NORWICH, N.Y., Jan. 28, 2019 (GLOBE NEWSWIRE) -- NBT Bancorp Inc. (“NBT” or the “Company”) (NASDAQ: NBTB) reported record net income and diluted earnings per share for the year ended December 31, 2018.

Net income for the year ended December 31, 2018 was $112.6 million, up 37.0% from $82.2 million for the prior year driven by net interest margin expansion, loan growth, strong asset quality and a reduction in tax expense due to tax reform. Diluted earnings per share for the year ended December 31, 2018 was $2.56, as compared with $1.87 for the prior year, an increase of 37%.

Net income for the three months ended December 31, 2018 was $28.7 million, down 3.9% from $29.8 million for the third quarter of 2018 and up 62.5% from $17.6 million for the fourth quarter of 2017. Diluted earnings per share for the three months ended December 31, 2018 was $0.65, as compared with $0.68 for the prior quarter, a decrease of 4.4%, and $0.40 for the fourth quarter of 2017, an increase of 63%.

Highlights:

• Diluted earnings per share up 37% from prior year
• Earnings in excess of $100 million for the first time in the 163 year history of the Company
• Loan growth for the year ended December 31, 2018 of 4.6%
• Average demand deposits for the year ended December 31, 2018 up 4.7% over 2017
• FTE net interest margin of 3.58% for year ended December 31, 2018 up 11 bps from 2017
• Recognized a one-time $5.5 million tax benefit in the fourth quarter
• Recorded a $6.6 million loss on securities sold in the fourth quarter related to the restructuring of the investment portfolio
• Full cycle deposit beta of 6.9% through the quarter ending December 31, 2018¹

“As our 2018 results demonstrate, NBT had a strong year. We achieved record net income for the sixth consecutive year and a new annual EPS record,” said NBT President and CEO John H. Watt, Jr. “This strong performance was delivered by a focused and aligned team across all lines of business. They concentrate on the fundamentals of our business, including low-cost deposit gathering, loan growth and strong asset quality, while continuing to grow our fee-based business, including the RPS acquisition in the second quarter. At the same time we continued to invest in enhancing the customer experience and digitizing our offerings. As we continue to grow the Company and build shareholder value, we were pleased to increase the cash dividend paid to shareholders on two occasions in 2018 for a combined increase of 13%.”

Net interest income for the year ended 2018 was $305.6 million, up $22.1 million, or 7.8%, from 2017. The fully taxable equivalent (“FTE”) net interest margin of 3.58% for the year ended December 31, 2018, was up from 3.47% for the year ended December 31, 2017 primarily due to asset yields increasing 24 basis points (“bps”), more than offsetting the 20 bp rise in the cost of interest bearing liabilities. Average interest earning assets were up $320.1 million, or 3.9%, for the year ended December 31, 2018, as compared to the same period in 2017, driven by a $406.3 million increase in loans that was partially offset by a $81.4 million decrease in securities. Interest income increased $34.8 million, or 11.3%, due to the increase in earning assets combined with a 24 bp improvement in loan yields. Interest expense was up $12.7 million, or 49.1%, for the year ended December 31, 2018 as compared to the same period in 2017 resulting primarily from a 20 bp increase in rates on interest bearing liabilities driven by higher borrowing costs and a 14 bp increase in the cost of interest bearing deposits, combined with an increase in average interest bearing liabilities of $173.0 million. The Federal Reserve has raised its target fed funds rate nine times from December 2015 through December 2018 for a total of 225 bps. During this same cycle of increasing rates, the Company’s deposit rates have increased by 15 bps, resulting in a full cycle deposit beta of 6.9%.

Net interest income was $78.9 million for the fourth quarter of 2018, up $1.3 million, or 1.7%, from the previous quarter. The FTE net interest margin was 3.61% for the three months ended December 31, 2018, up 4 bps from the previous quarter, as higher rates on average earning assets were partially offset by higher funding costs. Interest income increased $2.3 million, or 2.6%, as the yield on average earning assets increased 9 bps from the prior quarter to 4.14%, combined with an increase in average interest earning assets of $38.7 million, or 0.4%, driven by the increase in average loans of $36.8 million. Interest expense was up $1.0 million, or 9.1%, as the cost of interest bearing liabilities increased 6 bps to 0.77% for the quarter ended December 31, 2018, driven by interest-bearing deposit costs increasing 6 bps with increased short-term borrowings cost.

Net interest income was $78.9 million for the fourth quarter of 2018, up $5.4 million, or 7.4%, from the fourth quarter of 2017. The FTE net interest margin of 3.61% was up 9 bps from the fourth quarter of 2017. Interest income increased $10.3 million, or 12.8%, as the yield on average earning assets increased 30 bps from the same period in 2017, and average interest earning assets increased $338.2 million, or 4.0%, primarily due to the $347.9 million increase in average loans. Interest expense increased $4.9 million, or 71.8%, as the cost of interest bearing liabilities increased 31 bps, driven by interest-bearing deposit costs increasing 23 bps combined with the increase in short-term borrowing costs.

Noninterest income for the year ended December 31, 2018 was $124.8 million, up $3.5 million, or 2.9%, from the same period in 2017. The increase from the prior year was driven by higher retirement plan administration fees and an increase in other noninterest income that was partially offset by net securities losses in 2018. Retirement plan administration fees increased due to the acquisitions of Retirement Plan Services, LLC (“RPS”) in the second quarter of 2018 and of Downeast Pension Services in the second quarter of 2017. In the fourth quarter of 2018, the Company restructured the investment portfolio by selling $109 million lower yielding bonds and reinvesting the proceeds in higher yielding bonds, which resulted in a $6.6 million loss on securities sold. Other noninterest income in 2018 increased compared to the same period of 2017 due to non-recurring gains recognized in 2018. Excluding net securities (losses) gains, noninterest income for the year ended December 31, 2018 would have been $131.1 million, up $11.7 million, or 9.8%, from the same period in 2017.

Noninterest income for the three months ended December 31, 2018 was $25.9 million, down $7.4 million, or 22.3%, from the prior quarter and down $5.5 million, or 17.6%, from the fourth quarter of 2017. Excluding net securities (losses) gains, noninterest income for the three months ended December 31, 2018 would have been $32.9 million, comparable to the prior quarter and up $3.3 million, or 11.0% from the fourth quarter of 2017. The increase from the fourth quarter of 2017 was primarily due to higher retirement plan administration fees resulting from the acquisition of RPS in the second quarter of 2018 and higher other noninterest income due primarily to swap fees.

Noninterest expense for the year ended December 31, 2018 was $264.6 million, up $18.9 million, or 7.7%, from the same period in 2017. The increase from the prior year was driven by higher salaries and employee benefits due to the retirement plan services acquisitions in 2018 and 2017, higher incentive compensation and wage increases for over 60% of our employees from the Company’s commitment to invest a portion of the tax reform benefit in our employees.

Noninterest expense for the three months ended December 31, 2018 was $68.9 million, up $2.4 million, or 3.6%, from the prior quarter and up $5.5 million, or 8.6%, from the fourth quarter of 2017. The increase from the fourth quarter of 2017 was driven by an increase in salaries and employee benefits expenses primarily due to the RPS acquisition, wage increases related to tax reform initiatives and higher incentive compensation associated with business growth. The increase from the prior quarter was primarily due to increases in salaries and employee benefits due to an increase in medical costs, an increase in professional fees and advertising expense due to timing of initiatives and an increase in other noninterest expense. The increase in other noninterest expense was primarily due to the timing of contributions and $0.5 million in non-recurring items.

Income tax expense for the year ended December 31, 2018 was $24.4 million, down $21.6 million, or 46.9%, from the same period of 2017. The effective tax rate of 17.8% in 2018 was down from 35.9% for the same period in the prior year. The decrease in income tax expense from the prior year was due to the lower effective tax rate resulting from the Tax Cuts and Jobs Act (“TCJA”), a $5.5 million tax benefit recorded in the fourth quarter of 2018 primarily related to one-time income tax return accounting method changes during the fourth quarter of 2018, combined with the $4.4 million estimated non-cash charge related to the enactment of the TCJA in 2017 for the Company’s deferred tax assets due to the tax rate reduction. This was partially offset by a higher level of taxable income and lower tax benefit from equity-based transactions. Excluding the tax benefit from equity-based transactions, the tax benefit in the fourth quarter of 2018 and the TCJA charge in 2017, the effective tax rate was 22.2% and 33.8% for the years ending December 31, 2018 and 2017, respectively.

Income tax expense for the three months ended December 31, 2018 was $0.7 million, down $7.8 million, or 91.4%, from the prior quarter and down $15.0 million, or 95.3%, from the fourth quarter of 2017. The effective tax rate of 2.5% for the fourth quarter of 2018 was down from 22.3% for the third quarter of 2018 and down from 47.1% for the fourth quarter of 2017. The decrease in income tax expense from the prior quarter was primarily due to one-time income tax return accounting method changes during the fourth quarter of 2018. The decrease in income tax expense from the fourth quarter of 2017 was due to the lower effective tax rate resulting from the TCJA, and the income tax return accounting method changes during the fourth quarter of 2018, combined with the $4.4 million estimated non-cash charge related to the enactment of the TCJA in 2017 for the revaluation of the Company’s deferred tax assets due to the tax rate reduction. This was partially offset by a higher level of taxable income.

Asset Quality

Net charge-offs of $25.8 million for the year ended December 31, 2018 were down as compared to $26.7 million for the same period of 2017. Provision expense was $28.8 million for the year ended December 31, 2018, as compared with $31.0 million for the same period of 2017. Annualized net charge-offs to average loans for the year ended December 31, 2018 was 0.38% as compared with 0.42% for the same period of 2017.

Net charge-offs of $6.8 million for the three months ended December 31, 2018 were up as compared to $5.7 million for the prior quarter and comparable to the $7.0 million for the fourth quarter of 2017. Provision expense was higher at $6.5 million for the three months ended December 31, 2018, as compared with $6.0 million for the prior quarter and lower compared with $8.2 million for the fourth quarter of 2017. Annualized net charge-offs to average loans for the fourth quarter of 2018 was 0.39%, up from 0.33% for the prior quarter and down from 0.43% for the fourth quarter of 2017.

Nonperforming loans to total loans was 0.44% at December 31, 2018, up 3 bps from 0.41% for the prior quarter and down 3 bps from 0.47% at December 31, 2017. Past due loans as a percentage of total loans were 0.55% at December 31, 2018, up from 0.53% at September 30, 2018 and down from 0.63% at December 31, 2017.

The allowance for loan losses totaled $72.5 million at December 31, 2018, compared to $72.8 million at September 30, 2018 and $69.5 million at December 31, 2017. The allowance for loan losses as a percentage of loans was 1.05% (1.10% excluding acquired loans) at December 31, 2018, compared to 1.06% (1.11% excluding acquired loans) at September 30, 2018 and 1.06% (1.12% excluding acquired loans) at December 31, 2017.

Balance Sheet

Total assets were $9.6 billion at December 31, 2018, up $419.6 million, or 4.6%, from December 31, 2017. Loans were $6.9 billion at December 31, 2018, up $304.1 million, or 4.6%, from December 31, 2017. Total deposits were $7.4 billion at December 31, 2018, up $197.6 million, or 2.8%, from December 31, 2017, reflecting growth in core and municipal deposits. Stockholders’ equity was $1.0 billion, representing a total equity-to-total assets ratio of 10.65% at December 31, 2018, compared with $958.2 million or a total equity-to-total assets ratio of 10.49% at December 31, 2017.

Dividend

The Board of Directors approved a first-quarter 2019 cash dividend of $0.26 per share at a meeting held today. The dividend will be paid on March 15, 2019 to shareholders of record as of March 1, 2019.

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, N.Y., with total assets of $9.6 billion at December 31, 2018. 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 151 banking locations in New York, Pennsylvania, Vermont, Massachusetts, New Hampshire and Maine. EPIC Retirement Plan Services, based in Rochester, N.Y., is a full-service 401(k) plan recordkeeping firm. NBT Insurance Agency, LLC, based in Norwich, N.Y., is a full-service insurance agency. More information about NBT and its divisions is available online at: www.nbtbancorp.com, www.nbtbank.com, www.epic1st.com and www.nbtinsurance.com.

Forward-Looking Statements

This news release contains forward-looking statements. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of NBT and its subsidiaries and on the information available to management at the time that these statements were made. There are a number of factors, many of which are beyond NBT’s control, which could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others: (1) competitive pressures among depository and other financial institutions may increase significantly, including as a result of competitors having greater financial resources than NBT; (2) revenues may be lower than expected; (3) changes in the interest rate environment may reduce interest margins; (4) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit; (5) legislative or regulatory changes, including changes in accounting standards and tax laws, may adversely affect business and results; (6) NBT’s ability to successfully integrate acquired businesses and employees; and (7) adverse changes may occur in the securities markets or with respect to inflation. Forward-looking statements speak only as of the date they are made. Except as required by law, NBT does not update forward-looking statements to reflect subsequent circumstances or events.

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”). These measures adjust GAAP measures to exclude the effects of acquisition related intangible amortization expense on earnings and equity as well as providing a FTE yield on securities and loans. Where non-GAAP disclosures are used in this press release, 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 NBT’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 NBT’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of NBT.

¹ The change in the Company’s quarterly deposit costs from December 31, 2015 to December 31, 2018 of 0.15% divided by the change in Federal Reserve’s target fed funds rate from December 2015 to December 2018 of 2.25%

Contact:
John H. Watt, Jr., President and CEO
Michael J. Chewens, CFO
NBT Bancorp Inc.
52 South Broad Street
Norwich, NY 13815
607-337-6119

NBT Bancorp Inc. and Subsidiaries
Selected Financial Data
(unaudited, dollars in thousands except per share data)
		2018												2017
Profitability:	4th Q			3rd Q			2nd Q			1st Q			4th Q
Diluted earnings per share	$	0.65		$	0.68		$	0.64		$	0.59		$	0.40
Weighted average diluted common shares outstanding		44,059,796			44,050,557			44,016,940			43,975,248			43,957,571
Return on average assets (1)		1.20%			1.25%			1.21%			1.15%			0.77%
Return on average equity (1)		11.34%			11.96%			11.64%			10.99%			7.27%
Return on average tangible common equity (1)(3)		16.37%			17.42%			17.08%			15.95%			10.65%
Net interest margin (1)(2)		3.61%			3.57%			3.57%			3.57%			3.52%
	12 Months ended December 31,
Profitability:		2018			2017
Diluted earnings per share	$	2.56		$	1.87
Weighted average diluted common shares outstanding		44,019,698			43,904,520
Return on average assets		1.20%			0.91%
Return on average equity		11.49%			8.71%
Return on average tangible common equity (4)		16.71%			12.82%
Net interest margin (2)		3.58%			3.47%
(1) Annualized.
(2) Calculated on a FTE basis.
(3) Non-GAAP measure - excludes amortization of intangible assets (net of tax) from net income and average tangible common equity is calculated as follows:
		2018												2017
	4th Q			3rd Q			2nd Q			1st Q			4th Q
Net income	$	28,652		$	29,807		$	28,121		$	25,986		$	17,637
Amortization of intangible assets (net of tax)		734			791			822			686			594
Net income, excluding intangibles amortization	$	29,386		$	30,598		$	28,943		$	26,672		$	18,231
Average stockholders' equity	$	1,002,822		$	988,551		$	969,029		$	959,044		$	962,660
Less: average goodwill and other intangibles		290,854			291,814			289,250			281,027			283,554
Average tangible common equity	$	711,968		$	696,737		$	679,779		$	678,017		$	679,106
(4) Non-GAAP measure - excludes amortization of intangible assets (net of tax) from net income and average tangible common equity is calculated as follows:
	12 Months ended December 31,
		2018			2017
Net income	$	112,566		$	82,151
Amortization of intangible assets (net of tax)		3,032			2,446
Net income, excluding intangibles amortization	$	115,598		$	84,597
Average stockholders' equity	$	980,005		$	943,676
Less: average goodwill and other intangibles		288,273			283,573
Average tangible common equity	$	691,732		$	660,103
Note: Year-to-date EPS may not equal sum of quarters due to differences in outstanding shares.

NBT Bancorp Inc. and Subsidiaries
Selected Financial Data
(unaudited, dollars in thousands except per share data)
		2018												2017
	4th Q			3rd Q			2nd Q			1st Q			4th Q
Balance sheet data:
Securities available for sale	$	998,496		$	1,101,074		$	1,192,939		$	1,265,912		$	1,255,925
Securities held to maturity		783,599			659,949			544,163			487,126			484,073
Net loans		6,815,204			6,814,457			6,785,721			6,575,522			6,514,139
Total assets		9,556,363			9,547,284			9,467,138			9,230,834			9,136,812
Total deposits		7,368,211			7,441,290			7,344,449			7,393,928			7,170,636
Total borrowings		1,046,616			986,656			1,028,971			776,032			909,188
Total liabilities		8,538,454			8,553,129			8,488,209			8,278,104			8,178,635
Stockholders' equity		1,017,909			994,155			978,929			952,730			958,177
Asset quality:
Nonaccrual loans	$	25,487		$	23,301		$	24,006		$	25,426		$	25,708
90 days past due and still accruing		5,085			4,734			2,209			2,934			5,410
Total nonperforming loans		30,572			28,035			26,215			28,360			31,118
Other real estate owned		2,441			3,271			4,349			4,949			4,529
Total nonperforming assets		33,013			31,306			30,564			33,309			35,647
Allowance for loan losses		72,505			72,805			72,450			70,200			69,500
Asset quality ratios (total):
Allowance for loan losses to total loans		1.05%			1.06%			1.06%			1.06%			1.06%
Total nonperforming loans to total loans		0.44%			0.41%			0.38%			0.43%			0.47%
Total nonperforming assets to total assets		0.35%			0.33%			0.32%			0.36%			0.39%
Allowance for loan losses to total nonperforming loans		237.16%			259.69%			276.37%			247.53%			223.34%
Past due loans to total loans		0.55%			0.53%			0.50%			0.53%			0.63%
Net charge-offs to average loans (1)		0.39%			0.33%			0.39%			0.42%			0.43%
Asset quality ratios (originated) (2):
Allowance for loan losses to loans		1.10%			1.11%			1.11%			1.12%			1.12%
Nonperforming loans to loans		0.43%			0.39%			0.36%			0.41%			0.46%
Allowance for loan losses to nonperforming loans		254.92%			285.86%			306.08%			273.54%			243.85%
Past due loans to loans		0.56%			0.53%			0.50%			0.53%			0.65%
Capital:
Equity to assets		10.65%			10.41%			10.34%			10.32%			10.49%
Book value per share	$	23.31		$	22.77		$	22.43		$	21.84		$	22.01
Tangible book value per share (3)	$	16.66		$	16.10		$	15.73		$	15.41		$	15.54
Tier 1 leverage ratio		9.52%			9.36%			9.25%			9.26%			9.14%
Common equity tier 1 capital ratio		10.49%			10.28%			10.04%			10.12%			10.06%
Tier 1 capital ratio		11.79%			11.58%			11.35%			11.48%			11.42%
Total risk-based capital ratio		12.78%			12.58%			12.34%			12.47%			12.42%
Common stock price (end of period)	$	34.59		$	38.38		$	38.15		$	35.48		$	36.80
(1)  Annualized.
(2)  Non-GAAP measure - Excludes acquired loans.
(3)  Non-GAAP measure - Stockholders' equity less goodwill and intangible assets divided by common shares outstanding.

NBT Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited, dollars in thousands)
	December 31,		December 31,
Assets:		2018		2017
Cash and due from banks	$	175,550	$	156,852
Short-term interest bearing accounts		5,405		2,812
Equity securities, at fair value (1)		23,053		-
Securities available for sale, at fair value (1)		998,496		1,255,925
Securities held to maturity (fair value $778,675 and $481,871)		783,599		484,073
Trading securities (1)		-		11,467
Federal Reserve Bank and Federal Home Loan Bank stock		53,229		46,706
Loans held for sale		6,943		1,134
Loans		6,887,709		6,583,639
Less allowance for loan losses		72,505		69,500
Net loans	$	6,815,204	$	6,514,139
Premises and equipment, net		78,970		81,305
Goodwill		274,769		268,043
Intangible assets, net		15,599		13,420
Bank owned life insurance		177,479		172,388
Other assets		148,067		128,548
Total assets	$	9,556,363	$	9,136,812
Liabilities and stockholders' equity:
Demand (noninterest bearing)	$	2,361,099	$	2,286,892
Savings, NOW and money market		4,076,434		4,076,978
Time		930,678		806,766
Total deposits	$	7,368,211	$	7,170,636
Short-term borrowings		871,696		719,123
Long-term debt		73,724		88,869
Junior subordinated debt		101,196		101,196
Other liabilities		123,627		98,811
Total liabilities	$	8,538,454	$	8,178,635
Total stockholders' equity	$	1,017,909	$	958,177
Total liabilities and stockholders' equity	$	9,556,363	$	9,136,812
(1) Available for sale and trading equity securities amounts reclassified from securities available for sale and trading securities to equity securities for the current period, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.

NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited, dollars in thousands except per share data)
	Three Months Ended					Twelve Months Ended
	December 31,					December 31,
		2018			2017		2018			2017
Interest, fee and dividend income:
Interest and fees on loans	$	78,963		$	69,697	$	300,827		$	267,096
Securities available for sale (1)		6,332			7,059		26,920			28,564
Securities held to maturity		4,344			2,671		13,242			10,934
Other		885			803		3,266			2,813
Total interest, fee and dividend income	$	90,524		$	80,230	$	344,255		$	309,407
Interest expense:
Deposits	$	6,977		$	3,817	$	22,144		$	14,475
Short-term borrowings		3,131			1,621		10,552			5,996
Long-term debt		431			505		1,790			2,299
Junior subordinated debt		1,110			836		4,140			3,144
Total interest expense	$	11,649		$	6,779	$	38,626		$	25,914
Net interest income	$	78,875		$	73,451	$	305,629		$	283,493
Provision for loan losses		6,528			8,153		28,828			30,988
Net interest income after provision for loan losses	$	72,347		$	65,298	$	276,801		$	252,505
Noninterest income:
Insurance and other financial services revenue	$	5,843		$	5,605	$	24,345		$	23,532
Service charges on deposit accounts		4,503			4,351		17,224			16,750
ATM and debit card fees		5,704			5,347		22,699			21,372
Retirement plan administration fees		7,113			5,332		26,992			20,213
Trust		4,573			4,966		19,524			19,586
Bank owned life insurance income		1,239			1,262		5,091			5,175
Net securities (losses) gains		(6,916	)		1,869		(6,341	)		1,867
Other (1)		3,887			2,740		15,228			12,809
Total noninterest income	$	25,946		$	31,472	$	124,762		$	121,304
Noninterest expense:
Salaries and employee benefits (2)	$	38,998		$	33,812	$	151,685		$	135,222
Occupancy		5,284			5,280		22,318			21,808
Data processing and communications		4,431			4,242		17,652			17,068
Professional fees and outside services		3,968			3,751		14,376			13,499
Equipment		4,529			4,001		17,037			15,225
Office supplies and postage		1,564			1,604		6,204			6,284
FDIC expense		1,135			1,196		4,651			4,767
Advertising		1,006			1,033		2,782			2,744
Amortization of intangible assets		978			961		4,042			3,960
Loan collection and other real estate owned, net		738			1,136		4,217			4,763
Other (2)		6,273			6,428		19,597			20,308
Total noninterest expense	$	68,904		$	63,444	$	264,561		$	245,648
Income before income tax expense	$	29,389		$	33,326	$	137,002		$	128,161
Income tax expense		737			15,689		24,436			46,010
Net income	$	28,652		$	17,637	$	112,566		$	82,151
Earnings Per Share:
Basic	$	0.66		$	0.40	$	2.58		$	1.89
Diluted	$	0.65		$	0.40	$	2.56		$	1.87
Note: Year-to-date EPS may not equal sum of quarters due to differences in outstanding shares.
(1) Income on available for sale and trading equity securities amounts reclassified from interest, fee and dividend income on securities available for sale to other noninterest income for the current periods, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.
(2) Amounts reclassified for the prior periods from salaries and employee benefits to other expenses related to the adoption of Accounting Standard Update No. 2017-07, Compensation – Retirement Benefits (Topic 715), in the first quarter of 2018.

NBT Bancorp Inc. and Subsidiaries
Quarterly Consolidated Statements of Income
(unaudited, dollars in thousands except per share data)
		2018									2017
	4th Q			3rd Q		2nd Q		1st Q		4th Q
Interest, fee and dividend income:
Interest and fees on loans	$	78,963		$	77,249	$	74,172	$	70,443	$	69,697
Securities available for sale (1)		6,332			6,659		7,003		6,926		7,059
Securities held to maturity		4,344			3,462		2,811		2,625		2,671
Other		885			834		781		766		803
Total interest, fee and dividend income	$	90,524		$	88,204	$	84,767	$	80,760	$	80,230
Interest expense:
Deposits	$	6,977		$	6,157	$	5,079	$	3,931	$	3,817
Short-term borrowings		3,131			3,000		2,455		1,966		1,621
Long-term debt		431			431		452		476		505
Junior subordinated debt		1,110			1,089		1,040		901		836
Total interest expense	$	11,649		$	10,677	$	9,026	$	7,274	$	6,779
Net interest income	$	78,875		$	77,527	$	75,741	$	73,486	$	73,451
Provision for loan losses		6,528			6,026		8,778		7,496		8,153
Net interest income after provision for loan losses	$	72,347		$	71,501	$	66,963	$	65,990	$	65,298
Noninterest income:
Insurance and other financial services revenue	$	5,843		$	6,172	$	5,826	$	6,504	$	5,605
Service charges on deposit accounts		4,503			4,503		4,246		3,972		4,351
ATM and debit card fees		5,704			5,906		5,816		5,273		5,347
Retirement plan administration fees		7,113			7,244		7,296		5,339		5,332
Trust		4,573			4,808		5,265		4,878		4,966
Bank owned life insurance income		1,239			1,288		1,217		1,347		1,262
Net securities (losses) gains		(6,916	)		412		91		72		1,869
Other (1)		3,887			3,048		4,401		3,892		2,740
Total noninterest income	$	25,946		$	33,381	$	34,158	$	31,277	$	31,472
Noninterest expense:
Salaries and employee benefits (2)	$	38,998		$	38,394	$	37,726	$	36,567	$	33,812
Occupancy		5,284			5,380		5,535		6,119		5,280
Data processing and communications		4,431			4,434		4,508		4,279		4,242
Professional fees and outside services		3,968			3,580		3,336		3,492		3,751
Equipment		4,529			4,319		4,151		4,038		4,001
Office supplies and postage		1,564			1,563		1,504		1,573		1,604
FDIC expense		1,135			1,223		1,092		1,201		1,196
Advertising		1,006			739		700		337		1,033
Amortization of intangible assets		978			1,054		1,096		914		961
Loan collection and other real estate owned, net		738			1,234		908		1,337		1,136
Other (2)		6,273			4,577		4,332		4,415		6,428
Total noninterest expense	$	68,904		$	66,497	$	64,888	$	64,272	$	63,444
Income before income tax expense	$	29,389		$	38,385	$	36,233	$	32,995	$	33,326
Income tax expense		737			8,578		8,112		7,009		15,689
Net income	$	28,652		$	29,807	$	28,121	$	25,986	$	17,637
Earnings Per Share:
Basic	$	0.66		$	0.68	$	0.64	$	0.60	$	0.40
Diluted	$	0.65		$	0.68	$	0.64	$	0.59	$	0.40
(1) Income on available for sale and trading equity securities amounts reclassified from interest, fee and dividend income on securities available for sale to other noninterest income for the current periods, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.
(2) Amounts reclassified for the prior periods from salaries and employee benefits to other expenses related to the adoption of Accounting Standard Update No. 2017-07, Compensation – Retirement Benefits (Topic 715), in the first quarter of 2018.

 

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
Three Months ended,	Q4 - 2018				Q3 - 2018				Q2 - 2018				Q1 - 2018				Q4 - 2017
Assets:
Short-term interest bearing accounts	$	3,780	5.25	%	$	3,328	6.08	%	$	3,574	5.16	%	$	2,818	5.18	%	$	5,804	2.39	%
Securities available for sale (1)(3)		1,104,198	2.29	%		1,197,910	2.22	%		1,266,304	2.23	%		1,273,634	2.22	%		1,313,870	2.16	%
Securities held to maturity (1)		688,840	2.73	%		591,220	2.58	%		503,501	2.50	%		482,375	2.48	%		490,182	2.68	%
Investment in FRB and FHLB Banks		47,689	6.95	%		50,107	6.20	%		48,184	6.12	%		46,844	6.32	%		44,320	6.87	%
Loans (2)		6,876,341	4.56	%		6,839,565	4.49	%		6,750,710	4.41	%		6,592,447	4.34	%		6,528,449	4.25	%
Total interest earning assets	$	8,720,848	4.14	%	$	8,682,130	4.05	%	$	8,572,273	3.99	%	$	8,398,118	3.92	%	$	8,382,625	3.84	%
Other assets (3)		769,302				776,219				766,604				746,172				747,468
Total assets	$	9,490,150			$	9,458,349			$	9,338,877			$	9,144,290			$	9,130,093
Liabilities and stockholders' equity:
Money market deposit accounts	$	1,745,980	0.65	%	$	1,724,853	0.58	%	$	1,699,956	0.43	%	$	1,655,308	0.27	%	$	1,725,242	0.25	%
NOW deposit accounts		1,166,383	0.18	%		1,164,513	0.17	%		1,222,889	0.16	%		1,211,029	0.13	%		1,200,651	0.12	%
Savings deposits		1,250,703	0.06	%		1,279,520	0.06	%		1,289,062	0.06	%		1,248,432	0.06	%		1,215,932	0.06	%
Time deposits		921,252	1.47	%		881,792	1.33	%		858,080	1.22	%		802,959	1.13	%		792,969	1.10	%
Total interest bearing deposits	$	5,084,318	0.54	%	$	5,050,678	0.48	%	$	5,069,987	0.40	%	$	4,917,728	0.32	%	$	4,934,794	0.31	%
Short-term borrowings		724,693	1.71	%		766,372	1.55	%		706,694	1.39	%		712,220	1.12	%		684,447	0.94	%
Long-term debt		73,735	2.32	%		73,762	2.32	%		84,676	2.14	%		88,844	2.17	%		81,010	2.47	%
Junior subordinated debt		101,196	4.35	%		101,196	4.27	%		101,196	4.12	%		101,196	3.61	%		101,196	3.28	%
Total interest bearing liabilities	$	5,983,942	0.77	%	$	5,992,008	0.71	%	$	5,962,553	0.61	%	$	5,819,988	0.51	%	$	5,801,447	0.46	%
Demand deposits		2,373,235				2,356,216				2,294,023				2,259,955				2,266,672
Other liabilities		130,151				121,574				113,272				105,303				99,314
Stockholders' equity		1,002,822				988,551				969,029				959,044				962,660
Total liabilities and stockholders' equity	$	9,490,150			$	9,458,349			$	9,338,877			$	9,144,290			$	9,130,093
Interest rate spread			3.37	%			3.34	%			3.38	%			3.41	%			3.38	%
Net interest margin (FTE)			3.61	%			3.57	%			3.57	%			3.57	%			3.52	%
(1) Securities are shown at average amortized cost.
(2) For purposes of these computations, nonaccrual loans and loans held for sale are included in the average loan balances outstanding.
(3) For purposes of the average balance sheet presentation, equity securities amounts reclassified for the current periods from securities available for sale to other assets, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.
Note: Interest income for tax-exempt securities and loans has been adjusted to a FTE basis using the statutory Federal income tax rate of 21% for 2018 and 35% for 2017.

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
Twelve Months ended December 31,		2018						2017
Assets:
Short-term interest bearing accounts	$	3,377	$	183	5.42	%	$	9,636	$	179	1.86	%
Securities available for sale (1)(3)		1,210,013		27,081	2.24	%		1,350,995		28,969	2.14	%
Securities held to maturity (1)		567,117		14,657	2.58	%		507,583		13,490	2.66	%
Investment in FRB and FHLB Banks		48,214		3,083	6.39	%		46,673		2,634	5.64	%
Loans (2)		6,765,748		301,258	4.45	%		6,359,447		267,934	4.21	%
Total interest earning assets	$	8,594,469	$	346,262	4.03	%	$	8,274,334	$	313,206	3.79	%
Other assets (3)		764,670						752,258
Total assets	$	9,359,139					$	9,026,592
Liabilities and stockholders' equity:
Money market deposit accounts	$	1,706,823	$	8,314	0.49	%	$	1,697,386	$	3,864	0.23	%
NOW deposit accounts		1,191,008		1,894	0.16	%		1,153,361		1,051	0.09	%
Savings deposits		1,266,970		725	0.06	%		1,214,480		683	0.06	%
Time deposits		866,388		11,211	1.29	%		817,370		8,877	1.09	%
Total interest bearing deposits	$	5,031,189	$	22,144	0.44	%	$	4,882,597	$	14,475	0.30	%
Short-term borrowings		727,635		10,552	1.45	%		690,036		5,996	0.87	%
Long-term debt		80,195		1,790	2.23	%		93,389		2,299	2.46	%
Junior subordinated debt		101,196		4,140	4.09	%		101,196		3,144	3.11	%
Total interest bearing liabilities	$	5,940,215	$	38,626	0.65	%	$	5,767,218	$	25,914	0.45	%
Demand deposits		2,321,264						2,217,785
Other liabilities		117,655						97,913
Stockholders' equity		980,005						943,676
Total liabilities and stockholders' equity	$	9,359,139					$	9,026,592
Net interest income (FTE)			$	307,636					$	287,292
Interest rate spread					3.38	%					3.34	%
Net interest margin (FTE)					3.58	%					3.47	%
Taxable equivalent adjustment			$	2,007					$	3,799
Net interest income			$	305,629					$	283,493
(1) Securities are shown at average amortized cost.
(2) For purposes of these computations, nonaccrual loans and loans held for sale are included in the average loan balances outstanding.
(3) For purposes of the average balance sheet presentation, equity securities amounts reclassified for the current period from securities available for sale to other assets, related to the adoption of Accounting Standard Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, in the first quarter of 2018.
Note: Interest income for tax-exempt securities and loans has been adjusted to a FTE basis using the statutory Federal income tax rate of 21% for 2018 and 35% for 2017.

NBT Bancorp Inc. and Subsidiaries
Consolidated Loan Balances
(unaudited, dollars in thousands)
		2018								2017
	4th Q		3rd Q		2nd Q		1st Q		4th Q
Commercial	$	1,291,568	$	1,310,262	$	1,299,437	$	1,252,729	$	1,258,212
Commercial real estate		1,930,742		1,902,315		1,891,119		1,795,101		1,769,620
Residential real estate mortgages		1,380,836		1,373,487		1,350,336		1,331,587		1,320,370
Dealer finance		1,216,144		1,229,700		1,252,843		1,238,051		1,227,870
Specialty lending		524,928		521,396		507,151		469,268		438,866
Home equity		474,566		480,761		488,493		491,807		498,179
Other consumer		68,925		69,341		68,792		67,179		70,522
Total loans	$	6,887,709	$	6,887,262	$	6,858,171	$	6,645,722	$	6,583,639