Delaware
|
|
16-1268674
|
(State or other jurisdiction of incorporation or organization)
|
|
(IRS Employer Identification No.)
|
Title of each class:
|
|
Name of each exchange on which registered:
|
Common Stock, par value $0.01 per share
|
|
The NASDAQ Stock Market LLC
|
Large accelerated filer
|
Accelerated filer
|
Non-accelerated filer
|
Smaller reporting company
|
Emerging growth company
|
PART I
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ITEM 1
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4
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ITEM 1A
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17 | |
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ITEM 1B
|
24
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ITEM 2
|
25
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ITEM 3
|
26
|
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ITEM 4
|
26
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PART II
|
|
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ITEM 5
|
26
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ITEM 6
|
28
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|
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ITEM 7
|
30
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|
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ITEM 7A
|
47
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ITEM 8
|
49
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49
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|
50
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|
|
51
|
|
|
52
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|
|
53
|
|
|
54
|
|
|
55
|
|
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|
|
ITEM 9
|
97
|
|
|
|
|
ITEM 9A
|
97
|
|
|
|
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ITEM 9B
|
100
|
|
|
|
|
PART III
|
|
|
|
|
|
ITEM 10
|
100
|
|
|
|
|
ITEM 11
|
100
|
|
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|
|
ITEM 12
|
100
|
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|
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ITEM 13
|
100
|
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|
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ITEM 14
|
100
|
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|
PART IV
|
|
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ITEM 15
|
101
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ITEM 16
|
103
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104 |
County
|
State
|
Deposits
in thousands*
|
Market Share
|
Market
Rank
|
Number of
Branches*
|
Number of ATMs*
|
|||||||||||||||
Chenango
|
NY
|
$
|
912,559
|
95.23
|
%
|
1
|
11
|
12
|
|||||||||||||
Fulton
|
NY
|
469,501
|
63.14
|
%
|
1
|
5
|
6
|
||||||||||||||
Schoharie
|
NY
|
220,361
|
48.22
|
%
|
1
|
4
|
4
|
||||||||||||||
Hamilton
|
NY
|
44,578
|
44.66
|
%
|
2
|
1
|
1
|
||||||||||||||
Cortland
|
NY
|
278,943
|
40.65
|
%
|
1
|
5
|
7
|
||||||||||||||
Montgomery
|
NY
|
264,234
|
36.53
|
%
|
2
|
5
|
4
|
||||||||||||||
Otsego
|
NY
|
355,933
|
32.80
|
%
|
2
|
8
|
11
|
||||||||||||||
Delaware
|
NY
|
312,890
|
31.89
|
%
|
1
|
5
|
5
|
||||||||||||||
Essex
|
NY
|
199,357
|
27.62
|
%
|
2
|
3
|
5
|
||||||||||||||
Madison
|
NY
|
223,268
|
25.35
|
%
|
2
|
4
|
8
|
||||||||||||||
Susquehanna
|
PA
|
174,753
|
20.41
|
%
|
2
|
5
|
7
|
||||||||||||||
Broome
|
NY
|
370,208
|
13.75
|
%
|
2
|
7
|
10
|
||||||||||||||
Saint Lawrence
|
NY
|
165,489
|
13.68
|
%
|
3
|
5
|
5
|
||||||||||||||
Oneida
|
NY
|
475,730
|
13.38
|
%
|
4
|
7
|
9
|
||||||||||||||
Pike
|
PA
|
82,836
|
11.45
|
%
|
5
|
2
|
2
|
||||||||||||||
Oswego
|
NY
|
140,096
|
11.28
|
%
|
4
|
4
|
6
|
||||||||||||||
Wayne
|
PA
|
118,528
|
9.20
|
%
|
4
|
3
|
4
|
||||||||||||||
Herkimer
|
NY
|
59,319
|
9.02
|
%
|
4
|
2
|
1
|
||||||||||||||
Tioga
|
NY
|
34,906
|
7.75
|
%
|
5
|
1
|
1
|
||||||||||||||
Clinton
|
NY
|
105,184
|
7.63
|
%
|
5
|
3
|
3
|
||||||||||||||
Lackawanna
|
PA
|
413,114
|
7.28
|
%
|
6
|
12
|
17
|
||||||||||||||
Schenectady
|
NY
|
158,950
|
5.79
|
%
|
5
|
2
|
2
|
||||||||||||||
Franklin
|
NY
|
28,894
|
5.54
|
%
|
4
|
1
|
1
|
||||||||||||||
Onondaga
|
NY
|
454,061
|
4.22
|
%
|
6
|
11
|
13
|
||||||||||||||
Saratoga
|
NY
|
153,381
|
3.42
|
%
|
8
|
4
|
4
|
||||||||||||||
Monroe
|
PA
|
79,468
|
2.96
|
%
|
8
|
4
|
4
|
||||||||||||||
Berkshire
|
MA
|
124,705
|
2.93
|
%
|
7
|
6
|
6
|
||||||||||||||
Greene
|
NY
|
39,733
|
2.84
|
%
|
5
|
2
|
2
|
||||||||||||||
Warren
|
NY
|
45,380
|
2.56
|
%
|
7
|
2
|
3
|
||||||||||||||
Chittenden
|
VT
|
81,225
|
1.84
|
%
|
7
|
3
|
3
|
||||||||||||||
Cheshire
|
NH
|
27,215
|
1.81
|
%
|
7
|
1
|
-
|
||||||||||||||
Rensselaer
|
NY
|
31,153
|
1.62
|
%
|
10
|
1
|
1
|
||||||||||||||
Luzerne
|
PA
|
79,314
|
1.32
|
%
|
13
|
4
|
6
|
||||||||||||||
Albany
|
NY
|
226,583
|
1.14
|
%
|
9
|
4
|
5
|
||||||||||||||
Hillsborough
|
NH
|
74,688
|
0.66
|
%
|
12
|
2
|
2
|
||||||||||||||
Rutland
|
VT
|
4,281
|
0.43
|
%
|
9
|
1
|
1
|
||||||||||||||
Rockingham
|
NH
|
9,923
|
0.13
|
%
|
22
|
1
|
2
|
||||||||||||||
Cumberland
|
ME
|
7,712
|
0.09
|
%
|
16
|
1
|
-
|
||||||||||||||
|
|
$
|
7,048,453
|
152
|
183
|
● |
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.
|
● |
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.
|
● |
compliance with the FRB’s annual stress testing requirements;
|
● |
increased capital, leverage, liquidity and risk management standards;
|
● |
examinations by the CFPB for compliance with federal consumer financial protection laws and regulations;
|
● |
limits on interchange fees on debit cards; and
|
● |
changes to the FDIC deposit insurance assessments calculation that would increase our insurance premium costs.
|
● |
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.
|
● |
our ability to realize anticipated cost savings;
|
● |
the difficulty of integrating operations and personnel, the 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, 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.
|
● |
the political climate and whether the proposed policies of the current Presidential administration in the U.S. that have affected market prices for financial institution stocks are successfully implemented;
|
● |
changes in securities analysts’ recommendations or expectations of financial performance;
|
● |
volatility of stock market prices and volumes;
|
● |
incorrect information or speculation;
|
● |
changes in industry valuations;
|
● |
variations in operating results from general expectations;
|
● |
actions taken against the Company by various regulatory agencies;
|
● |
changes in authoritative accounting guidance;
|
● |
changes in general domestic economic conditions such as inflation rates, tax rates, unemployment rates, labor and healthcare cost trend rates, recessions and changing government policies, laws and regulations; and
|
● |
severe weather, natural disasters, acts of war or terrorism and other external events.
|
County
|
Branches
|
ATMs
|
County
|
Branches
|
ATMs
|
||||||||||||
New York
|
Pennsylvania
|
||||||||||||||||
Albany
|
4
|
5
|
Lackawanna
|
12
|
17
|
||||||||||||
Broome
|
7
|
10
|
Luzerne
|
4
|
6
|
||||||||||||
Chenango
|
11
|
12
|
Monroe
|
4
|
4
|
||||||||||||
Clinton
|
3
|
3
|
Pike
|
2
|
2
|
||||||||||||
Cortland
|
5
|
7
|
Susquehanna
|
5
|
7
|
||||||||||||
Delaware
|
5
|
5
|
Wayne
|
3
|
4
|
||||||||||||
Essex
|
3
|
5
|
|
||||||||||||||
Franklin
|
1
|
1
|
New Hampshire
|
||||||||||||||
Fulton
|
5
|
6
|
Cheshire
|
1
|
-
|
||||||||||||
Greene
|
2
|
2
|
Hillsborough
|
2
|
2
|
||||||||||||
Hamilton
|
1
|
1
|
Rockingham
|
1
|
2
|
||||||||||||
Herkimer
|
2
|
1
|
|
||||||||||||||
Madison
|
4
|
8
|
Vermont
|
||||||||||||||
Montgomery
|
5
|
4
|
Chittenden
|
3
|
3
|
||||||||||||
Oneida
|
7
|
9
|
Rutland
|
1
|
1
|
||||||||||||
Onondaga
|
11
|
13
|
|
||||||||||||||
Oswego
|
4
|
6
|
Massachusetts
|
||||||||||||||
Otsego
|
8
|
11
|
Berkshire
|
6
|
6
|
||||||||||||
Rensselaer
|
1
|
1
|
|
||||||||||||||
Saint Lawrence
|
5
|
5
|
Maine
|
||||||||||||||
Saratoga
|
4
|
4
|
Cumberland
|
1
|
-
|
||||||||||||
Schenectady
|
2
|
2
|
|
||||||||||||||
Schoharie
|
4
|
4
|
|
||||||||||||||
Tioga
|
1
|
1
|
|
||||||||||||||
Warren
|
2
|
3
|
|
||||||||||||||
|
|
||||||||||||||||
|
Total
|
152
|
183
|
Market for Registrant’s Common Equity, Related Stockholder matters and Issuer Purchases of Equity Securities
|
|
High
|
Low
|
Dividend
|
|||||||||
2017
|
||||||||||||
1st quarter
|
$
|
42.56
|
$
|
35.96
|
$
|
0.23
|
||||||
2nd quarter
|
40.85
|
34.80
|
0.23
|
|||||||||
3rd quarter
|
38.03
|
31.28
|
0.23
|
|||||||||
4th quarter
|
40.47
|
35.18
|
0.23
|
|||||||||
2016
|
||||||||||||
1st quarter
|
$
|
27.50
|
$
|
23.81
|
$
|
0.22
|
||||||
2nd quarter
|
29.55
|
25.67
|
0.22
|
|||||||||
3rd quarter
|
33.04
|
27.31
|
0.23
|
|||||||||
4th quarter
|
42.49
|
32.26
|
0.23
|
|
Period Ending
|
|||||||||||||||||||||||
Index
|
12/31/12
|
12/31/13
|
12/31/14
|
12/31/15
|
12/31/16
|
12/31/17
|
||||||||||||||||||
NBT Bancorp
|
$
|
100.00
|
$
|
132.34
|
$
|
138.95
|
$
|
152.36
|
$
|
235.43
|
$
|
212.08
|
||||||||||||
KBW Regional Bank Index
|
$
|
100.00
|
$
|
146.72
|
$
|
150.21
|
$
|
159.19
|
$
|
221.23
|
$
|
225.15
|
||||||||||||
NASDAQ Composite Index
|
$
|
100.00
|
$
|
140.11
|
$
|
160.85
|
$
|
172.31
|
$
|
187.68
|
$
|
243.42
|
|
Year ended December 31,
|
|||||||||||||||||||
(In thousands, except share and per share data)
|
2017
|
2016
|
2015
|
2014
|
2013 (1)
|
|||||||||||||||
Interest, fee and dividend income
|
$
|
309,407
|
$
|
286,947
|
$
|
273,224
|
$
|
275,081
|
$
|
268,723
|
||||||||||
Interest expense
|
25,914
|
22,506
|
20,616
|
23,203
|
30,644
|
|||||||||||||||
Net interest income
|
283,493
|
264,441
|
252,608
|
251,878
|
238,079
|
|||||||||||||||
Provision for loan losses
|
30,988
|
25,431
|
18,285
|
19,539
|
22,424
|
|||||||||||||||
Noninterest income excluding net securities gains (losses)
|
119,437
|
116,357
|
115,394
|
125,935
|
101,789
|
|||||||||||||||
Net securities gains (losses)
|
1,867
|
(644
|
)
|
3,087
|
92
|
1,426
|
||||||||||||||
Noninterest expense
|
245,648
|
235,922
|
236,176
|
246,063
|
228,927
|
|||||||||||||||
Income before income taxes
|
128,161
|
118,801
|
116,628
|
112,303
|
89,943
|
|||||||||||||||
Net income
|
82,151
|
78,409
|
76,425
|
75,074
|
61,747
|
|||||||||||||||
Per common share
|
||||||||||||||||||||
Basic earnings
|
$
|
1.89
|
$
|
1.81
|
$
|
1.74
|
$
|
1.71
|
$
|
1.47
|
||||||||||
Diluted earnings
|
1.87
|
1.80
|
1.72
|
1.69
|
1.46
|
|||||||||||||||
Cash dividends paid
|
0.92
|
0.90
|
0.87
|
0.84
|
0.81
|
|||||||||||||||
Book value at year-end
|
22.01
|
21.11
|
20.31
|
19.69
|
18.77
|
|||||||||||||||
Tangible book value at year-end (2)
|
15.54
|
14.61
|
13.79
|
13.22
|
12.09
|
|||||||||||||||
Average diluted common shares outstanding
|
43,905
|
43,622
|
44,389
|
44,395
|
42,351
|
|||||||||||||||
Securities available for sale, at fair value
|
$
|
1,255,925
|
$
|
1,338,290
|
$
|
1,174,544
|
$
|
1,013,171
|
$
|
1,364,881
|
||||||||||
Securities held to maturity, at amortized cost
|
484,073
|
527,948
|
471,031
|
454,361
|
117,283
|
|||||||||||||||
Loans
|
6,584,773
|
6,198,057
|
5,883,133
|
5,595,271
|
5,406,795
|
|||||||||||||||
Allowance for loan losses
|
69,500
|
65,200
|
63,018
|
66,359
|
69,434
|
|||||||||||||||
Assets
|
9,136,812
|
8,867,268
|
8,262,646
|
7,807,340
|
7,652,175
|
|||||||||||||||
Deposits
|
7,170,636
|
6,973,688
|
6,604,843
|
6,299,605
|
5,890,224
|
|||||||||||||||
Borrowings
|
909,188
|
886,986
|
674,124
|
548,943
|
866,061
|
|||||||||||||||
Stockholders’ equity
|
958,177
|
913,316
|
882,004
|
864,181
|
816,569
|
|||||||||||||||
Key ratios
|
||||||||||||||||||||
Return on average assets
|
0.91
|
%
|
0.92
|
%
|
0.96
|
%
|
0.97
|
%
|
0.85
|
%
|
||||||||||
Return on average equity
|
8.71
|
%
|
8.74
|
%
|
8.70
|
%
|
8.84
|
%
|
8.09
|
%
|
||||||||||
Average equity to average assets
|
10.45
|
%
|
10.49
|
%
|
10.98
|
%
|
10.95
|
%
|
10.50
|
%
|
||||||||||
Net interest margin
|
3.47
|
%
|
3.43
|
%
|
3.50
|
%
|
3.61
|
%
|
3.66
|
%
|
||||||||||
Dividend payout ratio
|
49.20
|
%
|
50.00
|
%
|
49.92
|
%
|
49.16
|
%
|
55.48
|
%
|
||||||||||
Tier 1 leverage
|
9.14
|
%
|
9.11
|
%
|
9.44
|
%
|
9.39
|
%
|
8.93
|
%
|
||||||||||
Common equity tier 1 capital ratio
|
10.06
|
%
|
9.98
|
%
|
10.20
|
%
|
N/A
|
N/A
|
||||||||||||
Tier 1 risk-based capital
|
11.42
|
%
|
11.42
|
%
|
11.73
|
%
|
12.32
|
%
|
11.74
|
%
|
||||||||||
Total risk-based capital
|
12.42
|
%
|
12.39
|
%
|
12.74
|
%
|
13.50
|
%
|
12.99
|
%
|
(1) |
Includes the impact of the acquisition of Alliance Financial Corporation ("Alliance") on March 8, 2013.
|
(2)
|
Tangible book value calculation (non-GAAP):
|
|
Year ended December 31,
|
|||||||||||||||||||
(In thousands, except share and per share data)
|
2017
|
2016
|
2015
|
2014
|
2013
|
|||||||||||||||
Stockholders' equity
|
$
|
958,177
|
$
|
913,316
|
$
|
882,004
|
$
|
864,181
|
$
|
816,569
|
||||||||||
Intangibles
|
281,463
|
281,254
|
283,222
|
283,951
|
290,554
|
|||||||||||||||
Tangible equity
|
$ |
676,714
|
$ |
632,062
|
$ |
598,782
|
$ |
580,230
|
$ |
526,015
|
||||||||||
Diluted common shares outstanding
|
43,543
|
43,258
|
43,431
|
43,896
|
43,513
|
|||||||||||||||
Tangible book value
|
$
|
15.54
|
$
|
14.61
|
$
|
13.79
|
$
|
13.22
|
$
|
12.09
|
|
2017
|
2016
|
||||||||||||||||||||||||||||||
(In thousands, except share and per share data)
|
Fourth
|
Third
|
Second
|
First
|
Fourth
|
Third
|
Second
|
First
|
||||||||||||||||||||||||
Interest, fee and dividend income
|
$
|
80,230
|
$
|
78,847
|
$
|
75,894
|
$
|
74,436
|
$
|
73,109
|
$
|
72,509
|
$
|
71,375
|
$
|
69,954
|
||||||||||||||||
Interest expense
|
6,779
|
6,917
|
6,273
|
5,945
|
5,684
|
5,847
|
5,598
|
5,377
|
||||||||||||||||||||||||
Net interest income
|
73,451
|
71,930
|
69,621
|
68,491
|
67,425
|
66,662
|
65,777
|
64,577
|
||||||||||||||||||||||||
Provision for loan losses
|
8,153
|
7,889
|
7,567
|
7,379
|
8,165
|
6,388
|
4,780
|
6,098
|
||||||||||||||||||||||||
Noninterest income excluding net securities gains (losses)
|
29,603
|
30,782
|
30,302
|
28,750
|
28,762
|
29,644
|
29,613
|
28,338
|
||||||||||||||||||||||||
Net securities gains (losses)
|
1,869
|
(4
|
)
|
2
|
-
|
(674
|
)
|
-
|
1
|
29
|
||||||||||||||||||||||
Noninterest expense
|
63,444
|
60,601
|
60,321
|
61,282
|
57,639
|
59,614
|
60,445
|
58,224
|
||||||||||||||||||||||||
Net income
|
17,637
|
22,876
|
21,359
|
20,279
|
19,608
|
20,001
|
19,909
|
18,891
|
||||||||||||||||||||||||
Basic earnings per share
|
$
|
0.40
|
$
|
0.52
|
$
|
0.49
|
$
|
0.47
|
$
|
0.45
|
$
|
0.46
|
$
|
0.46
|
$
|
0.44
|
||||||||||||||||
Diluted earnings per share
|
$
|
0.40
|
$
|
0.52
|
$
|
0.49
|
$
|
0.46
|
$
|
0.45
|
$
|
0.46
|
$
|
0.46
|
$
|
0.43
|
||||||||||||||||
Annualized net interest margin
|
3.52
|
%
|
3.47
|
%
|
3.44
|
%
|
3.46
|
%
|
3.41
|
%
|
3.40
|
%
|
3.44
|
%
|
3.47
|
%
|
||||||||||||||||
Annualized return on average assets
|
0.77
|
%
|
1.00
|
%
|
0.95
|
%
|
0.92
|
%
|
0.89
|
%
|
0.92
|
%
|
0.94
|
%
|
0.92
|
%
|
||||||||||||||||
Annualized return on average equity
|
7.27
|
%
|
9.55
|
%
|
9.11
|
%
|
8.94
|
%
|
8.54
|
%
|
8.80
|
%
|
9.00
|
%
|
8.63
|
%
|
||||||||||||||||
Weighted average diluted common shares outstanding
|
43,958
|
43,915
|
43,901
|
43,883
|
43,703
|
43,562
|
43,454
|
43,707
|
● |
Net income for 2017 was $82.2 million, the highest in the Company's history, and up from $78.4 million in 2016.
|
● |
Net income for 2017 excluding the $4.4 million estimated one-time, non-cash charge recorded in the provision for income taxes related to tax reform was $86.6 million, up 10.4% from 2016.
|
● |
Net interest margin for 2017 increased 4 basis points driven by increases in loans and securities.
|
● |
Continued demand deposit growth strategies resulting in 8.4% growth in average deposits from 2016 to 2017.
|
● |
Asset quality indicators showed stability from last year:
|
▪ |
Nonperforming loans to total loans were 0.47% at December 31, 2017 compared to 0.65% at December 31, 2016;
|
▪ |
Past due loans to total loans decreased to 0.63% at December 31, 2017 from 0.64% at December 31, 2016; and
|
▪ |
Net charge-offs to average loans were 0.42% for 2017 compared to 0.39% in 2016.
|
● |
Increased efforts to grow noninterest income with focus on organic growth of our wealth management businesses.
|
● |
Continued improvement in economic conditions may lead to further increases in interest rates. This would result in principal and interest payments on currently outstanding loans and investments being reinvested at higher rates. In addition, rising market rates would likely increase deposit and borrowing costs from current low levels. This could potentially offset, or more than offset, the benefits of higher rates on our earning assets. The magnitude and timing of interest rate increases, along with the shape of the yield curve, will impact net interest income in 2018.
|
● |
The Tax Act has created an important opportunity for the Company to invest in employees, our customer experience and our communities as the Company will realize a reduction in tax expense beginning in 2018 due to the Federal tax rate for corporations reduction from 35% to 21%. In conjunction with such reduction, the Company is raising the starting hourly pay rate of $11 to $15 per hour and employees earning $50,000 or less will receive a permanent minimum increase of 5%. This will positively impact over 61% of the Company's workforce. Moreover, in 2018 the Company will be increasing both its investment in infrastructure to enhance customer-facing technology and contributions to nonprofit organizations in its footprint.
|
● |
Proposals for regulatory relief are currently on the legislative agenda. The success and timing of these potential reforms will determine the significance and materiality of any such measures in 2018.
|
● |
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 2018 outlook is subject to factors in addition to those identified above and those risks and uncertainties that could impact the Company’s future results are explained in ITEM 1A. RISK FACTORS.
|
|
2017
|
2016
|
2015
|
|||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate
|
|||||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||||||
Short-term interest bearing accounts
|
$
|
9,636
|
$
|
179
|
1.86
|
%
|
$
|
16,301
|
$
|
95
|
0.58
|
%
|
$
|
10,157
|
$
|
33
|
0.33
|
%
|
||||||||||||||||||
Securities available for sale (1)(2)
|
1,350,995
|
28,969
|
2.14
|
%
|
1,237,930
|
24,450
|
1.98
|
%
|
1,059,284
|
20,888
|
1.97
|
%
|
||||||||||||||||||||||||
Securities held to maturity (1)
|
507,583
|
13,490
|
2.66
|
%
|
487,837
|
12,255
|
2.51
|
%
|
459,589
|
11,296
|
2.46
|
%
|
||||||||||||||||||||||||
Federal Reserve Bank and FHLB stock
|
46,673
|
2,634
|
5.64
|
%
|
38,867
|
1,973
|
5.08
|
%
|
33,044
|
1,712
|
5.18
|
%
|
||||||||||||||||||||||||
Loans (3)
|
6,359,447
|
267,934
|
4.21
|
%
|
6,035,513
|
251,723
|
4.17
|
%
|
5,743,860
|
242,587
|
4.22
|
%
|
||||||||||||||||||||||||
Total interest earning assets
|
$
|
8,274,334
|
$
|
313,206
|
3.79
|
%
|
$
|
7,816,448
|
$
|
290,496
|
3.72
|
%
|
$
|
7,305,934
|
$
|
276,516
|
3.78
|
%
|
||||||||||||||||||
Other assets
|
752,258
|
740,506
|
691,583
|
|||||||||||||||||||||||||||||||||
Total assets
|
$
|
9,026,592
|
$
|
8,556,954
|
$
|
7,997,517
|
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Liabilities and Stockholders' Equity:
|
||||||||||||||||||||||||||||||||||||
Money market deposit accounts
|
$
|
1,697,386
|
$
|
3,864
|
0.23
|
%
|
$
|
1,668,555
|
$
|
3,599
|
0.22
|
%
|
$
|
1,582,078
|
$
|
3,351
|
0.21
|
%
|
||||||||||||||||||
NOW deposit accounts
|
1,153,361
|
1,051
|
0.09
|
%
|
1,077,581
|
546
|
0.05
|
%
|
987,638
|
515
|
0.05
|
%
|
||||||||||||||||||||||||
Savings deposits
|
1,214,480
|
683
|
0.06
|
%
|
1,135,182
|
652
|
0.06
|
%
|
1,071,753
|
651
|
0.06
|
%
|
||||||||||||||||||||||||
Time deposits
|
817,370
|
8,877
|
1.09
|
%
|
905,126
|
9,569
|
1.06
|
%
|
960,188
|
9,740
|
1.01
|
%
|
||||||||||||||||||||||||
Total interest bearing deposits
|
$
|
4,882,597
|
$
|
14,475
|
0.30
|
%
|
$
|
4,786,444
|
$
|
14,366
|
0.30
|
%
|
$
|
4,601,657
|
$
|
14,257
|
0.31
|
%
|
||||||||||||||||||
Short-term borrowings
|
690,036
|
5,996
|
0.87
|
%
|
497,654
|
2,309
|
0.46
|
%
|
339,885
|
783
|
0.23
|
%
|
||||||||||||||||||||||||
Long-term debt
|
93,389
|
2,299
|
2.46
|
%
|
118,860
|
3,204
|
2.70
|
%
|
130,705
|
3,355
|
2.57
|
%
|
||||||||||||||||||||||||
Junior subordinated debt
|
101,196
|
3,144
|
3.11
|
%
|
101,196
|
2,627
|
2.60
|
%
|
101,196
|
2,221
|
2.19
|
%
|
||||||||||||||||||||||||
Total interest bearing liabilities
|
$
|
5,767,218
|
$
|
25,914
|
0.45
|
%
|
$
|
5,504,154
|
$
|
22,506
|
0.41
|
%
|
$
|
5,173,443
|
$
|
20,616
|
0.40
|
%
|
||||||||||||||||||
Demand deposits
|
2,217,785
|
2,045,465
|
1,857,027
|
|||||||||||||||||||||||||||||||||
Other liabilities
|
97,913
|
110,105
|
88,937
|
|||||||||||||||||||||||||||||||||
Stockholders' equity
|
943,676
|
897,230
|
878,110
|
|||||||||||||||||||||||||||||||||
Total liabilities and stockholders' equity
|
$
|
9,026,592
|
$
|
8,556,954
|
$
|
7,997,517
|
||||||||||||||||||||||||||||||
Net FTE interest income
|
$ |
287,292
|
$ |
267,990
|
$ |
255,900
|
||||||||||||||||||||||||||||||
Interest rate spread
|
3.34
|
%
|
3.31
|
%
|
3.38
|
%
|
||||||||||||||||||||||||||||||
Net interest margin
|
3.47
|
%
|
3.43
|
%
|
3.50
|
%
|
||||||||||||||||||||||||||||||
Taxable equivalent adjustment
|
$ |
3,799
|
$ |
3,549
|
$ |
3,292
|
||||||||||||||||||||||||||||||
Net interest income
|
$
|
283,493
|
$
|
264,441
|
$
|
252,608
|
(1)
|
Securities are shown at average amortized cost.
|
(2)
|
Excluding net unrealized gains or losses.
|
(3)
|
For purposes of these computations, nonaccrual loans are included in the average loan balances outstanding.
|
Note:
|
Interest income for tax-exempt securities and loans has been adjusted to a FTE basis using the statutory Federal income tax rate of 35%.
|
|
Increase (Decrease)
2017 over 2016
|
Increase (Decrease)
2016 over 2015
|
||||||||||||||||||||||
(In thousands)
|
Volume
|
Rate
|
Total
|
Volume
|
Rate
|
Total
|
||||||||||||||||||
Short-term interest-bearing accounts
|
$
|
(52
|
)
|
$
|
136
|
$
|
84
|
$
|
27
|
$
|
35
|
$
|
62
|
|||||||||||
Securities available for sale
|
2,331
|
2,188
|
4,519
|
3,527
|
35
|
3,562
|
||||||||||||||||||
Securities held to maturity
|
508
|
727
|
1,235
|
706
|
253
|
959
|
||||||||||||||||||
Federal Reserve Bank and FHLB stock
|
425
|
236
|
661
|
296
|
(35
|
)
|
261
|
|||||||||||||||||
Loans
|
13,627
|
2,584
|
16,211
|
12,194
|
(3,058
|
)
|
9,136
|
|||||||||||||||||
Total FTE interest income
|
$
|
16,839
|
$
|
5,871
|
$
|
22,710
|
$
|
16,750
|
$
|
(2,770
|
)
|
$
|
13,980
|
|||||||||||
Money market deposit accounts
|
63
|
202
|
265
|
186
|
62
|
248
|
||||||||||||||||||
NOW deposit accounts
|
41
|
464
|
505
|
46
|
(15
|
)
|
31
|
|||||||||||||||||
Savings deposits
|
45
|
(14
|
)
|
31
|
37
|
(36
|
)
|
1
|
||||||||||||||||
Time deposits
|
(948
|
)
|
256
|
(692
|
)
|
(572
|
)
|
401
|
(171
|
)
|
||||||||||||||
Short-term borrowings
|
1,132
|
2,555
|
3,687
|
479
|
1,047
|
1,526
|
||||||||||||||||||
Long-term debt
|
(644
|
)
|
(261
|
)
|
(905
|
)
|
(314
|
)
|
163
|
(151
|
)
|
|||||||||||||
Junior subordinated debt
|
-
|
517
|
517
|
-
|
406
|
406
|
||||||||||||||||||
Total FTE interest expense
|
$
|
(311
|
)
|
$
|
3,719
|
$
|
3,408
|
$
|
(138
|
)
|
$
|
2,028
|
$
|
1,890
|
||||||||||
Change in FTE net interest income
|
$
|
17,150
|
$
|
2,152
|
$
|
19,302
|
$
|
16,888
|
$
|
(4,798
|
)
|
$
|
12,090
|
|
December 31,
|
|||||||||||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
2014
|
2013
|
|||||||||||||||
Residential real estate mortgages
|
$
|
1,321,695
|
$
|
1,262,614
|
$
|
1,196,780
|
$
|
1,115,715
|
$
|
1,041,502
|
||||||||||
Commercial
|
1,317,174
|
1,242,701
|
1,159,089
|
1,144,761
|
1,180,995
|
|||||||||||||||
Commercial real estate
|
1,711,095
|
1,543,301
|
1,430,618
|
1,334,984
|
1,218,988
|
|||||||||||||||
Consumer
|
1,740,038
|
1,641,657
|
1,568,204
|
1,430,216
|
1,345,395
|
|||||||||||||||
Home equity
|
494,771
|
507,784
|
528,442
|
569,595
|
619,915
|
|||||||||||||||
Total
|
$
|
6,584,773
|
$
|
6,198,057
|
$
|
5,883,133
|
$
|
5,595,271
|
$
|
5,406,795
|
|
Remaining maturity at December 31, 2017
|
|||||||||||||||
(In thousands)
|
Within One Year
|
|
After One
Year But
Within Five
Years
|
After Five Years
|
Total
|
|||||||||||
Floating/adjustable rate:
|
||||||||||||||||
Commercial, commercial real estate, agricultural and agricultural real estate
|
$
|
474,290
|
$
|
419,618
|
$
|
1,335,712
|
$
|
2,229,620
|
||||||||
Fixed rate:
|
||||||||||||||||
Commercial, commercial real estate, agricultural and agricultural real estate
|
65,990
|
441,692
|
290,967
|
798,649
|
||||||||||||
Total
|
$
|
540,280
|
$
|
861,310
|
$
|
1,626,679
|
$
|
3,028,269
|
|
As of December 31,
|
|||||||||||||||||||||||
|
2017
|
2016
|
2015
|
|||||||||||||||||||||
(In thousands)
|
Amortized
Cost
|
Fair
Value
|
Amortized
Cost
|
Fair
Value
|
Amortized
Cost
|
Fair
Value
|
||||||||||||||||||
AFS securities:
|
||||||||||||||||||||||||
Federal agency
|
$
|
109,862
|
$
|
108,899
|
$
|
175,135
|
$
|
174,408
|
$
|
312,580
|
$
|
311,272
|
||||||||||||
State & municipal
|
42,171
|
41,956
|
47,053
|
46,726
|
31,208
|
31,637
|
||||||||||||||||||
Mortgage-backed
|
556,755
|
554,927
|
528,769
|
529,844
|
406,277
|
409,896
|
||||||||||||||||||
Collateralized mortgage obligations
|
546,754
|
535,994
|
574,253
|
566,573
|
405,635
|
404,971
|
||||||||||||||||||
Other securities
|
10,623
|
14,149
|
15,849
|
20,739
|
13,637
|
16,768
|
||||||||||||||||||
Total AFS securities
|
$
|
1,266,165
|
$
|
1,255,925
|
$
|
1,341,059
|
$
|
1,338,290
|
$
|
1,169,337
|
$
|
1,174,544
|
||||||||||||
|
||||||||||||||||||||||||
HTM securities:
|
||||||||||||||||||||||||
Mortgage-backed
|
$
|
96,775
|
$
|
96,107
|
$
|
97,201
|
$
|
96,112
|
$
|
10,043
|
$
|
10,031
|
||||||||||||
Collateralized mortgage obligations
|
186,327
|
183,974
|
225,213
|
224,765
|
272,550
|
272,401
|
||||||||||||||||||
State & municipal
|
200,971
|
201,790
|
205,534
|
204,173
|
188,438
|
190,708
|
||||||||||||||||||
Total HTM securities
|
$
|
484,073
|
$
|
481,871
|
$
|
527,948
|
$
|
525,050
|
$
|
471,031
|
$
|
473,140
|
(Dollars in thousands)
|
Amortized cost
|
Estimated fair value
|
Weighted Average Yield
|
|||||||||
AFS debt securities:
|
||||||||||||
Within one year
|
$
|
63,309
|
$
|
63,186
|
2.06
|
%
|
||||||
From one to five years
|
90,119
|
89,275
|
2.13
|
%
|
||||||||
From five to ten years
|
178,128
|
177,961
|
2.67
|
%
|
||||||||
After ten years
|
923,986
|
911,354
|
2.50
|
%
|
||||||||
Total AFS debt securities
|
$
|
1,255,542
|
$
|
1,241,776
|
||||||||
HTM debt securities:
|
||||||||||||
Within one year
|
$
|
31,412
|
$
|
31,413
|
2.03
|
%
|
||||||
From one to five years
|
42,363
|
42,588
|
3.10
|
%
|
||||||||
From five to ten years
|
174,950
|
174,937
|
2.39
|
%
|
||||||||
After ten years
|
235,348
|
232,933
|
2.27
|
%
|
||||||||
Total HTM debt securities
|
$
|
484,073
|
$
|
481,871
|
(In thousands)
|
December 31,
2017
|
|||
Within three months
|
$
|
17,792
|
||
After three but within twelve months
|
28,133
|
|||
After one but within three years
|
33,335
|
|||
Over three years
|
13,571
|
|||
Total
|
$
|
92,831
|
|
Years ended December 31,
|
|||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
|||||||||
Insurance and other financial services revenue
|
$
|
23,532
|
$
|
24,396
|
$
|
24,211
|
||||||
Service charges on deposit accounts
|
16,750
|
16,729
|
17,056
|
|||||||||
ATM and debit card fees
|
21,372
|
19,448
|
18,248
|
|||||||||
Retirement plan administration fees
|
20,213
|
16,063
|
14,146
|
|||||||||
Trust
|
19,586
|
18,565
|
19,026
|
|||||||||
Bank owned life insurance income
|
5,175
|
5,195
|
4,334
|
|||||||||
Net securities gains (losses)
|
1,867
|
(644
|
)
|
3,087
|
||||||||
Gain on the sale of equity investment
|
818
|
-
|
4,179
|
|||||||||
Other
|
11,991
|
15,961
|
14,194
|
|||||||||
Total noninterest income
|
$
|
121,304
|
$
|
115,713
|
$
|
118,481
|
|
Years ended December 31,
|
|||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
|||||||||
Salaries and employee benefits
|
$
|
133,610
|
$
|
131,284
|
$
|
125,633
|
||||||
Occupancy
|
21,808
|
20,940
|
22,095
|
|||||||||
Data processing and communications
|
17,068
|
16,495
|
16,588
|
|||||||||
Professional fees and outside services
|
13,499
|
13,617
|
13,407
|
|||||||||
Equipment
|
15,225
|
14,295
|
13,408
|
|||||||||
Office supplies and postage
|
6,284
|
6,168
|
6,367
|
|||||||||
FDIC expenses
|
4,767
|
5,111
|
5,145
|
|||||||||
Advertising
|
2,744
|
2,556
|
2,654
|
|||||||||
Amortization of intangible assets
|
3,960
|
3,928
|
4,864
|
|||||||||
Loan collection and other real estate owned, net
|
4,763
|
3,458
|
2,620
|
|||||||||
Other
|
21,920
|
18,070
|
23,395
|
|||||||||
Total noninterest expense
|
$
|
245,648
|
$
|
235,922
|
$
|
236,176
|
|
As of December 31,
|
|||||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
2017
|
%
|
2016
|
%
|
2015
|
%
|
2014
|
%
|
2013
|
%
|
||||||||||||||||||||||||||||||
Nonaccrual loans:
|
||||||||||||||||||||||||||||||||||||||||
Commercial, agricultural and real estate loans
|
$
|
12,485
|
48
|
%
|
$
|
19,351
|
54
|
%
|
$
|
14,655
|
43
|
%
|
$
|
18,226
|
45
|
%
|
$
|
27,033
|
54
|
%
|
||||||||||||||||||||
Real estate mortgages
|
5,919
|
23
|
%
|
8,027
|
23
|
%
|
8,625
|
26
|
%
|
10,867
|
26
|
%
|
10,296
|
21
|
%
|
|||||||||||||||||||||||||
Consumer
|
4,324
|
17
|
%
|
4,653
|
13
|
%
|
6,009
|
18
|
%
|
8,086
|
20
|
%
|
7,213
|
14
|
%
|
|||||||||||||||||||||||||
Troubled debt restructured loans
|
2,980
|
12
|
%
|
3,681
|
10
|
%
|
4,455
|
13
|
%
|
3,895
|
9
|
%
|
5,423
|
11
|
%
|
|||||||||||||||||||||||||
Total nonaccrual loans
|
$
|
25,708
|
100
|
%
|
$
|
35,712
|
100
|
%
|
$
|
33,744
|
100
|
%
|
$
|
41,074
|
100
|
%
|
$
|
49,965
|
100
|
%
|
||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Loans 90 days or more past due and still accruing:
|
||||||||||||||||||||||||||||||||||||||||
Commercial, agricultural and real estate loans
|
$
|
-
|
-
|
% |
$
|
-
|
-
|
% |
$
|
-
|
-
|
% |
$
|
84
|
2
|
%
|
$
|
105
|
3
|
%
|
||||||||||||||||||||
Real estate mortgages
|
1,402
|
26
|
%
|
1,733
|
36
|
%
|
1,022
|
28
|
%
|
1,927
|
39
|
%
|
808
|
22
|
%
|
|||||||||||||||||||||||||
Consumer
|
4,008
|
74
|
%
|
3,077
|
64
|
%
|
2,640
|
72
|
%
|
2,930
|
59
|
%
|
2,824
|
75
|
%
|
|||||||||||||||||||||||||
Total loans 90 days or more past due and still accruing
|
$
|
5,410
|
100
|
%
|
$
|
4,810
|
100
|
%
|
$
|
3,662
|
100
|
%
|
$
|
4,941
|
100
|
%
|
$
|
3,737
|
100
|
%
|
||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Total nonperforming loans
|
$
|
31,118
|
$
|
40,522
|
$
|
37,406
|
$
|
46,015
|
$
|
53,702
|
||||||||||||||||||||||||||||||
Other real estate owned
|
4,529
|
5,581
|
4,666
|
3,964
|
2,904
|
|||||||||||||||||||||||||||||||||||
Total nonperforming assets
|
$
|
35,647
|
$
|
46,103
|
$
|
42,072
|
$
|
49,979
|
$
|
56,606
|
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Total nonperforming loans to total loans
|
0.47
|
%
|
0.65
|
%
|
0.64
|
%
|
0.82
|
%
|
0.99
|
%
|
||||||||||||||||||||||||||||||
Total nonperforming assets to total assets
|
0.39
|
%
|
0.52
|
%
|
0.51
|
%
|
0.64
|
%
|
0.74
|
%
|
||||||||||||||||||||||||||||||
Total allowance for loan losses to nonperforming loans
|
223.34
|
%
|
160.90
|
%
|
168.47
|
%
|
144.21
|
%
|
129.29
|
%
|
(Dollars in thousands)
|
2017
|
2016
|
2015
|
2014
|
2013
|
|||||||||||||||
Balance at January 1,
|
$
|
65,200
|
$
|
63,018
|
$
|
66,359
|
$
|
69,434
|
$
|
69,334
|
||||||||||
Loans charged-off:
|
||||||||||||||||||||
Commercial and agricultural
|
4,169
|
4,592
|
5,718
|
9,414
|
10,459
|
|||||||||||||||
Residential real estate mortgages
|
1,846
|
1,343
|
2,229
|
1,417
|
1,771
|
|||||||||||||||
Consumer*
|
27,072
|
23,364
|
18,140
|
16,642
|
15,459
|
|||||||||||||||
Total loans charged-off
|
$
|
33,087
|
$
|
29,299
|
$
|
26,087
|
$
|
27,473
|
$
|
27,689
|
||||||||||
Recoveries:
|
||||||||||||||||||||
Commercial and agricultural
|
$ |
1,077
|
$ |
1,887
|
$ |
1,014
|
$ |
1,774
|
$ |
1,956
|
||||||||||
Residential real estate mortgages
|
180
|
293
|
320
|
285
|
272
|
|||||||||||||||
Consumer*
|
5,142
|
3,870
|
3,127
|
2,800
|
3,137
|
|||||||||||||||
Total recoveries
|
$
|
6,399
|
$
|
6,050
|
$
|
4,461
|
$
|
4,859
|
$
|
5,365
|
||||||||||
Net loans charged-off
|
$
|
26,688
|
$
|
23,249
|
$
|
21,626
|
$
|
22,614
|
$
|
22,324
|
||||||||||
|
||||||||||||||||||||
Provision for loan losses
|
$
|
30,988
|
$
|
25,431
|
$
|
18,285
|
$
|
19,539
|
$
|
22,424
|
||||||||||
Balance at December 31,
|
$
|
69,500
|
$
|
65,200
|
$
|
63,018
|
$
|
66,359
|
$
|
69,434
|
||||||||||
Allowance for loan losses to loans outstanding at end of year
|
1.06
|
%
|
1.05
|
%
|
1.07
|
%
|
1.19
|
%
|
1.28
|
%
|
||||||||||
Net charge-offs to average loans outstanding
|
0.42
|
%
|
0.39
|
%
|
0.38
|
%
|
0.41
|
%
|
0.44
|
%
|
|
December 31,
|
|||||||||||||||||||||||||||||||||||||||
|
2017
|
2016
|
2015
|
2014
|
2013
|
|||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Allowance
|
Category
Percent of
Loans
|
Allowance
|
Category
Percent of
Loans
|
Allowance
|
Category
Percent of
Loans
|
Allowance
|
Category
Percent of
Loans
|
Allowance
|
Category
Percent of
of Loans
|
||||||||||||||||||||||||||||||
Commercial and agricultural
|
$
|
27,606
|
46
|
%
|
$
|
25,444
|
45
|
%
|
$
|
25,545
|
44
|
%
|
$
|
32,433
|
44
|
%
|
$
|
35,090
|
44
|
%
|
||||||||||||||||||||
Real estate mortgages
|
5,064
|
20
|
%
|
6,381
|
20
|
%
|
7,960
|
20
|
%
|
7,130
|
20
|
%
|
6,520
|
19
|
%
|
|||||||||||||||||||||||||
Consumer
|
36,830
|
34
|
%
|
33,375
|
35
|
%
|
29,253
|
36
|
%
|
26,720
|
36
|
%
|
27,694
|
37
|
%
|
|||||||||||||||||||||||||
Unallocated
|
-
|
-
|
%
|
-
|
-
|
%
|
260
|
-
|
%
|
76
|
-
|
%
|
130
|
-
|
%
|
|||||||||||||||||||||||||
Total
|
$
|
69,500
|
100
|
%
|
$
|
65,200
|
100
|
%
|
$
|
63,018
|
100
|
%
|
$
|
66,359
|
100
|
%
|
$
|
69,434
|
100
|
%
|
|
Payments Due by Period
|
|||||||||||||||||||||||||||
(In thousands)
|
2018
|
2019
|
2020
|
2021
|
2022
|
Thereafter
|
Total
|
|||||||||||||||||||||
Long-term debt obligations
|
$
|
40,037
|
$
|
20,000
|
$
|
25,000
|
$
|
56
|
$
|
-
|
$
|
3,776
|
$
|
88,869
|
||||||||||||||
Junior subordinated debt
|
-
|
-
|
-
|
-
|
-
|
101,196
|
101,196
|
|||||||||||||||||||||
Operating lease obligations
|
7,910
|
7,227
|
6,547
|
5,352
|
4,646
|
16,660
|
48,342
|
|||||||||||||||||||||
Capital lease obligations
|
201
|
188
|
149
|
78
|
8
|
-
|
624
|
|||||||||||||||||||||
IT/Software obligations
|
6,826
|
1,695
|
850
|
11
|
-
|
-
|
9,382
|
|||||||||||||||||||||
Data processing commitments
|
3,186
|
3,186
|
3,186
|
1,140
|
1,140
|
-
|
11,838
|
|||||||||||||||||||||
Total contractual obligations
|
$
|
58,160
|
$
|
32,296
|
$
|
35,732
|
$
|
6,637
|
$
|
5,794
|
$
|
121,632
|
$
|
260,251
|
(In thousands) | December 31, 2017 | |||
Within one year
|
$
|
18,545
|
||
After one but within three years
|
19,645
|
|||
After three but within five years
|
2,044
|
|||
After five years
|
901
|
|||
Total
|
$
|
41,135
|
Change in interest rates
(In basis points)
|
Percent change
in net interest income
|
||||
+200
|
(3.43
|
%)
|
|||
-100
|
(1.85
|
%)
|
Change in interest rates
(In basis points)
|
Percent change
in net portfolio value
|
||||
+200
|
(1.98
|
%)
|
|||
-100
|
8.98
|
%
|
|
As of December 31,
|
|||||||
(In thousands, except share and per share data)
|
2017
|
2016
|
||||||
Assets
|
||||||||
Cash and due from banks
|
$
|
156,852
|
$
|
147,789
|
||||
Short-term interest bearing accounts
|
2,812
|
1,392
|
||||||
Securities available for sale, at fair value
|
1,255,925
|
1,338,290
|
||||||
Securities held to maturity (fair value $481,871 and $525,050)
|
484,073
|
527,948
|
||||||
Trading securities
|
11,467
|
9,259
|
||||||
Federal Reserve Bank and Federal Home Loan Bank stock
|
46,706
|
47,033
|
||||||
Loans
|
6,584,773
|
6,198,057
|
||||||
Less allowance for loan losses
|
69,500
|
65,200
|
||||||
Net loans
|
$ |
6,515,273
|
$ |
6,132,857
|
||||
Premises and equipment, net
|
81,305
|
84,187
|
||||||
Goodwill
|
268,043
|
265,439
|
||||||
Intangible assets, net
|
13,420
|
15,815
|
||||||
Bank owned life insurance
|
172,388
|
168,012
|
||||||
Other assets
|
128,548
|
129,247
|
||||||
Total assets
|
$
|
9,136,812
|
$
|
8,867,268
|
||||
Liabilities
|
||||||||
Demand (noninterest bearing)
|
$
|
2,286,892
|
$
|
2,195,845
|
||||
Savings, NOW and money market
|
4,076,978
|
3,905,432
|
||||||
Time
|
806,766
|
872,411
|
||||||
Total deposits
|
$ |
7,170,636
|
$ |
6,973,688
|
||||
Short-term borrowings
|
719,123
|
681,703
|
||||||
Long-term debt
|
88,869
|
104,087
|
||||||
Junior subordinated debt
|
101,196
|
101,196
|
||||||
Other liabilities
|
98,811
|
93,278
|
||||||
Total liabilities
|
$ |
8,178,635
|
$ |
7,953,952
|
||||
Stockholders’ equity
|
||||||||
Preferred stock, $0.01 par value; authorized 2,500,000 shares at December 31, 2017 and 2016
|
$ |
-
|
$ |
-
|
||||
Common stock, $0.01 par value; authorized 100,000,000 shares at December 31, 2017 and 2016, respectively; issued 49,651,493 at December 31, 2017 and 2016
|
497
|
497
|
||||||
Additional paid-in-capital
|
574,209
|
575,078
|
||||||
Retained earnings
|
543,713
|
501,761
|
||||||
Accumulated other comprehensive loss
|
(22,077
|
)
|
(21,520
|
)
|
||||
Common stock in treasury, at cost, 6,108,684 and 6,393,743 shares at December 31, 2017 and 2016, respectively
|
(138,165
|
)
|
(142,500
|
)
|
||||
Total stockholders’ equity
|
$ |
958,177
|
$ |
913,316
|
||||
Total liabilities and stockholders’ equity
|
$
|
9,136,812
|
$
|
8,867,268
|
|
Years ended December 31,
|
|||||||||||
(In thousands, except per share data)
|
2017
|
2016
|
2015
|
|||||||||
Interest, fee and dividend income
|
||||||||||||
Interest and fees on loans
|
$
|
267,096
|
$
|
250,994
|
$
|
241,828
|
||||||
Securities available for sale
|
28,564
|
24,033
|
20,418
|
|||||||||
Securities held to maturity
|
10,934
|
9,852
|
9,233
|
|||||||||
Other
|
2,813
|
2,068
|
1,745
|
|||||||||
Total interest, fee and dividend income
|
$ |
309,407
|
$ |
286,947
|
$ |
273,224
|
||||||
Interest expense
|
||||||||||||
Deposits
|
14,475
|
14,366
|
14,257
|
|||||||||
Short-term borrowings
|
5,996
|
2,309
|
783
|
|||||||||
Long-term debt
|
2,299
|
3,204
|
3,355
|
|||||||||
Junior subordinated debt
|
3,144
|
2,627
|
2,221
|
|||||||||
Total interest expense
|
$ |
25,914
|
$ |
22,506
|
$ |
20,616
|
||||||
Net interest income
|
$ |
283,493
|
$ |
264,441
|
$ |
252,608
|
||||||
Provision for loan losses
|
30,988
|
25,431
|
18,285
|
|||||||||
Net interest income after provision for loan losses
|
$ |
252,505
|
$ |
239,010
|
$ |
234,323
|
||||||
Noninterest income
|
||||||||||||
Insurance and other financial services revenue
|
$ |
23,532
|
$ |
24,396
|
$ |
24,211
|
||||||
Service charges on deposit accounts
|
16,750
|
16,729
|
17,056
|
|||||||||
ATM and debit card fees
|
21,372
|
19,448
|
18,248
|
|||||||||
Retirement plan administration fees
|
20,213
|
16,063
|
14,146
|
|||||||||
Trust
|
19,586
|
18,565
|
19,026
|
|||||||||
Bank owned life insurance income
|
5,175
|
5,195
|
4,334
|
|||||||||
Net securities gains (losses)
|
1,867
|
(644
|
)
|
3,087
|
||||||||
Gain on the sale of equity investment
|
818
|
-
|
4,179
|
|||||||||
Other
|
11,991
|
15,961
|
14,194
|
|||||||||
Total noninterest income
|
$ |
121,304
|
$ |
115,713
|
$ |
118,481
|
||||||
Noninterest expense
|
||||||||||||
Salaries and employee benefits
|
$ |
133,610
|
$ |
131,284
|
$ |
125,633
|
||||||
Occupancy
|
21,808
|
20,940
|
22,095
|
|||||||||
Data processing and communications
|
17,068
|
16,495
|
16,588
|
|||||||||
Professional fees and outside services
|
13,499
|
13,617
|
13,407
|
|||||||||
Equipment
|
15,225
|
14,295
|
13,408
|
|||||||||
Office supplies and postage
|
6,284
|
6,168
|
6,367
|
|||||||||
FDIC expenses
|
4,767
|
5,111
|
5,145
|
|||||||||
Advertising
|
2,744
|
2,556
|
2,654
|
|||||||||
Amortization of intangible assets
|
3,960
|
3,928
|
4,864
|
|||||||||
Loan collection and other real estate owned, net
|
4,763
|
3,458
|
2,620
|
|||||||||
Other
|
21,920
|
18,070
|
23,395
|
|||||||||
Total noninterest expense
|
$ |
245,648
|
$ |
235,922
|
$ |
236,176
|
||||||
Income before income tax expense
|
$ |
128,161
|
$ |
118,801
|
$ |
116,628
|
||||||
Income tax expense
|
46,010
|
40,392
|
40,203
|
|||||||||
Net income
|
$
|
82,151
|
$
|
78,409
|
$
|
76,425
|
||||||
Earnings per share
|
||||||||||||
Basic
|
$
|
1.89
|
$
|
1.81
|
$
|
1.74
|
||||||
Diluted
|
$
|
1.87
|
$
|
1.80
|
$
|
1.72
|
|
Years ended December 31,
|
|||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
|||||||||
Net income
|
$
|
82,151
|
$
|
78,409
|
$
|
76,425
|
||||||
Other comprehensive (loss) income, net of tax:
|
||||||||||||
Unrealized net holding (losses) arising during the year (pre-tax amounts of $(6,915), $(8,618) and $(3,159))
|
$ |
(4,070
|
)
|
$ |
(5,265
|
)
|
$ |
(1,930
|
)
|
|||
Reclassification adjustment for net (gains) losses related to securities available for sale included in net income (pre-tax amounts of $(1,869), $644 and $(3,087))
|
(1,153
|
)
|
393
|
(1,886
|
)
|
|||||||
Reclassification adjustment for an impairment write-down of an equity security (pre-tax amounts of $1,312, $- and $-)
|
811
|
-
|
-
|
|||||||||
Unrealized gains on derivatives (cash flow hedges) (pre-tax amounts of $609, $2,901 and $-)
|
372
|
1,772
|
-
|
|||||||||
Amortization of unrealized net gains and losses related to the reclassification of available for sale investment securities to held to maturity (pre-tax amounts of $875, $1,094 and $1,311)
|
540
|
668
|
801
|
|||||||||
Pension and other benefits:
|
||||||||||||
Amortization of prior service cost and actuarial gains (pre-tax amounts of $1,852, $2,370 and $2,239)
|
1,112
|
1,421
|
1,371
|
|||||||||
Decrease (increase) in unrecognized actuarial loss (pre-tax amounts of $2,401, $3,154 and $(6,144))
|
1,831
|
1,909
|
(3,747
|
)
|
||||||||
Total other comprehensive (loss) income
|
$ |
(557
|
)
|
$ |
898
|
$ |
(5,391
|
)
|
||||
Comprehensive income
|
$
|
81,594
|
$ |
79,307
|
$ |
71,034
|
(In thousands, except share and per share data)
|
Common
Stock
|
Additional
Paid-in-
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
(Loss) Income
|
Common
Stock in
Treasury
|
Total
|
||||||||||||||||||
Balance at December 31, 2014
|
$
|
497
|
$
|
576,504
|
$
|
423,956
|
$
|
(17,027
|
)
|
$
|
(119,749
|
)
|
$
|
864,181
|
||||||||||
Net income
|
-
|
-
|
76,425
|
-
|
-
|
76,425
|
||||||||||||||||||
Cash dividends - $0.87 per share
|
-
|
-
|
(38,149
|
)
|
-
|
-
|
(38,149
|
)
|
||||||||||||||||
Purchase of 1,047,152 treasury shares
|
-
|
-
|
-
|
-
|
(26,797
|
)
|
(26,797
|
)
|
||||||||||||||||
Net issuance of 581,400 shares to employee and other stock plans, including tax benefit
|
-
|
(3,864
|
)
|
-
|
-
|
11,513
|
7,649
|
|||||||||||||||||
Stock-based compensation
|
-
|
4,086
|
-
|
-
|
-
|
4,086
|
||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
(5,391
|
)
|
-
|
(5,391
|
)
|
||||||||||||||||
Balance at December 31, 2015
|
$
|
497
|
$
|
576,726
|
$
|
462,232
|
$
|
(22,418
|
)
|
$
|
(135,033
|
)
|
$
|
882,004
|
||||||||||
Net income
|
-
|
-
|
78,409
|
-
|
-
|
78,409
|
||||||||||||||||||
Cash dividends - $0.90 per share
|
-
|
-
|
(38,880
|
)
|
-
|
-
|
(38,880
|
)
|
||||||||||||||||
Purchase of 675,535 treasury shares
|
-
|
-
|
-
|
-
|
(17,193
|
)
|
(17,193
|
)
|
||||||||||||||||
Net issuance of 502,585 shares to employee and other stock plans, including tax benefit
|
-
|
(6,026
|
)
|
-
|
-
|
9,726
|
3,700
|
|||||||||||||||||
Stock-based compensation
|
-
|
4,378
|
-
|
-
|
-
|
4,378
|
||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
898
|
-
|
898
|
||||||||||||||||||
Balance at December 31, 2016
|
$
|
497
|
$
|
575,078
|
$
|
501,761
|
$
|
(21,520
|
)
|
$
|
(142,500
|
)
|
$
|
913,316
|
||||||||||
Net income
|
-
|
-
|
82,151
|
-
|
-
|
82,151
|
||||||||||||||||||
Cash dividends - $0.92 per share
|
-
|
-
|
(40,104
|
)
|
-
|
-
|
(40,104
|
)
|
||||||||||||||||
Net issuance of 285,059 shares to employee and other stock plans
|
-
|
(4,608
|
)
|
-
|
-
|
4,335
|
(273
|
)
|
||||||||||||||||
Stock-based compensation
|
-
|
3,739
|
(95
|
)
|
-
|
-
|
3,644
|
|||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
(557
|
)
|
-
|
(557
|
)
|
||||||||||||||||
Balance at December 31, 2017
|
$
|
497
|
$
|
574,209
|
$
|
543,713
|
$
|
(22,077
|
)
|
$
|
(138,165
|
)
|
$
|
958,177
|
|
Years ended December 31,
|
|||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
|||||||||
Operating activities
|
||||||||||||
Net income
|
$
|
82,151
|
$
|
78,409
|
$
|
76,425
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||||||
Provision for loan losses
|
30,988
|
25,431
|
18,285
|
|||||||||
Depreciation and amortization of premises and equipment
|
9,056
|
9,023
|
8,646
|
|||||||||
Net accretion on securities
|
4,786
|
5,278
|
2,554
|
|||||||||
Amortization of intangible assets
|
3,960
|
3,928
|
4,864
|
|||||||||
Excess tax benefit on stock-based compensation
|
1,769
|
1,055
|
(43
|
)
|
||||||||
Stock-based compensation expense
|
3,644
|
4,378
|
4,086
|
|||||||||
Bank owned life insurance income
|
(5,175
|
)
|
(5,195
|
)
|
(4,334
|
)
|
||||||
Trading security purchases
|
(1,586
|
)
|
(287
|
)
|
(810
|
)
|
||||||
Net unrealized (gains) losses in trading securities
|
(623
|
)
|
(594
|
)
|
226
|
|||||||
Proceeds from sales of loans held for sale
|
111,284
|
96,603
|
72,498
|
|||||||||
Originations and purchases of loans held for sale
|
(111,206
|
)
|
(96,692
|
)
|
(69,677
|
)
|
||||||
Net gains on sales of loans held for sale
|
(349
|
)
|
(499
|
)
|
(239
|
)
|
||||||
Net security (gains) losses
|
(1,867
|
)
|
644
|
(3,087
|
)
|
|||||||
Net (gains) on sales and write-down of other real estate owned
|
(221
|
)
|
(687
|
)
|
(1,337
|
)
|
||||||
(Gain) on sale of equity investment
|
(818
|
)
|
-
|
(4,179
|
)
|
|||||||
Impairment write-down of equity security
|
1,312
|
-
|
-
|
|||||||||
Impairment write-down of goodwill and intangible assets
|
1,530
|
2,565
|
-
|
|||||||||
(Gain) on asset sold
|
-
|
(2,462
|
)
|
-
|
||||||||
Re-evaluation of deferred tax amounts from Tax Act
|
4,407
|
-
|
-
|
|||||||||
Net decrease in other assets
|
28
|
364
|
15,386
|
|||||||||
Net increase (decrease) in other liabilities
|
3,834
|
(10,697
|
)
|
5,236
|
||||||||
Net cash provided by operating activities
|
$ |
136,904
|
$ |
110,565
|
$ |
124,500
|
||||||
Investing activities
|
||||||||||||
Net cash (used in) acquisitions
|
$ |
(4,000
|
)
|
$ |
(2,000
|
)
|
$ |
(3,100
|
)
|
|||
Securities available for sale:
|
||||||||||||
Proceeds from maturities, calls and principal paydowns
|
290,613
|
324,781
|
299,302
|
|||||||||
Proceeds from sales
|
14,788
|
98,466
|
15,091
|
|||||||||
Purchases
|
(233,804
|
)
|
(597,428
|
)
|
(481,262
|
)
|
||||||
Securities held to maturity:
|
||||||||||||
Proceeds from maturities, calls and principal paydowns
|
103,759
|
100,893
|
79,212
|
|||||||||
Proceeds from sales
|
764
|
-
|
-
|
|||||||||
Purchases
|
(60,706
|
)
|
(157,418
|
)
|
(95,272
|
)
|
||||||
Other:
|
||||||||||||
Net increase in loans
|
(419,114
|
)
|
(344,448
|
)
|
(315,363
|
)
|
||||||
Proceeds from Federal Home Loan Bank stock redemption
|
248,887
|
158,818
|
60,852
|
|||||||||
Purchases of Federal Reserve Bank and Federal Home Loan Bank stock
|
(248,560
|
)
|
(169,178
|
)
|
(64,899
|
)
|
||||||
Proceeds from settlement of bank owned life insurance
|
799
|
1,477
|
1,541
|
|||||||||
Purchase of bank owned life insurance
|
-
|
(47,250
|
)
|
-
|
||||||||
Purchases of premises and equipment, net
|
(6,691
|
)
|
(3,308
|
)
|
(8,193
|
)
|
||||||
Proceeds from sale of equity investment
|
818
|
-
|
4,179
|
|||||||||
Proceeds from sales of other real estate owned
|
7,254
|
6,635
|
3,908
|
|||||||||
Net cash (used in) investing activities
|
$ |
(305,193
|
)
|
$ |
(629,960
|
)
|
$ |
(504,004
|
)
|
|||
Financing activities
|
||||||||||||
Net increase in deposits
|
$ |
196,948
|
$ |
368,845
|
$ |
305,238
|
||||||
Net increase in short-term borrowings
|
37,419
|
239,222
|
125,679
|
|||||||||
Proceeds from issuance of long-term debt
|
25,000
|
23,880
|
-
|
|||||||||
Repayments of long-term debt
|
(40,218
|
)
|
(50,240
|
)
|
(498
|
)
|
||||||
Proceeds from the issuance of shares to employee benefit plans and other stock plans
|
3,309
|
6,032
|
9,356
|
|||||||||
Cash paid by employer for tax-withholding on stock issuance
|
(3,582
|
)
|
(3,387
|
)
|
(1,664
|
)
|
||||||
Purchase of treasury stock
|
-
|
(17,193
|
)
|
(26,797
|
)
|
|||||||
Cash dividends
|
(40,104
|
)
|
(38,880
|
)
|
(38,149
|
)
|
||||||
Net cash provided by financing activities
|
$ |
178,772
|
$ |
528,279
|
$ |
373,165
|
||||||
Net increase (decrease) in cash and cash equivalents
|
$ |
10,483
|
$ |
8,884
|
$ |
(6,339
|
)
|
|||||
Cash and cash equivalents at beginning of year
|
149,181
|
140,297
|
146,636
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
159,664
|
$
|
149,181
|
$
|
140,297
|
Supplemental disclosure of cash flow information:
|
||||||||||||
Years ended December 31,
|
||||||||||||
Cash paid during the year for:
|
2017
|
2016
|
2015
|
|||||||||
Interest expense
|
$
|
25,887
|
$
|
22,466
|
$
|
20,908
|
||||||
Income taxes paid, net of refund
|
33,675
|
40,879
|
28,684
|
|||||||||
Noncash investing activities:
|
||||||||||||
Loans transferred to other real estate owned
|
$
|
5,981
|
$
|
6,863
|
$
|
3,293
|
||||||
Acquisitions:
|
||||||||||||
Fair value of assets acquired
|
$
|
3,096
|
$
|
2,584
|
$
|
1,756
|
1.
|
Summary of Significant Accounting Policies
|
2.
|
Acquisitions
|
3.
|
Securities
|
(In thousands)
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||||
As of December 31, 2017
|
||||||||||||||||
Federal agency
|
$
|
109,862
|
$
|
-
|
$
|
963
|
$
|
108,899
|
||||||||
State & municipal
|
42,171
|
62
|
277
|
41,956
|
||||||||||||
Mortgage-backed:
|
||||||||||||||||
Government-sponsored enterprises
|
530,392
|
1,406
|
3,345
|
528,453
|
||||||||||||
U.S. government agency securities
|
26,363
|
334
|
223
|
26,474
|
||||||||||||
Collateralized mortgage obligations:
|
||||||||||||||||
Government-sponsored enterprises
|
496,033
|
254
|
10,114
|
486,173
|
||||||||||||
U.S. government agency securities
|
50,721
|
165
|
1,065
|
49,821
|
||||||||||||
Other securities
|
10,623
|
3,672
|
146
|
14,149
|
||||||||||||
Total AFS securities
|
$
|
1,266,165
|
$
|
5,893
|
$
|
16,133
|
$
|
1,255,925
|
||||||||
As of December 31, 2016
|
||||||||||||||||
Federal agency
|
$
|
175,135
|
$
|
78
|
$
|
805
|
$
|
174,408
|
||||||||
State & municipal
|
47,053
|
153
|
480
|
46,726
|
||||||||||||
Mortgage-backed:
|
||||||||||||||||
Government-sponsored enterprises
|
513,814
|
3,345
|
2,492
|
514,667
|
||||||||||||
U.S. government securities
|
14,955
|
411
|
189
|
15,177
|
||||||||||||
Collateralized mortgage obligations:
|
||||||||||||||||
Government-sponsored enterprises
|
513,431
|
532
|
7,688
|
506,275
|
||||||||||||
U.S. government securities
|
60,822
|
184
|
708
|
60,298
|
||||||||||||
Other securities
|
15,849
|
6,394
|
1,504
|
20,739
|
||||||||||||
Total AFS securities
|
$
|
1,341,059
|
$
|
11,097
|
$
|
13,866
|
$
|
1,338,290
|
|
Years ended December 31,
|
|||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
|||||||||
Gross realized gains
|
$
|
2,241
|
$
|
683
|
$
|
3,099
|
||||||
Gross realized (losses)
|
(372
|
)
|
(1,327
|
)
|
(12
|
)
|
||||||
Net AFS realized gains (losses)
|
$
|
1,869
|
$
|
(644
|
)
|
$
|
3,087
|
(In thousands)
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||||
As of December 31, 2017
|
||||||||||||||||
Mortgage-backed:
|
||||||||||||||||
Government-sponsored enterprises
|
$
|
96,357
|
$ |
85
|
$
|
810
|
$
|
95,632
|
||||||||
U.S. government agency securities
|
418
|
57
|
-
|
475
|
||||||||||||
Collateralized mortgage obligations:
|
||||||||||||||||
Government-sponsored enterprises
|
186,327
|
224
|
2,577
|
183,974
|
||||||||||||
State & municipal
|
200,971
|
1,439
|
620
|
201,790
|
||||||||||||
Total HTM securities
|
$
|
484,073
|
$
|
1,805
|
$
|
4,007
|
$
|
481,871
|
||||||||
As of December 31, 2016
|
||||||||||||||||
Mortgage-backed:
|
||||||||||||||||
Government-sponsored enterprises
|
$
|
96,668
|
$
|
-
|
$
|
1,176
|
$
|
95,492
|
||||||||
U.S. government agency securities
|
533
|
87
|
-
|
620
|
||||||||||||
Collateralized mortgage obligations:
|
||||||||||||||||
Government-sponsored enterprises
|
225,213
|
1,060
|
1,508
|
224,765
|
||||||||||||
State & municipal
|
205,534
|
434
|
1,795
|
204,173
|
||||||||||||
Total HTM securities
|
$
|
527,948
|
$
|
1,581
|
$
|
4,479
|
$
|
525,050
|
|
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, 2017
|
||||||||||||||||||||||||||||||||||||
AFS securities:
|
||||||||||||||||||||||||||||||||||||
Federal agency
|
$
|
64,653
|
$
|
(242
|
)
|
5
|
$
|
44,246
|
$
|
(721
|
)
|
4
|
$
|
108,899
|
$
|
(963
|
)
|
9
|
||||||||||||||||||
State & municipal
|
23,566
|
(200
|
)
|
39
|
5,994
|
(77
|
)
|
8
|
29,560
|
(277
|
)
|
47
|
||||||||||||||||||||||||
Mortgage-backed
|
317,630
|
(2,381
|
)
|
55
|
58,316
|
(1,188
|
)
|
24
|
375,946
|
(3,569
|
)
|
79
|
||||||||||||||||||||||||
Collateralized mortgage obligations
|
227,917
|
(2,658
|
)
|
35
|
275,303
|
(8,521
|
)
|
42
|
503,220
|
(11,179
|
)
|
77
|
||||||||||||||||||||||||
Other securities
|
-
|
-
|
-
|
2,959
|
(146
|
)
|
1
|
2,959
|
(146
|
)
|
1
|
|||||||||||||||||||||||||
Total securities with unrealized losses
|
$
|
633,766
|
$
|
(5,481
|
)
|
134
|
$
|
386,818
|
$
|
(10,653
|
)
|
79
|
$
|
1,020,584
|
$
|
(16,134
|
)
|
213
|
||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
HTM securities:
|
||||||||||||||||||||||||||||||||||||
Mortgage-backed
|
$
|
15,477
|
$
|
(140
|
)
|
2
|
$
|
33,703
|
$
|
(670
|
)
|
2
|
$
|
49,180
|
$
|
(810
|
)
|
4
|
||||||||||||||||||
Collateralized mortgage obligations
|
118,476
|
(1,064
|
)
|
17
|
37,614
|
(1,513
|
)
|
6
|
156,090
|
(2,577
|
)
|
23
|
||||||||||||||||||||||||
State & municipal
|
22,387
|
(132
|
)
|
40
|
15,720
|
(488
|
)
|
24
|
38,107
|
(620
|
)
|
64
|
||||||||||||||||||||||||
Total securities with unrealized losses
|
$
|
156,340
|
$
|
(1,336
|
)
|
59
|
$
|
87,037
|
$
|
(2,671
|
)
|
32
|
$
|
243,377
|
$
|
(4,007
|
)
|
91
|
||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
As of December 31, 2016
|
||||||||||||||||||||||||||||||||||||
AFS securities:
|
||||||||||||||||||||||||||||||||||||
Federal agency
|
$
|
119,363
|
$
|
(805
|
)
|
10
|
$
|
-
|
$
|
-
|
-
|
$
|
119,363
|
$
|
(805
|
)
|
10
|
|||||||||||||||||||
State & municipal
|
31,873
|
(478
|
)
|
55
|
483
|
(2
|
)
|
1
|
32,356
|
(480
|
)
|
56
|
||||||||||||||||||||||||
Mortgage-backed
|
277,524
|
(2,668
|
)
|
49
|
985
|
(13
|
)
|
4
|
278,509
|
(2,681
|
)
|
53
|
||||||||||||||||||||||||
Collateralized mortgage obligations
|
473,746
|
(8,396
|
)
|
57
|
-
|
-
|
-
|
473,746
|
(8,396
|
)
|
57
|
|||||||||||||||||||||||||
Other securities
|
-
|
-
|
-
|
4,363
|
(1,504
|
)
|
2
|
4,363
|
(1,504
|
)
|
2
|
|||||||||||||||||||||||||
Total securities with unrealized losses
|
$
|
902,506
|
$
|
(12,347
|
)
|
171
|
$
|
5,831
|
$
|
(1,519
|
)
|
7
|
$
|
908,337
|
$
|
(13,866
|
)
|
178
|
||||||||||||||||||
HTM securities:
|
||||||||||||||||||||||||||||||||||||
Mortgage-backed
|
$
|
95,492
|
$
|
(1,176
|
)
|
5
|
$
|
-
|
$
|
-
|
-
|
$
|
95,492
|
$
|
(1,176
|
)
|
5
|
|||||||||||||||||||
Collateralized mortgage obligations
|
108,587
|
(319
|
)
|
12
|
35,209
|
(1,189
|
)
|
4
|
143,796
|
(1,508
|
)
|
16
|
||||||||||||||||||||||||
State & municipal
|
81,984
|
(1,795
|
)
|
155
|
-
|
-
|
-
|
81,984
|
(1,795
|
)
|
155
|
|||||||||||||||||||||||||
Total securities with unrealized losses
|
$
|
286,063
|
$
|
(3,290
|
)
|
172
|
$
|
35,209
|
$
|
(1,189
|
)
|
4
|
$
|
321,272
|
$
|
(4,479
|
)
|
176
|
(In thousands)
|
Amortized
Cost
|
Estimated Fair
Value
|
||||||
AFS debt securities:
|
||||||||
Within one year
|
$
|
63,309
|
$
|
63,186
|
||||
From one to five years
|
90,119
|
89,275
|
||||||
From five to ten years
|
178,128
|
177,961
|
||||||
After ten years
|
923,987
|
911,354
|
||||||
Total AFS debt securities
|
$
|
1,255,543
|
$
|
1,241,776
|
||||
HTM debt securities:
|
||||||||
Within one year
|
$
|
31,412
|
$
|
31,413
|
||||
From one to five years
|
42,363
|
42,588
|
||||||
From five to ten years
|
174,950
|
174,937
|
||||||
After ten years
|
235,348
|
232,933
|
||||||
Total HTM debt securities
|
$
|
484,073
|
$
|
481,871
|
4.
|
Loans
|
|
At December 31,
|
|||||||
(In thousands)
|
2017
|
2016
|
||||||
Residential real estate mortgages
|
$
|
1,321,695
|
$
|
1,262,614
|
||||
Commercial
|
1,317,174
|
1,242,701
|
||||||
Commercial real estate
|
1,711,095
|
1,543,301
|
||||||
Consumer
|
1,740,038
|
1,641,657
|
||||||
Home equity
|
494,771
|
507,784
|
||||||
Total loans
|
$
|
6,584,773
|
$
|
6,198,057
|
(In thousands)
|
2017
|
2016
|
||||||
Balance at January 1,
|
$
|
2,050
|
$
|
2,346
|
||||
New loans
|
297
|
936
|
||||||
Adjustment due to change in composition of related parties
|
198
|
(406
|
)
|
|||||
Repayments
|
(968
|
)
|
(826
|
)
|
||||
Balance at December 31,
|
$
|
1,577
|
$
|
2,050
|
5.
|
Allowance for Loan Losses and Credit Quality of Loans
|
Portfolio
|
Class
|
Commercial Loans
|
Commercial
|
Commercial Real Estate
|
|
Agricultural
|
|
Agricultural Real Estate
|
|
|
Business Banking
|
Consumer Loans
|
Indirect
|
Home Equity
|
|
Direct | |
Residential Real Estate Mortgages
|
|
(In thousands)
|
Commercial
Loans
|
Consumer
Loans
|
Residential
Real Estate
Mortgages
|
Unallocated
|
Total
|
|||||||||||||||
Balance as of December 31, 2016
|
$
|
25,444
|
$
|
33,375
|
$
|
6,381
|
$
|
-
|
$
|
65,200
|
||||||||||
Charge-offs
|
(4,169
|
)
|
(27,072
|
)
|
(1,846
|
)
|
-
|
(33,087
|
)
|
|||||||||||
Recoveries
|
1,077
|
5,142
|
180
|
-
|
6,399
|
|||||||||||||||
Provision
|
5,254
|
25,385
|
349
|
-
|
30,988
|
|||||||||||||||
Ending Balance as of December 31, 2017
|
$
|
27,606
|
$
|
36,830
|
$
|
5,064
|
$
|
-
|
$
|
69,500
|
||||||||||
|
||||||||||||||||||||
Balance as of December 31, 2015
|
$
|
25,545
|
$
|
29,253
|
$
|
7,960
|
$
|
260
|
$
|
63,018
|
||||||||||
Charge-offs
|
(4,592
|
)
|
(23,364
|
)
|
(1,343
|
)
|
-
|
(29,299
|
)
|
|||||||||||
Recoveries
|
1,887
|
3,870
|
293
|
-
|
6,050
|
|||||||||||||||
Provision
|
2,604
|
23,616
|
(529
|
)
|
(260
|
)
|
25,431
|
|||||||||||||
Ending Balance as of December 31, 2016
|
$
|
25,444
|
$
|
33,375
|
$
|
6,381
|
$
|
-
|
$
|
65,200
|
||||||||||
|
||||||||||||||||||||
Balance as of December 31, 2014
|
$
|
32,433
|
$
|
26,720
|
$
|
7,130
|
$
|
76
|
$
|
66,359
|
||||||||||
Charge-offs
|
(5,718
|
)
|
(18,140
|
)
|
(2,229
|
)
|
-
|
(26,087
|
)
|
|||||||||||
Recoveries
|
1,014
|
3,127
|
320
|
-
|
4,461
|
|||||||||||||||
Provision
|
(2,184
|
)
|
17,546
|
2,739
|
184
|
18,285
|
||||||||||||||
Ending Balance as of December 31, 2015
|
$
|
25,545
|
$
|
29,253
|
$
|
7,960
|
$
|
260
|
$
|
63,018
|
(In thousands)
|
Commercial
Loans
|
Consumer
Loans
|
Residential
Real Estate
Mortgages
|
Total
|
||||||||||||
As of December 31, 2017
|
||||||||||||||||
Allowance for loan losses
|
$
|
27,606
|
$
|
36,830
|
$
|
5,064
|
$
|
69,500
|
||||||||
Allowance for loans individually evaluated for impairment
|
57
|
-
|
-
|
57
|
||||||||||||
Allowance for loans collectively evaluated for impairment
|
|
27,549
|
|
36,830
|
|
5,064
|
|
69,443
|
||||||||
Ending balance of loans
|
|
3,028,269
|
|
2,234,809
|
|
1,321,695
|
|
6,584,773
|
||||||||
Ending balance of originated loans individually evaluated for impairment
|
5,876
|
8,432
|
6,830
|
21,138
|
||||||||||||
Ending balance of acquired loans collectively evaluated for impairment
|
187,313
|
43,906
|
170,472
|
401,691
|
||||||||||||
Ending balance of originated loans collectively evaluated for impairment
|
$
|
2,835,080
|
$
|
2,182,471
|
$
|
1,144,393
|
$
|
6,161,944
|
||||||||
|
||||||||||||||||
As of December 31, 2016
|
||||||||||||||||
Allowance for loan losses
|
$
|
25,444
|
$
|
33,375
|
$
|
6,381
|
$
|
65,200
|
||||||||
Allowance for loans individually evaluated for impairment
|
1,517
|
-
|
-
|
1,517
|
||||||||||||
Allowance for loans collectively evaluated for impairment
|
|
23,927
|
|
33,375
|
|
6,381
|
|
63,683
|
||||||||
Ending balance of loans
|
|
2,786,002
|
|
2,149,441
|
|
1,262,614
|
|
6,198,057
|
||||||||
Ending balance of originated loans individually evaluated for impairment
|
13,070
|
8,488
|
6,111
|
27,669
|
||||||||||||
Ending balance of acquired loans individually evaluated for impairment
|
1,205
|
-
|
-
|
1,205
|
||||||||||||
Ending balance of acquired loans collectively evaluated for impairment
|
236,413
|
63,005
|
199,471
|
498,889
|
||||||||||||
Ending balance of originated loans collectively evaluated for impairment
|
$
|
2,535,314
|
$
|
2,077,948
|
$
|
1,057,032
|
$
|
5,670,294
|
(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, 2017 | ||||||||||||||||||||||||||||
Originated
|
||||||||||||||||||||||||||||
Commercial Loans:
|
||||||||||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
202
|
$
|
753,577
|
$
|
753,779
|
||||||||||||||
Commercial Real Estate
|
161
|
138
|
-
|
299
|
3,178
|
1,533,065
|
1,536,542
|
|||||||||||||||||||||
Agricultural
|
117
|
-
|
-
|
117
|
1,043
|
34,386
|
35,546
|
|||||||||||||||||||||
Agricultural Real Estate
|
493
|
-
|
-
|
493
|
2,736
|
30,905
|
34,134
|
|||||||||||||||||||||
Business Banking
|
1,907
|
597
|
-
|
2,504
|
5,304
|
473,147
|
480,955
|
|||||||||||||||||||||
Total Commercial Loans
|
$
|
2,678
|
$
|
735
|
$
|
-
|
$
|
3,413
|
$
|
12,463
|
$
|
2,825,080
|
$
|
2,840,956
|
||||||||||||||
Consumer Loans:
|
||||||||||||||||||||||||||||
Indirect
|
$
|
18,747
|
$
|
4,033
|
$
|
3,492
|
$
|
26,272
|
$
|
2,115
|
$
|
1,642,664
|
$
|
1,671,051
|
||||||||||||||
Home Equity
|
2,887
|
854
|
341
|
4,082
|
2,736
|
448,081
|
454,899
|
|||||||||||||||||||||
Direct
|
341
|
108
|
70
|
519
|
35
|
64,399
|
64,953
|
|||||||||||||||||||||
Total Consumer Loans
|
$
|
21,975
|
$
|
4,995
|
$
|
3,903
|
$
|
30,873
|
$
|
4,886
|
$
|
2,155,144
|
$
|
2,190,903
|
||||||||||||||
Residential Real Estate Mortgages
|
$
|
3,730
|
$
|
667
|
$
|
1,262
|
$
|
5,659
|
$
|
5,987
|
$
|
1,139,577
|
$
|
1,151,223
|
||||||||||||||
Total Originated Loans
|
$
|
28,383
|
$
|
6,397
|
$
|
5,165
|
$
|
39,945
|
$
|
23,336
|
$
|
6,119,801
|
$
|
6,183,082
|
||||||||||||||
|
||||||||||||||||||||||||||||
Acquired
|
||||||||||||||||||||||||||||
Commercial Loans:
|
||||||||||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
39,575
|
$
|
39,575
|
||||||||||||||
Commercial Real Estate
|
-
|
-
|
-
|
-
|
2
|
106,632
|
106,634
|
|||||||||||||||||||||
Business Banking
|
354
|
-
|
-
|
354
|
669
|
40,081
|
41,104
|
|||||||||||||||||||||
Total Commercial Loans
|
$
|
354
|
$
|
-
|
$
|
-
|
$
|
354
|
$
|
671
|
$
|
186,288
|
$
|
187,313
|
||||||||||||||
Consumer Loans:
|
||||||||||||||||||||||||||||
Indirect
|
$
|
38
|
$
|
-
|
$
|
1
|
$
|
39
|
$
|
22
|
$
|
1,157
|
$
|
1,218
|
||||||||||||||
Home Equity
|
254
|
34
|
103
|
391
|
225
|
39,256
|
39,872
|
|||||||||||||||||||||
Direct
|
6
|
1
|
1
|
8
|
23
|
2,785
|
2,816
|
|||||||||||||||||||||
Total Consumer Loans
|
$
|
298
|
$
|
35
|
$
|
105
|
$
|
438
|
$
|
270
|
$
|
43,198
|
$
|
43,906
|
||||||||||||||
Residential Real Estate Mortgages
|
$
|
627
|
$
|
226
|
$
|
140
|
$
|
993
|
$
|
1,431
|
$
|
168,048
|
$
|
170,472
|
||||||||||||||
Total Acquired Loans
|
$
|
1,279
|
$
|
261
|
$
|
245
|
$
|
1,785
|
$
|
2,372
|
$
|
397,534
|
$
|
401,691
|
||||||||||||||
Total Loans
|
$
|
29,662
|
$
|
6,658
|
$
|
5,410
|
$
|
41,730
|
$
|
25,708
|
$
|
6,517,335
|
$
|
6,584,773
|
(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, 2016 | ||||||||||||||||||||||||||||
Originated
|
||||||||||||||||||||||||||||
Commercial Loans:
|
||||||||||||||||||||||||||||
Commercial
|
$
|
33
|
$
|
5
|
$
|
-
|
$
|
38
|
$
|
2,964
|
$
|
650,568
|
$
|
653,570
|
||||||||||||||
Commercial Real Estate
|
-
|
-
|
-
|
-
|
7,935
|
1,343,854
|
1,351,789
|
|||||||||||||||||||||
Agricultural
|
-
|
-
|
-
|
-
|
730
|
37,186
|
37,916
|
|||||||||||||||||||||
Agricultural Real Estate
|
-
|
-
|
-
|
-
|
1,803
|
30,619
|
32,422
|
|||||||||||||||||||||
Business Banking
|
1,609
|
318
|
-
|
1,927
|
4,860
|
465,900
|
472,687
|
|||||||||||||||||||||
Total Commercial Loans
|
$
|
1,642
|
$
|
323
|
$
|
-
|
$
|
1,965
|
$
|
18,292
|
$
|
2,528,127
|
$
|
2,548,384
|
||||||||||||||
Consumer Loans:
|
||||||||||||||||||||||||||||
Indirect
|
$ |
19,253
|
$ |
4,185
|
$ |
2,499
|
$ |
25,937
|
$ |
2,145
|
$ |
1,538,593
|
$ |
1,566,675
|
||||||||||||||
Home Equity
|
3,416
|
1,065
|
528
|
5,009
|
2,851
|
448,797
|
456,657
|
|||||||||||||||||||||
Direct
|
452
|
125
|
20
|
597
|
107
|
62,400
|
63,104
|
|||||||||||||||||||||
Total Consumer Loans
|
$
|
23,121
|
$
|
5,375
|
$
|
3,047
|
$
|
31,543
|
$
|
5,103
|
$
|
2,049,790
|
$
|
2,086,436
|
||||||||||||||
Residential Real Estate Mortgages
|
$
|
2,725
|
$
|
172
|
$
|
1,406
|
$
|
4,303
|
$
|
6,682
|
$
|
1,052,158
|
$
|
1,063,143
|
||||||||||||||
Total Originated Loans
|
$
|
27,488
|
$
|
5,870
|
$
|
4,453
|
$
|
37,811
|
$
|
30,077
|
$
|
5,630,075
|
$
|
5,697,963
|
||||||||||||||
|
||||||||||||||||||||||||||||
Acquired
|
||||||||||||||||||||||||||||
Commercial Loans:
|
||||||||||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
49,447
|
$
|
49,447
|
||||||||||||||
Commercial Real Estate
|
-
|
-
|
-
|
-
|
1,891
|
135,398
|
137,289
|
|||||||||||||||||||||
Business Banking
|
236
|
-
|
-
|
236
|
804
|
49,842
|
50,882
|
|||||||||||||||||||||
Total Commercial Loans
|
$
|
236
|
$
|
-
|
$
|
-
|
$
|
236
|
$
|
2,695
|
$
|
234,687
|
$
|
237,618
|
||||||||||||||
Consumer Loans:
|
||||||||||||||||||||||||||||
Indirect
|
$
|
100
|
$
|
5
|
$
|
-
|
$
|
105
|
$
|
47
|
$
|
8,541
|
$
|
8,693
|
||||||||||||||
Home Equity
|
254
|
53
|
30
|
337
|
237
|
50,553
|
51,127
|
|||||||||||||||||||||
Direct
|
30
|
2
|
-
|
32
|
20
|
3,133
|
3,185
|
|||||||||||||||||||||
Total Consumer Loans
|
$
|
384
|
$
|
60
|
$
|
30
|
$
|
474
|
$
|
304
|
$
|
62,227
|
$
|
63,005
|
||||||||||||||
Residential Real Estate Mortgages
|
$
|
609
|
$
|
28
|
$
|
327
|
$
|
964
|
$
|
2,636
|
$
|
195,871
|
$
|
199,471
|
||||||||||||||
Total Acquired Loans
|
$
|
1,229
|
$
|
88
|
$
|
357
|
$
|
1,674
|
$
|
5,635
|
$
|
492,785
|
$
|
500,094
|
||||||||||||||
Total Loans
|
$
|
28,717
|
$
|
5,958
|
$
|
4,810
|
$
|
39,485
|
$
|
35,712
|
$
|
6,122,860
|
$
|
6,198,057
|
|
December 31, 2017
|
December 31, 2016
|
||||||||||||||||||||||
(In thousands)
|
Recorded
Investment
Balance
(Book)
|
Unpaid
Principal
Balance
(Legal)
|
Related
Allowance
|
Recorded
Investment
Balance
(Book)
|
Unpaid
Principal
Balance
(Legal)
|
Related
Allowance
|
||||||||||||||||||
Originated
|
||||||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||||||
Commercial Loans:
|
||||||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
251
|
$
|
1,278
|
$
|
1,697
|
||||||||||||||||
Commercial Real Estate
|
2,211
|
3,979
|
3,816
|
3,841
|
||||||||||||||||||||
Agricultural
|
452
|
465
|
130
|
137
|
||||||||||||||||||||
Agricultural Real Estate
|
2,250
|
2,423
|
1,434
|
1,567
|
||||||||||||||||||||
Business Banking
|
860
|
1,730
|
655
|
728
|
||||||||||||||||||||
Total Commercial Loans
|
$
|
5,773
|
$
|
8,848
|
$
|
7,313
|
$
|
7,970
|
||||||||||||||||
Consumer Loans:
|
||||||||||||||||||||||||
Indirect
|
$
|
131
|
$
|
143
|
$
|
5
|
$
|
16
|
||||||||||||||||
Home Equity
|
8,027
|
9,966
|
8,483
|
9,429
|
||||||||||||||||||||
Direct
|
274
|
274
|
-
|
-
|
||||||||||||||||||||
Total Consumer Loans
|
$
|
8,432
|
$
|
10,383
|
$
|
8,488
|
$
|
9,445
|
||||||||||||||||
Residential Real Estate Mortgages
|
$
|
6,830
|
$
|
8,780
|
$
|
6,111
|
$
|
6,906
|
||||||||||||||||
Total
|
$
|
21,035
|
$
|
28,011
|
$
|
21,912
|
$
|
24,321
|
||||||||||||||||
|
||||||||||||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||||||
Commercial Loans:
|
||||||||||||||||||||||||
Commercial Real Estate
|
$ |
76
|
$ |
82
|
$ |
30
|
$ |
5,553
|
$ |
5,736
|
$ |
735
|
||||||||||||
Agricultural
|
27
|
27
|
27
|
49
|
49
|
37
|
||||||||||||||||||
Agricultural Real Estate
|
-
|
-
|
-
|
155
|
155
|
54
|
||||||||||||||||||
Total Commercial Loans
|
$
|
103
|
$
|
109
|
$
|
57
|
$
|
5,757
|
$
|
5,940
|
$
|
826
|
||||||||||||
|
||||||||||||||||||||||||
Acquired
|
||||||||||||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||||||
Commercial Loans:
|
||||||||||||||||||||||||
Commercial Real Estate
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,205
|
$
|
1,321
|
$
|
691
|
||||||||||||
Total Commercial Loans
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,205
|
$
|
1,321
|
$
|
691
|
||||||||||||
Total
|
$
|
21,138
|
$
|
28,120
|
$
|
57
|
$
|
28,874
|
$
|
31,582
|
$
|
1,517
|
|
December 31, 2017
|
December 31, 2016
|
December 31, 2015
|
|||||||||||||||||||||
(In thousands)
|
Average
Recorded
Investment
|
Interest Income
Recognized
Accrual
|
Average
Recorded
Investment
|
Interest Income
Recognized
Accrual
|
Average
Recorded
Investment
|
Interest Income
Recognized
Accrual
|
||||||||||||||||||
Originated
|
||||||||||||||||||||||||
Commercial Loans:
|
||||||||||||||||||||||||
Commercial
|
$
|
1,841
|
$
|
-
|
$
|
6,217
|
$
|
-
|
$
|
2,219
|
$
|
71
|
||||||||||||
Commercial Real Estate
|
3,534
|
115
|
5,828
|
167
|
8,538
|
164
|
||||||||||||||||||
Agricultural
|
224
|
1
|
715
|
1
|
148
|
1
|
||||||||||||||||||
Agricultural Real Estate
|
1,709
|
43
|
908
|
44
|
628
|
45
|
||||||||||||||||||
Business Banking
|
875
|
12
|
830
|
9
|
960
|
21
|
||||||||||||||||||
Total Commerical Loans
|
$ | 8,183 | $ | 171 | $ | 14,498 | $ | 221 | $ | 12,493 | $ | 302 | ||||||||||||
Consumer Loans:
|
||||||||||||||||||||||||
Indirect
|
$ |
35
|
$ |
3
|
$ |
8
|
$ |
-
|
$ |
-
|
$ |
-
|
||||||||||||
Home Equity
|
8,226
|
446
|
8,278
|
480
|
7,070
|
374
|
||||||||||||||||||
Direct
|
178
|
8
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Total Consumer Loans
|
$ | 8,439 | $ | 457 | $ | 8,286 | $ | 480 | $ | 7,070 | $ | 374 | ||||||||||||
Residential Real Estate Mortgages
|
$
|
6,523
|
296
|
6,143
|
269
|
5,128
|
219
|
|||||||||||||||||
Total Originated
|
$
|
23,145
|
$
|
924
|
$
|
28,927
|
$
|
970
|
$
|
24,691
|
$
|
895
|
||||||||||||
Acquired
|
||||||||||||||||||||||||
Commercial Loans
|
||||||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
2,045
|
$
|
-
|
||||||||||||
Commercial Real Estate
|
93
|
-
|
1,205
|
-
|
5,734
|
-
|
||||||||||||||||||
Total Commerical Loans
|
$ | 93 | $ | - | $ | 1,205 | $ | - | $ | 7,779 | $ | - | ||||||||||||
Total Acquired
|
$
|
93
|
$
|
-
|
$
|
1,205
|
$
|
-
|
$
|
7,779
|
$
|
-
|
||||||||||||
Total
|
$
|
23,238
|
$
|
924
|
$
|
30,132
|
$
|
970
|
$
|
32,470
|
$
|
895
|
● |
Doubtful
|
● |
Substandard
|
●
|
Special Mention
|
●
|
Pass
|
●
|
Classified
|
●
|
Non-classified
|
●
|
Nonperforming
|
●
|
Performing
|
(In thousands)
|
December 31, 2017 | |||||||||||||||||||
Originated
|
||||||||||||||||||||
Commercial Credit Exposure
|
||||||||||||||||||||
By Internally Assigned Grade:
|
Commercial
|
Commercial
Real Estate
|
Agricultural
|
Agricultural
Real Estate
|
Total
|
|||||||||||||||
Pass
|
$
|
708,567
|
$
|
1,481,926
|
$
|
31,142
|
$
|
23,381
|
$
|
2,245,016
|
||||||||||
Special Mention
|
30,337
|
28,264
|
2,294
|
2,441
|
63,336
|
|||||||||||||||
Substandard
|
14,875
|
26,352
|
2,110
|
8,312
|
51,649
|
|||||||||||||||
Total
|
$
|
753,779
|
$
|
1,536,542
|
$
|
35,546
|
$
|
34,134
|
$
|
2,360,001
|
Business Banking Credit Exposure
|
||||||||
By Internally Assigned Grade:
|
Business
Banking
|
Total
|
||||||
Non-classified
|
$
|
468,898
|
$
|
468,898
|
||||
Classified
|
12,057
|
12,057
|
||||||
Total
|
$
|
480,955
|
$
|
480,955
|
Consumer Credit Exposure | ||||||||||||||||
By Payment Activity:
|
Indirect
|
Home
Equity
|
Direct
|
Total
|
||||||||||||
Performing
|
$
|
1,665,444
|
$
|
451,822
|
$
|
64,848
|
$
|
2,182,114
|
||||||||
Nonperforming
|
5,607
|
3,077
|
105
|
8,789
|
||||||||||||
Total
|
$
|
1,671,051
|
$
|
454,899
|
$
|
64,953
|
$
|
2,190,903
|
Residential Mortgage Credit Exposure
|
||||||||
By Payment Activity:
|
Residential
Mortgage
|
Total
|
||||||
Performing
|
$
|
1,143,974
|
$
|
1,143,974
|
||||
Nonperforming
|
7,249
|
7,249
|
||||||
Total
|
$
|
1,151,223
|
$
|
1,151,223
|
Acquired
|
||||||||||||
Commercial Credit Exposure
|
||||||||||||
By Internally Assigned Grade:
|
Commercial
|
Commercial
Real Estate
|
Total
|
|||||||||
Pass
|
$
|
37,825
|
$
|
103,248
|
$
|
141,073
|
||||||
Special Mention
|
425
|
498
|
923
|
|||||||||
Substandard
|
1,325
|
2,888
|
4,213
|
|||||||||
Total
|
$
|
39,575
|
$
|
106,634
|
$
|
146,209
|
Business Banking Credit Exposure
|
||||||||
By Internally Assigned Grade:
|
Business
Banking
|
Total
|
||||||
Non-classified
|
$
|
38,236
|
$
|
38,236
|
||||
Classified
|
2,868
|
2,868
|
||||||
Total
|
$
|
41,104
|
$
|
41,104
|
Consumer Credit Exposure
|
||||||||||||||||
By Payment Activity:
|
Indirect
|
Home E
quity
|
Direct
|
Total
|
||||||||||||
Performing
|
$
|
1,195
|
$
|
39,544
|
$
|
2,792
|
$
|
43,531
|
||||||||
Nonperforming
|
23
|
328
|
24
|
375
|
||||||||||||
Total
|
$
|
1,218
|
$
|
39,872
|
$
|
2,816
|
$
|
43,906
|
Residential Mortgage Credit Exposure
|
||||||||
By Payment Activity:
|
Residential
Mortgage
|
Total
|
||||||
Performing
|
$
|
168,901
|
$
|
168,901
|
||||
Nonperforming
|
1,571
|
1,571
|
||||||
Total
|
$
|
170,472
|
$
|
170,472
|
(In thousands) | December 31, 2016 | |||||||||||||||||||
Originated
|
||||||||||||||||||||
Commercial Credit Exposure
|
||||||||||||||||||||
By Internally Assigned Grade:
|
Commercial
|
Commercial
Real Estate
|
Agricultural
|
Agricultural
Real Estate
|
Total
|
|||||||||||||||
Pass
|
$
|
616,829
|
$
|
1,288,409
|
$
|
36,762
|
$
|
28,912
|
$
|
1,970,912
|
||||||||||
Special Mention
|
7,750
|
31,053
|
25
|
1,896
|
40,724
|
|||||||||||||||
Substandard
|
28,991
|
32,327
|
1,124
|
1,614
|
64,056
|
|||||||||||||||
Doubtful
|
-
|
-
|
5
|
-
|
5
|
|||||||||||||||
Total
|
$
|
653,570
|
$
|
1,351,789
|
$
|
37,916
|
$
|
32,422
|
$
|
2,075,697
|
Business Banking Credit Exposure
|
||||||||
By Internally Assigned Grade:
|
Business
Banking
|
Total
|
||||||
Non-classified
|
$
|
458,864
|
$
|
458,864
|
||||
Classified
|
13,823
|
13,823
|
||||||
Total
|
$
|
472,687
|
$
|
472,687
|
Consumer Credit Exposure
|
||||||||||||||||
By Payment Activity:
|
Indirect
|
Home Equity
|
Direct
|
Total
|
||||||||||||
Performing
|
$
|
1,562,031
|
$
|
453,278
|
$
|
62,977
|
$
|
2,078,286
|
||||||||
Nonperforming
|
4,644
|
3,379
|
127
|
8,150
|
||||||||||||
Total
|
$
|
1,566,675
|
$
|
456,657
|
$
|
63,104
|
$
|
2,086,436
|
Residential Mortgage Credit Exposure
|
||||||||
By Payment Activity:
|
Residential
Mortgage
|
Total
|
||||||
Performing
|
$
|
1,055,055
|
$
|
1,055,055
|
||||
Nonperforming
|
8,088
|
8,088
|
||||||
Total
|
$
|
1,063,143
|
$
|
1,063,143
|
Acquired
|
||||||||||||
Commercial Credit Exposure
|
||||||||||||
By Internally Assigned Grade:
|
Commercial
|
Commercial
Real Estate
|
Total
|
|||||||||
Pass
|
$
|
48,194
|
$
|
127,660
|
$
|
175,854
|
||||||
Special Mention
|
76
|
1,231
|
1,307
|
|||||||||
Substandard
|
1,177
|
7,193
|
8,370
|
|||||||||
Doubtful
|
-
|
1,205
|
1,205
|
|||||||||
Total
|
$
|
49,447
|
$
|
137,289
|
$
|
186,736
|
Business Banking Credit Exposure
|
||||||||
By Internally Assigned Grade:
|
Business
Banking
|
Total
|
||||||
Non-classified
|
$
|
47,347
|
$
|
47,347
|
||||
Classified
|
3,535
|
3,535
|
||||||
Total
|
$
|
50,882
|
$
|
50,882
|
Consumer Credit Exposure
|
||||||||||||||||
By Payment Activity:
|
Indirect
|
Home Equity
|
Direct
|
Total
|
||||||||||||
Performing
|
$
|
8,646
|
$
|
50,860
|
$
|
3,165
|
$
|
62,671
|
||||||||
Nonperforming
|
47
|
267
|
20
|
334
|
||||||||||||
Total
|
$
|
8,693
|
$
|
51,127
|
$
|
3,185
|
$
|
63,005
|
Residential Mortgage Credit Exposure
|
||||||||
By Payment Activity:
|
Residential
Mortgage
|
Total
|
||||||
Performing
|
$
|
196,508
|
$
|
196,508
|
||||
Nonperforming
|
2,963
|
2,963
|
||||||
Total
|
$
|
199,471
|
$
|
199,471
|
Year ended December 31, 2017
|
||||||||||||
(In thousands)
|
Number of
Contracts
|
Pre-
Modification
Outstanding
Recorded Investment
|
Post-
Modification
Outstanding
Recorded
Investment
|
|||||||||
Commercial Loans:
|
||||||||||||
Commercial
|
1
|
$
|
3,300
|
$
|
3,239
|
|||||||
Business Banking
|
3
|
385
|
381
|
|||||||||
Total Commercial Loans
|
4
|
$
|
3,685
|
$
|
3,620
|
|||||||
Consumer Loans:
|
||||||||||||
Indirect
|
8
|
$
|
145
|
$
|
143
|
|||||||
Home Equity
|
13
|
552
|
600
|
|||||||||
Direct
|
2
|
279
|
279
|
|||||||||
Total Consumer Loans
|
23
|
$
|
976
|
$
|
1,022
|
|||||||
Residential Real Estate Mortgages
|
15
|
$
|
1,454
|
$
|
1,474
|
|||||||
Total Troubled Debt Restructurings
|
42
|
$
|
6,115
|
$
|
6,116
|
|
Year ended December 31, 2016
|
|||||||||||
(In thousands)
|
Number of
contracts
|
Pre-
Modification
Outstanding
Recorded
Investment
|
Post-
Modification
Outstanding
Recorded
Investment
|
|||||||||
Consumer Loans:
|
||||||||||||
Home Equity
|
28
|
$
|
1,886
|
$
|
1,743
|
|||||||
Total Consumer Loans
|
28
|
$
|
1,886
|
$
|
1,743
|
|||||||
Residential Real Estate Mortgages
|
13
|
$
|
1,084
|
$
|
843
|
|||||||
Total Troubled Debt Restructurings
|
41
|
$
|
2,970
|
$
|
2,586
|
Year ended December 31, 2017
|
Year ended December 31, 2016
|
|||||||||||||||
(In thousands)
|
Number of contracts
|
Recorded Investment
|
Number of contracts
|
Recorded Investment
|
||||||||||||
Commercial Loans:
|
||||||||||||||||
Commercial
|
1
|
$
|
145
|
1
|
$
|
169
|
||||||||||
Commercial Real Estate
|
-
|
-
|
1
|
1,573
|
||||||||||||
Business Banking
|
1
|
329
|
1
|
67
|
||||||||||||
Total Commercial Loans
|
2
|
$
|
474
|
3
|
$
|
1,809
|
||||||||||
Consumer Loans:
|
||||||||||||||||
Indirect
|
2
|
$
|
19
|
-
|
$
|
-
|
||||||||||
Home Equity
|
34
|
1,720
|
34
|
1,770
|
||||||||||||
Total Consumer Loans
|
36
|
$ |
1,739
|
34
|
$ |
1,770
|
||||||||||
Residential Real Estate Mortgages
|
19
|
$
|
1,302
|
16
|
$
|
1,109
|
||||||||||
Total Troubled Debt Restructurings
|
57
|
$
|
3,515
|
53
|
$
|
4,688
|
6.
|
Premises and Equipment, Net
|
|
December 31,
|
|||||||
(In thousands)
|
2017
|
2016
|
||||||
Land, buildings and improvements
|
$
|
121,771
|
$
|
121,037
|
||||
Equipment
|
57,080
|
56,243
|
||||||
Premises and equipment before accumulated depreciation
|
$ |
178,851
|
$ |
177,280
|
||||
Accumulated depreciation
|
97,546
|
93,093
|
||||||
Total premises and equipment
|
$
|
81,305
|
$
|
84,187
|
(In thousands)
|
December 31, 2017 | |||
2018
|
$
|
7,910
|
||
2019
|
7,227
|
|||
2020
|
6,547
|
|||
2021
|
5,352
|
|||
2022
|
4,646
|
|||
Thereafter
|
16,660
|
|||
Total
|
$
|
48,342
|
7.
|
Goodwill and Other Intangible Assets
|
(In thousands)
|
||||
January 1, 2017
|
$
|
265,439
|
||
Goodwill Acquired
|
2,604
|
|||
December 31, 2017
|
$
|
268,043
|
||
|
||||
January 1, 2016
|
$
|
265,957
|
||
Goodwill Acquired
|
2,047
|
|||
Goodwill Adjustments
|
(2,565
|
)
|
||
December 31, 2016
|
$
|
265,439
|
|
December 31,
|
|||||||
(In thousands)
|
2017
|
2016
|
||||||
Core deposit intangibles:
|
||||||||
Gross carrying amount
|
$
|
8,975
|
$
|
8,975
|
||||
Less: accumulated amortization
|
6,581
|
5,626
|
||||||
Net carrying amount
|
$ |
2,394
|
$ |
3,349
|
||||
|
||||||||
Identified intangible assets:
|
||||||||
Gross carrying amount
|
$ |
33,632
|
$ |
32,338
|
||||
Less: accumulated amortization
|
22,606
|
19,872
|
||||||
Net carrying amount
|
$ |
11,026
|
$ |
12,466
|
||||
|
||||||||
Total intangibles:
|
||||||||
Gross carrying amount
|
$ |
42,607
|
$ |
41,313
|
||||
Less: accumulated amortization
|
29,187
|
25,498
|
||||||
Net carrying amount
|
$
|
13,420
|
$
|
15,815
|
8.
|
Deposits
|
(In thousands)
|
December 31, 2017 | |||
Within one year
|
$
|
394,674
|
||
After one but within two years
|
259,710
|
|||
After two but within three years
|
62,536
|
|||
After three but within four years
|
40,151
|
|||
After four but within five years
|
28,525
|
|||
After five years
|
21,170
|
|||
Total
|
$
|
806,766
|
9.
|
Short-Term Borrowings
|
(Dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Federal funds purchased:
|
||||||||||||
Balance at year-end
|
$
|
60,000
|
$
|
50,000
|
$
|
99,500
|
||||||
Average during the year
|
54,162
|
65,257
|
97,424
|
|||||||||
Maximum month end balance
|
80,000
|
85,000
|
159,000
|
|||||||||
Weighted average rate during the year
|
2.16
|
%
|
0.98
|
%
|
0.36
|
%
|
||||||
Weighted average rate at year-end
|
2.41
|
%
|
1.19
|
%
|
0.51
|
%
|
||||||
|
||||||||||||
Securities sold under repurchase agreements:
|
||||||||||||
Balance at year-end
|
$
|
182,123
|
$
|
173,703
|
$
|
167,981
|
||||||
Average during the year
|
175,539
|
168,821
|
162,201
|
|||||||||
Maximum month end balance
|
190,326
|
189,875
|
178,326
|
|||||||||
Weighted average rate during the year
|
0.07
|
%
|
0.06
|
%
|
0.06
|
%
|
||||||
Weighted average rate at year-end
|
0.07
|
%
|
0.07
|
%
|
0.06
|
%
|
||||||
|
||||||||||||
Other short-term borrowings:
|
||||||||||||
Balance at year-end
|
$
|
477,000
|
$
|
458,000
|
$
|
175,000
|
||||||
Average during the year
|
460,334
|
263,575
|
80,260
|
|||||||||
Maximum month end balance
|
591,000
|
424,000
|
175,000
|
|||||||||
Weighted average rate during the year
|
1.02
|
%
|
0.59
|
%
|
0.42
|
%
|
||||||
Weighted average rate at year-end
|
1.18
|
%
|
0.70
|
%
|
0.56
|
%
|
10.
|
Long-Term Debt
|
(Dollars in thousands) |
December 31, 2017
|
December 31, 2016
|
||||||||||||||||||||||||||||||
Maturity
|
Amount
|
Weighted
Average
Rate
|
Callable
Amount
|
Weighted
Average
Rate
|
Amount
|
Weighted
Average
Rate
|
Callable
Amount
|
Weighted
Average
Rate
|
||||||||||||||||||||||||
2017
|
$
|
-
|
-
|
$
|
-
|
-
|
$
|
40,150
|
2.67
|
%
|
$
|
25,000
|
3.48
|
%
|
||||||||||||||||||
2018
|
40,037
|
2.57
|
%
|
25,000
|
3.15
|
%
|
40,000
|
2.57
|
%
|
25,000
|
3.15
|
%
|
||||||||||||||||||||
2019
|
20,000
|
1.96
|
%
|
-
|
-
|
20,000
|
1.96
|
%
|
-
|
-
|
||||||||||||||||||||||
2020
|
25,000
|
2.34
|
%
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
2021
|
56
|
4.00
|
%
|
-
|
-
|
72
|
4.00
|
%
|
-
|
-
|
||||||||||||||||||||||
2031
|
3,776
|
2.45
|
%
|
-
|
-
|
3,865
|
2.45
|
%
|
-
|
-
|
||||||||||||||||||||||
Total
|
$
|
88,869
|
$
|
25,000
|
$
|
104,087
|
$
|
50,000
|
11.
|
Junior Subordinated Debt
|
Description
|
Issuance Date
|
Trust
Preferred
Securities
Outstanding
|
Interest Rate
|
Trust
Preferred
Debt Owed
To Trust
|
Final Maturity Date
|
||||||
|
|
|
|
||||||||
CNBF Capital Trust I
|
August 1999
|
$
|
18,000
|
3-month LIBOR
plus 2.75%
|
$
|
18,720
|
August 2029
|
||||
|
|
|
|
||||||||
NBT Statutory Trust I
|
November 2005
|
5,000
|
3-month LIBOR
plus 1.40%
|
5,155
|
December 2035
|
||||||
|
|
|
|
||||||||
NBT Statutory Trust II
|
February 2006
|
50,000
|
3-month LIBOR
plus 1.40%
|
51,547
|
March 2036
|
||||||
|
|
|
|
||||||||
Alliance Financial Capital Trust I
|
December 2003
|
10,000
|
3-month LIBOR
plus 2.85%
|
10,310
|
January 2034
|
||||||
|
|
|
|
||||||||
Alliance Financial Capital Trust II
|
September 2006
|
15,000
|
3-month LIBOR
plus 1.65%
|
15,464
|
September 2036
|
12.
|
Income Taxes
|
|
Years ended December 31,
|
|||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
|||||||||
Current:
|
||||||||||||
Federal
|
$
|
35,839
|
$
|
30,492
|
$
|
32,871
|
||||||
State
|
6,599
|
5,628
|
4,329
|
|||||||||
Total Current
|
$ |
42,438
|
$ |
36,120
|
$ |
37,200
|
||||||
|
||||||||||||
Deferred:
|
||||||||||||
Federal
|
$ |
3,850
|
$ |
3,994
|
$ |
2,521
|
||||||
State
|
(278
|
)
|
278
|
482
|
||||||||
Total Deferred
|
$ |
3,572
|
$ |
4,272
|
$ |
3,003
|
||||||
Total income tax expense
|
$
|
46,010
|
$
|
40,392
|
$
|
40,203
|
|
December 31,
|
|||||||
(In thousands)
|
2017
|
2016
|
||||||
Deferred tax assets:
|
||||||||
Allowance for loan losses
|
$
|
17,390
|
$
|
24,925
|
||||
Deferred compensation
|
7,230
|
11,578
|
||||||
Postretirement benefit obligation
|
2,159
|
2,929
|
||||||
Fair value adjustments from acquisitions
|
919
|
1,883
|
||||||
Unrealized losses on securities
|
3,715
|
3,259
|
||||||
Accrued liabilities
|
769
|
1,775
|
||||||
Stock-based compensation expense
|
2,642
|
4,817
|
||||||
Other
|
711
|
1,148
|
||||||
Total deferred tax assets
|
$ |
35,535
|
$ |
52,314
|
||||
Deferred tax liabilities:
|
||||||||
Pension benefits
|
$ |
12,439
|
$ |
17,303
|
||||
Amortization of intangible assets
|
11,110
|
17,557
|
||||||
Premises and equipment, primarily due to accelerated depreciation
|
2,792
|
4,375
|
||||||
Deferred loan costs
|
634
|
1,759
|
||||||
Cash flow hedges
|
877
|
1,129
|
||||||
Other
|
390
|
501
|
||||||
Total deferred tax liabilities
|
$ |
28,242
|
$ |
42,624
|
||||
Net deferred tax asset at year-end
|
$ |
7,293
|
$ |
9,690
|
||||
Net deferred tax asset at beginning of year
|
9,690
|
14,940
|
||||||
(Decrease) in net deferred tax asset
|
$
|
(2,397
|
)
|
$
|
(5,250
|
)
|
|
Years ended December 31,
|
|||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
|||||||||
Federal income tax at statutory rate
|
$
|
44,857
|
$
|
41,581
|
$
|
40,820
|
||||||
Tax exempt income
|
(2,303
|
)
|
(2,205
|
)
|
(2,037
|
)
|
||||||
Net increase in cash surrender value of life insurance
|
(1,780
|
)
|
(1,712
|
)
|
(1,373
|
)
|
||||||
Federal tax credit
|
(1,343
|
)
|
(1,323
|
)
|
(939
|
)
|
||||||
State taxes, net of federal tax benefit
|
4,107
|
3,838
|
3,127
|
|||||||||
Federal tax reform (Tax Act)
|
4,407
|
-
|
-
|
|||||||||
Stock-based compensation, excess tax benefit
|
(1,619
|
)
|
-
|
-
|
||||||||
Other, net
|
(316
|
)
|
213
|
605
|
||||||||
Income tax expense
|
$
|
46,010
|
$
|
40,392
|
$
|
40,203
|
(In thousands)
|
2017
|
2016
|
||||||
Balance at January 1
|
$
|
559
|
$
|
-
|
||||
Additions for tax positions of prior years
|
-
|
425
|
||||||
Reduction for tax positions of prior years
|
(31
|
)
|
-
|
|||||
Current period tax positions
|
137
|
134
|
||||||
Balance at December 31
|
$
|
665
|
$
|
559
|
||||
Amount that would affect the effective tax rate if recognized, gross of tax
|
$
|
525
|
$
|
363
|
13.
|
Employee Benefit Plans
|
|
Pension Benefits
|
Other Benefits
|
||||||||||||||
(In thousands)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Net actuarial loss
|
$
|
23,585
|
$
|
28,328
|
$
|
1,731
|
$
|
1,430
|
||||||||
Prior service cost (credit)
|
94
|
140
|
196
|
(38
|
)
|
|||||||||||
Total amounts recognized in AOCI (pre-tax)
|
$
|
23,679
|
$
|
28,468
|
$
|
1,927
|
$
|
1,392
|
|
Pension Benefits
|
Other Benefits
|
||||||||||||||
(In thousands)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Change in benefit obligation:
|
||||||||||||||||
Benefit obligation at beginning of year
|
$
|
90,477
|
$
|
92,445
|
$
|
7,478
|
$
|
8,322
|
||||||||
Service cost
|
1,511
|
2,162
|
12
|
14
|
||||||||||||
Interest cost
|
4,168
|
4,223
|
357
|
353
|
||||||||||||
Plan participants' contributions
|
-
|
-
|
218
|
234
|
||||||||||||
Actuarial loss (gain)
|
4,028
|
(1,635
|
)
|
388
|
(786
|
)
|
||||||||||
Curtailment/ settlement
|
-
|
(715
|
)
|
286
|
-
|
|||||||||||
Benefits paid
|
(9,234
|
)
|
(6,003
|
)
|
(689
|
)
|
(659
|
)
|
||||||||
Projected benefit obligation at end of year
|
$ |
90,950
|
$ |
90,477
|
$ |
8,050
|
$ |
7,478
|
||||||||
Change in plan assets:
|
||||||||||||||||
Fair value of plan assets at beginning of year
|
$ |
116,216
|
$ |
107,529
|
$ |
-
|
$ |
-
|
||||||||
Actual return on plan assets
|
15,032
|
8,259
|
-
|
-
|
||||||||||||
Employer contributions
|
2,212
|
6,431
|
471
|
425
|
||||||||||||
Plan participants' contributions
|
-
|
-
|
218
|
234
|
||||||||||||
Benefits paid
|
(9,234
|
)
|
(6,003
|
)
|
(689
|
)
|
(659
|
)
|
||||||||
Fair value of plan assets at end of year
|
$ |
124,226
|
$ |
116,216
|
$ |
-
|
$ |
-
|
||||||||
|
||||||||||||||||
Funded (unfunded) status at year end
|
$
|
33,276
|
$
|
25,739
|
$
|
(8,050
|
)
|
$
|
(7,478
|
)
|
|
Pension Benefits
|
Other Benefits
|
||||||||||||||
(In thousands)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Other assets
|
$
|
52,775
|
$
|
45,344
|
$
|
-
|
$
|
-
|
||||||||
Other liabilities
|
(19,499
|
)
|
(19,605
|
)
|
(8,050
|
)
|
(7,478
|
)
|
||||||||
Funded status
|
$
|
33,276
|
$
|
25,739
|
$
|
(8,050
|
)
|
$
|
(7,478
|
)
|
|
Years ended December 31,
|
|||||||||||
|
2017
|
2016
|
2015
|
|||||||||
Weighted average assumptions:
|
||||||||||||
The following assumptions were used to determine benefit obligations:
|
||||||||||||
Discount rate
|
4.20% - 4.21
|
%
|
4.76%-4.84
|
%
|
4.69%-4.71
|
%
|
||||||
Expected long-term return on plan assets
|
7.00
|
%
|
7.00
|
%
|
7.00
|
%
|
||||||
Rate of compensation increase
|
3.00
|
%
|
3.00
|
%
|
3.00
|
%
|
||||||
|
||||||||||||
The following assumptions were used to determine net periodic pension cost:
|
||||||||||||
Discount rate
|
4.76% - 4.84
|
%
|
4.69%-4.71
|
%
|
4.19%-4.30
|
%
|
||||||
Expected long-term return on plan assets
|
7.00
|
%
|
7.00
|
%
|
7.50
|
%
|
||||||
Rate of compensation increase
|
3.00
|
%
|
3.00
|
%
|
3.00%-3.75
|
%
|
|
Pension Benefits
|
Other Benefits
|
||||||||||||||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
2017
|
2016
|
2015
|
||||||||||||||||||
Components of net periodic benefit cost:
|
||||||||||||||||||||||||
Service cost
|
$
|
1,511
|
$
|
2,162
|
$
|
2,677
|
$
|
12
|
$
|
14
|
$
|
17
|
||||||||||||
Interest cost
|
4,168
|
4,223
|
3,977
|
357
|
353
|
374
|
||||||||||||||||||
Expected return on plan assets
|
(7,929
|
)
|
(7,430
|
)
|
(8,589
|
)
|
-
|
-
|
-
|
|||||||||||||||
Amortization of gain due to curtailment
|
-
|
(768
|
)
|
(154
|
)
|
-
|
-
|
-
|
||||||||||||||||
Amortization of prior service cost (credit)
|
46
|
32
|
21
|
51
|
(57
|
)
|
(219
|
)
|
||||||||||||||||
Amortization of unrecognized net loss
|
1,668
|
2,235
|
2,174
|
87
|
117
|
263
|
||||||||||||||||||
Net periodic pension cost
|
$
|
(536
|
)
|
$
|
454
|
$
|
106
|
$
|
507
|
$
|
427
|
$
|
435
|
|||||||||||
|
||||||||||||||||||||||||
Other changes in plan assets and benefit obligations recognized in OCI (pre-tax):
|
||||||||||||||||||||||||
Net (gain) loss
|
$
|
(3,075
|
)
|
$
|
(2,464
|
)
|
$
|
6,523
|
$
|
388
|
$
|
(786
|
)
|
$
|
(333
|
)
|
||||||||
Prior service cost
|
-
|
96
|
-
|
286
|
-
|
-
|
||||||||||||||||||
Amortization of gain due to settlement
|
-
|
(43
|
)
|
(46
|
)
|
-
|
-
|
-
|
||||||||||||||||
Amortization of prior service (cost) credit
|
(46
|
)
|
(32
|
)
|
(21
|
)
|
(51
|
)
|
57
|
219
|
||||||||||||||
Amortization of unrecognized net (loss)
|
(1,668
|
)
|
(2,235
|
)
|
(2,174
|
)
|
(87
|
)
|
(117
|
)
|
(263
|
)
|
||||||||||||
Total recognized in OCI
|
$
|
(4,789
|
)
|
$
|
(4,678
|
)
|
$
|
4,282
|
$
|
536
|
$
|
(846
|
)
|
$
|
(377
|
)
|
||||||||
|
||||||||||||||||||||||||
Total recognized in net periodic benefit cost and OCI, pre-tax
|
$
|
(5,325
|
)
|
$
|
(4,224
|
)
|
$
|
4,388
|
$
|
1,043
|
$
|
(419
|
)
|
$
|
58
|
(In thousands)
|
Pension
Benefits
|
Other
Benefits
|
||||||
2018
|
$
|
7,256
|
$
|
606
|
||||
2019
|
7,087
|
598
|
||||||
2020
|
6,997
|
583
|
||||||
2021
|
6,728
|
559
|
||||||
2022
|
6,666
|
566
|
||||||
2023 - 2027
|
|
37,688
|
|
2,818
|
(In thousands)
|
One
Percentage
Point
Increase
|
One
Percentage
Point
Decrease
|
||||||
Increase (decrease) on total service and interest cost components
|
$
|
40
|
$
|
(34
|
)
|
|||
Increase (decrease) on post-retirement accumulated benefit obligation
|
855
|
(738
|
)
|
|
Target 2017
|
2017
|
2016
|
|||||||||
Cash and cash equivalents
|
0 - 20%
|
|
3%
|
|
2%
|
|
||||||
Fixed income securities
|
25 - 55%
|
|
45%
|
|
46%
|
|
||||||
Equities
|
40 - 65%
|
|
52%
|
|
52%
|
|
||||||
Total
|
100%
|
|
100%
|
|
(In thousands)
|
Level 1
|
Level 2
|
December 31, 2017
|
|||||||||
Cash and cash equivalents
|
$
|
3,684
|
$
|
-
|
$
|
3,684
|
||||||
Foreign equity mutual funds
|
44,508
|
-
|
44,508
|
|||||||||
Equity mutual funds
|
26,747
|
-
|
26,747
|
|||||||||
U.S. government bonds
|
-
|
99
|
99
|
|||||||||
Corporate bonds
|
-
|
49,188
|
49,188
|
|||||||||
Total
|
$
|
74,939
|
$
|
49,287
|
$
|
124,226
|
|
Level 1
|
Level 2
|
December 31, 2016
|
|||||||||
Cash and cash equivalents
|
$
|
3,500
|
$
|
-
|
$
|
3,500
|
||||||
Foreign equity mutual funds
|
33,687
|
-
|
33,687
|
|||||||||
Equity mutual funds
|
28,256
|
-
|
28,256
|
|||||||||
U.S. government bonds
|
-
|
1,283
|
1,283
|
|||||||||
Corporate bonds
|
-
|
49,490
|
49,490
|
|||||||||
Total
|
$
|
65,443
|
$
|
50,773
|
$
|
116,216
|
14.
|
Stock-Based Compensation
|
(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, 2017
|
230,174
|
$
|
24.35
|
|||||||||||||
Granted
|
1,500
|
40.63
|
||||||||||||||
Exercised
|
(118,844
|
)
|
25.94
|
|||||||||||||
Expired
|
(800
|
)
|
24.46
|
|||||||||||||
Outstanding at December 31, 2017
|
112,030
|
$
|
22.88
|
2.13
|
$
|
1,566
|
||||||||||
Exercisable at December 31, 2017
|
107,280
|
$
|
22.41
|
1.84
|
$
|
1,544
|
||||||||||
Expected to Vest
|
4,750
|
$
|
33.52
|
8.68
|
$
|
22
|
|
Years ended December 31,
|
|||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
|||||||||
Proceeds from stock options exercised
|
$
|
3,083
|
$
|
8,398
|
$
|
12,044
|
||||||
Tax benefits related to stock options exercised
|
650
|
1,223
|
952
|
|||||||||
Intrinsic value of stock options exercised
|
1,699
|
3,143
|
2,446
|
|||||||||
Fair value of shares vested during the year
|
329
|
105
|
63
|
|
Number
of
Shares
|
Weighted-
Average
Grant Date Fair
Value
|
||||||
Unvested at January 1, 2017
|
613,163
|
$
|
22.62
|
|||||
Forfeited
|
(5,545
|
)
|
23.18
|
|||||
Vested
|
(198,652
|
)
|
22.34
|
|||||
Granted
|
125,772
|
36.15
|
||||||
Unvested at December 31, 2017
|
534,738
|
$
|
25.77
|
15.
|
Stockholders’ Equity
|
(In thousands)
|
2017
|
2016
|
2015
|
|||||||||
Unrecognized prior service cost and net actuarial (losses) on pension plans
|
$
|
(15,284
|
)
|
$
|
(18,227
|
)
|
$
|
(21,557
|
)
|
|||
Unrealized gains on derivatives (cash flow hedges)
|
2,144
|
1,772
|
-
|
|||||||||
Unrealized net holding (losses) on AFS securities
|
(8,937
|
)
|
(5,065
|
)
|
(861
|
)
|
||||||
AOCI
|
$
|
(22,077
|
)
|
$
|
(21,520
|
)
|
$
|
(22,418
|
)
|
16.
|
Regulatory Capital Requirements
|
|
Actual
|
Regulatory Ratio Requirements
|
||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Ratio
|
Minimum
Capital
Adequacy
|
Minimum plus Buffer
|
For
Classification
as Well-
Capitalized
|
|||||||||||||||
As of December 31, 2017
|
||||||||||||||||||||
Tier I Capital (to average assets)
|
||||||||||||||||||||
Company
|
$
|
810,445
|
9.14
|
%
|
4.00
|
%
|
5.00
|
%
|
||||||||||||
NBT Bank
|
756,521
|
8.59
|
%
|
4.00
|
%
|
5.00
|
%
|
|||||||||||||
Common Equity Tier 1 Capital
|
||||||||||||||||||||
Company
|
713,445
|
10.06
|
%
|
4.50
|
%
|
5.75
|
%
|
6.50
|
%
|
|||||||||||
NBT Bank
|
756,521
|
10.74
|
%
|
4.50
|
%
|
5.75
|
%
|
6.50
|
%
|
|||||||||||
Tier I Capital (to risk-weighted assets)
|
||||||||||||||||||||
Company
|
810,445
|
11.42
|
%
|
6.00
|
%
|
7.25
|
%
|
6.00
|
%
|
|||||||||||
NBT Bank
|
756,521
|
10.74
|
%
|
6.00
|
%
|
7.25
|
%
|
6.00
|
%
|
|||||||||||
Total Capital (to risk-weighted assets)
|
||||||||||||||||||||
Company
|
880,874
|
12.42
|
%
|
8.00
|
%
|
9.25
|
%
|
10.00
|
%
|
|||||||||||
NBT Bank
|
826,950
|
11.74
|
%
|
8.00
|
%
|
9.25
|
%
|
10.00
|
%
|
|||||||||||
|
||||||||||||||||||||
As of December 31, 2016
|
||||||||||||||||||||
Tier I Capital (to average assets)
|
||||||||||||||||||||
Company
|
$
|
773,111
|
9.11
|
%
|
4.00
|
%
|
5.00
|
%
|
||||||||||||
NBT Bank
|
723,992
|
8.59
|
%
|
4.00
|
%
|
5.00
|
%
|
|||||||||||||
Common Equity Tier 1 Capital
|
||||||||||||||||||||
Company
|
676,111
|
9.98
|
%
|
4.50
|
%
|
5.125
|
%
|
6.50
|
%
|
|||||||||||
NBT Bank
|
723,992
|
10.76
|
%
|
4.50
|
%
|
5.125
|
%
|
6.50
|
%
|
|||||||||||
Tier I Capital (to risk-weighted assets)
|
||||||||||||||||||||
Company
|
773,111
|
11.42
|
%
|
6.00
|
%
|
6.625
|
%
|
8.00
|
%
|
|||||||||||
NBT Bank
|
723,992
|
10.76
|
%
|
6.00
|
%
|
6.625
|
%
|
8.00
|
%
|
|||||||||||
Total Capital (to risk-weighted assets)
|
||||||||||||||||||||
Company
|
839,152
|
12.39
|
%
|
8.00
|
%
|
8.625
|
%
|
10.00
|
%
|
|||||||||||
NBT Bank
|
790,034
|
11.75
|
%
|
8.00
|
%
|
8.625
|
%
|
10.00
|
%
|
17.
|
Earnings Per Share
|
|
Years ended December 31,
|
|||||||||||||||||||||||||||||||||||
|
2017
|
2016
|
2015
|
|||||||||||||||||||||||||||||||||
(In thousands except share and 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
|
$
|
82,151
|
43,575
|
$
|
1.89
|
$
|
78,409
|
43,244
|
$
|
1.81
|
$
|
76,425
|
43,836
|
$
|
1.74
|
|||||||||||||||||||||
Effect of dilutive securities:
|
||||||||||||||||||||||||||||||||||||
Stock-based compensation
|
330
|
378
|
553
|
|||||||||||||||||||||||||||||||||
Diluted EPS
|
$
|
82,151
|
43,905
|
$
|
1.87
|
$
|
78,409
|
43,622
|
$
|
1.80
|
$
|
76,425
|
44,389
|
$
|
1.72
|
18.
|
Reclassification Adjustments Out of Other Comprehensive Income (Loss)
|
Detail About AOCI Components
|
Amount Reclassified from AOCI
|
Affected Line Item in the Consolidated Statements of OCI
|
|||||||||||
|
Years ended
|
|
|||||||||||
(In thousands)
|
December 31,
2017
|
December 31,
2016
|
December 31,
2015
|
|
|||||||||
AFS securities:
|
|
||||||||||||
(Gains) losses on AFS securities
|
$
|
(1,869
|
)
|
$
|
644
|
$
|
(3,087
|
)
|
Net securities (gains) losses
|
||||
Amortization of unrealized gains related to securities transfer
|
875
|
1,094
|
1,311
|
Interest income
|
|||||||||
Impairment write-down of an equity security
|
1,312 | - | - |
Other noninterest income
|
|||||||||
Tax effect
|
$
|
(120
|
)
|
$
|
(677
|
)
|
$
|
691
|
Income tax (expense) benefit
|
||||
Net of tax
|
$
|
198
|
$
|
1,061
|
$
|
(1,085
|
)
|
|
|||||
|
|
||||||||||||
Pension and other benefits:
|
|
||||||||||||
Amortization of net losses
|
$
|
1,755
|
$
|
2,395
|
$
|
2,437
|
Salaries and employee benefits
|
||||||
Amortization of prior service costs
|
97
|
(25
|
)
|
(198
|
)
|
Salaries and employee benefits
|
|||||||
Tax effect
|
(740
|
)
|
(949
|
)
|
(868
|
)
|
Income tax (expense) benefit
|
||||||
Net of tax
|
$
|
1,112
|
$
|
1,421
|
$
|
1,371
|
|
||||||
|
|
||||||||||||
Total reclassifications, net of tax
|
$
|
1,310
|
$
|
2,482
|
$
|
286
|
|
19.
|
Commitments and Contingent Liabilities
|
|
At December 31,
|
|||||||
(In thousands)
|
2017
|
2016
|
||||||
Unused lines of credit
|
$
|
351,227
|
$
|
292,140
|
||||
Commitments to extend credits, primarily variable rate
|
1,215,187
|
1,177,842
|
||||||
Standby letters of credit
|
41,135
|
36,815
|
||||||
Loans sold with recourse
|
29,120
|
28,463
|
20.
|
Derivative Instruments and Hedging Activities
|
December 31, | ||||||||
(In thousands)
|
2017
|
2016
|
||||||
Derivatives Not Designated as Hedging Instruments:
|
||||||||
Fair value adjustment
|
$
|
210
|
$
|
309
|
||||
Notional amount:
|
||||||||
Interest rate derivatives
|
481,185
|
371,101
|
||||||
Risk participation agreements
|
35,628
|
11,421
|
||||||
Derivatives Designated as Hedging Instruments:
|
||||||||
Fair value adjustment - interest rate derivatives
|
3,510
|
2,704
|
||||||
Notional amount - interest rate derivatives
|
250,000
|
250,000
|
December 31, | ||||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
|||||||||
Non-hedging interest rate derivatives:
|
||||||||||||
Increase in interest income
|
$
|
179
|
$
|
95
|
$
|
33
|
||||||
Increase in other income
|
2,945
|
3,480
|
684
|
|||||||||
Hedging interest rate derivatives:
|
||||||||||||
Decrease (increase) in interest expense
|
289
|
(70
|
)
|
-
|
21.
|
Fair Values of Financial Instruments
|
(In thousands)
|
Level 1
|
Level 2
|
Level 3
|
December 31,
2017
|
||||||||||||
Assets:
|
||||||||||||||||
AFS securities:
|
||||||||||||||||
Federal agency
|
$
|
-
|
$
|
108,899
|
$
|
-
|
$
|
108,899
|
||||||||
State & municipal
|
-
|
41,956
|
-
|
41,956
|
||||||||||||
Mortgage-backed
|
-
|
554,927
|
-
|
554,927
|
||||||||||||
Collateralized mortgage obligations
|
-
|
535,994
|
-
|
535,994
|
||||||||||||
Other securities
|
5,845
|
8,304
|
-
|
14,149
|
||||||||||||
Total AFS securities
|
$
|
5,845
|
$
|
1,250,080
|
$
|
-
|
$
|
1,255,925
|
||||||||
Trading securities
|
11,467
|
-
|
-
|
11,467
|
||||||||||||
Derivatives
|
-
|
3,732
|
-
|
3,732
|
||||||||||||
Total
|
$
|
17,312
|
$
|
1,253,812
|
$
|
-
|
$
|
1,271,124
|
||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Derivatives
|
$
|
-
|
$
|
324
|
$
|
-
|
$
|
324
|
||||||||
Total
|
$
|
-
|
$
|
324
|
$
|
-
|
$
|
324
|
(In thousands)
|
Level 1
|
Level 2
|
Level 3
|
December 31,
2016
|
||||||||||||
Assets:
|
||||||||||||||||
AFS securities:
|
||||||||||||||||
Federal agency
|
$
|
-
|
$
|
174,408
|
$
|
-
|
$
|
174,408
|
||||||||
State & municipal
|
-
|
46,726
|
-
|
46,726
|
||||||||||||
Mortgage-backed
|
-
|
529,844
|
-
|
529,844
|
||||||||||||
Collateralized mortgage obligations
|
-
|
566,573
|
-
|
566,573
|
||||||||||||
Other securities
|
11,493
|
9,246
|
-
|
20,739
|
||||||||||||
Total AFS securities
|
$
|
11,493
|
$
|
1,326,797
|
$
|
-
|
$
|
1,338,290
|
||||||||
Trading securities
|
9,259
|
-
|
-
|
9,259
|
||||||||||||
Derivatives
|
-
|
3,210
|
-
|
3,210
|
||||||||||||
Total
|
$
|
20,752
|
$
|
1,330,007
|
$
|
-
|
$
|
1,350,759
|
||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Derivatives
|
$
|
-
|
$
|
506
|
$
|
-
|
$
|
506
|
||||||||
Total
|
$
|
-
|
$
|
506
|
$
|
-
|
$
|
506
|
|
December 31, 2017
|
December 31, 2016
|
||||||||||||||||||
(In thousands)
|
Fair Value
Hierarchy
|
Carrying
Amount
|
Estimated
Fair
Value
|
Carrying
Amount
|
Estimated
Fair
Value
|
|||||||||||||||
Financial assets:
|
||||||||||||||||||||
HTM securities
|
2
|
$
|
484,073
|
$
|
481,871
|
$
|
527,948
|
$
|
525,050
|
|||||||||||
Net loans
|
3
|
6,515,273
|
6,651,931
|
6,132,857
|
6,273,233
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Time deposits
|
2
|
$
|
806,766
|
$
|
801,294
|
$
|
872,411
|
$
|
868,153
|
|||||||||||
Long-term debt
|
2
|
88,869
|
88,346
|
104,087
|
104,113
|
|||||||||||||||
Junior subordinated debt
|
2
|
101,196
|
104,593
|
101,196
|
102,262
|
22.
|
Parent Company Financial Information
|
|
December 31,
|
|||||||
(In thousands)
|
2017
|
2016
|
||||||
Assets
|
||||||||
Cash and cash equivalents
|
$
|
7,572
|
$
|
4,152
|
||||
AFS securities, at estimated fair value
|
10,065
|
15,273
|
||||||
Trading securities
|
11,245
|
8,968
|
||||||
Investment in subsidiaries, on equity basis
|
1,048,908
|
1,006,444
|
||||||
Other assets
|
40,461
|
44,178
|
||||||
Total assets
|
$
|
1,118,251
|
$
|
1,079,015
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Total liabilities
|
$
|
160,074
|
$
|
165,699
|
||||
Stockholders’ equity
|
958,177
|
913,316
|
||||||
Total liabilities and stockholders’ equity
|
$
|
1,118,251
|
$
|
1,079,015
|
|
Years ended December 31,
|
|||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
|||||||||
Dividends from subsidiaries
|
$
|
38,300
|
$
|
10,200
|
$
|
78,200
|
||||||
Management fee from subsidiaries
|
99,319
|
95,244
|
92,629
|
|||||||||
Net securities gains
|
2,237
|
652
|
3,034
|
|||||||||
Interest, dividends and other income
|
928
|
976
|
693
|
|||||||||
Total revenue
|
$ |
140,784
|
$ |
107,072
|
$ |
174,556
|
||||||
Operating expenses
|
100,667
|
97,977
|
94,332
|
|||||||||
Income before income tax benefit and equity in undistributed income of subsidiaries
|
40,117
|
9,095
|
80,224
|
|||||||||
Income tax expense (benefit)
|
2,233
|
|
(321
|
) |
515
|
|
||||||
Dividends in excess of income (equity in undistributed income) of subsidiaries
|
44,267
|
68,993
|
(3,284
|
)
|
||||||||
Net income
|
$
|
82,151
|
$
|
78,409
|
$
|
76,425
|
|
Years ended December 31,
|
|||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
|||||||||
Operating activities
|
||||||||||||
Net income
|
$
|
82,151
|
$
|
78,409
|
$
|
76,425
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||||||
Depreciation and amortization of premises and equipment
|
2,974
|
2,805
|
2,522
|
|||||||||
Excess tax benefit on stock-based compensation
|
1,769
|
1,055
|
(43
|
) | ||||||||
Stock-based compensation expense
|
3,644
|
4,378
|
4,086
|
|||||||||
Net (gain) on sales of AFS securities
|
(2,238
|
)
|
(652
|
)
|
(3,034
|
)
|
||||||
Re-evaluation of deferred tax amounts from Tax Act
|
3,339
|
-
|
-
|
|||||||||
Equity in undistributed income of subsidiaries
|
(82,567
|
)
|
(79,193
|
)
|
(74,916
|
)
|
||||||
Cash dividend from subsidiaries
|
38,300
|
10,200
|
78,200
|
|||||||||
Bank owned life insurance income
|
(328
|
)
|
(356
|
)
|
(292
|
)
|
||||||
Net change in other liabilities
|
(5,624
|
)
|
(8,596
|
)
|
6,770
|
|||||||
Net change in other assets
|
(368
|
)
|
22,728
|
(6,652
|
)
|
|||||||
Net cash provided by operating activities
|
$ |
41,052
|
$ |
30,778
|
$ |
83,066
|
||||||
Investing activities
|
||||||||||||
Proceeds on sales and maturities of AFS securities
|
$ |
4,710
|
$ |
1,783
|
$ |
5,297
|
||||||
Purchases of AFS securities
|
(9
|
)
|
(580
|
)
|
(3,083
|
)
|
||||||
Proceeds from settlement of bank owned life insurance
|
308
|
-
|
-
|
|||||||||
Net purchases of premises and equipment
|
(2,264
|
)
|
(3,083
|
)
|
(2,930
|
)
|
||||||
Net cash provided by (used in) investing activities
|
$ |
2,745
|
$ |
(1,880
|
)
|
$ |
(716
|
)
|
||||
Financing activities
|
||||||||||||
Proceeds from the issuance of shares to employee benefit plans and other stock plans
|
$ |
3,309
|
$ |
6,032
|
$ |
8,856
|
||||||
Cash paid by employer for tax-withholding on stock issuance
|
(3,582
|
)
|
(3,387
|
)
|
(1,164
|
)
|
||||||
Purchases of treasury shares
|
-
|
(17,193
|
)
|
(26,797
|
)
|
|||||||
Cash dividends and payments for fractional shares
|
(40,104
|
)
|
(38,880
|
)
|
(38,149
|
)
|
||||||
Net cash (used in) financing activities
|
$ |
(40,377
|
)
|
$ |
(53,428
|
)
|
$ |
(57,254
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
$ |
3,420
|
$ |
(24,530
|
)
|
$ |
25,096
|
|||||
Cash and cash equivalents at beginning of year
|
4,152
|
28,682
|
3,586
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
7,572
|
$
|
4,152
|
$
|
28,682
|
23.
|
Recent Accounting Pronouncements
|
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
|
112,030
|
$
|
22.88
|
2,813,597
|
||||||||
Equity compensation plans not approved by stockholders
|
None
|
None
|
None
|
(a)(1)
|
The following Consolidated Financial Statements are included in Part II, Item 8 hereof:
|
|
Report of Independent Registered Public Accounting Firm.
|
|
Consolidated Balance Sheets as of December 31, 2017 and 2016.
|
|
Consolidated Statements of Income for each of the three years ended December 31, 2017, 2016 and 2015.
|
|
Consolidated Statements of Changes in Stockholders’ Equity for each of the three years ended December 31, 2017, 2016 and 2015.
|
|
Consolidated Statements of Cash Flows for each of the three years ended December 31, 2017, 2016 and 2015.
|
|
Consolidated Statements of Comprehensive Income for each of the three years ended December 31, 2017, 2016 and 2015.
|
|
Notes to the Consolidated Financial Statements.
|
(a)(2) There are no financial statement schedules that are required to be filed as part of this form since they are not applicable or the information is included in the consolidated financial statements.
|
|
(a)(3) See below for all exhibits filed herewith and the Exhibit Index.
|
3.1
|
|
3.2
|
|
3.3
|
|
4.1
|
Specimen common stock certificate for NBT Bancorp Inc. common stock (filed as Exhibit 4.1 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-4, filed on December 27, 2005, and incorporated herein by reference).
|
10.1
|
NBT Bancorp Inc. 1993 Stock Option Plan (filed as Exhibit 99.1 to Registrant's Form S-8 Registration Statement, file number 333-71830, filed on October 18, 2001, and incorporated by reference herein).*
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5
|
|
10.6
|
10.7
|
|
10.8
|
|
10.9
|
|
10.10
|
|
10.11
|
|
10.12
|
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).*
|
10.13
|
|
10.14
|
|
10.15
|
|
10.16
|
|
10.17
|
|
10.18
|
|
10.21
|
|
A list of the subsidiaries of the Registrant.
|
|
Consent of KPMG LLP.
|
|
Certification by the Chief Executive Officer pursuant to Rules 13(a)-14(a)/15(d)-14(e) of the Securities and Exchange Act of 1934.
|
|
Certification by the Chief Financial Officer pursuant to Rules 13(a)-14(a)/15(d)-14(e) of the Securities and Exchange Act of 1934.
|
|
Certification by the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
*
|
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.
|
NBT BANCORP INC. (Registrant)
|
March 1, 2018
|
|
/s/ John H. Watt Jr.
|
John H. Watt Jr.
|
Chief Executive Officer
|
/s/ Martin A. Dietrich
|
|
Martin A. Dietrich
|
Chairman and Director
|
Date: March 1, 2018
|
/s/ John H. Watt Jr.
|
|
John H. Watt Jr.
|
NBT Bancorp Inc. President, Chief Executive Officer, and Director (Principal Executive Officer)
|
Date: March 1, 2018
|
/s/ Michael J. Chewens
|
|
Michael J. Chewens
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
Date: March 1, 2018
|
/s/ Patricia T. Civil
|
|
Patricia T. Civil, Director
|
Date: March 1, 2018
|
/s/ Timothy E. Delaney
|
|
Timothy E. Delaney, Director
|
Date: March 1, 2018
|
/s/ James H. Douglas
|
|
James H. Douglas, Director
|
Date: March 1, 2018
|
/s/ Andrew S. Kowalczyk III
|
Andrew S. Kowalczyk III, Director
|
Date: March 1, 2018
|
/s/ John C. Mitchell
|
|
John C. Mitchell, Director
|
Date: March 1, 2018
|
/s/ V. Daniel Robinson II
|
|
V. Daniel Robinson II, Director
|
Date: March 1, 2018
|
/s/ Matthew J. Salanger
|
|
Matthew J. Salanger, Director
|
Date: March 1, 2018
|
/s/ Joseph A. Santangelo
|
|
Joseph A. Santangelo, Director
|
Date: March 1, 2018
|
/s/ Lowell A. Seifter
|
|
Lowell A. Seifter, Director
|
Date: March 1, 2018
|
/s/ Robert A. Wadsworth
|
|
Robert A. Wadsworth, Director
|
Date: March 1, 2018
|
/s/ Jack H. Webb
|
|
Jack H. Webb, Director
|
Date: March 1, 2018
|
NBT BANCORP INC.
|
||
By: | ||
Name: John H. Watt, Jr.
|
||
Title: President & Chief Executive Officer
|
||
EXECUTIVE
|
||
Joseph R. Stagliano
|
|
|
|
Date
|
|
|
Joseph R. Stagliano
|
|
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
|
||
Sarah A. Halliday
|
|
|
|
Date
|
|
|
Sarah A. Halliday
|
|
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
|
||
Hathaway Agency, Inc.
|
New York
|
Hathaway Agency
|
||
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.
|
||
LA Lease, Inc.
|
Pennsylvania
|
LA Lease
|
||
Colonial Financial Services, Inc.
|
New York
|
Colonial Financial Services
|
||
NBT Services, Inc.
|
Delaware
|
NBT Services
|
||
Broad Street Property Associates, Inc.
|
New York
|
Broad Street Property Associates
|
||
Pennstar Bank Services Company
|
Delaware
|
Pennstar Bank Services
|
||
FNB Financial Services, Inc.
|
Delaware
|
FNB Financial Services
|
||
CNB Realty Trust
|
Maryland
|
CNB Realty Trust
|
||
Alliance Preferred Funding Corp.
|
Delaware
|
Alliance Preferred Funding
|
||
Alliance Leasing, Inc.
|
New York
|
Alliance Leasing
|
||
NBT Financial Services, Inc. Subsidiaries:
|
||||
Pennstar Financial Services, Inc.
|
Pennsylvania
|
Pennstar Financial Services
|
||
EPIC Advisors, Inc.
|
New York
|
EPIC Advisors
|
||
Columbia Ridge Capital Management, Inc. | New York | Columbia Ridge Capital Management | ||
NBT Holdings, Inc. Subsidiaries:
|
||||
NBT Insurance Agency, LLC
|
New York
|
NBT - Mang Insurance Agency
|
By:
|
/s/ John H. Watt Jr.
|
|
John H. Watt Jr.
|
||
Chief Executive Officer
|
By:
|
/s/ Michael J. Chewens
|
|
Michael J. Chewens
|
||
Senior Executive Vice President and
|
||
Chief Financial Officer
|
/s/ John H. Watt Jr.
|
||
John H. Watt Jr.
|
||
Chief Executive Officer
|
||
March 1, 2018
|
/s/ Michael J. Chewens
|
||
Michael J. Chewens
|
||
Senior Executive Vice President and
|
||
Chief Financial Officer
|
||
March 1, 2018
|
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Feb. 09, 2018 |
Jun. 30, 2017 |
|
Document And Entity Information [Abstract] | |||
Entity Registrant Name | NBT BANCORP INC | ||
Entity Central Index Key | 0000790359 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,569,184,151 | ||
Entity Common Stock, Shares Outstanding | 43,592,795 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2017 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Assets | ||
Securities held to maturity fair value | $ 481,871 | $ 525,050 |
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) | 6,108,684 | 6,393,743 |
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Other comprehensive (loss) income, net of tax: | |||
Unrealized net holding (losses) arising during the period , pre-tax amounts | $ (6,915) | $ (8,618) | $ (3,159) |
Reclassification adjustment for net (gains) losses related to securities available for sale included in net income, pre-tax amounts | (1,869) | 644 | (3,087) |
Reclassification adjustment for an impairment write-down of equity security, pre-tax amounts | 1,312 | 0 | 0 |
Unrealized gain on derivatives (cash flow hedges), pre-tax amounts | 609 | 2,901 | 0 |
Amortization of unrealized net gains and losses related to the reclassification of available for sale investment securities to held to maturity, pre-tax amounts | 875 | 1,094 | 1,311 |
Amortization of prior service cost and actuarial gains, pre-tax amounts | 1,852 | 2,370 | 2,239 |
Decrease (increase) in unrecognized actuarial loss, pre-tax amounts | $ 2,401 | $ 3,154 | $ (6,144) |
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 |
---|---|---|---|---|---|---|
Balance at Dec. 31, 2014 | $ 497 | $ 576,504 | $ 423,956 | $ (17,027) | $ (119,749) | $ 864,181 |
Net income | 0 | 0 | 76,425 | 0 | 0 | 76,425 |
Cash dividends | 0 | 0 | (38,149) | 0 | 0 | (38,149) |
Purchase of treasury shares | 0 | 0 | 0 | 0 | (26,797) | (26,797) |
Net issuance of shares to employee and other stock plans, including tax benefit for 2016 and 2015 | 0 | (3,864) | 0 | 0 | 11,513 | 7,649 |
Stock-based compensation | 0 | 4,086 | 0 | 0 | 0 | 4,086 |
Other comprehensive income (loss) | 0 | 0 | 0 | (5,391) | 0 | (5,391) |
Balance at Dec. 31, 2015 | 497 | 576,726 | 462,232 | (22,418) | (135,033) | 882,004 |
Net income | 0 | 0 | 78,409 | 0 | 0 | 78,409 |
Cash dividends | 0 | 0 | (38,880) | 0 | 0 | (38,880) |
Purchase of treasury shares | 0 | 0 | 0 | 0 | (17,193) | (17,193) |
Net issuance of shares to employee and other stock plans, including tax benefit for 2016 and 2015 | 0 | (6,026) | 0 | 0 | 9,726 | 3,700 |
Stock-based compensation | 0 | 4,378 | 0 | 0 | 0 | 4,378 |
Other comprehensive income (loss) | 0 | 0 | 0 | 898 | 0 | 898 |
Balance at Dec. 31, 2016 | 497 | 575,078 | 501,761 | (21,520) | (142,500) | 913,316 |
Net income | 0 | 0 | 82,151 | 0 | 0 | 82,151 |
Cash dividends | 0 | 0 | (40,104) | 0 | 0 | (40,104) |
Net issuance of shares to employee and other stock plans, including tax benefit for 2016 and 2015 | 0 | (4,608) | 0 | 0 | 4,335 | (273) |
Stock-based compensation | 0 | 3,739 | (95) | 0 | 0 | 3,644 |
Other comprehensive income (loss) | 0 | 0 | 0 | (557) | 0 | (557) |
Balance at Dec. 31, 2017 | $ 497 | $ 574,209 | $ 543,713 | $ (22,077) | $ (138,165) | $ 958,177 |
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Consolidated Statements of Changes in Stockholders' Equity [Abstract] | |||
Cash dividends - per share (in dollars per share) | $ 0.92 | $ 0.90 | $ 0.87 |
Purchase of treasury shares (in shares) | 0 | 675,535 | 1,047,152 |
Net issuance of shares to employee and other stock plans, including tax benefit for 2016 and 2015 (in shares) | 285,059 | 502,585 | 581,400 |
Summary of Significant Accounting Policies |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 | |||
Summary of Significant Accounting Policies [Abstract] | |||
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 Holdings, Inc. and NBT Financial Services, Inc., conform, in all material respects, with accounting principles generally accepted 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 of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Estimates associated with the allowance for loan losses, income taxes, pension expense, fair values of financial instruments, status of contingencies and other-than-temporary impairment ("OTTI") on investments 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. 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 solely in the geographical regions of central and upstate New York, northeastern Pennsylvania, western Massachusetts, southern New Hampshire, Vermont and southern coastal Maine. 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"), trading or available for sale ("AFS"). HTM debt securities are those that the Company has the ability and intent to hold until maturity. Trading securities are securities purchased with the intent to sell within a short period of time. AFS securities are securities that are not classified as a HTM or trading securities. 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 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. Trading 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. Declines in the fair value of HTM and AFS securities below their amortized cost, less any current period credit loss, that are deemed to be OTTI are reflected in earnings as a realized loss, or in other comprehensive income ("OCI"). The classification is dependent upon whether the Company intends to sell the security, or whether it is more likely than not it will be required to sell the security before recovery. The OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If the Company does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the OTTI shall be separated into (a) the amount representing the credit loss and (b) the amount related to all other factors. The amount of the total OTTI impairment related to the credit loss shall be recognized in earnings. The amount of the total OTTI related to other factors shall be recognized in OCI, net of applicable taxes. In estimating OTTI losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer and (iii) the historical and implied volatility of the fair value of the security. 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. 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. 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 interest in accordance with contractual terms is doubtful. Loans are transferred to nonaccrual status generally when principal or interest payments become 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 loan 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 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. Commercial type loans are considered impaired when it is probable that the borrower will not repay the loan according to the original contractual terms of the loan agreement and all loan types are considered impaired if the loan is restructured in a troubled debt restructuring (“TDR”). In determining that we will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreements, we consider factors such as payment history and changes in the financial condition of individual borrowers, local economic conditions, historical loss experience and the conditions of the various markets in which the collateral may be liquidated. A loan is considered to be a 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 include the reduction of interest rates, forgiveness of all or a portion of principal or interest, or other modifications at interest rates that are less than the current market rate for new obligations with similar risk. 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. When the Company modifies a loan, management evaluates any possible impairment based on the present value of the expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized. Acquired Loans Acquired loans are initially measured at fair value as of the acquisition date without carryover of historical allowance for loan losses. For loans that meet the criteria stipulated in ASC 310-30, Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality, the Company shall recognize the accretable yield, which is defined as the excess of all cash flows expected at acquisition over the initial fair value of the loan, as interest income on a level-yield basis over the expected remaining life of the loan. The excess of the loan's contractually required payments over the cash flows expected to be collected is the nonaccretable difference. The nonaccretable difference shall not be recognized as an adjustment of yield, a loss accrual or a valuation allowance. Decreases in the expected cash flows in subsequent periods require the establishment of an allowance for loan losses. Improvements in expected cash flows in future periods result in a reduction of the nonaccretable discount, with such amount reclassified as part of the accretable yield and subsequently recognized in interest income over the remaining lives of the acquired loans on a level-yield basis if the amount and timing of future cash flows is reasonably estimable. Acquired loans that met the criteria for nonaccrual of interest prior to the acquisition are considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if the Company can reasonably estimate the timing and amount of the expected cash flows on such loans and if the Company expects to fully collect the new carrying value of the loans. As such, the Company may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable yield. As such, charge-offs on acquired loans are first applied to the nonaccretable difference and then to any allowance for loan losses recognized subsequent to acquisition. For loans that meet the criteria stipulated in ASC 310-20 - Receivables - Nonrefundable Fees and Other Costs ("ASC 310-20"), the Company shall amortize/accrete into interest income the premium/discount determined at the date of purchase on a level-yield basis over the life of the loan. Subsequent to the acquisition date, the methods utilized to estimate the required allowance for loan losses are similar to originated loans. Loans accounted for under ASC 310-20 are placed on nonaccrual status when past due in accordance with the Company's nonaccrual policy. An acquired loan may be resolved either through receipt of payment (in full or in part) from the borrower, the sale of the loan to a third party, or foreclosure of the collateral. In the event of a sale of the loan, a gain or loss on sale is recognized and reported within noninterest income based on the difference between the sales proceeds and the carrying amount of the loan. In other cases, individual loans are removed from the pool based on comparing the amount received from its resolution (fair value of the underlying collateral less costs to sell in the case of a foreclosure) with its outstanding balance. Any difference between these amounts is recorded as a charge-off through the allowance for loan losses. Acquired loans subject to modification are not removed from the pool even if those loans would otherwise be deemed TDRs as the pool and not the individual loan, represents the unit of account. Allowance for Loan Losses The allowance for loan losses is the amount, which in the opinion of management, is necessary to absorb incurred losses inherent in the loan portfolio. The allowance is determined based upon numerous considerations, including local and regional conditions, the growth and composition of the loan portfolio with respect to the mix between the various types of loans and their related risk characteristics, a review of the value of collateral supporting the loans, comprehensive reviews of the loan portfolio by the independent loan review staff and management, as well as consideration of volume and trends of delinquencies, nonperforming loans and loan charge-offs. Loan losses are charged off against the allowance, while recoveries of amounts previously charged off are credited to the allowance. As a result of tests of adequacy, required additions to the allowance for loan losses are made periodically by charges to the provision for loan losses. The allowance for loan losses related to impaired loans specifically allocated for impairment is based on discounted expected cash flows using the loan’s initial effective interest rate or the fair value of the collateral for certain loans where repayment of the loan is expected to be provided solely by the underlying collateral ("collateral dependent"). The Company’s impaired loans are generally collateral dependent. The Company considers the estimated cost to sell, on a discounted basis, when determining the fair value of collateral in the measurement of impairment if those costs are expected to reduce the cash flows available to repay or otherwise satisfy the loans. The allowance for loan losses for homogeneous non impaired loans is calculated using a systematic methodology with both a quantitative and a qualitative analysis that is applied on a quarterly basis. For purposes of our allowance methodology, the loan portfolio is segmented as described in Note 5. Each segment has a distinct set of risk characteristics monitored by management. We further assess and monitor risk and performance at a more disaggregated level, which includes our internal risk grading system for the commercial segments. We first apply historical loss rates to pools of loans with similar risk characteristics. Loss rates are calculated by historical charge-offs that have occurred within each pool of loans over the lookback period ("LBP"), multiplied by the loss emergence period ("LEP"). The LBP represents the historical data period utilized to calculate loss rates. The LEP is an estimate of the average amount of time from the point at which a loss is incurred on a loan to the point at which the loss is confirmed. In general, the LEP will be shorter in an economic slowdown or recession and longer during times of economic stability or growth, as customers are better able to delay loss confirmation after a potential loss event has occurred. In conjunction with our annual review of the ALL assumptions, we update our study of LEPs for each portfolio segment using our loan charge-off history. After consideration of the historic loss analysis, management applies additional qualitative adjustments so that the allowance for loan losses is reflective of the estimate of incurred losses that exist in the loan portfolio at the balance sheet date. Qualitative adjustments are made if, in the judgment of management, incurred loan losses inherent in the loan portfolio are not fully captured in the historical loss analysis. Qualitative considerations include the loan portfolio trends, composition and nature of loans; changes in lending policies and procedures, including underwriting standards and collection, charge-offs and recoveries; trends experienced in nonperforming and delinquent loans; current economic conditions in the Company’s market; portfolio concentrations that may affect loss experience across one of more components of the portfolio; the effect of external factors such as competition, legal and regulatory requirements; and the experience, ability and depth of lending management and staff. The evaluation of the various components of the allowance for loan losses requires considerable judgment in order to estimate inherent loss exposures. In addition, various regulatory agencies, as an integral component of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to make loan grade changes as well as recognize additions to the allowance based on their examinations. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize loan losses, future additions to the allowance for loan losses may be necessary based on changes in economic conditions or changes in the values of properties securing loans in the process of foreclosure. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination, which may not be currently available to management. 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. 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 not 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 maintains a noncontributory, defined benefit pension plan covering substantially all employees, as well as supplemental employee retirement plans covering certain 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 We maintain various long-term incentive stock benefit plans under which we grant stock options and restricted stock units to certain directors and key employees. We recognize compensation expense in our consolidated statements of income over the requisite service period, based on the grant-date fair value of the award. For restricted stock awards and units, we recognize compensation expense ratably over the vesting period for the fair value of the award, measured at the grant date. The fair values of options are estimated using the Black-Scholes option pricing model. 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). Comprehensive Income At the Company, comprehensive income represents net income plus OCI, which consists primarily of the net change in unrealized gains (losses) on AFS 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 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. Any hedge ineffectiveness would be recognized in the income statement line item pertaining to the hedged item. For derivatives designated as cash flow hedges, changes in fair value of the effective portion 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 a portion of a commercial loan that has an existing interest rate swap, it enters a risk participation agreement with the counterparty and assumes the credit risk of the loan customer related to the swap. 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 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 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; 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 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. 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 other financial instruments with off-balance-sheet risk such as commitments to extend credit, unused lines of credit as well as certain mortgage 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 credit risk involved in issuing letters of credit is essentially the same as that 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 stand-by letters of credit is recorded upon inception. Loan Sales and Loan Servicing Loan sales are recorded when the sales are funded. Mortgage servicing rights are recorded at fair value upon sale of the loan. Loans held for sale are recorded at the lower of cost or market. 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 dealer or bank with whom each transaction is executed. The dealers or banks, 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. 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. Trust income is recognized on the accrual method based on contractual rates applied to the balances of trust accounts. Reclassifications Amounts in prior period consolidated financial statements are reclassified whenever necessary to confirm with current period presentation. Subsequent Events The Company has evaluated subsequent events for potential recognition and/or disclosure and there were none identified. |
Acquisitions |
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Dec. 31, 2017 | |||
Acquisitions [Abstract] | |||
Acquisitions |
In 2017, the Company acquired Downeast Pension Services, Inc. for total consideration of $5.7 million. As part of the acquisition, the Company recorded goodwill of $2.6 million and $1.7 million contingent consideration recorded in other liabilities on the consolidated balance sheet as of December 31, 2017. In 2016, the Company acquired Actuarial Designs & Solutions, Inc. for total consideration of $3.0 million and Columbia Ridge Capital Management, Inc., for total consideration of $1.3 million. As part of the acquisitions, the Company recorded goodwill of $1.3 million and $0.8 million, respectively. In 2015 , the Company acquired Third Party Administrators, Inc., a retirement plan administration company for total consideration of $4.1 million. As part of the acquisition, the Company recorded goodwill of $2.3 million. The operating results of acquired companies are included in the consolidated results after the dates of acquisition. |
Securities |
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Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities |
The amortized cost, estimated fair value and unrealized gains (losses) of AFS securities are as follows:
The components of net realized gains (losses) on the sale of AFS securities are as follows. These amounts were reclassified out of AOCI and into earnings:
Included in net gains (losses) from sales transactions, the Company also recorded gains from calls on AFS securities of approximately $0.1 million for each of the years ended December 31, 2017, 2016 and 2015. In the year ended December 31, 2017, the Company recognized a loss of $2 thousand on HTM securities sales transactions. There were no sales of HTM securities in the year ended December 31, 2016. At December 31, 2017 and 2016, AFS and HTM securities with amortized costs totaling $1.5 billion were pledged to secure public deposits and for other purposes required or permitted by law. Additionally, at December 31, 2017 and 2016, AFS and HTM securities with an amortized cost of $231.3 million and $235.6 million, respectively, were pledged as collateral for securities sold under the repurchase agreements. The amortized cost, estimated fair value and unrealized gains (losses) of HTM securities are as follows:
At December 31, 2017 and 2016, all of the mortgaged-backed HTM securities were comprised of U.S. government agency securities. The following table sets forth information with regard to investment securities with unrealized losses segregated according to the length of time the securities had been in a continuous unrealized loss position:
Declines in the fair value of HTM and AFS securities below their amortized cost, less any current period credit loss, that are deemed to be OTTI are reflected in earnings as a realized loss, or in OCI. The classification is dependent upon whether the Company intends to sell the security, or whether it is more likely than not it will be required to sell the security before recovery. The OTTI shall be recognized in earnings equal to the entire difference between the investment's amortized cost basis and its fair value at the balance sheet date. If the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the OTTI shall be separated into (a) the amount representing the credit loss and (b) the amount related to all other factors. The amount of the total OTTI related to the credit loss shall be recognized in earnings. The amount of the total OTTI related to other factors shall be recognized in OCI net of applicable taxes. In estimating OTTI losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer and (iii) the historical and implied volatility of the fair value of the security. Management has the ability and intent to hold the securities classified as HTM until they mature, at which time it is believed the Company will receive full value for the securities. The unrealized losses on HTM debt securities are due to increases in market interest rates over yields at the time the underlying securities were purchased. When necessary, the Company has performed a discounted cash flow analysis to determine whether or not it will receive the contractual principal and interest on certain securities. The fair value is expected to recover as the bonds approach their maturity date or if market yields for such investments decline. Management also has the intent to hold, and will not be required to sell, the securities classified as AFS for a period of time sufficient for a recovery of cost, which may be until maturity. The unrealized losses on AFS debt securities are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. When necessary, the Company has performed a discounted cash flow analysis to determine whether or not it will receive the contractual principal and interest on certain securities. For AFS debt and equity securities, OTTI losses are recognized in earnings if the Company intends to sell the security. In other cases the Company considers the relevant factors noted above, as well as the Company's intent and ability to retain its investment for a period of time sufficient to allow for any anticipated recovery in market value and whether evidence exists to support a realizable value equal to or greater than the cost basis. Any impairment loss on an equity security is equal to the full difference between the cost basis and the fair value of the security. As of December 31, 2017 and 2016, management believes the impairments detailed in the table above are temporary. For the year ended December 31, 2017, $1.3 million of an OTTI loss on an AFS equity investment was realized in the Company’s consolidated statements of income. There were no OTTI losses realized in the Company’s consolidated statements of income for years ended December 31, 2016 and 2015. During the year ended December 31, 2017, the Company sold HTM securities with an amortized cost of $0.8 million and an unrealized loss of $2 thousand. Due to significant deterioration in the creditworthiness of the issuers of the HTM securities sold, the Company changed its intent to hold the HTM securities that were 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 year ended December 31, 2016. The following tables set forth information with regard to contractual maturities of debt securities at December 31, 2017:
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, there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders’ equity at December 31, 2017 and 2016. |
Loans |
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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 costs totaling $42.6 million and $40.3 million at December 31, 2017 and 2016, respectively. The Company had $0.7 million residential loans held for sale as of December 31, 2017. The Company had $0.6 million of residential loans held for sale as of December 31, 2016. The total amount of loans serviced by the Company for unrelated third parties was $586.7 million and $604.0 million at December 31, 2017 and 2016, respectively. At December 31, 2017 and 2016, the Company had $0.6 million and $0.9 million, respectively, of mortgage servicing rights. At December 31, 2017 and 2016, the Company serviced $29.1 million and $28.5 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, 2017 and 2016. 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:
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Allowance for Loan Losses and Credit Quality of Loans |
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Allowance for Loan Losses and Credit Quality of Loans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Loan Losses and Credit Quality of Loans |
Allowance for Loan Losses The allowance for loan losses is maintained at a level estimated by management to provide adequately for probable incurred losses inherent in the current loan portfolio. The appropriateness of the allowance for loan losses is continuously monitored. It is assessed for appropriateness using a methodology designed to ensure the level of the allowance reasonably reflects the loan portfolio’s risk profile. It is evaluated to ensure that it is sufficient to absorb all reasonably estimable credit losses inherent in the current loan portfolio. To develop and document a systematic methodology for determining the allowance for loan losses, the Company has divided the loan portfolio into three segments, each with different risk characteristics and methodologies for assessing risk. Those segments are further segregated between our loans accounted for under the amortized cost method (referred to as “originated” loans) and loans acquired in a business combination (referred to as “acquired” loans). Each portfolio segment is broken down into class segments where appropriate. Class segments contain unique measurement attributes, risk characteristics and methods for monitoring and assessing risk that are necessary to develop the allowance for loan losses. Unique characteristics such as borrower type, loan type, collateral type and risk characteristics define each class segment. 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 including commercial (non-real estate), commercial real estate, agricultural, agricultural real estate and business banking loans. 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 – The Company offers a variety of loan options to meet the specific needs of our commercial customers including term loans, time notes and lines of credit. Such loans are made available to businesses for working capital needs such as inventory and receivables, business expansion and equipment purchases. Generally, a collateral lien is placed on equipment or other assets owned by the borrower. These loans typically carry a higher risk than commercial real estate loans due to the nature of the underlying collateral, which can be business assets such as equipment and accounts receivable, which are generally less liquid than real estate. To reduce the risk, management also attempts to secure real estate as collateral and obtain personal guarantees of the borrowers. Commercial Real Estate – The Company offers commercial real estate loans to finance real estate purchases, refinancings, expansions and improvements to commercial properties. Commercial real estate loans are made to finance the purchases of real property, which generally consist of real estate with completed structures. These commercial real estate loans are secured by liens on the real estate, which may include both owner occupied and non-owner-occupied properties, such as apartments, commercial structures, housing businesses, health care facilities and other facilities. These loans are typically less risky than commercial loans, since they are secured by real estate and buildings. 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. Agricultural – The Company offers a variety of agricultural loans to meet the needs of our agricultural customers including term loans, time notes and lines of credit. These loans are made to purchase livestock, purchase and modernize equipment and finance seasonal crop expenses. Generally, a collateral lien is placed on the livestock, equipment, produce inventories and/or receivables owned by the borrower. These loans may carry a higher risk than commercial and agricultural real estate loans due to the industry price volatility and in some cases, the perishable nature of the underlying collateral. To reduce these risks, management may attempt to secure these loans with additional real estate collateral, obtain personal guarantees of the borrowers or obtain government loan guarantees to provide further support. Agricultural Real Estate – The Company offers real estate loans to our agricultural customers to finance farm related real estate purchases, refinancings, expansions and improvements to agricultural properties. Agricultural real estate loans are made to finance the purchase and improvements of farm properties that generally consist of barns, production facilities and land. The agricultural real estate loans are secured by liens on the farm real estate. Because they are secured by land and buildings, these loans may be less risky than agricultural loans. 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 75% of the appraised value of the property. Government loan guarantees may be obtained to provide further support. Business Banking – The Company offers a variety of loan options to meet the specific needs of our business banking customers including term loans, business banking mortgages and lines of credit. Such loans are generally less than $750 thousand and are made available to businesses for working capital such as inventory and receivables, business expansion, equipment purchases and agricultural needs. Generally, a collateral lien is placed on equipment or other assets owned by the borrower such as inventory and/or receivables. These loans carry a higher risk than commercial loans due to the smaller size of the borrower and lower levels of capital. To reduce these risks, the Company obtains personal guarantees of the owners for a majority of the loans. Consumer Loans The Company offers a variety of consumer loan products including indirect, home equity and direct loans. Indirect – 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 and recreational vehicles (such as campers, boats, etc.) indirectly through dealer relationships. Approximately 70% of the indirect relationships represent automobile financing. Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from three to six years, based upon the nature of the collateral and the size of the loan. The majority of indirect consumer loans are underwritten on a secured basis using the underlying collateral being financed. As of December 31, 2017 and 2016, respectively, the consumer loan portfolio includes $403.6 million and $374.9 million of unsecured consumer loans across a national footprint originated through our relationship with national technology-driven consumer lending companies. Advances of credit through this specialty lending business line are to prime borrowers and are subject to the Company’s underwriting standards. Home Equity – The Company offers fixed home equity loans as well as home equity lines of credit to consumers to finance home improvements, debt consolidation, education and other uses. Consumers are able to borrow up to 85% of the equity in their homes. The Company originates home equity lines of credit and second mortgage loans (loans secured by a second lien position on one-to-four-family residential real estate). These loans carry a higher risk than first mortgage residential loans as they are in a second position with respect to collateral. 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. Direct – The Company offers a variety of consumer installment loans to finance vehicle purchases, mobile home purchases and personal expenditures. Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from one to ten years, based upon the nature of the collateral and the size of the loan. The majority of consumer loans are underwritten on a secured basis using the underlying collateral being financed or a customer’s deposit account. In addition to installment loans, the Company also offers personal lines of credit and overdraft protection. A minimal amount of loans are unsecured, which carry a higher risk of loss. Residential Real Estate Mortgages Residential real estate loans consist primarily of loans secured by first or second deeds of trust on primary residences. We originate adjustable-rate and fixed-rate, one-to-four-family residential real estate loans for the construction, purchase or refinancing of a mortgage. These loans are collateralized by owner-occupied properties located in the Company’s market area. When market conditions are favorable, for longer term, fixed-rate residential mortgages without escrow, the Company retains the servicing, but sells the right to receive principal and interest to Freddie Mac. This practice allows the Company to manage interest rate, liquidity risk and credit risk. Loans on one-to-four-family residential real estate 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. Allowance for Loan Loss Calculation For purposes of evaluating the adequacy of the allowance, the Company considers a number of significant factors that affect the collectability of the portfolio. For individually impaired loans, these include estimates of impairment, if any, which reflect the facts and circumstances that affect the likelihood of repayment of such loans as of the evaluation date. For homogeneous pools of loans, estimates of the Company’s exposure to credit loss reflect a current assessment of a number of factors, which could affect collectability. These factors include: past loss experience, size, trend, composition and nature of loans; changes in lending policies and procedures, including underwriting standards and collection, charge-offs and recoveries; trends experienced in nonperforming and delinquent loans; current economic conditions in the Company’s market; portfolio concentrations that may affect loss experienced across one or more components of the portfolio; the effect of external factors such as competition, legal and regulatory requirements; and the experience, ability and depth of lending management and staff. After a thorough consideration of the factors discussed above, any required additions or reductions to the allowance for loan losses are made periodically by charges or credits to the provision for loan losses. These charges are necessary to maintain the allowance at a level that management believes is reflective of overall level of incurred loss in the portfolio. While management uses available information to recognize losses on loans, additions and reductions of the allowance may fluctuate from one reporting period to another. These fluctuations are reflective of changes in risk associated with portfolio content and/or changes in management’s assessment of any or all of the determining factors discussed above. The following table illustrates the changes in the allowance for loan losses by portfolio segment:
For acquired loans, to the extent that we experience deterioration in borrower credit quality resulting in a decrease in our expected cash flows subsequent to acquisition of the loans, an allowance for loan losses would be established based on our estimate of future credit losses over the remaining life of the loans. There was no allowance for loan losses for the acquired loan portfolio as of December 31, 2017 and $0.7 million as of December 31, 2016. Net charge-offs related to acquired loans totaled approximately $0.7 million, $0.5 million and $2.7 million during the years ended December 31, 2017, 2016 and 2015, respectively, and are included in the table above. The following table illustrates the allowance for loan losses and the recorded investment by portfolio segment:
The following table sets forth information with regard to past due and nonperforming loans by loan class:
There were no material commitments to extend further credit to borrowers with nonperforming loans as of December 31, 2017 and 2016. Classified loans, including all TDRs and nonaccrual commercial loans that are graded Substandard or below, with outstanding balances of $750 thousand or more are evaluated for impairment through the Company’s quarterly status review process. The Company considers commercial loans less than $750 thousand to be homogeneous loans. In determining that we will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreements, we consider factors such as payment history and changes in the financial condition of individual borrowers, local economic conditions, historical loss experience and the conditions of the various markets in which the collateral may be liquidated. For loans that are identified as impaired, impairment is measured by one of three methods: 1) the fair value of collateral less cost to sell, 2) present value of expected future cash flows or 3) the loan’s observable market price. These impaired loans are reviewed on a quarterly basis for changes in the measurement of impairment. Any change to the previously recognized amount of impairment loss is recognized as a component of the provision for loan losses. The following provides additional information on impaired loans specifically evaluated for impairment:
The following table summarizes the average recorded investments on loans specifically evaluated for impairment and the interest income recognized:
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, enabling recognition and response to problem loans and potential problem loans. Commercial Grading System For commercial and agricultural loans, the Company uses a grading system that relies on quantifiable and measurable characteristics when available. This would include 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. Classified loans are graded Doubtful, Substandard, Special Mention and Pass.
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 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 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, 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.
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. Business Banking Grading System Business Banking loans are graded as either Classified or Non-classified:
Classified loans are inadequately protected by the current worth and paying capacity of the obligor or, if applicable, the collateral pledged. These loans have a well-defined weakness or weaknesses, that jeopardize the liquidation of the debt or in some cases make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Classified loans have a high probability of payment default or a high probability of total or substantial loss. These loans require more intensive supervision by management and 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. When the likelihood of full collection of interest and principal may be in doubt, Classified loans are considered to have a nonaccrual status. In some cases, Classified loans are considered uncollectible and of such little value that their continuance as assets is not warranted.
Loans graded as Non-classified encompass all loans not graded as Classified. Non-classified loans are in compliance with loan covenants and payments are generally made as agreed. Consumer and Residential Mortgage Grading System Consumer and Residential Mortgage loans are graded as either Nonperforming or Performing.
Nonperforming loans are loans that are 1) over 90 days past due and interest is still accruing or 2) on nonaccrual status.
All loans not meeting any of these three criteria are considered Performing. The following tables illustrate the Company’s credit quality by loan class:
Troubled Debt Restructuring When the Company modifies a loan in a troubled debt restructuring, such modifications 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 home equity TDRs occurring during 2017 and 2016 were due to the reduction in the interest rate or extension of the term. Commercial and business banking TDRs during 2017 and 2016 were both a reduction of the interest rate and change in terms. When the Company modifies a loan in a troubled debt restructuring, management measures for impairment, if any, based on the present value of the expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sold (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, 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 an impairment charge would be recorded. The following tables illustrate the recorded investment and number of modifications for modified loans, 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 period:
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Premises and Equipment, Net |
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Premises and Equipment, Net |
A summary of premises and equipment follows:
Buildings and improvements are depreciated based on useful lives of 15 to 40 years. Equipment is depreciated based on useful lives of three to ten years. Rental expense included in occupancy expense amounted to $8.5 million in 2017, $7.8 million in December 31, 2016 and $7.9 million in December 31, 2015. The future minimum rental payments related to non-cancelable operating leases with original terms of one year or more are as follows:
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Goodwill and Other Intangible Assets |
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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 one to twenty years. There was no impairment of goodwill recorded during the year ended December 31, 2017. During the year ended December 31, 2016, as a result of the disposition of a line of business in the Company's insurance agency subsidiary, the Company performed a goodwill impairment test that resulted in an impairment charge of $2.6 million. A summary of core deposit and other intangible assets follows:
Amortization expense on intangible assets with definite useful lives totaled $4.0 million for 2017, $3.9 million for 2016 and $4.9 million for 2015. Amortization expense on intangible assets with definite useful lives is expected to total $3.3 million for 2018, $2.7 million for 2019, $2.2 million for 2020, $1.6 million for 2021, $1.1 million for 2022 and $2.5 million thereafter. Other identified intangible assets include customer lists and non-competes. During the year ended December 31, 2017, the Company disposed of an intangible asset that resulted in an impairment charge of $1.5 million. There was no impairment of intangible assets recorded during the year ended December 31, 2016. |
Deposits |
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Deposits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Deposits |
The following table sets forth the maturity distribution of time deposits:
Time deposits of $250,000 or more aggregated $92.8 million and $84.3 million December 31, 2017 and 2016, respectively. |
Short-Term Borrowings |
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Short-Term Borrowings [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 $719.1 million and $681.7 million at December 31, 2017 and 2016, 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 of approximately $2.0 billion and $1.9 billion at December 31, 2017 and 2016, 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 as of December 31,:
See Note 3 for additional information regarding securities pledged as collateral for securities sold under the repurchase agreements. |
Long-Term Debt |
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Long-Term Debt [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, certain of its mortgage-backed securities and a blanket lien on its residential real estate mortgage loans. A summary is as follows:
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Junior Subordinated Debt |
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Junior Subordinated Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2017. 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, 2017. 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, 2017, 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 |
The significant components of income tax expense attributable to operations are as follows:
On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes significant changes to the U.S. corporate income tax system including: a federal corporate rate reduction from 35% to 21%. The Tax Act also establishes new tax laws that will affect years subsequent to 2017. ASC 740, Income Taxes, requires a company to record the effects of a tax law change in the period of enactment, however shortly after the enactment of the Tax Act, the SEC staff issued Staff Accounting Bulletin 118 ("SAB 118"), which allows a company to record a provisional amount when it does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change in the tax law. The measurement period ends when the company has obtained, prepared and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year. In connection with our initial analysis of the impact of the Tax Act, the Company recorded a $4.4 million adjustment in the year ended December 31, 2017 for remeasurement of deferred tax assets and liabilities for the corporate rate reduction. A certain amount of this adjustment is provisional, related to consideration of depreciation, compensation matters and different interpretations by various regulatory authorities. In the first quarter of 2017, the Company adopted the provision of Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, requiring that all excess tax benefits and tax deficiencies associated with equity-based compensation be recognized as an income tax benefit or expense in the income statement. Previously, tax effects resulting from changes in the Company's share price subsequent to the grant date were recorded through stockholders' equity at the time of vesting or exercise. The adoption of ASU 2016-09 resulted in income tax benefits of $1.8 million in the year ended December 31, 2017. 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 or the existence of sufficient taxable income within the available carryback period. A valuation allowance is provided 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, 2017 and 2016. The following is a reconciliation of the provision for income taxes to the amount computed by applying the applicable Federal statutory rate of 35% to income before taxes:
A reconciliation of the beginning and ending balance of Federal and State gross unrecognized tax benefits ("UTBs") is as follows:
At December 31, 2015 the Company had no UTBs. We recognize interest and penalties on the income tax expense line in the accompanying consolidated statements of income. We monitor changes in tax statutes and regulations to determine if significant changes will occur over the next 12 months. As of December 31, 2017, no significant changes to UTBs are projected; however, tax audit examinations are possible. The Company recognized an insignificant amount of interest expense related to UTBs in the consolidated statement of income for the year ended December 31, 2017. During the year ended December 31, 2017, the Company settled the tax audit by the state of New York for tax years, 2011, 2012 and 2013 without any material audit assessments. The Company is no longer subject to U.S. Federal tax examination by tax authorities for years prior to 2014 and New York State for years prior to 2013. The 2013 tax year related to New York examinations, while previously audited by the state, remains open by statute. |
Employee Benefit Plans |
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Defined Benefit Post-retirement Plans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Post-retirement 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, 2017. Benefits paid from the plan are based on age, years of service, compensation, 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 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 certain former executives in the Alliance acquisition. The supplemental employee retirement plans and the defined benefit pension 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 NBT Bank 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 $91.0 million and $90.5 million at December 31, 2017 and 2016, respectively. The accumulated benefit obligation for other post-retirement benefits was $8.1 million and $7.5 million at December 31, 2017 and 2016, 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, 2017 and 2016.
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 Company expects that $1.2 million in net actuarial loss and nominal prior service costs will be recognized as components of net periodic benefit cost in 2018. The following table sets forth estimated future benefit payments for the pension plans and other post-retirement benefit plans as of December 31, 2017:
The Company made no voluntary contributions to the pension and other benefit plans during the year ended December 31, 2017. The Company made voluntary contributions to the pension plan totaling $5.6 million and no contributions to other benefit plans during the year ended December 31, 2016. For measurement purposes, the annual rates of increase in the per capita cost of covered medical and prescription drug benefits for fiscal year 2017 were assumed to be 6.3 % to 10.5 % percent. The rates were assumed to decrease gradually to 3.9 % 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. A one-percentage point change in the health care trend rates would have the following effects as of and for the year ended December 31, 2017:
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, 2017 and 2016 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, 2017 and 2016. Determination of Assumed Rate of Return The expected long-term rate-of-return on assets was 7.0% at December 31, 2017 and 2016. 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 $2.8 million in 2017, $2.7 million in 2016 and $2.5 million in 2015. Other Retirement Benefits Included in other liabilities is $2.4 million and $2.6 million at December 31, 2017 and 2016, respectively, for supplemental retirement benefits for retired executives from legacy plans assumed in acquisitions. The Company recognized $0.1, $0.2 and $0.3 million in expense for the years ended December 31, 2017, 2016 and 2015, respectively, related to these plans. |
Stock-Based Compensation |
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Stock-Based Compensation |
In April 2008, the Company adopted the NBT Bancorp Inc. 2008 Omnibus Incentive Plan (the “Stock Plan”). Under the terms of the Stock Plan, options and other 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. 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. Options granted have a vesting period of four years and terminate ten years from the date of the grant. Shares issued as a result of stock option exercises and vesting of restricted shares and stock unit awards are funded from the Company’s treasury stock. Restricted shares granted under the Plan vest after 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. The following table summarizes information concerning stock options outstanding:
Total stock-based compensation expense for stock option awards totaled $0.1 million, $0.2 million and $0.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. Cash proceeds, tax benefits and intrinsic value related to total stock options exercised is as follows:
The Company has outstanding restricted stock granted from various plans at December 31, 2017. The Company recognized $3.5 million, $4.2 million and $3.9 million in stock-based compensation expense related to these stock awards for the years ended December 31, 2017, 2016 and 2015, respectively. Tax benefits recognized with respect to restricted stock awards and stock units were $2.5 million, $2.9 million and $1.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. Unrecognized compensation cost related to restricted stock awards and stock units totaled $4.8 million at December 31, 2017 and will be recognized over 2.1 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, 2017:
The Company has 2,813,597 securities remaining available to be granted as part of the Plan at December 31, 2017. |
Stockholders' Equity |
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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 Comptroller of the Currency (the "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, 2017, approximately $107.5 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 being in 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 did not purchase any shares of its common stock during the year ended December 31, 2017. There are 1,000,000 shares available for repurchase under this plan, which expires on December 31, 2019. |
Regulatory Capital Requirements |
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Regulatory Capital Requirements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. As of December 31, 2017 and 2016, 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, 2017 and 2016, 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. Beginning in 2016, in addition to maintaining minimum capital ratios, the Company began to be subject to a capital conservation buffer ("Buffer") above the minimum to avoid restriction on capital distributions and discretionary bonus paychecks to officers. At December 31, 2017 and 2016 the Buffer was 1.25% and 0.625%, respectively. The Buffer regulatory minimum ratio is in the process of being phased in over four years, which started in 2016 with the minimum requirement of 0.625%, and is fully phased in for fiscal year 2019 with a requirement of 2.5%. 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 |
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, 2017, 2016 and 2015, respectively, 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. |
Reclassification Adjustments Out of Other Comprehensive Income (Loss) |
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Reclassification Adjustments Out of Other Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification Adjustments Out of Other Comprehensive Income |
The following table summarizes the reclassification adjustments out of AOCI:
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Commitments and Contingent Liabilities |
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Commitments and Contingent Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2017, 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 and Vermont. 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 stand-by letters of credit to third parties. These stand-by letters of credit are frequently issued in support of third party debt, such as corporate debt issuances, industrial revenue bonds and municipal securities. The risk involved in issuing stand-by 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 terms of 5 years or less and expire unused; therefore, the total amounts do not necessarily represent future cash requirements. The fair value of the Company’s stand-by letters of credit at December 31, 2017 and 2016 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 20, 2017 was $59.0 million. |
Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. The Company’s derivative financial instruments are used 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 principally related to certain fixed rate borrowings. The Company also 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 statement of income. The Company has seven risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are a participant. The risk participation agreement provides credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution. Derivatives Designated as Hedging Instruments The Company has 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. The following table depicts the fair value adjustment recorded related to the notional amount of derivatives outstanding as well as the notional amount of risk participation agreements:
The following table indicates the gain or loss recognized in income on derivatives for the years ended December 31:
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Fair Values of Financial Instruments |
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Fair Values of Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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; 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 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, amount other things. Management reviews the methodologies used in pricing the securities by its third party providers. 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. For the years ended December 31, 2017 and 2016, the Company has made no transfers of assets between the levels of the fair value hierarchy. The following table sets 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, OREO, collateral-dependent impaired loans, mortgage servicing rights and HTM securities. The only non-recurring fair value measurements recorded during the years ended December 31, 2017 and 2016 were related to impaired loans, write-downs of OREO and impairments of goodwill and intangible assets. The Company uses the fair value of underlying collateral, less costs to sell, to estimate the specific reserves for collateral dependent impaired loans. The appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses ranging from 10% to 35%. Based on the valuation techniques used, the fair value measurements for collateral dependent impaired loans are classified as Level 3. As of December 31, 2017 and 2016, the Company had collateral dependent impaired loans with a carrying value of $0.1 million and $7.0 million, which had specific reserves included in the allowance for loan losses of $0.1 million and $1.5 million, respectively. 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, trading securities, accrued interest receivable, non-maturity deposits, short-term borrowings, accrued interest payable and interest rate swaps.
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 trust and investment management operation that contributes net fee income annually. The trust and investment 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. Fair values for securities are based on quoted market prices or dealer quotes, where available. Where quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. When necessary, the Company utilizes matrix pricing from a third party pricing vendor to determine fair value pricing. Matrix prices are based on quoted prices for securities with similar coupons, ratings and maturities, rather than on specific bids and offers for the designated security. GAAP gives entities the option to measure eligible financial assets, financial liabilities and Company commitments at fair value (i.e., the fair value option), on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. The election to use the fair value option is available when an entity first recognizes a financial asset or financial liability or upon entering into a Company commitment. Subsequent changes in fair value must be recorded in earnings. As of December 31, 2017 and 2016, the Company did not elect the fair value option for any eligible items. HTM Securities The fair value of the Company’s investment 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 The fair value of the Company’s loans was estimated by discounting the expected future cash flows using the current interest rates at which similar loans would be made for the same remaining maturities. 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. 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. Junior Subordinated Debt The fair value of trust preferred debentures has been estimated using a discounted cash flow analysis. Interest Rate Swaps 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 statement of income. The Company has 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. |
Parent Company Financial Information |
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Parent Company Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parent Company Financial Information |
Condensed Balance Sheets
Condensed Statements of Income
Condensed Statements of Cash Flow
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. |
Recent Accounting Pronouncements |
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Dec. 31, 2017 | |||
Recent Accounting Pronouncements [Abstract] | |||
Recent Accounting Pronouncements |
Recently Adopted Accounting Standards Effective December 31, 2017, the Company adopted the provisions of SAB 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which was issued by the SEC in December 2017. SAB 118 provides guidance on the timing of recognition for the effects of the Tax Act. Under SAB 118, companies are provided a measurement period of up to one year from the enactment of the Tax Act to evaluate and record its effects. Companies are required to record provisional amounts when sufficient information to make a reasonable estimate is available and are expected to make final adjustments when the required information is available. SAB 118 contains several disclosure requirements regarding a company’s assessment and recording the effects of the Tax Act, including the amounts recorded and the status of estimating potential additional effects. SAB 118 was effective immediately upon issuance. The disclosures required by SAB 118 were included in Note 12 of the consolidated financial statements. Effective July 1, 2017, the Company early adopted the provision of FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 amends and simplifies the subsequent measurement of goodwill; the amendments eliminate Step 2 from the goodwill impairment test. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the qualitative impairment test is necessary. The amendments were applied on a prospective basis and the adoption did not have a significant impact on the consolidated financial statements. Effective January 1, 2017, the Company adopted the provision of FASB ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 requires several revisions to equity compensation accounting. Under the new guidance all excess tax benefits and deficiencies that occur when an award vests, is exercised or expires are recognized in income tax expense as discrete period items. Previously, these transactions were typically recorded directly within equity. Consistent with this change, excess tax benefits and deficiencies are no longer included within estimated proceeds when performing the treasury stock method for calculating diluted earnings per share. Excess tax benefits are also recognized at the time an award is exercised or vests compared to the previous requirements to delay recognition until the deduction reduces taxes payable. The presentation of excess tax benefits in the statement of cash flows shifted to an operating activity from the prior classification as a financing activity. ASU 2016-09 also provides an accounting policy election to recognize forfeitures of awards as they occur when estimating stock-based compensation expense rather than the previous requirement to estimate forfeitures from inception. Further, ASU 2016-09 permits employers to use a net settlement feature to withhold taxes on equity compensation awards up to the maximum statutory tax rate without affecting the equity classification of the award. Transition to the new guidance was accomplished through a combination of cumulative-effect adjustment to equity (forfeitures) and prospective methodologies (cash flows, tax windfalls and shortfalls). The adoption of ASU 2016-09 resulted in income tax benefits of $1.8 million in the year ended December 31, 2017 and the effect on earnings per share calculations and election to account for forfeitures as incurred have not been significant. Accounting Standards Issued Not Yet Adopted In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of -Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 requires a reclassification from AOCI to retained earnings for stranded tax effects resulting from the newly enacted federal corporate income tax rate in the Tax Act. The Tax Act included a reduction to the Federal corporate income tax rate from 35% to 21% effective January 1, 2018. The amount of the reclassification from AOCI to retained earnings would be the difference between the historical corporate income tax rate and the newly enacted rate and will be accounted for as a cumulative-effect adjustment to the balance sheet. ASU 2018-02 is effective for the Company on January 1, 2019. Early adoption is permitted. Management is evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures and does not expect the impact to be material. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 better aligns the accounting and reporting of hedging relationships with the economics of risk management activities. The standard requires the modified retrospective transition approach as of the date of adoption. ASU 2017-12 is effective for the Company on January 1, 2019. Early adoption is permitted. Management is evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures and does not expect the impact to be material. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718). ASU 2017-09 provides guidance about which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting. ASU 2017-09 is effective for the Company on January 1, 2018. Management has evaluated the effect that this guidance will have and concluded that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. In March 2017, the FASB issued ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20). ASU 2017-08 requires amortization of premiums to the earliest call date on debt securities with call features that are explicit, on contingent and callable at fixed prices on present dates. The ASU does not impact securities held at a discount; the discount continues to be amortized to the contractual maturity. The guidance is required to be applied with a modified retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. ASU 2017-08 is effective for the Company on January 1, 2019. Early adoption is permitted. Management is evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures and does not expect the impact to be material. In March 2017, the FASB issued ASU No. 2017-07, Compensation – Retirement Benefits (Topic 715). ASU 2017-07 requires the service cost component of net periodic pension and post-retirement benefit cost to be reported separately in the consolidated statements of income from the other components. Additionally, the amendments in the ASU require presentation of the service cost component in the consolidated statements of income in the same line item as other employee compensation costs and presentation of the other components in a different line item from the service cost component. The amendments in this ASU are required to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic post-retirement benefit cost in the income statement and prospectively, on or after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic post-retirement benefit in assets with a practical expedient allowed for prior comparative period presentation permitted. ASU 2017-07 is effective for the Company on January 1, 2018. Management has evaluated the effect that this guidance will have and concluded that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. In February 2017, the FASB issued ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20). ASU 2017-05 will clarify the scope of Subtopic 610-20 and add guidance for partial sales of nonfinancial assets. The amendments define the term in substance nonfinancial assets and clarify that a nonfinancial asset within the scope may include nonfinancial assets transferred within a legal entity to a counterparty, in part, as a financial asset promised to a counterparty in a contract. Additionally, the amendments in ASU clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial assets and allocate consideration to each distinct asset. The amendments should be applied either on retrospectively to each period presented or with a modified retrospective approach. ASU 2017-05 is effective for the Company on January 1, 2018 and the Company is required to apply the amendment at the same time that is applies the amendments in 2014-09. Management has evaluated the effect that this guidance will have and concluded that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 addresses diversity in practice from entities classifying and presenting transfers between cash and restricted cash as operating, investing or financing activities or as a combination of those activities in the statement of cash flows. The ASU requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the Statement of Cash Flows. As a result, transfers between such categories will no longer be presented in the Statement of Cash Flows. ASU 2016-18 is effective for the Company on January 1, 2018 using the retrospective method. Management has evaluated the effect that this guidance will have and concluded that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments). ASU 2016-15 addresses diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This standard addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for the Company on January 1, 2018. Management has evaluated the effect that this guidance will have and concluded that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, ASU 2016-13 amends the accounting for credit losses on AFS debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is effective for the Company on January 1, 2020. Early adoption is permitted for all organizations for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018. Management is evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize right of use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize a right of use asset and lease liability. Additionally, when measuring assets and liabilities arising from a lease, optional payments should be included only if the lessee is reasonable certain to exercise an option to extend the lease, exercise a purchase option or not exercise an option to terminate the lease. ASU 2016-02 is effective for the Company on January 1, 2019. Early adoption is permitted in any interim or annual period. Management is evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments and requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value. Any changes in fair value on equity investments with readily determinable market value will be recognized in net income unless the investments qualify for a new practicability exception. This ASU also requires entities to recognize changes in instrument-specific credit risk related to financial liabilities measured under the fair value option in OCI. No changes were made to the guidance for classifying and measuring investments in debt securities and loans. ASU 2016-01 is effective for the Company on January 1, 2018. Management has evaluated the effect that this guidance will have and concluded that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP and is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects consideration to which the entity expects to be entitled in exchange for those goods and services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. For financial reporting purposes, the standard allows for either full retrospective adoption, meaning the standard is applied to all of the periods presented, or modified retrospective adoption, meaning the standard is applied only to the most current period presented in the financial statements with the cumulative effect of initially applying the standard recognized at the date of initial application. ASU 2014-09 was initially effective for the Company on January 1, 2017; however, in August 2015, the FASB issued ASU No. 2015-14 - Revenue from Contracts with Customers - Deferral of the Effective Date, which deferred the effective date to January 1, 2018. In addition, the FASB has begun to issue targeted updates to clarify specific implementation issues of ASU 2014-09. These updates include ASU No. 2016-08 - Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU No. 2016-10 - Identifying Performance Obligations and Licensing, ASU No. 2016-12 - Narrow-Scope Improvements and Practical Expedients and ASU No. 2016-20 - Technical Corrections and Improvements to Top 606 - Revenue from Contract with Customers. In evaluating this standard, management determined that the majority of revenue earned by the Company is from revenue streams not included in the scope of this standard such as interest earned from loans, investment securities and bank owned life insurance income. For applicable revenue streams such as ATM and debit card fees, insurance, other financial services revenue, service charges on deposit accounts, retirement plan administration fees and trust fees, management reviewed the applicable contracts provisions and applied the principles in the new standard for revenue recognition. Based on the results of that review, management determined that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. |
Summary of Significant Accounting Policies (Policies) |
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Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
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. 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 | 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 solely in the geographical regions of central and upstate New York, northeastern Pennsylvania, western Massachusetts, southern New Hampshire, Vermont and southern coastal Maine. The Company has no reportable operating segments. |
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. |
Securities | Securities The Company classifies its securities at date of purchase as either held to maturity ("HTM"), trading or available for sale ("AFS"). HTM debt securities are those that the Company has the ability and intent to hold until maturity. Trading securities are securities purchased with the intent to sell within a short period of time. AFS securities are securities that are not classified as a HTM or trading securities. 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 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. Trading 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. Declines in the fair value of HTM and AFS securities below their amortized cost, less any current period credit loss, that are deemed to be OTTI are reflected in earnings as a realized loss, or in other comprehensive income ("OCI"). The classification is dependent upon whether the Company intends to sell the security, or whether it is more likely than not it will be required to sell the security before recovery. The OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If the Company does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the OTTI shall be separated into (a) the amount representing the credit loss and (b) the amount related to all other factors. The amount of the total OTTI impairment related to the credit loss shall be recognized in earnings. The amount of the total OTTI related to other factors shall be recognized in OCI, net of applicable taxes. In estimating OTTI losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer and (iii) the historical and implied volatility of the fair value of the security. 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. 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. |
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 interest in accordance with contractual terms is doubtful. Loans are transferred to nonaccrual status generally when principal or interest payments become 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 loan 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 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. Commercial type loans are considered impaired when it is probable that the borrower will not repay the loan according to the original contractual terms of the loan agreement and all loan types are considered impaired if the loan is restructured in a troubled debt restructuring (“TDR”). In determining that we will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreements, we consider factors such as payment history and changes in the financial condition of individual borrowers, local economic conditions, historical loss experience and the conditions of the various markets in which the collateral may be liquidated. A loan is considered to be a 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 include the reduction of interest rates, forgiveness of all or a portion of principal or interest, or other modifications at interest rates that are less than the current market rate for new obligations with similar risk. 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. When the Company modifies a loan, management evaluates any possible impairment based on the present value of the expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized. |
Acquired Loans | Acquired Loans Acquired loans are initially measured at fair value as of the acquisition date without carryover of historical allowance for loan losses. For loans that meet the criteria stipulated in ASC 310-30, Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality, the Company shall recognize the accretable yield, which is defined as the excess of all cash flows expected at acquisition over the initial fair value of the loan, as interest income on a level-yield basis over the expected remaining life of the loan. The excess of the loan's contractually required payments over the cash flows expected to be collected is the nonaccretable difference. The nonaccretable difference shall not be recognized as an adjustment of yield, a loss accrual or a valuation allowance. Decreases in the expected cash flows in subsequent periods require the establishment of an allowance for loan losses. Improvements in expected cash flows in future periods result in a reduction of the nonaccretable discount, with such amount reclassified as part of the accretable yield and subsequently recognized in interest income over the remaining lives of the acquired loans on a level-yield basis if the amount and timing of future cash flows is reasonably estimable. Acquired loans that met the criteria for nonaccrual of interest prior to the acquisition are considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if the Company can reasonably estimate the timing and amount of the expected cash flows on such loans and if the Company expects to fully collect the new carrying value of the loans. As such, the Company may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable yield. As such, charge-offs on acquired loans are first applied to the nonaccretable difference and then to any allowance for loan losses recognized subsequent to acquisition. For loans that meet the criteria stipulated in ASC 310-20 - Receivables - Nonrefundable Fees and Other Costs ("ASC 310-20"), the Company shall amortize/accrete into interest income the premium/discount determined at the date of purchase on a level-yield basis over the life of the loan. Subsequent to the acquisition date, the methods utilized to estimate the required allowance for loan losses are similar to originated loans. Loans accounted for under ASC 310-20 are placed on nonaccrual status when past due in accordance with the Company's nonaccrual policy. An acquired loan may be resolved either through receipt of payment (in full or in part) from the borrower, the sale of the loan to a third party, or foreclosure of the collateral. In the event of a sale of the loan, a gain or loss on sale is recognized and reported within noninterest income based on the difference between the sales proceeds and the carrying amount of the loan. In other cases, individual loans are removed from the pool based on comparing the amount received from its resolution (fair value of the underlying collateral less costs to sell in the case of a foreclosure) with its outstanding balance. Any difference between these amounts is recorded as a charge-off through the allowance for loan losses. Acquired loans subject to modification are not removed from the pool even if those loans would otherwise be deemed TDRs as the pool and not the individual loan, represents the unit of account. |
Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses is the amount, which in the opinion of management, is necessary to absorb incurred losses inherent in the loan portfolio. The allowance is determined based upon numerous considerations, including local and regional conditions, the growth and composition of the loan portfolio with respect to the mix between the various types of loans and their related risk characteristics, a review of the value of collateral supporting the loans, comprehensive reviews of the loan portfolio by the independent loan review staff and management, as well as consideration of volume and trends of delinquencies, nonperforming loans and loan charge-offs. Loan losses are charged off against the allowance, while recoveries of amounts previously charged off are credited to the allowance. As a result of tests of adequacy, required additions to the allowance for loan losses are made periodically by charges to the provision for loan losses. The allowance for loan losses related to impaired loans specifically allocated for impairment is based on discounted expected cash flows using the loan’s initial effective interest rate or the fair value of the collateral for certain loans where repayment of the loan is expected to be provided solely by the underlying collateral ("collateral dependent"). The Company’s impaired loans are generally collateral dependent. The Company considers the estimated cost to sell, on a discounted basis, when determining the fair value of collateral in the measurement of impairment if those costs are expected to reduce the cash flows available to repay or otherwise satisfy the loans. The allowance for loan losses for homogeneous non impaired loans is calculated using a systematic methodology with both a quantitative and a qualitative analysis that is applied on a quarterly basis. For purposes of our allowance methodology, the loan portfolio is segmented as described in Note 5. Each segment has a distinct set of risk characteristics monitored by management. We further assess and monitor risk and performance at a more disaggregated level, which includes our internal risk grading system for the commercial segments. We first apply historical loss rates to pools of loans with similar risk characteristics. Loss rates are calculated by historical charge-offs that have occurred within each pool of loans over the lookback period ("LBP"), multiplied by the loss emergence period ("LEP"). The LBP represents the historical data period utilized to calculate loss rates. The LEP is an estimate of the average amount of time from the point at which a loss is incurred on a loan to the point at which the loss is confirmed. In general, the LEP will be shorter in an economic slowdown or recession and longer during times of economic stability or growth, as customers are better able to delay loss confirmation after a potential loss event has occurred. In conjunction with our annual review of the ALL assumptions, we update our study of LEPs for each portfolio segment using our loan charge-off history. After consideration of the historic loss analysis, management applies additional qualitative adjustments so that the allowance for loan losses is reflective of the estimate of incurred losses that exist in the loan portfolio at the balance sheet date. Qualitative adjustments are made if, in the judgment of management, incurred loan losses inherent in the loan portfolio are not fully captured in the historical loss analysis. Qualitative considerations include the loan portfolio trends, composition and nature of loans; changes in lending policies and procedures, including underwriting standards and collection, charge-offs and recoveries; trends experienced in nonperforming and delinquent loans; current economic conditions in the Company’s market; portfolio concentrations that may affect loss experience across one of more components of the portfolio; the effect of external factors such as competition, legal and regulatory requirements; and the experience, ability and depth of lending management and staff. The evaluation of the various components of the allowance for loan losses requires considerable judgment in order to estimate inherent loss exposures. In addition, various regulatory agencies, as an integral component of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to make loan grade changes as well as recognize additions to the allowance based on their examinations. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize loan losses, future additions to the allowance for loan losses may be necessary based on changes in economic conditions or changes in the values of properties securing loans in the process of foreclosure. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination, which may not be currently available to management. |
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. |
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. |
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 not 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 | 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 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 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 | Pension Costs The Company maintains a noncontributory, defined benefit pension plan covering substantially all employees, as well as supplemental employee retirement plans covering certain 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 | Stock-Based Compensation We maintain various long-term incentive stock benefit plans under which we grant stock options and restricted stock units to certain directors and key employees. We recognize compensation expense in our consolidated statements of income over the requisite service period, based on the grant-date fair value of the award. For restricted stock awards and units, we recognize compensation expense ratably over the vesting period for the fair value of the award, measured at the grant date. The fair values of options are estimated using the Black-Scholes option pricing model. |
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). |
Comprehensive Income | Comprehensive Income At the Company, comprehensive income represents net income plus OCI, which consists primarily of the net change in unrealized gains (losses) on AFS 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 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 | 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. Any hedge ineffectiveness would be recognized in the income statement line item pertaining to the hedged item. For derivatives designated as cash flow hedges, changes in fair value of the effective portion 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 a portion of a commercial loan that has an existing interest rate swap, it enters a risk participation agreement with the counterparty and assumes the credit risk of the loan customer related to the swap. 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 | Fair Value Measurements 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 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; 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 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. 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 | Other Financial Instruments The Company is a party to certain other financial instruments with off-balance-sheet risk such as commitments to extend credit, unused lines of credit as well as certain mortgage 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 credit risk involved in issuing letters of credit is essentially the same as that 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 stand-by letters of credit is recorded upon inception. |
Loan Sales and Loan Servicing | Loan Sales and Loan Servicing Loan sales are recorded when the sales are funded. Mortgage servicing rights are recorded at fair value upon sale of the loan. Loans held for sale are recorded at the lower of cost or market. |
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 dealer or bank with whom each transaction is executed. The dealers or banks, 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. |
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. Trust income is recognized on the accrual method based on contractual rates applied to the balances of trust accounts. |
Reclassifications | Reclassifications Amounts in prior period consolidated financial statements are reclassified whenever necessary to confirm with current period presentation. |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events for potential recognition and/or disclosure and there were none identified. |
Recent Accounting Pronouncements (Policies) |
12 Months Ended |
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Dec. 31, 2017 | |
Recent Accounting Pronouncements [Abstract] | |
Recent Accounting Pronouncements | Recently Adopted Accounting Standards Effective December 31, 2017, the Company adopted the provisions of SAB 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which was issued by the SEC in December 2017. SAB 118 provides guidance on the timing of recognition for the effects of the Tax Act. Under SAB 118, companies are provided a measurement period of up to one year from the enactment of the Tax Act to evaluate and record its effects. Companies are required to record provisional amounts when sufficient information to make a reasonable estimate is available and are expected to make final adjustments when the required information is available. SAB 118 contains several disclosure requirements regarding a company’s assessment and recording the effects of the Tax Act, including the amounts recorded and the status of estimating potential additional effects. SAB 118 was effective immediately upon issuance. The disclosures required by SAB 118 were included in Note 12 of the consolidated financial statements. Effective July 1, 2017, the Company early adopted the provision of FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 amends and simplifies the subsequent measurement of goodwill; the amendments eliminate Step 2 from the goodwill impairment test. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the qualitative impairment test is necessary. The amendments were applied on a prospective basis and the adoption did not have a significant impact on the consolidated financial statements. Effective January 1, 2017, the Company adopted the provision of FASB ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 requires several revisions to equity compensation accounting. Under the new guidance all excess tax benefits and deficiencies that occur when an award vests, is exercised or expires are recognized in income tax expense as discrete period items. Previously, these transactions were typically recorded directly within equity. Consistent with this change, excess tax benefits and deficiencies are no longer included within estimated proceeds when performing the treasury stock method for calculating diluted earnings per share. Excess tax benefits are also recognized at the time an award is exercised or vests compared to the previous requirements to delay recognition until the deduction reduces taxes payable. The presentation of excess tax benefits in the statement of cash flows shifted to an operating activity from the prior classification as a financing activity. ASU 2016-09 also provides an accounting policy election to recognize forfeitures of awards as they occur when estimating stock-based compensation expense rather than the previous requirement to estimate forfeitures from inception. Further, ASU 2016-09 permits employers to use a net settlement feature to withhold taxes on equity compensation awards up to the maximum statutory tax rate without affecting the equity classification of the award. Transition to the new guidance was accomplished through a combination of cumulative-effect adjustment to equity (forfeitures) and prospective methodologies (cash flows, tax windfalls and shortfalls). The adoption of ASU 2016-09 resulted in income tax benefits of $1.8 million in the year ended December 31, 2017 and the effect on earnings per share calculations and election to account for forfeitures as incurred have not been significant. |
Accounting Standards Issued Not Yet Adopted | Accounting Standards Issued Not Yet Adopted In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of -Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 requires a reclassification from AOCI to retained earnings for stranded tax effects resulting from the newly enacted federal corporate income tax rate in the Tax Act. The Tax Act included a reduction to the Federal corporate income tax rate from 35% to 21% effective January 1, 2018. The amount of the reclassification from AOCI to retained earnings would be the difference between the historical corporate income tax rate and the newly enacted rate and will be accounted for as a cumulative-effect adjustment to the balance sheet. ASU 2018-02 is effective for the Company on January 1, 2019. Early adoption is permitted. Management is evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures and does not expect the impact to be material. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 better aligns the accounting and reporting of hedging relationships with the economics of risk management activities. The standard requires the modified retrospective transition approach as of the date of adoption. ASU 2017-12 is effective for the Company on January 1, 2019. Early adoption is permitted. Management is evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures and does not expect the impact to be material. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718). ASU 2017-09 provides guidance about which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting. ASU 2017-09 is effective for the Company on January 1, 2018. Management has evaluated the effect that this guidance will have and concluded that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. In March 2017, the FASB issued ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20). ASU 2017-08 requires amortization of premiums to the earliest call date on debt securities with call features that are explicit, on contingent and callable at fixed prices on present dates. The ASU does not impact securities held at a discount; the discount continues to be amortized to the contractual maturity. The guidance is required to be applied with a modified retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. ASU 2017-08 is effective for the Company on January 1, 2019. Early adoption is permitted. Management is evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures and does not expect the impact to be material. In March 2017, the FASB issued ASU No. 2017-07, Compensation – Retirement Benefits (Topic 715). ASU 2017-07 requires the service cost component of net periodic pension and post-retirement benefit cost to be reported separately in the consolidated statements of income from the other components. Additionally, the amendments in the ASU require presentation of the service cost component in the consolidated statements of income in the same line item as other employee compensation costs and presentation of the other components in a different line item from the service cost component. The amendments in this ASU are required to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic post-retirement benefit cost in the income statement and prospectively, on or after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic post-retirement benefit in assets with a practical expedient allowed for prior comparative period presentation permitted. ASU 2017-07 is effective for the Company on January 1, 2018. Management has evaluated the effect that this guidance will have and concluded that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. In February 2017, the FASB issued ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20). ASU 2017-05 will clarify the scope of Subtopic 610-20 and add guidance for partial sales of nonfinancial assets. The amendments define the term in substance nonfinancial assets and clarify that a nonfinancial asset within the scope may include nonfinancial assets transferred within a legal entity to a counterparty, in part, as a financial asset promised to a counterparty in a contract. Additionally, the amendments in ASU clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial assets and allocate consideration to each distinct asset. The amendments should be applied either on retrospectively to each period presented or with a modified retrospective approach. ASU 2017-05 is effective for the Company on January 1, 2018 and the Company is required to apply the amendment at the same time that is applies the amendments in 2014-09. Management has evaluated the effect that this guidance will have and concluded that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 addresses diversity in practice from entities classifying and presenting transfers between cash and restricted cash as operating, investing or financing activities or as a combination of those activities in the statement of cash flows. The ASU requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the Statement of Cash Flows. As a result, transfers between such categories will no longer be presented in the Statement of Cash Flows. ASU 2016-18 is effective for the Company on January 1, 2018 using the retrospective method. Management has evaluated the effect that this guidance will have and concluded that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments). ASU 2016-15 addresses diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This standard addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for the Company on January 1, 2018. Management has evaluated the effect that this guidance will have and concluded that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, ASU 2016-13 amends the accounting for credit losses on AFS debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is effective for the Company on January 1, 2020. Early adoption is permitted for all organizations for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018. Management is evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize right of use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize a right of use asset and lease liability. Additionally, when measuring assets and liabilities arising from a lease, optional payments should be included only if the lessee is reasonable certain to exercise an option to extend the lease, exercise a purchase option or not exercise an option to terminate the lease. ASU 2016-02 is effective for the Company on January 1, 2019. Early adoption is permitted in any interim or annual period. Management is evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments and requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value. Any changes in fair value on equity investments with readily determinable market value will be recognized in net income unless the investments qualify for a new practicability exception. This ASU also requires entities to recognize changes in instrument-specific credit risk related to financial liabilities measured under the fair value option in OCI. No changes were made to the guidance for classifying and measuring investments in debt securities and loans. ASU 2016-01 is effective for the Company on January 1, 2018. Management has evaluated the effect that this guidance will have and concluded that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP and is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects consideration to which the entity expects to be entitled in exchange for those goods and services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. For financial reporting purposes, the standard allows for either full retrospective adoption, meaning the standard is applied to all of the periods presented, or modified retrospective adoption, meaning the standard is applied only to the most current period presented in the financial statements with the cumulative effect of initially applying the standard recognized at the date of initial application. ASU 2014-09 was initially effective for the Company on January 1, 2017; however, in August 2015, the FASB issued ASU No. 2015-14 - Revenue from Contracts with Customers - Deferral of the Effective Date, which deferred the effective date to January 1, 2018. In addition, the FASB has begun to issue targeted updates to clarify specific implementation issues of ASU 2014-09. These updates include ASU No. 2016-08 - Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU No. 2016-10 - Identifying Performance Obligations and Licensing, ASU No. 2016-12 - Narrow-Scope Improvements and Practical Expedients and ASU No. 2016-20 - Technical Corrections and Improvements to Top 606 - Revenue from Contract with Customers. In evaluating this standard, management determined that the majority of revenue earned by the Company is from revenue streams not included in the scope of this standard such as interest earned from loans, investment securities and bank owned life insurance income. For applicable revenue streams such as ATM and debit card fees, insurance, other financial services revenue, service charges on deposit accounts, retirement plan administration fees and trust fees, management reviewed the applicable contracts provisions and applied the principles in the new standard for revenue recognition. Based on the results of that review, management determined that the impact on the consolidated financial statements and related disclosures will not be material upon adoption on January 1, 2018. |
Securities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized cost, estimated fair value, and unrealized gains and losses of securities available for sale | The amortized cost, estimated fair value and unrealized gains (losses) of AFS securities are as follows:
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Schedule of sales transactions of securities available for sale | The components of net realized gains (losses) on the sale of AFS securities are as follows. These amounts were reclassified out of AOCI and into earnings:
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Amortized cost, estimated fair value, and unrealized gains and losses of securities held to maturity | The amortized cost, estimated fair value and unrealized gains (losses) of HTM securities are as follows:
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Investment securities with unrealized losses | The following table sets forth information with regard to investment securities with unrealized losses segregated according to the length of time the securities had been in a continuous unrealized loss position:
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Contractual maturities of debt securities | The following tables set forth information with regard to contractual maturities of debt securities at December 31, 2017:
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Loans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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Allowance for Loan Losses and Credit Quality of Loans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Loan Losses and Credit Quality of Loans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses by portfolio |
The following table illustrates the allowance for loan losses and the recorded investment by 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 class:
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Impaired loans and specific reserve allocations | The following provides additional information on impaired loans specifically evaluated for impairment:
The following table summarizes the average recorded investments on loans specifically evaluated for impairment and the interest income recognized:
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Financing receivable credit quality by loan class | The following tables illustrate the Company’s credit quality by loan class:
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Troubled debt restructurings on financing receivables | The following tables illustrate the recorded investment and number of modifications for modified loans, 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 period:
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Premises and Equipment, Net (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premises and Equipment, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of premises and equipment | A summary of premises and equipment follows:
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Future minimum rental payments related to noncancelable operating leases | Rental expense included in occupancy expense amounted to $8.5 million in 2017, $7.8 million in December 31, 2016 and $7.9 million in December 31, 2015. The future minimum rental payments related to non-cancelable operating leases with original terms of one year or more are as follows:
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Goodwill and Other Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2017 | |||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Maturity distribution of time deposits | The following table sets forth the maturity distribution of time deposits:
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Short-Term Borrowings (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Borrowings [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information related to short-term borrowings | Information related to short-term borrowings is summarized as follows as of December 31,:
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Long-Term Debt (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, certain of its mortgage-backed securities and a blanket lien on its residential real estate mortgage loans. A summary is as follows:
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Junior Subordinated Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Junior Subordinated Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt of VIE where entity is not primary beneficiary | As of December 31, 2017, 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, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 of 35% 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, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Post-retirement 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 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 $91.0 million and $90.5 million at December 31, 2017 and 2016, respectively. The accumulated benefit obligation for other post-retirement benefits was $8.1 million and $7.5 million at December 31, 2017 and 2016, 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, 2017 and 2016.
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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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Components of 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, 2017:
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Effect of one-percentage point change in assumed health care cost trend rates | For measurement purposes, the annual rates of increase in the per capita cost of covered medical and prescription drug benefits for fiscal year 2017 were assumed to be 6.3 % to 10.5 % percent. The rates were assumed to decrease gradually to 3.9 % 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. A one-percentage point change in the health care trend rates would have the following effects as of and for the year ended December 31, 2017:
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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, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | Total stock-based compensation expense for stock option awards totaled $0.1 million, $0.2 million and $0.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. Cash proceeds, tax benefits and intrinsic value related to total stock options exercised is as follows:
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Unvested restricted stock units activity | The Company has outstanding restricted stock granted from various plans at December 31, 2017. The Company recognized $3.5 million, $4.2 million and $3.9 million in stock-based compensation expense related to these stock awards for the years ended December 31, 2017, 2016 and 2015, respectively. Tax benefits recognized with respect to restricted stock awards and stock units were $2.5 million, $2.9 million and $1.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. Unrecognized compensation cost related to restricted stock awards and stock units totaled $4.8 million at December 31, 2017 and will be recognized over 2.1 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, 2017:
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Stockholders' Equity (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of 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, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification Adjustments Out of Other Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification Out of Accumulated Other Comprehensive Income | 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, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of 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, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Value Adjustment Recorded Related to Notional Amount of Derivatives Outstanding and Notional Amount of Risk Participation Agreements | The following table depicts the fair value adjustment recorded related to the notional amount of derivatives outstanding as well as the notional amount of risk participation agreements:
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Gain or Loss Recognized in Income on Derivatives | The following table indicates the gain or loss recognized in income on derivatives for the years ended December 31:
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Fair Values of Financial Instruments (Tables) |
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Fair Values of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis | The following table sets 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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Fair Value of Financial Instruments by Balance Sheet Grouping | 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, trading securities, accrued interest receivable, non-maturity deposits, short-term borrowings, accrued interest payable and interest rate swaps.
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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 Flow
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. |
Summary of Significant Accounting Policies (Details) |
12 Months Ended |
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Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Minimum number of days past due for nonaccrual loan status | 90 days |
Period of sustained repayment performance for nonperforming TDRs to be returned to performing status | 6 months |
Standby letters of credit expiration period | 1 year |
Acquisitions (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Business Acquisition [Line Items] | |||
Goodwill acquired | $ 2,604 | $ 2,047 | |
Downeast Pension Services, Inc.[Member] | |||
Business Acquisition [Line Items] | |||
Total consideration paid | 5,700 | ||
Goodwill acquired | 2,600 | ||
Contingent consideration, liability | $ 1,700 | ||
Actuarial Designs & Solutions, Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Total consideration paid | 3,000 | ||
Goodwill acquired | 1,300 | ||
Columbia Ridge Capital Management, Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Total consideration paid | 1,300 | ||
Goodwill acquired | $ 800 | ||
Third Party Administrators, Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Total consideration paid | $ 4,100 | ||
Goodwill acquired | $ 2,300 |
Deposits (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Maturities of Time Deposits [Abstract] | ||
Within one year | $ 394,674 | |
After one but within two years | 259,710 | |
After two but within three years | 62,536 | |
After three but within four years | 40,151 | |
After four but within five years | 28,525 | |
After five years | 21,170 | |
Total | 806,766 | $ 872,411 |
Time Deposits, $250,000 or More [Abstract] | ||
Time deposits of $250,000 or more | $ 92,800 | $ 84,300 |
Employee Benefit Plans, 401(k) Plan and Other Retirement Benefits (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Other Retirement Benefits [Abstract] | |||
Supplemental retirement benefits for retired executives under other retirement benefits plan | $ 2.4 | $ 2.6 | |
Expense related to other retirement benefits plan | 0.1 | 0.2 | $ 0.3 |
401(K) Plan [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer contribution to plan | $ 2.8 | $ 2.7 | $ 2.5 |
Stockholders' Equity (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Stockholders' Equity [Abstract] | |||
Unrecognized prior service cost and net actuarial (losses) on pension plans | $ (15,284) | $ (18,227) | $ (21,557) |
Unrealized gains on derivatives (cash flow hedges) | 2,144 | 1,772 | 0 |
Unrealized net holding (losses) on AFS securities | (8,937) | (5,065) | (861) |
Accumulated other comprehensive (loss) | $ (22,077) | $ (21,520) | $ (22,418) |
Class of Warrant or Right [Line Items] | |||
Preceding period of retained net profits for approval of Office of Comptroller of the Currency | 2 years | ||
Statutory amount available for dividend payments | $ 107,500 | ||
Common stock repurchased during period (in shares) | 0 | 675,535 | 1,047,152 |
Number of shares available for repurchase under stock repurchase program (in shares) | 1,000,000 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Basic earnings per share [Abstract] | |||
Net income | $ 82,151 | $ 78,409 | $ 76,425 |
Weighted average shares, basic (in shares) | 43,575 | 43,244 | 43,836 |
Basic EPS (in dollars per share) | $ 1.89 | $ 1.81 | $ 1.74 |
Diluted earnings per share [Abstract] | |||
Net income | $ 82,151 | $ 78,409 | $ 76,425 |
Dilutive effect of stock based compensation (in shares) | 330 | 378 | 553 |
Weighted average shares, diluted (in shares) | 43,905 | 43,622 | 44,389 |
Diluted EPS (in dollars per share) | $ 1.87 | $ 1.80 | $ 1.72 |
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