|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Smaller reporting company
|
Emerging growth company
|
PART I
|
||
ITEM 1.
|
3
|
|
ITEM 1A.
|
16 | |
ITEM 1B.
|
23 | |
ITEM 2.
|
24 | |
ITEM 3.
|
24 | |
ITEM 4.
|
24 | |
PART II
|
||
ITEM 5.
|
24 | |
ITEM 6.
|
25 | |
ITEM 7.
|
26 | |
ITEM 7A.
|
44 | |
ITEM 8.
|
45 | |
45 | ||
47 | ||
48 | ||
49 | ||
50 | ||
51 | ||
53 | ||
ITEM 9.
|
95 | |
ITEM 9A.
|
95 | |
ITEM 9B.
|
97 | |
ITEM 9C.
|
97 | |
PART III
|
||
ITEM 10.
|
97 | |
ITEM 11.
|
97 | |
ITEM 12.
|
97 | |
ITEM 13.
|
97 | |
ITEM 14.
|
97 | |
PART IV
|
||
ITEM 15.
|
98 | |
ITEM 16.
|
100 | |
101 |
County
|
State
|
Deposits
in Thousands
|
Market Share
|
Market
Rank
|
Number of
Branches*
|
Number of
ATMs*
|
||||||||||||||||
Chenango
|
NY
|
$
|
815,939
|
92.59
|
%
|
1
|
11
|
12
|
||||||||||||||
Fulton
|
NY
|
652,866
|
67.56
|
%
|
1
|
5
|
6
|
|||||||||||||||
Schoharie
|
NY
|
307,266
|
48.36
|
%
|
1
|
4
|
4
|
|||||||||||||||
Montgomery
|
NY
|
436,892
|
45.24
|
%
|
1
|
5
|
4
|
|||||||||||||||
Hamilton
|
NY
|
56,988
|
43.94
|
%
|
2
|
1
|
1
|
|||||||||||||||
Cortland
|
NY
|
367,577
|
38.89
|
%
|
1
|
4
|
6
|
|||||||||||||||
Otsego
|
NY
|
513,121
|
37.62
|
%
|
1
|
8
|
11
|
|||||||||||||||
Essex
|
NY
|
329,672
|
32.77
|
%
|
1
|
3
|
4
|
|||||||||||||||
Madison
|
NY
|
391,727
|
31.86
|
%
|
2
|
5
|
7
|
|||||||||||||||
Delaware
|
NY
|
347,797
|
28.68
|
%
|
3
|
5
|
5
|
|||||||||||||||
Susquehanna
|
PA
|
273,215
|
19.73
|
%
|
2
|
5
|
7
|
|||||||||||||||
Broome
|
NY
|
580,368
|
15.61
|
%
|
2
|
7
|
9
|
|||||||||||||||
Oneida
|
NY
|
704,944
|
14.88
|
%
|
2
|
6
|
8
|
|||||||||||||||
St. Lawrence
|
NY
|
229,331
|
14.44
|
%
|
3
|
4
|
4
|
|||||||||||||||
Pike
|
PA
|
128,742
|
12.82
|
%
|
4
|
2
|
2
|
|||||||||||||||
Oswego
|
NY
|
197,469
|
10.77
|
%
|
4
|
4
|
5
|
|||||||||||||||
Herkimer
|
NY
|
75,148
|
9.22
|
%
|
5
|
1
|
1
|
|||||||||||||||
Wayne
|
PA
|
176,403
|
9.12
|
%
|
4
|
3
|
4
|
|||||||||||||||
Tioga
|
NY
|
48,715
|
8.72
|
%
|
4
|
1
|
1
|
|||||||||||||||
Lackawanna
|
PA
|
620,344
|
7.67
|
%
|
6
|
10
|
12
|
|||||||||||||||
Schenectady
|
NY
|
288,903
|
7.54
|
%
|
5
|
2
|
2
|
|||||||||||||||
Clinton
|
NY
|
135,721
|
7.16
|
%
|
5
|
2
|
2
|
|||||||||||||||
Franklin
|
NY
|
43,230
|
6.02
|
%
|
4
|
1
|
1
|
|||||||||||||||
Onondaga
|
NY
|
695,914
|
5.30
|
%
|
6
|
10
|
10
|
|||||||||||||||
Saratoga
|
NY
|
292,090
|
4.37
|
%
|
8
|
3
|
4
|
|||||||||||||||
Warren
|
NY
|
113,835
|
3.98
|
%
|
4
|
2
|
2
|
|||||||||||||||
Berkshire
|
MA
|
181,641
|
3.70
|
%
|
7
|
5
|
5
|
|||||||||||||||
Monroe
|
PA
|
118,254
|
3.04
|
%
|
8
|
3
|
3
|
|||||||||||||||
Chittenden
|
VT
|
182,948
|
2.99
|
%
|
7
|
3
|
4
|
|||||||||||||||
Cheshire
|
NH
|
61,989
|
2.29
|
%
|
7
|
1
|
1
|
|||||||||||||||
Albany
|
NY
|
371,414
|
1.69
|
%
|
9
|
4
|
5
|
|||||||||||||||
Greene
|
NY
|
46,485
|
1.53
|
%
|
5
|
1
|
1
|
|||||||||||||||
Luzerne
|
PA
|
120,150
|
1.48
|
%
|
12
|
2
|
2
|
|||||||||||||||
Hillsborough
|
NH
|
147,083
|
0.84
|
%
|
12
|
2
|
2
|
|||||||||||||||
Rensselaer
|
NY
|
18,311
|
0.67
|
%
|
11
|
1
|
1
|
|||||||||||||||
Cumberland
|
ME
|
35,531
|
0.24
|
%
|
16
|
1
|
1
|
|||||||||||||||
Hartford
|
CT
|
36,894
|
0.08
|
%
|
21
|
2
|
1
|
|||||||||||||||
Merrimack
|
NH
|
2,315
|
0.04
|
%
|
16
|
1
|
1
|
|||||||||||||||
$
|
10,147,232
|
140
|
161
|
● |
4.5% CET1 to risk-weighted assets;
|
● |
6.0% Tier 1 capital (CET1 plus Additional Tier 1 capital) to risk-weighted assets;
|
● |
8.0% Total capital (Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and
|
● |
4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”).
|
● |
the Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
|
● |
the Equal Credit Opportunity Act (“ECOA”), prohibiting discrimination in connection with the extension of credit;
|
● |
the Home Mortgage Disclosure Act (“HMDA”), requiring home mortgage lenders, including the Bank, to make available to the public expanded information regarding the pricing of home mortgage loans, including the
“rate spread” between the annual percentage rate and the average prime offer rate for mortgage loans of a comparable type;
|
● |
the Fair Credit Reporting Act (“FCRA”), governing the provision of consumer information to credit reporting agencies and the use of consumer information; and
|
● |
the Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected by collection agencies.
|
ITEM 1A. |
RISK FACTORS
|
● |
investors may have less confidence in the equity markets in general and in financial services industry stocks in particular, which could place downward pressure on the Company’s stock price and resulting market
valuation;
|
● |
consumer and business confidence levels could be lowered and cause declines in credit usage and adverse changes in payment patterns, causing increases in delinquencies and default rates;
|
● |
the Company’s ability to assess the creditworthiness of its customers may be impaired if the models and approaches the Company uses to select, manage and underwrite its customers become less predictive of future
behaviors;
|
● |
the Company could suffer decreases in demand for loans or other financial products and services or decreased deposits or other investments in accounts with the Company;
|
● |
demand for and income received from the Company’s fee-based services could decline;
|
● |
customers of the Company’s trust and benefit plan administration business may liquidate investments, which together with lower asset values, may reduce the level of assets under management and administration and
thereby decrease the Company’s investment management and administration revenues;
|
● |
competition in the financial services industry could intensify as a result of the increasing consolidation of financial services companies in connection with current market conditions or otherwise; and
|
● |
the value of loans and other assets or collateral securing loans may decrease.
|
● |
the ability to develop, maintain and build upon long-term customer relationships based on top quality service, high ethical standards and safe, sound assets;
|
● |
the ability to expand the Company’s market position;
|
● |
the scope, relevance and pricing of products and services offered to meet customer needs and demands;
|
● |
the rate at which the Company introduces new products, services and technologies relative to its competitors;
|
● |
customer satisfaction with the Company’s level of service;
|
● |
industry and general economic trends; and
|
● |
the ability to attract and retain talented employees.
|
● |
applicability of Volcker Rule requirements and restrictions;
|
● |
increased capital, leverage, liquidity and risk management standards;
|
● |
examinations by the CFPB for compliance with federal consumer financial protection laws and regulations; and
|
● |
limits on interchange fees from debit cards transactions.
|
● |
the Company could incur substantial costs relating to the proposed merger, such as legal, accounting, financial advisor, filing, printing and mailing fees; and
|
● |
the Company’s management’s and employees’ attention may be diverted from their day-to-day business and operational matters as a result of efforts relating to attempting to consummate the merger.
|
● |
we may not have enough cash to pay such dividends due to changes in its cash requirements, capital spending plans, cash flow or financial position;
|
● |
decisions on whether, when and in what amounts to make any future dividends will remain at all times entirely at the discretion of our Board of Directors, which reserves the right to change our dividend practices
at any time and for any reason; and
|
● |
the amount of dividends that our subsidiaries may distribute to us may be subject to restrictions imposed by state law and restrictions imposed by the terms of any current or future indebtedness that these
subsidiaries may incur.
|
● |
exposure to potential asset quality issues of the acquired business;
|
● |
potential exposure to unknown or contingent liabilities of the acquired business;
|
● |
our ability to realize anticipated cost savings;
|
● |
the difficulty of integrating operations and personnel and the potential loss of key employees;
|
● |
the potential disruption of our or the acquired company’s ongoing business in such a way that could result in decreased revenues or the inability of our management to maximize our financial and strategic position;
|
● |
the inability to maintain uniform standards, controls, procedures and policies; and
|
● |
the impairment of relationships with the acquired company’s employees and customers as a result of changes in ownership and management.
|
ITEM 1B. |
UNRESOLVED STAFF COMMENTS
|
ITEM 2. |
PROPERTIES
|
ITEM 3. |
LEGAL PROCEEDINGS
|
ITEM 4. |
MINE SAFETY DISCLOSURES
|
ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Period Ending
|
||||||||||||||||||||||||
Index
|
12/31/17
|
12/31/18
|
12/31/19
|
12/31/20
|
12/31/21
|
12/31/22
|
||||||||||||||||||
NBT Bancorp
|
$
|
100.00
|
$
|
96.48
|
$
|
116.34
|
$
|
95.26
|
$
|
117.77
|
$
|
136.65
|
||||||||||||
KBW Regional Bank Index
|
$
|
100.00
|
$
|
82.51
|
$
|
102.20
|
$
|
93.33
|
$
|
127.53
|
$
|
118.71
|
||||||||||||
NASDAQ Composite Index
|
$
|
100.00
|
$
|
97.18
|
$
|
132.88
|
$
|
192.74
|
$
|
235.56
|
$
|
158.97
|
ITEM 6. |
[RESERVED]
|
ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
● |
net income of $152.0 million, or $3.52 diluted earnings per share;
|
● |
noninterest income of $155.6 million, down 1.4% from 2021; represents 30% of total revenues;
|
● |
period end loans were $8.15 billion, up 8.7% (10.2% excluding Paycheck Protection Program (“PPP”) loans);
|
● |
strong credit quality metrics including net charge-offs of 0.11% and allowance for loan losses to total loans at 1.24%;
|
● |
book value per share of $27.38 at December 31, 2022; tangible book value per share was $20.65(1) at December 31, 2022.
|
(1) |
Non-GAAP measure - Refer to non-GAAP reconciliation below.
|
● |
Generated positive operating leverage of $21.7 million with total revenues increasing 8.1%, or $38.9 million, while operating expenses were higher by 6.0%, or $17.2 million.
|
● |
Net interest income in 2022 improved in comparison to 2021, primarily due to higher yields on earning assets due to increases in the Federal Reserve’s targeted Federal Funds rate combined with growth in
earning assets, strongly overcoming a $17.6 million ($0.31 per diluted share) year-over-year decrease in income from the Paycheck Protection Program (“PPP”).
|
● |
The Company recorded a provision for loan losses of $17.1 million ($0.31 per diluted share) in 2022, compared to a net benefit of $8.3 million ($0.15 per diluted share) in 2021.
|
● |
Card services income was lower than 2021 driven by the impact from the Company being subject to the statutory price cap provisions of the Durbin Amendment to the Dodd-Frank Act (“Durbin Amendment”) of
approximately $8 million ($0.14 per diluted share).
|
● |
2022 full-year results included $1.0 million in merger-related expenses. Significant non-recurring transactions occurring in 2021 included a $4.3 million estimated litigation settlement cost related to a
pending lawsuit regarding certain of the Company’s deposit products and related disclosures. Significant non-recurring transactions occurring in 2020 included a $4.8 million expense related to branch optimization.
|
Years Ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Performance:
|
||||||||||||
Diluted earnings per share
|
$
|
3.52
|
$
|
3.54
|
$
|
2.37
|
||||||
Return on average assets
|
1.29
|
%
|
1.33
|
%
|
0.99
|
%
|
||||||
Return on average equity
|
12.67
|
%
|
12.71
|
%
|
9.09
|
%
|
||||||
Return on average tangible common equity
|
16.89
|
%
|
16.92
|
%
|
12.48
|
%
|
||||||
Net interest margin (FTE)
|
3.34
|
%
|
3.03
|
%
|
3.31
|
%
|
||||||
Capital:
|
||||||||||||
Equity to assets
|
10.00
|
%
|
10.41
|
%
|
10.86
|
%
|
||||||
Tangible equity ratio
|
7.73
|
%
|
8.20
|
%
|
8.41
|
%
|
||||||
Book value per share
|
$
|
27.38
|
$
|
28.97
|
$
|
27.22
|
||||||
Tangible book value per share
|
$
|
20.65
|
$
|
22.26
|
$
|
20.52
|
||||||
Leverage ratio
|
10.32
|
%
|
9.41
|
%
|
9.56
|
%
|
||||||
Common equity tier 1 capital ratio
|
12.12
|
%
|
12.25
|
%
|
11.84
|
%
|
||||||
Tier 1 capital ratio
|
13.19
|
%
|
13.43
|
%
|
13.09
|
%
|
||||||
Total risk-based capital ratio
|
15.38
|
%
|
15.73
|
%
|
15.62
|
%
|
Years Ended December 31,
|
||||||||||||
(In thousands, except per share data)
|
2022
|
2021
|
2020
|
|||||||||
Return on average tangible common equity:
|
||||||||||||
Net income
|
$
|
151,995
|
$
|
154,885
|
$
|
104,388
|
||||||
Amortization of intangible assets (net of tax)
|
1,698
|
2,106
|
2,546
|
|||||||||
Net income, excluding intangible amortization
|
$
|
153,693
|
$
|
156,991
|
$
|
106,934
|
||||||
Average stockholders’ equity
|
$
|
1,199,383
|
$
|
1,218,449
|
$
|
1,148,475
|
||||||
Less: average goodwill and other intangibles
|
289,238
|
290,838
|
291,787
|
|||||||||
Average tangible common equity
|
$
|
910,145
|
$
|
927,611
|
$
|
856,688
|
||||||
Return on average tangible common equity
|
16.89
|
%
|
16.92
|
%
|
12.48
|
%
|
||||||
Tangible equity ratio:
|
||||||||||||
Stockholders’ equity
|
$
|
1,173,554
|
$
|
1,250,453
|
$
|
1,187,618
|
||||||
Intangibles
|
288,545
|
289,468
|
292,276
|
|||||||||
Assets
|
$
|
11,739,296
|
$
|
12,012,111
|
$
|
10,932,906
|
||||||
Tangible equity ratio
|
7.73
|
%
|
8.20
|
%
|
8.41
|
%
|
||||||
Tangible book value:
|
||||||||||||
Stockholders’ equity
|
$
|
1,173,554
|
$
|
1,250,453
|
$
|
1,187,618
|
||||||
Intangibles
|
288,545
|
289,468
|
292,276
|
|||||||||
Tangible equity
|
$
|
885,009
|
$
|
960,985
|
$
|
895,342
|
||||||
Diluted common shares outstanding
|
42,858
|
43,168
|
43,629
|
|||||||||
Tangible book value per share
|
$
|
20.65
|
$
|
22.26
|
$
|
20.52
|
● |
Excess liquidity in the banking system has significantly decreased:
|
ο |
loan growth may be negatively impacted as interest rates have risen and lenders have begun to revert back to historical credit spreads to account for overall higher cost of funds;
|
ο |
cost of deposits as well as overall cost of funds could negatively impact net interest margin. Excess liquidity allowed financial institutions to significantly lag deposit rates in 2022. This lag has increased the potential for a rapid
increase in deposit rates during 2023 relative to federal funds rate increases;
|
ο |
higher interest rates have afforded deposit customers investment opportunities outside the banking system resulting in deposit declines across the industry. Investment purchases have slowed as runoff investment cash flows have been
utilized as a source of funding.
|
● |
Inflationary pressures have taken a hold of the economy as drivers of inflation, initially considered to be transitory in nature, have proven to be more persistent:
|
ο |
this spike to inflation has had a significant impact on current and expected Federal Reserve Monetary Policy;
|
ο |
the tightening of monetary policy through measures to raise interest rates has thus far had a benefit given the Company’s asset sensitive balance sheet position. However, elevated deposit costs and the slowing of the economy could
arise as a result of the higher interest rates.
|
● |
The Company’s continued focus on long-term strategies including growth in the New England markets, diversification of revenue, improving operating efficiencies and investing in technology.
|
● |
The Company’s merger with Salisbury Bancorp, Inc. (“Salisbury”) is expected to close in the second quarter of 2023 subject to customary closing conditions, including approval by the stockholders of Salisbury and
required regulatory approvals.
|
2022
|
2021
|
2020
|
||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate
|
|||||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||||||
Short-term interest-bearing accounts
|
$
|
440,429
|
$
|
3,072
|
0.70
|
%
|
$
|
932,086
|
$
|
1,229
|
0.13
|
%
|
$
|
372,144
|
$
|
610
|
0.16
|
%
|
||||||||||||||||||
Securities taxable(1)
|
2,424,925
|
43,229
|
1.78
|
%
|
1,910,641
|
31,962
|
1.67
|
%
|
1,531,237
|
33,653
|
2.20
|
%
|
||||||||||||||||||||||||
Securities tax-exempt(1) (3)
|
233,515
|
5,070
|
2.17
|
%
|
220,759
|
4,929
|
2.23
|
%
|
173,031
|
5,144
|
2.97
|
%
|
||||||||||||||||||||||||
Federal Reserve Bank and FHLB stock
|
27,040
|
995
|
3.68
|
%
|
25,255
|
616
|
2.44
|
%
|
33,570
|
2,096
|
6.24
|
%
|
||||||||||||||||||||||||
Loans(2) (3)
|
7,772,962
|
333,008
|
4.28
|
%
|
7,543,149
|
302,331
|
4.01
|
%
|
7,461,795
|
308,080
|
4.13
|
%
|
||||||||||||||||||||||||
Total interest-earning assets
|
$
|
10,898,871
|
$
|
385,374
|
3.54
|
%
|
$
|
10,631,890
|
$
|
341,067
|
3.21
|
%
|
$
|
9,571,777
|
$
|
349,583
|
3.65
|
%
|
||||||||||||||||||
Other assets
|
893,197
|
983,809
|
942,274
|
|||||||||||||||||||||||||||||||||
Total assets
|
$
|
11,792,068
|
$
|
11,615,699
|
$
|
10,514,051
|
||||||||||||||||||||||||||||||
Liabilities and stockholders’ equity:
|
||||||||||||||||||||||||||||||||||||
Money market deposit accounts
|
$
|
2,447,978
|
$
|
4,955
|
0.20
|
%
|
$
|
2,587,748
|
$
|
5,117
|
0.20
|
%
|
$
|
2,320,947
|
$
|
10,313
|
0.44
|
%
|
||||||||||||||||||
NOW deposit accounts
|
1,578,831
|
2,600
|
0.16
|
%
|
1,452,560
|
738
|
0.05
|
%
|
1,194,398
|
716
|
0.06
|
%
|
||||||||||||||||||||||||
Savings deposits
|
1,829,360
|
592
|
0.03
|
%
|
1,656,893
|
829
|
0.05
|
%
|
1,393,436
|
745
|
0.05
|
%
|
||||||||||||||||||||||||
Time deposits
|
464,912
|
1,776
|
0.38
|
%
|
577,150
|
4,030
|
0.70
|
%
|
733,073
|
10,296
|
1.40
|
%
|
||||||||||||||||||||||||
Total interest-bearing deposits
|
$
|
6,321,081
|
$
|
9,923
|
0.16
|
%
|
$
|
6,274,351
|
$
|
10,714
|
0.17
|
%
|
$
|
5,641,854
|
$
|
22,070
|
0.39
|
%
|
||||||||||||||||||
Federal funds purchased
|
14,644
|
588
|
4.02
|
%
|
17
|
-
|
-
|
14,727
|
302
|
2.05
|
%
|
|||||||||||||||||||||||||
Repurchase agreements
|
69,561
|
67
|
0.10
|
%
|
100,519
|
132
|
0.13
|
%
|
154,383
|
266
|
0.17
|
%
|
||||||||||||||||||||||||
Short-term borrowings
|
46,371
|
1,968
|
4.24
|
%
|
1,302
|
26
|
2.00
|
%
|
183,699
|
2,840
|
1.55
|
%
|
||||||||||||||||||||||||
Long-term debt
|
6,579
|
161
|
2.45
|
%
|
15,479
|
389
|
2.51
|
%
|
62,990
|
1,553
|
2.47
|
%
|
||||||||||||||||||||||||
Subordinated debt, net
|
98,439
|
5,424
|
5.51
|
%
|
98,259
|
5,437
|
5.53
|
%
|
51,394
|
2,842
|
5.53
|
%
|
||||||||||||||||||||||||
Junior subordinated debt
|
101,196
|
3,749
|
3.70
|
%
|
101,196
|
2,090
|
2.07
|
%
|
101,196
|
2,731
|
2.70
|
%
|
||||||||||||||||||||||||
Total interest-bearing liabilities
|
$
|
6,657,871
|
$
|
21,880
|
0.33
|
%
|
$
|
6,591,123
|
$
|
18,788
|
0.29
|
%
|
$
|
6,210,243
|
$
|
32,604
|
0.53
|
%
|
||||||||||||||||||
Demand deposits
|
3,696,957
|
3,565,693
|
2,895,341
|
|||||||||||||||||||||||||||||||||
Other liabilities
|
237,857
|
240,434
|
259,992
|
|||||||||||||||||||||||||||||||||
Stockholders’ equity
|
1,199,383
|
1,218,449
|
1,148,475
|
|||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity
|
$
|
11,792,068
|
$
|
11,615,699
|
$
|
10,514,051
|
||||||||||||||||||||||||||||||
Net interest income (FTE)
|
$
|
363,494
|
$
|
322,279
|
$
|
316,979
|
||||||||||||||||||||||||||||||
Interest rate spread
|
3.21
|
%
|
2.92
|
%
|
3.12
|
%
|
||||||||||||||||||||||||||||||
Net interest margin (FTE)
|
3.34
|
%
|
3.03
|
%
|
3.31
|
%
|
||||||||||||||||||||||||||||||
Taxable equivalent adjustment
|
$
|
1,304
|
$
|
1,191
|
$
|
1,301
|
||||||||||||||||||||||||||||||
Net interest income
|
$
|
362,190
|
$
|
321,088
|
$
|
315,678
|
(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) |
Interest income for tax-exempt securities and loans have been adjusted to an FTE basis using the statutory Federal income tax rate of 21%.
|
Increase (Decrease)
2022 over 2021
|
Increase (Decrease)
2021 over 2020
|
|||||||||||||||||||||||
(In thousands)
|
Volume
|
Rate
|
Total
|
Volume
|
Rate
|
Total
|
||||||||||||||||||
Short-term interest-bearing accounts
|
$
|
(953
|
)
|
$
|
2,796
|
$
|
1,843
|
$
|
759
|
$
|
(140
|
)
|
$
|
619
|
||||||||||
Securities taxable
|
9,057
|
2,210
|
11,267
|
7,324
|
(9,015
|
)
|
(1,691
|
)
|
||||||||||||||||
Securities tax-exempt
|
279
|
(138
|
)
|
141
|
1,233
|
(1,448
|
)
|
(215
|
)
|
|||||||||||||||
Federal Reserve Bank and FHLB stock
|
46
|
333
|
379
|
(428
|
)
|
(1,052
|
)
|
(1,480
|
)
|
|||||||||||||||
Loans
|
9,406
|
21,271
|
30,677
|
3,332
|
(9,081
|
)
|
(5,749
|
)
|
||||||||||||||||
Total FTE interest income
|
$
|
17,835
|
$
|
26,472
|
$
|
44,307
|
$
|
12,220
|
$
|
(20,736
|
)
|
$
|
(8,516
|
)
|
||||||||||
Money market deposit accounts
|
(281
|
)
|
119
|
(162
|
)
|
1,073
|
(6,269
|
)
|
(5,196
|
)
|
||||||||||||||
NOW deposit accounts
|
70
|
1,792
|
1,862
|
141
|
(119
|
)
|
22
|
|||||||||||||||||
Savings deposits
|
79
|
(316
|
)
|
(237
|
)
|
134
|
(50
|
)
|
84
|
|||||||||||||||
Time deposits
|
(677
|
)
|
(1,577
|
)
|
(2,254
|
)
|
(1,863
|
)
|
(4,403
|
)
|
(6,266
|
)
|
||||||||||||
Federal funds purchased
|
588
|
-
|
588
|
(151
|
)
|
(151
|
)
|
(302
|
)
|
|||||||||||||||
Repurchase agreements
|
(35
|
)
|
(30
|
)
|
(65
|
)
|
(80
|
)
|
(54
|
)
|
(134
|
)
|
||||||||||||
Short-term borrowings
|
1,881
|
61
|
1,942
|
(3,456
|
)
|
642
|
(2,814
|
)
|
||||||||||||||||
Long-term debt
|
(218
|
)
|
(10
|
)
|
(228
|
)
|
(1,193
|
)
|
29
|
(1,164
|
)
|
|||||||||||||
Subordinated debt, net
|
10
|
(23
|
)
|
(13
|
)
|
2,593
|
2
|
2,595
|
||||||||||||||||
Junior subordinated debt
|
-
|
1,659
|
1,659
|
-
|
(641
|
)
|
(641
|
)
|
||||||||||||||||
Total FTE interest expense
|
$
|
1,417
|
$
|
1,675
|
$
|
3,092
|
$
|
(2,802
|
)
|
$
|
(11,014
|
)
|
$
|
(13,816
|
)
|
|||||||||
Change in FTE net interest income
|
$
|
16,418
|
$
|
24,797
|
$
|
41,215
|
$
|
15,022
|
$
|
(9,722
|
)
|
$
|
5,300
|
December 31,
|
||||||||||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
2019
|
2018
|
|||||||||||||||
Commercial & industrial
|
$
|
1,265,082
|
$
|
1,155,240
|
$
|
1,121,224
|
$
|
1,112,616
|
$
|
1,158,113
|
||||||||||
Commercial real estate
|
2,807,941
|
2,655,367
|
2,526,813
|
2,331,650
|
2,064,197
|
|||||||||||||||
Paycheck protection program
|
949
|
101,222
|
430,810
|
-
|
-
|
|||||||||||||||
Residential real estate
|
1,649,870
|
1,571,232
|
1,466,662
|
1,445,156
|
1,380,836
|
|||||||||||||||
Indirect auto
|
989,587
|
859,454
|
931,286
|
1,193,635
|
1,216,144
|
|||||||||||||||
Residential solar
|
856,798
|
440,016
|
282,224
|
219,210
|
129,038
|
|||||||||||||||
Home equity
|
314,124
|
330,357
|
387,974
|
444,082
|
474,566
|
|||||||||||||||
Other consumer
|
265,796
|
385,571
|
351,892
|
389,749
|
464,815
|
|||||||||||||||
Total loans
|
$
|
8,150,147
|
$
|
7,498,459
|
$
|
7,498,885
|
$
|
7,136,098
|
$
|
6,887,709
|
(1) |
Loans are summarized by business line which does not align with how the Company assesses credit risk in the estimate for credit losses under CECL.
|
Remaining Maturity at December 31, 2022
|
||||||||||||||||||||||||
(In thousands)
|
C&I
|
CRE
|
Indirect
Auto
|
Other
Consumer
|
Residential
|
Total
|
||||||||||||||||||
Within one year
|
$
|
207,737
|
$
|
12,621
|
$
|
-
|
$
|
11,767
|
$
|
2
|
$
|
232,127
|
||||||||||||
From one to five years
|
371,004
|
514,260
|
300,940
|
173,255
|
13,656
|
1,373,115
|
||||||||||||||||||
From five to fifteen years
|
470,640
|
2,035,443
|
688,647
|
543,141
|
368,627
|
4,106,498
|
||||||||||||||||||
After fifteen years
|
216,650
|
245,617
|
-
|
708,555
|
1,267,585
|
2,438,407
|
||||||||||||||||||
Total
|
$
|
1,266,031
|
$
|
2,807,941
|
$
|
989,587
|
$
|
1,436,718
|
$
|
1,649,870
|
$
|
8,150,147
|
||||||||||||
Interest rate terms on amounts due after one year:
|
||||||||||||||||||||||||
Fixed
|
$
|
687,863
|
$
|
711,532
|
$
|
989,526
|
$
|
1,219,550
|
$
|
1,574,230
|
$
|
5,182,701
|
||||||||||||
Variable
|
$
|
370,431
|
$
|
2,083,788
|
$
|
61
|
$
|
205,401
|
$
|
75,638
|
$
|
2,735,319
|
As of December 31,
|
||||||||||||||||||||||||
2022
|
2021
|
2020
|
||||||||||||||||||||||
(In thousands)
|
Amortized
Cost
|
Fair
Value
|
Amortized
Cost
|
Fair
Value
|
Amortized
Cost
|
Fair
Value
|
||||||||||||||||||
AFS securities:
|
||||||||||||||||||||||||
U.S. treasury
|
$
|
132,891
|
$
|
121,658
|
$
|
73,016
|
$
|
73,069
|
$
|
-
|
$
|
-
|
||||||||||||
Federal agency
|
248,419
|
206,419
|
248,454
|
239,931
|
245,590
|
243,597
|
||||||||||||||||||
State & municipal
|
97,036
|
82,851
|
95,531
|
94,088
|
42,550
|
43,180
|
||||||||||||||||||
Mortgage-backed
|
536,021
|
473,694
|
603,375
|
606,675
|
576,497
|
595,839
|
||||||||||||||||||
Collateralized mortgage obligations
|
669,111
|
588,363
|
623,930
|
621,595
|
426,574
|
437,804
|
||||||||||||||||||
Corporate
|
60,404
|
54,240
|
50,500
|
52,003
|
27,500
|
28,278
|
||||||||||||||||||
Total AFS securities
|
$
|
1,743,882
|
$
|
1,527,225
|
$
|
1,694,806
|
$
|
1,687,361
|
$
|
1,318,711
|
$
|
1,348,698
|
||||||||||||
HTM securities:
|
||||||||||||||||||||||||
Federal agency
|
$
|
100,000
|
$
|
79,322
|
$
|
100,000
|
$
|
95,635
|
$
|
100,000
|
$
|
98,342
|
||||||||||||
Mortgage-backed
|
267,907
|
230,473
|
170,574
|
172,001
|
119,447
|
125,009
|
||||||||||||||||||
Collateralized mortgage obligations
|
274,366
|
249,848
|
138,815
|
140,280
|
182,250
|
190,677
|
||||||||||||||||||
State & municipal
|
277,244
|
253,004
|
323,821
|
327,344
|
214,863
|
222,799
|
||||||||||||||||||
Total HTM securities
|
$
|
919,517
|
$
|
812,647
|
$
|
733,210
|
$
|
735,260
|
$
|
616,560
|
$
|
636,827
|
Less than 1 Year
|
1 Year to 5 Years
|
5 Years to 10 Years
|
Over 10 Years
|
Total
|
||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
$ |
|
%
|
$ |
|
%
|
$ |
|
%
|
$ |
|
%
|
$ |
|
%
|
|||||||||||||||||||||||||
AFS securities:
|
||||||||||||||||||||||||||||||||||||||||
U.S. treasury
|
$
|
-
|
-
|
$
|
108,444
|
1.70
|
%
|
$
|
24,447
|
1.90
|
%
|
$
|
-
|
-
|
$
|
132,891
|
1.73
|
%
|
||||||||||||||||||||||
Federal agency
|
-
|
-
|
70,000
|
0.79
|
%
|
178,419
|
1.08
|
%
|
-
|
-
|
248,419
|
1.00
|
%
|
|||||||||||||||||||||||||||
State & municipal
|
-
|
-
|
46,275
|
1.21
|
%
|
50,761
|
1.53
|
%
|
-
|
-
|
97,036
|
1.38
|
%
|
|||||||||||||||||||||||||||
Mortgage-backed
|
682
|
1.78
|
%
|
93,240
|
1.35
|
%
|
178,944
|
2.28
|
%
|
263,155
|
1.58
|
%
|
536,021
|
1.78
|
%
|
|||||||||||||||||||||||||
Collateralized mortgage obligations
|
-
|
-
|
84,848
|
2.58
|
%
|
89,761
|
1.37
|
%
|
494,502
|
1.94
|
%
|
669,111
|
1.94
|
%
|
||||||||||||||||||||||||||
Corporate
|
-
|
-
|
-
|
-
|
60,404
|
3.92
|
%
|
-
|
-
|
60,404
|
3.92
|
%
|
||||||||||||||||||||||||||||
Total AFS securities
|
$
|
682
|
1.78
|
%
|
$
|
402,807
|
1.59
|
%
|
$
|
582,736
|
1.86
|
%
|
$
|
757,657
|
1.81
|
%
|
$
|
1,743,882
|
1.78
|
%
|
||||||||||||||||||||
HTM securities:
|
||||||||||||||||||||||||||||||||||||||||
Federal agency
|
$
|
-
|
-
|
$
|
-
|
-
|
$
|
100,000
|
1.11
|
%
|
$
|
-
|
-
|
$
|
100,000
|
1.11
|
%
|
|||||||||||||||||||||||
Mortgage-backed
|
-
|
-
|
16
|
7.42
|
%
|
18,380
|
4.02
|
%
|
249,511
|
2.02
|
%
|
267,907
|
2.16
|
%
|
||||||||||||||||||||||||||
Collateralized mortgage obligations
|
-
|
-
|
10,636
|
2.50
|
%
|
101,670
|
3.02
|
%
|
162,060
|
2.81
|
%
|
274,366
|
2.88
|
%
|
||||||||||||||||||||||||||
State & municipal
|
49,986
|
2.48
|
%
|
81,791
|
2.27
|
%
|
58,614
|
1.95
|
%
|
86,853
|
1.84
|
%
|
277,244
|
2.11
|
%
|
|||||||||||||||||||||||||
Total HTM securities
|
$
|
49,986
|
2.48
|
%
|
$
|
92,443
|
2.30
|
%
|
$
|
278,664
|
2.17
|
%
|
$
|
498,424
|
2.25
|
%
|
$
|
919,517
|
2.12
|
%
|
Years Ended December 31,
|
||||||||||||||||||||||||
2022
|
2021
|
2020
|
||||||||||||||||||||||
(In thousands)
|
Average
Balance
|
Yield/Rate
|
Average
Balance
|
Yield Rate
|
Average
Balance
|
Yield/Rate
|
||||||||||||||||||
Demand deposits
|
$
|
3,696,957
|
$
|
3,565,693
|
$
|
2,895,341
|
||||||||||||||||||
Money market deposit accounts
|
2,447,978
|
0.20
|
%
|
2,587,748
|
0.20
|
%
|
2,320,947
|
0.44
|
%
|
|||||||||||||||
NOW deposit accounts
|
1,578,831
|
0.16
|
%
|
1,452,560
|
0.05
|
%
|
1,194,398
|
0.06
|
%
|
|||||||||||||||
Savings deposits
|
1,829,360
|
0.03
|
%
|
1,656,893
|
0.05
|
%
|
1,393,436
|
0.05
|
%
|
|||||||||||||||
Time deposits
|
464,912
|
0.38
|
%
|
577,150
|
0.70
|
%
|
733,073
|
1.40
|
%
|
|||||||||||||||
Total interest-bearing deposits
|
$
|
6,321,081
|
0.16
|
%
|
$
|
6,274,351
|
0.17
|
%
|
$
|
5,641,854
|
0.39
|
%
|
As of December 31,
|
||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Estimated amount of uninsured deposits
|
$
|
3,555,342
|
$
|
4,175,208
|
$
|
3,639,731
|
(In thousands)
|
December 31, 2022
|
|||
Portion of time deposits in excess of insurance limit
|
$
|
20,623
|
||
Time deposits otherwise uninsured with a maturity of:
|
||||
Within three months
|
$
|
4,362
|
||
After three but within six months
|
2,377
|
|||
After six but within twelve months
|
2,176
|
|||
Over twelve months
|
11,708
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Service charges on deposit account
|
$
|
14,630
|
$
|
13,348
|
$
|
13,201
|
||||||
Card services income
|
29,058
|
34,682
|
28,611
|
|||||||||
Retirement plan administration fees
|
48,112
|
42,188
|
35,851
|
|||||||||
Wealth management
|
33,311
|
33,718
|
29,247
|
|||||||||
Insurance services
|
14,696
|
14,083
|
14,757
|
|||||||||
Bank owned life insurance income
|
6,044
|
6,217
|
5,743
|
|||||||||
Net securities (losses) gains
|
(1,131
|
)
|
566
|
(388
|
)
|
|||||||
Other
|
10,858
|
12,992
|
19,254
|
|||||||||
Total noninterest income
|
$
|
155,578
|
$
|
157,794
|
$
|
146,276
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Salaries and employee benefits
|
$
|
187,830
|
$
|
172,580
|
$
|
161,934
|
||||||
Technology and data services
|
35,712
|
34,717
|
32,294
|
|||||||||
Occupancy
|
26,282
|
26,048
|
25,756
|
|||||||||
Professional fees and outside services
|
16,810
|
16,306
|
15,082
|
|||||||||
Office supplies and postage
|
6,140
|
6,006
|
6,138
|
|||||||||
FDIC expenses
|
3,197
|
3,041
|
2,688
|
|||||||||
Advertising
|
2,822
|
2,521
|
2,288
|
|||||||||
Amortization of intangible assets
|
2,263
|
2,808
|
3,395
|
|||||||||
Loan collection and other real estate owned, net
|
2,647
|
2,915
|
3,295
|
|||||||||
Merger expenses
|
967
|
-
|
-
|
|||||||||
Other
|
19,795
|
20,339
|
24,863
|
|||||||||
Total noninterest expense
|
$
|
304,465
|
$
|
287,281
|
$
|
277,733
|
As of December 31,
|
||||||||||||||||||||||||
(Dollars in thousands)
|
2022
|
%
|
2021
|
%
|
2020
|
%
|
||||||||||||||||||
Nonaccrual loans:
|
||||||||||||||||||||||||
Commercial
|
$
|
7,664
|
44
|
%
|
$
|
15,942
|
53
|
%
|
$
|
23,557
|
53
|
%
|
||||||||||||
Residential
|
4,835
|
28
|
%
|
8,862
|
29
|
%
|
13,082
|
29
|
%
|
|||||||||||||||
Consumer
|
1,667
|
10
|
%
|
1,511
|
5
|
%
|
3,020
|
7
|
%
|
|||||||||||||||
Troubled debt restructured loans
|
3,067
|
18
|
%
|
3,970
|
13
|
%
|
4,988
|
11
|
%
|
|||||||||||||||
Total nonaccrual loans
|
$
|
17,233
|
100
|
%
|
$
|
30,285
|
100
|
%
|
$
|
44,647
|
100
|
%
|
||||||||||||
Loans over 90 days past due and still accruing:
|
||||||||||||||||||||||||
Commercial
|
$
|
4
|
-
|
$
|
-
|
-
|
$
|
493
|
16
|
%
|
||||||||||||||
Residential
|
771
|
20
|
%
|
808
|
33
|
%
|
518
|
16
|
%
|
|||||||||||||||
Consumer
|
3,048
|
80
|
%
|
1,650
|
67
|
%
|
2,138
|
68
|
%
|
|||||||||||||||
Total loans over 90 days past due and still accruing
|
$
|
3,823
|
100
|
%
|
$
|
2,458
|
100
|
%
|
$
|
3,149
|
100
|
%
|
||||||||||||
Total nonperforming loans
|
$
|
21,056
|
$
|
32,743
|
$
|
47,796
|
||||||||||||||||||
OREO
|
105
|
167
|
1,458
|
|||||||||||||||||||||
Total nonperforming assets
|
$
|
21,161
|
$
|
32,910
|
$
|
49,254
|
||||||||||||||||||
Total nonaccrual loans to total loans
|
0.21
|
%
|
0.40
|
%
|
0.60
|
%
|
||||||||||||||||||
Total nonperforming loans to total loans
|
0.26
|
%
|
0.44
|
%
|
0.64
|
%
|
||||||||||||||||||
Total nonperforming assets to total assets
|
0.18
|
%
|
0.27
|
%
|
0.45
|
%
|
||||||||||||||||||
Total allowance for loan losses to nonperforming loans
|
478.72
|
%
|
280.98
|
%
|
230.14
|
%
|
||||||||||||||||||
Total allowance for loan losses to nonaccrual loans
|
584.92
|
%
|
303.78
|
%
|
246.38
|
%
|
As of December 31,
|
||||||||||||||||
(Dollars in thousands)
|
2019
|
%
|
2018
|
%
|
||||||||||||
Nonaccrual loans:
|
||||||||||||||||
Commercial
|
$
|
12,379
|
49
|
%
|
$
|
11,804
|
46
|
%
|
||||||||
Residential real estate
|
5,233
|
21
|
%
|
6,526
|
26
|
%
|
||||||||||
Consumer
|
4,046
|
16
|
%
|
4,068
|
16
|
%
|
||||||||||
Troubled debt restructured loans
|
3,516
|
14
|
%
|
3,089
|
12
|
%
|
||||||||||
Total nonaccrual loans
|
$
|
25,174
|
100
|
%
|
$
|
25,487
|
100
|
%
|
||||||||
Loans over 90 days past due and still accruing:
|
||||||||||||||||
Commercial
|
$
|
-
|
-
|
$
|
588
|
12
|
%
|
|||||||||
Residential real estate
|
927
|
25
|
%
|
1,182
|
23
|
%
|
||||||||||
Consumer
|
2,790
|
75
|
%
|
3,315
|
65
|
%
|
||||||||||
Total loans over 90 days past due and still accruing
|
$
|
3,717
|
100
|
%
|
$
|
5,085
|
100
|
%
|
||||||||
Total nonperforming loans
|
$
|
28,891
|
$
|
30,572
|
||||||||||||
OREO
|
1,458
|
2,441
|
||||||||||||||
Total nonperforming assets
|
$
|
30,349
|
$
|
33,013
|
||||||||||||
Total nonaccrual loans to total loans
|
0.35
|
%
|
0.37
|
%
|
||||||||||||
Total nonperforming loans to total loans
|
0.40
|
%
|
0.44
|
%
|
||||||||||||
Total nonperforming assets to total assets
|
0.31
|
%
|
0.35
|
%
|
||||||||||||
Total allowance for loan losses to nonperforming loans
|
252.55
|
%
|
237.16
|
%
|
||||||||||||
Total allowance for loan losses to nonaccrual loans
|
289.84
|
%
|
284.48
|
%
|
(Dollars in thousands)
|
2022
|
2021
|
2020
|
|||||||||
Balance at January 1*
|
$
|
92,000
|
$
|
110,000
|
$
|
75,999
|
||||||
Loans charged-off
|
||||||||||||
Commercial
|
1,870
|
4,638
|
4,005
|
|||||||||
Residential
|
633
|
979
|
1,135
|
|||||||||
Consumer**
|
16,140
|
14,489
|
21,938
|
|||||||||
Total loans charged-off
|
$
|
18,643
|
$
|
20,106
|
$
|
27,078
|
||||||
Recoveries
|
||||||||||||
Commercial
|
$
|
2,430
|
$
|
723
|
$
|
786
|
||||||
Residential
|
852
|
1,069
|
618
|
|||||||||
Consumer**
|
7,014
|
8,571
|
8,541
|
|||||||||
Total recoveries
|
$
|
10,296
|
$
|
10,363
|
$
|
9,945
|
||||||
Net loans charged-off
|
$
|
8,347
|
$
|
9,743
|
$
|
17,133
|
||||||
Provision for loan losses
|
$
|
17,147
|
$
|
(8,257
|
)
|
$
|
51,134
|
|||||
Balance at December 31
|
$
|
100,800
|
$
|
92,000
|
$
|
110,000
|
||||||
Allowance for loan losses to loans outstanding at end of year
|
1.24
|
%
|
1.23
|
%
|
1.47
|
%
|
||||||
Commercial net charge-offs to average loans outstanding
|
(0.01
|
%)
|
0.05
|
%
|
0.04
|
%
|
||||||
Residential net charge-offs to average loans outstanding
|
-
|
-
|
0.01
|
%
|
||||||||
Consumer net charge-offs to average loans outstanding
|
0.12
|
%
|
0.08
|
%
|
0.18
|
%
|
||||||
Net charge-offs to average loans outstanding
|
0.11
|
%
|
0.13
|
%
|
0.23
|
%
|
* |
2020 includes an adjustment of $3.0 million as a result of our January 1, 2020, adoption of Accounting Standards Codification (“ASC”) 326.
|
**
|
Consumer charge-off and recoveries include consumer and home equity.
|
(Dollars in thousands)
|
2019
|
2018
|
||||||
Balance at January 1
|
$
|
72,505
|
$
|
69,500
|
||||
Loans charged-off
|
||||||||
Commercial and agricultural
|
3,151
|
3,463
|
||||||
Residential real estate
|
991
|
913
|
||||||
Consumer
|
28,398
|
29,752
|
||||||
Total loans charged-off
|
$
|
32,540
|
$
|
34,128
|
||||
Recoveries
|
||||||||
Commercial and agricultural
|
$
|
534
|
$
|
1,178
|
||||
Residential real estate
|
141
|
306
|
||||||
Consumer
|
6,913
|
6,821
|
||||||
Total recoveries
|
$
|
7,588
|
$
|
8,305
|
||||
Net loans charged-off
|
$
|
24,952
|
$
|
25,823
|
||||
Provision for loan losses
|
$
|
25,412
|
$
|
28,828
|
||||
Balance at December 31
|
$
|
72,965
|
$
|
72,505
|
||||
Allowance for loan losses to loans outstanding at end of year
|
1.02
|
%
|
1.05
|
%
|
||||
Commercial and agricultural net charge-offs to average loans outstanding
|
0.04
|
%
|
0.03
|
%
|
||||
Residential real estate net charge-offs to average loans outstanding
|
0.01
|
%
|
0.01
|
%
|
||||
Consumer net charge-offs to average loans outstanding
|
0.31
|
%
|
0.34
|
%
|
||||
Net charge-offs to average loans outstanding
|
0.36
|
%
|
0.38
|
%
|
December 31,
|
||||||||||||||||||||||||
2022
|
2021
|
2020
|
||||||||||||||||||||||
(Dollars in thousands)
|
Allowance
|
Category
Percent of Loans
|
Allowance
|
Category
Percent of Loans
|
Allowance
|
Category
Percent of Loans
|
||||||||||||||||||
Commercial
|
$
|
34,722
|
48
|
%
|
$
|
28,941
|
51
|
%
|
$
|
50,942
|
53
|
%
|
||||||||||||
Residential
|
15,127
|
26
|
%
|
18,806
|
27
|
%
|
21,255
|
26
|
%
|
|||||||||||||||
Consumer
|
50,951
|
26
|
%
|
44,253
|
22
|
%
|
37,803
|
21
|
%
|
|||||||||||||||
Total
|
$
|
100,800
|
100
|
%
|
$
|
92,000
|
100
|
%
|
$
|
110,000
|
100
|
%
|
December 31,
|
||||||||||||||||
2019
|
2018
|
|||||||||||||||
(Dollars in thousands)
|
Allowance
|
Category
Percent of Loans
|
Allowance
|
Category
Percent of Loans
|
||||||||||||
Commercial and agricultural
|
$
|
34,525
|
48
|
%
|
$
|
32,759
|
47
|
%
|
||||||||
Residential real estate
|
2,793
|
20
|
%
|
2,568
|
20
|
%
|
||||||||||
Consumer
|
35,647
|
32
|
%
|
37,178
|
33
|
%
|
||||||||||
Total
|
$
|
72,965
|
100
|
%
|
$
|
72,505
|
100
|
%
|
(In thousands)
|
December 31, 2022
|
|||
Within one year
|
$
|
47,744
|
||
After one but within three years
|
4,498
|
|||
After three but within five years
|
901
|
|||
After five years
|
164
|
|||
Total
|
$
|
53,307
|
ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|
Change in interest rates
(in bps points)
|
Percent change in
net interest income
|
||||
+200
|
2.83
|
%
|
|||
+100
|
1.60
|
%
|
|||
-200
|
(3.99
|
%)
|
● |
development of the collective ACL on loans methodology
|
● |
development of the PD regression models
|
● |
continued use and appropriateness of changes made to PD regression and LGD models
|
● |
performance monitoring of the PD regression and LGD models
|
● |
identification and determination of the expected prepayments assumption and the significant assumptions used in the PD regression and LGD models
|
● |
development of the qualitative methodology, including the significant assumptions used in the measurement of select qualitative adjustments
|
● |
analysis of the collective ACL on loans results, trends, and ratios.
|
● |
evaluating the Company’s collective ACL on loans methodology for compliance with U.S. generally accepted accounting principles
|
● |
evaluating judgments made by the Company relative to the development and performance monitoring of the PD regression and LGD models, by comparing
them to relevant Company-specific metrics and trends and the applicable industry practices
|
● |
assessing the conceptual soundness and performance testing of the PD regression and LGD models, by inspecting the model documentation to determine
whether the models are suitable for their intended use
|
● |
evaluating the expected prepayments assumption by comparing to relevant Company-specific metrics and trends and current economic considerations
|
● |
evaluating the selection of economic forecast scenarios, including weighting of the scenarios, and underlying economic variables, by comparing to the
Company’s business environment and relevant industry practices
|
● |
evaluating the length of the period from which historical Company and peer experience was used and the reasonable and supportable forecast period by
comparing them to specific portfolio risk characteristics and trends
|
● |
assessing the composition of the peer group by comparing to Company and specific portfolio risk characteristics
|
● |
determining whether the loan portfolio is segmented by similar risk characteristics by comparing to the Company’s business environment, loan
portfolio categories and sub-categories and relevant industry practices
|
● |
evaluating the methodology used to develop the qualitative adjustments and the effect of those adjustments on the collective ACL on loans by
comparing to relevant credit risk factors, the current economic environment and consistency with credit trends and identified limitations of the underlying quantitative models.
|
● |
cumulative results of the audit procedures
|
● |
qualitative aspects of the Company’s accounting practices
|
● |
potential bias in the accounting estimate.
|
As of December 31,
|
||||||||
2022
|
2021
|
|||||||
(In thousands except share and per share data)
|
||||||||
Assets
|
||||||||
Cash and due from banks
|
$
|
|
$
|
|
||||
Short-term interest-bearing accounts
|
|
|
||||||
Equity securities, at fair value
|
|
|
||||||
Securities available for sale, at fair value
|
|
|
||||||
Securities held to maturity (fair value $
|
|
|
||||||
Federal Reserve and Federal Home Loan Bank stock
|
|
|
||||||
Loans held for sale
|
|
|
||||||
Loans
|
|
|
||||||
Less allowance for loan losses
|
|
|
||||||
Net loans
|
$
|
|
$
|
|
||||
Premises and equipment, net
|
|
|
||||||
Goodwill
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Bank owned life insurance
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
Liabilities
|
||||||||
Demand (noninterest bearing)
|
$
|
|
$
|
|
||||
Savings, NOW and money market
|
|
|
||||||
Time
|
|
|
||||||
Total deposits
|
$
|
|
$
|
|
||||
Short-term borrowings
|
|
|
||||||
Long-term debt
|
|
|
||||||
Subordinated debt, net
|
|
|
||||||
Junior subordinated debt
|
|
|
||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
$
|
|
$
|
|
||||
Stockholders’ equity
|
||||||||
Preferred stock, $
|
$
|
|
$
|
|
||||
Common stock, $
|
|
|
||||||
Additional paid-in-capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Common stock in treasury, at cost,
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
$
|
|
$
|
|
||||
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
Years Ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
(In thousands, except per share data)
|
||||||||||||
Interest, fee and dividend income
|
||||||||||||
Interest and fees on loans
|
$
|
|
$
|
|
$
|
|
||||||
Securities available for sale
|
|
|
|
|||||||||
Securities held to maturity
|
|
|
|
|||||||||
Other
|
|
|
|
|||||||||
Total interest, fee and dividend income
|
$
|
|
$
|
|
$
|
|
||||||
Interest expense
|
||||||||||||
Deposits
|
$
|
|
$
|
|
$
|
|
||||||
Short-term borrowings
|
|
|
|
|||||||||
Long-term debt
|
|
|
|
|||||||||
Subordinated debt
|
|
|
|
|||||||||
Junior subordinated debt
|
|
|
|
|||||||||
Total interest expense
|
$
|
|
$
|
|
$
|
|
||||||
Net interest income
|
$
|
|
$
|
|
$
|
|
||||||
Provision for loan losses
|
|
(
|
)
|
|
||||||||
Net interest income after provision for loan losses
|
$
|
|
$
|
|
$
|
|
||||||
Noninterest income
|
||||||||||||
Service charges on deposit accounts
|
$
|
|
$
|
|
$
|
|
||||||
Card services income
|
|
|
|
|||||||||
Retirement plan administration fees
|
|
|
|
|||||||||
Wealth management
|
|
|
|
|||||||||
Insurance services
|
|
|
|
|||||||||
Bank owned life insurance income
|
|
|
|
|||||||||
Net securities (losses) gains
|
(
|
)
|
|
(
|
)
|
|||||||
Other
|
|
|
|
|||||||||
Total noninterest income
|
$
|
|
$
|
|
$
|
|
||||||
Noninterest expense
|
||||||||||||
Salaries and employee benefits
|
$
|
|
$
|
|
$
|
|
||||||
Technology and data services | ||||||||||||
Occupancy
|
|
|
|
|||||||||
Professional fees and outside services
|
|
|
|
|||||||||
Office supplies and postage
|
|
|
|
|||||||||
FDIC expenses
|
|
|
|
|||||||||
Advertising
|
|
|
|
|||||||||
Amortization of intangible assets
|
|
|
|
|||||||||
Loan collection and other real estate owned, net
|
|
|
|
|||||||||
Merger expenses |
||||||||||||
Other
|
|
|
|
|||||||||
Total noninterest expense
|
$
|
|
$
|
|
$
|
|
||||||
Income before income tax expense
|
$
|
|
$
|
|
$
|
|
||||||
Income tax expense
|
|
|
|
|||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
Earnings per share
|
||||||||||||
Basic
|
$
|
|
$
|
|
$
|
|
||||||
Diluted
|
$
|
|
$
|
|
$
|
|
Years Ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
(In thousands)
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Securities available for sale:
|
||||||||||||
Unrealized net holding (losses) gains arising during the period, gross
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
Tax effect
|
|
|
(
|
)
|
||||||||
Unrealized net holding (losses) gains arising during the period, net
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
Reclassification adjustment for net (gains) in net income, gross
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Tax effect
|
|
|
|
|||||||||
Reclassification adjustment for net (gains) in net income, net
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, gross
|
$
|
|
$
|
|
$
|
|
||||||
Tax effect
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, net
|
$
|
|
$
|
|
$
|
|
||||||
Total securities available for sale, net
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
Cash flow hedges:
|
||||||||||||
Unrealized losses on derivatives (cash flow hedges), gross
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Tax effect
|
|
|
|
|||||||||
Unrealized losses on derivatives (cash flow hedges), net
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Reclassification of net unrealized losses on cash flow hedges to interest expense, gross
|
$
|
|
$
|
|
$
|
|
||||||
Tax effect
|
|
(
|
)
|
(
|
)
|
|||||||
Reclassification of net unrealized losses on cash flow hedges to interest expense, net
|
$
|
|
$
|
|
$
|
|
||||||
Total cash flow hedges, net
|
$
|
|
$
|
|
$
|
|
||||||
Pension and other benefits:
|
||||||||||||
Amortization of prior service cost and actuarial losses, gross
|
$
|
|
$
|
|
$
|
|
||||||
Tax effect
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Amortization of prior service cost and actuarial losses, net
|
$
|
|
$
|
|
$
|
|
||||||
(Increase) decrease in unrecognized actuarial loss, gross
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
Tax effect
|
|
(
|
)
|
(
|
)
|
|||||||
(Increase) decrease in unrecognized actuarial loss, net
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
Total pension and other benefits, net
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
Total other comprehensive (loss) income
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
Comprehensive (loss) income
|
$
|
(
|
)
|
$
|
|
$
|
|
|
Common
Stock
|
Additional
Paid-in-
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
(Loss) Income
|
Common
Stock in
Treasury
|
Total
|
||||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||||||||||
Balance at December 31, 2019
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||||
Cumulative effect adjustment for ASU 2016-13 implementation as of January 1, 2020
|
( |
) | ( |
) | ||||||||||||||||||||
Net income
|
|
|
|
|
|
|
||||||||||||||||||
Cash dividends - $
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Purchase of |
( |
) | ( |
) | ||||||||||||||||||||
Net issuance of
|
|
(
|
)
|
|
|
|
(
|
)
|
||||||||||||||||
Stock-based compensation
|
|
|
|
|
|
|
||||||||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2020
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||
Net income
|
|
|
|
|
|
|
||||||||||||||||||
Cash dividends - $
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Purchase of
|
( |
) | ( |
) | ||||||||||||||||||||
Net issuance of
|
|
(
|
)
|
|
|
|
(
|
)
|
||||||||||||||||
Stock-based compensation
|
|
|
|
|
|
|
||||||||||||||||||
Other comprehensive (loss)
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Balance at December 31, 2021
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||||
Net income
|
|
|
|
|
|
|
||||||||||||||||||
Cash dividends - $
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Purchase of
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Net issuance of
|
|
(
|
)
|
|
|
|
(
|
)
|
||||||||||||||||
Stock-based compensation
|
|
|
|
|
|
|
||||||||||||||||||
Other comprehensive (loss)
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Balance at December 31, 2022
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Years Ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
(In thousands)
|
||||||||||||
Operating activities
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||||||
Provision for loan losses
|
|
(
|
)
|
|
||||||||
Depreciation and amortization of premises and equipment
|
|
|
|
|||||||||
Net amortization on securities
|
|
|
|
|||||||||
Amortization of intangible assets
|
|
|
|
|||||||||
Amortization of operating lease right-of-use assets
|
|
|
|
|||||||||
Excess tax benefit on stock-based compensation
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Stock-based compensation expense
|
|
|
|
|||||||||
Bank owned life insurance income
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Amortization of subordinated debt issuance costs
|
|
|
|
|||||||||
Discount on repurchase of subordinated debt |
( |
) | ||||||||||
Proceeds from sale of loans held for sale
|
|
|
|
|||||||||
Originations of loans held for sale
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net gains on sales of loans held for sale
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net security losses (gains)
|
|
(
|
)
|
|
||||||||
Net (gains) losses on sale of other real estate owned
|
(
|
)
|
|
(
|
)
|
|||||||
Lease termination losses
|
|
|
|
|||||||||
Net change in other assets and other liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net cash provided by operating activities
|
$
|
|
$
|
|
$
|
|
||||||
Investing activities
|
||||||||||||
Net cash used in acquisitions
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Securities available for sale:
|
||||||||||||
Proceeds from maturities, calls and principal paydowns
|
|
|
|
|||||||||
Purchases
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Securities held to maturity:
|
||||||||||||
Proceeds from maturities, calls and principal paydowns
|
|
|
|
|||||||||
Proceeds from sales
|
|
|
|
|||||||||
Purchases
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Equity securities:
|
||||||||||||
Proceeds from calls
|
|
|
|
|||||||||
Purchases
|
(
|
)
|
|
|
||||||||
Other:
|
||||||||||||
Net increase in loans
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Proceeds from Federal Home Loan Bank stock redemption
|
|
|
|
|||||||||
Purchases of Federal Reserve Bank and Federal Home Loan Bank stock
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Proceeds from settlement of bank owned life insurance
|
|
|
|
|||||||||
Purchase of bank owned life insurance | ( |
) | ||||||||||
Purchases of premises and equipment, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Proceeds from sales of other real estate owned
|
|
|
|
|||||||||
Net cash used in investing activities
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Financing activities
|
||||||||||||
Net (decrease) increase in deposits
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
Net increase (decrease) in short-term borrowings
|
|
(
|
)
|
(
|
)
|
|||||||
Proceeds from issuance of subordinated debt
|
|
|
|
|||||||||
Payment of subordinated debt issuance costs
|
|
|
(
|
)
|
||||||||
Repurchase of subordinated debt |
( |
) | ||||||||||
Proceeds from issuance of long-term debt
|
|
|
|
|||||||||
Repayments of long-term debt
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Proceeds from the issuance of shares to employee and other stock plans
|
|
|
|
|||||||||
Cash paid by employer for tax-withholding on stock issuance
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Purchase of treasury stock
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Cash dividends
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net cash (used in) provided by financing activities
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
Net (decrease) increase in cash and cash equivalents
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
Cash and cash equivalents at beginning of year
|
|
|
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
|
$
|
|
$
|
|
Years Ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest expense
|
$
|
|
$
|
|
$
|
|
||||||
Income taxes paid, net of refund
|
|
|
|
|||||||||
Noncash investing activities:
|
||||||||||||
Loans transferred to other real estate owned
|
$
|
|
$
|
|
$
|
|
||||||
Acquisitions:
|
||||||||||||
Fair value of assets acquired
|
$
|
|
$
|
|
$
|
|
Portfolio Segment
|
Class
|
Commercial Loans
|
Commercial & Industrial
Paycheck Protection Program
Commercial Real Estate
|
Consumer Loans
|
Auto
Other Consumer
|
Residential Loans
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Noninterest income
|
||||||||||||
In-Scope of ASC 606:
|
||||||||||||
Service charges on deposit accounts
|
$
|
|
$
|
|
$
|
|
||||||
Card services income
|
|
|
|
|||||||||
Retirement plan administration fees
|
|
|
|
|||||||||
Wealth management
|
|
|
|
|||||||||
Insurance services
|
|
|
|
|||||||||
Other
|
|
|
|
|||||||||
Total noninterest income in-scope of ASC 606
|
$
|
|
$
|
|
$
|
|
||||||
Total noninterest income out-of-scope of ASC 606
|
$
|
|
$
|
|
$
|
|
||||||
Total noninterest income
|
$
|
|
$
|
|
$
|
|
2.
|
Recent Accounting Pronouncements
|
3. |
Acquisitions
|
4. |
Securities
|
(In thousands)
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||||
As of December 31, 2022
|
||||||||||||||||
U.S. treasury |
$ | $ | $ | ( |
) | $ | ||||||||||
Federal agency
|
|
|
(
|
)
|
|
|||||||||||
State & municipal
|
|
|
(
|
)
|
|
|||||||||||
Mortgage-backed:
|
||||||||||||||||
Government-sponsored enterprises
|
|
|
(
|
)
|
|
|||||||||||
U.S. government agency securities
|
|
|
(
|
)
|
|
|||||||||||
Collateralized mortgage obligations:
|
||||||||||||||||
Government-sponsored enterprises
|
|
|
(
|
)
|
|
|||||||||||
U.S. government agency securities
|
|
|
(
|
)
|
|
|||||||||||
Corporate
|
|
|
(
|
)
|
|
|||||||||||
Total AFS securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
As of December 31, 2021
|
||||||||||||||||
U.S. treasury |
$ | $ | $ | ( |
) | $ | ||||||||||
Federal agency
|
|
|
(
|
)
|
|
|||||||||||
State & municipal
|
|
|
(
|
)
|
|
|||||||||||
Mortgage-backed:
|
||||||||||||||||
Government-sponsored enterprises
|
|
|
(
|
)
|
|
|||||||||||
U.S. government securities
|
|
|
(
|
)
|
|
|||||||||||
Collateralized mortgage obligations:
|
||||||||||||||||
Government-sponsored enterprises
|
|
|
(
|
)
|
|
|||||||||||
U.S. government securities
|
|
|
(
|
)
|
|
|||||||||||
Corporate |
( |
) | ||||||||||||||
Total AFS securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Gross realized gains
|
$
|
|
$
|
|
$
|
|
||||||
Gross realized (losses)
|
|
|
|
|||||||||
Net AFS realized gains (losses)
|
$
|
|
$
|
|
$
|
|
(In thousands)
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||||
As of December 31, 2022
|
||||||||||||||||
Federal agency
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Mortgage-backed:
|
||||||||||||||||
Government-sponsored enterprises
|
|
|
(
|
)
|
|
|||||||||||
U.S. government agency securities
|
|
|
(
|
)
|
|
|||||||||||
Collateralized mortgage obligations:
|
||||||||||||||||
Government-sponsored enterprises
|
|
|
(
|
)
|
|
|||||||||||
U.S. government agency securities
|
|
|
(
|
)
|
|
|||||||||||
State & municipal
|
|
|
(
|
)
|
|
|||||||||||
Total HTM securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
As of December 31, 2021
|
||||||||||||||||
Federal agency |
$ | $ | $ | ( |
) | $ | ||||||||||
Mortgage-backed:
|
||||||||||||||||
Government-sponsored enterprises
|
|
|
(
|
)
|
|
|||||||||||
U.S. government agency securities
|
|
|
|
|
||||||||||||
Collateralized mortgage obligations:
|
||||||||||||||||
Government-sponsored enterprises
|
|
|
(
|
)
|
|
|||||||||||
U.S. government agency securities
|
|
|
(
|
)
|
|
|||||||||||
State & municipal
|
|
|
(
|
)
|
|
|||||||||||
Total HTM securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Years Ended
December 31,
|
||||||||
(In thousands)
|
2022
|
2021
|
||||||
Net (losses) and gains recognized on equity securities
|
$
|
(
|
)
|
$
|
|
|||
Less: Net (losses) and gains recognized on equity securities sold during the period |
|
|
||||||
Unrealized (losses) and gains recognized on equity securities still held
|
$
|
(
|
)
|
$
|
|
(In thousands)
|
Amortized
Cost
|
Estimated
Fair Value
|
||||||
AFS debt securities:
|
||||||||
Within one year
|
$
|
|
$
|
|
||||
From one to five years
|
|
|
||||||
From five to ten years
|
|
|
||||||
After ten years
|
|
|
||||||
Total AFS debt securities
|
$
|
|
$
|
|
||||
HTM debt securities:
|
||||||||
Within one year
|
$
|
|
$
|
|
||||
From one to five years
|
|
|
||||||
From five to ten years
|
|
|
||||||
After ten years
|
|
|
||||||
Total HTM debt securities
|
$
|
|
$
|
|
Less Than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||||||||||||||
(In thousands)
|
Fair
Value
|
Unrealized
Losses
|
Number
of
Positions
|
Fair
Value
|
Unrealized
Losses
|
Number
of
Positions
|
Fair
Value
|
Unrealized
Losses
|
Number
of
Positions
|
|||||||||||||||||||||||||||
As of December 31, 2022
|
||||||||||||||||||||||||||||||||||||
AFS securities:
|
||||||||||||||||||||||||||||||||||||
U.S. treasury |
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||||||||||
Federal agency
|
|
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|||||||||||||||||||||||||
State & municipal |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
Mortgage-backed
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||||||||||
Collateralized mortgage obligations
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||||||||||
Corporate |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
Total securities with unrealized losses
|
$
|
|
$
|
(
|
)
|
|
$
|
|
$
|
(
|
)
|
|
$
|
|
$
|
(
|
)
|
|
||||||||||||||||||
HTM securities:
|
||||||||||||||||||||||||||||||||||||
Federal agency
|
$
|
|
$
|
|
|
$
|
|
$
|
(
|
)
|
|
$
|
|
$
|
(
|
)
|
|
|||||||||||||||||||
Mortgage-backed |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
Collateralized mortgage obligations |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
State & municipal
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||||||||||
Total securities with unrealized losses
|
$
|
|
$
|
(
|
)
|
|
$
|
|
$
|
(
|
)
|
|
$
|
|
$
|
(
|
)
|
|
||||||||||||||||||
As of December 31, 2021
|
||||||||||||||||||||||||||||||||||||
AFS securities:
|
||||||||||||||||||||||||||||||||||||
U.S. treasury |
$ | $ | ( |
) | $ | $ | $ | $ | ( |
) | ||||||||||||||||||||||||||
Federal agency
|
|
|
|
(
|
)
|
|
|
|
|
(
|
)
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||
State & municipal
|
( |
) | ( |
) | ||||||||||||||||||||||||||||||||
Mortgage-backed
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||||||||||
Collateralized mortgage obligations
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||||||||||
Corporate |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||
Total securities with unrealized losses
|
$
|
|
$
|
(
|
)
|
|
$
|
|
$
|
(
|
)
|
|
$
|
|
$
|
(
|
)
|
|
||||||||||||||||||
HTM securities:
|
||||||||||||||||||||||||||||||||||||
Federal agency |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||||||||||||
Mortgage-backed
|
( |
) | ( |
) | ||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
State & municipal
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||||||||||
Total securities with unrealized losses
|
$
|
|
$
|
(
|
)
|
|
$
|
|
$
|
(
|
)
|
|
$
|
|
$
|
(
|
)
|
|
At December 31,
|
||||||||
(In thousands)
|
2022
|
2021
|
||||||
Commercial & industrial
|
$
|
|
$
|
|
||||
Commercial real estate
|
|
|
||||||
Paycheck protection program
|
|
|
||||||
Residential real estate
|
|
|
||||||
Indirect auto
|
|
|
||||||
Residential solar
|
|
|
||||||
Home equity
|
|
|
||||||
Other consumer
|
|
|
||||||
Total loans
|
$
|
|
$
|
|
(In thousands)
|
2022
|
2021
|
||||||
Balance at January 1
|
$
|
|
$
|
|
||||
New loans
|
|
|
||||||
Adjustment due to change in composition of related parties
|
(
|
)
|
(
|
)
|
||||
Repayments
|
(
|
)
|
(
|
)
|
||||
Balance at December 31
|
$
|
|
$
|
|
(In thousands)
|
Commercial
Loans
|
Consumer
Loans
|
Residential
|
Total
|
||||||||||||
Balance as of December 31, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Charge-offs
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Recoveries
|
|
|
|
|
||||||||||||
Provision
|
|
|
(
|
)
|
|
|||||||||||
Ending
Balance as of December 31, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
||||||||||||||||
Balance as of December 31, 2020
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Charge-offs
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Recoveries
|
|
|
|
|
||||||||||||
Provision
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||
Ending Balance as of December 31, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Balance as of January 1, 2020 (after adoption of ASC 326) | $ | $ | $ | $ | ||||||||||||
Charge-offs | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Recoveries | ||||||||||||||||
Provision | ||||||||||||||||
Ending Balance as of December 31, 2020 | $ | $ | $ | $ |
(In thousands)
|
31-60 Days
Past Due
Accruing
|
61-90 Days
Past Due
Accruing
|
Greater
Than
90 Days
Past Due
Accruing
|
Total
Past Due
Accruing
|
Nonaccrual
|
Current
|
Recorded
Total
Loans
|
|||||||||||||||||||||
As of December 31, 2022
|
||||||||||||||||||||||||||||
Commercial loans:
|
||||||||||||||||||||||||||||
C&I
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
CRE
|
|
|
|
|
|
|
|
|||||||||||||||||||||
PPP
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total commercial loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Consumer loans:
|
||||||||||||||||||||||||||||
Auto
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Other consumer
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total consumer loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Residential
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Total loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
(In thousands)
|
31-60 Days
Past Due
Accruing
|
61-90 Days
Past Due
Accruing
|
Greater
Than
90 Days
Past Due
Accruing
|
Total
Past Due
Accruing
|
Nonaccrual
|
Current
|
Recorded
Total
Loans
|
|||||||||||||||||||||
As of December 31, 2021
|
||||||||||||||||||||||||||||
Commercial loans:
|
||||||||||||||||||||||||||||
C&I
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
CRE
|
|
|
|
|
|
|
|
|||||||||||||||||||||
PPP
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total commercial loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Consumer loans:
|
||||||||||||||||||||||||||||
Auto
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Other consumer
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total consumer loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Residential
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Total loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
(In thousands)
|
2022
|
2021
|
2020
|
2019
|
2018
|
Prior
|
Revolving
Loans
Amortized
Cost Basis
|
Revolving
Loans
Converted
to Term
|
Total
|
|||||||||||||||||||||||||||
As of December 31, 2022 | ||||||||||||||||||||||||||||||||||||
C&I
|
||||||||||||||||||||||||||||||||||||
By internally assigned grade:
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total C&I
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
CRE
|
||||||||||||||||||||||||||||||||||||
By internally assigned grade:
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total CRE
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
PPP
|
||||||||||||||||||||||||||||||||||||
By internally assigned grade:
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Total PPP
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Auto
|
||||||||||||||||||||||||||||||||||||
By payment activity:
|
||||||||||||||||||||||||||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Nonperforming
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total auto
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Other consumer
|
||||||||||||||||||||||||||||||||||||
By payment activity:
|
||||||||||||||||||||||||||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Nonperforming
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total other consumer
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Residential
|
||||||||||||||||||||||||||||||||||||
By payment activity:
|
||||||||||||||||||||||||||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Nonperforming
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total residential
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Total loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
(In thousands)
|
2021
|
2020
|
2019
|
2018
|
2017
|
Prior
|
Revolving
Loans
Amortized
Cost Basis
|
Revolving
Loans
Converted
to Term
|
Total
|
|||||||||||||||||||||||||||
As of December 31, 2021 | ||||||||||||||||||||||||||||||||||||
C&I
|
||||||||||||||||||||||||||||||||||||
By internally assigned grade:
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total C&I
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
CRE
|
||||||||||||||||||||||||||||||||||||
By internally assigned grade:
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total CRE
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
PPP
|
||||||||||||||||||||||||||||||||||||
By internally assigned grade:
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Total PPP
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Auto
|
||||||||||||||||||||||||||||||||||||
By payment activity:
|
||||||||||||||||||||||||||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Nonperforming
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total auto
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Other consumer
|
||||||||||||||||||||||||||||||||||||
By payment activity:
|
||||||||||||||||||||||||||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Nonperforming
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total other consumer
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Residential
|
||||||||||||||||||||||||||||||||||||
By payment activity:
|
||||||||||||||||||||||||||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Nonperforming
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total residential
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Total loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
Year Ended December 31, 2022
|
Year Ended December 31, 2021
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Number of Contracts
|
Pre-Modification Outstanding Recorded Investment
|
Post-Modification Outstanding Recorded Investment
|
Number of Contracts
|
Pre-Modification Outstanding Recorded Investment
|
Post-Modification Outstanding Recorded Investment
|
||||||||||||||||||
Consumer loans:
|
||||||||||||||||||||||||
Auto
|
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||||||||||||
Total consumer loans
|
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||||||||||||
Residential
|
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||||||||||||
Total TDRs
|
|
$ |
|
$ |
|
|
$ |
|
$ |
|
Year Ended December 31,
2022
|
Year Ended December 31,
2021
|
Year Ended December 31,
2020
|
||||||||||||||||||||||
(Dollars in thousands)
|
Number of
Contracts
|
Recorded
Investment
|
Number of
Contracts
|
Recorded
Investment
|
Number of
Contracts
|
Recorded
Investment
|
||||||||||||||||||
Commercial loans:
|
||||||||||||||||||||||||
C&I
|
|
$
|
|
$ | $ | |||||||||||||||||||
CRE
|
|
|
||||||||||||||||||||||
Total commercial loans
|
|
$
|
|
$ | $ | |||||||||||||||||||
Consumer loans:
|
||||||||||||||||||||||||
Auto
|
|
$
|
|
$ | $ | |||||||||||||||||||
Total consumer loans
|
|
$
|
|
$ | $ | |||||||||||||||||||
Residential
|
|
$
|
|
$ | $ | |||||||||||||||||||
Total TDRs
|
|
$
|
|
$ | $ |
December 31,
|
||||||||
(In thousands)
|
2022
|
2021
|
||||||
Land, buildings and improvements
|
$
|
|
$
|
|
||||
Furniture and equipment
|
|
|
||||||
Premises and equipment before accumulated depreciation
|
$
|
|
$
|
|
||||
Accumulated depreciation
|
|
|
||||||
Total premises and equipment
|
$
|
|
$
|
|
December 31,
|
||||||||
(In thousands)
|
2022
|
2021
|
||||||
Operating lease cost
|
$
|
|
$
|
|
||||
Variable lease cost
|
|
|
||||||
Short-term lease cost
|
|
|
||||||
Sublease income
|
(
|
)
|
(
|
)
|
||||
Total premises and equipment
|
$
|
|
$
|
|
(In thousands)
|
||||
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Thereafter
|
|
|||
Total lease payments
|
$
|
|
||
Less: interest
|
(
|
)
|
||
Present value of lease liabilities
|
$
|
|
December 31,
|
||||||||
(In thousands except for percent and period data)
|
2022
|
2021
|
||||||
Weighted average remaining lease term, in years
|
|
|
||||||
Weighted average discount rate
|
|
%
|
|
%
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||||||
Operating cash flows from operating leases
|
$
|
|
$
|
|
||||
ROU assets obtained in exchange for lease liabilities
|
|
|
(In thousands)
|
||||
January 1, 2022
|
$
|
|
||
Goodwill acquired
|
|
|||
December 31, 2022
|
$
|
|
||
January 1, 2021
|
$
|
|
||
Goodwill acquired
|
|
|||
December 31, 2021
|
$
|
|
December 31,
|
||||||||
(In thousands)
|
2022
|
2021
|
||||||
Core deposit intangibles:
|
||||||||
Gross carrying amount
|
$
|
|
$
|
|
||||
Less: accumulated amortization
|
|
|
||||||
Net carrying amount
|
$
|
|
$
|
|
||||
Identified intangible assets:
|
||||||||
Gross carrying amount
|
$
|
|
$
|
|
||||
Less: accumulated amortization
|
|
|
||||||
Net carrying amount
|
$
|
|
$
|
|
||||
Total intangibles:
|
||||||||
Gross carrying amount
|
$
|
|
$
|
|
||||
Less: accumulated amortization
|
|
|
||||||
Net carrying amount
|
$
|
|
$
|
|
(In thousands)
|
December 31, 2022
|
|||
Within one year
|
$
|
|
||
After one but within two years
|
|
|||
After two but within three years
|
|
|||
After three but within four years
|
|
|||
After four but within five years
|
|
|||
After five years
|
|
|||
Total
|
$
|
|
December 31, |
||||||||||||
(Dollars in thousands)
|
2022
|
2021
|
2020
|
|||||||||
Federal funds purchased:
|
||||||||||||
Balance at year-end
|
$
|
|
$
|
|
$
|
|
||||||
Average during the year
|
|
|
|
|||||||||
Maximum month end balance
|
|
|
|
|||||||||
Weighted average rate during the year
|
|
%
|
|
%
|
|
%
|
||||||
Weighted average rate at year-end
|
|
%
|
|
|
||||||||
Securities sold under repurchase agreements:
|
||||||||||||
Balance at year-end
|
$
|
|
$
|
|
$
|
|
||||||
Average during the year
|
|
|
|
|||||||||
Maximum month end balance
|
|
|
|
|||||||||
Weighted average rate during the year
|
|
%
|
|
%
|
|
%
|
||||||
Weighted average rate at year-end
|
|
%
|
|
%
|
|
%
|
||||||
Other short-term borrowings:
|
||||||||||||
Balance at year-end
|
$
|
|
$
|
|
$
|
|
||||||
Average during the year
|
|
|
|
|||||||||
Maximum month end balance
|
|
|
|
|||||||||
Weighted average rate during the year
|
|
%
|
|
%
|
|
%
|
||||||
Weighted average rate at year-end
|
|
%
|
|
|
%
|
(Dollars in thousands)
|
December 31, 2022
|
December 31, 2021
|
||||||||||||||
Maturity
|
Amount
|
Weighted
Average Rate
|
Amount
|
Weighted
Average Rate
|
||||||||||||
2022
|
$
|
-
|
-
|
$
|
|
|
%
|
|||||||||
2025
|
|
|
%
|
|
|
|||||||||||
2031
|
|
|
%
|
|
|
%
|
||||||||||
Total
|
$
|
|
$
|
|
(Dollars in thousands)
|
December 31, 2022 |
December 31,
2021
|
||||||
Subordinated notes issued June 2020 – fixed interest rate of
|
$ |
$
|
|
|||||
Unamortized debt issuance costs
|
( |
) |
(
|
)
|
||||
Total subordinated debt, net
|
$ |
$
|
|
Description
|
Issuance Date
|
Trust
Preferred
Securities
Outstanding
|
Interest Rate
|
Trust
Preferred
Debt Owed
To Trust
|
Final Maturity Date
|
||||||
CNBF Capital Trust I
|
|
$
|
|
plus
|
$
|
|
|
||||
NBT Statutory Trust I
|
|
|
plus
|
|
|
||||||
NBT Statutory Trust II
|
|
|
plus
|
|
|
||||||
Alliance Financial Capital Trust I
|
|
|
plus
|
|
|
||||||
Alliance Financial Capital Trust II
|
|
|
plus
|
|
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Current
|
||||||||||||
Federal
|
$
|
|
$
|
|
$
|
|
||||||
State
|
|
|
|
|||||||||
Total Current
|
$
|
|
$
|
|
$
|
|
||||||
Deferred
|
||||||||||||
Federal
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
State
|
(
|
)
|
|
(
|
)
|
|||||||
Total Deferred
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
Total income tax expense
|
$
|
|
$
|
|
$
|
|
December 31,
|
||||||||
(In thousands)
|
2022
|
2021
|
||||||
Deferred tax assets:
|
||||||||
Allowance for loan losses
|
$
|
|
$
|
|
||||
Lease liability
|
|
|
||||||
Deferred compensation
|
|
|
||||||
Loan fees
|
|
|
||||||
Stock-based compensation expense
|
|
|
||||||
Unrealized losses on securities |
||||||||
Other
|
|
|
||||||
Total deferred tax assets
|
$
|
|
$
|
|
||||
Deferred tax liabilities:
|
||||||||
Pension benefits
|
$
|
|
$
|
|
||||
Lease right-of-use asset
|
|
|
||||||
Amortization of intangible assets
|
|
|
||||||
Premises and equipment, primarily due to accelerated depreciation
|
|
|
||||||
Other
|
|
|
||||||
Total deferred tax liabilities
|
$
|
|
$
|
|
||||
Net deferred tax asset at year-end
|
$
|
|
$
|
|
||||
Net deferred tax asset at beginning of year
|
|
|
||||||
Increase in net deferred tax asset
|
$
|
|
$
|
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Federal income tax at statutory rate
|
$
|
|
$
|
|
$
|
|
||||||
Tax exempt income
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net increase in cash surrender value of life insurance
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Federal tax credits
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
State taxes, net of federal tax benefit
|
|
|
|
|||||||||
Other, net
|
|
|
(
|
)
|
||||||||
Income tax expense
|
$
|
|
$
|
|
$
|
|
(In thousands)
|
2022
|
2021
|
||||||
Balance at January 1
|
$
|
|
$
|
|
||||
Additions for tax positions of prior years
|
|
|
||||||
Current period tax positions
|
|
|
||||||
Balance at December 31
|
$
|
|
$
|
|
||||
Amount that would affect the effective tax rate if recognized, gross of tax
|
$
|
|
$
|
|
Pension Benefits
|
Other Benefits
|
|||||||||||||||
(In thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Net actuarial loss (gain)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||
Prior service cost (credit)
|
|
|
(
|
)
|
(
|
)
|
||||||||||
Total amounts recognized in AOCI (pre-tax)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
Pension Benefits
|
Other Benefits
|
|||||||||||||||
(In thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Change in benefit obligation:
|
||||||||||||||||
Benefit obligation at beginning of year
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Service cost
|
|
|
|
|
||||||||||||
Interest cost
|
|
|
|
|
||||||||||||
Plan participants’ contributions
|
|
|
|
|
||||||||||||
Actuarial (gain) loss
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||
Benefits paid
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Projected benefit obligation at end of year
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Change in plan assets:
|
||||||||||||||||
Fair value of plan assets at beginning of year
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
(Loss) gain on plan assets
|
(
|
)
|
|
|
|
|||||||||||
Employer contributions
|
|
|
|
|
||||||||||||
Plan participants’ contributions
|
|
|
|
|
||||||||||||
Benefits paid
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Fair value of plan assets at end of year
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Funded (unfunded) status at year end
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
Pension Benefits
|
Other Benefits
|
|||||||||||||||
(In thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Other assets
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Funded status
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
Years Ended December 31,
|
|||
2022
|
2021
|
2020
|
|
Weighted average assumptions:
|
|||
The following assumptions were used to determine benefit obligations:
|
|||
Discount rate
|
|
|
|
Expected long-term return on plan assets
|
|
|
|
Rate of compensation increase
|
|
|
|
Interest rate of credit for cash balance plan
|
|
|
|
The following
assumptions were used to determine net periodic pension cost:
|
|||
Discount rate
|
|
|
|
Expected long-term return on plan assets
|
|
|
|
Rate of compensation increase
|
|
|
|
Interest rate of credit for cash balance plan
|
|
|
|
Pension Benefits
|
Other Benefits
|
|||||||||||||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
2022
|
2021
|
2020
|
||||||||||||||||||
Components of net periodic (benefit) cost:
|
||||||||||||||||||||||||
Service cost
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Interest cost
|
|
|
|
|
|
|
||||||||||||||||||
Expected return on plan assets
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
|
|||||||||||||||
Additional gain due to curtailment
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
Amortization of prior service cost
|
|
|
|
|
|
|
||||||||||||||||||
Amortization of unrecognized net loss
|
|
|
|
|
|
|
||||||||||||||||||
Net periodic pension (benefit) cost
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
|||||||||
Other changes in plan assets and benefit obligations recognized in OCI (pre-tax):
|
||||||||||||||||||||||||
Net loss (gain)
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||
Additional gain due to curtailment
|
|
|
|
|
|
|
||||||||||||||||||
Amortization of prior service cost
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
Amortization of unrecognized net loss
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
|
|||||||||||||||
Total recognized in OCI
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||
Total recognized in net periodic cost (benefit) and OCI, pre-tax
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
(In thousands)
|
Pension
Benefits
|
Other
Benefits
|
||||||
2023
|
$
|
|
$
|
|
||||
2024
|
|
|
||||||
2025
|
|
|
||||||
2026
|
|
|
||||||
2027
|
|
|
||||||
2028 - 2032
|
|
|
Target 2022
|
2022
|
2021
|
|
Cash and cash equivalents
|
|
|
|
Fixed income securities
|
|
|
|
Equities
|
|
|
|
Total
|
|
|
(In thousands)
|
Level 1
|
Level 2
|
December 31,
2022
|
|||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
||||||
Foreign equity mutual funds
|
|
|
|
|||||||||
Equity mutual funds
|
|
|
|
|||||||||
U.S. government bonds
|
|
|
|
|||||||||
Corporate bonds
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
Level 1
|
Level 2
|
December 31,
2021
|
||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
||||||
Foreign equity mutual funds
|
|
|
|
|||||||||
Equity mutual funds
|
|
|
|
|||||||||
U.S. government bonds
|
|
|
|
|||||||||
Corporate bonds
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
|
Number
of Shares
|
Weighted-
Average Grant
Date Fair Value
|
||||||
Unvested at January 1, 2022
|
|
$
|
|
|||||
Forfeited
|
(
|
)
|
|
|||||
Vested
|
(
|
)
|
|
|||||
Granted
|
|
|
||||||
Unvested at December 31, 2022
|
|
$
|
|
(In thousands, except share and per share data)
|
Number
of Shares
|
Weighted
Average
Exercise Price
|
Weighted Average
Remaining
Contractual Term
(in Years)
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding at January 1, 2022
|
|
$
|
|
|||||||||||||
Exercised
|
|
|
||||||||||||||
Expired
|
|
|
||||||||||||||
Outstanding at December 31, 2022
|
|
$
|
|
|
$
|
|
||||||||||
Exercisable at December 31, 2022
|
|
$
|
|
|
$
|
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Proceeds from stock options exercised
|
$
|
|
$
|
|
$
|
|
||||||
Tax benefits related to stock options exercised
|
|
|
|
|||||||||
Intrinsic value of stock options exercised
|
|
|
|
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Unrecognized prior service cost and net actuarial (losses) on pension plans
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Unrealized (losses) on derivatives (cash flow hedges)
|
|
|
(
|
)
|
||||||||
Unrealized net holding (losses) gains on AFS securities
|
(
|
)
|
(
|
)
|
|
|||||||
AOCI
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Actual
|
Regulatory Ratio Requirements
|
|||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Ratio
|
Minimum
Capital
Adequacy
|
Minimum
plus Buffer
|
For
Classification
as Well-
Capitalized
|
|||||||||||||||
As of December 31, 2022
|
||||||||||||||||||||
Tier I Capital (to average assets)
|
||||||||||||||||||||
Company
|
$
|
|
|
%
|
|
%
|
|
%
|
||||||||||||
NBT Bank
|
|
|
%
|
|
%
|
|
%
|
|||||||||||||
Common Equity Tier 1 Capital
|
||||||||||||||||||||
Company
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|||||||||||
NBT Bank
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|||||||||||
Tier I Capital (to risk-weighted assets)
|
||||||||||||||||||||
Company
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|||||||||||
NBT Bank
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|||||||||||
Total Capital (to risk-weighted assets)
|
||||||||||||||||||||
Company
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|||||||||||
NBT Bank
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|||||||||||
As of December 31, 2021
|
||||||||||||||||||||
Tier I Capital (to average assets)
|
||||||||||||||||||||
Company
|
$
|
|
|
%
|
|
%
|
|
%
|
||||||||||||
NBT Bank
|
|
|
%
|
|
%
|
|
%
|
|||||||||||||
Common Equity Tier 1 Capital
|
||||||||||||||||||||
Company
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|||||||||||
NBT Bank
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|||||||||||
Tier I Capital (to risk-weighted assets)
|
||||||||||||||||||||
Company
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|||||||||||
NBT Bank
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|||||||||||
Total Capital (to risk-weighted assets)
|
||||||||||||||||||||
Company
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|||||||||||
NBT Bank
|
|
|
%
|
|
%
|
|
%
|
|
%
|
Years Ended December 31,
|
||||||||||||||||||||||||||||||||||||
2022
|
2021
|
2020
|
||||||||||||||||||||||||||||||||||
(In thousands except per share data)
|
Net
Income
|
Weighted
Average
Shares
|
Per
Share
Amount
|
Net
Income
|
Weighted
Average
Shares
|
Per
Share
Amount
|
Net
Income
|
Weighted
Average
Shares
|
Per
Share
Amount
|
|||||||||||||||||||||||||||
Basic EPS
|
$
|
|
|
$
|
|
$
|
|
|
$
|
|
$
|
|
|
$
|
|
|||||||||||||||||||||
Effect of dilutive securities:
|
||||||||||||||||||||||||||||||||||||
Stock-based compensation
|
|
|
|
|||||||||||||||||||||||||||||||||
Diluted EPS
|
$
|
|
|
$
|
|
$
|
|
|
$
|
|
$
|
|
|
$
|
|
Detail About AOCI Components
|
Amount Reclassified From AOCI
|
Affected Line Item in the Consolidated
Statements of Comprehensive Income (Loss)
|
|||||||||||
(In thousands)
|
Years Ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
|||||||||||
AFS securities:
|
|||||||||||||
(Gains) on AFS securities
|
$
|
|
$
|
|
$
|
(
|
)
|
Net securities (gains) losses
|
|||||
Amortization of unrealized gains related to securities transfer
|
|
|
|
Interest income
|
|||||||||
Tax effect
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Income tax (benefit)
|
|||
Net of tax
|
$
|
|
$
|
|
$
|
|
|||||||
Cash flow hedges:
|
|||||||||||||
Net unrealized losses on cash flow hedges reclassified to interest expense
|
$
|
|
$
|
|
$
|
|
Interest expense
|
||||||
Tax effect
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
Income tax (benefit)
|
||||
Net of tax
|
$
|
|
$
|
|
$
|
|
|||||||
Pension and other benefits:
|
|||||||||||||
Amortization of net losses
|
$
|
|
$
|
|
$
|
|
Other noninterest expense
|
||||||
Amortization of prior service costs
|
|
|
|
Other noninterest expense
|
|||||||||
Tax effect
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Income tax (benefit)
|
|||
Net of tax
|
$
|
|
$
|
|
$
|
|
|||||||
Total reclassifications, net of tax
|
$
|
|
$
|
|
$
|
|
At December 31,
|
||||||||
(In thousands)
|
2022
|
2021
|
||||||
Unused lines of credit
|
$
|
|
$
|
|
||||
Commitments to extend credits, primarily variable rate
|
|
|
||||||
Standby letters of credit
|
|
|
||||||
Loans sold with recourse
|
|
|
(In thousands)
|
Notional
Amount
|
Balance
Sheet
Location
|
Fair
Value
|
Notional
Amount
|
Balance
Sheet
Location
|
Fair
Value
|
||||||||||||
As of December 31, 2022
|
||||||||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||||
Interest rate derivatives
|
$
|
|
|
$
|
|
$
|
|
|
$
|
|
||||||||
Risk participation agreements
|
|
Other assets
|
|
|
Other liabilities
|
|
||||||||||||
Total derivatives not designated as hedging instruments
|
$
|
|
$
|
|
||||||||||||||
Netting adjustments(1)
|
|
|
||||||||||||||||
Net derivatives in the balance sheet
|
$
|
|
$
|
|
||||||||||||||
Derivatives not offset on the balance sheet
|
$
|
|
$
|
|
||||||||||||||
Cash collateral(2)
|
|
|
||||||||||||||||
Net derivative amounts
|
$
|
|
$
|
|
||||||||||||||
As of December 31, 2021
|
||||||||||||||||||
Derivatives not designated as hedging instruments
|
||||||||||||||||||
Interest rate derivatives
|
$
|
|
|
$
|
|
$
|
|
|
$
|
|
||||||||
Risk participation agreements
|
|
Other assets
|
|
|
Other liabilities
|
|
||||||||||||
Total derivatives not designated as hedging instruments
|
$
|
|
$
|
|
||||||||||||||
Netting adjustments(1)
|
( |
) | ||||||||||||||||
Net derivatives in the balance sheet
|
$ |
$ |
||||||||||||||||
Derivatives not offset on the balance sheet
|
$ |
$ |
||||||||||||||||
Cash collateral(2)
|
|
|
||||||||||||||||
Net derivative amounts
|
$
|
|
$
|
|
(1) |
|
(2) |
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Derivatives designated as hedging instruments:
|
||||||||||||
Interest rate derivatives - included component
|
||||||||||||
Amount of loss recognized in OCI
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Amount of loss reclassified from AOCI into interest expense
|
|
|
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Derivatives not designated as hedging instruments:
|
||||||||||||
(Decrease) increase in other income
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
(In thousands)
|
Level 1
|
Level 2
|
Level 3
|
December 31,
2022
|
||||||||||||
Assets:
|
||||||||||||||||
AFS securities
|
||||||||||||||||
U.S. treasury | $ |
$ | $ | $ | ||||||||||||
Federal agency
|
|
|
|
|
|
|
|
|
||||||||
State & municipal
|
|
|
|
|
||||||||||||
Mortgage-backed
|
|
|
|
|
||||||||||||
Collateralized mortgage obligations
|
|
|
|
|
||||||||||||
Corporate
|
|
|
|
|
||||||||||||
Total AFS securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Equity securities
|
|
|
|
|
||||||||||||
Derivatives
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Liabilities:
|
||||||||||||||||
Derivatives
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
(In thousands)
|
Level 1
|
Level 2
|
Level 3
|
December 31,
2021
|
||||||||||||
Assets:
|
||||||||||||||||
AFS securities
|
||||||||||||||||
U.S. treasury
|
$ |
$ |
$ |
$ |
||||||||||||
Federal agency
|
|
|
|
|
|
|
|
|
||||||||
State & municipal
|
|
|
|
|
||||||||||||
Mortgage-backed
|
|
|
|
|
||||||||||||
Collateralized mortgage obligations
|
|
|
|
|
||||||||||||
Corporate | ||||||||||||||||
Total AFS securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Equity securities
|
|
|
|
|
||||||||||||
Derivatives
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Liabilities:
|
||||||||||||||||
Derivatives
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
December 31, 2021
|
|||||||||||||||||||
(In thousands)
|
Fair Value
Hierarchy
|
Carrying
Amount
|
Estimated
Fair Value
|
Carrying
Amount
|
Estimated
Fair Value
|
|||||||||||||||
Financial assets:
|
||||||||||||||||||||
HTM securities
|
2
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||
Net loans
|
3
|
|
|
|
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Time deposits
|
2
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||
Long-term debt
|
2
|
|
|
|
|
|||||||||||||||
Subordinated debt
|
1
|
|
|
|
|
|||||||||||||||
Junior subordinated debt
|
2
|
|
|
|
|
December 31,
|
||||||||
(In thousands)
|
2022
|
2021
|
||||||
Assets
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Equity securities, at estimated fair value
|
|
|
||||||
Investment in subsidiaries, on equity basis
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Total liabilities
|
$
|
|
$
|
|
||||
Stockholders’ equity
|
|
|
||||||
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Dividends from subsidiaries
|
$
|
|
$
|
|
$
|
|
||||||
Management fee from subsidiaries
|
|
|
|
|||||||||
Net securities (losses) gains
|
(
|
)
|
|
(
|
)
|
|||||||
Interest, dividends and other income
|
|
|
|
|||||||||
Total revenue
|
$
|
|
$
|
|
$
|
|
||||||
Operating expenses
|
|
|
|
|||||||||
Income before income tax benefit and equity in undistributed income of subsidiaries
|
$
|
|
$
|
|
$
|
|
||||||
Income tax benefit
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Equity in undistributed income of subsidiaries
|
|
|
|
|||||||||
Net income
|
$
|
|
$
|
|
$
|
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
2022
|
2021
|
2020
|
|||||||||
Operating activities
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||||||
Depreciation and amortization of premises and equipment
|
|
|
|
|||||||||
Excess tax benefit on stock-based compensation
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Stock-based compensation expense
|
|
|
|
|||||||||
Net securities losses (gains)
|
|
(
|
)
|
|
||||||||
Equity in undistributed income of subsidiaries
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Bank owned life insurance income
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Amortization of subordinated debt issuance costs
|
|
|
|
|||||||||
Discount on repurchase of subordinated debt |
( |
) | ||||||||||
Net change in other assets and other liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net cash provided by operating activities
|
$
|
|
$
|
|
$
|
|
||||||
Investing activities
|
||||||||||||
Investment in the Bank
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Proceeds from calls of equity securities
|
|
|
|
|||||||||
Net cash provided by (used in) investing activities
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Financing activities
|
||||||||||||
Proceeds from issuance of subordinated debt
|
$
|
|
$
|
|
$
|
|
||||||
Payment of subordinated debt issuance costs
|
|
|
(
|
)
|
||||||||
Repurchase of subordinated debt |
( |
) | ||||||||||
Proceeds from the issuance of shares to employee and other stock plans
|
|
|
|
|||||||||
Cash paid by employer for tax-withholding on stock issuance
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Purchases of treasury shares
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Cash dividends
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net cash (used in) provided by financing activities
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
Net increase in cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
||||||
Cash and cash equivalents at beginning of year
|
|
|
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
|
$
|
|
$
|
|
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A. |
CONTROLS AND PROCEDURES
|
ITEM 9B. |
OTHER INFORMATION
|
ITEM 9C. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
|
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11. |
EXECUTIVE COMPENSATION
|
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Plan Category
|
A. Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights
|
B. Weighted-
average exercise
price of
outstanding
options, warrants
and rights
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column A)
|
|||||||||
Equity compensation plans approved by stockholders
|
9,100
|
$
|
29.89
|
384,182
|
||||||||
Equity compensation plans not approved by stockholders
|
None
|
None
|
None
|
ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 15. |
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
Agreement and Plan of Merger, dated as of December 5, 2022, by and among NBT Bancorp Inc., NBT Bank, N.A.,
Salisbury Bancorp, Inc. and Salisbury Bank and Trust Company (filed as Exhibit 2.1 to Registrant’s Form 8-K, filed on December 5, 2022, and incorporated herein by reference).
|
|
Restated Certificate of Incorporation of NBT Bancorp Inc. as amended through July 1, 2015 (filed as Exhibit 3.1 to Registrant’s Form 10-Q, filed on August 10, 2015, and incorporated herein by reference).
|
|
Amended and Restated Bylaws of NBT Bancorp Inc. effective May 22, 2018 (filed as
Exhibit 3.1 to Registrant’s Form 8-K, filed on May 23, 2018 and incorporated herein by reference).
|
|
Certificate of Designation of the Series A Junior Participating Preferred Stock (filed
as Exhibit A to Exhibit 4.1 of the Registrant’s Form 8-K, filed on November 18, 2004, and incorporated herein by reference).
|
|
Specimen common stock certificate for NBT’s Bancorp Inc. common stock (filed
as Exhibit 4.3 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-4, filed on December 27, 2005, and incorporated herein by reference).
|
|
Description of Registrant’s Securities (filed as Exhibit 4.2 to the Registrant’s Form
10-K for the year ended December 31, 2019, filed on March 2, 2020, and incorporated herein by reference).
|
|
Subordinated Indenture, dated as of June 23, 2020, between NBT Bancorp
Inc. and U.S. Bank National Association (filed as Exhibit 4.1 to Registrant’s Form 8-K, filed on June 23, 2020 and incorporated herein by reference).
|
|
First Supplemental Indenture, dated as of June 23, 2020, between NBT
Bancorp Inc. and U.S. Bank National Association (filed as Exhibit 4.2 to Registrant’s Form 8-K, filed on June 23, 2020 and incorporated herein by reference).
|
|
Form of 5.000% Fixed-to-Floating Rate Subordinated Notes due 2030
(included in Exhibit 4.4).
|
|
NBT Bancorp Inc. Non-employee Directors Restricted and Deferred Stock Plan (filed as
Exhibit 10.5 to Registrant’s Form 10-K for the year ended December 31, 2008, filed on March 2, 2009, and incorporated herein by reference).*
|
|
Supplemental Executive Retirement Agreement between NBT Bancorp Inc. and Martin A. Dietrich as amended and restated
January 20, 2010 (filed as Exhibit 10.14 to Registrant’s Form 10-K for the year ended December 31, 2009, filed on March 1, 2010, and incorporated herein by reference).*
|
|
Split-Dollar Agreement between NBT Bancorp Inc., NBT Bank, National Association and Martin A. Dietrich made November
10, 2008 (filed as Exhibit 10.1 to Registrant’s Form 10-Q for the quarterly period ended September 30, 2008, filed on November 10, 2008, and incorporated herein by reference).*
|
|
First Amendment dated November 5, 2009 to Split-Dollar Agreement between NBT Bancorp Inc., NBT Bank, National
Association and Martin A. Dietrich made November 10, 2008 (filed as Exhibit 10.6 to Registrant’s Form 10-Q for the quarterly period ended September 30, 2009, filed on November 9, 2009, and incorporated
herein by reference).*
|
|
Second Amendment dated July 28, 2014 to Split-Dollar Agreement between NBT Bancorp Inc., NBT Bank, National
Association, and Martin A. Dietrich made November 10, 2008 (filed as Exhibit 10.1 to Registrant’s Form 8-K, filed on August 1, 2014, and incorporated herein by reference).*
|
|
NBT Bancorp Inc. 2008 Omnibus Incentive Plan (filed as Appendix A of Registrant’s
Definitive Proxy Statement on Form 14A, filed on March 31, 2008, and incorporated herein by reference).*
|
Long-Term Incentive Compensation Plan for Named Executive Officers (filed as Exhibit
10.24 to Registrant’s Form 10-K for the year ended December 31, 2011, filed on February 29, 2012, and incorporated herein by reference).*
|
|
Amended and Restated Supplemental Retirement Agreement and First Amendment to the Supplemental Retirement Agreement
between Alliance Financial Corporation, Alliance Bank, N.A. and Jack H. Webb (filed as Exhibit 10.29 to Registrant’s Form 10-K for the year ended December 31, 2013, filed on March 3, 2014, and
incorporated herein by reference).*
|
|
Employment Agreement, dated December 19, 2016, by and between NBT Bancorp Inc. and John H. Watt, Jr. (filed as Exhibit 10.1 to Registrant’s Form 8-K, filed on December 20, 2016, and incorporated herein by reference).*
|
|
Split-Dollar Agreement between NBT Bancorp Inc., NBT Bank, National Association and John H. Watt, Jr. dated May 9, 2017 (filed as Exhibit 10.1 to Registrant’s Form 10-Q, filed on May 10, 2017, and incorporated herein by reference).*
|
|
Supplemental Executive Retirement Agreement, dated December 19, 2016 by and between NBT Bancorp Inc. and John H.
Watt, Jr. (filed as Exhibit 10.2 to Registrant’s Form 8-K, filed on December 20, 2016, and incorporated herein by reference).*
|
|
Employment Agreement, dated December 19, 2016, by and between NBT Bancorp Inc. and Joseph R. Stagliano (Filed as Exhibit 10.19 to Registrant’s Form 10-K, filed on March 1, 2018, and incorporated herein by reference).*
|
|
Employment Agreement, dated August 5, 2021 by and between NBT Bancorp Inc. and Scott A. Kingsley (Filed as Exhibit 10.1 to Registrant’s Form 10-Q, filed on August 6, 2021, and incorporated herein by reference).*
|
|
Form of Amendment to Employment Agreements, dated September 27, 2017, by and between NBT Bancorp Inc. and John H. Watt,
Jr. and Joseph R. Stagliano, respectively (Filed as Exhibit 10.1 to Registrant’s Form 8-K, filed on September 29, 2017, and incorporated herein by reference).*
|
|
NBT Bancorp Inc. 2018 Omnibus Incentive Plan (filed as Appendix A of Registrant’s
Definitive Proxy Statement on Form 14A, filed on April 6, 2018, and incorporated herein by reference).*
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
* |
Management contract or compensatory plan or arrangement.
|
(b) |
Exhibits to this Form 10-K are attached or incorporated herein by reference as noted above.
|
(c) |
Not applicable.
|
ITEM 16. |
FORM 10-K SUMMARY
|
/s/ John H. Watt, Jr.
|
|
John H. Watt, Jr.
|
|
Chief Executive Officer
|
/s/ Martin A. Dietrich
|
/s/ Heidi M. Hoeller
|
|
Martin A. Dietrich
|
Heidi M. Hoeller, Director
|
|
Chairman and Director
|
Date: March 1, 2023
|
|
Date: March 1, 2023
|
/s/ John H. Watt, Jr.
|
/s/ Andrew S. Kowalczyk III
|
|
John H. Watt, Jr.
|
Andrew S. Kowalczyk III, Director
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
Date: March 1, 2023
|
|
Date: March 1, 2023
|
/s/ Scott A. Kingsley
|
/s/ V. Daniel Robinson II
|
|
Scott A. Kingsley
|
V. Daniel Robinson II, Director
|
|
Chief Financial Officer
|
Date: March 1, 2023
|
|
(Principal Financial Officer)
|
||
Date: March 1, 2023
|
/s/ Annette L. Burns
|
/s/ Matthew J. Salanger
|
|
Annette L. Burns
|
Matthew J. Salanger, Director
|
|
Chief Accounting Officer
|
Date: March 1, 2023
|
|
(Principal Accounting Officer)
|
||
Date: March 1, 2023
|
/s/ Johanna R. Ames
|
/s/ Joseph A. Santangelo
|
|
Johanna R. Ames, Director
|
Joseph A. Santangelo, Director
|
|
Date: March 1, 2023
|
Date: March 1, 2023
|
/s/ J. David Brown
|
/s/ Lowell A. Seifter
|
|
J. David Brown, Director
|
Lowell A. Seifter, Director
|
|
Date: March 1, 2023
|
Date: March 1, 2023
|
/s/ Timothy E. Delaney
|
/s/ Jack H. Webb
|
|
Timothy E. Delaney, Director
|
Jack H. Webb, Director
|
|
Date: March 1, 2023
|
Date: March 1, 2023
|
/s/ James H. Douglas
|
||
James H. Douglas, Director
|
||
Date: March 1, 2023
|
NBT BANCORP INC.
|
||
By:
|
|
|
Name:
|
John H. Watt, Jr.
|
|
Title:
|
President & Chief Executive Officer
|
EXECUTIVE
|
|
|
|
Ruth H. Mahoney
|
Date | |||
Ruth H. Mahoney
|
STATE OF NEW YORK
|
)
|
: ss.:
|
|
COUNTY OF
|
)
|
Notary Public
|
NBT BANCORP INC.
|
||||
By:
|
Date:
|
|||
Title:
|
NBT BANCORP INC.
|
By:
|
||
Name:
|
John H. Watt, Jr
|
|
Title:
|
President & Chief Executive Officer
|
EXECUTIVE
|
|
M. Randolph Sparks
|
Date | |||
M. Randolph Sparks
|
STATE OF NEW YORK
|
)
|
: ss.:
|
|
COUNTY OF
|
)
|
Notary Public
|
NBT BANCORP INC. | ||||
By:
|
Date:
|
|||
Title:
|
Jurisdiction of
Incorporation
|
Names Under Which
Subsidiary does Business
|
|||
NBT Bancorp Inc. Subsidiaries:
|
||||
NBT Bank, National Association
|
Organized in the United States of America
|
NBT Bank
|
||
NBT Financial Services, Inc.
|
Delaware
|
NBT Financial Services
|
||
CNBF Capital Trust I
|
Delaware
|
CNBF Capital Trust I
|
||
NBT Statutory Trust I
|
Delaware
|
NBT Statutory Trust I
|
||
NBT Statutory Trust II
|
Delaware
|
NBT Statutory Trust II
|
||
NBT Holdings, Inc.
|
New York
|
NBT Holdings
|
||
Alliance Financial Capital Trust I
|
Delaware
|
Alliance Financial Capital Trust I
|
||
Alliance Financial Capital Trust II
|
Delaware
|
Alliance Financial Capital Trust II
|
||
NBT Bank, National Association Subsidiaries:
|
||||
NBT Capital Corp.
|
New York
|
NBT Capital Corp
|
||
NBT Capital Management, Inc.
|
New York
|
NBT Capital Management
|
||
Broad Street Property Associates, Inc.
|
New York
|
Broad Street Property Associates
|
||
FNB Financial Services, Inc.
|
Delaware
|
FNB Financial Services
|
||
NBT Financial Services, Inc. Subsidiaries:
|
||||
Pennstar Financial Services, Inc.
|
Pennsylvania
|
Pennstar Financial Services
|
||
EPIC Advisors, Inc.
|
New York
|
EPIC Retirement Plan Services
|
||
NBT Holdings, Inc. Subsidiaries:
|
||||
NBT Insurance Agency, LLC
|
New York
|
NBT Insurance Agency
|
By:
|
/s/ John H. Watt, Jr.
|
|
John H. Watt, Jr.
|
||
Chief Executive Officer
|
By:
|
/s/ Scott A. Kingsley
|
|
Scott A. Kingsley
|
||
Chief Financial Officer
|
/s/ John H. Watt, Jr.
|
||
John H. Watt, Jr.
|
||
Chief Executive Officer
|
||
March 1, 2023
|
/s/ Scott A. Kingsley
|
||
Scott A. Kingsley
|
||
Chief Financial Officer
|
||
March 1, 2023
|
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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Assets | ||
Securities held to maturity fair value | $ 812,647 | $ 735,260 |
Stockholders' equity | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 2,500,000 | 2,500,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 49,651,493 | 49,651,493 |
Common stock in treasury, at cost (in shares) | 6,793,670 | 6,483,481 |
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands |
Common Stock [Member] |
Additional Paid-in-Capital [Member] |
Retained Earnings [Member] |
Accumulated Other Comprehensive (Loss) Income [Member] |
Common Stock in Treasury [Member] |
Total |
Cumulative Effect Adjustment for ASU Implementation [Member]
Common Stock [Member]
|
Cumulative Effect Adjustment for ASU Implementation [Member]
Additional Paid-in-Capital [Member]
|
Cumulative Effect Adjustment for ASU Implementation [Member]
Retained Earnings [Member]
|
Cumulative Effect Adjustment for ASU Implementation [Member]
Accumulated Other Comprehensive (Loss) Income [Member]
|
Cumulative Effect Adjustment for ASU Implementation [Member]
Common Stock in Treasury [Member]
|
Cumulative Effect Adjustment for ASU Implementation [Member] |
---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2019 | $ 497 | $ 576,708 | $ 696,214 | $ (19,026) | $ (133,996) | $ 1,120,397 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 0 | 0 | 104,388 | 0 | 0 | 104,388 | ||||||
Cash dividends | 0 | 0 | (47,207) | 0 | 0 | (47,207) | ||||||
Purchase of treasury shares | 0 | 0 | 0 | 0 | (7,980) | (7,980) | ||||||
Net issuance of shares to employee and other stock plans | 0 | (3,207) | 0 | 0 | 1,542 | (1,665) | ||||||
Stock-based compensation | 0 | 4,581 | 0 | 0 | 0 | 4,581 | ||||||
Other comprehensive income (loss) | 0 | 0 | 0 | 19,443 | 0 | 19,443 | ||||||
Balance at Dec. 31, 2020 | 497 | 578,082 | 749,056 | 417 | (140,434) | 1,187,618 | ||||||
Balance (ASU 2016-13 [Member]) at Dec. 31, 2020 | $ 0 | $ 0 | $ (4,339) | $ 0 | $ 0 | $ (4,339) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 0 | 0 | 154,885 | 0 | 0 | 154,885 | ||||||
Cash dividends | 0 | 0 | (47,738) | 0 | 0 | (47,738) | ||||||
Purchase of treasury shares | 0 | 0 | 0 | 0 | (21,714) | (21,714) | ||||||
Net issuance of shares to employee and other stock plans | 0 | (5,520) | 0 | 0 | 2,269 | (3,251) | ||||||
Stock-based compensation | 0 | 4,414 | 0 | 0 | 0 | 4,414 | ||||||
Other comprehensive income (loss) | 0 | 0 | 0 | (23,761) | 0 | (23,761) | ||||||
Balance at Dec. 31, 2021 | 497 | 576,976 | 856,203 | (23,344) | (159,879) | 1,250,453 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 0 | 0 | 151,995 | 0 | 0 | 151,995 | ||||||
Cash dividends | 0 | 0 | (49,765) | 0 | 0 | (49,765) | ||||||
Purchase of treasury shares | 0 | 0 | 0 | 0 | (14,713) | (14,713) | ||||||
Net issuance of shares to employee and other stock plans | 0 | (3,653) | 0 | 0 | 1,397 | (2,256) | ||||||
Stock-based compensation | 0 | 4,530 | 0 | 0 | 0 | 4,530 | ||||||
Other comprehensive income (loss) | 0 | 0 | 0 | (166,690) | 0 | (166,690) | ||||||
Balance at Dec. 31, 2022 | $ 497 | $ 577,853 | $ 958,433 | $ (190,034) | $ (173,195) | $ 1,173,554 |
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Consolidated Statements of Changes in Stockholders' Equity [Abstract] | |||
Cash dividends - per share (in dollars per share) | $ 1.16 | $ 1.1 | $ 1.08 |
Purchase of treasury shares (in shares) | 400,000 | 604,637 | 263,507 |
Net issuance of shares to employee benefit plans and other stock plans (in shares) | 89,811 | 143,555 | 95,990 |
Summary of Significant Accounting Policies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
1. Summary of Significant Accounting Policies
The accounting and reporting policies of NBT Bancorp Inc. (“NBT Bancorp”) and its subsidiaries, NBT Bank, National Association (“NBT Bank” or the “Bank”), NBT Financial
Services, Inc. and NBT Holdings, Inc., conform, in all material respects, with generally accepted accounting principles in the United States of America
(“GAAP”) and to general practices within the banking industry. Collectively, NBT Bancorp and its subsidiaries are referred to herein as (“the Company”).
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial
statements and accompanying notes. Actual results could differ from these estimates and such differences could be material to the financial statements.
Estimates associated with the allowance for credit losses, pension accounting, provision for income taxes, fair values of financial instruments and status of contingencies
are particularly susceptible to material change in the near term.
The following is a description of significant policies and practices:
Consolidation
The accompanying consolidated financial statements include the accounts of NBT Bancorp and its wholly-owned subsidiaries mentioned above. All
material intercompany transactions have been eliminated in consolidation. Amounts previously reported in the consolidated financial statements are reclassified whenever necessary to conform to the current year’s presentation. The Company combined ATM
and debit card fees with card related income previously reported in Other noninterest income which is now disclosed as Card services income. The Company reclassified Data processing and communications expense into Technology and data services
expense. The Company reclassified Equipment expense into Occupancy expense and Technology and data services expense. In the “Parent Company Financial Information,” the investment in subsidiaries is recorded using the equity method of accounting.
The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable
interest entity under GAAP. Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the
right to receive residual returns and the right to make decisions about the entity’s activities. The Company consolidates voting interest entities in which it has all, or at least a majority of, the voting interest. As defined in applicable accounting
standards, variable interest entities (“VIEs”) are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when the Company has both the power and ability to direct the
activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company’s wholly-owned subsidiaries CNBF
Capital Trust I, NBT Statutory Trust I, NBT Statutory Trust II, Alliance Financial Capital Trust I and Alliance Financial Capital Trust II are VIEs for which the Company is not the primary beneficiary. Accordingly, the accounts of these entities are
not included in the Company’s consolidated financial statements.
Segment Reporting
The Company’s operations are primarily in the community banking industry and include the provision of traditional banking services. The Company also provides other
services through its subsidiaries such as insurance, retirement plan administration and trust administration. The Company operates in the geographical regions of central and upstate New York, northeastern Pennsylvania, southern New Hampshire, western
Massachusetts, Vermont, southern Maine and central Connecticut. The Company has no reportable operating segments.
Cash Equivalents
The Company considers amounts due from correspondent banks, cash items in process of collection and institutional money market mutual funds to be cash equivalents for
purposes of the consolidated statements of cash flows.
Securities
The Company classifies its securities at date of purchase as either held to maturity (“HTM”), available for sale (“AFS”) or equity. HTM debt securities are those that the
Company has the ability and intent to hold until maturity. AFS debt securities are securities that are not classified as HTM. AFS securities are recorded at
fair value. Unrealized holding gains and losses, net of the related tax effect, on AFS securities are excluded from earnings and are reported in the consolidated statements of changes in stockholders’ equity and the consolidated statements of
comprehensive income as a component of accumulated other comprehensive income or loss (“AOCI”). HTM securities are recorded at amortized cost. Equity securities are recorded at fair value, with net unrealized gains and losses recognized in
income. Transfers of securities between categories are recorded at fair value at the date of transfer. Non-marketable equity securities are carried at cost. Equity securities without readily determinable fair values are carried at cost. The Company
performs a qualitative assessment on equity securities to determine whether the investments are impaired and downward or upward adjustments are recognized through the income statement.
Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to yield using the interest method. Dividend and interest income
are recognized when earned. Realized gains and losses on securities sold are derived using the specific identification method for determining the cost of securities sold.
Allowance for Credit Losses –HTM Debt Securities
With respect to its HTM debt securities, the Company is required to utilize the Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) approach to estimate expected credit losses. Management measures
expected credit losses on HTM debt securities on a collective basis by major security types that share similar risk characteristics, such as (as applicable): internal or external (third-party) credit score or credit ratings, risk ratings or
classification, financial asset type, collateral type, size, effective interest rate, term, geographical location, industry of the borrower, vintage, historical or expected credit loss patterns, and reasonable and supportable forecast periods.
Management classifies the HTM portfolio into the following major security types: U.S. government agency or U.S. government-sponsored mortgage-backed and collateralized mortgage obligations securities, and state and municipal debt securities.
The mortgage-backed and collateralized mortgage obligations HTM securities are issued by U.S. government entities and agencies. These securities are
either explicitly and/or implicitly guaranteed by the U.S. government as to timely repayment of principal and interest, are highly rated by major rating agencies, and have a long history of zero credit losses. Therefore, the Company did not record an
allowance for credit loss for these securities.
State and municipal bonds generally carry a Moody’s rating of A to AAA. In addition, the Company has a limited amount of New York state local
municipal bonds that are not rated. The estimate of expected credit losses on the HTM portfolio is based on the expected cash flows of each individual bond over its contractual life and considers historical credit loss information, current conditions
and reasonable and supportable forecasts. Given the rarity of municipal defaults and losses, the Company utilized Moody’s Municipal Loss Forecast Model as the sole source of municipal default and loss rates which provides decades of data across all
municipal sectors and geographies. As with the loan portfolio, cash flows are forecast over a 6-quarter period under various weighted economic conditions, with a reversion to long-term average economic conditions over a 4-quarter period on a
straight-line basis. Management may exercise discretion to make adjustments based on environmental factors. The Company determined that the expected credit loss on its HTM municipal bond portfolio was immaterial and therefore no allowance for credit losses was recorded.
Allowance for Credit Losses –AFS Debt Securities
The impairment model for AFS debt securities differs from the CECL approach utilized for HTM debt securities because AFS debt securities are measured
at fair value rather than amortized cost. For AFS debt securities in an unrealized loss position, the Bank first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its
amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For AFS debt securities that do not meet the aforementioned criteria, in
making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, adverse conditions specifically related to the security, failure of the issuer of the
debt security to make scheduled interest or principal payments, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost
basis of the security. The cash flows should be estimated using information relevant to the collectability of the security, including information about past events, current conditions and reasonable and supportable forecasts. If the present value of
cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any
impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.
Investments in Federal Reserve Bank and Federal Home Loan Bank (“FHLB”) stock are required for membership in those organizations and are carried at cost since there is no
market value available. The FHLB New York continues to pay dividends and repurchase stock. As such, the Company has not recognized any impairment on its holdings of Federal Reserve Bank and FHLB stock.
Loan Held for Sale and Loan Servicing
Loans held for sale are recorded at the lower of cost or fair value on an individual basis. Loan sales are recorded when the sales are funded. Gains and losses on sales of
loans held for sale are included in other noninterest income in the Consolidated Statements of Income. Mortgage loans held for sale are generally sold with servicing rights retained. Mortgage servicing rights are recorded at fair value upon sale of the
loan, and are amortized in proportion to and over the period of estimated net servicing income.
Loans
Loans are recorded at their current unpaid principal balance, net of unearned income and unamortized loan fees and expenses, which are amortized under the effective
interest method over the estimated lives of the loans. Interest income on loans is accrued based on the principal amount outstanding.
For all loan classes within the Company’s loan portfolio, loans are placed on nonaccrual status when timely collection of principal and/or interest in accordance with
contractual terms is in doubt. Loans are transferred to nonaccrual status generally when principal or interest payments become over ninety days
delinquent, unless the loan is well secured and in the process of collection or sooner when management concludes circumstances indicate that borrowers may be unable to meet contractual principal or interest payments. When a loan is transferred to a
nonaccrual status, all interest previously accrued in the current period but not collected is reversed against interest income in that period. Interest accrued in a prior period and not collected is charged-off against the allowance for credit losses.
If ultimate repayment of a nonaccrual loan is expected, any payments received are applied in accordance with contractual terms. If ultimate repayment of principal is not
expected, any payment received on a nonaccrual loan is applied to principal until ultimate repayment becomes expected. For all loan classes within the Company’s loan portfolio, nonaccrual loans are returned to accrual status when they become current as
to principal and interest and demonstrate a period of performance under the contractual terms and, in the opinion of management, are fully collectible as to principal and interest. For loans in all portfolios, the principal amount is charged off in
full or in part as soon as management determines, based on available facts, that the collection of principal in full or in part is improbable. For Commercial loans, management considers specific facts and circumstances relative to individual credits in
making such a determination. For Consumer and Residential loan classes, management uses specific guidance and thresholds from the Federal Financial Institutions Examination Council’s Uniform Retail Credit Classification and Account Management Policy.
A loan is considered to be a troubled debt restructuring (“TDR”) when the Company
grants a concession to the borrower because of the borrower’s financial condition that the Company would not otherwise consider. Such concessions generally include one or a combination of the following: an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a temporary reduction in the interest rate; or a change in scheduled payment
amount. TDR loans are nonaccrual loans; however, they can be returned to accrual status after a period of performance, generally evidenced by six months
of compliance with their modified terms.
Allowance for Credit Losses - Loans
The CECL approach requires an estimate of the credit losses expected over the life of a loan (or pool of loans). The allowance for credit losses is a
valuation account that is deducted from, or added to, the loans’ amortized cost basis to present the net, lifetime amount expected to be collected on the loans. Loan losses are charged off against the allowance when management believes a loan balance
is confirmed to be uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.
Management estimates the allowance balance using relevant information, from internal and external sources, related to past events, current conditions,
and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss
experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience is used. Adjustments to historical loss information is made for
differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level or term as well as changes in environmental conditions, such as changes in unemployment rates, production metrics,
property values, or other relevant factors. Company historical loss experience is supplemented with peer information when there is insufficient loss data for the Company. Peer selection is based on a review of institutions with comparable loss
experience as well as loan yield, bank size, portfolio concentration and geography. Finally, the Company considers forecasts about future economic conditions that are reasonable and supportable. Significant management judgment is required at various
points in the measurement process.
Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit
losses. Management developed segments for estimating loss based on type of borrower and collateral which is generally based upon federal call report segmentation and have been combined or subsegmented as needed to ensure loans of similar risk profiles
are appropriately pooled.
The following table illustrates the portfolio and class segments for the Company’s loan portfolio:
Commercial Loans
The Company offers a variety of commercial loan products. The Company’s underwriting analysis for commercial loans typically includes credit
verification, independent appraisals, a review of the borrower’s financial condition and a detailed analysis of the borrower’s underlying cash flows.
Commercial and Industrial (“C&I”) – The Company offers a
variety of loan options to meet the specific needs of our C&I customers including term loans, time notes and lines of credit. Such loans are made available to businesses for working capital needs and are typically collateralized by business assets
such as equipment, accounts receivable and perishable agricultural products, which are exposed to industry price volatility. To reduce these risks, management also attempts to obtain personal guarantees of the owners or to obtain government loan
guarantees to provide further support.
Paycheck Protection Program (“PPP”) – Section 1102 of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) created the Paycheck Protection Program, a program administered by the Small Business Administration (the “SBA”) to
provide loans to small businesses for payroll and other basic expenses during the coronavirus (“COVID-19”) pandemic. The Company has been a participant in the PPP as a lender. Loans made under the PPP are fully guaranteed by the SBA, whose
guarantee is backed by the full faith and credit of the United States government. PPP covered loans also afford borrowers forgiveness up to the principal amount of the PPP covered loan, plus accrued interest, if the loan proceeds are used to retain
workers and maintain payroll or to make certain mortgage interest, lease and utility payments, and certain other criteria are satisfied. The SBA will reimburse PPP lenders for any amount of a PPP covered loan that is forgiven, and PPP lenders will
not be held liable for any representations made by PPP borrowers in connection with their requests for loan forgiveness. Lenders receive pre-determined fees for processing and servicing PPP loans. In addition, PPP loans are risk-weighted at zero
percent under the generally applicable Standardized Approach used to calculate risk-weighted assets for regulatory capital purposes. The Company processed approximately 6,100 loans totaling $835 million in relief. As of December 31, 2022 total forgiveness and paydown is
equal to 99% of the original balance.
Commercial Real Estate (“CRE”) – The Company offers CRE
loans to finance real estate purchases, refinancing’s, expansions and improvements to commercial and agricultural properties. CRE loans are loans that are secured by liens on real estate, which may include both owner-occupied and nonowner-occupied
properties, such as apartments, commercial structures, health care facilities and other facilities. The Company’s underwriting analysis includes credit verification, independent appraisals, a review of the borrower’s financial condition and a detailed
analysis of the borrower’s underlying cash flows. These loans are typically originated in amounts of no more than 80% of the appraised value
of the property. Government loan guarantees may be obtained to provide further support for agricultural property.
Consumer Loans
The Company offers a variety of Consumer loan products including Auto and Other Consumer loans.
Auto – The Company provides both direct and indirect
financing of automobiles (“Auto”). The Company maintains relationships with many dealers primarily in the communities that we serve. Through these relationships, the Company primarily finances the purchases of automobiles indirectly through dealer
relationships. Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from to six years, based upon the nature of the collateral and the size of the loan.
Other Consumer – The Other Consumer loan segment consists primarily of unsecured consumer loans, residential solar loans and direct consumer loans. The Company offers unsecured consumer loans across a national footprint originated through our
relationships with national technology-driven consumer lending companies to finance such things as dental and medical procedures, K-12 tuition, solar energy installations and other consumer purpose loans. Advances of credit through this business
line are subject to the Company’s underwriting standards including criteria such as FICO score and debt to income thresholds. In 2017, the Company partnered with Sungage Financial, Inc. to offer financing to consumers for solar ownership with the
program tailored for delivery through solar installers. Advances of credit through this business line are to prime borrowers and are subject to the Company’s underwriting standards. Typically, the Company collects origination fees that are deferred
and recognized into interest income over the estimated life of the loan. The Company offers a variety of direct consumer installment loans to finance various personal expenditures. In addition to installment loans, the Company also offers personal
lines of credit, overdraft protection, debt consolidation, education and other uses. Direct consumer installment loans carry a fixed rate of interest with principal repayment terms typically ranging from to fifteen years, based upon the nature of the collateral
and the size of the loan. Consumer installment loans are often secured with collateral consisting of a perfected lien on the asset being purchased or a perfected lien on a consumer’s deposit account. Risk is reduced through underwriting criteria,
which include credit verification, appraisals, a review of the borrower’s financial condition and personal cash flows. A security interest, with title insurance when necessary, is taken in the underlying real estate.
Residential
Residential loans consist primarily of loans secured by a first or second mortgage on primary residences, home equity loans and lines of credit in
first and second lien positions and residential construction loans. We originate adjustable-rate and fixed rate, one-to-four-family residential loans for the construction or purchase of a residential property or the refinancing of a mortgage. These
loans are collateralized by properties located in the Company’s market area. Loans on one-to-four-family residential are generally originated in amounts of no more than 85% of the purchase price or appraised value (whichever is lower) or have private mortgage insurance. Mortgage title insurance and hazard insurance are normally required. Construction loans have
a unique risk because they are secured by an incomplete dwelling. This risk is reduced through periodic site inspections, including one at each loan draw period. For home equity loans, consumers are able to borrow up to 85% of the equity in their homes and are generally tied to Prime with a ten-year draw followed by a fifteen-year amortization. These loans carry a higher
risk than first mortgage residential loans as they are often in a second position with respect to collateral.
Historical credit loss experience for both the Company and segment-specific peers provides the basis for the estimation of expected credit losses,
where observed credit losses are converted to probability of default rate (“PD”) curves through the use of segment-specific loss given default (“LGD”) risk factors that convert default rates to loss severity based on industry-level, observed
relationships between the two variables for each asset class, primarily due to the nature of the underlying collateral. These risk factors were assessed for reasonableness against the Company’s own loss experience and adjusted in certain cases when the
relationship between the Company’s historical default and loss severity deviate from that of the wider industry. The historical PD curves, together with corresponding economic conditions, establish a quantitative relationship between economic
conditions and loan performance through an economic cycle.
Using the historical relationship between economic conditions and loan performance, management’s expectation of future loan performance is
incorporated using externally developed economic forecasts which are probabilistically weighted to reflect potential forecast inaccuracy and model limitations. These forecasts are applied over a period that management has determined to be reasonable
and supportable. Beyond the period over which management can develop or source a reasonable and supportable forecast, the model will revert to long-term average economic conditions using a straight-line, time-based methodology.
The allowance for credit losses is measured on a collective (pool) basis, with both a quantitative and qualitative analysis that is applied on a
quarterly basis, when similar risk characteristics exist. The respective quantitative allowance for each segment is measured using an econometric, PD/LGD modeling methodology in which distinct, segment-specific multi-variate regression models are
applied to multiple, probabilistically weighted external economic forecasts. Under the discounted cash flows methodology, expected credit losses are estimated over the effective life of the loans by measuring the difference between the net present
value of modeled cash flows and amortized cost basis. Contractual cash flows over the contractual life of the loans are the basis for modeled cash flows, adjusted for modeled defaults and expected prepayments and discounted at the loan-level stated
interest rate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a TDR will be executed with an individual borrower
or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.
After quantitative considerations, management applies additional qualitative adjustments so that the allowance for credit losses is reflective of the
estimate of lifetime losses that exist in the loan portfolio at the balance sheet date. Qualitative considerations include limitations inherent in the quantitative model; trends experienced in nonperforming and delinquent loans; changes in value of
underlying collateral; changes in lending policies and procedures; nature and composition of loans; portfolio concentrations that may affect loss experience across one or more components of the portfolio; the experience, ability and depth of lending
management and staff; the Company’s credit review system; and the effect of external factors; such as competition, legal and regulatory requirements.
Loans that do not share risk characteristics and meet materiality criteria are evaluated on an individual basis and are excluded from the pooled
evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. If the loan is not collateral dependent, the
allowance for credit losses related to individually assessed loans is based on discounted expected cash flows using the loan’s initial effective interest rate. Generally, individually assessed loans are collateral dependent.
A loan for which the terms have been modified resulting in a concession, and for
which the borrower is experiencing financial difficulties is considered to be a TDR. The allowance for credit losses on a TDR is measured using the same method as all other loans held for investment, except that the original interest rate is used
to discount the expected cash flows, not the rate specified within the restructuring. If the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral, then management uses the current fair value of the
collateral, less selling costs. If management determines that the value of the modified loan is less than the recorded investment in the loan, a write-down would be recorded.
Allowance for Credit Losses on Off-Balance Sheet Credit Exposures
The Company estimates expected credit losses over the contractual period in which the Company has exposure to credit risk via a contractual obligation
to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted as an expense in other noninterest expense. The estimate includes consideration of
the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated lives. Estimating credit losses on unfunded commitments requires the Bank to consider the following categories of
off-balance sheet credit exposure: unfunded commitments to extend credit, unfunded lines of credit, and standby letters of credit. Each of these unfunded commitments is then analyzed for a probability of funding to calculate a probable funding amount.
The life of loan loss factor by related portfolio segment from the loan allowance for credit loss calculation is then applied to the probable funding amount to calculate a reserve on unfunded commitments.
Accrued Interest Receivable
Accrued interest receivable balances are presented separately within other assets balance sheet line item. The Company has excluded interest
receivable that is included in amortized cost of financing receivables from related disclosures requirements and accrued interest receivable is written off by reversing interest income. For loans, write off typically occurs upon becoming over 90 to 120 days past due and therefore the
amount of such write offs are immaterial. Historically, the Company has not experienced uncollectible accrued interest receivable on investment securities.
Premises and Equipment
Premises and equipment are stated at cost, less accumulated depreciation. Depreciation of premises and equipment is determined using the straight-line method over the
estimated useful lives of the respective assets. Expenditures for maintenance, repairs and minor replacements are charged to expense as incurred.
Leases
The Company determines if a lease is present at the inception of an agreement. Right-of-use (“ROU”) assets and lease liabilities are recognized at lease commencement based
on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental borrowing rate at the lease commencement date. ROU assets and operating lease liabilities, are included in other assets and other
liabilities, respectively, on the consolidated balance sheets. Leases with original terms of 12 months or less are recognized in profit or loss on a
straight-line basis over the lease term.
Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make
lease payments arising from the lease. ROU assets are further adjusted for lease incentives. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized
on a straight-line basis over the lease term, and is recorded in occupancy expense in the consolidated statements of income.
The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, non-lease components and other
non-components, such as common area maintenance charges, real estate taxes and insurance are not included in the measurement of the lease liability since they are generally able to be segregated. Our leases relate primarily to office space and bank
branches, and some contain options to renew the lease. These options to renew are generally not considered reasonably certain to exercise, and are therefore not included in the lease term until such time that the option to renew is reasonably certain.
Other Real Estate Owned
Other real estate owned (“OREO”) consists of properties acquired through foreclosure or by acceptance of a deed in lieu of foreclosure. These assets are recorded at the
lower of fair value of the asset acquired less estimated costs to sell or “cost” (defined as the fair value at initial foreclosure). At the time of foreclosure, or when foreclosure occurs in-substance, the excess, if any, of the loan over the fair
market value of the assets received, less estimated selling costs, is charged to the allowance for loan losses and any subsequent valuation write-downs are charged to other expense. In connection with the determination of the allowance for loan losses
and the valuation of OREO, management obtains appraisals for properties. Operating costs associated with the properties are charged to expense as incurred. Gains on the sale of OREO are included in income when title has passed and the sale has met the
minimum down payment requirements prescribed by GAAP. The balance of OREO is recorded in other assets on the consolidated balance sheets.
Goodwill and Other Intangible Assets
Goodwill represents the cost of acquired business in excess of the fair value of the related net assets acquired. Goodwill is not amortized but tested at the reporting
unit level for impairment on an annual basis and on an interim basis or when events or circumstances dictate. The Company has elected June 30 as the annual impairment testing date for the insurance and retirement services reporting units and December
31 for the Bank reporting unit.
The Company has the option to first assess qualitative factors, by performing a qualitative analysis, to determine whether the existence of events or circumstances leads
to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the events or circumstances, the Company determines it is more likely than not that the fair value of a
reporting unit is greater than its carrying amount, the impairment test is not required. If the Company concludes otherwise, the Company is required to perform a quantitative impairment test. In the quantitative impairment test, the estimated fair
value of a reporting unit is compared to the carrying amount in order to determine if impairment is indicated. If the estimated fair value exceeds the carrying amount, the reporting unit is not deemed to be impaired. If the estimated fair value is
below the carrying value of the reporting unit, the difference is the amount of impairment.
Intangible assets that have indefinite useful lives are not amortized, but are tested at least annually for impairment. Intangible assets that have finite useful lives are
amortized over their useful lives. Core deposit intangibles and trust intangibles at the Company are amortized using the sum-of-the-years’-digits method. Covenants not to compete are amortized on a straight-line basis. Customer lists are amortized
using an accelerated method. When facts and circumstances indicate potential impairment of amortizable intangible assets, the Company evaluates the recoverability of the asset carrying value, using estimates of undiscounted future cash flows over the
remaining asset life. Any impairment loss is measured by the excess of carrying value over fair value.
Determining the fair value of a reporting unit under the goodwill impairment tests and determining the fair value of other intangible assets are judgmental and often
involve the use of significant estimates and assumptions. Estimates of fair value are primarily determined using the discounted cash flows method, which uses significant estimates and assumptions including projected future cash flows, discount rates
reflecting the market rate of return and projected growth rates. Future events may impact such estimates and assumptions and could cause the Company to conclude that our goodwill or intangible assets have become impaired, which would result in
recording an impairment loss.
Bank-Owned Life Insurance
The Bank has purchased life insurance policies on certain employees, key executives and directors. Bank-owned life insurance is recorded at the amount that can be realized
under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.
Treasury Stock
Treasury stock acquisitions are recorded at cost. Subsequent sales of treasury stock are recorded on an average cost basis. Gains on the sale of treasury stock are
credited to additional paid-in-capital. Losses on the sale of treasury stock are charged to additional paid-in-capital to the extent of previous gains, otherwise charged to retained earnings.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes interest accrued and penalties related
to unrecognized tax benefits in income tax expense.
Tax positions are recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being
presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 percent likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.
Pension Costs
The Company has a qualified, noncontributory, defined benefit pension plan covering substantially all of its employees, as well as supplemental employee retirement plans
to certain current and former executives and a defined benefit postretirement healthcare plan that covers certain employees. Costs associated with these plans, based on actuarial computations of current and future benefits for employees, are charged to
current operating expenses.
Stock-Based Compensation
The Company maintains various long-term incentive stock benefit plans under which restricted stock units are granted to certain directors and key
employees. Compensation expense is recognized in the consolidated statements of income over the requisite service period, based on the grant-date fair value of the award. For restricted stock units, compensation expense is recognized ratably over the
vesting period for the fair value of the award, measured at the grant date.
Earnings Per Share
Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity (such as the Company’s dilutive stock options and restricted stock units).
Comprehensive Income (Loss)
At the Company, comprehensive income (loss) represents net income plus OCI, which consists primarily of the net change in unrealized gains (losses) on AFS debt securities
for the period, changes in the funded status of employee benefit plans and unrealized gains (losses) on derivatives designated as hedging instruments. AOCI represents the net unrealized gains (losses) on AFS debt securities, the previously unrecognized
portion of the funded status of employee benefit plans and the fair value of instruments designated as hedging instruments, net of income taxes, as of the consolidated balance sheet dates.
Derivative Instruments and Hedging Activities
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the
derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and
qualifying as a hedge of the exposure to changes in the fair value of an asset, liability or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a
hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the
hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.
The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are
recognized in earnings. For derivatives designated as cash flow hedges, changes in fair value of the cash flow hedges are reported in OCI. When the cash flows associated with the hedged item are realized, the gain or loss included in OCI is recognized
in the consolidated statements of income.
When the Company purchases or sells a portion of a commercial loan that has an existing interest rate swap, it may enter into a risk participation agreement to provide credit protection to the financial institution that originated the swap transaction should the borrower fail to perform on its obligation. The Company enters
into both risk participation agreements in which it purchases credit protection from other financial institutions and those in which it provides credit protection to other financial institutions. Any fee paid to the Company under a risk
participation agreement is in consideration of the credit risk of the counterparties and is recognized in the income statement. Credit risk on the risk participation agreements is determined after considering the risk rating, probability of default and
loss given default of the counterparties.
Fair Value Measurements
GAAP states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. Fair value measurements are not adjusted for transaction costs. A fair value hierarchy exists within GAAP that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs that are observable, either directly or
indirectly, for substantially the full term of the asset or liability; and
Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no
market activity).
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities, many other sovereign government
obligations, liquid mortgage products, active listed equities and most money market securities. Such instruments are generally classified within Level 1 or Level 2 of the fair value hierarchy. The Company does not adjust the quoted price for such
instruments.
The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations or quote from alternative pricing sources with
reasonable levels of price transparency include most investment-grade and high-yield corporate bonds, less liquid mortgage products, less liquid agency securities, less liquid listed equities, state, municipal and provincial obligations and certain
physical commodities. Such instruments are generally classified within Level 2 of the fair value hierarchy. Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices). Other investment securities are
reported at fair value utilizing Level 1 and Level 2 inputs. The prices for Level 2 instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases and sales
of investment securities. Prices obtained from these sources include prices derived from market quotations and matrix pricing. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S.
Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Management reviews the methodologies used in pricing the securities by its
third-party providers in pricing the securities.
Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions. Valuations are adjusted to reflect illiquidity and/or
non-transferability and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate will be used. Management’s best estimate consists of both internal and external support on certain
Level 3 investments. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment
or comparable entities, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, offerings in the equity or debt markets and changes in financial ratios or cash flows.
Other Financial Instruments
The Company is a party to certain instruments with off-balance-sheet risk such as commitments to extend credit, unused lines of credit, standby letter of credit and
certain agricultural real estate loans sold to investors with recourse. The Company’s policy is to record such instruments when funded.
Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third-party. The risk involved in issuing standby letters of
credit is essentially the same as the credit risk involved in extending loan facilities to customers. Under the standby letters of credit, the Company is required to make payments to the beneficiary of the letters of credit upon request by the
beneficiary contingent upon the customer’s failure to perform under the terms of the underlying contract with the beneficiary. Standby letters of credit typically have one year expirations with an option to renew upon annual review. The Company typically receives a fee for these transactions. The fair value of standby letters of credit is recorded upon
inception.
Repurchase Agreements
Repurchase agreements are accounted for as secured financing transactions since the Company maintains effective control over the transferred
securities and the transfer meets the other criteria for such accounting. Obligations to repurchase securities sold are reflected as a liability in the consolidated balance sheets. The securities underlying the agreements are delivered to a custodial
account for the benefit of the counterparties with whom each transaction is executed. The counterparties, who may sell, loan or otherwise dispose of such securities to other parties in the normal course of their operations, agree to resell to the
Company the same securities at the maturities of the agreements.
Revenue from Contracts with Customers
Effective January 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification (“ASC”) Topic 606) (“ASC 606” and “ASU 2014-09”), and all subsequent ASUs that modified ASC
606. The implementation of ASC 606 did not have a material impact on the measurement or recognition of revenue; as such, a cumulative effect adjustment to opening retained earnings was not deemed necessary. ASC 606 does not apply to revenue associated
with financial instruments, including revenue from loans and securities and certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives and certain credit card fees are also not in scope.
ASC 606 is applicable to noninterest revenue streams such as retirement plan administration fees, trust and asset management income, deposit related fees and annuity and insurance commissions; however, the recognition of these revenue streams did not
change significantly upon adoption of ASC 606.
Service Charges on Deposit Accounts
Service charges on deposit accounts consist of overdraft fees, monthly service fees, check orders and other deposit account related fees. Overdraft, monthly service, check
orders and other deposit account related fees are transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily
received immediately or in the following month through a direct charge to customers’ accounts.
Card Services Income
ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Debit card income is primarily comprised
of interchange fees earned whenever the Company’s debit cards are processed through card payment networks. The Company’s performance obligations for these revenue streams are satisfied, and related revenue recognized, when the services are rendered or
upon completion. Payment is typically received immediately or in the following month.
Retirement Plan Administration Fees
Retirement plan administration fees are primarily generated for services related to the recordkeeping, administration and plan design solutions of defined benefit, defined
contribution and revenue sharing plans. Revenue is recognized in arrears for services already provided in accordance with fees established in contracts with customers or based on rates agreed to with investment trade platforms based on ending
investment balances held. The Company’s performance obligation is satisfied, and related revenue recognized based on services completed or ending investment balances, for which receivables are recorded at the time of revenue recognition.
Wealth Management
Wealth Management revenue primarily is comprised of trust and other financial services revenue. Trust and asset management income is primarily
comprised of fees earned from the management and administration of trusts, pensions and other customer assets. The Company’s performance obligation is generally satisfied with the resulting fees recognized monthly, based upon services completed or the
month-end market value of the assets under management and the applicable fee rate. Payment is generally received shortly after services are rendered or a few days after month end through a direct charge to customers’ accounts. The Company does not earn
performance-based incentives. Financial services revenue primarily consists of commissions received on brokered investment product sales. For other financial services revenue, the Company’s performance obligation is generally satisfied upon the
issuance of the annuity policy. Shortly after the policy is issued, the carrier remits the commission payment to the Company, and the Company recognizes the revenue. The Company does not earn a significant amount of trailing commission fees on brokered
investment product sales. The majority of the trailing commission fees are calculated based on a percentage of market value of a period end and revenue is recognized when an investment product’s market value can be determined.
Insurance Revenue
Insurance and other financial services revenue primarily consists of commissions received on insurance. The Company acts as an intermediary between
the Company’s customer and the insurance carrier. The Company’s performance obligation related to insurance sales for both property and casualty insurance and employee benefit plans is generally satisfied upon the later of the issuance or effective
date of the policy. The Company earns performance based incentives, commonly known as contingency payments, which usually are based on certain criteria established by the insurance carrier such as premium volume, growth and insured loss ratios.
Contingent payments are accrued for based upon management’s expectations for the year. Commission expense associated with sales of insurance products is expensed as incurred. The Company does not earn a significant amount of trailing commission fees on
insurance product sales. The majority of the trailing commission fees are calculated based on a percentage of market value of a period end and revenue is recognized when an investment product’s market value can be determined.
Other
Other noninterest income consists of other recurring revenue streams such as account and loan fees, interest rate swap fees, safe deposit box rental fees and other
miscellaneous revenue streams. These revenue streams are primarily transactional based and payment is received immediately or in the following month, and therefore, the Company’s performance obligation is satisfied, and the related revenue is
recognized, at a point in time.
The following table presents noninterest income, segregated by revenue streams in-scope and out-of-scope of ASC 606:
Contract Balances
A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration or before payment is due, which would result in
contract receivables or assets, respectively. A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment or for which payment is due from the customer. The Company’s
noninterest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after the Company
satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances.
Contract Acquisition Costs
ASC 606 requires the capitalization, and subsequently amortization into expense, of certain incremental costs of obtaining a contract with a customer if these costs are
expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. The Company elected the practical
expedient, which allows immediate expensing of contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less, and did not capitalize any contract acquisition costs upon
adoption of ASC 606 as of or during the year ended December 31, 2022, 2021 and 2020.
Trust Operations
Assets held by the Company in a fiduciary or agency capacity for its customers are not included in the accompanying consolidated balance sheets, since such assets are not
assets of the Company.
Subsequent Events
The Company has evaluated subsequent events for potential recognition and/or disclosure and there were none identified.
|
Recent Accounting Pronouncements |
12 Months Ended | ||
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Dec. 31, 2022 | |||
Recent Accounting Pronouncements [Abstract] | |||
Recent Accounting Pronouncements |
Recently Adopted Accounting Standards
In March 2020, the FASB issued ASU 2020-04, Reference Rate
Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. On January 7, 2021, the FASB issued ASU 2021-01, which refines the scope of Topic 848 and clarifies some of its guidance. ASU 2020-04 and
related amendments provide temporary optional expedients and exceptions to the existing guidance for applying GAAP to affected contract modifications and hedge accounting relationships in the transition away from the London Interbank Offered
Rate (“LIBOR”) or other interbank offered rates on financial reporting. The guidance also allows a one-time election to sell and/or reclassify to AFS or trading HTM debt securities that reference an interest rate affected by reference rate
reform. The amendments in this ASU are effective March 12, 2020 through December 31, 2022 and permits relief solely for reference rate reform actions and permits different elections over the effective date for legacy and new activity.
In December 2020, the FASB issued ASU 2022-06, Reference Rate
Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The ASU extends the period of time companies can utilize the reference rate reform relief guidance provided by ASU 2020-04 and ASU 2021-01. The guidance which was effective
upon issuance, defers the sunset date from December 31, 2022 to December 31, 2024, after which companies will no longer be permitted to apply the relief guidance in Topic 848. The adoption did not have a material impact on the consolidated
financial statements and related disclosures.
Accounting Standards Issued Not Yet Adopted
In March 2022, the FASB issued ASU 2022-02, Financial Instruments - CECL Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The ASU eliminates
the guidance on Troubled Debt Restructurings (“TDRs”) and requires an evaluation on all loan modifications to determine if they result in a new loan or a continuation of the existing loan. The ASU also requires that entities disclose
current-period gross charge-offs by year of origination. The elimination of the TDR guidance may be adopted prospectively for loan modifications after adoption or on a modified retrospective basis, which would also apply to loans previously
modified, resulting in a cumulative effect adjustment to retained earnings in the period of adoption for changes in the allowance for credit losses. The amendments in this ASU are effective for the Company on January 1, 2023, with early adoption
permitted. The adoption is not expected to have a material impact on the consolidated financial statements and related disclosures.
|
Acquisitions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 | |||
Acquisitions [Abstract] | |||
Acquisitions |
In 2020, the Company acquired Alliance Benefit Group of Illinois, Inc. for a total consideration of $9.1 million. As part of the acquisition, the Company recorded goodwill of $5.8
million and $5.1 million of contingent consideration recorded in other liabilities on the consolidated balance sheet as of December 31,
2020.
The operating results of acquired companies are included in the consolidated results after the dates of acquisition.
Pending Acquisition of Salisbury Bancorp, Inc.
On December 5, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Salisbury Bancorp, Inc.
(“Salisbury”), Salisbury Bank and Trust Company (“Salisbury Bank”), Salisbury’s subsidiary bank, and NBT Bank, the Company’s subsidiary bank, pursuant to which the Company will acquire Salisbury. Salisbury, with assets of approximately $1.54 billion at December 31, 2022, is headquartered in Lakeville, Connecticut. Its primary subsidiary, Salisbury Bank, is a Connecticut chartered
commercial bank with 14 banking locations in northwestern Connecticut, the Hudson Valley region of New York and southwestern
Massachusetts.
Subject to the terms and conditions of the Merger Agreement, which has been approved by the boards of directors of each party, Salisbury will
merge with and into the Company, with the Company as the surviving entity, and immediately thereafter, Salisbury Bank will merge with and into NBT Bank, with NBT Bank as the surviving bank (the “Merger”).
Under the terms of the Merger Agreement, each outstanding share of Salisbury common stock will be converted into the right to receive 0.7450 shares of the Company’s common stock. The Merger is subject to customary closing conditions, including the receipt of regulatory approvals and
approval by the stockholders of Salisbury, and is expected to close in the second quarter of 2023.
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Securities |
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Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities |
The amortized cost, estimated fair value and unrealized gains (losses) of AFS securities are as follows:
There was no allowance for credit losses on AFS
securities as of December 31, 2022 and 2021.
The components of net realized gains (losses) on AFS securities are as follows.
The Company had no net realized gains (losses) on AFS securities for the years ended December 31, 2022 and 2021. Included in net realized gains (losses) on AFS securities, the Company recorded gains from
calls of approximately $3 thousand for the year ended December 31, 2020, which were reclassified out of AOCI and into earnings.
The amortized cost, estimated fair value and unrealized gains (losses) of HTM securities are as follows:
At December 31, 2022 and 2021, all of the mortgaged-backed HTM securities were comprised of U.S. government agency and government-sponsored enterprises securities. There
was no allowance for credit losses on HTM securities as of December 31, 2022 and 2021 because the expectation of nonrepayment of the amortized cost is zero, except for state & municipal securities, which such expected losses from nonrepayment are immaterial.
Included in net realized gains (losses), the Company recorded gains from calls on HTM
securities of approximately $4 thousand for
the year ended December 31, 2022, approximately $29 thousand for the year ended December 31, 2021 and approximately $24 thousand for the year ended December 31, 2020.
During the year ended December 31, 2020, the Company sold HTM securities with an amortized cost of $1.0 million and resulted in a realized loss of $1 thousand. Due to
significant deterioration in the creditworthiness of the issuer of the HTM securities, the circumstances caused the Company to change its intent to hold the HTM securities sold to maturity, which did not affect the Company’s intent to hold the
remainder of the HTM portfolio to maturity. There were no sales of HTM securities in the years ended December 31, 2022 and 2021.
AFS and HTM securities with amortized costs totaling $1.73 billion at December 31, 2022 and $1.63 billion at December 31, 2021 were pledged to secure public deposits and for other purposes required or permitted by law. Additionally,
at December 31, 2022 and 2021, AFS and HTM securities with an amortized cost of $149.5 million and $162.1 million, respectively, were pledged as collateral for securities sold under repurchase agreements.
The following table set forth information with regard to gains and (losses) on equity securities:
As of December 31, 2022 and 2021 the carrying value of equity securities without readily determinable fair values was $1.0 million. The Company performed a qualitative assessment to determine whether the investments were impaired and identified no areas of concern as of December 31, 2022 and
2021. There were no impairments, downward or upward adjustments recognized for equity securities without readily determinable fair
values during the years ended December 31, 2022 and 2021.
The following table set forth information with regard to contractual maturities of debt securities at December 31, 2022:
Maturities of mortgage-backed, collateralized mortgage obligations and asset-backed securities are stated based on their estimated average lives. Actual maturities may
differ from estimated average lives or contractual maturities because, in certain cases, borrowers have the right to call or prepay obligations with or without call or prepayment penalties.
Except for U.S. government securities and government-sponsored enterprises securities, there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders’ equity at December 31, 2022, 2021 and 2020.
The following table sets forth information with regard to investment securities with unrealized losses, for which an allowance for credit losses has not been recorded, segregated according to the length of time the securities had been in a continuous unrealized loss position:
The Company does not believe the AFS securities that were in an unrealized loss position as of December 31, 2022 and 2021, which consisted of 415 and 149 individual securities,
respectively, represented a credit loss impairment. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. As of December 31, 2022 and 2021, the majority of the AFS securities in an
unrealized loss position consisted of debt securities issued by U.S. government agencies or U.S. government-sponsored enterprises that carry the explicit and/or implicit guarantee of the U.S. government, which are widely recognized as “risk-free” and
have a long history of zero credit losses. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment
securities. The Company does not intend to sell, nor is it more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may be at maturity. The Company elected to exclude accrued
interest receivable (“AIR”) from the amortized cost basis of debt securities. AIR on AFS debt securities totaled $4.2 million at December
31, 2022 and $3.9 million at December 31, 2021 and is excluded from the estimate of credit losses and reported in the
financial statement line.None of the bank’s HTM debt securities were past due
or on nonaccrual status as of December 31, 2022 and 2021. There was no accrued interest reversed against interest income for the years
ended December 31, 2022 and 2021 as all securities remained on accrual status. In addition, there were no collateral-dependent HTM
debt securities as of December 31, 2022 and 2021. As of December 31, 2022 and 2021, 70% and 56%, respectively, of the Company’s HTM debt securities were issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit
and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit loss. Therefore, the Company did not record an allowance for credit losses for these securities as of December 31, 2022 and
2021. The remaining HTM debt securities at December 31, 2022 and 2021 were comprised of state and municipal obligations generally with bond ratings of A to AAA. Utilizing the CECL approach, the Company determined that the expected credit loss on its
HTM municipal bond portfolio was immaterial and therefore no allowance for credit loss was recorded as of December 31, 2022 and 2021. AIR on HTM debt securities totaled $3.8 million at December 31, 2022 and $2.7 million at December 31, 2021 and is
excluded from the estimate of credit losses and reported in the
financial statement line. |
Loans |
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Loans |
5. Loans
A summary of loans, net of deferred fees and origination costs, by category is as follows:
Included in the above loans are net deferred loan origination (fees) costs totaling $(109.1) million and $(23.7) million at December 31, 2022 and 2021, respectively. The
Company had $0.6 million and $0.8
million of residential loans held for sale as of December 31, 2022 and 2021, respectively.
The total amount of loans serviced by the Company for unrelated third parties was $576.0 million and $575.9 million at December 31, 2022 and 2021, respectively. At
December 31, 2022 and 2021,
the Company had $0.6 million and $1.0
million, respectively, of mortgage servicing rights. In addition, as of December 31, 2022 and 2021, the Company serviced Springstone consumer loans of $6.2
million and $11.4 million, respectively.
At December 31, 2022 and 2021, the Company serviced $31.0 million
and $25.6 million, respectively, of agricultural loans sold with recourse. Due to sufficient collateral on these loans and government
guarantees, no reserve is considered necessary at December 31, 2022 and 2021.
FHLB advances are collateralized by a blanket lien on the Company’s residential real estate mortgages.
In the ordinary course of business, the Company has made loans at prevailing rates and terms to directors, officers and other related parties. Such loans, in
management’s opinion, do not present more than the normal risk of collectability or incorporate other unfavorable features. The aggregate amount of loans outstanding to qualifying related parties and changes during the years are summarized as
follows:
|
Allowance for Credit Losses and Credit Quality of Loans |
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Allowance for Credit Losses and Credit Quality of Loans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Credit Losses and Credit Quality of Loans |
6. Allowance for Credit Losses and Credit Quality of Loans
The allowance for credit losses totaled $100.8 million at December 31, 2022, compared to $92.0 million at December 31,
2021. The allowance for credit losses as a percentage of loans was 1.24% at December 31, 2022, compared to
1.23% at December 31, 2021.
The January 1, 2020 (“Day 1”) increase in the allowance for credit loss on loans relating to the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments was $3.0
million, which decreased retained earnings by $2.3 million and increased the deferred tax asset by $0.7 million.
The allowance for credit losses calculation incorporated a 6-quarter forecast period to account for forecast economic conditions under each scenario
utilized in the measurement. For periods beyond the 6-quarter forecast, the model reverts to long-term economic conditions over a 4-quarter reversion period on a straight-line basis. The Company considers a baseline, upside and downside economic
forecast in measuring the allowance.
The quantitative model as of December 31, 2022 incorporates a baseline economic outlook along with an alternative downside scenario sourced from a
reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment initially around pre-COVID-19 levels at 3.9% that increases slightly during the forecast period to
4.0%. Northeast GDP’s annualized growth (on a quarterly basis) is expected to start the first quarter of 2023 at approximately 3.9% and hovering around 4.6% by the end of the forecast period. Other utilized economic variables have generally
deteriorated in their respective forecasts, with retail sales and housing starts forecasts declining from the prior year. Key assumptions in the baseline economic outlook included a full employment economy being realized in the near future, continued
tapering of the Federal Reserve balance sheet, an increasing yield on ten-year treasury securities, and a gradual decline in global oil prices. The alternative downside scenario assumed deteriorated economic and pandemic related conditions from the
baseline outlook. Under this scenario, northeast unemployment rises from 3.9% in the fourth quarter of 2022 to a peak of 6.9% in the first quarter of 2024. These scenarios and their respective weightings are evaluated at each measurement date and
reflect management’s expectations as of December 31, 2022. Additional adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools, considerations for inflation, and recent
trends in asset value indices. Additional monitoring for industry concentrations, loan growth, and policy exceptions was also conducted. All these factors were considered through separate quantitative processes and incorporated when applicable into
the estimate of current expected credit losses at December 31, 2022.
The quantitative model as of December 31, 2021 incorporates a baseline economic outlook along with alternative upside and downside scenarios sourced from
a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment initially above pre-COVID-19 levels at 4.8% but falling below pre-COVID-19 levels by the end of
the forecast period to 3.5%. Northeast GDP’s annualized growth (on a quarterly basis) was expected to start the first quarter of 2022 at approximately 9% and hover around 5% by the middle and end of the forecast period. The alternative downside
scenario assumed deteriorated economic and pandemic related conditions from the baseline outlook. Under this scenario, northeast unemployment rose from 5.7% in the fourth quarter of 2021 to a peak of 8% in the first quarter of 2023, remaining around
or above 7% for the entire forecast period. The alternative upside scenario incorporated a more optimistic outlook than the baseline scenario, with a swift return to full employment by the second quarter of 2022 and with northeast unemployment moving
down to 3.1% by the end of the forecast period. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2021. At December 31, 2021, the weightings were 60%, 10%
and 30% for the baseline, upside and downside economic forecasts, respectively. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in the second and
third quarters of 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government sponsored loan programs. The Company also continued to monitor the
level of criticized and classified loans in the fourth quarter of 2021 compared to the level contemplated by the model during similar, historical economic conditions, and an adjustment was made to estimate potential additional losses above modeled
losses. Additionally, qualitative adjustments were made for Moody’s baseline economic forecast to include impacts of the Build Back Better Act not passing by December 31, 2021 and to address potential economic deterioration due to Omicron, as well as
isolated model limitations related to modeled outputs given abnormally high retail sales and business output growth rates in historical periods. These factors were considered through separate quantitative processes and incorporated into the estimate
of current expected credit losses at December 31, 2021.
The quantitative model as of December 31, 2020 incorporated a baseline economic outlook, along with alternative upside and downside scenarios sourced
from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment above pre-COVID-19 levels for the entire forecast period, though steadily improving, before
returning to low single digits by the end of 2023. Northeast GDP’s annual growth (on a quarterly basis) was expected to start 2021 in the low to mid-single digits, with a peak growth rate of 8% in the fourth quarter of 2021 and steadily falling back
down to normalized levels through 2023 and 2024. Other utilized economic variables show improvement in their respective forecasts, namely business output. Key assumptions in the baseline economic outlook included an additional stimulus package passed
at the same timing and a comparable level to that of the actual $900 billion COVID-19 relief package passed in December 2020 along with no significant secondary surge in COVID-19 cases or pandemic-related business closures. The alternative downside
scenario assumed deteriorated economic and pandemic related conditions from the baseline outlook. In the same way, the alternative upside scenario assumed a faster economic recovery and more effective management of the COVID-19 virus from the
baseline outlook. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2020. Additional adjustments were made for COVID-19 related factors not incorporated in
the forecasts, such as the mitigating impact of unprecedented stimulus in 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government-sponsored loan
programs. The commercial & industrial and consumer segment models were based upon percent change in unemployment with modeled values as of December 31, 2020 well outside the observed historical experience. Therefore, adjustments were required to
produce outputs more aligned with default expectations given the forecast economic environment. Additionally, the Company identified a slightly higher level of criticized and classified loans during 2020 than those contemplated by the model during
similar economic conditions in the past for which an adjustment was made for estimated expected additional losses above modeled output. These factors were considered through a separate quantitative process and incorporated into the estimate for
allowance for credit losses at December 31, 2020.
There were no loans purchased with credit deterioration during the years ended December 31, 2022 and 2021. During 2022, the Company purchased $11.5 million of residential loans at a 1.53% premium and $50.1 million in consumer loans at par. The allowance for credit losses recorded for these loans on the purchase date was $3.2 million. During 2021, the Company purchased $58.9
million of residential loans at premiums ranging from 2% to 5% and $92.5 million of consumer loans at a par. The
allowance for credit losses recorded for these loans on the purchase date was $6.8 million. The Company made a policy election to
report AIR in the line item on the balance sheet. AIR on loans totaled $25.0 million at December 31, 2022 and $19.5 million at
December 31, 2021 and there was no estimated allowance for credit losses related to AIR at December 31, 2022 and 2021.
The following tables present the activity in the allowance for credit losses by our portfolio segment:
The increase in the allowance for credit losses from December 31, 2021 to December 31, 2022 was primarily due to an increase in loan balances and a modest
deterioration in the economic forecast. The decrease in the allowance for credit losses from December 31, 2020 to December 31, 2021 was primarily due to the improvement in the economic forecast, partly offset by providing for the increase in loan
balances. The increase in the allowance for credit losses from Day 1 to December 31, 2020 was primarily due to the deterioration of macroeconomic factors surrounding the COVID-19 pandemic.
Individually Evaluated Loans
As of December 31, 2022, there were two
relationships identified to be evaluated for loss on an individual basis which, in aggregate, had an amortized cost basis of $2.4
million, with no allowance for credit loss. As of December 31, 2021, there were five relationships identified to be evaluated for loss on an individual basis with an aggregate amortized cost basis of $10.2 million and no allowance for credit loss. The decrease in
the amortized cost basis on an individual basis from December 31, 2021 to December 31, 2022 was primarily due to principal payments and resolution of one
relationship in which the cost basis was substantially collected and the related $0.8 million allowance for credit losses was reversed.
The following table sets forth
information with regard to past due and nonperforming loans by loan segment:
As of December 31, 2022 and 2021, there were $1.1 million and $8.8 million, respectively, of loans in nonaccrual that were
specifically evaluated for individual expected credit loss without an allowance for credit losses.
Credit Quality Indicators
The Company has developed an internal loan grading system to evaluate and quantify the Company’s loan portfolio with respect to quality and risk. The system focuses on,
among other things, financial strength of borrowers, experience and depth of borrower’s management, primary and secondary sources of repayment, payment history, nature of the business and outlook on particular industries. The internal grading system
enables the Company to monitor the quality of the entire loan portfolio on a consistent basis and provide management with an early warning system, which facilitates recognition and response to problem loans and potential problem loans.
Commercial Grading System
For Commercial and Industrial (“C&I”), Paycheck Protection Program (“PPP”) and Commercial Real Estate (“CRE”) loans, the Company uses a grading system that relies on
quantifiable and measurable characteristics when available. This includes comparison of financial strength to available industry averages, comparison of transaction factors (loan terms and conditions) to loan policy and comparison of credit history
to stated repayment terms and industry averages. Some grading factors are necessarily more subjective such as economic and industry factors, regulatory environment and management. C&I and CRE loans are graded Doubtful, Substandard, Special
Mention and Pass.
Doubtful
A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its
classification as a loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations,
capital injections, the perfection of liens on additional collateral, the valuation of collateral and refinancing. Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new
information. Nonaccrual treatment is required for Doubtful assets because of the high probability of loss.
Substandard
Substandard loans have a high probability of payment default or they have other well-defined weaknesses. They require more intensive supervision by
bank management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity or marginal capitalization. Repayment may depend on collateral or other credit
risk mitigants. For some Substandard loans, the likelihood of full collection of interest and principal may be in doubt and those loans should be placed on nonaccrual. Although Substandard assets, in the aggregate, will have a distinct potential
for loss, an individual asset’s loss potential does not have to be distinct for the asset to be rated Substandard.
Special Mention
Special Mention loans have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position
at some future date. These loans pose elevated risk, but their weakness does not yet justify a Substandard classification. Borrowers may be experiencing adverse operating trends (i.e., declining revenues or margins) or may be struggling with an
ill-proportioned balance sheet (i.e., increasing inventory without an increase in sales, high leverage and/or tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support
a Special Mention rating. Although a Special Mention loan has a higher probability of default than a Pass asset, its default is not imminent.
Pass
Loans graded as Pass encompass all loans not graded as Doubtful, Substandard or Special Mention. Pass loans are in compliance with loan covenants and
payments are generally made as agreed. Pass loans range from superior quality to fair quality. Pass loans also include any portion of a government guaranteed loan, including PPP loans.
Consumer and Residential Grading System
Consumer and Residential loans are graded as either Nonperforming or Performing.
Nonperforming
Nonperforming loans are loans that are (1) over 90 days past due and interest is still accruing or (2) on nonaccrual status.
Performing
All loans not meeting any of the above criteria are considered Performing.
The following tables illustrate the Company’s credit quality by loan class by year of
origination (vintage):
Allowance for Credit Losses on Off-Balance Sheet Credit Exposures
The allowance for losses on unfunded commitments totaled $5.1
million as of December 31, 2022 and 2021.
Troubled Debt Restructuring
When the Company modifies a loan in a troubled debt restructuring (“TDR”), such modifications generally include one or a combination of the following: an extension of
the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; temporary reduction in the interest rate; or change in scheduled payment amount. Residential and Consumer TDRs occurring during 2022 and
2021 were due to reductions in the interest rate and/or extension of the term.
On August 3, 2020, the Federal Financial Institutions Examination Council issued a joint statement on additional loan accommodations related to COVID-19. The joint
statement clarifies that for loan modifications in which Section 4013 of the CARES Act (“Section 4013”) is being applied, subsequent modifications could also be eligible under Section 4013. Accordingly, the Company offered modifications made in
response to COVID-19 to borrowers who were current and otherwise not past due in accordance with the criteria stated in Section 4013. These include short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions
of repayment terms, or other delays in payment. The Company evaluated the modification programs provided to its borrowers and has concluded the modifications were generally made in accordance with the CARES Act guidance to borrowers who were in good
standing prior to the COVID-19 pandemic and are not required to be designated as TDRs.
The following tables illustrate the recorded investment and number of modifications designated as TDRs, including the recorded
investment in the loans prior to a modification and the recorded investment in the loans after restructuring:
The following table illustrates the recorded investment and number of modifications for TDRs where a concession has been made and subsequently defaulted during the year:
|
Premises, Equipment and Leases |
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Premises, Equipment and Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premises, Equipment and Leases |
7. Premises, Equipment and Leases
A summary of premises and equipment follows:
Buildings and improvements are depreciated based on useful lives of
to twenty years. Furniture and equipment is depreciated based on useful lives of to ten years.Operating leases in which the Company is the lessee are recorded as operating lease ROU assets and operating lease liabilities, included in
and ,
respectively, on the consolidated balance sheets. The Company does not have any significant finance leases in which we are the lessee as of December 31, 2022 and December 31, 2021.Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent
our obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s
incremental borrowing rate at the lease commencement date. ROU assets are further adjusted for lease incentives. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease
liability, is recognized on a straight-line basis over the lease term and is recorded in occupancy expense in the consolidated statements of income.
The Company made a policy election to exclude the recognition requirements to all classes of leases with original terms of 12 months or less. Instead,
the short-term lease payments are recognized in profit or loss on a straight-line basis over the lease term.
The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, non-lease
components and other non-components, such as common area maintenance charges, real estate taxes and insurance are not included in the measurement of the lease liability since they are generally able to be segregated.
Our leases relate primarily to office space and bank branches, and some contain options to renew the lease. These options to renew are generally not
considered reasonably certain to exercise, and are therefore not included in the lease term until such time that the option to renew is reasonably certain. As of December 31, 2022, operating lease ROU assets and liabilities were $23.9 million and $25.6 million, respectively.
As of December 31, 2021, operating lease ROU assets and liabilities were $23.3 million and $27.6 million, respectively.
The table below summarizes net lease cost:
The table below shows future minimum rental commitments related to non-cancelable operating leases for the next five years and thereafter as of December 31, 2022.
The following table shows the weighted average remaining operating lease term, the weighted average discount rate and supplemental information on the consolidated
statements of cash flows for operating leases:
As of December 31, 2022 there are no new significant leases that have not yet commenced.
Rental expense included in occupancy expense amounted to $7.2
million in 2022, $7.2 million in 2021 and $8.0
million in 2020.
|
Goodwill and Other Intangible Assets |
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Goodwill and Other Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets |
8. Goodwill and Other Intangible Assets
A summary of goodwill is as follows:
The Company has intangible assets with definite useful lives capitalized on its consolidated balance sheet in the form of core deposit and other identified intangible
assets. These intangible assets are amortized over their estimated useful lives, which range primarily from
to twenty years.There was no impairment of goodwill recorded during
the years ended December 31, 2022 and 2021.
A summary of core deposit and other intangible assets follows:
Amortization expense on intangible assets with definite useful lives totaled $2.3 million for 2022, $2.8 million for 2021 and $3.4 million for 2020. Amortization
expense on intangible assets with definite useful lives is expected to total $1.9 million for 2023, $1.6 million for 2024, $1.2 million for 2025, $1.0 million for 2026, $0.7 million for 2027 and $1.0 million thereafter. Other
identified intangible assets include customer lists and non-compete agreements.
During the years ended December 31, 2022, 2021 and 2020, there was no
impairment of intangible assets.
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Deposits |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Deposits |
9. Deposits
The following table sets forth the maturity distribution of time deposits:
Time deposits of $250,000 or more aggregated $48.4 million
and $72.3 million December 31, 2022
and 2021, respectively.
|
Borrowings |
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Borrowings [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings |
10. Borrowings
Short-Term Borrowings
In addition to the liquidity provided by balance sheet cash flows, liquidity must also be supplemented with additional sources such as credit lines from correspondent
banks as well as borrowings from the FHLB and the Federal Reserve Bank. Other funding alternatives may also be appropriate from time to time, including wholesale and retail repurchase agreements and brokered certificate of deposit (“CD”) accounts.
Short-term borrowings totaled $585.0 million and $97.8 million at December 31, 2022 and 2021, respectively, and consist of Federal funds purchased and securities sold under repurchase agreements, which generally represent overnight borrowing
transactions and other short-term borrowings, primarily FHLB advances, with original maturities of one year or less.
The Company has unused lines of credit with the FHLB and access to brokered deposits available for short-term financing. Those sources totaled approximately $2.90 billion and $3.45 billion at December
31, 2022 and 2021,
respectively. Borrowings on the FHLB lines are secured by FHLB stock, certain securities and one-to-four family first lien mortgage loans. Securities collateralizing repurchase agreements are held in safekeeping by nonaffiliated financial institutions
and are under the Company’s control.
Information related to short-term borrowings is summarized as follows:
See Note 4 for additional information regarding securities pledged as collateral for securities sold under the repurchase agreements.
Long-Term Debt
Long-term debt consists of obligations having an original maturity at issuance of more than one year. A majority of the Company’s long-term debt is
comprised of FHLB advances collateralized by the FHLB stock owned by the Company, and a blanket lien on its residential real estate mortgage loans. As of December 31, 2022 the Company had no callable long-term debt. A summary is as follows:
Subordinated Debt
On June 23, 2020, the Company issued $100.0
million aggregate principal amount of 5.00% fixed-to-floating rate subordinated notes due 2030. The subordinated notes, which qualify as
Tier 2 capital, bear interest at an annual rate of 5.00%, payable semi-annually in arrears commencing on January 1, 2021, and a floating
rate of interest equivalent to the three-month Secured Overnight Financing Rate (“SOFR”) plus a spread of 4.85%, payable quarterly in arrears commencing on October 1, 2025. The subordinated notes issuance costs of $2.2 million are being amortized on a straight-line basis into interest expense over five years.
The Company may redeem the subordinated notes (1) in whole or in part beginning with the interest payment date of July 1, 2025, and on any interest
payment date thereafter or (2) in whole but not in part upon the occurrence of a “Tax Event”, a “Tier 2 Capital Event” or in the event the Company is required to register as an investment company pursuant to the Investment Company Act of 1940, as
amended. The redemption price for any redemption is 100% of the principal amount of the subordinated notes being redeemed, plus accrued
and unpaid interest thereon to, but excluding, the date of redemption. Any redemption of the subordinated notes will be subject to the receipt of the approval of the Board of Governors of the Federal Reserve System to the extent then required under
applicable laws or regulations, including capital regulations.
The Company repurchased $2.0 million of the subordinated notes during the year ended December 31, 2022 at a discount of $0.1 million. The following table summarizes the Company’s subordinated debt:
Junior Subordinated Debt
The Company sponsors five business
trusts, CNBF Capital Trust I, NBT Statutory Trust I, NBT Statutory Trust II, Alliance Financial Capital Trust I and Alliance Financial Capital Trust II (collectively, the “Trusts”). The Company’s junior subordinated debentures include amounts related
to the Company’s NBT Statutory Trust I and II as well as junior subordinated debentures associated with one statutory trust affiliate that
was acquired from our merger with CNB Financial Corp. and two statutory trusts that were acquired from our acquisition of Alliance
Financial Corporation (“Alliance”). The Trusts were formed for the purpose of issuing company-obligated mandatorily redeemable trust preferred securities to third-party investors and investing in the proceeds from the sale of such preferred
securities solely in junior subordinated debt securities of the Company for general corporate purposes. The Company guarantees, on a limited basis, payments of distributions on the trust preferred securities and payments on redemption of the trust
preferred securities. The Trusts are VIEs for which the Company is not the primary beneficiary, as defined by GAAP. In accordance with GAAP, the accounts of the Trusts are not included in the Company’s consolidated financial statements. See Note 1
for additional information about the Company’s consolidation policy.
The debentures held by each trust are the sole assets of that trust. The Trusts hold, as their sole assets, junior subordinated debentures of the
Company with face amounts totaling $98.0 million at December 31, 2022. The Company owns all of the common securities of the Trusts and has
accordingly recorded $3.2 million in equity method investments classified as other assets in our consolidated balance sheets at December
31, 2022. The Company owns all of the common stock of the Trusts, which have issued trust preferred securities in conjunction with the Company issuing trust preferred debentures to the Trusts. The terms of the trust preferred debentures are
substantially the same as the terms of the trust preferred securities.
As of December 31, 2022, the Trusts had the following trust preferred securities outstanding and held the following junior subordinated debentures
of the Company (dollars in thousands):
The Company’s junior subordinated debentures are redeemable prior to the maturity date at our option upon each trust’s stated option repurchase
dates and from time to time thereafter. These debentures are also redeemable in whole at any time upon the occurrence of specific events defined within the trust indenture. Our obligations under the debentures and related documents, taken together,
constitute a full and unconditional guarantee by the Company of the issuers’ obligations under the trust preferred securities. The Company owns all of the common stock of the Trusts, which have issued trust preferred securities in conjunction with
the Company issuing trust preferred debentures to the Trusts. The terms of the trust preferred debentures are substantially the same as the terms of the trust preferred securities.
With respect to the Trusts, the Company has the right to defer payments of interest on the debentures issued to the Trusts at any time or from time
to time for a period of up to ten consecutive semi-annual periods with respect to each deferral period. Under the terms of the debentures,
if in certain circumstances there is an event of default under the debentures or the Company elects to defer interest on the debentures, the Company may not, with certain exceptions, declare or pay any dividends or distributions on its capital stock
or purchase or acquire any of its capital stock.
Despite the fact that the Trusts are not included in the Company’s consolidated financial statements, $97 million of the $101 million in trust preferred securities issued
by these subsidiary trusts is included in the Tier 1 capital of the Company for regulatory capital purposes as allowed by the Federal Reserve Board (NBT Bank owns $1.0 million of CNBF Trust I securities). The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires bank holding companies with assets greater than $500 million to be subject to the same capital requirements as insured depository institutions, meaning, for instance, that such bank holding companies
will not be able to count trust preferred securities issued after May 19, 2010 as Tier 1 capital. The aforementioned Trusts are grandfathered with respect to this enactment based on their date of issuance.
|
Income Taxes |
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Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
11. Income Taxes
The significant components of income tax expense attributable to operations are as follows:
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
Realization of deferred tax assets is dependent upon the generation of future taxable income. A valuation allowance is recorded when it is more likely than not that some
portion of the deferred tax asset will not be realized. Based on available evidence, gross deferred tax assets will ultimately be realized and a valuation allowance was not deemed necessary at December 31, 2022 and 2021.
The following is a reconciliation of the provision for income taxes to the amount computed by applying the applicable Federal statutory rate to income before taxes:
A reconciliation of the beginning and ending balance of Federal and State gross unrecognized tax benefits (“UTBs”) is as follows:
The Company recognizes interest and penalties on the income tax expense line in the accompanying consolidated statements of income. The Company monitors changes in tax
statutes and regulations to determine if significant changes will occur over the next 12 months. As of December 31, 2022, no
significant changes to UTBs are projected; however, tax audit examinations are possible, but it is not reasonably possible to estimate when examinations in
subsequent years will be completed. The Company recognized an insignificant amount of interest expense related to UTBs in the consolidated statement of income for the year ended December 31, 2022.
As of December 31, 2022, the Company is no longer subject to U.S. Federal tax examination by tax authorities for years prior to 2019. The tax years
are currently being audited by New York State. |
Employee Benefit Plans |
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Employee Benefit Plans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans |
12. Employee Benefit Plans
Defined Benefit Post-Retirement Plans
The Company has a qualified, noncontributory, defined benefit pension plan (“the Plan”) covering substantially all of its employees at December 31, 2022. Benefits paid
from the Plan are based on age, years of service, compensation and social security benefits and are determined in accordance with defined formulas. The Company’s policy is to fund the Plan in accordance with Employee Retirement Income Security Act of
1974 standards. Assets of the Plan are invested in publicly traded stocks, bonds and mutual funds. Prior to January 1, 2000, the Plan was a traditional defined benefit plan based on final average compensation. On January 1, 2000, the Plan was converted
to a cash balance plan with grandfathering provisions for existing participants. Effective March 1, 2013, the Plan was amended. Benefit accruals for participants who, as of January 1, 2000, elected to continue participating in the traditional defined
benefit plan design were frozen as of March 1, 2013. In May 2013, the noncontributory, frozen, defined benefit pension plan assumed from Alliance in the acquisition was merged into the Plan. In addition to the Plan, the Company provides supplemental
employee retirement plans to certain current and former executives. The Company also assumed supplemental retirement plans for former executives in the Alliance acquisition. These supplemental employee retirement plans and the Plan are collectively
referred to herein as “Pension Benefits.”
In addition, the Company provides certain health care benefits for retired employees. Benefits were accrued over the employees’ active service period. Only employees that
were employed by the Company on or before January 1, 2000 are eligible to receive post-retirement health care benefits. The Plan is contributory for participating retirees, requiring participants to absorb certain deductibles and coinsurance amounts
with contributions adjusted annually to reflect cost sharing provisions and benefit limitations called for in the Plan. Employees become eligible for these benefits if they reach normal retirement age while working for the Company. For eligible
employees described above, the Company funds the cost of post-retirement health care as benefits are paid. The Company elected to recognize the transition obligation on a delayed basis over twenty years. In addition, the Company assumed post-retirement medical life insurance benefits for certain Alliance employees, retirees and their spouses, if applicable, in the Alliance
acquisition. These post-retirement benefits are referred to herein as “Other Benefits.”
Accounting standards require an employer to: (1) recognize the overfunded or underfunded status of defined benefit post-retirement plans, which is
measured as the difference between plan assets at fair value and the benefit obligation, as an asset or liability in its balance sheet; (2) recognize changes in that funded status in the year in which the changes occur through comprehensive income; and
(3) measure the defined benefit plan assets and obligations as of the date of its year-end balance sheet.
The components of AOCI, which have not yet been recognized as components of net periodic benefit cost, related to pensions and other post-retirement benefits are
summarized below:
A December 31 measurement date is used for the pension, supplemental pension and post-retirement benefit plans. The following table sets forth changes in benefit
obligations, changes in plan assets and the funded status of the pension plans and other post-retirement benefits:
An asset is recognized for an overfunded plan and a liability is recognized for an underfunded plan. The accumulated benefit obligation for pension benefits was $75.9 million and $88.9 million at December
31, 2022 and 2021, respectively. The accumulated benefit obligation for other post-retirement benefits was $4.2 million and $5.2 million at December 31, 2022 and 2021, respectively. The funded status of the pension and other post-retirement benefit plans has been recognized as
follows in the consolidated balance sheets at December 31, 2022 and 2021.
The following assumptions were used to determine the benefit obligation and the net periodic pension cost for the years indicated:
Net periodic benefit cost and other amounts recognized in OCI for the years ended December 31 included the following components:
The service cost component of the net periodic (benefit) cost is included in Salaries and Employee Benefits and the interest cost, expected return on
plan assets and net amortization components are included in Other Noninterest Expense on the consolidated statements of income.
The following table sets forth estimated future benefit payments for the pension plans and other post-retirement benefit plans as of December 31, 2022:
The Company made no voluntary contributions to the
pension and other benefit plans during the years ended December 31, 2022 and 2021.
For measurement purposes, the annual rates of increase in the per capita cost of covered medical and prescription drug benefits for fiscal year 2022 were assumed to be 4.5% to 6.5%. The rates were assumed to
decrease gradually to 4.0% for fiscal year 2075 and remain at that level thereafter. Assumed health care cost trend rates have a significant
effect on amounts reported for health care plans.
Plan Investment Policy
The Company’s key investment objectives in managing its defined benefit plan assets are to ensure that present and future benefit obligations to all participants and
beneficiaries are met as they become due; to provide a total return that, over the long-term, maximizes the ratio of the plan assets to liabilities, while minimizing the present value of required Company contributions, at the appropriate levels of
risk; to meet statutory requirements and regulatory agencies’ requirements; and to satisfy applicable accounting standards. The Company periodically evaluates the asset allocations, funded status, rate of return assumption and contribution strategy for
satisfaction of our investment objectives.
The target and actual allocations expressed as a percentage of the defined benefit pension plan’s assets are as follows:
Only high-quality bonds are to be included in the portfolio. All issues that are rated lower than A by Standard and Poor’s are to be excluded. Equity securities at
December 31, 2022 and 2021 do not include any Company common stock.
The following table presents the financial instruments recorded at fair value on a recurring basis by the Plan:
The plan had no financial instruments recorded at fair value on a non-recurring basis as of December 31, 2022 and 2021.
Determination of Assumed Rate of Return
The expected long-term rate-of-return on assets was 6.7%
at December 31, 2022 and 2021, respectively. This assumption represents the rate of return on plan assets reflecting the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the projected
benefit obligation. The assumption has been determined by reflecting expectations regarding future rates of return for the portfolio considering the asset distribution and related historical rates of return. The appropriateness of the assumption is
reviewed annually.
Employee 401(k) and Employee Stock Ownership Plans
The Company maintains a 401(k) and employee stock ownership plan (the “401(k) Plan”). The Company contributes to the 401(k) Plan based on employees’ contributions out of
their annual salaries. In addition, the Company may also make discretionary contributions to the 401(k) Plan based on profitability. Participation in the 401(k) Plan is contingent upon certain age and service requirements. The employer contributions
associated with the 401(k) Plan were $4.0 million in 2022, $3.9 million in 2021 and $3.6 million in 2020.
Other Retirement Benefits
Included in other liabilities is $1.1 million and $1.3 million at December 31, 2022 and 2021, respectively, for supplemental retirement benefits for retired executives from legacy plans assumed in
acquisitions. The Company recognized $0.2 million in expense for each of the years ended December 31, 2022, 2021 and 2020, related to
these plans.
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Stock-Based Compensation |
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Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation |
13. Stock-Based Compensation
In May 2018, the Company adopted the NBT Bancorp Inc. 2018 Omnibus Incentive Plan (the “Stock Plan”) replacing the 2008 Omnibus Incentive Plan which automatically
expired in April 2018. Under the terms of the Stock Plan, equity-based awards are granted to directors and employees to increase their direct proprietary interest in the operations and success of the Company. The Stock Plan assumed all prior
equity-based incentive plans and any new equity-based awards are granted under the terms of the Stock Plan. Restricted shares granted under the Plan typically vest
after or five years for employees and three years
for non-employee directors. Restricted stock units granted under the Stock Plan may have different terms and conditions. Performance shares and units granted under the Stock Plan for executives may have different terms and conditions. Since 2011, the
Company primarily grants restricted stock unit awards. Stock option grants since that time were reloads of existing grants which terminate ten years
from the date of the grant. Under terms of the Stock Plan, stock options are granted to purchase shares of the Company’s common stock at a price equal to the fair market value of the common stock on the date of the grant. Shares issued as a
result of vesting of restricted stock unit awards and stock option exercises are funded from the Company’s treasury stock.
The Company has outstanding restricted stock granted from various plans at December 31, 2022. The Company recognized $4.5 million, $4.4 million and $4.6 million in stock-based compensation expense
related to these stock awards for the years ended December 31, 2022, 2021 and 2020, respectively. Tax benefits recognized with
respect to restricted stock units were $1.2 million, $1.9 million and $1.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. Unrecognized compensation cost related to restricted stock units totaled $5.7 million at December 31, 2022 and will be recognized over 1.5 years on a weighted average basis. Shares issued are funded from the Company’s treasury stock. The following table summarizes information for
unvested restricted stock units outstanding as of December 31, 2022:
The following table summarizes information concerning stock options outstanding:
There was no stock-based compensation expense for stock option awards for the years ended December
31, 2022, 2021 and 2020. Cash proceeds, tax benefits and intrinsic value related to total stock options exercised is as follows:
The Company has 384,182 securities remaining available to
be granted as part of the Plan at December 31, 2022.
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Stockholders' Equity |
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity |
14. Stockholders’ Equity
In accordance with GAAP, unrecognized prior service costs and net actuarial gains or losses associated with the Company’s pension and postretirement benefit plans and
unrealized gains on derivatives and on AFS securities are included in AOCI, net of tax. For the years ended December 31, components of AOCI are:
Certain restrictions exist regarding the ability of the subsidiary bank to transfer funds to the Company in the form of cash dividends. The approval of the Office of the
Comptroller of the Currency (“OCC”) is required to pay dividends when a bank fails to meet certain minimum regulatory capital standards or when such dividends are in excess of a subsidiary bank’s earnings retained in the current year plus retained
net profits for the preceding two years as specified in applicable OCC regulations. At December 31, 2022, approximately $145.3 million of the
total stockholders’ equity of the Bank was available for payment of dividends to the Company without approval by the OCC. The Bank’s ability to pay dividends also is subject to the Bank’s continued compliance with regulatory capital requirements. The
Bank is currently in compliance with these requirements. Under the State of Delaware General Corporation Law, the Company may declare and pay dividends either out of accumulated net retained earnings or capital surplus.
The Company purchased 400,000 shares of its common stock
during the year ended December 31, 2022, for a
total of $14.7 million at an average price of
$36.78 per share under its previously
announced share repurchase program. On
December 20, 2021, the Board of Directors authorized a repurchase program for the Company to repurchase up to 2,000,000 shares of its
outstanding common stock. As of December 31, 2022, there were 1,600,000 shares available for repurchase under this plan which is set to expire on December 31, 2023.
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Regulatory Capital Requirements |
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Regulatory Capital Requirements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirements |
15. Regulatory Capital Requirements
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of NBT Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting
practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier 1 Capital to risk-weighted assets and of Tier 1 capital to average assets. In addition to maintaining minimum capital ratios, the
Company is subject to a capital conservation buffer (“Buffer”) of 2.50% above the minimum to avoid restriction on capital distributions and discretionary bonus paychecks to officers. At December 31, 2022 and 2021, the Company and the Bank meet all capital adequacy requirements to which they were subject.
Under their prompt corrective action regulations, regulatory authorities are required to take certain supervisory actions (and may take additional discretionary actions)
with respect to an undercapitalized institution. Such actions could have a direct material effect on an institution’s financial statements. The regulations establish a framework for the classification of banks into five categories: well-capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. As of December 31, 2022 and 2021, the most recent notifications from the Bank’s regulators categorized the Bank as well-capitalized under the regulatory framework for prompt
corrective action. To be categorized as well-capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 Capital to Average Asset ratios as set forth in the table below. There are no conditions or events since that
notification that management believes have changed the Bank’s category.
In March 2020, the OCC, the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance
Corporation (“FDIC”) announced an interim final rule to delay the estimated impact on regulatory capital stemming from the implementation of CECL. Under the modified CECL transition provision, the regulatory capital impact of the
January 1, 2020 CECL adoption date adjustment to the allowance for credit losses (after-tax) has been deferred and will phase into regulatory capital at 25% per year commencing January 1, 2022. For the ongoing impact of CECL, the Company is
allowed to defer the regulatory capital impact of the allowance for credit losses in an amount equal to 25% of the change in the allowance for credit losses (pre-tax) recognized through earnings for each period between January 1, 2020 and
December 31, 2021. The cumulative adjustment to the allowance for credit losses between January 1, 2020 and December 31, 2021, will also phase into regulatory capital at 25% per year commencing January 1, 2022. The Company adopted the capital
transition relief over the permissible five-year period. The Company and NBT Bank’s actual capital amounts and ratios are presented as follows:
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Earnings Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share |
16. Earnings Per Share
The following is a reconciliation of basic and diluted EPS for the years presented in the consolidated statements of income:
There was a nominal number of weighted average stock options outstanding for the years ended December 31, 2022, 2021 and 2020, that were not considered in the calculation of diluted EPS since the stock options’ exercise prices were greater than the average market price during these periods.
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Reclassification Adjustments Out of Other Comprehensive Income (Loss) |
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Reclassification Adjustments Out of Other Comprehensive Income (Loss) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification Adjustments Out of Other Comprehensive Income (Loss) |
17. Reclassification Adjustments Out of Other Comprehensive Income (Loss)
The following table summarizes the reclassification adjustments out of AOCI:
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Commitments and Contingent Liabilities |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities |
18. Commitments and Contingent Liabilities
The Company’s concentrations of credit risk are reflected in the consolidated balance sheets. The concentrations of credit risk with standby letters of credit, unused
lines of credit, commitments to originate new loans and loans sold with recourse generally follow the loan classifications.
At December 31, 2022, approximately 59% of the Company’s
loans were secured by real estate located in central and upstate New York, northeastern Pennsylvania, western Massachusetts, southern New Hampshire, Vermont, southern Maine and central Connecticut. Accordingly, the ultimate collectability of a
substantial portion of the Company’s portfolio is susceptible to changes in market conditions of those areas. Management is not aware of any material concentrations of credit to any industry or individual borrowers.
The Company is a party to certain financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit, unused lines of credit, standby letters of credit and certain agricultural real estate loans sold to investors with recourse, with the sold portion having a government guarantee that is
assignable back to the Company upon repurchase of the loan in the event of default. The Company’s exposure to credit loss in the event of nonperformance by the other party to the commitments to extend credit, unused lines of credit, standby letters
of credit and loans sold with recourse is represented by the contractual amount of those instruments. The credit risk associated with commitments to extend credit and standby and commercial letters of credit is essentially the same as that involved
with extending loans to customers and is subject to normal credit policies. Collateral may be obtained based on management’s assessment of the customer’s creditworthiness.
Since many loan commitments, standby letters of credit and guarantees and indemnification contracts expire without being funded in whole or in part, the contract amounts
are not necessarily indicative of future cash flows. The Company does not issue any guarantees that would require liability-recognition or disclosure, other than its standby letters of credit.
The Company guarantees the obligations or performance of customers by issuing standby letters of credit to third-parties. These standby letters of
credit are generally issued in support of third-party debt, such as corporate debt issuances, industrial revenue bonds and municipal securities. The risk involved in issuing standby letters of credit is essentially the same as the credit risk
involved in extending loan facilities to customers and letters of credit are subject to the same credit origination, portfolio maintenance and management procedures in effect to monitor other credit and off-balance sheet products. Typically, these
instruments have one year expirations with an option to renew upon annual review; therefore, the total amounts do not necessarily
represent future cash requirements. As of December 31, 2022 and 2021, the fair value of the Company’s standby letters of credit was not significant.
In the normal course of business there are various outstanding legal proceedings. If legal costs are deemed material by management, the Company accrues for the estimated
loss from a loss contingency if the information available indicates that it is probable that a liability had been incurred at the date of the financial statements and the amount of loss can be reasonably estimated.
The Company is required to maintain reserve balances with the Federal Reserve Bank. The required average total reserve for NBT Bank for the 14-day maintenance period ending December 28, 2022 was $86.7
million.
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Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities |
19. Derivative Instruments and Hedging Activities
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide
variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, primarily by managing the amount, sources and duration of its assets and liabilities and
through the use of derivative instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash
amounts, the value of which are determined by interest rates. Generally, the Company may use derivative financial instruments to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or
expected cash payments. Currently, the Company has interest rate derivatives that result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The
Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions.
Derivatives Not Designated as Hedging Instruments
The
Company enters into interest rate swaps to facilitate customer transactions and meet their financing needs. These swaps are considered derivatives, but are not designated in hedging relationships. These instruments have interest rate and credit
risk associated with them. To mitigate the interest rate risk, the Company enters into offsetting interest rate swaps with counterparties. The counterparty swaps are also considered derivatives and are also not designated in hedging
relationships. Interest rate swaps are recorded within other assets or other liabilities on the consolidated balance sheet at their estimated fair value. Changes to the fair value of assets and liabilities arising from these derivatives are
included, net, in other operating income in the consolidated statements of income.
The Company is subject
to over-the-counter derivative clearing requirements, which require certain derivatives to be cleared through central clearing houses. Accordingly, the Company began to clear certain derivative transactions through the Chicago Mercantile Exchange
Clearing House (“CME”) in January of 2021. The CME requires the Company to post initial and variation margin payments to mitigate the risk of non-payment, the latter of which is received or paid daily based on the net asset or liability position of
the contracts. A daily settlement occurs through the CME for changes in the fair value of centrally cleared derivatives. Not all of the derivatives are required to be cleared through the daily clearing agent. As a result, the total fair values of
loan level derivative assets and liabilities recognized on the Company’s financial statements are not equal and offsetting.
As of December 31, 2022 and 2021, the Company had fifteen
and eighteen risk participation agreements, respectively, with financial institution counterparties for interest rate swaps related to
participated loans. Risk participation agreements provide credit protection to the financial institution that originated the swap transaction should the borrower fail to perform on its obligation. The Company enters into both risk participation
agreements in which it purchases credit protection from other financial institutions and those in which it provides credit protection to other financial institutions.
Derivatives Designated as Hedging Instruments
The Company has previously entered into interest rate swaps to modify the interest rate characteristics of certain short-term FHLB advances from variable rate to fixed
rate in order to reduce the impact of changes in future cash flows due to market interest rate changes. These agreements are designated as cash flow hedges with currently none outstanding.
The following table summarizes the derivatives outstanding:
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCI and subsequently
reclassified into interest expense in the same period during which the hedge transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s
short-term rate borrowings. During 2021 the Company’s final cash flow hedge of interest rate risk matured and the remaining balance was reclassified from AOCI as a reduction to interest expense. There is no additional amount that will be reclassified from AOCI as a reduction to interest expense.
The following table indicates the effect of cash flow hedge accounting on AOCI and on the consolidated statement of income:
The following table indicates the gain or loss recognized in income on derivatives not designated as a hedging relationship:
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Fair Value Measurements and Fair Values of Financial Instruments |
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Fair Value Measurements and Fair Values of Financial Instruments |
20. Fair Value Measurements and Fair Values of Financial Instruments
GAAP states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. Fair value measurements are not adjusted for transaction costs. A fair value hierarchy exists within GAAP that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs that are observable, either directly or
indirectly, for substantially the full term of the asset or liability; and
Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no
market activity).
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities, many other sovereign government
obligations, liquid mortgage products, active listed equities and most money market securities. Such instruments are generally classified within Level 1 or Level 2 of the fair value hierarchy. The Company does not adjust the quoted prices for such
instruments.
The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations or quote from alternative pricing sources with
reasonable levels of price transparency include most investment-grade and high-yield corporate bonds, less liquid mortgage products, less liquid agency securities, less liquid listed equities, state, municipal and provincial obligations and certain
physical commodities. Such instruments are generally classified within Level 2 of the fair value hierarchy. Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices). Other investment securities are
reported at fair value utilizing Level 1 and Level 2 inputs. The prices for Level 2 instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases and sales
of investment securities. Prices obtained from these sources include prices derived from market quotations and matrix pricing. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S.
Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Management reviews the methodologies used by its third-party providers in
pricing the securities.
Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions. Valuations are adjusted to reflect illiquidity and/or
non-transferability and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate will be used. Management’s best estimate consists of both internal and external support on certain
Level 3 investments. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment
or comparable entities, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, offerings in the equity or debt markets and changes in financial ratios or cash flows.
The following tables set forth the Company’s financial assets and liabilities measured on a recurring basis that were accounted for at fair value. Assets and liabilities
are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:
GAAP requires disclosure of assets and liabilities measured and recorded at fair value
on a non-recurring basis such as goodwill, loans held for sale, other real estate owned, collateral-dependent loans individually evaluated for expected credit losses and HTM securities. The non-recurring fair value measurements recorded during the
years ended December 31, 2022 and 2021 were related to loans individually evaluated for expected credit losses with fair value of $1.1 million and $7.4 million as of December 31, 2022 and 2021, respectively. The
Company uses the fair value of underlying collateral, less costs to sell, to estimate the allowance for credit losses for individually evaluated collateral dependent loans. The appraisals may be adjusted by management for qualitative factors such as
economic conditions and estimated liquidation expenses ranging from 10% to 50%. Based on the valuation techniques used, the fair value measurements for collateral
dependent individually evaluated loans are classified as Level 3.
The following table sets forth information with regard to estimated fair values of financial instruments. This table excludes financial instruments for which the carrying
amount approximates fair value. Financial instruments for which the fair value approximates carrying value include cash and cash equivalents, AFS securities, equity securities, accrued interest receivable, non-maturity deposits, short-term borrowings,
accrued interest payable and derivatives.
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not
reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair
value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties
and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the
value of assets and liabilities that are not considered financial instruments. For example, the Company has a substantial wealth operation that contributes net fee income annually. The wealth management operation is not considered a financial
instrument and its value has not been incorporated into the fair value estimates. Other significant assets and liabilities include the benefits resulting from the low-cost funding of deposit liabilities as compared to the cost of borrowing funds in the
market and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimate of fair value.
HTM Securities
The fair value of the Company’s HTM securities is primarily measured using information from a third-party pricing service. The fair value measurements consider observable
data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.
Net Loans
Net loans include portfolio loans and loans held for sale. Loans were first segregated by type and then further segmented into fixed and variable rate
and loan quality categories. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments, and those expected future cash flows also include credit risk, illiquidity risk and other market factors to
calculate the exit price fair value in accordance with ASC 820.
Time Deposits
The fair value of time deposits was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments. The
fair values of the Company’s time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.
Long-Term Debt
The fair value of long-term debt was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments.
Subordinated Debt
The fair value of subordinated debt has been measured using the observable market price as of the period reported.
Junior Subordinated Debt
The fair value of junior subordinated debt has been estimated using a discounted cash flow analysis.
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Parent Company Financial Information |
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Parent Company Financial Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parent Company Financial Information |
21. Parent Company Financial Information
Condensed Balance Sheets
Condensed Statements of Income
Condensed Statements of Cash Flows
A statement of changes in stockholders’ equity has not been presented since it is the same as the consolidated statement of changes in stockholders’ equity previously
presented.
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Summary of Significant Accounting Policies (Policies) |
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Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial
statements and accompanying notes. Actual results could differ from these estimates and such differences could be material to the financial statements.
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Use of Estimates |
Estimates associated with the allowance for credit losses, pension accounting, provision for income taxes, fair values of financial instruments and status of contingencies
are particularly susceptible to material change in the near term.
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Consolidation |
Consolidation
The accompanying consolidated financial statements include the accounts of NBT Bancorp and its wholly-owned subsidiaries mentioned above. All
material intercompany transactions have been eliminated in consolidation. Amounts previously reported in the consolidated financial statements are reclassified whenever necessary to conform to the current year’s presentation. The Company combined ATM
and debit card fees with card related income previously reported in Other noninterest income which is now disclosed as Card services income. The Company reclassified Data processing and communications expense into Technology and data services
expense. The Company reclassified Equipment expense into Occupancy expense and Technology and data services expense. In the “Parent Company Financial Information,” the investment in subsidiaries is recorded using the equity method of accounting.
The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable
interest entity under GAAP. Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the
right to receive residual returns and the right to make decisions about the entity’s activities. The Company consolidates voting interest entities in which it has all, or at least a majority of, the voting interest. As defined in applicable accounting
standards, variable interest entities (“VIEs”) are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when the Company has both the power and ability to direct the
activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company’s wholly-owned subsidiaries CNBF
Capital Trust I, NBT Statutory Trust I, NBT Statutory Trust II, Alliance Financial Capital Trust I and Alliance Financial Capital Trust II are VIEs for which the Company is not the primary beneficiary. Accordingly, the accounts of these entities are
not included in the Company’s consolidated financial statements.
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Segment Reporting |
Segment Reporting
The Company’s operations are primarily in the community banking industry and include the provision of traditional banking services. The Company also provides other
services through its subsidiaries such as insurance, retirement plan administration and trust administration. The Company operates in the geographical regions of central and upstate New York, northeastern Pennsylvania, southern New Hampshire, western
Massachusetts, Vermont, southern Maine and central Connecticut. The Company has no reportable operating segments.
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Cash Equivalents |
Cash Equivalents
The Company considers amounts due from correspondent banks, cash items in process of collection and institutional money market mutual funds to be cash equivalents for
purposes of the consolidated statements of cash flows.
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Securities |
Securities
The Company classifies its securities at date of purchase as either held to maturity (“HTM”), available for sale (“AFS”) or equity. HTM debt securities are those that the
Company has the ability and intent to hold until maturity. AFS debt securities are securities that are not classified as HTM. AFS securities are recorded at
fair value. Unrealized holding gains and losses, net of the related tax effect, on AFS securities are excluded from earnings and are reported in the consolidated statements of changes in stockholders’ equity and the consolidated statements of
comprehensive income as a component of accumulated other comprehensive income or loss (“AOCI”). HTM securities are recorded at amortized cost. Equity securities are recorded at fair value, with net unrealized gains and losses recognized in
income. Transfers of securities between categories are recorded at fair value at the date of transfer. Non-marketable equity securities are carried at cost. Equity securities without readily determinable fair values are carried at cost. The Company
performs a qualitative assessment on equity securities to determine whether the investments are impaired and downward or upward adjustments are recognized through the income statement.
Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to yield using the interest method. Dividend and interest income
are recognized when earned. Realized gains and losses on securities sold are derived using the specific identification method for determining the cost of securities sold.
Allowance for Credit Losses –HTM Debt Securities
With respect to its HTM debt securities, the Company is required to utilize the Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) approach to estimate expected credit losses. Management measures
expected credit losses on HTM debt securities on a collective basis by major security types that share similar risk characteristics, such as (as applicable): internal or external (third-party) credit score or credit ratings, risk ratings or
classification, financial asset type, collateral type, size, effective interest rate, term, geographical location, industry of the borrower, vintage, historical or expected credit loss patterns, and reasonable and supportable forecast periods.
Management classifies the HTM portfolio into the following major security types: U.S. government agency or U.S. government-sponsored mortgage-backed and collateralized mortgage obligations securities, and state and municipal debt securities.
The mortgage-backed and collateralized mortgage obligations HTM securities are issued by U.S. government entities and agencies. These securities are
either explicitly and/or implicitly guaranteed by the U.S. government as to timely repayment of principal and interest, are highly rated by major rating agencies, and have a long history of zero credit losses. Therefore, the Company did not record an
allowance for credit loss for these securities.
State and municipal bonds generally carry a Moody’s rating of A to AAA. In addition, the Company has a limited amount of New York state local
municipal bonds that are not rated. The estimate of expected credit losses on the HTM portfolio is based on the expected cash flows of each individual bond over its contractual life and considers historical credit loss information, current conditions
and reasonable and supportable forecasts. Given the rarity of municipal defaults and losses, the Company utilized Moody’s Municipal Loss Forecast Model as the sole source of municipal default and loss rates which provides decades of data across all
municipal sectors and geographies. As with the loan portfolio, cash flows are forecast over a 6-quarter period under various weighted economic conditions, with a reversion to long-term average economic conditions over a 4-quarter period on a
straight-line basis. Management may exercise discretion to make adjustments based on environmental factors. The Company determined that the expected credit loss on its HTM municipal bond portfolio was immaterial and therefore no allowance for credit losses was recorded.
Allowance for Credit Losses –AFS Debt Securities
The impairment model for AFS debt securities differs from the CECL approach utilized for HTM debt securities because AFS debt securities are measured
at fair value rather than amortized cost. For AFS debt securities in an unrealized loss position, the Bank first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its
amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For AFS debt securities that do not meet the aforementioned criteria, in
making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, adverse conditions specifically related to the security, failure of the issuer of the
debt security to make scheduled interest or principal payments, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost
basis of the security. The cash flows should be estimated using information relevant to the collectability of the security, including information about past events, current conditions and reasonable and supportable forecasts. If the present value of
cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any
impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.
Investments in Federal Reserve Bank and Federal Home Loan Bank (“FHLB”) stock are required for membership in those organizations and are carried at cost since there is no
market value available. The FHLB New York continues to pay dividends and repurchase stock. As such, the Company has not recognized any impairment on its holdings of Federal Reserve Bank and FHLB stock.
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Loan Held for Sale and Loan Servicing |
Loan Held for Sale and Loan Servicing
Loans held for sale are recorded at the lower of cost or fair value on an individual basis. Loan sales are recorded when the sales are funded. Gains and losses on sales of
loans held for sale are included in other noninterest income in the Consolidated Statements of Income. Mortgage loans held for sale are generally sold with servicing rights retained. Mortgage servicing rights are recorded at fair value upon sale of the
loan, and are amortized in proportion to and over the period of estimated net servicing income.
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Loans |
Loans
Loans are recorded at their current unpaid principal balance, net of unearned income and unamortized loan fees and expenses, which are amortized under the effective
interest method over the estimated lives of the loans. Interest income on loans is accrued based on the principal amount outstanding.
For all loan classes within the Company’s loan portfolio, loans are placed on nonaccrual status when timely collection of principal and/or interest in accordance with
contractual terms is in doubt. Loans are transferred to nonaccrual status generally when principal or interest payments become over ninety days
delinquent, unless the loan is well secured and in the process of collection or sooner when management concludes circumstances indicate that borrowers may be unable to meet contractual principal or interest payments. When a loan is transferred to a
nonaccrual status, all interest previously accrued in the current period but not collected is reversed against interest income in that period. Interest accrued in a prior period and not collected is charged-off against the allowance for credit losses.
If ultimate repayment of a nonaccrual loan is expected, any payments received are applied in accordance with contractual terms. If ultimate repayment of principal is not
expected, any payment received on a nonaccrual loan is applied to principal until ultimate repayment becomes expected. For all loan classes within the Company’s loan portfolio, nonaccrual loans are returned to accrual status when they become current as
to principal and interest and demonstrate a period of performance under the contractual terms and, in the opinion of management, are fully collectible as to principal and interest. For loans in all portfolios, the principal amount is charged off in
full or in part as soon as management determines, based on available facts, that the collection of principal in full or in part is improbable. For Commercial loans, management considers specific facts and circumstances relative to individual credits in
making such a determination. For Consumer and Residential loan classes, management uses specific guidance and thresholds from the Federal Financial Institutions Examination Council’s Uniform Retail Credit Classification and Account Management Policy.
A loan is considered to be a troubled debt restructuring (“TDR”) when the Company
grants a concession to the borrower because of the borrower’s financial condition that the Company would not otherwise consider. Such concessions generally include one or a combination of the following: an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a temporary reduction in the interest rate; or a change in scheduled payment
amount. TDR loans are nonaccrual loans; however, they can be returned to accrual status after a period of performance, generally evidenced by six months
of compliance with their modified terms.
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Allowance for Credit Losses - Loans |
Allowance for Credit Losses - Loans
The CECL approach requires an estimate of the credit losses expected over the life of a loan (or pool of loans). The allowance for credit losses is a
valuation account that is deducted from, or added to, the loans’ amortized cost basis to present the net, lifetime amount expected to be collected on the loans. Loan losses are charged off against the allowance when management believes a loan balance
is confirmed to be uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.
Management estimates the allowance balance using relevant information, from internal and external sources, related to past events, current conditions,
and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss
experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience is used. Adjustments to historical loss information is made for
differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level or term as well as changes in environmental conditions, such as changes in unemployment rates, production metrics,
property values, or other relevant factors. Company historical loss experience is supplemented with peer information when there is insufficient loss data for the Company. Peer selection is based on a review of institutions with comparable loss
experience as well as loan yield, bank size, portfolio concentration and geography. Finally, the Company considers forecasts about future economic conditions that are reasonable and supportable. Significant management judgment is required at various
points in the measurement process.
Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit
losses. Management developed segments for estimating loss based on type of borrower and collateral which is generally based upon federal call report segmentation and have been combined or subsegmented as needed to ensure loans of similar risk profiles
are appropriately pooled.
The following table illustrates the portfolio and class segments for the Company’s loan portfolio:
Commercial Loans
The Company offers a variety of commercial loan products. The Company’s underwriting analysis for commercial loans typically includes credit
verification, independent appraisals, a review of the borrower’s financial condition and a detailed analysis of the borrower’s underlying cash flows.
Commercial and Industrial (“C&I”) – The Company offers a
variety of loan options to meet the specific needs of our C&I customers including term loans, time notes and lines of credit. Such loans are made available to businesses for working capital needs and are typically collateralized by business assets
such as equipment, accounts receivable and perishable agricultural products, which are exposed to industry price volatility. To reduce these risks, management also attempts to obtain personal guarantees of the owners or to obtain government loan
guarantees to provide further support.
Paycheck Protection Program (“PPP”) – Section 1102 of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) created the Paycheck Protection Program, a program administered by the Small Business Administration (the “SBA”) to
provide loans to small businesses for payroll and other basic expenses during the coronavirus (“COVID-19”) pandemic. The Company has been a participant in the PPP as a lender. Loans made under the PPP are fully guaranteed by the SBA, whose
guarantee is backed by the full faith and credit of the United States government. PPP covered loans also afford borrowers forgiveness up to the principal amount of the PPP covered loan, plus accrued interest, if the loan proceeds are used to retain
workers and maintain payroll or to make certain mortgage interest, lease and utility payments, and certain other criteria are satisfied. The SBA will reimburse PPP lenders for any amount of a PPP covered loan that is forgiven, and PPP lenders will
not be held liable for any representations made by PPP borrowers in connection with their requests for loan forgiveness. Lenders receive pre-determined fees for processing and servicing PPP loans. In addition, PPP loans are risk-weighted at zero
percent under the generally applicable Standardized Approach used to calculate risk-weighted assets for regulatory capital purposes. The Company processed approximately 6,100 loans totaling $835 million in relief. As of December 31, 2022 total forgiveness and paydown is
equal to 99% of the original balance.
Commercial Real Estate (“CRE”) – The Company offers CRE
loans to finance real estate purchases, refinancing’s, expansions and improvements to commercial and agricultural properties. CRE loans are loans that are secured by liens on real estate, which may include both owner-occupied and nonowner-occupied
properties, such as apartments, commercial structures, health care facilities and other facilities. The Company’s underwriting analysis includes credit verification, independent appraisals, a review of the borrower’s financial condition and a detailed
analysis of the borrower’s underlying cash flows. These loans are typically originated in amounts of no more than 80% of the appraised value
of the property. Government loan guarantees may be obtained to provide further support for agricultural property.
Consumer Loans
The Company offers a variety of Consumer loan products including Auto and Other Consumer loans.
Auto – The Company provides both direct and indirect
financing of automobiles (“Auto”). The Company maintains relationships with many dealers primarily in the communities that we serve. Through these relationships, the Company primarily finances the purchases of automobiles indirectly through dealer
relationships. Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from to six years, based upon the nature of the collateral and the size of the loan.
Other Consumer – The Other Consumer loan segment consists primarily of unsecured consumer loans, residential solar loans and direct consumer loans. The Company offers unsecured consumer loans across a national footprint originated through our
relationships with national technology-driven consumer lending companies to finance such things as dental and medical procedures, K-12 tuition, solar energy installations and other consumer purpose loans. Advances of credit through this business
line are subject to the Company’s underwriting standards including criteria such as FICO score and debt to income thresholds. In 2017, the Company partnered with Sungage Financial, Inc. to offer financing to consumers for solar ownership with the
program tailored for delivery through solar installers. Advances of credit through this business line are to prime borrowers and are subject to the Company’s underwriting standards. Typically, the Company collects origination fees that are deferred
and recognized into interest income over the estimated life of the loan. The Company offers a variety of direct consumer installment loans to finance various personal expenditures. In addition to installment loans, the Company also offers personal
lines of credit, overdraft protection, debt consolidation, education and other uses. Direct consumer installment loans carry a fixed rate of interest with principal repayment terms typically ranging from to fifteen years, based upon the nature of the collateral
and the size of the loan. Consumer installment loans are often secured with collateral consisting of a perfected lien on the asset being purchased or a perfected lien on a consumer’s deposit account. Risk is reduced through underwriting criteria,
which include credit verification, appraisals, a review of the borrower’s financial condition and personal cash flows. A security interest, with title insurance when necessary, is taken in the underlying real estate.
Residential
Residential loans consist primarily of loans secured by a first or second mortgage on primary residences, home equity loans and lines of credit in
first and second lien positions and residential construction loans. We originate adjustable-rate and fixed rate, one-to-four-family residential loans for the construction or purchase of a residential property or the refinancing of a mortgage. These
loans are collateralized by properties located in the Company’s market area. Loans on one-to-four-family residential are generally originated in amounts of no more than 85% of the purchase price or appraised value (whichever is lower) or have private mortgage insurance. Mortgage title insurance and hazard insurance are normally required. Construction loans have
a unique risk because they are secured by an incomplete dwelling. This risk is reduced through periodic site inspections, including one at each loan draw period. For home equity loans, consumers are able to borrow up to 85% of the equity in their homes and are generally tied to Prime with a ten-year draw followed by a fifteen-year amortization. These loans carry a higher
risk than first mortgage residential loans as they are often in a second position with respect to collateral.
Historical credit loss experience for both the Company and segment-specific peers provides the basis for the estimation of expected credit losses,
where observed credit losses are converted to probability of default rate (“PD”) curves through the use of segment-specific loss given default (“LGD”) risk factors that convert default rates to loss severity based on industry-level, observed
relationships between the two variables for each asset class, primarily due to the nature of the underlying collateral. These risk factors were assessed for reasonableness against the Company’s own loss experience and adjusted in certain cases when the
relationship between the Company’s historical default and loss severity deviate from that of the wider industry. The historical PD curves, together with corresponding economic conditions, establish a quantitative relationship between economic
conditions and loan performance through an economic cycle.
Using the historical relationship between economic conditions and loan performance, management’s expectation of future loan performance is
incorporated using externally developed economic forecasts which are probabilistically weighted to reflect potential forecast inaccuracy and model limitations. These forecasts are applied over a period that management has determined to be reasonable
and supportable. Beyond the period over which management can develop or source a reasonable and supportable forecast, the model will revert to long-term average economic conditions using a straight-line, time-based methodology.
The allowance for credit losses is measured on a collective (pool) basis, with both a quantitative and qualitative analysis that is applied on a
quarterly basis, when similar risk characteristics exist. The respective quantitative allowance for each segment is measured using an econometric, PD/LGD modeling methodology in which distinct, segment-specific multi-variate regression models are
applied to multiple, probabilistically weighted external economic forecasts. Under the discounted cash flows methodology, expected credit losses are estimated over the effective life of the loans by measuring the difference between the net present
value of modeled cash flows and amortized cost basis. Contractual cash flows over the contractual life of the loans are the basis for modeled cash flows, adjusted for modeled defaults and expected prepayments and discounted at the loan-level stated
interest rate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a TDR will be executed with an individual borrower
or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.
After quantitative considerations, management applies additional qualitative adjustments so that the allowance for credit losses is reflective of the
estimate of lifetime losses that exist in the loan portfolio at the balance sheet date. Qualitative considerations include limitations inherent in the quantitative model; trends experienced in nonperforming and delinquent loans; changes in value of
underlying collateral; changes in lending policies and procedures; nature and composition of loans; portfolio concentrations that may affect loss experience across one or more components of the portfolio; the experience, ability and depth of lending
management and staff; the Company’s credit review system; and the effect of external factors; such as competition, legal and regulatory requirements.
Loans that do not share risk characteristics and meet materiality criteria are evaluated on an individual basis and are excluded from the pooled
evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. If the loan is not collateral dependent, the
allowance for credit losses related to individually assessed loans is based on discounted expected cash flows using the loan’s initial effective interest rate. Generally, individually assessed loans are collateral dependent.
A loan for which the terms have been modified resulting in a concession, and for
which the borrower is experiencing financial difficulties is considered to be a TDR. The allowance for credit losses on a TDR is measured using the same method as all other loans held for investment, except that the original interest rate is used
to discount the expected cash flows, not the rate specified within the restructuring. If the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral, then management uses the current fair value of the
collateral, less selling costs. If management determines that the value of the modified loan is less than the recorded investment in the loan, a write-down would be recorded.
Allowance for Credit Losses on Off-Balance Sheet Credit Exposures
The Company estimates expected credit losses over the contractual period in which the Company has exposure to credit risk via a contractual obligation
to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted as an expense in other noninterest expense. The estimate includes consideration of
the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated lives. Estimating credit losses on unfunded commitments requires the Bank to consider the following categories of
off-balance sheet credit exposure: unfunded commitments to extend credit, unfunded lines of credit, and standby letters of credit. Each of these unfunded commitments is then analyzed for a probability of funding to calculate a probable funding amount.
The life of loan loss factor by related portfolio segment from the loan allowance for credit loss calculation is then applied to the probable funding amount to calculate a reserve on unfunded commitments.
Accrued Interest Receivable
Accrued interest receivable balances are presented separately within other assets balance sheet line item. The Company has excluded interest
receivable that is included in amortized cost of financing receivables from related disclosures requirements and accrued interest receivable is written off by reversing interest income. For loans, write off typically occurs upon becoming over 90 to 120 days past due and therefore the
amount of such write offs are immaterial. Historically, the Company has not experienced uncollectible accrued interest receivable on investment securities.
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Premises and Equipment |
Premises and Equipment
Premises and equipment are stated at cost, less accumulated depreciation. Depreciation of premises and equipment is determined using the straight-line method over the
estimated useful lives of the respective assets. Expenditures for maintenance, repairs and minor replacements are charged to expense as incurred.
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Leases |
Leases
The Company determines if a lease is present at the inception of an agreement. Right-of-use (“ROU”) assets and lease liabilities are recognized at lease commencement based
on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental borrowing rate at the lease commencement date. ROU assets and operating lease liabilities, are included in other assets and other
liabilities, respectively, on the consolidated balance sheets. Leases with original terms of 12 months or less are recognized in profit or loss on a
straight-line basis over the lease term.
Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make
lease payments arising from the lease. ROU assets are further adjusted for lease incentives. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized
on a straight-line basis over the lease term, and is recorded in occupancy expense in the consolidated statements of income.
The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, non-lease components and other
non-components, such as common area maintenance charges, real estate taxes and insurance are not included in the measurement of the lease liability since they are generally able to be segregated. Our leases relate primarily to office space and bank
branches, and some contain options to renew the lease. These options to renew are generally not considered reasonably certain to exercise, and are therefore not included in the lease term until such time that the option to renew is reasonably certain.
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Other Real Estate Owned |
Other Real Estate Owned
Other real estate owned (“OREO”) consists of properties acquired through foreclosure or by acceptance of a deed in lieu of foreclosure. These assets are recorded at the
lower of fair value of the asset acquired less estimated costs to sell or “cost” (defined as the fair value at initial foreclosure). At the time of foreclosure, or when foreclosure occurs in-substance, the excess, if any, of the loan over the fair
market value of the assets received, less estimated selling costs, is charged to the allowance for loan losses and any subsequent valuation write-downs are charged to other expense. In connection with the determination of the allowance for loan losses
and the valuation of OREO, management obtains appraisals for properties. Operating costs associated with the properties are charged to expense as incurred. Gains on the sale of OREO are included in income when title has passed and the sale has met the
minimum down payment requirements prescribed by GAAP. The balance of OREO is recorded in other assets on the consolidated balance sheets.
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Goodwill and Other Intangible Assets |
Goodwill and Other Intangible Assets
Goodwill represents the cost of acquired business in excess of the fair value of the related net assets acquired. Goodwill is not amortized but tested at the reporting
unit level for impairment on an annual basis and on an interim basis or when events or circumstances dictate. The Company has elected June 30 as the annual impairment testing date for the insurance and retirement services reporting units and December
31 for the Bank reporting unit.
The Company has the option to first assess qualitative factors, by performing a qualitative analysis, to determine whether the existence of events or circumstances leads
to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the events or circumstances, the Company determines it is more likely than not that the fair value of a
reporting unit is greater than its carrying amount, the impairment test is not required. If the Company concludes otherwise, the Company is required to perform a quantitative impairment test. In the quantitative impairment test, the estimated fair
value of a reporting unit is compared to the carrying amount in order to determine if impairment is indicated. If the estimated fair value exceeds the carrying amount, the reporting unit is not deemed to be impaired. If the estimated fair value is
below the carrying value of the reporting unit, the difference is the amount of impairment.
Intangible assets that have indefinite useful lives are not amortized, but are tested at least annually for impairment. Intangible assets that have finite useful lives are
amortized over their useful lives. Core deposit intangibles and trust intangibles at the Company are amortized using the sum-of-the-years’-digits method. Covenants not to compete are amortized on a straight-line basis. Customer lists are amortized
using an accelerated method. When facts and circumstances indicate potential impairment of amortizable intangible assets, the Company evaluates the recoverability of the asset carrying value, using estimates of undiscounted future cash flows over the
remaining asset life. Any impairment loss is measured by the excess of carrying value over fair value.
Determining the fair value of a reporting unit under the goodwill impairment tests and determining the fair value of other intangible assets are judgmental and often
involve the use of significant estimates and assumptions. Estimates of fair value are primarily determined using the discounted cash flows method, which uses significant estimates and assumptions including projected future cash flows, discount rates
reflecting the market rate of return and projected growth rates. Future events may impact such estimates and assumptions and could cause the Company to conclude that our goodwill or intangible assets have become impaired, which would result in
recording an impairment loss.
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Bank-Owned Life Insurance |
Bank-Owned Life Insurance
The Bank has purchased life insurance policies on certain employees, key executives and directors. Bank-owned life insurance is recorded at the amount that can be realized
under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.
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Treasury Stock |
Treasury Stock
Treasury stock acquisitions are recorded at cost. Subsequent sales of treasury stock are recorded on an average cost basis. Gains on the sale of treasury stock are
credited to additional paid-in-capital. Losses on the sale of treasury stock are charged to additional paid-in-capital to the extent of previous gains, otherwise charged to retained earnings.
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Income Taxes |
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes interest accrued and penalties related
to unrecognized tax benefits in income tax expense.
Tax positions are recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being
presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 percent likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.
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Pension Costs |
Pension Costs
The Company has a qualified, noncontributory, defined benefit pension plan covering substantially all of its employees, as well as supplemental employee retirement plans
to certain current and former executives and a defined benefit postretirement healthcare plan that covers certain employees. Costs associated with these plans, based on actuarial computations of current and future benefits for employees, are charged to
current operating expenses.
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Stock-Based Compensation |
Stock-Based Compensation
The Company maintains various long-term incentive stock benefit plans under which restricted stock units are granted to certain directors and key
employees. Compensation expense is recognized in the consolidated statements of income over the requisite service period, based on the grant-date fair value of the award. For restricted stock units, compensation expense is recognized ratably over the
vesting period for the fair value of the award, measured at the grant date.
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Earnings Per Share |
Earnings Per Share
Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity (such as the Company’s dilutive stock options and restricted stock units).
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Comprehensive Income (Loss) |
Comprehensive Income (Loss)
At the Company, comprehensive income (loss) represents net income plus OCI, which consists primarily of the net change in unrealized gains (losses) on AFS debt securities
for the period, changes in the funded status of employee benefit plans and unrealized gains (losses) on derivatives designated as hedging instruments. AOCI represents the net unrealized gains (losses) on AFS debt securities, the previously unrecognized
portion of the funded status of employee benefit plans and the fair value of instruments designated as hedging instruments, net of income taxes, as of the consolidated balance sheet dates.
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Derivative Instruments and Hedging Activities |
Derivative Instruments and Hedging Activities
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the
derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and
qualifying as a hedge of the exposure to changes in the fair value of an asset, liability or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a
hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the
hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.
The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are
recognized in earnings. For derivatives designated as cash flow hedges, changes in fair value of the cash flow hedges are reported in OCI. When the cash flows associated with the hedged item are realized, the gain or loss included in OCI is recognized
in the consolidated statements of income.
When the Company purchases or sells a portion of a commercial loan that has an existing interest rate swap, it may enter into a risk participation agreement to provide credit protection to the financial institution that originated the swap transaction should the borrower fail to perform on its obligation. The Company enters
into both risk participation agreements in which it purchases credit protection from other financial institutions and those in which it provides credit protection to other financial institutions. Any fee paid to the Company under a risk
participation agreement is in consideration of the credit risk of the counterparties and is recognized in the income statement. Credit risk on the risk participation agreements is determined after considering the risk rating, probability of default and
loss given default of the counterparties.
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Fair Value Measurements |
Fair Value Measurements
GAAP states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. Fair value measurements are not adjusted for transaction costs. A fair value hierarchy exists within GAAP that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs that are observable, either directly or
indirectly, for substantially the full term of the asset or liability; and
Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no
market activity).
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities, many other sovereign government
obligations, liquid mortgage products, active listed equities and most money market securities. Such instruments are generally classified within Level 1 or Level 2 of the fair value hierarchy. The Company does not adjust the quoted price for such
instruments.
The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations or quote from alternative pricing sources with
reasonable levels of price transparency include most investment-grade and high-yield corporate bonds, less liquid mortgage products, less liquid agency securities, less liquid listed equities, state, municipal and provincial obligations and certain
physical commodities. Such instruments are generally classified within Level 2 of the fair value hierarchy. Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices). Other investment securities are
reported at fair value utilizing Level 1 and Level 2 inputs. The prices for Level 2 instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases and sales
of investment securities. Prices obtained from these sources include prices derived from market quotations and matrix pricing. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S.
Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Management reviews the methodologies used in pricing the securities by its
third-party providers in pricing the securities.
Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions. Valuations are adjusted to reflect illiquidity and/or
non-transferability and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate will be used. Management’s best estimate consists of both internal and external support on certain
Level 3 investments. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment
or comparable entities, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, offerings in the equity or debt markets and changes in financial ratios or cash flows.
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Other Financial Instruments |
Other Financial Instruments
The Company is a party to certain instruments with off-balance-sheet risk such as commitments to extend credit, unused lines of credit, standby letter of credit and
certain agricultural real estate loans sold to investors with recourse. The Company’s policy is to record such instruments when funded.
Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third-party. The risk involved in issuing standby letters of
credit is essentially the same as the credit risk involved in extending loan facilities to customers. Under the standby letters of credit, the Company is required to make payments to the beneficiary of the letters of credit upon request by the
beneficiary contingent upon the customer’s failure to perform under the terms of the underlying contract with the beneficiary. Standby letters of credit typically have one year expirations with an option to renew upon annual review. The Company typically receives a fee for these transactions. The fair value of standby letters of credit is recorded upon
inception.
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Repurchase Agreements |
Repurchase Agreements
Repurchase agreements are accounted for as secured financing transactions since the Company maintains effective control over the transferred
securities and the transfer meets the other criteria for such accounting. Obligations to repurchase securities sold are reflected as a liability in the consolidated balance sheets. The securities underlying the agreements are delivered to a custodial
account for the benefit of the counterparties with whom each transaction is executed. The counterparties, who may sell, loan or otherwise dispose of such securities to other parties in the normal course of their operations, agree to resell to the
Company the same securities at the maturities of the agreements.
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Revenue from Contracts with Customers |
Revenue from Contracts with Customers
Effective January 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification (“ASC”) Topic 606) (“ASC 606” and “ASU 2014-09”), and all subsequent ASUs that modified ASC
606. The implementation of ASC 606 did not have a material impact on the measurement or recognition of revenue; as such, a cumulative effect adjustment to opening retained earnings was not deemed necessary. ASC 606 does not apply to revenue associated
with financial instruments, including revenue from loans and securities and certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives and certain credit card fees are also not in scope.
ASC 606 is applicable to noninterest revenue streams such as retirement plan administration fees, trust and asset management income, deposit related fees and annuity and insurance commissions; however, the recognition of these revenue streams did not
change significantly upon adoption of ASC 606.
Service Charges on Deposit Accounts
Service charges on deposit accounts consist of overdraft fees, monthly service fees, check orders and other deposit account related fees. Overdraft, monthly service, check
orders and other deposit account related fees are transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily
received immediately or in the following month through a direct charge to customers’ accounts.
Card Services Income
ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Debit card income is primarily comprised
of interchange fees earned whenever the Company’s debit cards are processed through card payment networks. The Company’s performance obligations for these revenue streams are satisfied, and related revenue recognized, when the services are rendered or
upon completion. Payment is typically received immediately or in the following month.
Retirement Plan Administration Fees
Retirement plan administration fees are primarily generated for services related to the recordkeeping, administration and plan design solutions of defined benefit, defined
contribution and revenue sharing plans. Revenue is recognized in arrears for services already provided in accordance with fees established in contracts with customers or based on rates agreed to with investment trade platforms based on ending
investment balances held. The Company’s performance obligation is satisfied, and related revenue recognized based on services completed or ending investment balances, for which receivables are recorded at the time of revenue recognition.
Wealth Management
Wealth Management revenue primarily is comprised of trust and other financial services revenue. Trust and asset management income is primarily
comprised of fees earned from the management and administration of trusts, pensions and other customer assets. The Company’s performance obligation is generally satisfied with the resulting fees recognized monthly, based upon services completed or the
month-end market value of the assets under management and the applicable fee rate. Payment is generally received shortly after services are rendered or a few days after month end through a direct charge to customers’ accounts. The Company does not earn
performance-based incentives. Financial services revenue primarily consists of commissions received on brokered investment product sales. For other financial services revenue, the Company’s performance obligation is generally satisfied upon the
issuance of the annuity policy. Shortly after the policy is issued, the carrier remits the commission payment to the Company, and the Company recognizes the revenue. The Company does not earn a significant amount of trailing commission fees on brokered
investment product sales. The majority of the trailing commission fees are calculated based on a percentage of market value of a period end and revenue is recognized when an investment product’s market value can be determined.
Insurance Revenue
Insurance and other financial services revenue primarily consists of commissions received on insurance. The Company acts as an intermediary between
the Company’s customer and the insurance carrier. The Company’s performance obligation related to insurance sales for both property and casualty insurance and employee benefit plans is generally satisfied upon the later of the issuance or effective
date of the policy. The Company earns performance based incentives, commonly known as contingency payments, which usually are based on certain criteria established by the insurance carrier such as premium volume, growth and insured loss ratios.
Contingent payments are accrued for based upon management’s expectations for the year. Commission expense associated with sales of insurance products is expensed as incurred. The Company does not earn a significant amount of trailing commission fees on
insurance product sales. The majority of the trailing commission fees are calculated based on a percentage of market value of a period end and revenue is recognized when an investment product’s market value can be determined.
Other
Other noninterest income consists of other recurring revenue streams such as account and loan fees, interest rate swap fees, safe deposit box rental fees and other
miscellaneous revenue streams. These revenue streams are primarily transactional based and payment is received immediately or in the following month, and therefore, the Company’s performance obligation is satisfied, and the related revenue is
recognized, at a point in time.
The following table presents noninterest income, segregated by revenue streams in-scope and out-of-scope of ASC 606:
Contract Balances
A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration or before payment is due, which would result in
contract receivables or assets, respectively. A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment or for which payment is due from the customer. The Company’s
noninterest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after the Company
satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances.
Contract Acquisition Costs
ASC 606 requires the capitalization, and subsequently amortization into expense, of certain incremental costs of obtaining a contract with a customer if these costs are
expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. The Company elected the practical
expedient, which allows immediate expensing of contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less, and did not capitalize any contract acquisition costs upon
adoption of ASC 606 as of or during the year ended December 31, 2022, 2021 and 2020.
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Trust Operations |
Trust Operations
Assets held by the Company in a fiduciary or agency capacity for its customers are not included in the accompanying consolidated balance sheets, since such assets are not
assets of the Company.
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Subsequent Events |
Subsequent Events
The Company has evaluated subsequent events for potential recognition and/or disclosure and there were none identified.
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Recent Accounting Pronouncements (Policies) |
12 Months Ended |
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Dec. 31, 2022 | |
Recent Accounting Pronouncements [Abstract] | |
Recently Adopted Accounting Standards and Accounting Standards Issued Not Yet Adopted |
Recently Adopted Accounting Standards
In March 2020, the FASB issued ASU 2020-04, Reference Rate
Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. On January 7, 2021, the FASB issued ASU 2021-01, which refines the scope of Topic 848 and clarifies some of its guidance. ASU 2020-04 and
related amendments provide temporary optional expedients and exceptions to the existing guidance for applying GAAP to affected contract modifications and hedge accounting relationships in the transition away from the London Interbank Offered
Rate (“LIBOR”) or other interbank offered rates on financial reporting. The guidance also allows a one-time election to sell and/or reclassify to AFS or trading HTM debt securities that reference an interest rate affected by reference rate
reform. The amendments in this ASU are effective March 12, 2020 through December 31, 2022 and permits relief solely for reference rate reform actions and permits different elections over the effective date for legacy and new activity.
In December 2020, the FASB issued ASU 2022-06, Reference Rate
Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The ASU extends the period of time companies can utilize the reference rate reform relief guidance provided by ASU 2020-04 and ASU 2021-01. The guidance which was effective
upon issuance, defers the sunset date from December 31, 2022 to December 31, 2024, after which companies will no longer be permitted to apply the relief guidance in Topic 848. The adoption did not have a material impact on the consolidated
financial statements and related disclosures.
Accounting Standards Issued Not Yet Adopted
In March 2022, the FASB issued ASU 2022-02, Financial Instruments - CECL Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The ASU eliminates
the guidance on Troubled Debt Restructurings (“TDRs”) and requires an evaluation on all loan modifications to determine if they result in a new loan or a continuation of the existing loan. The ASU also requires that entities disclose
current-period gross charge-offs by year of origination. The elimination of the TDR guidance may be adopted prospectively for loan modifications after adoption or on a modified retrospective basis, which would also apply to loans previously
modified, resulting in a cumulative effect adjustment to retained earnings in the period of adoption for changes in the allowance for credit losses. The amendments in this ASU are effective for the Company on January 1, 2023, with early adoption
permitted. The adoption is not expected to have a material impact on the consolidated financial statements and related disclosures.
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Securities (Policies) |
12 Months Ended |
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Dec. 31, 2022 | |
Securities [Abstract] | |
Investment, Policy |
The Company does not believe the AFS securities that were in an unrealized loss position as of December 31, 2022 and 2021, which consisted of 415 and 149 individual securities,
respectively, represented a credit loss impairment. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. As of December 31, 2022 and 2021, the majority of the AFS securities in an
unrealized loss position consisted of debt securities issued by U.S. government agencies or U.S. government-sponsored enterprises that carry the explicit and/or implicit guarantee of the U.S. government, which are widely recognized as “risk-free” and
have a long history of zero credit losses. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment
securities. The Company does not intend to sell, nor is it more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may be at maturity. The Company elected to exclude accrued
interest receivable (“AIR”) from the amortized cost basis of debt securities. AIR on AFS debt securities totaled $4.2 million at December
31, 2022 and $3.9 million at December 31, 2021 and is excluded from the estimate of credit losses and reported in the
financial statement line.None of the bank’s HTM debt securities were past due
or on nonaccrual status as of December 31, 2022 and 2021. There was no accrued interest reversed against interest income for the years
ended December 31, 2022 and 2021 as all securities remained on accrual status. In addition, there were no collateral-dependent HTM
debt securities as of December 31, 2022 and 2021. As of December 31, 2022 and 2021, 70% and 56%, respectively, of the Company’s HTM debt securities were issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit
and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit loss. Therefore, the Company did not record an allowance for credit losses for these securities as of December 31, 2022 and
2021. The remaining HTM debt securities at December 31, 2022 and 2021 were comprised of state and municipal obligations generally with bond ratings of A to AAA. Utilizing the CECL approach, the Company determined that the expected credit loss on its
HTM municipal bond portfolio was immaterial and therefore no allowance for credit loss was recorded as of December 31, 2022 and 2021. AIR on HTM debt securities totaled $3.8 million at December 31, 2022 and $2.7 million at December 31, 2021 and is
excluded from the estimate of credit losses and reported in the
financial statement line. |
Allowance for Credit Losses and Credit Quality of Loans (Policies) |
12 Months Ended |
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Dec. 31, 2022 | |
Allowance for Credit Losses and Credit Quality of Loans [Abstract] | |
Allowance for Credit Losses |
The January 1, 2020 (“Day 1”) increase in the allowance for credit loss on loans relating to the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments was $3.0
million, which decreased retained earnings by $2.3 million and increased the deferred tax asset by $0.7 million.
The allowance for credit losses calculation incorporated a 6-quarter forecast period to account for forecast economic conditions under each scenario
utilized in the measurement. For periods beyond the 6-quarter forecast, the model reverts to long-term economic conditions over a 4-quarter reversion period on a straight-line basis. The Company considers a baseline, upside and downside economic
forecast in measuring the allowance.
The quantitative model as of December 31, 2022 incorporates a baseline economic outlook along with an alternative downside scenario sourced from a
reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment initially around pre-COVID-19 levels at 3.9% that increases slightly during the forecast period to
4.0%. Northeast GDP’s annualized growth (on a quarterly basis) is expected to start the first quarter of 2023 at approximately 3.9% and hovering around 4.6% by the end of the forecast period. Other utilized economic variables have generally
deteriorated in their respective forecasts, with retail sales and housing starts forecasts declining from the prior year. Key assumptions in the baseline economic outlook included a full employment economy being realized in the near future, continued
tapering of the Federal Reserve balance sheet, an increasing yield on ten-year treasury securities, and a gradual decline in global oil prices. The alternative downside scenario assumed deteriorated economic and pandemic related conditions from the
baseline outlook. Under this scenario, northeast unemployment rises from 3.9% in the fourth quarter of 2022 to a peak of 6.9% in the first quarter of 2024. These scenarios and their respective weightings are evaluated at each measurement date and
reflect management’s expectations as of December 31, 2022. Additional adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools, considerations for inflation, and recent
trends in asset value indices. Additional monitoring for industry concentrations, loan growth, and policy exceptions was also conducted. All these factors were considered through separate quantitative processes and incorporated when applicable into
the estimate of current expected credit losses at December 31, 2022.
The quantitative model as of December 31, 2021 incorporates a baseline economic outlook along with alternative upside and downside scenarios sourced from
a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment initially above pre-COVID-19 levels at 4.8% but falling below pre-COVID-19 levels by the end of
the forecast period to 3.5%. Northeast GDP’s annualized growth (on a quarterly basis) was expected to start the first quarter of 2022 at approximately 9% and hover around 5% by the middle and end of the forecast period. The alternative downside
scenario assumed deteriorated economic and pandemic related conditions from the baseline outlook. Under this scenario, northeast unemployment rose from 5.7% in the fourth quarter of 2021 to a peak of 8% in the first quarter of 2023, remaining around
or above 7% for the entire forecast period. The alternative upside scenario incorporated a more optimistic outlook than the baseline scenario, with a swift return to full employment by the second quarter of 2022 and with northeast unemployment moving
down to 3.1% by the end of the forecast period. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2021. At December 31, 2021, the weightings were 60%, 10%
and 30% for the baseline, upside and downside economic forecasts, respectively. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in the second and
third quarters of 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government sponsored loan programs. The Company also continued to monitor the
level of criticized and classified loans in the fourth quarter of 2021 compared to the level contemplated by the model during similar, historical economic conditions, and an adjustment was made to estimate potential additional losses above modeled
losses. Additionally, qualitative adjustments were made for Moody’s baseline economic forecast to include impacts of the Build Back Better Act not passing by December 31, 2021 and to address potential economic deterioration due to Omicron, as well as
isolated model limitations related to modeled outputs given abnormally high retail sales and business output growth rates in historical periods. These factors were considered through separate quantitative processes and incorporated into the estimate
of current expected credit losses at December 31, 2021.
The quantitative model as of December 31, 2020 incorporated a baseline economic outlook, along with alternative upside and downside scenarios sourced
from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment above pre-COVID-19 levels for the entire forecast period, though steadily improving, before
returning to low single digits by the end of 2023. Northeast GDP’s annual growth (on a quarterly basis) was expected to start 2021 in the low to mid-single digits, with a peak growth rate of 8% in the fourth quarter of 2021 and steadily falling back
down to normalized levels through 2023 and 2024. Other utilized economic variables show improvement in their respective forecasts, namely business output. Key assumptions in the baseline economic outlook included an additional stimulus package passed
at the same timing and a comparable level to that of the actual $900 billion COVID-19 relief package passed in December 2020 along with no significant secondary surge in COVID-19 cases or pandemic-related business closures. The alternative downside
scenario assumed deteriorated economic and pandemic related conditions from the baseline outlook. In the same way, the alternative upside scenario assumed a faster economic recovery and more effective management of the COVID-19 virus from the
baseline outlook. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2020. Additional adjustments were made for COVID-19 related factors not incorporated in
the forecasts, such as the mitigating impact of unprecedented stimulus in 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government-sponsored loan
programs. The commercial & industrial and consumer segment models were based upon percent change in unemployment with modeled values as of December 31, 2020 well outside the observed historical experience. Therefore, adjustments were required to
produce outputs more aligned with default expectations given the forecast economic environment. Additionally, the Company identified a slightly higher level of criticized and classified loans during 2020 than those contemplated by the model during
similar economic conditions in the past for which an adjustment was made for estimated expected additional losses above modeled output. These factors were considered through a separate quantitative process and incorporated into the estimate for
allowance for credit losses at December 31, 2020.
There were no loans purchased with credit deterioration during the years ended December 31, 2022 and 2021. During 2022, the Company purchased $11.5 million of residential loans at a 1.53% premium and $50.1 million in consumer loans at par. The allowance for credit losses recorded for these loans on the purchase date was $3.2 million. During 2021, the Company purchased $58.9
million of residential loans at premiums ranging from 2% to 5% and $92.5 million of consumer loans at a par. The
allowance for credit losses recorded for these loans on the purchase date was $6.8 million. The Company made a policy election to
report AIR in the line item on the balance sheet. AIR on loans totaled $25.0 million at December 31, 2022 and $19.5 million at
December 31, 2021 and there was no estimated allowance for credit losses related to AIR at December 31, 2022 and 2021.
|
Troubled Debt Restructuring |
Troubled Debt Restructuring
When the Company modifies a loan in a troubled debt restructuring (“TDR”), such modifications generally include one or a combination of the following: an extension of
the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; temporary reduction in the interest rate; or change in scheduled payment amount. Residential and Consumer TDRs occurring during 2022 and
2021 were due to reductions in the interest rate and/or extension of the term.
On August 3, 2020, the Federal Financial Institutions Examination Council issued a joint statement on additional loan accommodations related to COVID-19. The joint
statement clarifies that for loan modifications in which Section 4013 of the CARES Act (“Section 4013”) is being applied, subsequent modifications could also be eligible under Section 4013. Accordingly, the Company offered modifications made in
response to COVID-19 to borrowers who were current and otherwise not past due in accordance with the criteria stated in Section 4013. These include short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions
of repayment terms, or other delays in payment. The Company evaluated the modification programs provided to its borrowers and has concluded the modifications were generally made in accordance with the CARES Act guidance to borrowers who were in good
standing prior to the COVID-19 pandemic and are not required to be designated as TDRs.
|
Premises, Equipment and Leases (Policies) |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Premises, Equipment and Leases [Abstract] | |
Estimated Useful Lives |
Buildings and improvements are depreciated based on useful lives of
to twenty years. Furniture and equipment is depreciated based on useful lives of to ten years. |
Operating Leases |
Operating leases in which the Company is the lessee are recorded as operating lease ROU assets and operating lease liabilities, included in
and ,
respectively, on the consolidated balance sheets. The Company does not have any significant finance leases in which we are the lessee as of December 31, 2022 and December 31, 2021.Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent
our obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s
incremental borrowing rate at the lease commencement date. ROU assets are further adjusted for lease incentives. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease
liability, is recognized on a straight-line basis over the lease term and is recorded in occupancy expense in the consolidated statements of income.
The Company made a policy election to exclude the recognition requirements to all classes of leases with original terms of 12 months or less. Instead,
the short-term lease payments are recognized in profit or loss on a straight-line basis over the lease term.
The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, non-lease
components and other non-components, such as common area maintenance charges, real estate taxes and insurance are not included in the measurement of the lease liability since they are generally able to be segregated.
Our leases relate primarily to office space and bank branches, and some contain options to renew the lease. These options to renew are generally not
considered reasonably certain to exercise, and are therefore not included in the lease term until such time that the option to renew is reasonably certain. As of December 31, 2022, operating lease ROU assets and liabilities were $23.9 million and $25.6 million, respectively.
As of December 31, 2021, operating lease ROU assets and liabilities were $23.3 million and $27.6 million, respectively.
|
Employee Benefit Plans (Policies) |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Employee Benefit Plans [Abstract] | |
Postemployment Benefit Plans, Policy |
Defined Benefit Post-Retirement Plans
The Company has a qualified, noncontributory, defined benefit pension plan (“the Plan”) covering substantially all of its employees at December 31, 2022. Benefits paid
from the Plan are based on age, years of service, compensation and social security benefits and are determined in accordance with defined formulas. The Company’s policy is to fund the Plan in accordance with Employee Retirement Income Security Act of
1974 standards. Assets of the Plan are invested in publicly traded stocks, bonds and mutual funds. Prior to January 1, 2000, the Plan was a traditional defined benefit plan based on final average compensation. On January 1, 2000, the Plan was converted
to a cash balance plan with grandfathering provisions for existing participants. Effective March 1, 2013, the Plan was amended. Benefit accruals for participants who, as of January 1, 2000, elected to continue participating in the traditional defined
benefit plan design were frozen as of March 1, 2013. In May 2013, the noncontributory, frozen, defined benefit pension plan assumed from Alliance in the acquisition was merged into the Plan. In addition to the Plan, the Company provides supplemental
employee retirement plans to certain current and former executives. The Company also assumed supplemental retirement plans for former executives in the Alliance acquisition. These supplemental employee retirement plans and the Plan are collectively
referred to herein as “Pension Benefits.”
In addition, the Company provides certain health care benefits for retired employees. Benefits were accrued over the employees’ active service period. Only employees that
were employed by the Company on or before January 1, 2000 are eligible to receive post-retirement health care benefits. The Plan is contributory for participating retirees, requiring participants to absorb certain deductibles and coinsurance amounts
with contributions adjusted annually to reflect cost sharing provisions and benefit limitations called for in the Plan. Employees become eligible for these benefits if they reach normal retirement age while working for the Company. For eligible
employees described above, the Company funds the cost of post-retirement health care as benefits are paid. The Company elected to recognize the transition obligation on a delayed basis over twenty years. In addition, the Company assumed post-retirement medical life insurance benefits for certain Alliance employees, retirees and their spouses, if applicable, in the Alliance
acquisition. These post-retirement benefits are referred to herein as “Other Benefits.”
Accounting standards require an employer to: (1) recognize the overfunded or underfunded status of defined benefit post-retirement plans, which is
measured as the difference between plan assets at fair value and the benefit obligation, as an asset or liability in its balance sheet; (2) recognize changes in that funded status in the year in which the changes occur through comprehensive income; and
(3) measure the defined benefit plan assets and obligations as of the date of its year-end balance sheet.
Plan Investment Policy
The Company’s key investment objectives in managing its defined benefit plan assets are to ensure that present and future benefit obligations to all participants and
beneficiaries are met as they become due; to provide a total return that, over the long-term, maximizes the ratio of the plan assets to liabilities, while minimizing the present value of required Company contributions, at the appropriate levels of
risk; to meet statutory requirements and regulatory agencies’ requirements; and to satisfy applicable accounting standards. The Company periodically evaluates the asset allocations, funded status, rate of return assumption and contribution strategy for
satisfaction of our investment objectives.
Determination of Assumed Rate of Return
The expected long-term rate-of-return on assets was 6.7%
at December 31, 2022 and 2021, respectively. This assumption represents the rate of return on plan assets reflecting the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the projected
benefit obligation. The assumption has been determined by reflecting expectations regarding future rates of return for the portfolio considering the asset distribution and related historical rates of return. The appropriateness of the assumption is
reviewed annually.
Employee 401(k) and Employee Stock Ownership Plans
The Company maintains a 401(k) and employee stock ownership plan (the “401(k) Plan”). The Company contributes to the 401(k) Plan based on employees’ contributions out of
their annual salaries. In addition, the Company may also make discretionary contributions to the 401(k) Plan based on profitability. Participation in the 401(k) Plan is contingent upon certain age and service requirements. The employer contributions
associated with the 401(k) Plan were $4.0 million in 2022, $3.9 million in 2021 and $3.6 million in 2020.
|
Fair Value Measurements and Fair Values of Financial Instruments (Policies) |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Fair Value Measurements and Fair Values of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments, Policy |
GAAP states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. Fair value measurements are not adjusted for transaction costs. A fair value hierarchy exists within GAAP that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs that are observable, either directly or
indirectly, for substantially the full term of the asset or liability; and
Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no
market activity).
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities, many other sovereign government
obligations, liquid mortgage products, active listed equities and most money market securities. Such instruments are generally classified within Level 1 or Level 2 of the fair value hierarchy. The Company does not adjust the quoted prices for such
instruments.
The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations or quote from alternative pricing sources with
reasonable levels of price transparency include most investment-grade and high-yield corporate bonds, less liquid mortgage products, less liquid agency securities, less liquid listed equities, state, municipal and provincial obligations and certain
physical commodities. Such instruments are generally classified within Level 2 of the fair value hierarchy. Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices). Other investment securities are
reported at fair value utilizing Level 1 and Level 2 inputs. The prices for Level 2 instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases and sales
of investment securities. Prices obtained from these sources include prices derived from market quotations and matrix pricing. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S.
Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Management reviews the methodologies used by its third-party providers in
pricing the securities.
Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions. Valuations are adjusted to reflect illiquidity and/or
non-transferability and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate will be used. Management’s best estimate consists of both internal and external support on certain
Level 3 investments. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment
or comparable entities, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, offerings in the equity or debt markets and changes in financial ratios or cash flows.
GAAP requires disclosure of assets and liabilities measured and recorded at fair value
on a non-recurring basis such as goodwill, loans held for sale, other real estate owned, collateral-dependent loans individually evaluated for expected credit losses and HTM securities. The non-recurring fair value measurements recorded during the
years ended December 31, 2022 and 2021 were related to loans individually evaluated for expected credit losses with fair value of $1.1 million and $7.4 million as of December 31, 2022 and 2021, respectively. The
Company uses the fair value of underlying collateral, less costs to sell, to estimate the allowance for credit losses for individually evaluated collateral dependent loans. The appraisals may be adjusted by management for qualitative factors such as
economic conditions and estimated liquidation expenses ranging from 10% to 50%. Based on the valuation techniques used, the fair value measurements for collateral
dependent individually evaluated loans are classified as Level 3.
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not
reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair
value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties
and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the
value of assets and liabilities that are not considered financial instruments. For example, the Company has a substantial wealth operation that contributes net fee income annually. The wealth management operation is not considered a financial
instrument and its value has not been incorporated into the fair value estimates. Other significant assets and liabilities include the benefits resulting from the low-cost funding of deposit liabilities as compared to the cost of borrowing funds in the
market and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimate of fair value.
HTM Securities
The fair value of the Company’s HTM securities is primarily measured using information from a third-party pricing service. The fair value measurements consider observable
data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.
Net Loans
Net loans include portfolio loans and loans held for sale. Loans were first segregated by type and then further segmented into fixed and variable rate
and loan quality categories. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments, and those expected future cash flows also include credit risk, illiquidity risk and other market factors to
calculate the exit price fair value in accordance with ASC 820.
Time Deposits
The fair value of time deposits was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments. The
fair values of the Company’s time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.
Long-Term Debt
The fair value of long-term debt was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments.
Subordinated Debt
The fair value of subordinated debt has been measured using the observable market price as of the period reported.
Junior Subordinated Debt
The fair value of junior subordinated debt has been estimated using a discounted cash flow analysis.
|
Summary of Significant Accounting Policies (Tables) |
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Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio and Class Segments |
The following table illustrates the portfolio and class segments for the Company’s loan portfolio:
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Noninterest Income, Segregated by Revenue Streams in-Scope and Out-of-Scope of ASC 606 |
The following table presents noninterest income, segregated by revenue streams in-scope and out-of-scope of ASC 606:
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Securities (Tables) |
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Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost, Estimated Fair Value and Unrealized Gains (Losses) of Available for Sale ("AFS") Securities |
The amortized cost, estimated fair value and unrealized gains (losses) of AFS securities are as follows:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Realized Gains (Losses) on Sale of AFS Securities |
The components of net realized gains (losses) on AFS securities are as follows.
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost, Estimated Fair Value and Unrealized Gains (Losses) of Held to Maturity ("HTM") Securities |
The amortized cost, estimated fair value and unrealized gains (losses) of HTM securities are as follows:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains and (Losses) on Equity Securities |
The following table set forth information with regard to gains and (losses) on equity securities:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Maturities of Debt Securities |
The following table set forth information with regard to contractual maturities of debt securities at December 31, 2022:
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Investment Securities with Unrealized Losses |
The following table sets forth information with regard to investment securities with unrealized losses, for which an allowance for credit losses has not been recorded, segregated according to the length of time the securities had been in a continuous unrealized loss position:
|
Loans (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans, Net of Deferred Fees and Origination Costs |
A summary of loans, net of deferred fees and origination costs, by category is as follows:
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Related Party Loans |
In the ordinary course of business, the Company has made loans at prevailing rates and terms to directors, officers and other related parties. Such loans, in
management’s opinion, do not present more than the normal risk of collectability or incorporate other unfavorable features. The aggregate amount of loans outstanding to qualifying related parties and changes during the years are summarized as
follows:
|
Allowance for Credit Losses and Credit Quality of Loans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Credit Losses and Credit Quality of Loans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Loan Losses by Portfolio |
The following tables present the activity in the allowance for credit losses by our portfolio segment:
|
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Past due and Nonperforming Loans by Loan Class |
The following table sets forth
information with regard to past due and nonperforming loans by loan segment:
|
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Credit Quality by Loan Class by Year of Origination (Vintage) |
The following tables illustrate the Company’s credit quality by loan class by year of
origination (vintage):
|
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Troubled Debt Restructurings on Financing Receivables |
The following tables illustrate the recorded investment and number of modifications designated as TDRs, including the recorded
investment in the loans prior to a modification and the recorded investment in the loans after restructuring:
The following table illustrates the recorded investment and number of modifications for TDRs where a concession has been made and subsequently defaulted during the year:
|
Premises, Equipment and Leases (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premises, Equipment and Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Premises and Equipment |
A summary of premises and equipment follows:
|
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Net Lease Cost |
The table below summarizes net lease cost:
|
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Future Minimum Rental Commitments Related to Non-cancelable Operating Leases |
The table below shows future minimum rental commitments related to non-cancelable operating leases for the next five years and thereafter as of December 31, 2022.
|
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Additional Information for Operating Leases |
The following table shows the weighted average remaining operating lease term, the weighted average discount rate and supplemental information on the consolidated
statements of cash flows for operating leases:
|
Goodwill and Other Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Goodwill |
A summary of goodwill is as follows:
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Summary of Core Deposit and Other Intangible Assets |
A summary of core deposit and other intangible assets follows:
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Deposits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Maturity Distribution of Time Deposits |
The following table sets forth the maturity distribution of time deposits:
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Borrowings (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information Related to Short-term Borrowings |
Information related to short-term borrowings is summarized as follows:
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Summary of Long-term Debt |
Long-term debt consists of obligations having an original maturity at issuance of more than one year. A majority of the Company’s long-term debt is
comprised of FHLB advances collateralized by the FHLB stock owned by the Company, and a blanket lien on its residential real estate mortgage loans. As of December 31, 2022 the Company had no callable long-term debt. A summary is as follows:
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Subordinated Debt |
The following table summarizes the Company’s subordinated debt:
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Schedule of Debt of VIE where Entity is not Primary Beneficiary |
As of December 31, 2022, the Trusts had the following trust preferred securities outstanding and held the following junior subordinated debentures
of the Company (dollars in thousands):
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Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income Tax Expense Attributable to Operations |
The significant components of income tax expense attributable to operations are as follows:
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Components of Deferred Tax Assets and Liabilities |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
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Reconciliation of the Provision for Income taxes to the Amount Computed by Applying the Federal Statutory Rate |
The following is a reconciliation of the provision for income taxes to the amount computed by applying the applicable Federal statutory rate to income before taxes:
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Reconciliation of Gross Unrecognized Tax Benefits |
A reconciliation of the beginning and ending balance of Federal and State gross unrecognized tax benefits (“UTBs”) is as follows:
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Employee Benefit Plans (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accumulated Other Comprehensive Income (Loss), Net Periodic Benefit Cost |
The components of AOCI, which have not yet been recognized as components of net periodic benefit cost, related to pensions and other post-retirement benefits are
summarized below:
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Changes in Benefit Obligations, Changes in Plan Assets, and the Funded Status of the Pension Plans and Other Postretirement Benefits |
A December 31 measurement date is used for the pension, supplemental pension and post-retirement benefit plans. The following table sets forth changes in benefit
obligations, changes in plan assets and the funded status of the pension plans and other post-retirement benefits:
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Amounts Recognized in Balance Sheet |
An asset is recognized for an overfunded plan and a liability is recognized for an underfunded plan. The accumulated benefit obligation for pension benefits was $75.9 million and $88.9 million at December
31, 2022 and 2021, respectively. The accumulated benefit obligation for other post-retirement benefits was $4.2 million and $5.2 million at December 31, 2022 and 2021, respectively. The funded status of the pension and other post-retirement benefit plans has been recognized as
follows in the consolidated balance sheets at December 31, 2022 and 2021.
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Assumptions used to Determine Benefit Obligations and Net Periodic Pension Cost |
The following assumptions were used to determine the benefit obligation and the net periodic pension cost for the years indicated:
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Net Periodic Pension Benefits and Other Benefit Costs |
Net periodic benefit cost and other amounts recognized in OCI for the years ended December 31 included the following components:
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Estimated Future Benefit Payments for the Pension Plans and Other Postretirement Benefit Plans |
The following table sets forth estimated future benefit payments for the pension plans and other post-retirement benefit plans as of December 31, 2022:
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Target and Actual Allocations of Defined Benefit Pension Plan's Assets |
The target and actual allocations expressed as a percentage of the defined benefit pension plan’s assets are as follows:
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Financial Instruments Recorded at Fair Value on a Recurring Basis by the Plan |
The following table presents the financial instruments recorded at fair value on a recurring basis by the Plan:
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Stock-Based Compensation (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unvested Restricted Stock Units Activity |
The Company has outstanding restricted stock granted from various plans at December 31, 2022. The Company recognized $4.5 million, $4.4 million and $4.6 million in stock-based compensation expense
related to these stock awards for the years ended December 31, 2022, 2021 and 2020, respectively. Tax benefits recognized with
respect to restricted stock units were $1.2 million, $1.9 million and $1.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. Unrecognized compensation cost related to restricted stock units totaled $5.7 million at December 31, 2022 and will be recognized over 1.5 years on a weighted average basis. Shares issued are funded from the Company’s treasury stock. The following table summarizes information for
unvested restricted stock units outstanding as of December 31, 2022:
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Stock Option Activity |
The following table summarizes information concerning stock options outstanding:
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Cash Proceeds, Tax Benefits and Intrinsic Value of Stock Options Exercised |
There was no stock-based compensation expense for stock option awards for the years ended December
31, 2022, 2021 and 2020. Cash proceeds, tax benefits and intrinsic value related to total stock options exercised is as follows:
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Stockholders' Equity (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accumulated Other Comprehensive (Loss) Income |
In accordance with GAAP, unrecognized prior service costs and net actuarial gains or losses associated with the Company’s pension and postretirement benefit plans and
unrealized gains on derivatives and on AFS securities are included in AOCI, net of tax. For the years ended December 31, components of AOCI are:
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Regulatory Capital Requirements (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compliance with Regulatory Compliance Requirements Under Banking Regulations | The Company and NBT Bank’s actual capital amounts and ratios are presented as follows:
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Earnings Per Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Basic and Diluted Earnings Per Share |
The following is a reconciliation of basic and diluted EPS for the years presented in the consolidated statements of income:
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Reclassification Adjustments Out of Other Comprehensive Income (Loss) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification Adjustments Out of Other Comprehensive Income (Loss) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification Adjustments out of AOCI |
The following table summarizes the reclassification adjustments out of AOCI:
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Commitments and Contingent Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum Commitments Potential Obligation |
The Company is a party to certain financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit, unused lines of credit, standby letters of credit and certain agricultural real estate loans sold to investors with recourse, with the sold portion having a government guarantee that is
assignable back to the Company upon repurchase of the loan in the event of default. The Company’s exposure to credit loss in the event of nonperformance by the other party to the commitments to extend credit, unused lines of credit, standby letters
of credit and loans sold with recourse is represented by the contractual amount of those instruments. The credit risk associated with commitments to extend credit and standby and commercial letters of credit is essentially the same as that involved
with extending loans to customers and is subject to normal credit policies. Collateral may be obtained based on management’s assessment of the customer’s creditworthiness.
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Derivative Instruments and Hedging Activities (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Derivatives Outstanding |
The following table summarizes the derivatives outstanding:
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Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of Derivatives on AOCI and on Consolidated Statement of Income |
The following table indicates the effect of cash flow hedge accounting on AOCI and on the consolidated statement of income:
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Not Designated as Hedging Instrument [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of Derivatives on AOCI and on Consolidated Statement of Income |
The following table indicates the gain or loss recognized in income on derivatives not designated as a hedging relationship:
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Fair Value Measurements and Fair Values of Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements and Fair Values of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis |
The following tables set forth the Company’s financial assets and liabilities measured on a recurring basis that were accounted for at fair value. Assets and liabilities
are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:
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Information with Regard to Estimated Fair Values of Financial Instruments |
The following table sets forth information with regard to estimated fair values of financial instruments. This table excludes financial instruments for which the carrying
amount approximates fair value. Financial instruments for which the fair value approximates carrying value include cash and cash equivalents, AFS securities, equity securities, accrued interest receivable, non-maturity deposits, short-term borrowings,
accrued interest payable and derivatives.
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Parent Company Financial Information (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Parent Company Financial Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parent Company Financial Information |
Condensed Balance Sheets
Condensed Statements of Income
Condensed Statements of Cash Flows
|
Summary of Significant Accounting Policies, Securities (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2022
USD ($)
| |
Securities [Abstract] | |
Allowance for credit losses - HTM debt securities | $ 0 |
Summary of Significant Accounting Policies, Loans (Details) |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Loans [Abstract] | |
Minimum number of days past due for loans to be considered nonperforming | 90 days |
Period of sustained repayment performance for nonperforming TDRs to be returned to performing status | 6 months |
Summary of Significant Accounting Policies, Other Financial Instruments (Details) |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Other Financial Instruments [Abstract] | |
Standby letters of credit expiration period | 1 year |
Acquisitions (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022
USD ($)
Location
shares
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
|
Business Acquisitions [Abstract] | |||
Goodwill acquired | $ 663 | $ 0 | |
Alliance Benefit Group of Illinois, Inc. [Member] | |||
Business Acquisitions [Abstract] | |||
Total consideration paid | $ 9,100 | ||
Goodwill acquired | 5,800 | ||
Contingent consideration, liability | $ 5,100 | ||
Salisbury Bank [Member] | |||
Business Acquisitions [Abstract] | |||
Total consideration to be paid | $ 1,540,000 | ||
Number of banking locations operated by acquiree | Location | 14 | ||
Business acquisition shares to be converted to receive entity's common stock (in shares) | shares | 0.745 |
Securities, Gains and (Losses) on Equity Securities (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Gains (losses) on equity securities [Abstract] | ||
Net (losses) and gains recognized on equity securities | $ (1,135) | $ 537 |
Less: Net (losses) and gains recognized on equity securities sold during the period | 0 | 0 |
Unrealized (losses) and gains recognized on equity securities still held | (1,135) | 537 |
Equity Securities without Readily Determinable Fair Value, Annual Amount [Abstract] | ||
Carrying amount of equity securities without readily determinable fair values | 1,000 | 1,000 |
Impairment adjustments of equity securities without readily determinable fair values | 0 | 0 |
Downward adjustments of equity securities without readily determinable fair values | 0 | 0 |
Upward adjustments of equity securities without readily determinable fair values | $ 0 | $ 0 |
Securities, AFS Debt Securities, Contractual Maturities (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Available-for-sale Securities, Debt Maturities, Amortized Cost [Abstract] | ||
Within one year | $ 682 | |
From one to five years | 402,807 | |
From five to ten years | 582,736 | |
After ten years | 757,657 | |
Amortized cost | 1,743,882 | $ 1,694,806 |
Available-for-sale Securities, Debt Maturities, Estimated Fair Value [Abstract] | ||
Within one year | 675 | |
From one to five years | 361,295 | |
From five to ten years | 506,036 | |
After ten years | 659,219 | |
Fair value | $ 1,527,225 | $ 1,687,361 |
Securities, HTM Debt Securities, Contractual Maturities (Details) $ in Thousands |
Dec. 31, 2022
USD ($)
Issuer
|
Dec. 31, 2021
USD ($)
Issuer
|
Dec. 31, 2020
Issuer
|
---|---|---|---|
Held-to-maturity Securities, Debt Maturities, Amortized Cost [Abstract] | |||
Within one year | $ 49,986 | ||
From one to five years | 92,443 | ||
From five to ten years | 278,664 | ||
After ten years | 498,424 | ||
Amortized cost | 919,517 | $ 733,210 | |
Held-to-maturity Securities, Debt Maturities, Estimated Fair Value [Abstract] | |||
Within one year | 49,979 | ||
From one to five years | 89,979 | ||
From five to ten years | 241,294 | ||
After ten years | 431,395 | ||
Fair value | $ 812,647 | $ 735,260 | |
Number of issuers whose holdings exceeded 10% of consolidated stockholders' equity, excluding U.S. Government securities | Issuer | 0 | 0 | 0 |
Allowance for Credit Losses and Credit Quality of Loans, Allowance for Credit Losses on Off-Balance Sheet Credit Exposures (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|---|---|
Allowance for Credit Losses and Credit Quality of Loans [Abstract] | ||||
Allowance for credit losses | $ 100,800 | $ 92,000 | $ 110,000 | $ 75,999 |
Unfunded Commitment [Member] | ||||
Allowance for Credit Losses and Credit Quality of Loans [Abstract] | ||||
Allowance for credit losses | $ 5,100 | $ 5,100 |
Deposits (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Maturities of Time Deposits [Abstract] | ||
Within one year | $ 280,996 | |
After one but within two years | 92,492 | |
After two but within three years | 24,033 | |
After three but within four years | 21,483 | |
After four but within five years | 14,332 | |
After five years | 436 | |
Total | 433,772 | $ 501,472 |
Time Deposits, $250,000 or More [Abstract] | ||
Time deposits of $250,000 or more | $ 48,400 | $ 72,300 |
Borrowings, Long-Term Debt (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Long-term debt by maturity, amount [Abstract] | ||
Due in next 12 months | $ 10,598 | |
Due in year three | $ 1,519 | |
Due in year four | 0 | |
Due in year nine | 3,296 | |
Due in year ten | 3,397 | |
Total | $ 4,815 | $ 13,995 |
Long-term debt by maturity, weighted average rate [Abstract] | ||
Due in next 12 months | 2.53% | |
Due in year three | 4.39% | |
Due in year four | 0.00% | |
Due in year nine | 2.45% | |
Due in year ten | 2.45% |
Employee Benefit Plans, 401(k) Plan and Other Retirement Benefits (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Other Retirement Benefits [Abstract] | |||
Supplemental retirement benefits for retired executives under other retirement benefits plan | $ 1.1 | $ 1.3 | |
Expense related to other retirement benefits plan | 0.2 | 0.2 | $ 0.2 |
401(K) Plan [Member] | |||
Defined benefit plan disclosure [Abstract] | |||
Employer contribution to plan | $ 4.0 | $ 3.9 | $ 3.6 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Basic EPS [Abstract] | |||
Net income | $ 151,995 | $ 154,885 | $ 104,388 |
Weighted average shares, basic (in shares) | 42,917 | 43,421 | 43,693 |
Basic EPS (in dollars per share) | $ 3.54 | $ 3.57 | $ 2.39 |
Diluted earnings per share [Abstract] | |||
Net income | $ 151,995 | $ 154,885 | $ 104,388 |
Dilutive effect of stock-based compensation (in shares) | 264 | 298 | 296 |
Weighted average shares, diluted (in shares) | 43,181 | 43,719 | 43,989 |
Diluted EPS (in dollars per share) | $ 3.52 | $ 3.54 | $ 2.37 |
Fair Value Measurements and Fair Values of Financial Instruments, Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
AFS securities [Abstract] | ||
AFS securities | $ 1,527,225 | $ 1,687,361 |
Equity securities | $ 30,784 | 33,550 |
Minimum [Member] | ||
Fair Value Measurements [Abstract] | ||
Liquidation expense ratio on impaired collateral | 10.00% | |
Maximum [Member] | ||
Fair Value Measurements [Abstract] | ||
Liquidation expense ratio on impaired collateral | 50.00% | |
U.S. Treasury [Member] | ||
AFS securities [Abstract] | ||
AFS securities | $ 121,658 | 73,069 |
Federal Agency [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 206,419 | 239,931 |
State & Municipal [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 82,851 | 94,088 |
Corporate [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 54,240 | 52,003 |
Recurring Basis [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 1,527,225 | 1,687,361 |
Equity securities | 30,784 | 33,550 |
Derivatives | $ 93,185 | $ 60,625 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other Assets | Other Assets |
Total | $ 1,651,194 | $ 1,781,536 |
Liabilities [Abstract] | ||
Derivatives | $ 117,257 | $ 60,263 |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other Liabilities | Other Liabilities |
Total | $ 117,257 | $ 60,263 |
Recurring Basis [Member] | Level 1 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 121,658 | 73,069 |
Equity securities | 29,784 | 32,550 |
Derivatives | 0 | 0 |
Total | 151,442 | 105,619 |
Liabilities [Abstract] | ||
Derivatives | 0 | 0 |
Total | 0 | 0 |
Recurring Basis [Member] | Level 2 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 1,405,567 | 1,614,292 |
Equity securities | 1,000 | 1,000 |
Derivatives | 93,185 | 60,625 |
Total | 1,499,752 | 1,675,917 |
Liabilities [Abstract] | ||
Derivatives | 117,257 | 60,263 |
Total | 117,257 | 60,263 |
Recurring Basis [Member] | Level 3 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Equity securities | 0 | 0 |
Derivatives | 0 | 0 |
Total | 0 | 0 |
Liabilities [Abstract] | ||
Derivatives | 0 | 0 |
Total | 0 | 0 |
Recurring Basis [Member] | U.S. Treasury [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 121,658 | 73,069 |
Recurring Basis [Member] | U.S. Treasury [Member] | Level 1 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 121,658 | 73,069 |
Recurring Basis [Member] | U.S. Treasury [Member] | Level 2 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Recurring Basis [Member] | U.S. Treasury [Member] | Level 3 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Recurring Basis [Member] | Federal Agency [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 206,419 | 239,931 |
Recurring Basis [Member] | Federal Agency [Member] | Level 1 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Recurring Basis [Member] | Federal Agency [Member] | Level 2 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 206,419 | 239,931 |
Recurring Basis [Member] | Federal Agency [Member] | Level 3 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Recurring Basis [Member] | State & Municipal [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 82,851 | 94,088 |
Recurring Basis [Member] | State & Municipal [Member] | Level 1 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Recurring Basis [Member] | State & Municipal [Member] | Level 2 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 82,851 | 94,088 |
Recurring Basis [Member] | State & Municipal [Member] | Level 3 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Recurring Basis [Member] | Mortgage-Backed [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 473,694 | 606,675 |
Recurring Basis [Member] | Mortgage-Backed [Member] | Level 1 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Recurring Basis [Member] | Mortgage-Backed [Member] | Level 2 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 473,694 | 606,675 |
Recurring Basis [Member] | Mortgage-Backed [Member] | Level 3 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Recurring Basis [Member] | Collateralized Mortgage Obligations [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 588,363 | 621,595 |
Recurring Basis [Member] | Collateralized Mortgage Obligations [Member] | Level 1 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Recurring Basis [Member] | Collateralized Mortgage Obligations [Member] | Level 2 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 588,363 | 621,595 |
Recurring Basis [Member] | Collateralized Mortgage Obligations [Member] | Level 3 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Recurring Basis [Member] | Corporate [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 54,240 | 52,003 |
Recurring Basis [Member] | Corporate [Member] | Level 1 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Recurring Basis [Member] | Corporate [Member] | Level 2 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 54,240 | 52,003 |
Recurring Basis [Member] | Corporate [Member] | Level 3 [Member] | ||
AFS securities [Abstract] | ||
AFS securities | 0 | 0 |
Non-Recurring Basis [Member] | ||
Fair Value Measurements [Abstract] | ||
Loans individually evaluated for expected credit losses, fair value | $ 1,100 | $ 7,400 |
Fair Value Measurements and Fair Values of Financial Instruments, Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Financial assets [Abstract] | ||
HTM securities | $ 812,647 | $ 735,260 |
Carrying Amount [Member] | Level 1 [Member] | ||
Financial liabilities [Abstract] | ||
Subordinated debt | 98,000 | 100,000 |
Carrying Amount [Member] | Level 2 [Member] | ||
Financial assets [Abstract] | ||
HTM securities | 919,517 | 733,210 |
Financial liabilities [Abstract] | ||
Time deposits | 433,772 | 501,472 |
Long-term debt | 4,815 | 13,995 |
Junior subordinated debt | 101,196 | 101,196 |
Carrying Amount [Member] | Level 3 [Member] | ||
Financial assets [Abstract] | ||
Net loans | 8,049,909 | 7,407,289 |
Estimated Fair Value [Member] | Level 1 [Member] | ||
Financial liabilities [Abstract] | ||
Subordinated debt | 92,883 | 107,402 |
Estimated Fair Value [Member] | Level 2 [Member] | ||
Financial assets [Abstract] | ||
HTM securities | 812,647 | 735,260 |
Financial liabilities [Abstract] | ||
Time deposits | 413,868 | 500,717 |
Long-term debt | 4,539 | 14,260 |
Junior subordinated debt | 98,372 | 107,569 |
Estimated Fair Value [Member] | Level 3 [Member] | ||
Financial assets [Abstract] | ||
Net loans | $ 7,840,350 | $ 7,530,768 |
Parent Company Financial Information, Condensed Balance Sheets (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|---|---|
Assets [Abstract] | ||||
Equity securities, at estimated fair value | $ 30,784 | $ 33,550 | ||
Other assets | 379,797 | 266,733 | ||
Total assets | 11,739,296 | 12,012,111 | ||
Liabilities and Stockholders' Equity [Abstract] | ||||
Total liabilities | 10,565,742 | 10,761,658 | ||
Stockholders' equity | 1,173,554 | 1,250,453 | $ 1,187,618 | $ 1,120,397 |
Total liabilities and stockholders' equity | 11,739,296 | 12,012,111 | ||
NBT Bancorp Inc [Member] | ||||
Assets [Abstract] | ||||
Cash and cash equivalents | 116,129 | 77,182 | $ 37,915 | $ 9,387 |
Equity securities, at estimated fair value | 24,499 | 27,622 | ||
Investment in subsidiaries, on equity basis | 1,245,459 | 1,359,613 | ||
Other assets | 39,339 | 36,216 | ||
Total assets | 1,425,426 | 1,500,633 | ||
Liabilities and Stockholders' Equity [Abstract] | ||||
Total liabilities | 251,872 | 250,180 | ||
Stockholders' equity | 1,173,554 | 1,250,453 | ||
Total liabilities and stockholders' equity | $ 1,425,426 | $ 1,500,633 |
Parent Company Financial Information, Condensed Statements of Income (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Consolidated Statements of Income [Abstract] | |||
Net securities (losses) gains | $ (1,131) | $ 566 | $ (388) |
Interest, dividends and other income | 384,070 | 339,876 | 348,282 |
Income before income tax expense | 196,156 | 199,858 | 133,087 |
Income tax benefit | 44,161 | 44,973 | 28,699 |
Net income | 151,995 | 154,885 | 104,388 |
NBT Bancorp Inc [Member] | |||
Consolidated Statements of Income [Abstract] | |||
Dividends from subsidiaries | 119,000 | 118,900 | 77,000 |
Management fee from subsidiaries | 2,005 | 2,653 | 4,151 |
Net securities (losses) gains | (618) | 543 | (483) |
Interest, dividends and other income | 638 | 564 | 824 |
Total revenue | 121,025 | 122,660 | 81,492 |
Operating expenses | 14,035 | 11,956 | 11,825 |
Income before income tax expense | 106,990 | 110,704 | 69,667 |
Income tax benefit | (3,027) | (2,250) | (2,653) |
Equity in undistributed income of subsidiaries | 41,978 | 41,931 | 32,068 |
Net income | $ 151,995 | $ 154,885 | $ 104,388 |
Parent Company Financial Information, Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Operating activities [Abstract] | |||
Net income | $ 151,995 | $ 154,885 | $ 104,388 |
Adjustments to reconcile net income to net cash provided by operating activities [Abstract] | |||
Depreciation and amortization of premises and equipment | 10,155 | 9,896 | 9,772 |
Excess tax benefit on stock-based compensation | (288) | (385) | (181) |
Stock-based compensation expense | 4,530 | 4,414 | 4,581 |
Net security losses (gains) | 1,131 | (566) | 388 |
Bank owned life insurance income | (6,044) | (6,217) | (5,743) |
Amortization of subordinated debt issuance costs | 437 | 438 | 230 |
Discount on repurchase of subordinated debt | (106) | 0 | 0 |
Net change in other assets and other liabilities | (7,918) | (11,117) | (47,069) |
Net cash provided by operating activities | 183,223 | 159,185 | 145,273 |
Investing activities [Abstract] | |||
Net cash provided by (used in) investing activities | (926,216) | (547,608) | (712,586) |
Financing activities [Abstract] | |||
Proceeds from issuance of subordinated debt | 0 | 0 | 100,000 |
Payment of subordinated debt issuance costs | 0 | 0 | (2,178) |
Repurchase of subordinated debt | (2,000) | 0 | 0 |
Proceeds from the issuance of shares to employee and other stock plans | 0 | 112 | 184 |
Cash paid by employer for tax-withholding on stock issuance | (1,751) | (2,931) | (1,537) |
Purchases of treasury shares | (14,713) | (21,714) | (7,980) |
Cash dividends | (49,765) | (47,738) | (47,207) |
Net cash (used in) provided by financing activities | (328,728) | 984,813 | 1,023,151 |
Net (decrease) increase in cash and cash equivalents | (1,071,721) | 596,390 | 455,838 |
NBT Bancorp Inc [Member] | |||
Operating activities [Abstract] | |||
Net income | 151,995 | 154,885 | 104,388 |
Adjustments to reconcile net income to net cash provided by operating activities [Abstract] | |||
Depreciation and amortization of premises and equipment | 582 | 1,113 | 1,739 |
Excess tax benefit on stock-based compensation | (288) | (385) | (181) |
Stock-based compensation expense | 4,530 | 4,414 | 4,581 |
Net security losses (gains) | 618 | (543) | 483 |
Equity in undistributed income of subsidiaries | (41,978) | (41,931) | (32,068) |
Bank owned life insurance income | (238) | (326) | (391) |
Amortization of subordinated debt issuance costs | 437 | 438 | 230 |
Discount on repurchase of subordinated debt | (106) | 0 | 0 |
Net change in other assets and other liabilities | (8,376) | (7,127) | (3,535) |
Net cash provided by operating activities | 107,176 | 110,538 | 75,246 |
Investing activities [Abstract] | |||
Investment in the Bank | 0 | 0 | (90,000) |
Proceeds from calls of equity securities | 0 | 1,000 | 2,000 |
Net cash provided by (used in) investing activities | 0 | 1,000 | (88,000) |
Financing activities [Abstract] | |||
Proceeds from issuance of subordinated debt | 0 | 0 | 100,000 |
Payment of subordinated debt issuance costs | 0 | 0 | (2,178) |
Repurchase of subordinated debt | (2,000) | 0 | 0 |
Proceeds from the issuance of shares to employee and other stock plans | 0 | 112 | 184 |
Cash paid by employer for tax-withholding on stock issuance | (1,751) | (2,931) | (1,537) |
Purchases of treasury shares | (14,713) | (21,714) | (7,980) |
Cash dividends | (49,765) | (47,738) | (47,207) |
Net cash (used in) provided by financing activities | (68,229) | (72,271) | 41,282 |
Net (decrease) increase in cash and cash equivalents | 38,947 | 39,267 | 28,528 |
Cash and cash equivalents at beginning of year | 77,182 | 37,915 | 9,387 |
Cash and cash equivalents at end of year | $ 116,129 | $ 77,182 | $ 37,915 |
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