NBT Bancorp Inc. Announces Second Quarter Diluted Earnings Per Share of $0.40; Strong Loan Growth and Completion of Acquisition

GlobeNewswire

NORWICH, N.Y., July 23, 2012 (GLOBE NEWSWIRE) -- NBT Bancorp Inc. (NBT) (Nasdaq:NBTB) reported today net income for the six months ended June 30, 2012 was $26.9 million, down $2.1 million, or 7.1%, from the six months ended June 30, 2011. Net income per diluted share for the six months ended June 30, 2012 was $0.80 per share, down from $0.84 per diluted share for the six months ended June 30, 2011. The Company incurred approximately $1.3 million in merger related expenses for the first six months of 2012, which had a negative impact on diluted earnings per share of approximately $0.03. Annualized return on average assets and return on average equity were 0.94% and 9.89%, respectively, for the six months ended June 30, 2012, compared with 1.08% and 10.82%, respectively, for the six months ended June 30, 2011. Net interest margin (on a fully taxable equivalent or FTE basis) was 3.86% for the six months ended June 30, 2012, down 26 basis points from 4.12% for the six months ended June 30, 2011.

Net income for the three months ended June 30, 2012 was $13.3 million, down $1.4 million, or 9.5%, from the three months ended June 30, 2011. Net income per diluted share for the three months ended June 30, 2012 was $0.40 per share, down from $0.43 per diluted share for the three months ended June 30, 2011. The Company incurred approximately $0.8 million in merger related expenses for the three months ended June 30, 2012, which had a negative impact on diluted earnings per share of approximately $0.02. Annualized return on average assets and return on average equity were 0.92% and 9.66%, respectively, for the three months ended June 30, 2012, compared with 1.09% and 10.86%, respectively, for the three months ended June 30, 2011. FTE net interest margin was 3.82% for the three months ended June 30, 2012, down 31 basis points from 4.13% for the three months ended June 30, 2011.

Selected highlights for the second quarter of 2012 include:

Outstanding loan balances as of June 30, 2012 are up $361.0 million from December 31, 2011 driven by: 7.5% organic loan growth (annualized) Approximately $217 million in loans from the Hampshire First acquisition Net interest margin was 3.82% for the second quarter, down 8 basis points on a linked quarter basis, resulting from the continued impact of the low rate environment on loans and investments. Annualized net charge-off ratio was 0.48% as compared to 0.60% for the same period last year. Past due loans to total loans was 0.54% as of June 30, 2012, compared to 0.89% at December 31, 2011. Continued strategic expansion with the completion of the acquisition of Hampshire First Bank on June 8, 2012. The Company now operates 5 branches in southern New Hampshire.

"During the second quarter we continued to demonstrate commitment to strategic investment in our company's future with extension of our footprint into a fifth state through the successful acquisition of Hampshire First Bank in southern New Hampshire," said NBT President and CEO Martin Dietrich. "We are also encouraged by our strong loan growth during the first half of 2012, both organic and from our acquisition of Hampshire First Bank. Organic loan growth was spurred by strong commercial and consumer loan originations in our legacy markets, particularly our upstate New York footprint, as well as from our recent expansion into new markets such as Vermont. The economic and regulatory environment continues to present challenges, but we remain focused on the fundamentals of banking and customer service as our community-minded team works to meet the needs of our customers."

Loan and Lease Quality and Provision for Loan and Lease Losses

The Company recorded a provision for loan and lease losses of $8.6 million during the six months ended June 30, 2012, compared with $10.0 million for the six months ended June 30, 2011. Net charge-offs were $9.2 million for the six months ended June 30, 2012, down from $10.7 million for the same period in 2011, due primarily to the charge-off of one large commercial loan during the first quarter of 2011, as well as the general improvement in asset quality indicators. The annualized net charge-off ratio for the six months ended June 30, 2012 was 0.48%, compared to 0.60% for the six months ended June 30, 2011.

The Company recorded a provision for loan and lease losses of $4.1 million during the three months ended June 30, 2012, compared with $6.0 million for the three months ended June 30, 2011. Net charge-offs were $4.7 million for the three months ended June 30, 2012, down from $5.5 million for the same period in 2011, due primarily to the general improvement in asset quality indicators. The annualized net charge-off ratio for the three months ended June 30, 2012 was 0.48%, compared to 0.60% for the three months ended June 30, 2011.

Past due loans as a percentage of total loans was 0.54% at June 30, 2012, compared with 0.58% at March 31, 2012. Nonperforming loans decreased to $45.6 million or 1.09% of total loans and leases at June 30, 2012, compared with $45.9 million or 1.20% at March 31, 2012.

The allowance for loan and lease losses totaled $70.7 million at June 30, 2012, compared to $71.3 million at March 31, 2012. Improvement in the asset quality indicators noted above resulted in a reduction in the allowance, partially offset by reserves provided for the aforementioned loan growth. The allowance for loan losses as a percentage of loans and leases was 1.70% at June 30, 2012, compared to 1.87% at March 31, 2012. This reduction was due primarily to the addition of the Hampshire First loans that were recorded at fair value at acquisition. As acquired loans do not have a related allowance recorded, this resulted in a decrease of 11 basis points in the allowance for loan losses as a percentage of total loans as of June 30, 2012.

Net Interest Income

Net interest income was down slightly to $99.1 million for the six months ended June 30, 2012, compared with $99.4 million for the six months ended June 30, 2011. The Company's FTE net interest margin was 3.86% for the six months ended June 30, 2012, down from 4.12% for the six months ended June 30, 2011. The increase in average earning assets for the six months ended June 30, 2012, compared to the same period of 2011 offset the decline in net interest margin, resulting in a relatively flat net interest income for the periods.

While the yield on interest bearing liabilities decreased 19 basis points, the yield on interest earning assets declined 42 basis points, resulting in margin compression for the six months ended June 30, 2012, compared to the same period for 2011. The yield on securities available for sale was 2.57% for the six months ended June 30, 2012, compared with 3.12% for the six months ended June 30, 2011. This decrease was due primarily to the reinvestment of cash flows from maturing securities and cash received from branch acquisitions in 2011 and the first quarter of 2012 into lower yielding securities in the current rate environment. The average balance of securities available for sale for the six months ended June 30, 2012 was $1.2 billion, up approximately $112.1 million, or 10.2%, from the six months ended June 30, 2011. This increase was due primarily to reinvestment of maturing held to maturity securities into available for sale securities, and investment of liquidity from branch acquisition activity and deposit growth into available for sale securities. The yield on loans and leases was 5.25% for the six months ended June 30, 2012, compared with 5.69% for the six months ended June 30, 2011. The average balance of loans and leases for the six months ended June 30, 2012 was $3.9 billion, up approximately $241.7 million, or 6.7%, from the six months ended June 30, 2011. The reduction in yields on earning assets was partially offset by a reduction in rates paid on interest bearing liabilities. The rate on time deposits was 1.58% for the six months ended June 30, 2012, compared with 1.87% for the six months ended June 30, 2011. The rate on money market deposit accounts was 0.21% for the six months ended June 30, 2012, compared with 0.39% for the six months ended June 30, 2011.

Net interest income was down slightly to $49.8 million for the three months ended June 30, 2012, compared with $50.2 million for the three months ended June 30, 2011. The Company's FTE net interest margin was 3.82% for the three months ended June 30, 2012, down from 4.13% for the three months ended June 30, 2011. The increase in average earning assets for the three months ended June 30, 2012 as compared to the same period of 2011 offset the decline in net interest margin, resulting in a relatively flat net interest income for the periods.

While the yield on interest bearing liabilities decreased 17 basis points, the yield on interest earning assets declined 45 basis points, resulting in margin compression for the three months ended June 30, 2012, compared to the same period for 2011. The yield on securities available for sale was 2.53% for the three months ended June 30, 2012, as compared with 3.11% for the three months ended June 30, 2011. This decrease was due primarily to the reinvestment of cash flows from maturing securities and cash received from branch acquisitions into lower yielding securities in the current rate environment. The average balance of securities available for sale for the three months ended June 30, 2012 was $1.2 billion, up approximately $109.4 million, or 10.0%, from the three months ended June 30, 2011. This increase was due primarily to reinvestment of maturing held to maturity securities into available for sale securities, and investment of liquidity from branch acquisition activity and deposit growth into available for sale securities. The yield on loans and leases was 5.18% for the three months ended June 30, 2012, compared with 5.65% for the three months ended June 30, 2011. The average balance of loans and leases for the three months ended June 30, 2012 was $3.9 billion, up approximately $290.2 million, or 8.0%, from the three months ended June 30, 2011. The reduction in yields on earning assets was partially offset by a reduction in rates paid on interest bearing liabilities. The rate on time deposits was 1.52% for the three months ended June 30, 2012, compared with 1.85% for the three months ended June 30, 2011. The rate on money market deposit accounts was 0.19% for the three months ended June 30, 2012, compared with 0.37% for the three months ended June 30, 2011.

Noninterest Income

Noninterest income for the six months ended June 30, 2012 was $43.7 million, up 9.4% or $3.7 million, compared with $40.0 million for the same period in 2011. Insurance and other financial services revenue increased approximately $0.6 million for the six months ended June 30, 2012, compared to the six months ended June 30, 2011. This increase was due primarily to the acquisition of an insurance agency during the second quarter of 2011 and an increase in brokerage commission revenue from new business. ATM and debit card fees increased approximately $0.4 million for the six months ended June 30, 2012, compared to the six months ended June 30, 2011, due primarily to an increase in card usage. Other noninterest income increased approximately $3.5 million for the six months ended June 30, 2012 as compared to June 30, 2011. This increase was due primarily to a $1.1 million payoff gain on a purchased commercial real estate loan, as well as a prepayment penalty fee collected of $0.8 million during the six months ended June 30, 2012 related to a previously disclosed loss of a retirement plan client. In addition, mortgage banking revenue increased approximately $1.1 million for the six months ended June 30, 2012 as compared to the same period in 2011 as the Company sold certain residential mortgages as market conditions warranted. The Company also realized net securities gains of approximately $0.6 million during the six months ended June 30, 2012. These increases were partially offset by a decrease in service charges on deposit accounts of approximately $1.6 million, or 15.3%, for the six months ended June 30, 2012, compared with the same period in 2011 primarily due to a decrease in overdraft fee income.

Noninterest income for the three months ended June 30, 2012 was $20.7 million, up 4.1% or $0.8 million, compared with $19.9 million for the same period in 2011. Insurance and other financial services revenue increased approximately $0.3 million for the three months ended June 30, 2012, compared to the three months ended June 30, 2011. This increase was due primarily to the acquisition of an insurance agency in May 2011. Other noninterest income increased approximately $1.1 million for the three months ended June 30, 2012 as compared to the three months ended June 30, 2011. This increase was due primarily to an increase in mortgage banking activity during the three months ended June 30, 2012 as compared with the three months ended June 30, 2011. These increases were partially offset by a decrease in service charges on deposit accounts of approximately $0.9 million, or 16.2%, for the three months ended June 30, 2012, compared with the same period in 2011 primarily due to the aforementioned decrease in overdraft fee income.

Noninterest Expense and Income Tax Expense

Noninterest expense for the six months ended June 30, 2012 was $95.9 million, up $7.6 million or 8.7%, for the same period in 2011. Salaries and employee benefits increased $2.7 million, or 5.5%, for the six months ended June 30, 2012, compared with the same period in 2011. This increase was due primarily to increases in full-time-equivalent employees from acquisitions, merit increases, and increased pension expenses. Professional fees and outside services increased $1.0 million, or 23.1%, for the six months ended June 30, 2012 as compared to the same period in 2011. Data processing and communications expenses increased approximately $0.7 million, or 10.9%, for the six months ended June 30, 2012 as compared to the same period in 2011, due primarily to expansion into the new markets. Merger related expenses totaled $1.3 million in the first six months of 2012, which also contributed to the increase in noninterest expense for the period. These increases were partially offset by a decrease in Federal Deposit Insurance Corporation ("FDIC") expenses of approximately $0.6 million for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011. This decrease was due to the FDIC redefining the deposit insurance assessment base effective the second quarter of 2011. Income tax expense for the six month period ended June 30, 2012 was $11.5 million, down from $12.2 million for the same period in 2011. The effective tax rate was 30.0% for the six months ended June 30, 2012, compared to 29.7% for the same period in 2011.

Noninterest expense for the three months ended June 30, 2012 was $47.4 million, up $4.2 million or 9.8%, for the same period in 2011. Salaries and employee benefits increased $1.0 million, or 4.0%, for the three months ended June 30, 2012, compared with the same period in 2011. This increase was due primarily to increases in full-time-equivalent employees from acquisitions, merit increases, and increased pension expenses. Data processing and communications expenses increased approximately $0.3 million, or 10.1%, for the three months ended June 30, 2012 as compared to the same period in 2011, due primarily to expansion into the new markets. Loan collection and other real estate owned expenses increased $0.4 million for the three months ended June 30, 2012 as compared to the same period in 2011. Merger related expenses totaled $0.8 million for the three months ended June 30, 2012, which also contributed to the increase in noninterest expense for the period. Income tax expense for the three month period ended June 30, 2012 was $5.7 million, down from $6.2 million for the same period in 2011. The effective tax rate was 30.0% for the three months ended June 30, 2012, compared to 29.7% for the same period in 2011.

Balance Sheet

Total assets were $6.0 billion at June 30, 2012, up $369.2 million or 6.6% from December 31, 2011. Loans and leases were $4.2 billion at June 30, 2012, up $361.0 million from December 31, 2011. Total deposits were $4.7 billion at June 30, 2012, up $321.8 million from December 31, 2011. Stockholders' equity was $566.5 million, representing a total equity-to-total assets ratio of 9.49% at June 30, 2012, compared with $538.1 million or a total equity-to-total assets ratio of 9.61% at December 31, 2011.

Stock Repurchase Program

Under previously disclosed stock repurchase plans, the Company purchased 769,568 shares of its common stock during the six month period ended June 30, 2012, for a total of $15.5 million at an average price of $20.13 per share. At June 30, 2012, there were 748,013 shares available for repurchase under a previously disclosed repurchase plan, which expires on December 31, 2013.

Dividend

The NBT Board of Directors declared a 2012 third-quarter cash dividend of $0.20 per share at a meeting held today. The dividend will be paid on September 15, 2012 to shareholders of record as of September 1, 2012.

Corporate Overview

NBT Bancorp Inc. is a financial holding company headquartered in Norwich, N.Y., with total assets of $6.0 billion at June 30, 2012. The company primarily operates through NBT Bank, N.A., a full-service community bank with three divisions, and through two financial services companies. NBT Bank, N.A. has 137 locations, including 97 NBT Bank offices in upstate New York, northwestern Vermont and western Massachusetts, 35 Pennstar Bank offices in northeastern Pennsylvania, and 5 Hampshire First Bank offices in southern New Hampshire. EPIC Advisors, Inc., based in Rochester, N.Y., is a full-service 401(k) plan recordkeeping firm. Mang Insurance Agency, LLC, based in Norwich, N.Y., is a full-service insurance agency. More information about NBT and its divisions can be found on the Internet at: www.nbtbancorp.com, www.nbtbank.com, www.pennstarbank.com, www.hampshirefirst.com, www.epic1st.com and www.manginsurance.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 Bancorp 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, that 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, the following possibilities: (1) competitive pressures among depository and other financial institutions may increase significantly; (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 the businesses in which NBT is engaged; (6) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than NBT; 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.

NBT Bancorp Inc. and Subsidiaries SELECTED FINANCIAL HIGHLIGHTS (unaudited) Net Percent 2012 2011 Change Change (dollars in thousands, except per share data) Three Months Ended June 30, Net Income $13,257 $14,655 ($1,398) -10% Diluted Earnings Per Share $0.40 $0.43 ($0.03) -7% Weighted Average Diluted Common Shares Outstanding 33,492,659 34,319,665 (827,006) -2% Return on Average Assets (1) 0.92% 1.09% -17 bp -16% Return on Average Equity (1) 9.66% 10.86% -120 bp -11% Net Interest Margin (2) 3.82% 4.13% -31 bp -8% Six Months Ended June 30, Net Income $26,907 $28,962 ($2,055) -7% Diluted Earnings Per Share $0.80 $0.84 ($0.04) -5% Weighted Average Diluted Common Shares Outstanding 33,452,970 34,491,627 (1,038,657) -3% Return on Average Assets (1) 0.94% 1.08% -14 bp -13% Return on Average Equity (1) 9.89% 10.82% -93 bp -9% Net Interest Margin (2) 3.86% 4.12% -26 bp -6% Asset Quality June 30, December 31, 2012 2011 Nonaccrual Loans $43,924 $38,290 90 Days Past Due and Still Accruing $1,629 $3,190 Total Nonperforming Loans $45,553 $41,480 Other Real Estate Owned $1,815 $2,160 Total Nonperforming Assets $47,368 $43,640 Allowance for Loan and Lease Losses $70,734 $71,334 Allowance for Loan and Lease Losses to Total Loans and Leases 1.70% 1.88% Total Nonperforming Loans to Total Loans and Leases 1.09% 1.09% Total Nonperforming Assets to Total Assets 0.79% 0.78% Past Due Loans to Total Loans and Leases 0.54% 0.89% Allowance for Loan and Lease Losses to Total Nonperforming Loans 155.28% 171.97% Net Charge-Offs to YTD Average Loans and Leases (1) 0.48% 0.56% Capital Equity to Assets 9.49% 9.61% Book Value Per Share $16.79 $16.23 Tangible Book Value Per Share $11.76 $11.70 Tier 1 Leverage Ratio 8.59% 8.74% Tier 1 Capital Ratio 10.78% 11.56% Total Risk-Based Capital Ratio 12.03% 12.81% Quarterly Common Stock Price 2012 2011 Quarter End High Low High Low March 31 $24.10 $20.75 $24.98 $21.55 June 30 $22.50 $19.19 $23.32 $20.62 September 30 $23.25 $17.05 December 31 $22.63 $17.47 (1) Annualized (2) Calculated on a FTE basis NBT Bancorp Inc. and Subsidiaries SELECTED FINANCIAL HIGHLIGHTS (unaudited) June 30, December 31, Net Percent 2012 2011 Change Change (dollars in thousands) Balance Sheet Loans and Leases $4,161,214 $3,800,203 $361,011 9% Earning Assets $5,470,270 $5,112,831 $357,439 7% Total Assets $5,967,568 $5,598,406 $369,162 7% Deposits $4,688,907 $4,367,149 $321,758 7% Stockholders' Equity $566,505 $538,110 $28,395 5% June 30, June 30, Net 2012 2011 Change Average Balances (dollars in thousands) Three Months Ended Loans and Leases $3,938,592 $3,648,343 $290,249 Securities Available For Sale (excluding unrealized gains or losses) $1,208,384 $1,098,964 $109,420 Securities Held To Maturity $68,472 $85,615 ($17,143) Trading Securities $3,725 $3,202 $523 Regulatory Equity Investment $27,886 $27,071 $815 Short-Term Interest Bearing Accounts $102,192 $128,799 ($26,607) Total Earning Assets $5,345,526 $4,988,792 $356,734 Total Assets $5,810,584 $5,412,979 $397,605 Interest Bearing Deposits $3,470,553 $3,290,469 $180,084 Non-Interest Bearing Deposits $1,111,804 $932,066 $179,738 Short-Term Borrowings $171,545 $135,618 $35,927 Long-Term Borrowings $443,673 $444,881 ($1,208) Total Interest Bearing Liabilities $4,085,771 $3,870,968 $214,803 Stockholders' Equity $551,865 $541,349 $10,516 Average Balances Six Months Ended Loans and Leases $3,874,027 $3,632,355 $241,672 Securities Available For Sale (excluding unrealized gains or losses) $1,210,575 $1,098,506 $112,069 Securities Held To Maturity $69,507 $89,833 ($20,326) Trading Securities $3,512 $3,086 $426 Regulatory Equity Investment $27,453 $27,158 $295 Short-Term Interest Bearing Accounts $91,159 $135,019 ($43,860) Total Earning Assets $5,272,721 $4,982,871 $289,850 Total Assets $5,735,021 $5,405,062 $329,959 Interest Bearing Deposits $3,426,578 $3,290,198 $136,380 Non-Interest Bearing Deposits $1,087,180 $918,483 $168,697 Short-Term Borrowings $167,176 $144,447 $22,729 Long-Term Borrowings $444,745 $445,139 ($394) Total Interest Bearing Liabilities $4,038,499 $3,879,784 $158,715 Stockholders' Equity $547,246 $539,789 $7,457 NBT Bancorp Inc. and Subsidiaries June 30, December 31, Consolidated Balance Sheets (unaudited) 2012 2011 (in thousands) ASSETS Cash and due from banks $114,441 $128,517 Short term interest bearing accounts 24,723 864 Securities available for sale, at fair value 1,221,706 1,244,619 Securities held to maturity (fair value of $65,556 and $72,198 at June 30, 2012 and December 31, 2011, respectively) 64,387 70,811 Trading securities 3,641 3,062 Federal Reserve and Federal Home Loan Bank stock 28,706 27,020 Loans and leases 4,161,214 3,800,203 Less allowance for loan and lease losses 70,734 71,334 Net loans and leases 4,090,480 3,728,869 Premises and equipment, net 76,906 74,541 Goodwill 151,628 132,029 Intangible assets, net 18,191 18,194 Bank owned life insurance 79,215 77,626 Other assets 93,544 92,254 TOTAL ASSETS $5,967,568 $5,598,406 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Demand (noninterest bearing) $1,152,646 $1,052,906 Savings, NOW, and money market 2,483,683 2,381,116 Time 1,052,578 933,127 Total deposits 4,688,907 4,367,149 Short-term borrowings 212,203 181,592 Long-term debt 367,147 370,344 Trust preferred debentures 75,422 75,422 Other liabilities 57,384 65,789 Total liabilities 5,401,063 5,060,296 Total stockholders' equity 566,505 538,110 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,967,568 $5,598,406 Three Months Ended Six Months Ended NBT Bancorp Inc. and Subsidiaries June 30, June 30, Consolidated Statements of Income (unaudited) 2012 2011 2012 2011 (in thousands, except per share data) Interest, fee and dividend income: Loans and leases $50,509 $51,126 $100,717 $101,986 Securities available for sale 7,108 7,947 14,474 15,851 Securities held to maturity 617 745 1,257 1,545 Other 413 440 805 933 Total interest, fee and dividend income 58,647 60,258 117,253 120,315 Interest expense: Deposits 4,834 6,051 9,977 12,338 Short-term borrowings 48 52 89 110 Long-term debt 3,580 3,591 7,161 7,162 Trust preferred debentures 434 400 883 1,289 Total interest expense 8,896 10,094 18,110 20,899 Net interest income 49,751 50,164 99,143 99,416 Provision for loan and lease losses 4,103 6,021 8,574 9,986 Net interest income after provision for loan and lease losses 45,648 44,143 90,569 89,430 Noninterest income: Insurance and other financial services revenue 5,279 5,025 11,433 10,798 Service charges on deposit accounts 4,571 5,455 8,912 10,527 ATM and debit card fees 3,063 2,928 6,025 5,596 Retirement plan administration fees 2,411 2,268 4,744 4,439 Trust 2,312 2,258 4,441 4,294 Bank owned life insurance income 618 660 1,589 1,695 Net securities gains 97 59 552 86 Other 2,331 1,208 6,042 2,552 Total noninterest income 20,682 19,861 43,738 39,987 Noninterest expense: Salaries and employee benefits 24,992 24,035 51,717 49,039 Occupancy 4,222 3,987 8,713 8,509 Data processing and communications 3,431 3,117 6,689 6,031 Professional fees and outside services 2,388 2,088 5,113 4,154 Equipment 2,409 2,180 4,789 4,370 Office supplies and postage 1,574 1,342 3,245 2,887 FDIC expenses 942 965 1,873 2,461 Advertising 805 1,033 1,607 1,601 Amortization of intangible assets 841 771 1,660 1,504 Loan collection and other real estate owned 799 443 1,437 1,162 Merger 826 -- 1,337 -- Other operating 4,161 3,196 7,684 6,500 Total noninterest expense 47,390 43,157 95,864 88,218 Income before income taxes 18,940 20,847 38,443 41,199 Income taxes 5,683 6,192 11,536 12,237 Net income $13,257 $14,655 $26,907 $28,962 Earnings Per Share: Basic $0.40 $0.43 $0.81 $0.85 Diluted $0.40 $0.43 $0.80 $0.84 NBT Bancorp Inc. and Subsidiaries 2Q 1Q 4Q 3Q 2Q Quarterly Consolidated Statements of Income (unaudited) 2012 2012 2011 2011 2011 (in thousands, except per share data) Interest, fee and dividend income: Loans and leases $50,509 $50,208 $51,393 $50,991 $51,126 Securities available for sale 7,108 7,366 7,461 7,771 7,947 Securities held to maturity 617 640 661 680 745 Other 413 392 383 342 440 Total interest, fee and dividend income 58,647 58,606 59,898 59,784 60,258 Interest expense: Deposits 4,834 5,143 5,330 5,352 6,051 Short-term borrowings 48 41 39 56 52 Long-term debt 3,580 3,581 3,621 3,621 3,591 Trust preferred debentures 434 449 409 394 400 Total interest expense 8,896 9,214 9,399 9,423 10,094 Net interest income 49,751 49,392 50,499 50,361 50,164 Provision for loan and lease losses 4,103 4,471 5,576 5,175 6,021 Net interest income after provision for loan and lease losses 45,648 44,921 44,923 45,186 44,143 Noninterest income: Insurance and other financial services revenue 5,279 6,154 4,918 5,127 5,025 Service charges on deposit accounts 4,571 4,341 5,405 5,532 5,455 ATM and debit card fees 3,063 2,962 2,911 3,135 2,928 Retirement plan administration fees 2,411 2,333 2,184 2,295 2,268 Trust 2,312 2,129 2,480 2,090 2,258 Bank owned life insurance income 618 971 716 674 660 Net securities gains 97 455 52 12 59 Other 2,331 3,711 1,464 1,329 1,208 Total noninterest income 20,682 23,056 20,130 20,194 19,861 Noninterest expense: Salaries and employee benefits 24,992 26,725 25,105 25,068 24,035 Occupancy 4,222 4,491 3,967 3,887 3,987 Data processing and communications 3,431 3,258 3,186 3,054 3,117 Professional fees and outside services 2,388 2,725 2,552 2,215 2,088 Equipment 2,409 2,380 2,206 2,288 2,180 Office supplies and postage 1,574 1,671 1,655 1,531 1,342 FDIC expenses 942 931 886 920 965 Advertising 805 802 1,174 685 1,033 Amortization of intangible assets 841 819 760 782 771 Loan collection and other real estate owned 799 638 793 676 443 Merger 826 511 649 155 -- Other operating 4,161 3,523 4,479 3,785 3,196 Total noninterest expense 47,390 48,474 47,412 45,046 43,157 Income before income taxes 18,940 19,503 17,641 20,334 20,847 Income taxes 5,683 5,853 3,919 5,117 6,192 Net income $13,257 $13,650 $13,722 $15,217 $14,655 Earnings per share: Basic $0.40 $0.41 $0.42 $0.46 $0.43 Diluted $0.40 $0.41 $0.41 $0.45 $0.43 Three Months ended June 30, 2012 2011 Average Yield/ Average Yield/ (dollars in thousands) Balance Interest Rates Balance Interest Rates ASSETS Short-term interest bearing accounts $102,192 $84 0.33% $128,799 $111 0.35% Securities available for sale (1)(excluding unrealized gains or losses) 1,208,384 7,605 2.53% 1,098,964 8,512 3.11% Securities held to maturity (1) 68,472 931 5.47% 85,615 1,125 5.27% Investment in FRB and FHLB Banks 27,886 328 4.73% 27,071 329 4.87% Loans and leases (2) 3,938,592 50,741 5.18% 3,648,343 51,359 5.65% Total interest earning assets $ 5,345,526 $59,689 4.49% $ 4,988,792 $61,436 4.94% Other assets 465,058 424,187 Total assets $ 5,810,584 $ 5,412,979 LIABILITIES AND STOCKHOLDERS' EQUITY Money market deposit accounts $1,115,812 539 0.19% $1,091,001 $1,009 0.37% NOW deposit accounts 704,896 480 0.27% 672,345 627 0.37% Savings deposits 676,794 127 0.08% 607,533 182 0.12% Time deposits 973,051 3,688 1.52% 919,590 4,233 1.85% Total interest bearing deposits $ 3,470,553 $4,834 0.56% $ 3,290,469 $6,051 0.74% Short-term borrowings 171,545 48 0.11% 135,618 52 0.15% Trust preferred debentures 75,422 434 2.31% 75,422 400 2.13% Long-term debt 368,251 3,580 3.91% 369,459 3,591 3.90% Total interest bearing liabilities $ 4,085,771 $8,896 0.88% $ 3,870,968 $10,094 1.05% Demand deposits 1,111,804 932,066 Other liabilities 61,144 68,596 Stockholders' equity 551,865 541,349 Total liabilities and stockholders' equity $ 5,810,584 $ 5,412,979 Net interest income (FTE) 50,793 51,342 Interest rate spread 3.61% 3.89% Net interest margin 3.82% 4.13% Taxable equivalent adjustment 1,042 1,178 Net interest income $49,751 $50,164 (1) Securities are shown at average amortized cost (2) For purposes of these computations, nonaccrual loans are included in the average loan balances outstanding Six Months ended June 30, 2012 2011 Average Yield/ Average Yield/ (dollars in thousands) Balance Interest Rates Balance Interest Rates ASSETS Short-term interest bearing accounts $91,159 $120 0.26% $135,019 $180 0.27% Securities available for sale (1)(excluding unrealized gains or losses) 1,210,575 15,460 2.57% 1,098,506 17,013 3.12% Securities held to maturity (1) 69,507 1,896 5.48% 89,833 2,327 5.22% Investment in FRB and FHLB Banks 27,453 685 5.02% 27,158 754 5.60% Loans and leases (2) 3,874,027 101,184 5.25% 3,632,355 102,451 5.69% Total interest earning assets $ 5,272,721 $ 119,345 4.55% $ 4,982,871 $ 122,725 4.97% Other assets 462,300 422,191 Total assets $ 5,735,021 $ 5,405,062 LIABILITIES AND STOCKHOLDERS' EQUITY Money market deposit accounts $1,102,579 1,151 0.21% $1,088,456 $2,125 0.39% NOW deposit accounts 699,917 1,010 0.29% 685,171 1,261 0.37% Savings deposits 659,381 242 0.07% 591,043 347 0.12% Time deposits 964,701 7,574 1.58% 925,528 8,605 1.87% Total interest bearing deposits $ 3,426,578 $9,977 0.59% $ 3,290,198 $12,338 0.76% Short-term borrowings 167,176 89 0.11% 144,447 110 0.15% Trust preferred debentures 75,422 883 2.35% 75,422 1,289 3.45% Long-term debt 369,323 7,161 3.90% 369,717 7,162 3.91% Total interest bearing liabilities $ 4,038,499 $18,110 0.90% $ 3,879,784 $20,899 1.09% Demand deposits 1,087,180 918,483 Other liabilities 62,096 67,006 Stockholders' equity 547,246 539,789 Total liabilities and stockholders' equity $ 5,735,021 $ 5,405,062 Net interest income (FTE) 101,235 101,826 Interest rate spread 3.65% 3.88% Net interest margin 3.86% 4.12% Taxable equivalent adjustment 2,092 2,410 Net interest income $99,143 $99,416 (1) Securities are shown at average amortized cost (2) For purposes of these computations, nonaccrual loans are included in the average loan balances outstanding NBT Bancorp Inc. and Subsidiaries Loans and Leases (Unaudited) June 30, December 31, (In thousands) 2012 2011 Residential real estate mortgages $630,791 $581,511 Commercial 691,055 611,298 Commercial real estate mortgages 1,066,039 888,879 Real estate construction and development 99,236 93,977 Agricultural and agricultural real estate mortgages 107,337 108,423 Consumer 993,586 946,470 Home equity 573,170 569,645 Total loans and leases $4,161,214 $3,800,203 CONTACT: Martin A. Dietrich, CEO Michael J. Chewens, CFO NBT Bancorp Inc. 52 South Broad Street Norwich, NY 13815 607-337-6119Source: NBT Bancorp Inc.