NBT’s Q2 earnings dip, but outlook remains positive

NORWICH, N.Y. — NBT Bancorp, Inc. (NASDAQ: NBTB) closed out the second quarter of 2023 with about a 20 percent decline in profit amid a volatile market, but banking-company executives expressed a positive outlook for the remainder of the year.

NBT reported that net income fell to $30.1 million, or 70 cents a share, in the second quarter of this year, from net income of $37.8 million, or 88 cents per share, in the same quarter a year prior. The latest quarter’s results were also down from NBT’s first-quarter net income of $33.7 million, or 78 cents a share.

In an Aug. 1 conference call with analysts, investors, and the media, NBT officials attributed the lower earnings to higher funding costs, amid higher interest rates. NBT also experienced $4.5 million, or 8 cents per share, in securities losses during the second quarter and incurred $1.2 million, or 2.3 cents per share, in expenses related to its acquisition of Salisbury Bancorp, Inc. 

NBT formally completed that merger on Aug. 11, according to a company news release. Salisbury transitioned to NBT that day, with all 13 Salisbury branches in northwestern Connecticut, the Hudson Valley region, and southwestern Massachusetts opening as NBT branches on Aug. 14.

While noting there was a lot of volatility during the second quarter, John H. Watt, Jr., NBT president and CEO, remained positive. “Throughout this period, NBT focused on our customers and our communities, and our results demonstrate the success of this approach,” he contended.

With the Salisbury acquisition under its belt, Watt said NBT is on offense for the second half of the year.

“We are well positioned with strong liquidity and capital levels, a diversified business mix, highly effective risk-management practices, and a team of experienced professionals,” he said.

Q2 earnings details

Highlights of the second quarter include loan growth on both the commercial and consumer sides of 5 percent. Loans totaled $8.36 billion at the end of the quarter, up $208 million from Dec. 31, 2022.

“We grew loans in all our core portfolios in the second quarter, and our funding sources remained resilient. Our credit performance remained consistent and favorable, and we continued to grow capital,” Watt said in NBT’s earnings report issued on July 31.

The banking company’s deposits climbed by $34 million, or 0.4 percent, to $9.53 billion as of June 30, compared to the end of 2022. NBT also continued to experience a migration from noninterest-bearing and low-interest checking and savings accounts into higher-cost money market and time-deposit instruments as interest rates rose.

In July, NBT’s EPIC Retirement Plan Services subsidiary acquired the assets of North Carolina–based Retirement Direct, LLC, a move that added more than $2 billion in assets and more than 500 individual retirement plans to EPIC’s portfolio. 

NBT Bancorp also reported that it bought back 87,000 shares of its common stock in the second quarter of 2023 at an average price of $31.94 per share under its previously announced share repurchase program. The banking company said it may buy back shares of its common stock from time to time to mitigate the potential dilutive effects of stock-based incentive plans and other potential uses of common stock for corporate purposes. As of June 30, 2023, NBT had 1.5 million shares available for repurchase under this plan authorized on Dec. 20, 2021 and set to expire on Dec. 31, 2023.

NBT’s stock price has declined about 15 percent year to date, as of the close on Aug. 14. The stock had a solid 2022 year, rising nearly 12 percent.

Norwich–based NBT Bancorp, with total assets of $11.9 billion, is a financial holding company that operates NBT Bank, N.A., a full-service bank, as well as Rochester–based EPIC Retirement Plan Services, a benefits-administration firm, and NBT Insurance Agency, a full-service insurance agency.