$38.63
$70.83
bear $38.63
base $62.95
bull $70.83
margin of safety $31.00
market price* $50.85
NBT Bancorp is a community bank holding company serving customers in upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine and central and northwestern Connecticut. At the end of 2025 it had $11.6 billion of loans and $13.5 billion of deposits (loans were 85.9% of deposits). Net interest income was $501.5 million in 2025, and fee income of $195.3 million was 28% of revenue; retirement plan administration ($61.6 million) and wealth management ($44.8 million) are the largest fee lines. For a bank we treat owner earnings as net income per diluted share, which matches reported earnings per share. That figure was $1.80 in 2016, $1.87, $2.56, $2.74, $2.37 in 2020, $3.54, $3.52, $2.65 in 2023, $2.97 and $3.33 in 2025. The bank earned a profit in each year from 2014 through 2025, including 2020, when the loan loss provision doubled to $51.1 million and earnings per share fell about 14%. OWNER EARNINGS AND THE LEVEL WE USE. 2025 was distorted in both directions. It carried $19.5 million of Evans acquisition costs and a $13.0 million provision recorded on the acquired loans, which together we estimate cost roughly $0.49 per share after tax, and it included only eight months of Evans (the deal closed May 2, 2025; it added $1.67 billion of loans and $1.86 billion of deposits). The net interest margin rose to 3.59% from 3.23% in 2024 (3.29% in 2023), helped by the July 2025 redemption of $118 million of subordinated debt that carried a 5.45% average rate and would have reset to a floating rate above 9%. Earnings after the deal are now visible: the second half of 2025 produced about $2.12 per share (the full year of $3.33 less $1.21 for the first half), and the first half of 2026 produced $1.99 ($0.97 and $1.02 in the two quarters). Four consecutive quarters near $1.00 corroborate a new, higher level, and the business is the post-deal bank, so earlier years describe a smaller one. We anchor at $3.80 per share, the 2025 figure with the acquisition costs removed, which is below the $4.00 to $4.25 annual pace of the last four quarters because only a few post-deal quarters exist. The 2021 result ($3.54) was lifted by a $8.3 million reserve release and is not used. Judgements: we do not add back the loan loss provision (it is the real cost of lending) or the $11.9 million of 2025 intangible amortization, which is conservative by about $0.18 per share; we do not subtract any debt, because deposits and borrowings are the raw material of a bank and interest is already deducted from earnings. Two things we could not reconcile from the filings: how much of the current margin is accretion on the acquired loans, and quarter-by-quarter detail beyond the half-year totals. GROWTH CREDITED. Trailing actual growth in 2025 was +12.1% ($3.33 versus $2.97). The base case's first year is $3.80, which is 14% above reported 2025, a rate above the trailing actual, so we name the reasons, all in the filings: the $32.5 million of acquisition costs and acquisition provision that will not recur, four more months of Evans earnings, and first-half 2026 earnings already reported at $1.99. After year one we credit no growth. The reason is evidence: in 2025 loans rose $1.63 billion including $1.67 billion bought from Evans, so loans outside the deal were roughly flat, and deposits fell 7% in 2022 ($10.23 billion to $9.50 billion). Growth through further bank purchases (Salisbury in 2023 and Evans in 2025 were each a large step), fee growth tied to market values, margin expansion and share buybacks are left out because none is in the bag. The rising intangible amortization ($4.7 million in 2023, $8.4 million in 2024, $11.9 million in 2025) is a wasting asset, which is another reason not to credit growth. THE THREE CASES. Each case is discounted at 6% a year, and a bank's owner earnings are valued after interest, so no debt is subtracted: the value shown is what the business is worth to shareholders. Base case, $62.95 per share. Earnings stay at $3.80 per share. The one downturn we include is a 2020-type year in year five, when earnings fall 13.5% (2020 versus 2019 was the bank's own recent record) to about $3.29 and then recover. After year ten the deposit franchise keeps operating: the bank returned 0.95%, 1.04% and 1.11% on average assets in 2023, 2024 and 2025 and earned a profit every year in the record above; we carry that level forward flat, with no growth. Bear case, $38.63 per share. This case contains a full real-estate-led credit cycle like 2008 to 2010, plus a smaller margin. Commercial real estate is $4.80 billion, about 41% of loans, and 67% of loans are secured by real estate in the bank's footprint. The disclosed warning sign is potential problem loans of $271.8 million, up from $116.1 million a year earlier ($60.5 million of the increase came from Evans), although nonperforming loans were 0.45% of loans and the allowance was 267% of them. Our assumptions: the margin falls back to 3.23% (we estimate that costs about $50 million of pretax income a year); the bank's pre-provision profit slips from roughly $281 million (our estimate at a 22.9% tax rate and a $24 million normal provision) to $230 million. Loan loss provisions of about 1.0%, 1.7%, 1.2% and 0.6% of loans in years two through five total about $520 million, roughly 4.5% of loans against a $138 million allowance at the end of 2025. Earnings per share then run $3.41, $1.91, $0.56, $1.34, $2.36, and settle at $3.04 from year six. After year ten earnings decline 2% a year, reflecting the flat loans and the 2022 deposit outflow. Earnings stay positive, so we assume no stock issuance, but the dividend (about $77 million a year at the first-half 2026 pace) would likely be cut. This case is worth more than tangible book value ($26.54 per share at year-end 2025) because even in the worst year the bank earns money and it then earns about $3.04 a share for years from a deposit base that persisted through the margin squeeze of 2022 to 2023. Bull case, $70.83 per share. Earnings hold at $4.25 per share, the pace of the second half of 2025 (about $2.12 per share per half), with no downturn in the ten years, then continue flat. There is no growth, acquisition or market-driven fee gain in it. Each case has the same shape: the business value is the full figure, nothing is owed to lenders in the valuation, and the per-share difference between cases comes from credit losses and the margin. WHAT WOULD MAKE THIS WRONG. If the margin returns to 3.23% without any credit event, earnings of roughly $3.05 would be worth about $50; if losses are twice our bear assumption, the bank would erase several years of earnings, and tangible equity (8.95% of assets) could need to be rebuilt. The company says its net interest income is near neutral to interest rate moves, with only a modest decrease if rates fall, which supports holding the level. The 2025 report also says the loan book has no significant concentration in any one industry. MARGIN-OF-SAFETY PRICE: $31.00. We are fairly sure of the earnings level: four quarters near $1.00 per share against a $3.80 anchor, and rate sensitivity is near neutral. The worst plausible outcome is a severe real-estate credit cycle worse than our bear case, with losses several times the recent 0.16% net charge-off rate, which would take two to three years of earnings and might require raising equity at a low price. The structure should survive it: the bank is funded by deposits, has reserves of 1.19% of loans, and has no dominant customer or controlling owner we could find in the filings. If we are wrong about the margin (earnings near $3.05) or about credit (the bear path), the shares are worth around $50 or $39 on our figures, and in a severe case beyond the bear case, tangible book value of $26.54 is the reference floor, not a guarantee. The price assumes a three-to-five-year holding period. During that period the bank pays dividends of about $1.48 per share ($38.5 million in the first half of 2026) and retains the rest. At $31 the price is 8.2 times normal earnings (an earnings yield of 12.3%) and 1.17 times tangible book. For a 20% annual return over three years from $31, the shares would need to be worth about $49 (13 times $3.80), together with roughly $4.40 of dividends. That is a lower price than the base case value because a bank with 41% commercial real estate can lose several years of earnings, and the bear case, not the base case, sets the margin-of-safety price. NOTE ON EARLIER FIGURES. The bank's prior published estimates were made on a different valuation basis and are not comparable. One factual correction to that earlier note: tangible book value per share was $26.54 at the end of 2025, not about $31.