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NBT Bancorp Inc. Announces First-Quarter Results and Declares Quarterly Cash Dividend

04/25/05

NORWICH, N.Y., Apr 25, 2005 (BUSINESS WIRE) -- NBT Bancorp Inc. (NBT) (NASDAQ: NBTB) today reported net income for the three months ended March 31, 2005, of $12.8 million, up $0.4 million from net income of $12.4 million reported for the same period in 2004. Net income per diluted share for the three months ended March 31, 2005, was $0.39, up $0.02 or 5% from the $0.37 per diluted share earned in the same period in 2004. Return on average assets and return on average equity were 1.23% and 15.74%, respectively, for the three months ended March 31, 2005, compared with 1.23% and 15.73%, respectively, for the same period in 2004.

The results for the three months ended March 31, 2005, were driven primarily by increases in net interest income of $1.7 million and noninterest income of $0.3 million as well as a $0.3 million decrease in the provision for loan and lease losses offset by an increase in noninterest expense of $1.7 million compared with the same period in 2004.

In commenting on the results, NBT Chairman and CEO Daryl R. Forsythe stated, "We are pleased to report another solid quarter for the Company. These results were driven by the success of our key initiatives to increase the volume of quality loans, grow deposits and expand our community banking presence into higher growth markets. NBT continues to place its focus on superior customer service while also seeking opportunities to enhance stockholder value."

Loan and Lease Quality and Provision for Loan and Lease Losses

Nonperforming loans totaled $17.4 million at March 31, 2005, and represented 0.60% of total loans and leases, up from $16.2 million and 0.56% at December 31, 2004, and $13.7 million and 0.52% at March 31, 2004. Annualized net charge-offs to average loans and leases for the three months ended March 31, 2005, were 0.19%, down from the 0.22% annualized ratio for the three months ended March 31, 2004, and down from the year-to-date December 31, 2004, rate of 0.27%. The allowance for loan and lease losses as a percentage of total loans and leases was 1.57% at March 31, 2005, compared with 1.57% at December 31, 2004, and 1.64% at March 31, 2004. The ratio of the allowance for loan and lease losses to nonperforming loans was 261.28% at March 31, 2005, compared with 277.75% at December 31, 2004 and 315.25% at March 31, 2004. The Company anticipates selling approximately $5 million in nonperforming loans in the second quarter of 2005, which should lead to a further improvement in credit quality ratios. NBT President Martin Dietrich commented, "Our ability to improve credit quality reflects the strong process we have in place to resolve non-performing loans." For the three months ended March 31, 2005, the provision for loan and lease losses totaled $1.8 million, compared with $2.1 million provided in the same period in 2004. The decrease in the provision for loan and lease losses was driven primarily by a decrease in net charge-offs.

Net Interest Income and Net Interest Margin

Net interest income for the three months ended March 31, 2005, increased 5% to $38.8 million from $37.1 million for the same period in 2004. The increase in net interest income was driven primarily by loan growth. Average loans and leases increased 9% during the three months ended March 31, 2005, compared with the same period in 2004, as the Company experienced strong growth from commercial and consumer loans during the second half of 2004. The Company's net interest margin decreased slightly for the three months ended March 31, 2005 to 4.09% compared with 4.10% for the same period in 2004. The Company's net interest margin of 4.09% improved during the three months ended March 31, 2005, compared with the net interest margin of 4.03% for the three months ended December 31, 2004. The improvement in net interest margin from the December 31, 2004, quarter resulted primarily from earning assets repricing up faster than interest-bearing liabilities, principally from lagging core deposit pricing increases when compared with recent increases in the Federal Funds Rate.

Noninterest Income

Noninterest income for the three months ended March 31, 2005, totaled $10.7 million, up $0.3 million from the $10.4 million reported in the same period of 2004. Retirement plan administration fees for the three months ended March 31, 2005, totaled $0.9 million due to the acquisition of EPIC Advisors, Inc. in January 2005. Broker/dealer and insurance revenue for the three months ended March 31, 2005, decreased $0.4 million, primarily from the sale of the Company's broker/dealer subsidiary M. Griffith Inc. in March 2005.

Noninterest Expense

Total noninterest expense for the three months ended March 31, 2005, increased $1.7 million compared with the same period for 2004. Salaries and employee benefits for the three months ended March 31, 2005, increased $1.1 million or 8% over the same period in 2004, primarily from increases in salaries (from merit increases, market expansion and the EPIC Advisors, Inc. acquisition) and retirement expense. Occupancy expense for the three months ended March 31, 2005, increased $0.2 million over the same period in 2004, mainly from market expansion in the Albany and Binghamton markets. Equipment expense for the three months ended March 31, 2005, increased $0.2 million over the same period in 2004, due mainly to ATM upgrades.

Balance Sheet

Total assets were $4.3 billion at March 31, 2005, up $238.7 million from the $4.0 billion at March 31, 2004. Loans and leases were $2.9 billion at March 31, 2005, up 10% from the $2.6 billion at March 31, 2004. Loan growth was driven primarily by commercial and consumer loans, which experienced strong growth during the second half of 2004. Total deposits increased $154.3 million or 5%, totaling $3.2 billion at March 31, 2005, compared with $3.0 billion at March 31, 2004. Stockholders' equity was $319.2 million, representing a Tier 1 leverage ratio of 6.89%, at March 31, 2005, compared with $322.3 million or a Tier 1 leverage ratio of 6.96%, at March 31, 2004.

Stock Repurchase Program

On January 24, 2005, the NBT Board of Directors approved a new repurchase program whereby NBT is authorized to repurchase up to an additional 1,500,000 shares (approximately 5%) of its outstanding common stock from time to time as market conditions warrant in open market and privately negotiated transactions. At that time, there were 719,800 shares remaining under a previous authorization that was superseded by the new repurchase program. Under the authorized programs for the period, the Company purchased 514,683 shares of its common stock during the three months ended March 31, 2005, for a total of $11.9 million at an average price of $23.11 per share.

Dividend Declared

The NBT Board of Directors declared a second quarter 2005 cash dividend of $0.19 per share at a meeting held today. The dividend will be paid on June 15, 2005, to shareholders of record as of June 1, 2005.

Corporate Overview

NBT is a financial services holding company headquartered in Norwich, NY, with total assets of $4.3 billion at March 31, 2005. The Company primarily operates through NBT Bank, N.A., a full-service community bank with two divisions and through a financial services company. NBT Bank, N.A. has 115 locations, including 74 NBT Bank offices in upstate New York and 41 Pennstar Bank offices in northeastern Pennsylvania. EPIC Advisors, Inc. is a full-service 401(k) plan recordkeeping firm. More information about NBT and its divisions can be found on the Internet at www.nbtbancorp.com, www.nbtbank.com, www.pennstarbank.com and www.epic1st.com.

Forward-Looking Statements

This news release contains forward-looking statements. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of NBT Bancorp and its subsidiaries and on the information available to management at the time that these statements were made. There are a number of factors, many of which are beyond NBT's control, that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressures among depository and other financial institutions may increase significantly; (2) revenues may be lower than expected; (3) changes in the interest rate environment may reduce interest margins; (4) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit; (5) legislative or regulatory changes, including changes in accounting standards and tax laws, may adversely affect the businesses in which NBT is engaged; (6) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than NBT; and (7) adverse changes may occur in the securities markets or with respect to inflation. Forward-looking statements speak only as of the date they are made. Except as required by law, NBT does not undertake to update forward-looking statements to reflect subsequent circumstances or events.

NBT Bancorp Inc.
                     SELECTED FINANCIAL HIGHLIGHTS
                              (unaudited)

                                                        Net    Percent
                                      2005       2004  Change  Change
                                      ----       ----  ------  -------
                                (dollars in thousands,
                                 except share and per
                                 share data)

Three Months Ended March 31,
Net Income                         $12,789    $12,371     $418   3%
Diluted Earnings Per Share           $0.39      $0.37    $0.02   5%
Weighted Average Diluted
 Common Shares Outstanding      32,977,381 33,173,937 (196,556) -1%
Return on Average Assets              1.23%      1.23%    0.00%  0%
Return on Average Equity             15.74%     15.73%    0.01%  0%
Net Interest Margin                   4.09%      4.10%   -0.01%  0%
----------------------------------------------------------------------

Asset Quality                      March    December    March
                                 31, 2005   31, 2004  31, 2004
                                 --------   --------  --------
Nonaccrual Loans                  $16,612    $14,991   $13,258
90 Days Past Due and Still
 Accruing                            $760     $1,186      $478
Total Nonperforming Loans         $17,372    $16,177   $13,736
Other Real Estate Owned (OREO)       $438       $428      $757
Total Nonperforming Loans and
 OREO                             $17,810    $16,605   $14,493
Nonperforming Securities               $0         $0      $215
Total Nonperforming Assets        $17,810    $16,605   $14,708
Allowance for Loan and Lease
 Losses                           $45,389    $44,932   $43,303
Year-to-Date (YTD) Net Charge-
 Offs                              $1,339     $7,334    $1,472
Allowance to Loans and Leases        1.57%      1.57%     1.64%
Total Nonperforming Loans to
 Loans and Leases                    0.60%      0.56%     0.52%
Total Nonperforming Assets to
 Assets                              0.42%      0.39%     0.37%
Allowance to Nonperforming Loans   261.28%    277.75%   315.25%
Annualized Net Charge-Offs to
 YTD Average Loans and Leases        0.19%      0.27%     0.22%
----------------------------------------------------------------------

Capital
Equity to Assets                     7.50%      7.89%     8.02%
Book Value Per Share                $9.85     $10.11     $9.80
Tangible Book Value Per Share       $8.25      $8.66     $8.29
Tier 1 Leverage Ratio                6.89%      7.13%     6.96%
Tier 1 Capital Ratio                 9.41%      9.78%    10.12%
Total Risk-Based Capital Ratio      10.67%     11.04%    11.37%
----------------------------------------------------------------------

----------------------------------------------------------------------
Quarterly Common Stock Price     2005          2004          2003
Quarter End                   High   Low    High   Low    High   Low
                              ----   ---    ----   ---    ----   ---
March 31                     $25.66 $21.48 $23.00 $21.21 $18.60 $16.75
June 30                                     23.18  19.92  19.94  17.37
September 30                                24.34  21.02  21.76  19.24
December 31                                 26.84  21.94  22.78  19.50
----------------------------------------------------------------------

                           NBT Bancorp Inc.
                     SELECTED FINANCIAL HIGHLIGHTS
                              (unaudited)

                                                        Net    Percent
                                      2005       2004  Change  Change
                                      ----       ----  ------  ------
                                (dollars in thousands,
                                 except share and per
                                 share data)
Balance Sheet as of March 31,
Loans                           $2,898,187 $2,646,674 $251,513   10%
Earning Assets                  $3,984,545 $3,729,845 $254,700    7%
Total Assets                    $4,255,439 $4,016,733 $238,706    6%
Deposits                        $3,168,927 $3,014,616 $154,311    5%
Stockholders' Equity              $319,239   $322,280  ($3,041)  -1%
----------------------------------------------------------------------

Average Balances
Quarter Ended March 31,
Loans                           $2,876,853 $2,646,114 $230,739    9%
Securities AFS (excluding
 unrealized gains or losses)      $952,848   $964,648 ($11,800)  -1%
Securities HTM                     $84,783    $95,954 ($11,171) -12%
Regulatory Equity Investment       $36,535    $33,994   $2,541    7%
Short-Term Interest Bearing
 Accounts                           $6,578     $8,241  ($1,663) -20%
Total Earning Assets            $3,957,597 $3,748,951 $208,646    6%
Total Assets                    $4,237,627 $4,032,283 $205,344    5%
Interest Bearing Deposits       $2,604,441 $2,521,446  $82,995    3%
Non-Interest Bearing Deposits     $505,457   $468,722  $36,735    8%
Short-Term Borrowings             $329,726   $289,616  $40,110   14%
Long-Term Borrowings              $413,233   $386,708  $26,525    7%
Total Interest Bearing
 Liabilities                    $3,347,400 $3,197,770 $149,630    5%
Stockholders' Equity              $329,947   $316,064  $13,883    4%
----------------------------------------------------------------------

NBT Bancorp Inc. and Subsidiaries    March 31, December 31, March 31,
Consolidated Balance Sheets
 (unaudited)                           2005        2004       2004
----------------------------------------------------------------------
(in thousands)

ASSETS
Cash and due from banks               $106,520     $98,437    $93,090
Short term interest bearing accounts     5,783       8,286      9,619
Securities available for sale, at
 fair value                            950,555     952,542    977,950
Securities held to maturity (fair
 value of $87,407, $82,712, and
 $92,672, at March 31, 2005,
 December 31, 2004 and March 31,
 2004, respectively)                    87,063      81,782     91,205
Federal Reserve and Federal Home
 Loan Bank stock                        36,942      36,842     30,648
Loans and leases                     2,898,187   2,869,921  2,646,674
Less allowance for loan and lease
 losses                                 45,389      44,932     43,303
----------------------------------------------------------------------
  Net loans and leases               2,852,798   2,824,989  2,603,371
Premises and equipment, net             63,806      63,743     62,426
Goodwill                                47,544      45,570     47,521
Intangible assets, net                   4,234       2,013      2,260
Bank owned life insurance               32,634      32,302     31,200
Other assets                            67,560      65,798     67,443
----------------------------------------------------------------------
TOTAL ASSETS                        $4,255,439  $4,212,304 $4,016,733
----------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
 Demand (noninterest bearing)         $509,077    $520,218   $464,867
 Savings, NOW, and money market      1,467,265   1,435,561  1,482,755
 Time                                1,192,585   1,118,059  1,066,994
----------------------------------------------------------------------
  Total deposits                     3,168,927   3,073,838  3,014,616
Short-term borrowings                  307,514     338,823    238,093
Long-term debt                         394,500     394,523    369,679
Trust preferred debentures              18,720      18,720     18,720
Other liabilities                       46,539      54,167     53,345
----------------------------------------------------------------------
  Total liabilities                  3,936,200   3,880,071  3,694,453


Total stockholders' equity             319,239     332,233    322,280
----------------------------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS'
 EQUITY                             $4,255,439  $4,212,304 $4,016,733
----------------------------------------------------------------------

                                                    Three months ended
NBT Bancorp Inc. and Subsidiaries                       March 31,
Consolidated Statements of Income (unaudited)            2005    2004
----------------------------------------------------------------------
(in thousands, except per share data)
Interest, fee and dividend income:
Loans and leases                                      $43,944 $39,894
Securities available for sale                          10,247  10,769
Securities held to maturity                               803     797
Other                                                     467     267
----------------------------------------------------------------------
  Total interest, fee and dividend income              55,461  51,727
----------------------------------------------------------------------
Interest expense:
Deposits                                               10,720  10,045
Short-term borrowings                                   1,861     793
Long-term debt                                          3,808   3,615
Trust preferred debentures                                258     180
----------------------------------------------------------------------
  Total interest expense                               16,647  14,633
----------------------------------------------------------------------
Net interest income                                    38,814  37,094
Provision for loan and lease losses                     1,796   2,124
----------------------------------------------------------------------
Net interest income after provision for loan and
 lease losses                                          37,018  34,970
----------------------------------------------------------------------
Noninterest income:
Trust                                                   1,252   1,107
Service charges on deposit accounts                     3,929   4,037
ATM and debit card fees                                 1,400   1,258
Broker/dealer and insurance revenue                     1,352   1,731
Net securities gains                                       (4)      9
Bank owned life insurance income                          333     385
Retirement plan administration fees                       863       -
Other                                                   1,586   1,916
----------------------------------------------------------------------
  Total noninterest income                             10,711  10,443
----------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits                         15,223  14,113
Office supplies and postage                             1,150   1,031
Occupancy                                               2,788   2,598
Equipment                                               2,096   1,853
Professional fees and outside services                  1,675   1,632
Data processing and communications                      2,658   2,692
Amortization of intangible assets                         118      71
Loan collection and other real estate owned               401     372
Other operating                                         2,772   2,840
----------------------------------------------------------------------
  Total noninterest expense                            28,881  27,202
----------------------------------------------------------------------
Income before income taxes                             18,848  18,211
Income taxes                                            6,059   5,840
----------------------------------------------------------------------
   Net income                                         $12,789 $12,371
----------------------------------------------------------------------
Earnings Per Share:
     Basic                                              $0.39   $0.38
     Diluted                                            $0.39   $0.37
----------------------------------------------------------------------

NBT Bancorp Inc. and              1Q      4Q      3Q      2Q      1Q
 Subsidiaries
Quarterly Consolidated
 Statements of Income
 (unaudited)                     2005    2004    2004    2004    2004
----------------------------------------------------------------------
(in thousands, except per
 share data)
Interest, fee and dividend
 income:
Loans                         $43,944 $42,983 $41,283 $39,635 $39,894
Securities available for sale  10,247  10,398  10,784  10,313  10,769
Securities held to maturity       803     761     731     755     797
Other                             467     279     295     235     267
----------------------------------------------------------------------
  Total interest, fee and
   dividend income             55,461  54,421  53,093  50,938  51,727
----------------------------------------------------------------------
Interest expense:
Deposits                       10,720  10,299   9,743   9,674  10,045
Short-term borrowings           1,861   1,307   1,192     794     793
Long-term debt                  3,808   3,919   3,861   3,627   3,615
Trust preferred debentures        258     235     245     163     180
----------------------------------------------------------------------
  Total interest expense       16,647  15,760  15,041  14,258  14,633
----------------------------------------------------------------------
Net interest income            38,814  38,661  38,052  36,680  37,094
Provision for loan and lease
 losses                         1,796   2,750   2,313   2,428   2,124
----------------------------------------------------------------------
Net interest income after
 provision for loan and lease
 losses                        37,018  35,911  35,739  34,252  34,970
----------------------------------------------------------------------
Noninterest income:
Trust                           1,252   1,174   1,182   1,142   1,107
Service charges on deposit
 accounts                       3,929   4,184   4,159   4,090   4,037
ATM and debit card fees         1,400   1,402   1,474   1,396   1,258
Broker/dealer and insurance
 fees                           1,352   1,572   1,696   1,783   1,731
Net securities gains               (4)    160      18      29       9
Bank owned life insurance
 income                           333     345     348     409     385
Retirement plan administration
 fees                             863       -       -       -       -
Other                           1,586   1,503   1,240   1,140   1,916
----------------------------------------------------------------------
  Total noninterest income     10,711  10,340  10,117   9,989  10,443
----------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 15,223  14,063  13,345  12,542  14,113
Office supplies and postage     1,150   1,118   1,167   1,143   1,031
Occupancy                       2,788   2,416   2,445   2,446   2,598
Equipment                       2,096   1,998   1,941   1,781   1,853
Professional fees and outside
 services                       1,675   1,583   1,536   1,424   1,632
Data processing and
 communications                 2,658   2,740   2,688   2,852   2,692
Amortization of intangible
 assets                           118      71      71      71      71
Loan collection and other real
 estate owned                     401     431     339      99     372
Goodwill impairment                 -   1,950       -       -       -
Other operating                 2,772   3,037   3,773   3,505   2,840
----------------------------------------------------------------------
  Total noninterest expense    28,881  29,407  27,305  25,863  27,202
----------------------------------------------------------------------
Income before income taxes     18,848  16,844  18,551  18,378  18,211
Income taxes                    6,059   4,353   5,934   5,810   5,840
----------------------------------------------------------------------
   Net income                 $12,789 $12,491 $12,617 $12,568 $12,371
----------------------------------------------------------------------
Earnings per share:
   Basic                        $0.39   $0.38   $0.38   $0.38   $0.38
   Diluted                      $0.39   $0.38   $0.38   $0.38   $0.37
----------------------------------------------------------------------

SOURCE: NBT Bancorp Inc.

NBT Bancorp Inc.
Daryl R. Forsythe/Michael J. Chewens, 607-337-6416

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