NBT Bancorp (NASDAQ:NBTB) reported second-quarter net income of $53 million, or $1.02 per diluted common share, as record net interest income, loan growth and fee-based revenue contributed to improved results.
President and CEO Scott Kingsley said the company delivered “significantly stronger earnings” than in the prior-year quarter, with operating earnings rising 15%. Operating return on assets was 1.32% and operating return on tangible equity was 15.61%, while tangible book value per share reached $27.71, up 12.8% from a year earlier.
Loan Growth Broadens Across Business Lines
Total loans ended the quarter at $11.9 billion, an increase of $276 million, or 2.4%, from Dec. 31, 2025. Chief Financial Officer Annette Burns said all business lines grew during the first six months of the year, including a $178 million increase in commercial loans and a $98 million increase in consumer loans.
Commercial growth was balanced between commercial and industrial lending and commercial real estate relationships, according to Burns. Kingsley said loan activity improved after difficult winter conditions and elevated commercial real estate payoffs affected the first quarter. While he said the company may not replicate second-quarter growth in the second half, he characterized first-half performance as indicative of the company’s capability on a go-forward basis.
Kingsley also cited strong indirect auto lending during the quarter, though he said second-half growth in that category is not expected to match the second-quarter level. He said new indirect auto origination yields declined amid competition, but described the portfolio as fast-turning and low duration, with favorable loss characteristics.
Margin Expansion and Funding Trends
Net interest income rose to a record $137 million, up $3 million from the first quarter and more than 10% from the second quarter of 2025. The increase reflected organic growth in interest-earning assets, lower funding costs and one additional calendar day in the quarter, Burns said.
Net interest margin increased one basis point sequentially to 3.73%, and was 14 basis points above the year-earlier level. Management said the balance sheet remains positioned for a range of interest-rate environments, although further movement in earning-asset yields and margin will depend largely on the yield curve and reinvestment of loan and securities portfolio cash flows.
Burns said NBT expects stable to modestly higher margin over the next couple of quarters based on current rates. New originations are expected to be concentrated in commercial lending and residential mortgages, where management sees potential for higher pricing, although competition and deposit acquisition costs could affect that opportunity.
Total deposits stood at $13.5 billion at quarter-end. Deposits declined $205.7 million from March 31, primarily because of seasonal municipal outflows. Nearly 60% of deposits were held in no- and low-cost checking and savings accounts, with a blended cost just below 40 basis points. Total deposit costs fell one basis point during the quarter to 1.33%, while total funding costs declined to 1.41%.
Kingsley said commercial and business banking relationships create opportunities to add deposits through NBT’s treasury management platform. He said deposit growth from newly opened commercial relationships typically develops over quarters rather than weeks, as customers transition their banking activity.
Fee Income, Expenses and Credit Quality
Excluding securities gains, non-interest income was $49.6 million, unchanged from the prior quarter and up 5.8% year over year. Retirement plan administration revenue increased 7.8% from a year earlier. Combined quarterly revenue from retirement plan services, wealth management and insurance services exceeded $32 million, and non-interest income represented about 27% of total revenue.
Management said wealth management revenue was affected by the timing of activity-based fees and open personnel positions that affected production during the quarter.
Total operating expenses declined 0.7% sequentially. Salaries and employee benefits were $69 million, rising modestly because of the full-quarter effect of March merit increases, an additional payroll day and higher medical costs. Those factors were partly offset by lower payroll taxes and stock-based compensation expenses. Burns said NBT expects full-year operating expense growth of roughly 2.5% to 3%, with payroll timing, incentive compensation and technology investments contributing to higher expenses in the second half.
Provision expense was $6.1 million, compared with $5.6 million in the first quarter, primarily reflecting loan growth. Loan loss reserves were 1.18% of total loans and covered more than twice the level of nonperforming loans.
Expansion, Micron Activity and M&A
Kingsley said NBT continues to benefit from its acquisition of Evans Bancorp, completed more than a year ago, and noted that the Buffalo region generated the highest loan origination volume across the company during the second quarter.
The company is pursuing organic expansion in Southern Maine, Southern New Hampshire and the Rochester, New York, market. Kingsley said NBT opened a branch south of Portland earlier this year and plans another in early 2027. It has also committed to two sites in the greater Rochester market and is evaluating additional locations.
Management also pointed to growing activity around Micron’s semiconductor project near Syracuse. Kingsley said construction has advanced and opportunities are emerging in infrastructure, construction and professional services. He added that workforce training, housing and community development are becoming a greater focus as the project progresses toward expected production in 2030.
On acquisitions, Kingsley said NBT remains in regular discussions with smaller community banks, though there has not been substantial transaction activity in its markets. The company generally views institutions with $1 billion to $3 billion in assets as its preferred range, while also considering smaller firms with differentiated non-interest income businesses.
About NBT Bancorp (NASDAQ:NBTB)
NBT Bancorp, Inc (NASDAQ: NBTB) is the bank holding company for NBT Bank, N.A., a full-service commercial bank that serves both individual and corporate clients across the Northeastern United States. Through its branch network and digital channels, the company offers a comprehensive range of commercial banking services, including business lending, treasury management, cash management and specialized industry financing. Its consumer banking platform provides checking and savings accounts, certificates of deposit, home mortgages, home equity lines of credit and other lending solutions tailored to meet personal and household financial needs.
In addition to traditional banking, NBT Bancorp delivers wealth management and fiduciary services through its trust division, offering investment advisory, trust administration, retirement planning and estate settlement.
