NBT Bancorp trades at $44.99 per share and has stayed right on track with the overall market, gaining 6.5% over the last six months. At the same time, the S&P 500 has returned 6.7%.

Is now the time to buy NBT Bancorp, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Is NBT Bancorp Not Exciting?

We're cautious about NBT Bancorp. Here are three reasons you should be careful with NBTB and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income.

Unfortunately, NBT Bancorp’s 8.5% annualized revenue growth over the last five years was mediocre. This was below our standard for the banking sector.

2. Net Interest Income Points to Soft Demand

Our experience and research show the market cares primarily about a bank’s net interest income growth as one-time fees are considered a lower-quality and non-recurring revenue source.

NBT Bancorp’s net interest income has grown at a 9.7% annualized rate over the last five years, slightly worse than the broader banking industry. Its growth was driven by an increase in its net interest margin, which represents how much a bank earns in relation to its outstanding loans, as its loan book shrank throughout that period.

3. EPS Barely Growing

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

NBT Bancorp’s EPS grew at a weak 4.3% compounded annual growth rate over the last five years, lower than its 8.5% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Final Judgment

NBT Bancorp’s business quality ultimately falls short of our standards. That said, the stock currently trades at 1.2× forward P/B (or $44.99 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere. Let us point you toward a top digital advertising platform riding the creator economy.

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