Loans

• Period end total loans were $9.67 billion at September 30, 2023, $8.36 billion at June 30, 2023 and $8.15 billion at December 31, 2022.

• Period end loans increased $1.52 billion from December 31, 2022. Commercial and industrial loans increased $158.5 million to $1.42 billion; commercial real estate loans increased $767.7 million to $3.58 billion; and total consumer loans increased $591.0 million to $4.67 billion. Included in total consumer loans is $132.6 million of a portfolio of loans in a run-off status.

• Commercial line of credit utilization rate was 22% at September 30, 2023, compared to 23% at June 30, 2023 and September 30, 2022.
  

Deposits

• Total deposits at September 30, 2023 were $11.40 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.

• Loan to deposit ratio was 84.8% at September 30, 2023, compared to 85.8% at December 31, 2022.

Net Interest Income and Net Interest Margin

• Net interest income for the third quarter of 2023 was $94.9 million, which was up $5.8 million, or 6.5%, from the second quarter of 2023 and up $0.4 million, or 0.4%, from the third quarter of 2022. The increase in net interest income resulted from 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 third quarter of 2023 was 3.21%, a decrease of 6 bps from the second quarter of 2023 driven by the increase in the cost of interest-bearing deposits, partly offset by an increase in average earning asset yields and $1.4 million in acquisition-related net accretion. The NIM on an FTE basis decreased 30 bps from the third 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 September 30, 2023 increased 21 bps from the prior quarter to 4.63% and increased 95 bps from the same quarter in the prior year. Average earning assets grew $819.7 million, or 7.5%, from the second quarter of 2023 due primarily to the Salisbury acquisition and organic loan growth.

• Total cost of deposits, including noninterest bearing deposits, was 1.18% for the third quarter of 2023, up 33 bps from the prior quarter and up 109 bps from the same period in the prior year.

• Total cost of funds for the three months ended September 30, 2023 was 1.50%, up 28 bps from the prior quarter and up 132 bps from the third quarter of 2022.
  

Asset Quality and Allowance for Loan Losses

• Net charge-offs to total average loans was 18 bps compared to 17 bps in the prior quarter and 7 bps in the third quarter of 2022. The increase in net charge-offs from the third quarter of 2022 was due to an increase in charge-offs in the Company's other consumer portfolio, which is in a run-off status. Net charge-offs for the portfolios in a run-off status represented the majority of total net charge-offs for the third quarter.

• Nonperforming assets to total assets were 0.18% at September 30, 2023, compared to 0.17% at June 30, 2023 and 0.19% at September 30, 2022.

• Provision expense for the three months ended September 30, 2023 was $12.6 million, compared to $3.6 million for the second quarter of 2023 and $4.5 million for the third 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 allowance for loan losses was $114.6 million, or 1.19% of total loans, at September 30, 2023, compared to 1.20% of total loans at June 30, 2023 and 1.22% of total loans at September 30, 2022. The increase in the allowance for loan losses in the third quarter included $14.5 million of allowance for acquired Salisbury loans which included both the $8.8 million of non-purchased credit deteriorated allowance recognized through the provision for loan losses and the $5.8 million of purchased credit deteriorated allowance reclassified from loans.

• The reserve for unfunded loan commitments increased to $4.8 million at September 30, 2023 compared to the prior quarter-end at $4.4 million and to $5.3 million at September 30, 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 $40.4 million for the three months ended September 30, 2023, up $3.7 million from the second quarter and up $3.1 million from the prior year's third quarter.

• Card services income increased $0.4 million from the prior quarter and decreased $0.2 million from the third quarter of 2022.

• Retirement plan administration fees were up $1.1 million from the prior quarter and were $1.3 million higher than the third quarter of 2022 due primarily to seasonal activity-based fees in the quarter, favorable market conditions, new account growth and the acquisition of Retirement Direct, LLC on July 1, 2023.

• Wealth management fees increased $1.1 million from the prior quarter and were $0.9 million higher than the third quarter of 2022 primarily due to the Salisbury acquisition and approximately $0.5 million in seasonal activity-based fees.

• Insurance services were up $0.6 million from the prior quarter and were $0.5 million higher than the third quarter of 2022.
  

Noninterest Expense

• Total noninterest expense, excluding $7.9 million of acquisition expenses in the third quarter of 2023 and $1.2 million in the second quarter of 2023, increased 6.8% compared to the previous quarter due primarily to the acquisition of Salisbury and increased 8.1% from the third quarter of 2022 due primarily to the acquisition of Salisbury and merit increases for employees.

• Salaries and benefits increased 5.2% from the prior quarter driven by the Salisbury acquisition and increased from the third quarter of 2022 due to the Salisbury acquisition and merit increases.

• Amortization of intangible assets increased $1.2 million from the prior quarter and $1.1 million from the third quarter of 2022 primarily due to the amortization of intangible assets related to the Salisbury acquisition. The Company recorded a core deposit intangible of $31.2 million and a wealth management customer list intangible of $4.7 million for Salisbury.

• FDIC assessment expense increased $0.3 million in the prior quarter primarily due to the acquisition of Salisbury and increased $0.9 million from the third quarter of 2022 driven by the statutory increase in the FDIC assessment rate.

Income Taxes

• The effective tax rate was 22.4% for the third quarter of 2023 which was consistent with the second quarter of 2023 and 22.8% for the third quarter of 2022.
  

Capital

• Tangible common equity to tangible assets1 was 7.15% at September 30, 2023. Tangible book value per share2 was $20.39 at September 30, 2023, $21.55 at June 30, 2023 and $20.25 at September 30, 2022.

• Stockholders' equity increased $189.3 million from December 31, 2022 driven by the Salisbury acquisition adding $161.7 million of capital and net income generation of $88.3 million, partially offset by dividends declared of $40.8 million, the repurchase of common stock of $4.9 million and a $17.5 million decrease in accumulated other comprehensive income driven by the change in the market value of securities available for sale.

• September 30, 2023, CET1 capital ratio of 11.31%, leverage ratio of 10.23% and total risk-based capital ratio of 14.45%.
  

Dividend

• On October 23, 2023, the Board of Directors approved a fourth-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 fourth quarter of 2022. This is the Company's eleventh consecutive year of annual dividend increases. The dividend will be paid on December 15, 2023 to stockholders of record as of December 1, 2023.
  

Stock Repurchase

• The Company purchased 68,500 shares of its common stock in the third quarter of 2023 at an average price of $31.61 per share under its previously announced share repurchase program. The Company may repurchase shares of its common stock from time to time to mitigate the potential dilutive effects of stock-based incentive plans and other potential uses of common stock for corporate purposes. As of September 30, 2023, there were 1,444,500 shares available for repurchase under this plan.
  

Salisbury Bancorp, Inc. Merger

• On August 11, 2023, NBT completed its acquisition of Salisbury. Salisbury was a Connecticut-chartered commercial bank with 13 banking offices in northwestern Connecticut, the Hudson Valley region of New York, and southwestern Massachusetts.

• In connection with the acquisition, the Company issued 4.3 million shares and acquired approximately $1.57 billion of identifiable assets, including $1.18 billion of loans, $122.7 million in investment securities which were subsequently sold during the quarter, $31.2 million of core deposit intangibles and $4.7 million in a wealth management customer intangible, as well as $1.31 billion in deposits. As of the acquisition date, the fair value discount was $78.7 million for loans, net of the reclassification of the purchase credit deteriorated allowance, and was $3.0 million for subordinated debt, respectively.

Conference Call and Webcast

The Company will host a conference call at 8:30 a.m. (Eastern) Wednesday, October 25, 2023, to review third 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 $13.83 billion at September 30, 2023. The Company primarily operates through NBT Bank, N.A., a full-service community bank, and through two financial services companies. NBT Bank, N.A. has 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 and Salisbury 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.