NBTB NBT Bancorp Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

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FORM 8-K

Delaware	000-14703	16-1268674
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

Title of class		Trading Symbol		Name of exchange on which registered
Common Stock, par value $0.01 per share		NBTB		The NASDAQ Stock Market LLC

Item 2.02

Results of Operations and Financial Condition

Item 9.01

Financial Statements and Exhibits.

Exhibit No.		Description
99.1		Press release of NBT Bancorp Inc. January 23, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

	NBT BANCORP INC.
Date: January 23, 2024	By:	/s/ Scott A. Kingsley
		Scott A. Kingsley
		Executive Vice President and Chief Financial Officer

FOR IMMEDIATE RELEASE

Contact:	John H. Watt, Jr., President and CEO
	Scott A. Kingsley, Executive Vice President and CFO
	NBT Bancorp Inc.
	52 South Broad Street
	Norwich, NY 13815
	607-337-6589

NBT BANCORP INC. ANNOUNCES FULL YEAR NET INCOME AND DECLARES DIVIDEND

NORWICH, NY (January 23, 2024) – NBT Bancorp Inc. (“NBT” or the “Company”) (NASDAQ: NBTB) reported net income and diluted earnings per share for the three and twelve months ended December 31, 2023.

 

Net income for the three months ended December 31, 2023 was $30.4 million, or $0.64 per diluted common share, compared to $36.1 million, or $0.84 per diluted common share, for the three months ended December 31, 2022, and $24.6 million, or $0.54 per diluted common share, in the third quarter of 2023. Operating diluted earnings per share¹, a non-GAAP measure, which excludes acquisition expenses, acquisition-related provision for credit losses, securities gains (losses) and impairment of a minority interest equity investment, net of tax, was $0.72 for the fourth quarter of 2023, compared to $0.86 in the fourth quarter of 2022 and $0.84 in the third quarter of 2023.

 

Net income for the year ended December 31, 2023 was $118.8 million, or $2.65 per diluted common share, compared to $152.0 million, or $3.52 per diluted common share, in the prior year. Operating diluted earnings per share¹ was $3.23 for the year ended December 31, 2023, compared to $3.56 in the prior year.

 
CEO Comments

“NBT’s fourth quarter and full year results reflect our consistent dedication to improving our traditional banking franchise while growing our diversified revenue sources,” said NBT President and CEO John H. Watt, Jr. “In a year characterized by unprecedented market volatility, we grew loans and deposits, maintained strong asset quality, improved our capital position, completed the high-value acquisition of Salisbury Bancorp, Inc., and continued to deliver best-in-class customer service.”

Fourth Quarter Financial Highlights

 

Loans

■

Period end total loans were $9.65 billion at December 31, 2023, consistent with the end of the third quarter of 2023 and were $8.15 billion at December 31, 2022.

■

Period end total loans increased $1.50 billion from December 31, 2022, including loans acquired from Salisbury. Commercial and industrial loans increased $88.2 million to $1.35 billion; commercial real estate loans increased $819.0 million to $3.63 billion; and total consumer loans increased $593.4 million to $4.67 billion.

■

Commercial line of credit utilization rate was 20% at December 31, 2023, compared to 22% at September 30, 2023 and 21% at December 31, 2022.

Deposits

■

Total deposits at December 31, 2023 were $10.97 billion, compared to $9.50 billion at December 31, 2022. The Company continued to experience incremental migration from noninterest bearing and low interest checking and savings accounts into higher cost money market and time deposit instruments, during each quarter of 2023.

■

Loan to deposit ratio was 88.0% at December 31, 2023, compared to 85.8% at December 31, 2022. Consistent with historical trends and as seasonally expected, ending deposits declined from September 30, 2023 to December 31, 2023.

Net Interest Income and Net Interest Margin

■

Net interest income for the fourth quarter of 2023 was $99.2 million, which was up $4.3 million, or 4.5%, from the third quarter of 2023 and down $0.6 million, or 0.6%, from the fourth quarter of 2022. The increase in net interest income resulted from the benefit of the full quarter impact of the Salisbury acquisition and was partially offset by the increase in cost of funds outpacing the improvement in asset yields during the quarter.

■

The NIM on an FTE basis for the fourth quarter of 2023 was 3.15%, a decrease of 6 bps from the third quarter of 2023, driven by an increase in the cost of interest-bearing deposits, partly offset by an increase in average earning asset yields and a full quarter impact of acquisition-related net accretion. The NIM on an FTE basis decreased 53 bps from the fourth quarter of 2022 due to the increase in the cost of interest-bearing deposits and higher short-term borrowings costs and average balances, partially offset by higher earning asset yields.

■

Earning asset yields for the three months ended December 31, 2023 increased 16 bps from the prior quarter to 4.79% and increased 77 bps from the same quarter in the prior year. Average earning assets grew $761.0 million, or 6.4%, from the third quarter of 2023 due to the Salisbury acquisition and organic loan growth.

■

Total cost of deposits, including noninterest bearing deposits, was 1.51% for the fourth quarter of 2023, an increase of 33 bps from the prior quarter and up 134 bps from the same period in the prior year.

■

Total cost of funds for the three months ended December 31, 2023 was 1.72%, up 22 bps from the prior quarter and up 135 bps from the fourth quarter of 2022.

Asset Quality and Allowance for Loan Losses

■

Net charge-offs to total average loans was 22 bps compared to 18 bps in both the prior quarter and in the fourth quarter of 2022. Net charge-offs for the portfolios in a planned run-off status represented the majority of total net charge-offs for the quarter and full year.

■

Nonperforming assets to total assets were 0.28% at December 31, 2023, compared to 0.18% at both September 30, 2023 and December 31, 2022. The increase in nonperforming assets was attributable to a diversified, multi-tenant commercial real estate development relationship that was placed into a nonaccrual status in the fourth quarter of 2023, in which NBT is a participant. The relationship is being actively managed and recent appraised values continue to support its carrying value, and as such, no specific reserve has been established.

■

Provision expense for the three months ended December 31, 2023 was $5.1 million, compared to $12.6 million for the third quarter of 2023 and $7.7 million for the fourth quarter of 2022. Included in the provision expense in the third quarter of 2023 was $8.8 million of acquisition-related provision for loan losses.

■

The reserve for unfunded loan commitments increased to $5.1 million at December 31, 2023 compared to the prior quarter-end at $4.8 million and to $5.1 million at December 31, 2022. The provision for unfunded loan commitments in the third quarter of 2023 included $0.8 million of acquisition-related provision for unfunded loan commitments.

Noninterest Income

■

Total noninterest income, excluding securities gains (losses), was $38.0 million for the three months ended December 31, 2023, down $2.4 million from the seasonally high third quarter, and $3.7 million higher, or 10.7%, from the fourth quarter of 2022.

■

Service charges on deposit accounts were higher than the prior quarter and the fourth quarter of 2022 due primarily to the Salisbury acquisition and new account growth.

■

Retirement plan administration fees were down $1.6 million from the prior quarter and were $0.6 million higher than the fourth quarter of 2022. The decrease from the prior quarter, as expected, was due to certain seasonal activity-based fees in the third quarter. The increase from the fourth quarter of 2022 included the impact from the acquisition of Retirement Direct, LLC on July 1, 2023.

■

Wealth management fees were consistent with the prior quarter as certain prior quarter seasonal activity-based fees were offset by the full quarter addition of Salisbury revenues and were $1.1 million higher than the fourth quarter of 2022.

■

Insurance services were down $0.7 million from the third quarter which has comparatively higher levels of policy renewals than the fourth quarter.

Noninterest Expense

■

Total noninterest expense was $92.8 million for the fourth quarter of 2023 compared to $90.8 million in the third quarter of 2023 and $79.5 million in the fourth quarter of 2022. Total noninterest expense, excluding $0.3 million of acquisition expenses in the fourth quarter of 2023, $7.9 million in the third quarter of 2023 and $1.0 million in the fourth quarter of 2022, and the $4.8 million impairment of a minority interest equity investment in the fourth quarter of 2023 increased 5.9% compared to the previous quarter primarily due to a full quarter impact of the Salisbury acquisition and higher professional service fees and increased 11.7% from the fourth quarter of 2022.

■

Salaries and benefits increased 1.6% from the prior quarter driven by the full quarter impact of the Salisbury acquisition and was partially offset by lower quarterly incentive costs.

■

Technology and data services, professional fees and outside services, and advertising increased from the prior quarter and the fourth quarter of 2022 due to the timing of initiatives that occurred following the completion of the Salisbury acquisition in the third quarter.

■

Amortization of intangible assets increased $0.5 million from the prior quarter and $1.6 million from the fourth quarter of 2022 primarily due to the amortization of intangible assets related to the Salisbury acquisition.

■

FDIC assessment expense increased $0.2 million in the prior quarter primarily due to the acquisition of Salisbury and increased $1.1 million from the fourth quarter of 2022 driven by the statutory increase in the FDIC assessment rate.

■

In the fourth quarter of 2023, the Company recorded a full $4.8 million ($0.08 per diluted share) impairment of its minority interest equity investment in a provider of financial and technology services to residential solar equipment installers, due to the uncertainty in the realizability of the investment.

Income Taxes

■

The effective tax rate was 23.5% for the fourth quarter of 2023 which was up from 22.4% in the third quarter of 2023 and 22.6% for the fourth quarter of 2022 and primarily to adjust to a full year tax rate for 2023 of 22.6%, including assessment of acquisition related items.

Capital

■

Tangible common equity to tangible assets1 was 7.93% at December 31, 2023. Tangible book value per share2 was $21.72 at December 31, 2023, $20.39 at September 30, 2023 and $20.65 at December 31, 2022.

■

Stockholders’ equity increased $252.1 million from December 31, 2022 driven by the Salisbury acquisition adding $161.7 million of capital, net income generation of $118.8 million and a $29.1 million increase in accumulated other comprehensive income driven by the change in the market value of securities available for sale, partially offset by dividends declared of $55.9 million and the repurchase of common stock of $4.9 million.

■

December 31, 2023, CET1 capital ratio of 11.57%, leverage ratio of 9.71% and total risk-based capital ratio of 14.75%.

Dividend

■

On January 22, 2024, the Board of Directors approved a first-quarter cash dividend of $0.32 per share, which represents a $0.02 per quarter, or 6.7%, increase over the dividend paid in the first quarter of 2023. The dividend will be paid on March 15, 2024 to stockholders of record as of March 1, 2024.

Stock Repurchase

■

The Company purchased 155,500 shares of its common stock during 2023 at an average price of $31.79 per share under its previously announced share repurchase program. The repurchase program under which these shares were purchased expired on December 31, 2023.

■

On December 18, 2023, the Board of Directors authorized and approved an amendment to the Company’s previously announced stock repurchase program. Pursuant to the amended stock repurchase program, the Company may repurchase up to 2,000,000 of the currently outstanding shares of its common stock with all repurchases under the stock repurchase program to be made by December 31, 2025. 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.

Conference Call and Webcast

The Company will host a conference call at 8:30 a.m. (Eastern) Wednesday, January 24, 2024, to review fourth 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 $13.31 billion at December 31, 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 153 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 possibility that NBT may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes; (14) the ability to increase market share and control expenses; (15) changes in the competitive environment among financial holding companies; (16) 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; (17) 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; (18) changes in the Company’s organization, compensation and benefit plans; (19) 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; (20) greater than expected costs or difficulties related to the integration of new products and lines of business; and (21) 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
		4th Q				3rd Q				2nd Q				1st Q				4th Q
Profitability (reported)
Diluted earnings per share		$	0.64			$	0.54			$	0.70			$	0.78			$	0.84
Weighted average diluted common shares outstanding			47,356,899				45,398,937				43,126,498				43,125,986				43,144,666
Return on average assets3			0.89	%			0.76	%			1.02	%			1.16	%			1.23	%
Return on average equity3			8.79	%			7.48	%			9.91	%			11.47	%			12.30	%
Return on average tangible common equity1 3			13.08	%			10.73	%			13.13	%			15.31	%			16.54	%
Net interest margin1 3			3.15	%			3.21	%			3.27	%			3.55	%			3.68	%
		12 Months Ended December 31,
			2023				2022
Profitability (reported)
Diluted earnings per share		$	2.65			$	3.52
Weighted average diluted common shares outstanding			44,770,171				43,181,312
Return on average assets			0.95	%			1.29	%
Return on average equity			9.34	%			12.67	%
Return on average tangible common equity1			13.02	%			16.89	%
Net interest margin1			3.29	%			3.34	%
	2023																	2022
		4th Q				3rd Q				2nd Q				1st Q				4th Q
Profitability (operating)
Diluted earnings per share1		$	0.72			$	0.84			$	0.80			$	0.88			$	0.86
Return on average assets1 3			0.99	%			1.19	%			1.17	%			1.31	%			1.26	%
Return on average equity1 3			9.79	%			11.65	%			11.40	%			12.95	%			12.61	%
Return on average tangible common equity1 3			14.49	%			16.43	%			15.08	%			17.27	%			16.95	%
		12 Months Ended December 31,
			2023				2022
Profitability (operating)
Diluted earnings per share1		$	3.23			$	3.56
Return on average assets1			1.16	%			1.30	%
Return on average equity1			11.38	%			12.81	%
Return on average tangible common equity1			15.78	%			17.06	%
	2023																	2022
		4th Q				3rd Q				2nd Q				1st Q				4th Q
Balance sheet data
Short-term interest-bearing accounts		$	31,378			$	459,296			$	31,878			$	68,045			$	30,862
Securities available for sale			1,430,858				1,399,032				1,453,926				1,512,008				1,527,225
Securities held to maturity			905,267				914,520				912,876				906,824				919,517
Net loans			9,536,313				9,552,774				8,257,724				8,164,328				8,049,347
Total assets			13,309,040				13,827,628				11,890,497				11,839,730				11,739,296
Total deposits			10,968,994				11,401,452				9,529,919				9,681,205				9,495,933
Total borrowings			637,387				740,603				880,518				703,248				787,950
Total liabilities			11,883,349				12,464,807				10,680,004				10,628,071				10,565,742
Stockholders' equity			1,425,691				1,362,821				1,210,493				1,211,659				1,173,554
Capital
Equity to assets			10.71	%			9.86	%			10.18	%			10.23	%			10.00	%
Tangible equity ratio1			7.93	%			7.15	%			7.95	%			7.99	%			7.73	%
Book value per share		$	30.26			$	28.94			$	28.26			$	28.24			$	27.38
Tangible book value per share2		$	21.72			$	20.39			$	21.55			$	21.52			$	20.65
Leverage ratio			9.71	%			10.23	%			10.51	%			10.43	%			10.32	%
Common equity tier 1 capital ratio			11.57	%			11.31	%			12.29	%			12.28	%			12.12	%
Tier 1 capital ratio			12.50	%			12.23	%			13.35	%			13.34	%			13.19	%
Total risk-based capital ratio			14.75	%			14.45	%			15.50	%			15.53	%			15.38	%
Common stock price (end of period)		$	41.91			$	31.69			$	31.85			$	33.71			$	43.42

NBT Bancorp Inc. and Subsidiaries
Asset Quality and Consolidated Loan Balances
(unaudited, dollars in thousands)
	2023																	2022
		4th Q				3rd Q				2nd Q				1st Q				4th Q
Asset quality
Nonaccrual loans		$	34,213			$	20,736			$	16,931			$	16,284			$	17,233
90 days past due and still accruing			3,661				3,528				2,755				2,328				3,823
Total nonperforming loans			37,874				24,264				19,686				18,612				21,056
Other real estate owned			-				-				179				105				105
Total nonperforming assets			37,874				24,264				19,865				18,717				21,161
Allowance for loan losses			114,400				114,601				100,400				100,250				100,800
Asset quality ratios
Allowance for loan losses to total loans			1.19	%			1.19	%			1.20	%			1.21	%			1.24	%
Total nonperforming loans to total loans			0.39	%			0.25	%			0.24	%			0.23	%			0.26	%
Total nonperforming assets to total assets			0.28	%			0.18	%			0.17	%			0.16	%			0.18	%
Allowance for loan losses to total nonperforming loans			302.05	%			472.31	%			510.01	%			538.63	%			478.72	%
Past due loans to total loans4			0.32	%			0.49	%			0.45	%			0.30	%			0.33	%
Net charge-offs to average loans3			0.22	%			0.18	%			0.17	%			0.19	%			0.18	%
	2023																	2022
		4th Q				3rd Q				2nd Q				1st Q				4th Q
Loan net charge-offs by line of business
Commercial		$	1,107			$	(344	)		$	92			$	(252	)		$	(37	)
Residential real estate and home equity			11				(75	)			(43	)			80				(79	)
Indirect auto			399				451				273				423				445
Residential solar			1,081				1,253				581				656				596
Other consumer			2,729				2,919				2,553				2,904				2,752
Total loan net charge-offs		$	5,327			$	4,204			$	3,456			$	3,811			$	3,677
	2023																	2022
		4th Q				3rd Q				2nd Q				1st Q				4th Q
Allowance for loan losses as a percentage of loans by segment
Commercial & industrial			0.84	%			0.87	%			0.86	%			0.85	%			0.82	%
Commercial real estate			0.99	%			1.00	%			0.93	%			0.93	%			0.91	%
Residential real estate			0.84	%			0.79	%			0.73	%			0.73	%			0.72	%
Auto			0.83	%			0.82	%			0.80	%			0.77	%			0.81	%
Residential solar			3.28	%			3.19	%			3.09	%			3.04	%			3.21	%
Other consumer			4.70	%			5.23	%			5.98	%			6.19	%			6.27	%
Total			1.19	%			1.19	%			1.20	%			1.21	%			1.24	%
	2023																	2022
		4th Q				3rd Q				2nd Q				1st Q				4th Q
Loans by line of business
Commercial & industrial		$	1,354,248			$	1,424,579			$	1,319,093			$	1,278,291			$	1,266,031
Commercial real estate			3,626,910				3,575,595				2,884,264				2,845,631				2,807,941
Residential real estate			2,125,804				2,111,670				1,666,204				1,651,918				1,649,870
Indirect auto			1,130,132				1,099,558				1,048,739				1,031,315				989,587
Residential solar			917,755				934,082				926,365				920,084				856,798
Home equity			337,214				340,777				310,897				308,219				314,124
Other consumer			158,650				181,114				202,562				229,120				265,796
Total loans		$	9,650,713			$	9,667,375			$	8,358,124			$	8,264,578			$	8,150,147