NBT Bancorp

ANNUAL REPORT

2014NBT Bancorp 
Annual Report

2014 

financial highlights

(dollar amounts in thousands except share and per share data)

FOR THE YEAR 

2014 

2013

Corporate Headquarters
NBT Bancorp Inc.
52 South Broad Street
Norwich, N.Y. 13815
607.337.6416

Company Profile

 › Financial holding company

 › Incorporated in 1986 in the  

state of Delaware

 › Primarily operates through NBT Bank, N.A. 

and two financial services companies

 › NBT Bank, N.A. offers personal banking, 

asset management and business services 
through over 155 locations in six states, 
including New York, Pennsylvania, 
Vermont, Massachusetts, New Hampshire  
and Maine.

 › EPIC Advisors, Inc., based in Rochester, N.Y., 
is a full-service 401(k) plan recordkeeping 
firm.

 › NBT-Mang Insurance Agency, based  

in Norwich, N.Y., is a full-service  
insurance agency.

2

CORE PERFORMANCE* 
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
Diluted earnings per common share . . . . . .   $ 
Return on average assets . . . . . . . . . . . . . . . . . .  
Return on average tangible equity . . . . . . . .  

PERFORMANCE 
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
Return on average assets . . . . . . . . . . . . . . . . . .  
Return on average tangible equity . . . . . . . .  
Net interest margin  . . . . . . . . . . . . . . . . . . . . . . .  

PER COMMON SHARE DATA
Basic earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
Diluted earnings . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
Dividend yield. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  

At December 31

75,812 
1.71 
0.98% 
14.03% 

75,074  
0.97% 
13.90% 
3.61% 

$ 
 $ 
$ 

1.71 
1.69  
0.84 
3.20% 

$ 
$ 

69,857
1.65
0.96%
14.76%

 $ 

61,747

0.85%
13.11%
3.66%

1.47
1.46
0.81
3.13%

BALANCE SHEET DATA
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  7,797,926 
Total loans  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  5,595,271 
Allowance for loan losses  . . . . . . . . . . . . . . . . .   $ 
66,359 
Deposits  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  6,299,605 
Total shareholders’ equity . . . . . . . . . . . . . . . . . .   $  864,181 

$  7,652,175
$  5,406,795
$ 
69,434
$  5,890,224
$  816,569

ASSET QUALITY
Nonperforming loans . . . . . . . . . . . . . . . . . . . . .   $ 
Nonperforming assets . . . . . . . . . . . . . . . . . . . .   $ 
Nonperforming loans to total loans . . . . . . .  

46,015 
49,979 

0.82% 

$ 
$ 

53,702
56,606

0.99%

CAPITAL
12.32% 
Tier 1 capital ratio . . . . . . . . . . . . . . . . . . . . . . . . .  
13.50% 
Total risk-based capital ratio . . . . . . . . . . . . . . .  
19.69 
Book value per share . . . . . . . . . . . . . . . . . . . . . .   $ 
13.22 
Tangible book value per share  . . . . . . . . . . . .   $ 
26.27 
Closing stock price . . . . . . . . . . . . . . . . . . . . . . . .   $ 
Ending shares outstanding . . . . . . . . . . . . . . . .  
43,896,454 
Market capitalization . . . . . . . . . . . . . . . . . . . . . .   $  1,153,160 

11.74%
12.99%
18.77
$ 
12.09
$ 
$ 
25.90
43,513,050
$  1,126,988

ASSETS UNDER MANAGEMENT
Assets managed in a fiduciary capacity . . . .   $  4,866,548 

$  4,576,541

* Excludes merger-related expenses, gains on sales of securities, reorganization expenses 
and other non-core items. A reconciliation of core results with GAAP results and analysis 
regarding why these measures provide useful information about our results are included  
in Item 7 of the 2014 Form 10-K.

NBT BANCORPNET INCOME

2
1
8
,
5
7
7 $
5
8
,
9
6
$

4
0
4
,
7
5
$

1
0
9
,
7
5
$

1
0
8
,
4
5
$

2010

2011

2012
CORE

2013
CORE

2014
CORE

RETURN ON AVERAGE
TANGIBLE EQUITY

%
4
1
.
5
1

%
5
7
.
4
1

%
6
7
.
4
1

%
0
2
.
4
1

%
3
0
.
4
1

$75,000

$65,000

$55,000

$45,000

$35,000

16.00%

12.00%

8.00%

4.00%

0.00%

DILUTED EARNINGS 
PER SHARE

1
7
.
1
$

6
6
.
1
$

1
7
.
1
$

3
6
.
1
$

5
6
.
1
$

RETURN ON 
AVERAGE ASSETS

%
5
0
.
1

%
6
0
.
1

%
6
9
.
0

%
8
9
.
0

%
3
9
.
0

1.20%

0.80%

0.40%

0.00%

2010

2011

2012
CORE

2013
CORE

2014
CORE

2010

2011

2012
CORE

2013
CORE

2014
CORE

NET INTEREST 
INCOME

NONINTEREST 
INCOME*

8
7
8
,
1
5
2
$

9
7
0
,
8
3
2
$

8
2
5
,
2
0
2
$

6
7
2
,
0
0
2
$

3
0
2
,
4
0
2
$

4
3
5
,
6
0
1
$

9
8
7
,
1
0
1
$

8
2
7
,
6
8
$

4
1
6
,
0
8
$

1
6
1
,
0
8
$

$110,000

$100,000

$90,000

$80,000

$70,000

$60,000

$1.75

$1.50

$1.25

$1.00

$0.75

$0.50

$250,000

$225,000

$200,000

$175,000

$150,000

2010

2011

2012
CORE

2013
CORE

2014
CORE

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

NET CHARGE-OFFS
TO AVERAGE LOANS

TOTAL NONPERFORMING 
LOANS TO TOTAL LOANS

0.80%

0.60%

%
9
6
.
0

0.40%

0.20%

0.00%

%
6
5
.
0

%
5
5
.

0

%
4
4

.

0

%
1
4

.

0

%
4
2
.
1

%
9
0
.
1

%
8
9
.
0

%
9
9
.
0

%
2
8
.

0

1.25%

1.00%

0.75%

0.50%

0.25%

0.00%

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

Dollar amounts 

in thousands  

except per share data 

Prior to 2012, 

core performance 

approximated reported 

performance.

* Shown excluding  

net securities gains 

and the gain on 

sale of an equity 

investment in 2014

3

2014 ANNUAL REPORT 
 
to our shareholders

Fellow Shareholders,

We added another remarkable chapter to your company’s ever-
evolving story in 2014, a story that’s been nearly 160 years in 
the making. A story that is as much about staying true to our 
community focus and corporate values, as it is about change.

$75.8
MILLION

Core Net Income 
2014

From a performance standpoint, NBT 
Bancorp Inc. (NBT) set a new earnings 
record for the second consecutive 
year, generating $75.8 million in core 
net income for the 12 months ended 
December 31, 2014, up 8.5% from  
$69.9 million for 2013. Core diluted 

earnings per share for 2014 was $1.71—our second highest 
ever—up from $1.65 for the prior year.

And as we extended this upward earnings trajectory, asset 
quality improved and our growth strategies continued to flourish 
all across the company.

Our most visible growth initiative has been our expansion 
into New England. It’s also a prime example of our willingness 
and ability to change, paired with the discipline to keep our 
community commitment the same—no matter where we take 
the company.

Not so long ago, New England wasn’t even on our radar. Now, 
just five years after entering the market, NBT has 16 locations  
in four states, nearly 
100 employees and 
over $700 million 
in loans. In 2014 
alone, we added 
a sixth office in 
Massachusetts (our 
second in Pittsfield), 
a fourth in Vermont 
(Rutland), and 
also established a 
presence in Maine 
with a new regional 
headquarters in 
Portland.

4

We embraced change—four new states in five years—and we 
did it our way: through acquisition and organic growth in vibrant 
markets with an appetite for our locally focused, customer-
centric style of community banking. We believe this approach 
underlies our success in New England, and we see tremendous 
upside potential there as we continue to build strong teams of 
local bankers.

Wealth Management was another highlight in 2014 with total 
revenue up 14% over the prior year driven by gains in brokerage, 
investment and retirement plan income. Successful cross selling 
to existing bank and insurance customers was facilitated by a 
mutual referral program. We expect that cooperative effort will 
strengthen and continue to produce positive results for Wealth 
Management.

Commercial Banking ended 2014 with loans up 4% and 
deposits up 14% over the prior year. Here again, the underlying 
story harkens back to those values that compel us to engage 
and improve the communities we serve. And in the case of 
Commercial Banking, they literally have been transformational.

NBT provides tens of millions of dollars in financing to help 
make game-changing projects possible throughout our market 
areas. The projects featured below and others like them are 
transforming our communities by providing vital services, 
creating jobs, revitalizing downtowns and re-energizing rural 
areas.

•  Affordable housing in Norwich, New York ($5.5 million)

•  A Ronald McDonald House in Syracuse, New York  

($7.7 million)

•  An urgent care center in Clifton Park, New York ($9 million)

•  A retirement home in Pittsfield, Massachusetts ($14 million)

•  An office building in St. Albans, Vermont ($13 million)

If ever there was an intersection between our values as 
community bankers and our disposition as agents of change, 
this is truly it.

NBT also continued its leadership role in Small Business 
Administration lending, finishing 2014 as the top large 
community lender in the Syracuse District for the fourth 
consecutive year. We provided dozens of upstate New York 
businesses with SBA financing worth a total of $10 million. 

NBT BANCORP2014 SELF-SERVICE
CUSTOMER TRANSACTIONS

16,000

32,000

24,000

2
9
3
,
0
3

When it comes to change, 
nowhere is it more prevalent 
than with technology. 
From digital branches with 
updated floor plans and new 
self-service options, to more 
versatile ATMs and enhanced 
mobile banking, last year 
we continued rolling out 
new means for customers to 
manage their money from 
wherever they are, however 
they want to, whenever they 
need to. Our investments in technology are paying off as the 
number of online and mobile transactions continue to trend 
higher. This not only satisfies customer needs and preferences,  
it makes our business more efficient.

1
0
8
,
4
5
$

3
4
3
,
2
1

1
1
9
,
7

8
5
0
,
3

8,000

2Q

3Q

1Q

4Q

0

Technology is making NBT more efficient in other ways, too. 
Ongoing efforts by teams throughout the company identified 
opportunities to cut expenses by streamlining certain processes, 
reducing the need for couriers and eliminating unnecessary 
reports. There is more to do, and this work will naturally continue.

Our record core earnings for 2014 reflect the first full year of 
benefits from the acquisition of Alliance Financial Corporation, 
completed in March 2013. The acquisition of this like-minded 
community bank in central New York was a perfect fit for NBT, 
and we’re pleased to recognize its contribution to our solid 
performance.

We always strive to manage the company strategically to 
produce long-term value for our shareholders. Such was the case 
in 2014, when we leveraged a one-time gain from the sale of  
our equity interest in Springstone Financial to restructure our 
long-term borrowings and lowered the cost of the restructured  
long-term debt by approximately 200 basis points.

As planned, all of our Pennstar Bank branches in Pennsylvania 
and the Mang Insurance Agency were united under the  
NBT brand in 2014. This makes our locations easier to recognize, 
makes us more efficient and helps customers identify NBT 
with the full range of products and services offered by our 
increasingly diverse company.

Moving forward, we know that talented, dedicated employees 
will continue to be our primary competitive advantage. 
Accordingly, we remain focused on recruiting, retaining and 
supporting the very best people. They are the ones who will 
write the next chapters in our story and execute on the plans  
so vital to our success.

Our employees must also shoulder much of the responsibility for 
ensuring that NBT remains in compliance with evolving banking 
regulations and consumer protection laws. We manage this 
crucial task proactively by designing procedures, policies  
and products with compliance top of mind.

The Bank of Norwich, which would ultimately become NBT, 
opened for business in a small storefront on July 15, 1856. It 
started out with $125,000 in capital. At the end of 2014, NBT 
closed its books with $864,000,000 in equity, $1 billion in market 
capitalization and $7.8 billion in assets. That alone is quite a story.

How then does a bank preparing for the milestone of $10 billion 
in assets, with over 155 locations in six states, get to call itself a 
“community” bank? It’s those enduring 
community and corporate values that 
guide the personal way we go about 
our business—always seeking to put 
the customer first.

enduring 
community and 
corporate values

We can’t stop the world or our industry from changing. We can 
only carefully measure how we adapt to those changes based 
on the principles that have brought us success. And in that 
endeavor, we thank you for your support.

Martin A. Dietrich 
President and 
Chief Executive Officer

Daryl R. Forsythe 
Chairman of the Board 

5

2014 ANNUAL REPORTNBT Bancorp
leadership

board listings

Executive Management Team

NBT Bancorp Inc.

NBT Bank, N.A.

Daryl R. Forsythe,  
Chairman

Martin A. Dietrich,  
President and CEO

Richard Chojnowski
Patricia T. Civil
Timothy E. Delaney
James H. Douglas
John C. Mitchell
Michael M. Murphy
Joseph A. Santangelo
Lowell A. Seifter, Esq.
Paul M. Solomon
Robert A. Wadsworth
Jack H. Webb

Martin A. Dietrich
President and  
Chief Executive Officer

Michael J. Chewens
Senior Executive  
Vice President and  
Chief Financial Officer

Howard L. Atkinson
Executive Vice President,
Strategic Operations

Timothy L. Brenner
Executive Vice President  
and President of  
Wealth Management

Jeffrey M. Levy
Executive Vice President  
and President of  
Commercial Banking

F. Sheldon Prentice
Executive Vice President,  
General Counsel and 
Corporate Secretary

David E. Raven
Executive Vice President,
President of Retail Banking  
and President of Pennsylvania

Catherine M. Scarlett
Executive Vice President  
and Chief Human Resources 
Officer

Joseph R. Stagliano
Executive Vice President  
and Chief Information Officer

Jack H. Webb
Executive Vice President,   
Strategic Support

Additional information 
regarding our Executive 
Management Team and 
the NBT Bancorp Board of 
Directors can be found in 
the proxy statement for our 
2015 Annual Meeting of 
Shareholders.

NASDAQ
SYMBOL 

NBTB

6

Daryl R. Forsythe,  
Chairman

Martin A. Dietrich,  
President and CEO

Richard Chojnowski 
Patricia T. Civil
Timothy E. Delaney
Donald H. Dew
James H. Douglas 
Brian K. Hanaburgh
Andrew S. Kowalczyk III, Esq.
Susan H. Kwiatek
Thomas G. Mazzotta, Esq.
John C. Mitchell
Michael M. Murphy
V. Daniel Robinson II
Matthew J. Salanger
Joseph A. Santangelo
Lowell A. Seifter, Esq.
Paul M. Solomon
Russell B. Strait
Robert A. Wadsworth
Jack H. Webb

Honorary Directors
Carl Barbic
J. Peter Chaplin
Peter B. Gregory, DDS
Paul D. Horger, Esq.
Janet H. Ingraham
Andrew S. Kowalczyk Jr., Esq.
Van Ness D. Robinson
Paul O. Stillman
J.K. Weinman

NBT BANCORPshareholder information

Annual Meeting

Shareholder Relations

Tuesday, May 5, 2015, 10:00 a.m. 
DoubleTree by Hilton Hotel
225 Water Street  
Binghamton, N.Y. 13901
607.722.7575

Financial Reports and Releases

Copies of the company’s annual 
report to the Securities and Exchange 
Commission on Form 10-K, quarterly 
reports on Form 10-Q and news  
releases may be obtained without 
charge by visiting our website at  
www.nbtbancorp.com or by writing 
to Chief Financial Officer Michael J. 
Chewens at the corporate headquarters 
address provided on the back cover. 

Information regarding NBT Bancorp, 
our dividend reinvestment and stock 
repurchase plan, and direct deposit of 
dividends can be found on our website 
at www.nbtbancorp.com. 

Those seeking additional information 
should contact Shareholder Relations  
by phone at 800.NBT.BANK 
(800.628.2265), Option 7, or by mail  
in the care of NBT Bank at 20 Mohawk 
Street, Canajoharie, N.Y. 13317.

Stock
Traded on:  
NASDAQ Global Select Market
Symbol: NBTB

Stock Transfer  
and Registrar Agent

NBT Bank
20 Mohawk Street
Canajoharie, N.Y. 13317
800.NBT.BANK 
(800.628.2265), Option 7

Independent Auditors
KPMG LLP
515 Broadway
Albany, N.Y. 12207

NEW YORK

PENNSYLVANIA

MAINE

VERMONT

NEW
HAMPSHIRE

MASSACHUSETTS

NBT Bank
NBT-Mang Insurance Agency
NBT Bank and 
NBT-Mang Insurance Agency
EPIC Advisors

7

2014 ANNUAL REPORT52 South Broad Street    |    Norwich, N.Y. 13815    |    www.nbtbancorp.com

www.nbtbank.com

www.nbtmang.com

www.epic1st.com