10	%		60,061	0.09	%
Short-term borrowings			557,818	5.27	%		357,200	4.96	%		177,533	4.28	%		6,440	3.33	%		-	-
Long-term debt			29,773	3.91	%		7,299	2.61	%		3,817	2.18	%		3,331	2.38	%		5,336	2.48	%
Subordinated debt, net			97,081	5.52	%		96,966	5.58	%		97,839	5.46	%		98,748	5.46	%		98,642	5.53	%
Junior subordinated debt			101,196	7.00	%		101,196	6.74	%		101,196	5.58	%		101,196	4.07	%		101,196	2.92	%
Total interest-bearing liabilities		$	7,032,999	1.80	%	$	6,779,489	1.14	%	$	6,541,749	0.57	%	$	6,470,031	0.29	%	$	6,746,393	0.23	%
Demand deposits			3,316,955				3,502,489				3,658,965				3,708,131				3,711,049
Other liabilities			251,511				274,517				290,895				234,851				218,491
Stockholders' equity			1,217,306				1,190,316				1,164,916				1,201,656				1,190,585
Total liabilities and stockholders' equity		$	11,818,771			$	11,746,811			$	11,656,525			$	11,614,669			$	11,866,518
Interest rate spread				2.62	%			3.12	%			3.45	%			3.39	%			3.12	%
Net interest margin (FTE)1				3.27	%			3.55	%			3.68	%			3.51	%			3.21	%

NBT Bancorp Inc. and Subsidiaries
Average Year-to-Date Balance Sheets
(unaudited, dollars in thousands)
		Average				Yield/		Average				Yield/
		Balance		Interest		Rates		Balance		Interest		Rates
Six Months Ended June 30,			2023						2022
Assets
Short-term interest-bearing accounts		$	31,328	$	447	2.88	%	$	770,727	$	1,533	0.40	%
Securities taxable1			2,418,245		22,902	1.91	%		2,362,699		19,981	1.71	%
Securities tax-exempt1 5			201,908		2,826	2.82	%		257,651		2,347	1.84	%
FRB and FHLB stock			46,327		1,365	5.94	%		25,004		434	3.50	%
Loans1 6			8,249,034		208,038	5.09	%		7,619,691		151,964	4.02	%
Total interest-earning assets		$	10,946,842	$	235,578	4.34	%	$	11,035,772	$	176,259	3.22	%
Other assets			836,148						915,361
Total assets		$	11,782,990					$	11,951,133
Liabilities and stockholders' equity
Money market deposit accounts		$	2,097,678	$	18,368	1.77	%	$	2,648,458	$	1,924	0.15	%
NOW deposit accounts			1,531,021		2,824	0.37	%		1,581,603		460	0.06	%
Savings deposits			1,744,969		286	0.03	%		1,819,978		293	0.03	%
Time deposits			748,573		9,652	2.60	%		486,537		921	0.38	%
Total interest-bearing deposits		$	6,122,241	$	31,130	1.03	%	$	6,536,576	$	3,598	0.11	%
Federal funds purchased			46,381		1,184	5.15	%		-		-	-
Repurchase agreements			63,440		164	0.52	%		66,379		29	0.09	%
Short-term borrowings			458,064		11,697	5.15	%		-		-	-
Long-term debt			18,598		337	3.65	%		9,634		120	2.51	%
Subordinated debt, net			97,024		2,669	5.55	%		98,587		2,718	5.56	%
Junior subordinated debt			101,196		3,449	6.87	%		101,196		1,286	2.56	%
Total interest-bearing liabilities		$	6,906,944	$	50,630	1.48	%	$	6,812,372	$	7,751	0.23	%
Demand deposits			3,409,209						3,710,589
Other liabilities			262,951						212,425
Stockholders' equity			1,203,886						1,215,747
Total liabilities and stockholders' equity		$	11,782,990					$	11,951,133
Net interest income (FTE)1				$	184,948					$	168,508
Interest rate spread						2.86	%					2.99	%
Net interest margin (FTE)1						3.41	%					3.08	%
Taxable equivalent adjustment				$	797					$	575
Net interest income				$	184,151					$	167,933

1	The following tables provide the Non-GAAP reconciliations for the Non-GAAP measures contained in this release:
	Non-GAAP measures
	(unaudited, dollars in thousands)
	FTE adjustment		2023						2022
		2nd Q			1st Q			4th Q			3rd Q			2nd Q
	Net interest income	$	89,085		$	95,066		$	99,779		$	94,478		$	87,585
	Add: FTE adjustment		402			395			392			337			290
	Net interest income (FTE)	$	89,487		$	95,461		$	100,171		$	94,815		$	87,875
	Average earning assets	$	10,983,347		$	10,909,932		$	10,801,115		$	10,727,291		$	10,983,020
	Net interest margin (FTE)3		3.27	%		3.55	%		3.68	%		3.51	%		3.21	%
		6 Months Ended June 30,
			2023			2022
	Net interest income	$	184,151		$	167,933
	Add: FTE adjustment		797			575
	Net interest income (FTE)	$	184,948		$	168,508
	Average earning assets	$	10,946,842		$	11,035,772
	Net interest margin (FTE)3		3.41	%		3.08	%
	Interest income for tax-exempt securities and loans have been adjusted to an FTE basis using the statutory Federal income tax rate of 21%.
	Tangible equity to tangible assets		2023						2022
		2nd Q			1st Q			4th Q			3rd Q			2nd Q
	Total equity	$	1,210,493		$	1,211,659		$	1,173,554		$	1,156,546		$	1,188,556
	Intangible assets		287,701			288,159			288,545			289,083			289,259
	Total assets	$	11,890,497		$	11,839,730		$	11,739,296		$	11,640,742		$	11,720,459
	Tangible equity to tangible assets		7.95	%		7.99	%		7.73	%		7.64	%		7.87	%
	Return on average tangible common equity		2023						2022
		2nd Q			1st Q			4th Q			3rd Q			2nd Q
	Net income	$	30,072		$	33,658		$	36,121		$	38,973		$	37,775
	Amortization of intangible assets (net of tax)		344			402			404			408			409
	Net income, excluding intangibles amortization	$	30,416		$	34,060		$	36,525		$	39,381		$	38,184
	Average stockholders' equity	$	1,217,306		$	1,190,316		$	1,164,916		$	1,201,656		$	1,190,585
	Less: average goodwill and other intangibles		287,974			288,354			288,856			289,296			289,584
	Average tangible common equity	$	929,332		$	901,962		$	876,060		$	912,360		$	901,001
	Return on average tangible common equity3		13.13	%		15.31	%		16.54	%		17.12	%		17.00	%
		6 Months Ended June 30,
			2023			2022
	Net income	$	63,730		$	76,901
	Amortization of intangible assets (net of tax)		746			886
	Net income, excluding intangibles amortization	$	64,476		$	77,787
	Average stockholders' equity	$	1,203,886		$	1,215,747
	Less: average goodwill and other intangibles		288,163			289,402
	Average tangible common equity	$	915,723		$	926,345
	Return on average tangible common equity3		14.20	%		16.93	%
2	Non-GAAP measure - Stockholders' equity less goodwill and intangible assets divided by common shares outstanding.
3	Annualized.
4	Total past due loans, defined as loans 30 days or more past due and in an accrual status.
5	Securities are shown at average amortized cost.
6	For purposes of these computations, nonaccrual loans and loans held for sale are included in the average loan balances outstanding.

Contact:

John H. Watt, Jr., President and CEOScott A. Kingsley, Executive Vice President and CFONBT Bancorp Inc.52 South Broad StreetNorwich, NY 13815607-337-6589