NBT Bank posts profit increase in 2nd quarter

NORWICH — NBT Bancorp Inc. (NASDAQ: NBTB), parent company of NBT Bank, reported that its net income in the second quarter of this year rose to $21.4 million from $20.3 million in the first quarter, and from $19.9 million in the second quarter of 2016. 

NBT generated earnings per share of 49 cents in the latest quarter, up from 46 cents in both the prior quarter and the year-ago earnings period.

“Quarter-over-quarter and year-over-year increases in net income and earnings per share demonstrate the strong efforts of our team of professionals to develop relationships that drive growth in loans, demand deposits and noninterest income,” NBT President and CEO John H. Watt, Jr. said in in the banking company’s earnings report. “For 10 years NBT has been engaged in technology enabled point of sale consumer lending. The launch of our solar loan program with Sungage Financial, Inc. announced earlier this month leverages our experience partnering with fintech [financial technology] companies to offer affordable and responsible loans to consumers and at the same time further diversify our delivery channels and the risk on our balance sheet.”

NBT issued its earnings report after the close of regular trading on July 24. Its stock price rose slightly (0.2 percent) the next day.

The earnings numbers

NBT generated net interest income of $69.6 million for the second quarter of 2017, up 1.6 percent from the first quarter, and 5.8 percent higher than the second quarter of 2016.

The banking company’s fully taxable equivalent (FTE) net interest margin was 3.44 percent for the three months ending June 30, down from 3.46 percent in the previous quarter, but “consistent” with the second quarter of 2016, according to the earnings report.

NBT produced noninterest income of $30.3 million in this year’s second quarter, up 5.4 percent from the first quarter, and 2.3 percent higher than the second quarter of 2016. The increases in noninterest income were primarily driven by higher retirement-plan administration, trust, and ATM and debit-card fees that were offset by lower insurance and other financial-services revenue during the second quarter of 2017, NBT said. The retirement-plan administration fees, in particular, rose mostly due to acquisitions NBT completed in 2016, as well as the purchase of Downeast Pension Services (DPS) in the second quarter of 2017. 

ATM and debit-card fees increased from the prior quarters because of growth in the number of accounts and card usage. Insurance revenue decreased from the previous quarter due to “seasonality increases typically seen in the first quarter,” NBT noted. Other noninterest income declined from the year-ago earnings period due to a non-recurring gain recognized in the second quarter of 2016.

NBT said that in this year’s first quarter, it adopted new accounting guidance for equity-based transactions requiring that all excess tax benefits and tax deficiencies associated with stock-based compensation be recognized as an income-tax benefit or expense in the income statement. Previously, tax effects resulting from changes in NBT’s stock price subsequent to the grant date were recorded through stockholders’ equity at the time of vesting or exercise. The adoption of the accounting guidance resulted in $1.4 million and $100,000 income-tax benefits, in the first and second quarters of 2017, respectively. 

NBT incurred income-tax expense of $10.7 million in this year’s second quarter, up $2.4 million, or nearly 29 percent, from the first quarter, and up $0.4 million, or 4.1 percent, from the second quarter of 2016. 

The banking company’s effective tax rate of 33.3 percent for the second quarter of 2017 was up from 29 percent in the first quarter, but down from 34 percent for the second quarter of 2016. The increase from the prior quarter mainly stemmed from a decrease of nearly $1.4 million in the income-tax benefit related to adopting the new accounting guidance, as well as a higher level of taxable income in the latest quarter, NBT explained. The decrease in the effective tax rate from the year-ago quarter was mainly due to a higher level of non-taxable income as a percentage of pre-tax income in the second quarter of this year.

Asset quality

NBT’s net charge-offs totaled $6.7 million in this year’s second quarter, down from $6.9 million in the first quarter, but up from $4.5 million in the second quarter of 2016. 

The banking company’s annualized net charge-offs to average loans for the second quarter was 0.42 percent, compared to 0.45 percent in the first quarter and 0.30 percent for the second quarter of last year.

The ratio of nonperforming loans to total loans was 0.50 percent as of this June 30, down from 0.56 percent for the prior quarter, and down from 0.65 percent as of a year ago. 

The ratio of past-due loans as a percentage of total loans stood at 0.59 percent on June 30, as compared to 0.54 percent on March 31, and 0.60 percent on June 30, 2016. 

Balance sheet

NBT had total assets of $9.1 billion as of June 30, 2017, up 2.4 percent from the end of 2016. The banking company’s loans totaled $6.4 billion as of June 30, up 2.7 percent, from Dec. 31, 2016. 

NBT reported total deposits of $7 billion as of June 30, up 0.6 percent, from the end of last year. 

The NBT board of directors approved a 2017 third-quarter cash dividend of 23 cents per share. The dividend will be paid on Sept. 15, to shareholders of record as of Sept. 1.

 NBT Bancorp is a financial holding company, headquartered in Norwich, which primarily operates through NBT Bank, N.A., a full-service community bank, and through two financial-services companies. 

NBT Bank has 154 branches in New York, Pennsylvania, Vermont, Massachusetts, New Hampshire, and Maine. EPIC Advisors, Inc., based in Rochester, is a full-service 401(k) plan recordkeeping firm. NBT-Mang Insurance Agency, based in Norwich, is a full-service insurance agency.