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Acquisitions | 9 Months Ended
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Sep. 30, 2025
Acquisitions [Abstract] |
Acquisitions |
4. | Acquisitions
Evans Bancorp, Inc. On May 2, 2025, the Company completed the acquisition of Evans through the merger of Evans with and into the Company, with the Company surviving the merger. Total consideration for the acquisition was $221.8 million in common stock. Evans, with assets of $2.19 billion at December 31, 2024, was headquartered in Williamsville, New York. Its primary subsidiary, Evans Bank, was a federally-chartered national banking association operating 18 banking locations in Western New York. The acquisition enhances the Company’s presence in Western New York, including the Buffalo and Rochester communities. In connection with the acquisition, the Company issued 5.1 million shares of common stock and acquired approximately $130.4 million of identifiable net assets. Preliminary goodwill of $91.4 million was recognized as a result of the merger and is not amortizable or deductible for tax purposes. The effects of the acquired assets and liabilities have been included in the consolidated financial statements since May 2, 2025. As a result of the full integration of the operations of Evans, it is not practicable to determine all revenue or net income included in the Company’s operating results relating to Evans since the date of acquisition as Evans results cannot be separately identified. The acquisition of Evans is being accounted for as a business combination in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations” (“ASC 805”), using the acquisition method of accounting. Accordingly, as of the date of the acquisition, the Company recorded the assets acquired, liabilities assumed and consideration paid at fair value based on management’s best estimates using information available at the date of the acquisition. These estimates are subject to adjustment based on updated information not available at the time of the acquisition. The amount of goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company with Evans. Accrued income taxes and deferred taxes associated with the Evans acquisition were recorded on a provisional basis and could vary from the actual recorded balance once tax provisions and returns are finalized. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed:
|  | May 2, 2025 |
(In thousands) |  | Evans Bancorp, Inc. |
Consideration: |  |  |
Cash paid to shareholders (fractional shares) |  | $ | 25 |
Common stock issuance |  |  | 221,767 |
Total net consideration |  | $ | 221,792 |
Recognized amounts of identifiable assets acquired and (liabilities) assumed: |  |  |  |
Cash and cash equivalents |  | $ | 40,197 |
Securities available for sale |  |  | 255,487 |
Securities held to maturity |  |  | 3,494 |
Loans, net of allowance for credit losses on purchased credit deteriorated loans |  |  | 1,665,712 |
Premises and equipment, net |  |  | 15,069 |
Core deposit intangibles |  |  | 33,240 |
Bank owned life insurance |  |  | 44,100 |
Other assets |  |  | 70,337 |
Total identifiable assets acquired |  | $ | 2,127,636 |
Deposits |  | $ | (1,864,049 | )
Borrowings |  |  | (113,712 | )
Other liabilities |  |  | (19,492 | )
Total liabilities assumed |  | $ | (1,997,253 | )
Total identifiable assets, net |  | $ | 130,383 |
Goodwill |  | $ | 91,409 |
The following is a description of the valuation methodologies used to estimate the fair values of major categories of assets acquired and liabilities assumed. The Company used an independent valuation specialist to assist with the determination of fair values for certain acquired assets and assumed liabilities. Cash and due from banks - The estimated fair value was determined to approximate the carrying amount of these assets. Securities available for sale (“AFS”) - The estimated fair value of the AFS investment portfolio was primarily determined using quoted market prices and dealer quotes. The investment securities were sold immediately after the merger and no gains or losses were recorded. Securities held to maturity (“HTM”) - The estimated fair value of the HTM investment portfolio, which consisted of local municipal securities, was retained at par, which is estimated to be equal to fair value. Loans - The estimated fair value of loans were based on a discounted cash flow methodology applied on a pooled basis. Loans were first segmented by purchased credit deteriorated (“PCD”) or non-purchased credit deteriorated (“non-PCD”) status, and then further grouped according to Federal Deposit Insurance Corporation (“FDIC”) call report segmentation. The valuation considered key loan characteristics including loan type, term, rate, payment schedule and loan performance attributes. Assumptions related to prepayment speeds, probability of default (“PD”) and loss given default (“LGD”) were also considered. The discount rates applied were based on a build-up approach factoring in the funding mix, servicing costs, liquidity premium and factors related to performance risk. Core deposit intangible - The core deposit intangible was valued utilizing the cost savings method approach, which recognizes the cost savings represented by the expense of maintaining the core deposit base versus the cost of an alternative funding source. The valuation incorporated assumptions related to account retention, discount rates, deposit interest rates, deposit maintenance costs and alternative funding rates. Deposits - The fair value of noninterest bearing demand deposits, interest-bearing checking, money market and savings deposit accounts were assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. Certificate of deposit (“CD”) (time deposit accounts) were valued at the present value of the certificates’ expected contractual payments discounted at market rates for similar certificates which approximates carrying value. Borrowings - The estimated fair value of short-term borrowings was determined to approximate stated value. Long-term debt, subordinated debt and junior subordinated debt were valued using a discounted cash flow approach incorporating a discount rate that incorporated similar terms, maturity and credit rating. Accounting for Acquired Loans - Acquired loans are classified into two categories: PCD loans and non-PCD loans. PCD loans are defined as a loan or group of loans that have experienced more than insignificant credit deterioration since origination. Non-PCD loans had an allowance established on acquisition date, which is recognized as an expense through the provision for credit losses. For PCD loans, an allowance is recognized by adding it to the fair value of the loan, which is the amortized cost. There is no provision for credit loss expense recognized on PCD loans because the initial allowance is established by grossing-up the amortized cost of the PCD loan. The allowance for credit losses on non-PCD loans of $13.0 million was recorded through the provision for loan losses within the unaudited interim consolidated statements of income. The following table provides details related to the fair value of acquired PCD loans.
(In thousands) |  | PCD Loans |
Par value of PCD loans at acquisition |  | $ | 336,398 |
Allowance for credit losses at acquisition |  |  | 7,726 |
Discount at acquisition |  |  | (36,584 | )
Fair value of PCD loans at acquisition |  | $ | 307,540 |
Direct costs related to the acquisition were expensed as incurred. Acquisition integration-related expenses were $1.1 million and $19.5 million during the three and nine months ended September 30, 2025, respectively. These amounts have been separately stated in the unaudited interim consolidated statements of income and are included in operating activities in the unaudited interim consolidated statements of cash flow. Supplemental Pro Forma Financial Information (Unaudited) The following table presents certain unaudited pro forma financial information for illustrative purposes only, for the three and nine months ended September 30, 2025 and 2024, as if Evans had been acquired on January 1, 2024. This unaudited pro forma information combines the historical results of Evans with the Company’s consolidated historical results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the respective periods. The pro forma information is not indicative of what would have occurred had the acquisition taken place at the beginning of the year prior to the acquisition. The unaudited pro forma information does not consider any changes to the provision expense resulting from recording loan assets at fair value, cost savings or business synergies. As a result, actual amounts would have differed from the unaudited pro forma information presented and the differences could be significant.
|  | Pro Forma (Unaudited) |  |  | Pro Forma (Unaudited) |
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(In thousands,) |  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Total revenue, net of interest expense |  | $ | 186,068 |  |  | $ | 169,888 |  |  | $ | 535,434 |  |  | $ | 486,702 |
Net income |  |  | 54,471 |  |  |  | 43,390 |  |  |  | 107,338 |  |  |  | 116,797 |
Other Acquisitions In November 2024, the Company, through its subsidiary, NBT Bank, National Association, completed its acquisition of certain assets of PACO, Inc., a third-party administration business based in West Des Moines, Iowa for a total consideration of $3.3 million. As part of the acquisition, the Company recorded goodwill of $0.7 million and a $2.9 million contingent considerations recorded in other liabilities on the consolidated balance sheets as of December 31, 2024. In July 2024, the Company, through its subsidiary, NBT Insurance Agency, LLC, a full-service insurance agency, completed the acquisition of substantially all of the assets of Karl W. Reynard, Inc. located in Stamford, NY for a total consideration of $1.2 million. Karl W. Reynard, Inc. was a long-established property and casualty agency offering personal and commercial lines. This strategic acquisition expands the presence of NBT Insurance Agency, LLC in the Catskills, where the agency and the Bank are well established. As part of the acquisition, the Company recorded goodwill of $0.2 million and a $1.0 million contingent consideration recorded in other liabilities on the unaudited interim consolidated balance sheets. The operating results of the acquired companies are included in the consolidated results after the date of acquisition.

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