NORWICH – While other financial institutions across the country were lining up for federal handouts at the end of last year, NBT Bancorp kept their hands in their pockets. Now the Norwich-based financial holding company is reaping the rewards.
In late March, NBT Bancorp was tapped to join the ranks of other “small capital” companies in various industries to be included in Standard & Poor’s Small Cap 600 index. Last week, the bank was able to parlay that announcement into more than $34 million in additional capital with a public offering of 1,576,230 shares of its common stock.
According to NBT President and CEO Martin Dietrich, the offering was designed to “further strengthen (the bank’s) already strong capital position.”
When a stock is added to an index, a spike in trading activity typically takes place, Dietrich explained. According to the bank president, the stock offering was planned to take advantage of that increased interest.
“The best time to raise capital is when you don’t need it,” he explained, saying the bank had no specific purpose in mind for the $34 million infusion. Not only will the added capital further strengthen the bank’s balance sheet, he said, but it will also provide an even stronger foundation for future growth.
According to Dietrich, the bank’s consistent earnings and strong capitalization made it an ideal candidate for inclusion in the S&P Small Cap 600 index. “We fit the bill,” he said.
NBT’s successful stock offering may be a positive sign for the financial industry as a whole. When Federal Reserve Chairman Ben Bernanke gave testimony before Congress recently, Dietrich explained, he told lawmakers that they would know the financial crisis was coming to an end when a bank could raise capital through a public stock offering. NBT is the first bank to do so this year, he said.