NBT Bancorp Inc.

Company Overview

Business Model: NBT Bancorp Inc. is a registered financial holding company that, through its primary subsidiary NBT Bank, National Association, and other non-bank subsidiaries, provides commercial banking, retail banking, and wealth management services. Additionally, the Company offers retirement plan administration through EPIC Advisors, Inc. and full-service regional insurance services through NBT Insurance Agency, LLC. The Company operates as a community-oriented financial institution, emphasizing local decision-making and a broad array of financial services to retail, commercial, and municipal customers. Revenue is primarily generated from net interest income on loans and securities, supplemented by noninterest income from service charges, card services, retirement plan administration, wealth management, and insurance services.

Market Position: NBT Bancorp Inc. operates in a highly competitive financial services industry, competing with various financial institutions. The Company differentiates itself by stressing its community-oriented banking operations, local market knowledge, local decision-making, and specialized services, including agricultural lending, which many larger competitors do not offer. The Company's market area includes upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine, and central and northwestern Connecticut. As of December 31, 2025, the Company had over 613,000 deposit accounts with an average balance of $22,014, indicating a diverse and granular deposit base.

Recent Strategic Developments:

• Evans Bancorp, Inc. Acquisition (May 2, 2025): NBT Bancorp Inc. completed the acquisition of Evans Bancorp, Inc. for $221.8 million in common stock, issuing 5.1 million shares. This acquisition significantly enhanced the Company's presence in Western New York, including the Buffalo and Rochester communities, adding $1.67 billion in loans and $1.86 billion in deposits.
• Salisbury Bancorp, Inc. Acquisition (August 11, 2023): The Company acquired Salisbury Bancorp, Inc. for $161.7 million in stock, issuing 4.32 million shares. This expanded the Company's footprint into Massachusetts' Berkshire county, New York's Dutchess, Orange, and Ulster counties, and Connecticut's Litchfield county, adding $1.18 billion of loans and $1.31 billion in deposits.
• Strategic Acquisitions in Non-Banking Segments (2023-2024):
  • PACO, Inc. (November 2024): Acquired certain assets of this third-party administration business for $3.3 million, enhancing retirement plan administration services.
  • Karl W. Reynard, Inc. (July 2024): Acquired substantially all assets of this regional insurance agency for $1.2 million, expanding NBT Insurance Agency, LLC's presence in the Catskills.
  • Retirement Direct, LLC (July 2023): Acquired certain assets of this retirement plan administration business for $2.8 million.
• NBT CEI-Boulos Impact Fund: Launched in 2022, this $10 million real estate equity investment fund, with NBT Bank as the sole investor, supports low- and moderate-income individuals and communities through high-impact commercial real estate projects in New York. Its first equity investment in 2023 supported The Flanigan Square Transformation Project in Troy, providing affordable workforce housing and a grocery store.
• Flexible Banking Products: Continued offering the NBT iSelect Account, certified for meeting Bank On National Account Standards, featuring no monthly charges, no overdraft fees, and no minimum balance. Over 26,000 NBT iSelect Accounts have been opened since 2021. The Company also offers various home lending products, including government-guaranteed programs and in-house initiatives, supported by affordable housing specialists and partnerships with housing agencies.

Geographic Footprint: The Company's primary market area includes upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine, and central and northwestern Connecticut. As of December 31, 2025, the Company operated 175 branch locations across forty-seven counties in these states.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin (Net Interest Income / Total Interest, fee and dividend income): 70.5% (2025) vs 65.4% (2024)
• Operating Margin (Income before income tax expense / Total Revenue): 31.5% (2025) vs 31.1% (2024)
• Net Margin (Net Income / Total Revenue): 24.3% (2025) vs 24.4% (2024)

Investment in Growth:

• Capital Expenditures: $16.3 million (2025)
• Strategic Investments:
  • Evans Bancorp, Inc. acquisition: $221.8 million in common stock (May 2025)
  • PACO, Inc. acquisition: $3.3 million (November 2024)
  • Karl W. Reynard, Inc. acquisition: $1.2 million (July 2024)
  • Retirement Direct, LLC acquisition: $2.8 million (July 2023)

Business Segment Analysis

Banking

Financial Performance (2025):

• Net Interest Income: $501.472 million
• Noninterest Income: $120.960 million
• Noninterest Expense: $400.379 million
• Net Income: $144.734 million
• Key Growth Drivers: The Evans Bancorp, Inc. acquisition significantly contributed to the increase in interest-earning assets and deposits. Organic growth in earning assets and upward repricing of loans in the elevated interest rate environment also drove performance. The segment also benefited from increased service charges on deposit accounts and card services income due to the Evans acquisition.

Product Portfolio:

• Deposit Products: Demand deposit accounts, savings accounts, interest-bearing checking accounts, money market deposit accounts (MMDA), and certificate of deposit (CD) accounts.
• Loan Products: Indirect and direct consumer loans, home equity loans, mortgages, business banking loans, and commercial loans (Commercial & Industrial, Commercial Real Estate, Residential Mortgage).
• Other Services: Trust and investment services, financial planning, life insurance services, and electronic banking channels (online, mobile, telephone, ATM network).

Market Dynamics: The Banking segment operates in a highly competitive environment for deposits, loans, and other financial services. The Company emphasizes its community bank philosophy, local decision-making, and tailored services, including agricultural lending, to compete effectively. The segment's success is closely tied to local economic conditions in its operating regions.

Sub-segment Breakdown:

• Wealth Management: Revenue of $44.755 million in 2025, driven by market performance and growth in new customer accounts.

Retirement Plan Administration

Financial Performance (2025):

• Net Interest Income: $0.074 million
• Noninterest Income: $66.600 million
• Noninterest Expense: $42.128 million
• Net Income: $19.402 million
• Key Growth Drivers: Increased retirement plan administration fees were primarily driven by higher market values of assets under administration, organic growth, and the acquisition of PACO, Inc. in the fourth quarter of 2024.

Product Portfolio:

• Retirement plan and health savings account recordkeeping and administration.
• Investment management.
• Third-party administration.
• Actuarial services.

Market Dynamics: The segment operates nationally through EPIC Advisors, Inc., a national benefits administration firm.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $10.2 million for 250,000 shares during 2025 at an average price of $40.74 per share.
• Dividend Payments: $72.6 million in 2025, representing $1.42 per share.
• Future Capital Return Commitments: The Board authorized an amendment to the stock repurchase program on October 27, 2025, allowing for the repurchase of up to 2,000,000 shares of common stock by December 31, 2027. As of December 31, 2025, 1,750,000 shares remained available under this authorization.

Balance Sheet Position (as of December 31, 2025):

• Cash and Equivalents: $487.1 million
• Total Debt: $327.5 million (Short-term borrowings: $148.1M, Long-term debt: $43.2M, Subordinated debt, net: $24.5M, Junior subordinated debt: $111.7M)
• Net Cash Position: $159.6 million
• Credit Rating: Not disclosed in the filing.
• Debt Maturity Profile:
  • Long-term debt: $40.2 million due in 2027, $3.0 million due in 2031.
  • Subordinated debt: $25.0 million due March 31, 2031 (assumed from Salisbury Bancorp, Inc.).
  • Junior subordinated debt: Various maturities from August 2029 to September 2036.

Cash Flow Generation (2025):

• Operating Cash Flow: $235.2 million
• Free Cash Flow (Operating Cash Flow - Capital Expenditures): $218.9 million
• Cash Conversion Metrics: Not explicitly detailed in the filing.

Operational Excellence

Production & Service Model: NBT Bancorp Inc. operates as a community bank, emphasizing local decision-making and providing a broad array of banking and financial services. Its service delivery model combines a traditional branch network with 24-hour online, mobile, and telephone channels, as well as an ATM network. The Company's philosophy is to tailor services to meet the needs of the communities it serves.

Supply Chain Architecture: The Company relies on third parties for critical business infrastructure components, including data processing and storage, transaction recording and monitoring, online banking interfaces, internet connections, and network access. Vendor selection is careful, and third-party providers are required to maintain specific security levels.

Facility Network:

• Headquarters: Owned, located at 52 South Broad Street, Norwich, New York.
• Branch Network: 175 branch locations as of December 31, 2025, with 84 leased from third parties and the remainder owned.
• Other Facilities: EPIC Advisors, Inc. headquarters in Rochester, New York; NBT Insurance Agency, LLC headquartered in Norwich, New York.

Operational Metrics:

• The Company conserves energy in larger facilities through building energy management systems and motion sensor lighting controls. New construction and renovations incorporate high-efficiency mechanical equipment, LED lighting, and modern building techniques to reduce the carbon footprint.
• Digital banking services (mobile, online, remote deposit capture, eStatements) support reduced fuel and paper consumption.

Market Access & Customer Relationships

Go-to-Market Strategy: The Company's strategy emphasizes its community-oriented banking operations. It relies on local promotional activities, personal relationships cultivated by officers, directors, and employees, and specialized services tailored to community needs, such as agricultural lending.

Distribution Channels:

• Branch Network: 175 branch locations across upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine, and central and northwestern Connecticut.
• Digital Platforms: 24-hour online, mobile, and telephone channels, along with an ATM network, provide electronic access to products and services.

Customer Portfolio:

• Customer Base: Serves retail, commercial, and municipal customers.
• Customer Concentration: The Company's deposit base is diverse and granular, with over 613,000 accounts and an average balance of $22,014 per account as of December 31, 2025.
• Flexible Banking: Offers products like the NBT iSelect Account, which is Bank On National Account Standards certified, with no monthly charges, no overdraft fees, and no minimum balance, catering to unbanked and underbanked individuals.
• Homeownership Initiatives: Provides a suite of home lending products, including government-guaranteed programs (FHA, USDA, VA) and in-house programs (Habitat for Humanity, Home in the City, Portfolio Housing Agency, Portfolio 97), supported by specialists and partnerships with housing agencies.

Geographic Revenue Distribution: The Company's operations are concentrated in its market area across upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine, and central and northwestern Connecticut. Specific revenue distribution by region is not disclosed.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The financial services industry is highly competitive, influenced by interest rate environments, regulatory changes, technological advancements, and ongoing consolidation. The Company faces competition from commercial banks, savings and loan associations, securities and brokerage companies, mortgage companies, insurance companies, finance companies, money market funds, credit unions, and other nonbank financial service providers. Technology has lowered entry barriers, allowing non-banks to offer traditional banking services.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The filing does not name specific direct competitors but broadly categorizes them as national, regional, and community banks, as well as various other financial institutions (savings and loans, credit unions, finance companies, brokerage firms, insurance companies).

Emerging Competitive Threats: New entrants, disruptive technologies (including AI), and alternative financial solutions are noted as potential threats.

Competitive Response Strategy: NBT Bancorp Inc. maintains its competitive advantage by emphasizing its community bank model, local market knowledge, and responsiveness to customer needs. It also offers specialized services, such as agricultural lending, that larger competitors may not. The Company continuously invests in technology and partnerships to enhance its product and service offerings.

Risk Assessment Framework

Strategic & Market Risks

• Market Dynamics: The Company's business, results of operations, and financial condition are significantly affected by macroeconomic conditions, including consumer confidence, unemployment, and interest rates. Volatility in the U.S. and global economies, including potential for U.S. government debt default or recession, could adversely impact investor confidence, consumer/business spending, credit demand, and asset values.
• Local Economic Conditions: Success is highly dependent on economic conditions in its primary market areas (upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine, central and northwestern Connecticut). Downturns could increase nonperforming loans and reduce collateral values.
• Interest Rate Variations: Net interest income is highly sensitive to interest rate changes. Elevated or volatile interest rates can narrow interest rate spreads, increase funding costs, affect loan origination volumes, and lead to customer attrition due to competitor pricing.
• Lending Losses: Approximately 56% of the loan portfolio consists of commercial and industrial, agricultural, commercial construction, and commercial real estate (CRE) loans, which carry higher risks of non-payment and loss than residential mortgages. Deterioration in a few large commercial loans could significantly increase nonperforming loans and loan losses.
• Allowance for Credit Losses Sufficiency: The determination of the allowance for credit losses (ACL) is subjective, relying on estimates of current credit risks, economic forecasts, and future trends. Changes in these factors or regulatory reviews could necessitate increases in the ACL, negatively impacting net income and capital. The CECL model may introduce greater volatility to the ACL and reported earnings.
• Competition: Intense competition from various financial institutions, including larger entities with greater resources and broader product offerings, could weaken the Company's competitive position, growth, and profitability.
• Liquidity Risk: The Company faces the risk of not being able to satisfy financial commitments or becoming overly reliant on alternative funding sources. Competitive pressure on deposit pricing, loan growth exceeding deposit growth, or disruptions in wholesale funding markets could strain liquidity.
• Credit Rating Reduction: A downgrade of the Company's or NBT Bank's credit ratings could adversely affect access to liquidity and capital, increase funding costs, and reduce investor and counterparty willingness to engage.
• Third-Party Reliance: Dependence on third-party vendors for key business infrastructure (data processing, online banking) exposes the Company to risks from vendor breakdowns, disruptions, cyber-attacks, or poor performance, which could impact service delivery and business operations.
• New Lines of Business/Products: Introduction or expansion of new offerings involves substantial risks and uncertainties, including unachieved timetables, unmet profitability targets, and external factors like regulatory compliance and market preferences.

Operational & Execution Risks

• Controls and Procedures Failure: Internal controls, disclosure controls, and corporate governance policies, however well-designed, can fail or be circumvented, potentially leading to material adverse effects on business, results of operations, and financial condition.
• Environmental Liabilities: Foreclosure on real estate collateral could expose the Company to environmental liabilities (e.g., clean-up costs, property damage claims), which could be substantial.
• Soundness of Other Financial Institutions: Interconnectedness within the financial services industry means defaults or rumors about other institutions, including the Federal Home Loan Bank of New York (FHLB), could lead to losses or liquidity problems for the Company.

Financial & Regulatory Risks

• Extensive Government Regulation: The Company and its subsidiaries are subject to extensive federal and state regulation (BHC Act, SEC, NASDAQ, National Bank Act, OCC, FDIC, CFPB), primarily intended to protect depositors and the banking system, not shareholders. Changes in laws, regulations, or interpretations could increase costs, limit activities, or affect competitive balance.
• Heightened Regulatory Requirements (>$10B Assets): Exceeding $10 billion in total consolidated assets (currently $16.00 billion) subjects the Company to enhanced supervisory requirements under the Dodd-Frank Act, including Volcker Rule applicability, increased capital/liquidity/risk management standards, CFPB examination authority, and limits on debit card interchange fees. These requirements increase compliance costs and may impact operations.
• Capital Distributions: The Company's ability to pay dividends and service debt is substantially dependent on capital distributions from its subsidiaries, which are subject to regulatory restrictions (e.g., OCC approval for dividends exceeding current year's net income plus prior two years' retained net income).
• Volcker Rule: Restricts proprietary trading and investments in certain covered funds, subject to exceptions.
• Depositor Preference: In the event of an insured depository institution's liquidation, depositors' claims have priority over unsecured, non-deposit creditors, including the parent bank holding company.
• Consumer Protection and CFPB Supervision: Failure to comply with federal consumer financial laws (e.g., Truth-In-Lending Act, ECOA, HMDA, FCRA) can result in civil actions, regulatory enforcement, and reputational damage.
• USA PATRIOT Act & OFAC: Obligations to detect and report money laundering/terrorism financing, respond to law enforcement requests, and comply with economic sanctions (OFAC rules) impose compliance burdens and risks of legal/reputational consequences for non-compliance.
• Financial Privacy and Data Security: Subject to federal (GLBA) and state laws on consumer privacy and data security, requiring comprehensive information security programs and breach notifications.

Geopolitical & External Risks

• Geopolitical Exposure: Not explicitly detailed beyond general economic conditions.
• Trade Relations: Rising tariffs are noted as posing inflationary risks that the FOMC aims to manage, which could impact the economic outlook.
• Sanctions & Export Controls: Compliance with OFAC-administered sanctions is required, restricting transactions with designated foreign countries, nationals, and entities.
• Severe Weather & Climate Change: Branch locations and customer properties are vulnerable to severe weather, flooding, wildfires, and other climate change effects, potentially causing property damage, closures, and increased costs (insurance, energy). Regulatory changes related to climate risk management could also increase costs and risks.

Innovation & Technology Leadership

Research & Development Focus: The Company is committed to ongoing investment in enterprise technology initiatives. It continually encounters rapid technological change in the financial services industry, including new technology-driven products and services involving artificial intelligence (AI), machine learning, and blockchain. The Company's future success depends on its ability to adapt to these changes, provide technology-driven products, and create operational efficiencies.

Core Technology Areas:

• Digital Banking Platform: Modern digital banking platform offering online and mobile services, including access to credit score information and personal financial management tools.
• AI Integration: The Company or its third-party providers may develop or incorporate AI technology in business processes, services, or products. AI models are evaluated through the established Solutions Development Lifecycle (SDLC), including model validation and risk management controls.

Intellectual Property Portfolio: The filing does not provide specific details on the Company's intellectual property portfolio, patent strategy, or licensing programs.

Technology Partnerships: The Company has relationships with national technology-driven consumer lending companies, such as Sungage Financial, LLC (for residential solar financing) and LendingClub (formerly Springstone Financial LLC, for other consumer loans).

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Company's robust annual talent review and succession planning process, involving senior management and the Board, reinforces its commitment to leadership continuity and organizational strength.

Board Composition: The Board of Directors oversees cybersecurity risk through its Risk Management Committee (RMC). The RMC is led by the Chief Risk Officer and includes Board members and the Chief Executive Officer. The Board reviews the overall Information Security Program at least annually.

Human Capital Strategy

Workforce Composition:

• Total Employees: 2,303 full-time equivalent employees as of December 31, 2025.
• Geographic Distribution: Employees are located across the Company's operating footprint.
• Skill Mix: The Company invests in continuous learning and development to build skills, offering resources like the LinkedIn Learning Library.

Talent Management:

• Acquisition & Retention: The Company is committed to attracting, developing, and retaining exceptional talent. It offers a comprehensive Total Rewards Program, including paid parental leave, flexible work arrangements, paid time off, retirement transition options, and a robust Employee Assistance Program. Incentive programs are designed to recognize contributions and motivate employees.
• Retention Metrics: The Company reports a consistently strong retention rate.
• Employee Value Proposition: Focuses on a culture of inclusion and belonging, where individuals feel respected, supported, and empowered. Compensation philosophy, benefits, and culture are central to positioning the Company as an employer of choice.

Diversity & Development:

• Development Programs: Access to LinkedIn Learning Library (90% active users). Personal Advancement Through Honing Self-Awareness program for new banking industry employees. Tuition Reimbursement Program for undergraduate and graduate degrees. Strategic programs for early career talent (Management Development Program with accelerated paths and executive mentoring) and high-potential/emerging leaders (mentorship, coaching, 360-degree feedback, individual development plans).
• Culture & Engagement: The 2025 Employee Engagement Survey highlighted themes of culture, leadership, growth, development, and communication. Pulse surveys are planned for 2026 to assess progress and guide initiatives. The Company upholds high ethical standards with a zero-tolerance policy for harassment, bias, and unethical behavior, reinforced by a Code of Business Conduct and Ethics and regular training.

Environmental & Social Impact

Environmental Commitments:

• Climate Strategy: The Company is focused on sustainability and minimizing its environmental impact. It implements energy conservation measures in larger facilities (building energy management systems, motion sensor lighting) and incorporates high-efficiency mechanical equipment, LED lighting, and modern building techniques in new construction and renovations.
• Resource Conservation: Mobile and online banking, remote deposit capture, electronic loan payments, and eStatements support reduced fuel and paper consumption. Community shred days are hosted to promote safe document disposal and recycling.

Social Impact Initiatives:

• Community Investment: The Company actively contributes to its communities, investing over $3 million in 2025 through market-based committees. It supports hundreds of organizations providing health and human services, education, affordable housing, economic development, arts, and agriculture.
• Philanthropy: Contributed over $375,000 to United Way chapters in 2025 through corporate pledges and employee campaigns.
• Employee Volunteerism: Employees are encouraged to volunteer, contributing 12,500 hours of service in 2025.
• NBT CEI-Boulos Impact Fund: A $10 million real estate equity investment fund (Bank as sole investor, launched 2022) targets high-impact, community-supported commercial real estate projects in low- and moderate-income areas within the Bank’s Community Reinvestment Act assessment areas in New York. Focus areas include job creation, affordable/workforce housing, Main Street revitalization, non-profit support, and environmentally sustainable developments. The fund made its first equity investment in The Flanigan Square Transformation Project in Troy, which opened affordable housing and a grocery store in 2025 and 2024, respectively.
• Product Impact: Offers flexible banking products for unbanked and underbanked individuals, such as the Bank On National Account Standards certified NBT iSelect Account (no monthly fees, no overdraft fees, no minimum balance). Provides accessible homeownership options through government-guaranteed programs and in-house initiatives, supported by affordable housing specialists.

Business Cyclicality & Seasonality

Demand Patterns: The Company's business is sensitive to economic cycles. Loan repayments, deposit flows, and the maturity/prepayment of investment securities and mortgage-related securities are influenced by interest rates, the housing market, general and local economic conditions, and market competition.

Planning & Forecasting: Management continuously monitors marketplace trends to improve the predictability of deposit flows and asset prepayments. The Asset Liability Committee (ALCO) meets monthly to review interest rate risk and profitability, formulating investment and funding strategies.

Regulatory Environment & Compliance

Regulatory Framework: NBT Bancorp Inc. is a registered bank holding company and financial holding company under the Bank Holding Company Act of 1956, supervised by the Federal Reserve Board (FRB). NBT Bank, National Association is a national banking association chartered and supervised by the Office of the Comptroller of the Currency (OCC) and regulated by the Federal Deposit Insurance Corporation (FDIC) as its deposit insurer. The Company is also subject to SEC disclosure requirements and NASDAQ rules. Financial products and services are subject to federal consumer protection laws and regulations promulgated by the Consumer Financial Protection Bureau (CFPB).

Industry-Specific Regulations:

• Affiliate and Insider Transactions: Governed by Sections 23A and 23B of the Federal Reserve Act and Regulation W, and Section 22(h) of the Federal Reserve Act and Regulation O.
• Mergers and Acquisitions: Subject to prior approval by the FRB (BHC Act) and OCC (Bank Merger Act), considering competitive effects, public benefits, capital position, Community Reinvestment Act (CRA) performance, and anti-money laundering effectiveness.
• Capital Distributions: Dividends from NBT Bank to NBT Bancorp Inc. are subject to OCC oversight and capital requirements.
• Federal Deposit Insurance: NBT Bank's deposits are insured by the FDIC up to $250,000 per depositor, per insured bank. The FDIC uses a risk-based assessment system.
• Brokered Deposits: Acceptance is limited to well-capitalized institutions or those with an FDIC waiver if adequately capitalized.
• Federal Home Loan Bank System: NBT Bank is a member of the FHLB of New York, subject to its rules and capital stock requirements.
• Debit Card Interchange Fees: Subject to Dodd-Frank Act regulations limiting interchange fees, with an exemption for issuers with less than $10 billion in assets. A proposed FRB rule in October 2023 would further reduce the cap and increase the fraud-prevention adjustment.
• Source of Strength Doctrine: NBT Bancorp Inc. is required to act as a source of financial and managerial strength to NBT Bank.
• Capital Adequacy: Subject to Basel III-based Capital Rules (CET1, Tier 1, Total Capital ratios) and a capital conservation buffer of 2.5%. NBT Bank is categorized as "well capitalized" as of December 31, 2025.
• Prompt Corrective Action (PCA): Federal banking agencies are required to take PCA if an insured depository institution fails to meet capital adequacy standards.
• Volcker Rule: Section 619 of the Dodd-Frank Act restricts proprietary trading and investments in certain covered funds.
• Consumer Protection: Subject to various federal consumer financial statutes and regulations, including the Truth-In-Lending Act, Equal Credit Opportunity Act, Home Mortgage Disclosure Act, and Fair Credit Reporting Act.
• Anti-Money Laundering (AML): Compliance with the Bank Secrecy Act and USA PATRIOT Act, including Customer Due Diligence Rule.
• Identity Theft Prevention: Compliance with the FCRA's Red Flags Rule.
• Office of Foreign Assets Control (OFAC): Compliance with U.S. economic sanctions.
• Financial Privacy and Data Security: Compliance with the Gramm-Leach Bliley Act (GLBA) and state laws, requiring information security programs and breach notifications.
• Community Reinvestment Act (CRA): NBT Bank has a "Satisfactory" CRA rating.

Legal Proceedings: There are no material legal proceedings, other than ordinary litigation incidental to the business, to which the Company or any of its subsidiaries is a party.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 22.9% for 2025, up from 21.6% in 2024, primarily due to higher pretax income and the impact of certain nondeductible acquisition expenses related to the Evans Bancorp, Inc. acquisition.
• Geographic Tax Planning: State taxes in New York contributed to the majority of the state tax effect in 2025.
• Tax Reform Impact: The "One Big Beautiful Bill Act," enacted July 4, 2025, permanently extends and modifies certain provisions of the Tax Cuts and Jobs Act and imposes a floor on charitable contribution deductions. This legislation is not expected to have a material impact on the consolidated financial statements.

Insurance & Risk Transfer

Risk Management Framework: The Company manages economic risks, including interest rate risk, primarily by managing the amount, sources, and duration of its assets and liabilities, and through the use of derivative instruments. The Asset Liability Committee (ALCO) monitors interest rate risk and profitability monthly.

Insurance Coverage: The Company maintains cybersecurity insurance, though it acknowledges such coverage may not be sufficient to cover all potential losses.

Risk Transfer Mechanisms: The Company uses interest rate swaps to facilitate customer transactions and enters into offsetting interest rate swaps with counterparties to minimize net risk exposure. It also enters into risk participation agreements to provide credit protection to financial institutions that originated swap transactions.### Company Overview Business Model: NBT Bancorp Inc. is a registered financial holding company that primarily operates through its bank subsidiary, NBT Bank, National Association, offering commercial banking, retail banking, and wealth management services. Complementing its core banking activities, the Company also provides retirement plan administration through EPIC Advisors, Inc. and full-service regional insurance services via NBT Insurance Agency, LLC. The Company's business philosophy centers on operating as a community bank, emphasizing local decision-making and a comprehensive suite of financial services for retail, commercial, and municipal customers. Revenue is predominantly derived from net interest income on its loan and securities portfolios, augmented by noninterest income from its diverse service offerings.

Market Position: NBT Bancorp Inc. operates in a highly competitive financial services landscape. The Company distinguishes itself by fostering a community-oriented banking approach, leveraging local market knowledge, and providing tailored financial solutions, including specialized agricultural lending, which sets it apart from many larger competitors. Its market presence spans upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine, and central and northwestern Connecticut. As of December 31, 2025, the Company's deposit base was characterized by diversity and granularity, comprising over 613,000 accounts with an average balance of $22,014 per account.

Recent Strategic Developments:

• Evans Bancorp, Inc. Acquisition (May 2, 2025): NBT Bancorp Inc. completed the acquisition of Evans Bancorp, Inc. for $221.8 million in common stock, issuing 5.1 million shares. This strategic move significantly expanded the Company's footprint in Western New York, including the Buffalo and Rochester communities, adding $1.67 billion in loans and $1.86 billion in deposits.
• Salisbury Bancorp, Inc. Acquisition (August 11, 2023): The Company acquired Salisbury Bancorp, Inc. for $161.7 million in stock, issuing 4.32 million shares. This acquisition extended the Company's market reach into Massachusetts' Berkshire county, New York's Dutchess, Orange, and Ulster counties, and Connecticut's Litchfield county, contributing $1.18 billion of loans and $1.31 billion in deposits.
• Strategic Acquisitions in Non-Banking Segments (2023-2024): The Company further diversified its non-banking operations through targeted acquisitions, including PACO, Inc. (retirement plan administration, November 2024, $3.3 million), Karl W. Reynard, Inc. (insurance agency, July 2024, $1.2 million), and Retirement Direct, LLC (retirement plan administration, July 2023, $2.8 million).
• NBT CEI-Boulos Impact Fund: Launched in 2022, this $10 million real estate equity investment fund, with NBT Bank as the sole investor, is dedicated to supporting low- and moderate-income communities through high-impact commercial real estate projects in New York. Its inaugural equity investment in The Flanigan Square Transformation Project in Troy delivered affordable workforce housing and a grocery store in 2025 and 2024, respectively.
• Flexible Banking Products: The Company continues to offer the NBT iSelect Account, which has received certification for meeting the Bank On National Account Standards annually since its 2021 inception. This account features no monthly charges, no overdraft fees, and no minimum balance, with over 26,000 accounts opened. Additionally, the Company provides a comprehensive suite of home lending products, including government-guaranteed programs and proprietary initiatives, supported by dedicated affordable housing specialists and partnerships with housing agencies.

Geographic Footprint: NBT Bancorp Inc.'s primary operational regions encompass upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine, and central and northwestern Connecticut. As of December 31, 2025, the Company maintained a network of 175 branch locations across forty-seven counties within these states.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin (Net Interest Income / Total Interest, fee and dividend income): 70.5%
• Operating Margin (Income before income tax expense / Total Revenue): 31.5%
• Net Margin (Net Income / Total Revenue): 24.3%

Investment in Growth:

• Capital Expenditures: $16.3 million
• Strategic Investments:
  • Evans Bancorp, Inc. acquisition: $221.8 million in common stock (May 2025)
  • PACO, Inc. acquisition: $3.3 million (November 2024)
  • Karl W. Reynard, Inc. acquisition: $1.2 million (July 2024)
  • Retirement Direct, LLC acquisition: $2.8 million (July 2023)

Business Segment Analysis

Banking

Financial Performance (2025):

• Net Interest Income: $501.472 million
• Noninterest Income: $120.960 million
• Noninterest Expense: $400.379 million
• Net Income: $144.734 million
• Key Growth Drivers: The segment's performance was significantly bolstered by the Evans Bancorp, Inc. acquisition, which contributed to a $1.58 billion increase in average interest-earning assets. Organic growth in earning assets and upward repricing of loans in the prevailing interest rate environment also played a crucial role. Noninterest income benefited from increased service charges on deposit accounts and card services income, primarily due to the Evans acquisition.

Product Portfolio:

• Deposit Products: A comprehensive suite including demand deposit accounts, savings accounts, interest-bearing checking accounts, money market deposit accounts (MMDA), and certificate of deposit (CD) accounts.
• Loan Products: A diverse portfolio encompassing indirect and direct consumer loans, home equity loans, mortgages, business banking loans, and commercial loans (Commercial & Industrial, Commercial Real Estate, Residential Mortgage).
• Other Services: Integrated trust and investment services, financial planning, life insurance services, and accessible electronic banking channels (online, mobile, telephone, ATM network).

Market Dynamics: The Banking segment operates within a highly competitive landscape for deposits, loans, and financial services. The Company's strategy emphasizes its community bank model, local market expertise, and customized services, such as agricultural lending, to maintain a competitive edge. The segment's financial health is intrinsically linked to the economic vitality of its regional operating areas.

Sub-segment Breakdown:

• Wealth Management: Generated $44.755 million in revenue in 2025, driven by favorable market performance and the expansion of its customer base through new account acquisitions.

Retirement Plan Administration

Financial Performance (2025):

• Net Interest Income: $0.074 million
• Noninterest Income: $66.600 million
• Noninterest Expense: $42.128 million
• Net Income: $19.402 million
• Key Growth Drivers: The increase in retirement plan administration fees was primarily attributable to higher market values of assets under administration, sustained organic growth, and the strategic acquisition of PACO, Inc. in the fourth quarter of 2024.

Product Portfolio:

• Comprehensive retirement plan and health savings account recordkeeping and administration services.
• Investment management solutions.
• Third-party administration services.
• Actuarial services.

Market Dynamics: This segment operates on a national scale through EPIC Advisors, Inc., a specialized benefits administration firm.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: In 2025, the Company repurchased 250,000 shares of its common stock for $10.2 million, at an average price of $40.74 per share.
• Dividend Payments: Total dividend payments amounted to $72.6 million in 2025, corresponding to $1.42 per share.
• Future Capital Return Commitments: On October 27, 2025, the Board of Directors authorized an amendment to the stock repurchase program, permitting the repurchase of up to 2,000,000 shares of common stock by December 31, 2027. As of December 31, 2025, 1,750,000 shares remained available for repurchase under this authorization.

Balance Sheet Position (as of December 31, 2025):

• Cash and Equivalents: $487.1 million
• Total Debt: $327.5 million (comprising Short-term borrowings of $148.1 million, Long-term debt of $43.2 million, Subordinated debt, net of $24.5 million, and Junior subordinated debt of $111.7 million)
• Net Cash Position: $159.6 million
• Debt Maturity Profile: Long-term debt maturities include $40.2 million in 2027 and $3.0 million in 2031. Subordinated debt of $25.0 million is due March 31, 2031. Junior subordinated debt has various maturities ranging from August 2029 to September 2036.

Cash Flow Generation (2025):

• Operating Cash Flow: $235.2 million
• Free Cash Flow (Operating Cash Flow - Capital Expenditures): $218.9 million

Operational Excellence

Production & Service Model: NBT Bancorp Inc. operates on a community banking model, prioritizing local decision-making and delivering a broad spectrum of banking and financial services. Its service delivery integrates a traditional branch network with 24-hour online, mobile, and telephone channels, complemented by an extensive ATM network. The Company's operational philosophy is to customize services to align with the specific needs of the communities it serves.

Supply Chain Architecture: The Company's operations are supported by third-party vendors for essential business infrastructure, including data processing and storage, transaction recording and monitoring, online banking interfaces, internet connectivity, and network access. Vendor selection is rigorous, with third-party providers mandated to uphold specified security standards.

Facility Network:

• Headquarters: The Company owns its principal headquarters located at 52 South Broad Street, Norwich, New York.
• Branch Network: As of December 31, 2025, the Company operates 175 branch locations, with 84 of these leased from third parties and the remainder owned.
• Other Facilities: Key operational centers include EPIC Advisors, Inc.'s headquarters in Rochester, New York, and NBT Insurance Agency, LLC's headquarters in Norwich, New York.

Operational Metrics:

• Energy Conservation: Larger facilities implement energy conservation measures through building energy management systems and motion sensor lighting controls. New construction and renovation projects integrate high-efficiency mechanical equipment, LED lighting, and modern building techniques to minimize the carbon footprint.
• Digital Efficiency: The adoption of mobile and online banking, remote deposit capture, electronic loan payments, and eStatements contributes to reduced fuel and paper consumption.

Market Access & Customer Relationships

Go-to-Market Strategy: The Company's market access strategy is rooted in its community-oriented banking model. It leverages local promotional activities, cultivates strong personal relationships through its officers, directors, and employees, and offers specialized services, such as agricultural lending, to cater to specific community needs.

Distribution Channels:

• Branch Network: A physical presence across 175 branch locations spanning upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine, and central and northwestern Connecticut.
• Digital Platforms: Comprehensive 24-hour online, mobile, and telephone banking channels, alongside an ATM network, provide convenient electronic access to products and services.

Customer Portfolio:

• Customer Base: Serves a diverse clientele including retail, commercial, and municipal customers.
• Customer Concentration: The Company's deposit base is characterized by its diversity and granularity, with over 613,000 accounts and an average balance of $22,014 per account as of December 31, 2025.
• Flexible Banking: Offers inclusive banking solutions such as the NBT iSelect Account, which is certified by the Bank On National Account Standards, featuring no monthly charges, no overdraft fees, and no minimum balance, specifically designed to serve unbanked and underbanked individuals.
• Homeownership Initiatives: Provides a robust suite of home lending products, including government-guaranteed programs (FHA, USDA, VA) and proprietary in-house initiatives (Habitat for Humanity, Home in the City, Portfolio Housing Agency, Portfolio 97). These efforts are supported by dedicated affordable housing specialists and strategic partnerships with housing agencies.

Geographic Revenue Distribution: The Company's operations are concentrated within its defined market areas across seven states. Specific revenue distribution by individual region or country is not disclosed in the filing.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The financial services industry is intensely competitive, shaped by evolving interest rate environments, regulatory shifts, rapid technological advancements, and ongoing consolidation. NBT Bancorp Inc. competes with a broad spectrum of financial institutions, including national, regional, and community banks, as well as savings and loan associations, credit unions, finance companies, brokerage firms, insurance companies, and money market funds. The advent of new technologies has lowered barriers to entry, enabling non-bank entities to offer services traditionally provided by banks.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The filing does not identify specific direct competitors by name but broadly categorizes them as national, regional, and community banks, alongside various other financial institutions.

Emerging Competitive Threats: The Company acknowledges new market entrants, disruptive technologies (including artificial intelligence), and alternative financial solutions as potential competitive threats.

Competitive Response Strategy: NBT Bancorp Inc. maintains its competitive advantage by reinforcing its community bank model, leveraging deep local market knowledge, and adapting to customer needs with tailored services. The Company actively invests in technology and strategic partnerships to enhance its product and service offerings and operational capabilities.

Risk Assessment Framework

Strategic & Market Risks

• Market Dynamics: The Company's financial performance is highly sensitive to macroeconomic conditions, including consumer confidence, unemployment rates, and interest rate fluctuations. Volatility in the U.S. and global economies, such as potential U.S. government debt defaults or economic recessions, could negatively impact investor confidence, consumer and business spending, credit demand, and asset valuations.
• Local Economic Conditions: The Company's success is significantly tied to the economic health of its primary operating regions. Downturns in these local economies could lead to increased nonperforming loans and diminished collateral values.
• Interest Rate Variations: Net interest income is highly susceptible to changes in interest rates. Sustained high or volatile rates can compress interest rate spreads, elevate funding costs, reduce loan origination volumes, and potentially lead to customer attrition due to competitive pricing.
• Lending Losses: A substantial portion of the loan portfolio (approximately 56%) comprises commercial and industrial, agricultural, commercial construction, and Commercial Real Estate (CRE) loans, which inherently carry higher risks of non-payment and loss compared to residential mortgages. The deterioration of even a few large commercial loans could result in a significant increase in nonperforming loans and loan losses.
• Allowance for Credit Losses Sufficiency: The estimation of the Allowance for Credit Losses (ACL) is inherently subjective, relying on assessments of current credit risks, economic forecasts, and future trends. Material changes in these factors or regulatory reviews could necessitate increases in the ACL, adversely affecting net income and capital. The CECL model is expected to introduce greater volatility to the ACL and reported earnings.
• Competition: Intense competition from a diverse array of financial institutions, many of which possess greater financial resources and broader product offerings, could weaken the Company's competitive standing, growth prospects, and profitability.
• Liquidity Risk: The Company faces the risk of being unable to meet its financial commitments or becoming overly dependent on alternative funding sources. Factors such as competitive pressures on deposit pricing, loan growth outpacing deposit growth, or disruptions in wholesale funding markets could strain liquidity.
• Credit Rating Reduction: A downgrade of the Company's or NBT Bank's credit ratings could negatively impact access to liquidity and capital, significantly increase funding costs, and reduce the willingness of investors and counterparties to lend or purchase securities.
• Third-Party Reliance: Dependence on third-party vendors for critical business infrastructure (e.g., data processing, online banking) exposes the Company to risks stemming from vendor failures, service disruptions, cyber-attacks, or substandard performance, which could impair service delivery and business operations.
• New Lines of Business/Products: The introduction or expansion of new business lines or products carries substantial risks and uncertainties, including potential delays in implementation, failure to achieve profitability targets, and adverse impacts from external factors like regulatory compliance and shifting market preferences.

Operational & Execution Risks

• Controls and Procedures Failure: Internal controls, disclosure controls, and corporate governance policies, despite robust design and operation, are subject to inherent limitations and may fail or be circumvented. Such failures could have a material adverse effect on the Company's business, results of operations, and financial condition.
• Environmental Liabilities: Foreclosure on real estate collateral could expose the Company to significant environmental liabilities, including investigation and clean-up costs, property damage claims, or personal injury claims, which could be substantial.
• Soundness of Other Financial Institutions: The interconnectedness of the financial services industry means that defaults by, or even concerns about, other financial institutions, including the Federal Home Loan Bank of New York (FHLB), could lead to losses or liquidity problems for the Company.

Financial & Regulatory Risks

• Extensive Government Regulation: The Company and its subsidiaries are subject to extensive federal and state regulation, primarily aimed at protecting depositors, federal deposit insurance funds, and the stability of the U.S. banking system, rather than equity investors. Changes in laws, regulations, or their interpretations could increase operational costs, restrict permissible activities, or alter the competitive balance within the industry.
• Heightened Regulatory Requirements (>$10B Assets): With total consolidated assets exceeding $10 billion, the Company is subject to enhanced supervisory requirements under the Dodd-Frank Act. These include the applicability of the Volcker Rule, increased capital, leverage, liquidity, and risk management standards, CFPB examination authority, and limits on debit card interchange fees. These requirements lead to increased compliance costs and may impact operational flexibility.
• Capital Distributions: The Company's ability to pay dividends and service its debt obligations is substantially dependent on capital distributions from its subsidiaries, which are subject to regulatory restrictions, including the need for OCC approval for dividends exceeding certain earnings thresholds.
• Volcker Rule: Section 619 of the Dodd-Frank Act imposes restrictions on proprietary trading and investments in certain covered funds, subject to specific exceptions.
• Depositor Preference: In the event of an insured depository institution's liquidation or resolution, the claims of depositors (including the FDIC as subrogee) have priority over other general unsecured claims against the institution, including those of the parent bank holding company.
• Consumer Protection and CFPB Supervision: Non-compliance with federal consumer financial laws (e.g., Truth-In-Lending Act, Equal Credit Opportunity Act, Home Mortgage Disclosure Act, Fair Credit Reporting Act) can result in civil actions, regulatory enforcement actions, and reputational damage.
• USA PATRIOT Act & OFAC: The Company is obligated to comply with the Bank Secrecy Act and USA PATRIOT Act, including the Customer Due Diligence Rule, to detect and report money laundering and terrorism financing. Compliance with OFAC-administered economic sanctions is also required, restricting transactions with designated foreign entities and countries, carrying risks of legal and reputational consequences for non-compliance.
• Financial Privacy and Data Security: The Company is subject to federal (Gramm-Leach Bliley Act) and state laws governing consumer privacy and data security, necessitating comprehensive information security programs and breach notification protocols.

Geopolitical & External Risks

• Geopolitical Exposure: While not explicitly detailed, the Company acknowledges that rising tariffs pose inflationary risks that the Federal Open Market Committee (FOMC) aims to manage, which could influence the broader economic outlook.
• Sanctions & Export Controls: Compliance with OFAC-administered sanctions is a continuous requirement, imposing restrictions on transactions with designated foreign countries, nationals, and entities, which can limit business activities and incur compliance costs.
• Severe Weather & Climate Change: The Company's branch locations and its customers' properties are vulnerable to the adverse effects of severe weather conditions, including flooding, wildfires, and high winds. These events can lead to property closures, damage, and delays in development. Furthermore, changes in climate-related laws or regulations could result in increased capital expenditures for energy efficiency and higher regulatory, compliance, credit, and reputational risks.

Innovation & Technology Leadership

Research & Development Focus: NBT Bancorp Inc. is committed to continuous investment in enterprise technology initiatives. The financial services industry is characterized by rapid technological change, with frequent introductions of new technology-driven products and services, including those incorporating artificial intelligence (AI), machine learning, and blockchain. The Company's future success is partly contingent on its ability to effectively adopt and leverage these technologies to meet customer demands and enhance operational efficiencies.

Core Technology Areas:

• Digital Banking Platform: The Company operates a modern digital banking platform that provides online and mobile services, offering features such as current credit score information and personal financial management tools.
• AI Integration: The Company, or its third-party providers, may develop or integrate AI technology into various business processes, services, or products. The development and use of AI are evaluated through the established Solutions Development Lifecycle (SDLC), which includes model validation and other risk management controls.

Intellectual Property Portfolio: The filing does not provide specific details regarding the Company's intellectual property portfolio, patent strategy, or any licensing programs.

Technology Partnerships: The Company has established relationships with national technology-driven consumer lending companies, including Sungage Financial, LLC (for residential solar financing) and LendingClub (which acquired Springstone Financial LLC, for other consumer loans).

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Company emphasizes its commitment to leadership continuity and organizational strength through a robust annual talent review and succession planning process, which involves both senior management and the Board of Directors.

Board Composition: The Board of Directors oversees cybersecurity risk as an integral part of its broader oversight of business strategy and enterprise risk management. The Risk Management Committee (RMC), a Board committee led by the Chief Risk Officer and comprising Board members and the Chief Executive Officer, is responsible for overseeing the Information Security Program. The Board reviews the overall Information Security Program at least annually.

Human Capital Strategy

Workforce Composition:

• Total Employees: As of December 31, 2025, the Company had 2,303 full-time equivalent employees.
• Geographic Distribution: Employee locations are distributed across the Company's operational footprint.
• Skill Mix: The Company is dedicated to fostering continuous learning and internal career growth, providing resources to enhance employee skills and competencies.

Talent Management:

• Acquisition & Retention: The Company prioritizes attracting, developing, and retaining exceptional talent. It offers a comprehensive Total Rewards Program designed to support employee health, well-being, and financial security, including paid parental leave, flexible work arrangements, paid time off, retirement transition options, and a robust Employee Assistance Program. Incentive programs are structured to recognize contributions at all levels and motivate employees toward shared success, while incorporating strong risk management practices.
• Retention Metrics: The Company reports consistently strong employee retention rates.
• Employee Value Proposition: The Company strives to cultivate a culture of inclusion and belonging, where every individual feels respected, supported, and empowered. Its compensation philosophy, benefits, and overall culture are central to its strategy of being an employer of choice.

Diversity & Development:

• Development Programs: Employees have access to the LinkedIn Learning Library, with 90% active users. Programs like "Personal Advancement Through Honing Self-Awareness" guide new banking industry employees in career goal definition. The Tuition Reimbursement Program supports employees pursuing higher education. Strategic programs, such as the Management Development Program for college seniors and high-potential leadership programs for experienced professionals, are designed to accelerate career advancement and align with succession planning objectives.
• Culture & Engagement: The 2025 Employee Engagement Survey identified key themes including culture, leadership, growth and development, and communication. Future pulse surveys are planned to assess progress and inform targeted initiatives. The Company upholds the highest standards of ethical conduct and workplace respect, with a zero-tolerance policy for harassment, bias, and unethical behavior, reinforced by its Code of Business Conduct and Ethics and regular training.

Environmental & Social Impact

Environmental Commitments:

• Climate Strategy: The Company is committed to business practices that encourage sustainability and minimize its environmental impact. In larger facilities, energy is conserved through building energy management systems and motion sensor lighting controls. New construction and renovations incorporate high-efficiency mechanical equipment, LED lighting, and modern building techniques to reduce the carbon footprint.
• Resource Conservation: Digital services such as mobile and online banking, remote deposit capture, electronic loan payments, and eStatements support customer efforts to reduce fuel and paper consumption. The Company also hosts community shred days across its footprint to promote safe document disposal and recycling.

Social Impact Initiatives:

• Community Investment: The Company actively engages in its communities, contributing over $3 million in 2025 through market-based committees. These contributions support hundreds of organizations focused on health and human services, education, affordable housing, economic development, the arts, and agriculture.
• Philanthropy: In 2025, corporate pledges and employee campaign contributions to United Way chapters exceeded $375,000, providing resources for critical local services.
• Employee Volunteerism: Employees are encouraged to volunteer their time and expertise, reporting 12,500 hours of service in 2025.
• NBT CEI-Boulos Impact Fund: This $10 million real estate equity investment fund, with NBT Bank as the sole investor (launched 2022), targets high-impact, community-supported Commercial Real Estate (CRE) projects in low- and moderate-income areas within the Bank’s Community Reinvestment Act assessment areas in New York. Focus areas include job creation, affordable/workforce housing, Main Street revitalization, support for non-profit organizations, and environmentally sustainable real estate developments. Its first investment, The Flanigan Square Transformation Project in Troy, delivered affordable workforce housing and a grocery store in 2025 and 2024, respectively.
• Product Impact: The Company offers flexible banking products designed to be beneficial for unbanked and underbanked individuals, including the NBT iSelect Account, which is certified for meeting the Bank On National Account Standards. This account features no monthly charges, no overdraft fees, and no minimum balance, with over 26,000 accounts opened since 2021. The Company is also committed to making homeownership accessible through a suite of home lending products, including government-guaranteed programs (FHA, USDA Rural Housing Program, U.S. Department of Veterans Affairs) and various in-house programs, supported by affordable housing specialists and partnerships with housing agencies.

Business Cyclicality & Seasonality

Demand Patterns: The Company's business is subject to cyclical and seasonal influences. Loan repayments, deposit flows, and the maturity and prepayment of investment securities and mortgage-related securities are significantly influenced by prevailing interest rates, the housing market, general and local economic conditions, and competitive dynamics in the marketplace.

Planning & Forecasting: Management continuously monitors marketplace trends to identify patterns that can enhance the predictability of deposit flows and asset prepayments. The Asset Liability Committee (ALCO) convenes monthly to review the Company's interest rate risk position and profitability, and to formulate investment and funding strategies.

Regulatory Environment & Compliance

Regulatory Framework: NBT Bancorp Inc. is a registered bank holding company and financial holding company under the Bank Holding Company Act of 1956, subject to supervision by the Federal Reserve Board (FRB). Its bank subsidiary, NBT Bank, National Association, is a national banking association chartered and supervised by the Office of the Comptroller of the Currency (OCC) and regulated by the Federal Deposit Insurance Corporation (FDIC) as its deposit insurer. The Company is also subject to the disclosure and other regulatory requirements of the U.S. Securities and Exchange Commission (SEC) and the rules of The NASDAQ Stock Market LLC. Financial products and services are governed by federal consumer protection laws and regulations promulgated by the Consumer Financial Protection Bureau (CFPB).

Industry-Specific Regulations:

• Affiliate and Insider Transactions: Transactions between NBT Bank and its affiliates, including NBT Bancorp Inc., are governed by Sections 23A and 23B of the Federal Reserve Act and the FRB’s Regulation W. Loans to directors, executive officers, and principal stockholders are restricted by Section 22(h) of the Federal Reserve Act and Regulation O.
• Mergers and Acquisitions: Acquisitions of depository institutions and their holding companies require prior approval from the FRB (under the BHC Act) and the OCC (under the Bank Merger Act), with considerations including competitive effects, public benefits, capital position, Community Reinvestment Act (CRA) performance, and anti-money laundering effectiveness.
• Capital Distributions: Dividends from NBT Bank to NBT Bancorp Inc. are subject to OCC oversight and specific regulatory capital requirements.
• Federal Deposit Insurance: NBT Bank's deposit accounts are insured by the FDIC up to applicable limits, with FDIC assessments based on a risk-based system.
• Brokered Deposits: The acceptance of brokered deposits is restricted to well-capitalized institutions or those with an FDIC waiver if adequately capitalized.
• Federal Home Loan Bank System: NBT Bank is a member of the FHLB of New York, subject to its rules and capital stock holding requirements.
• Debit Card Interchange Fees: The Company is subject to Dodd-Frank Act regulations that limit interchange fees on debit card transactions, with an exemption for issuers with less than $10 billion in assets. A proposed FRB rule in October 2023 would further reduce the cap and increase the fraud-prevention adjustment.
• Source of Strength Doctrine: NBT Bancorp Inc. is required to serve as a source of financial and managerial strength to NBT Bank.
• Capital Adequacy: The Company is subject to Basel III-based Capital Rules, requiring minimum Common Equity Tier 1 (CET1), Tier 1, and Total Capital ratios, along with a capital conservation buffer of 2.5%. NBT Bank was categorized as "well capitalized" as of December 31, 2025.
• Prompt Corrective Action (PCA): Federal banking agencies are mandated to take PCA if an insured depository institution fails to meet certain capital adequacy standards.
• Volcker Rule: Section 619 of the Dodd-Frank Act restricts proprietary trading and investments in certain covered funds, subject to limited exceptions.
• Consumer Protection: The Company is subject to various federal consumer financial statutes and regulations, including the Truth-In-Lending Act, Equal Credit Opportunity Act, Home Mortgage Disclosure Act, and Fair Credit Reporting Act.
• Anti-Money Laundering (AML): Compliance with the Bank Secrecy Act and USA PATRIOT Act, including the Customer Due Diligence Rule, is required.
• Identity Theft Prevention: The Company complies with the FCRA's Red Flags Rule.
• Office of Foreign Assets Control (OFAC): Compliance with U.S. economic sanctions administered by OFAC is mandatory.
• Financial Privacy and Data Security: The Company is subject to federal (Gramm-Leach Bliley Act) and state laws concerning consumer privacy and data security, necessitating comprehensive information security programs and breach notification protocols.
• Community Reinvestment Act (CRA): NBT Bank's most current CRA rating was "Satisfactory."

Legal Proceedings: The Company is not a party to any material legal proceedings other than ordinary litigation incidental to its business.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The Company's effective tax rate was 22.9% for the year ended December 31, 2025, an increase from 21.6% in 2024. This increase was primarily driven by a higher level of pretax income and the impact of certain nondeductible acquisition expenses related to the Evans Bancorp, Inc. acquisition.
• Geographic Tax Planning: State taxes in New York constituted the majority (greater than 50%) of the state tax effect in 2025.
• Tax Reform Impact: The "One Big Beautiful Bill Act," enacted on July 4, 2025, permanently extended and modified certain provisions of the Tax Cuts and Jobs Act, including international tax provisions, and imposed a floor on tax deductions for charitable contributions. This legislation is not expected to have a material impact on the Company's consolidated financial statements.

Insurance & Risk Transfer

Risk Management Framework: The Company manages its economic risks, particularly interest rate risk, by strategically managing the amount, sources, and duration of its assets and liabilities. This is further supported by the judicious use of derivative instruments. The Asset Liability Committee (ALCO) plays a central role, meeting monthly to review the Company's interest rate risk position and profitability, and to formulate investment and funding strategies.

Insurance Coverage: The Company maintains cybersecurity insurance to mitigate potential losses from cyber incidents, though it acknowledges that such coverage may not be sufficient to cover all potential losses.

Risk Transfer Mechanisms: The Company utilizes interest rate swaps to facilitate customer transactions and enters into offsetting interest rate swaps with counterparties to minimize its net risk exposure from such transactions. Additionally, it engages in risk participation agreements to provide credit protection to financial institutions that originated swap transactions.