NBT Bancorp Q3 profit slips as merger costs rise

NORWICH — NBT Bancorp, Inc., (NASDAQ: NBTB), which last month announced plans to acquire Alliance Financial Corp. (NASDAQ: ALNC), reported an earnings dip in the third quarter as merger-related costs rose from previous acquisitions.

NBT reported net income of $14.5 million, or 43 cents a share, in the quarter, down 4.5 percent from $15.2 million, or 45 cents, in the third quarter of 2011. Merger-related costs totaled $600,000 during the quarter, up from $200,000 in the year-ago period, generating a negative impact of 1 cent per share on earnings.

However, the banking company still fared better than predicted by Damon DelMonte, an analyst in the Hartford, Conn. office
of New York City–based equity-research firm Keefe, Bruyette & Woods, Inc. DelMonte had forecast earnings of 40 cents per share for NBT.

It was “another strong quarter for NBTB as continued success in upstate New York markets, coupled with supplementing growth through its newly entered New England footprint, netted favorable results,” he wrote in his quarterly report about the company.

Improved earnings margins on interest income, coupled with higher fee income, were the primary factors that drove NBT’s earnings past his expectations, DelMonte wrote.

The strong third quarter, coupled with NBT’s recent announcement that it will acquire Alliance Financial, prompted DelMonte to upgrade his future outlook on the company. He increased his 2012 earnings estimate for NBT from $1.62 to $1.68 per share, with expected fourth-quarter earnings of 41 cents a share. DelMonte also bumped up his 2013 profit estimate from $1.67 to $1.76 a share, and established a 2014 earnings estimate of $1.85 per share.

“Acquiring the Alliance franchise in the greater Syracuse market is an exciting opportunity for strategic expansion that will be a great complement to our existing footprint in Central New York,” NBT President and CEO Martin Dietrich said in NBT’s earnings release.

In addition to its acquisition activity, NBT has also generated strong organic loan growth of 8.3 percent, Dietrich noted. “We are pleased with our results through the first three quarters of 2012, particularly in light of the pressures that the economy and regulatory environment continue to place on banks.”

NBT reported its earnings after the close of trading Oct. 22. Its shares rose 2.7 percent on Oct. 23.

For the first nine months of 2012, NBT reported net income of $41.4 million, down 6.2 percent from the year-ago period. Earnings per share totaled $1.23 in the first three quarters of this year, down from $1.29 per share a year earlier. Merger costs totaled $1.9 million, compared with $200,000 in the same period in 2011, resulting in a negative impact of 4 cents a share.

NBT reported total assets of $6 billion on Sept. 30, up by $430.5 million from Dec. 31, 2011. Loans and leases totaled $4.3 billion, up by $451 million from the end of 2011. Total deposits were $4.8 billion, up by $439 million from Dec. 31.

NBT’s board of directors declared a fourth-quarter cash dividend of 20 cents per share, payable on Dec. 15 to shareholders of record as of Dec. 1.

Headquartered in Norwich, NBT Bancorp, Inc. (www.nbtbancorp.com), is the financial holding company for NBT Bank, N.A. with 137 locations in New York, Vermont, and Massachusetts; Pennstar Bank with 35 locations in Pennsylvania; and Hampshire First Bank with five locations in New Hampshire. NBT also operates EPIC Advisors, Inc., a Rochester 401(k)-plan recordkeeping firm, and Mang Insurance Agency, LLC, a Norwich–based insurance agency.         

Contact DeLore at tdelore@tgbbj.com