NBT announces first quarter net income of $29.1 Million
NORWICH – NBT First Quarter highlights:
Net Income up 12.1%
Diluted earnings per share up 11.9%
Average demand deposits up 2.2%
FTE net interest margin of 3.64%
NORWICH – NBT reported net income and earnings per share for the last three months before March 31 this week.
Net income for the three months was $29.1 million, up 1.7 percent from $28.7 million for the fourth quarter of 2018 and up 12.1 percent from $26 million for the first quarter of 2018.
Diluted earnings per share for the three months was $0.66, as compared with $0.65 for the prior quarter, an increase of 1.5 percent, and $0.59 for the first quarter of 2018, an increase of 11.9 percent.
NBT Bancorp Inc. is a financial holding company headquartered in Norwich., with total assets of $9.5 billion. The company primarily operates through NBT Bank and through two financial services companies. NBT has 149 banking locations in New York, Pennsylvania, Vermont, Massachusetts, New Hampshire and Maine.
“In the first quarter of 2019, we achieved double-digit year-over-year earnings growth with net income and earnings per share up 12% over first quarter 2018. In addition, we continued to build our tangible capital which increases our ability to be opportunistic in executing on our long-term growth strategies,” said NBT President and CEO John H. Watt, Jr.
“Our strong financial results affirm the quality of our team and their commitment to providing our customers with the best service and financial products while constantly working to enhance the experience we deliver. This customer-focused approach drives our success and is the foundation of our efforts to build shareholder value,” he said.
Net interest income was $77.7 million for the first quarter of 2019, down $1.2 million, or 1.5 percent, from the previous quarter. The fully taxable equivalent (FTE) net interest margin was 3.64 percent for the three months, up three basis points (bps) from the previous quarter, as higher rates on lower average interest-earning assets more than offset higher funding costs on higher average interest-bearing liabilities. Interest income increased $0.8 million, or 0.9 percent, as the yield on average interest-earning assets increased 14 bps from the prior quarter to 4.28 percent, while average interest-earning assets of $8.7 billion remained relatively consistent with prior quarter. Interest expense was up $2.0 million, or 17.2 percent, as the cost of interest-bearing liabilities increased 15 bps to 0.92 percent. The Federal Reserve has raised its target fed funds rate nine times from December 2015 through March 2019 for a total increase of 225 bps. During this same cycle of increasing rates, the company’s average cost of deposits increased by 26 bps, resulting in a full cycle deposit beta of 11.7 percent.
Net interest income was $77.7 million for the first quarter of 2019, up $4.2 million, or 5.7 percent, from the first quarter of 2018. The FTE net interest margin of 3.64 percent was up seven bps from the first quarter of 2018. Interest income increased $10.6 million, or 13.1 percent, as the yield on average interest-earning assets increased 36 bps from the same period in 2018, and average interest-earning assets increased $314.0 million, or 3.7 percent, primarily due to a $294.2 million increase in average loans. Interest expense increased $6.4 million, as the cost of interest-bearing liabilities increased 41 bps, driven by interest-bearing deposit costs increasing 38 bps combined with a 72 basis point increase in short-term borrowing costs.
Noninterest income for the three months ended March 31, 2019 was $33.8 million, up $7.9 million, or 30.4 percent, from the prior quarter and up $2.5 million, or 8.1 percent, from the first quarter of 2018.
The increase from the prior quarter was primarily driven by lower net securities losses and seasonal increases in both insurance and other financial services revenue and retirement plan administration fees. In the fourth quarter of 2018, the company restructured the investment portfolio by selling $109 million of lower-yielding bonds and reinvesting the proceeds in higher-yielding bonds, which resulted in a $6.6 million loss on securities sold. Excluding net securities gains (losses), noninterest income for the three months ended March 31, 2019 would have been $33.8 million, up $0.9 million, or 2.7 percent from the prior quarter and up $2.6 million, or 8.2 percent from the first quarter of 2018. The increase from the first quarter of 2018 was primarily due to higher retirement plan administration fees resulting from the acquisition of Retirement Plan Services, LLC (RPS) in the second quarter of 2018.
Noninterest expense for the three months was $68.5 million, down $0.4 million, or 0.6 percent, from the prior quarter and up $4.2 million, or 6.5 percent, from the first quarter of 2018. The decrease from the prior quarter was primarily due to a $1.1 million decrease in other noninterest expense due to the timing of expense items combined with $0.4 million in non-recurring items in the fourth quarter of 2018, partially offset by a $0.7 million increase in pension interest and amortization costs.
Advertising expense decreased from the prior quarter by $0.5 million due to the timing of expenses in the fourth quarter of 2018. These decreases were partially offset by a $1.0 million increase in occupancy expense due to seasonal expenses. The increase from the first quarter of 2018 was driven by increases in salaries and employee benefits expense, equipment expense and other noninterest expense, which were partially offset by a decrease in loan collection and other real estate owned. Salaries and employee benefits expense increased from the first quarter of 2018 due primarily to the acquisition of RPS in the second quarter of 2018 and related employee benefits expenses combined with a $0.4 million increase in salaries related to the tax reform initiatives implemented in the first quarter of 2018.
Income tax expense for the three months ended March 31, 2019 was $8.1 million, up $7.4 million, from the prior quarter and up $1.1 million from the first quarter of 2018. The effective tax rate of 21.8 percent for the first quarter of 2019 was up from 2.5 percent for the fourth quarter of 2018 and up from 21.2 percent for the first quarter of 2018. The increase in income tax expense from the prior quarter was primarily due to 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. The increase in income tax expense from the first quarter of 2018 was primarily due to a higher level of taxable income.
Balance Sheet
Total assets were $9.5 billion at March 31, 2019 compared with $9.6 billion at December 31, 2018. Loans were $6.9 billion at March 31, 2019, comparable to December 31, 2018. In the first quarter of 2019, loan growth in commercial and commercial real estate was offset by run-off in our dealer finance portfolio. This is consistent with the Company’s strategy to focus on our higher returning portfolios thus reducing the need to rely more on price sensitive deposits to fund loan growth during the current interest rate environment. Total deposits were $7.6 billion at March 31, 2019, up $249.4 million, or 3.4 percent, from December 31, 2018, reflecting growth in core and municipal deposits. Stockholders’ equity was $1.0 billion, representing a total equity-to-total assets ratio of 10.85 percent at March 31, 2019, compared with $1.0 billion or a total equity-to-total assets ratio of 10.65 percent at December 31, 2018.
Dividend
On March 25, 2019, the Company announced that the Board of Directors approved a second-quarter 2019 cash dividend of $0.26 per share. The dividend will be paid on June 14, 2019 to shareholders of record.
-Sun Managing Editor Tyler Murphy
Pictured: NBT headquarters (Grady Thompson Photo)
Net Income up 12.1%
Diluted earnings per share up 11.9%
Average demand deposits up 2.2%
FTE net interest margin of 3.64%
NORWICH – NBT reported net income and earnings per share for the last three months before March 31 this week.
Net income for the three months was $29.1 million, up 1.7 percent from $28.7 million for the fourth quarter of 2018 and up 12.1 percent from $26 million for the first quarter of 2018.
Diluted earnings per share for the three months was $0.66, as compared with $0.65 for the prior quarter, an increase of 1.5 percent, and $0.59 for the first quarter of 2018, an increase of 11.9 percent.
NBT Bancorp Inc. is a financial holding company headquartered in Norwich., with total assets of $9.5 billion. The company primarily operates through NBT Bank and through two financial services companies. NBT has 149 banking locations in New York, Pennsylvania, Vermont, Massachusetts, New Hampshire and Maine.
“In the first quarter of 2019, we achieved double-digit year-over-year earnings growth with net income and earnings per share up 12% over first quarter 2018. In addition, we continued to build our tangible capital which increases our ability to be opportunistic in executing on our long-term growth strategies,” said NBT President and CEO John H. Watt, Jr.
“Our strong financial results affirm the quality of our team and their commitment to providing our customers with the best service and financial products while constantly working to enhance the experience we deliver. This customer-focused approach drives our success and is the foundation of our efforts to build shareholder value,” he said.
Net interest income was $77.7 million for the first quarter of 2019, down $1.2 million, or 1.5 percent, from the previous quarter. The fully taxable equivalent (FTE) net interest margin was 3.64 percent for the three months, up three basis points (bps) from the previous quarter, as higher rates on lower average interest-earning assets more than offset higher funding costs on higher average interest-bearing liabilities. Interest income increased $0.8 million, or 0.9 percent, as the yield on average interest-earning assets increased 14 bps from the prior quarter to 4.28 percent, while average interest-earning assets of $8.7 billion remained relatively consistent with prior quarter. Interest expense was up $2.0 million, or 17.2 percent, as the cost of interest-bearing liabilities increased 15 bps to 0.92 percent. The Federal Reserve has raised its target fed funds rate nine times from December 2015 through March 2019 for a total increase of 225 bps. During this same cycle of increasing rates, the company’s average cost of deposits increased by 26 bps, resulting in a full cycle deposit beta of 11.7 percent.
Net interest income was $77.7 million for the first quarter of 2019, up $4.2 million, or 5.7 percent, from the first quarter of 2018. The FTE net interest margin of 3.64 percent was up seven bps from the first quarter of 2018. Interest income increased $10.6 million, or 13.1 percent, as the yield on average interest-earning assets increased 36 bps from the same period in 2018, and average interest-earning assets increased $314.0 million, or 3.7 percent, primarily due to a $294.2 million increase in average loans. Interest expense increased $6.4 million, as the cost of interest-bearing liabilities increased 41 bps, driven by interest-bearing deposit costs increasing 38 bps combined with a 72 basis point increase in short-term borrowing costs.
Noninterest income for the three months ended March 31, 2019 was $33.8 million, up $7.9 million, or 30.4 percent, from the prior quarter and up $2.5 million, or 8.1 percent, from the first quarter of 2018.
The increase from the prior quarter was primarily driven by lower net securities losses and seasonal increases in both insurance and other financial services revenue and retirement plan administration fees. In the fourth quarter of 2018, the company restructured the investment portfolio by selling $109 million of lower-yielding bonds and reinvesting the proceeds in higher-yielding bonds, which resulted in a $6.6 million loss on securities sold. Excluding net securities gains (losses), noninterest income for the three months ended March 31, 2019 would have been $33.8 million, up $0.9 million, or 2.7 percent from the prior quarter and up $2.6 million, or 8.2 percent from the first quarter of 2018. The increase from the first quarter of 2018 was primarily due to higher retirement plan administration fees resulting from the acquisition of Retirement Plan Services, LLC (RPS) in the second quarter of 2018.
Noninterest expense for the three months was $68.5 million, down $0.4 million, or 0.6 percent, from the prior quarter and up $4.2 million, or 6.5 percent, from the first quarter of 2018. The decrease from the prior quarter was primarily due to a $1.1 million decrease in other noninterest expense due to the timing of expense items combined with $0.4 million in non-recurring items in the fourth quarter of 2018, partially offset by a $0.7 million increase in pension interest and amortization costs.
Advertising expense decreased from the prior quarter by $0.5 million due to the timing of expenses in the fourth quarter of 2018. These decreases were partially offset by a $1.0 million increase in occupancy expense due to seasonal expenses. The increase from the first quarter of 2018 was driven by increases in salaries and employee benefits expense, equipment expense and other noninterest expense, which were partially offset by a decrease in loan collection and other real estate owned. Salaries and employee benefits expense increased from the first quarter of 2018 due primarily to the acquisition of RPS in the second quarter of 2018 and related employee benefits expenses combined with a $0.4 million increase in salaries related to the tax reform initiatives implemented in the first quarter of 2018.
Income tax expense for the three months ended March 31, 2019 was $8.1 million, up $7.4 million, from the prior quarter and up $1.1 million from the first quarter of 2018. The effective tax rate of 21.8 percent for the first quarter of 2019 was up from 2.5 percent for the fourth quarter of 2018 and up from 21.2 percent for the first quarter of 2018. The increase in income tax expense from the prior quarter was primarily due to 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. The increase in income tax expense from the first quarter of 2018 was primarily due to a higher level of taxable income.
Balance Sheet
Total assets were $9.5 billion at March 31, 2019 compared with $9.6 billion at December 31, 2018. Loans were $6.9 billion at March 31, 2019, comparable to December 31, 2018. In the first quarter of 2019, loan growth in commercial and commercial real estate was offset by run-off in our dealer finance portfolio. This is consistent with the Company’s strategy to focus on our higher returning portfolios thus reducing the need to rely more on price sensitive deposits to fund loan growth during the current interest rate environment. Total deposits were $7.6 billion at March 31, 2019, up $249.4 million, or 3.4 percent, from December 31, 2018, reflecting growth in core and municipal deposits. Stockholders’ equity was $1.0 billion, representing a total equity-to-total assets ratio of 10.85 percent at March 31, 2019, compared with $1.0 billion or a total equity-to-total assets ratio of 10.65 percent at December 31, 2018.
Dividend
On March 25, 2019, the Company announced that the Board of Directors approved a second-quarter 2019 cash dividend of $0.26 per share. The dividend will be paid on June 14, 2019 to shareholders of record.
-Sun Managing Editor Tyler Murphy
Pictured: NBT headquarters (Grady Thompson Photo)
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