XML 38 R23.htm IDEA: XBRL DOCUMENT v3.22.4
Regulatory Capital Requirements
 12 Months Ended
Dec. 31, 2022
Regulatory Capital Requirements [Abstract]  
Regulatory Capital Requirements
15.          Regulatory Capital Requirements

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of NBT Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 Capital to risk-weighted assets and of Tier 1 capital to average assets. In addition to maintaining minimum capital ratios, the Company is subject to a capital conservation buffer (“Buffer”) of 2.50% above the minimum to avoid restriction on capital distributions and discretionary bonus paychecks to officers. At December 31, 2022 and 2021, the Company and the Bank meet all capital adequacy requirements to which they were subject.

Under their prompt corrective action regulations, regulatory authorities are required to take certain supervisory actions (and may take additional discretionary actions) with respect to an undercapitalized institution. Such actions could have a direct material effect on an institution’s financial statements. The regulations establish a framework for the classification of banks into five categories: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. As of December 31, 2022 and 2021, the most recent notifications from the Bank’s regulators categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 Capital to Average Asset ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the Bank’s category.

In March 2020, the OCC, the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (“FDIC”) announced an interim final rule to delay the estimated impact on regulatory capital stemming from the implementation of CECL. Under the modified CECL transition provision, the regulatory capital impact of the January 1, 2020 CECL adoption date adjustment to the allowance for credit losses (after-tax) has been deferred and will phase into regulatory capital at 25% per year commencing January 1, 2022. For the ongoing impact of CECL, the Company is allowed to defer the regulatory capital impact of the allowance for credit losses in an amount equal to 25% of the change in the allowance for credit losses (pre-tax) recognized through earnings for each period between January 1, 2020 and December 31, 2021. The cumulative adjustment to the allowance for credit losses between January 1, 2020 and December 31, 2021, will also phase into regulatory capital at 25% per year commencing January 1, 2022. The Company adopted the capital transition relief over the permissible five-year period. The Company and NBT Bank’s actual capital amounts and ratios are presented as follows:

 
Actual
    
Regulatory Ratio Requirements
  
(Dollars in thousands)
  
Amount
    
Ratio
    
Minimum
Capital
Adequacy
    
Minimum
plus Buffer
    
For
Classification
as Well-
Capitalized
  
As of December 31, 2022
                              
Tier I Capital (to average assets)
                              
Company
  
$
1,193,336
      
10.32
%
    
4.00
%
          
5.00
%
NBT Bank
    
1,133,481
      
9.86
%
    
4.00
%
          
5.00
%
Common Equity Tier 1 Capital
                                      
Company
    
1,096,336
      
12.12
%
    
4.50
%
    
7.00
%
    
6.50
%
NBT Bank
    
1,133,481
      
12.63
%
    
4.50
%
    
7.00
%
    
6.50
%
Tier I Capital (to risk-weighted assets)
                                        
Company
    
1,193,336
      
13.19
%
    
6.00
%
    
8.50
%
    
8.00
%
NBT Bank
    
1,133,481
      
12.63
%
    
6.00
%
    
8.50
%
    
8.00
%
Total Capital (to risk-weighted assets)
                                        
Company
    
1,391,182
      
15.38
%
    
8.00
%
    
10.50
%
    
10.00
%
NBT Bank
    
1,233,327
      
13.74
%
    
8.00
%
    
10.50
%
    
10.00
%
                                         
As of December 31, 2021
                                        
Tier I Capital (to average assets)
                                        
Company
  
$
1,103,661
      
9.41
%
    
4.00
%
            
5.00
%
NBT Bank
    
1,087,990
      
9.32
%
    
4.00
%
            
5.00
%
Common Equity Tier 1 Capital
                                        
Company
    
1,006,661
      
12.25
%
    
4.50
%
    
7.00
%
    
6.50
%
NBT Bank
    
1,087,990
      
13.36
%
    
4.50
%
    
7.00
%
    
6.50
%
Tier I Capital (to risk-weighted assets)
                                        
Company
    
1,103,661
      
13.43
%
    
6.00
%
    
8.50
%
    
8.00
%
NBT Bank
    
1,087,990
      
13.36
%
    
6.00
%
    
8.50
%
    
8.00
%
Total Capital (to risk-weighted assets)
                                        
Company
    
1,292,669
      
15.73
%
    
8.00
%
    
10.50
%
    
10.00
%
NBT Bank
    
1,176,998
      
14.45
%
    
8.00
%
    
10.50
%
    
10.00
%