NBTB WACC - Weighted Average Cost of Capital
The WACC of NBT Bancorp Inc (NBTB) is 8.4%.
| Range | Selected | |
| Cost of equity | 8.2% - 10.4% | 9.3% |
| Tax rate | 22.2% - 22.5% | 22.35% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.5% - 9.4% | 8.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.94 | 0.99 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.2% | 10.4% |
| Tax rate | 22.2% | 22.5% |
| Debt/Equity ratio | 0.19 | 0.19 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.5% | 9.4% |
| Selected WACC | 8.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NBTB | NBT Bancorp Inc | 0.19 | 0.92 | 0.8 |
| BANC | Banc of California Inc | 0.59 | 0.18 | 0.13 |
| BUSE | First Busey Corp | 0.22 | 1.03 | 0.88 |
| EFSC | Enterprise Financial Services Corp | 0.21 | 0.78 | 0.67 |
| FCF | First Commonwealth Financial Corp | 0.09 | 0.85 | 0.79 |
| OCFC | OceanFirst Financial Corp | 0.25 | 1.11 | 0.93 |
| SBCF | Seacoast Banking Corporation of Florida | 0.14 | 0.94 | 0.85 |
| SBSI | Southside Bancshares Inc | 0.26 | 0.72 | 0.6 |
| TBK | Triumph Bancorp Inc | 0.12 | 1.15 | 1.05 |
| VBTX | Veritex Holdings Inc | 0.16 | 1.1 | 0.98 |
| Low | High | |
| Unlevered beta | 0.8 | 0.86 |
| Relevered beta | 0.91 | 0.99 |
| Adjusted relevered beta | 0.94 | 0.99 |
NBTB's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for NBTB:
cost_of_equity (9.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.94) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.