NBTB Q3 2026 Earnings Rise as Net Interest Margin Widens

NBTB reported record quarterly earnings for the third quarter of 2026 as loan growth and a wider net interest margin lifted revenue. Net income rose 6.5% from a year earlier to $58.0 million, while diluted earnings per share increased 7.8% to $1.11.

Revenue excluding net securities gains and losses advanced 4.8% year over year to $195 million. Fully tax-equivalent net interest income, a non-GAAP measure, increased 5.5% to $142.7 million, supported by organic loan growth and higher earning-asset yields. One additional day in the quarter also contributed to the sequential increase.

The fully tax-equivalent net interest margin widened to 3.78%, up 5 basis points from the second quarter and 12 basis points from the prior-year period. Interest-earning asset yields increased 6 basis points sequentially, including a 5-basis-point rise in loan yields, while the total cost of funds edged up 1 basis point to 1.42%. Net accretion from acquired loans and borrowings totaled $7.3 million, $1.5 million more than in the previous quarter.

Operating net income, which excludes certain securities gains or losses and acquisition-related items, was also $58.0 million, with operating diluted EPS of $1.11. Operating return on average assets was 1.41%, while operating return on average tangible common equity was 16.53%. The latter was below 17.61% a year earlier despite improving from 15.61% in the second quarter.

Loan Growth Continues as Run-Off Portfolios Decline

Period-end loans reached $11.95 billion, increasing $74.4 million from the second quarter and $350.4 million, or 3.0%, from the end of 2025. Excluding residential solar and other consumer portfolios in planned run-off, loans grew $427.2 million, or 3.9%, during the first nine months of the year.

Commercial loans increased by $234 million from year-end to $6.70 billion, while consumer loans rose by $116 million to $5.24 billion. Commercial lending represented 56% of the portfolio and consumer lending accounted for 44%. Non-owner-occupied commercial real estate was the largest loan category at 33% of total loans and equaled 214.1% of capital.

The overall loan yield rose to 5.69% from 5.64% in the second quarter. New third-quarter originations carried yields of 6.41% for commercial loans, 5.51% for indirect auto loans and 6.02% for residential mortgages.

Period-end deposits were $13.59 billion, up $49.1 million sequentially but down $74.5 million, or 0.5%, from the prior-year quarter. Core deposits, excluding time deposits, grew 2.6% during the first nine months of 2026. No- and low-cost deposits made up 59% of total deposits and carried an average cost of 38 basis points.

The cost of total deposits declined 1 basis point sequentially to 1.32%. Deposits supplied 96% of funding, and the loan-to-deposit ratio was 87.9%, which the company said provided balance-sheet flexibility.

Fee Income Rises, While Expenses Increase

Noninterest income excluding net securities gains and losses totaled $52.9 million, up $1.5 million, or 2.9%, from a year earlier. Retirement-plan administration fees increased $1.4 million, service charges on deposit accounts rose $0.8 million and card-services income gained $0.4 million. Those increases were partly offset by a $0.8 million decline in bank-owned life insurance income.

Salaries and benefits rose $0.6 million sequentially to $69.6 million, reflecting an additional payroll day and higher incentive compensation, partly offset by lower medical expenses and payroll taxes. Other expenses increased to $45.6 million, driven by higher activity-based costs and a $0.5 million increase in the reserve for unfunded loan commitments.

Credit Metrics Show Mixed Movement

Net charge-offs were $4.3 million, or an annualized 0.14% of average loans, compared with 0.15% in both the second quarter and the year-earlier period. The provision for loan losses declined to $3.8 million from $6.1 million in the previous quarter.

Nonperforming assets increased to $70.3 million, representing 0.43% of assets, from $65.3 million and 0.40% in the second quarter. The loan-loss reserve stood at $140.0 million, or 1.17% of loans, compared with 1.18% three months earlier. The reserve ratio for residential solar and other consumer loans was 4.44%, the highest among the disclosed portfolio categories.

Capital ratios remained above the levels reported a year earlier. The common equity Tier 1 ratio was 12.43%, total risk-based capital was 14.36% and the non-GAAP tangible equity ratio was 9.07%. Tangible book value per share reached $27.75, up 8.8% year over year. NBTB also announced a fourth-quarter cash dividend of $0.40 per share, 8.1% above the prior-year fourth-quarter dividend.

The presentation did not provide broad earnings guidance. It indicated that the investment portfolio is expected to generate $375 million to $400 million of annual cash flows. However, total net unrealized losses on available-for-sale and held-to-maturity securities increased 52% from year-end to approximately $237.8 million at September 30.

NBTB identified economic conditions, interest-rate and trade-policy changes, credit deterioration, reserve requirements, acquisition integration, regulation, competition and expense control among the factors that could cause future results to differ from current expectations.