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NBT Bancorp Inc. Announces Quarterly Earnings of $14.5 Million; Declares Cash Dividend

10/23/06

NORWICH, NY, Oct 23, 2006 (MARKET WIRE via COMTEX News Network) -- NBT Bancorp Inc. (NBT) (NASDAQ: NBTB) reported today that net income for the quarter ended September 30, 2006 was $14.5 million, up 7.5% or $1.0 million from net income of $13.5 million reported for the same period in 2005. Net income per diluted share for the three months ended September 30, 2006 was $0.43 per share, compared with $0.41 per share for the same period in 2005. Return on average assets and return on average equity were 1.15% and 14.89%, respectively, for the quarter ended September 30, 2006, compared with 1.23% and 16.06% respectively, for the same period in 2005. The increase in net income for the quarter ended September 30, 2006, was primarily the result of a $1.0 million increase in net interest income and a $2.2 million increase in noninterest income. In addition, the Company experienced a decrease in the provision for loan and lease losses of $0.3 million for the quarter ended September 30, 2006, compared with the same period in 2005. The aforementioned increases in income and reduction of the provision for loan and lease losses were partially offset by a $1.3 million increase in noninterest expense. Results for the three months ended September 30, 2006, include $0.4 million in pre-tax salaries and benefits expense related to stock options resulting from the adoption on January 1, 2006, of Statement of Financial Accounting Standard No. 123 (revised 2004) (FAS 123R) "Share-Based Payment," which requires companies to measure and recognize compensation expense for all share-based payments. The adoption of FAS 123R lowered diluted earnings per share by $0.01 for the three months ended September 30, 2006.

Net income for the nine months ended September 30, 2006, was $42.3 million, up 7.2% or $2.9 million from net income of $39.4 million reported for the same period in 2005. Net income per diluted share for the nine month period ended September 30, 2006 was $1.24 per share, compared with $1.20 per share for the same period in 2005. Return on average assets and return on average equity were 1.16% and 14.93%, respectively, for the nine months ended September 30, 2006, compared with 1.23% and 16.03%, respectively, for the same period in 2005. The increase in net income for the nine months ended September 30, 2006 was primarily the result of a $4.3 million increase in net interest income and a $4.2 million increase in noninterest income. In addition, the Company experienced a decrease in the provision for loan and lease losses of $1.0 million for the nine months ended September 30, 2006, compared with the same period in 2005. The aforementioned increases in income were partially offset by a $5.9 million increase in noninterest expense. Results for the nine months ended September 30, 2006, include $1.4 million in pre-tax salaries and benefits expense related to stock options resulting from the adoption of FAS 123R on January 1, 2006. This lowered diluted earnings per share by $0.03 for the nine months ended September 30, 2006.

The comparability of financial information is affected by the acquisition of CNB Bancorp, Inc. ("CNB"). Operating results include the operations of CNB from the date of acquisition, which was February 10, 2006.

NBT President and CEO Martin A. Dietrich said, "Despite the continuing flat/inverted yield curve environment in our industry, we were able to sustain our growth and eclipse $5 billion in total assets during the quarter. While net interest margins continue to tighten, we were able to post improved earnings due to our noninterest income and the growth of our earning assets. We overcame the effects of the historic June flooding with minimal financial impact and minimal business interruption due to the focus and commitment of our people."

Loan and Lease Quality and Provision for Loan and Lease Losses

Nonperforming loans at September 30, 2006 were $14.5 million or 0.43% of total loans and leases compared with $13.3 million or 0.44% of total loans and leases at September 30, 2005 and $14.3 million or 0.47% of total loans and leases at December 31, 2005. Annualized net charge-offs to average loans and leases for the nine months ended September 30, 2006, were 0.21%, compared with the 0.19% annualized ratio for the nine months ended September 30, 2005, and the ratio for the year ended December 31, 2005 of 0.23%. The Company's allowance for loan and lease losses was 1.50% of loans and leases at September 30, 2006, compared with 1.58% at September 30, 2005, and 1.57% at December 31, 2005. The ratio of the allowance for loan and lease losses to nonperforming loans was 350.49% at September 30, 2006 compared with 356.85% at September 30, 2005, and 331.92% at December 31, 2005.

For the quarter and nine months ended September 30, 2006, the provision for loan and lease losses totaled $2.5 million and $5.9 million, respectively, compared with the $2.8 million and $6.9 million for the same periods in 2005. The provision for loan and lease losses has increased on a linked quarter basis due to a slight deterioration in asset quality.

Net Interest Income

Net interest income was up 2.4% to $40.9 million for the quarter ended September 30, 2006, compared with $40.0 million for the same period a year ago. Despite a decrease in the Company's net interest margin, which was 3.60% for the quarter ended September 30, 2006, down from 3.99% for the same period in 2005, the increase in net interest income was attributable to 15% growth in average earning assets. The growth in average earning assets was due primarily to the acquisition of CNB. The Company's net interest margin was 3.73% for the nine months ended September 30, 2006, down from 4.04% for the same period in 2005. Despite this decrease, net interest income for the nine months ended September 30, 2006, increased 3.7%, to $122.4 million from $118.1 million in the same period for 2005, which was attributable to a 13% growth in average earning assets due primarily to the acquisition of CNB. The decline in the net interest margin is due largely to the effect from our borrowings, money market accounts and time deposits repricing in the higher interest rate environment. Earning assets, particularly those tied to a fixed rate, have not realized the benefit of the higher interest rate environment, since rates for earning assets with terms three years or longer have remained relatively flat during this period. The Company anticipates that margin pressure will persist into the next several quarters, given the flat/inverted yield curve. If the yield curve remains flat or inverted, we expect net income to be relatively flat in 2007.

Noninterest Income

Noninterest income for the quarter ended September 30, 2006, was $12.5 million, up $2.1 million or 20.9% from $10.4 million for the same period in 2005. Fees from service charges on deposit accounts and ATM and debit cards collectively increased $0.4 million from solid growth in demand deposit accounts and debit card base. Retirement plan administration fees for the three months ended September 30, 2006, increased $0.3 million, compared with the same period in 2005, as a result of our growing client base. Trust administration income increased $0.1 million for the quarter ended September 30, 2006, compared with the same period in 2005. This increase stems from the increased market value of accounts generating greater fees, an increase in customer accounts as a result of the acquisition of CNB and successful business development. Broker/dealer and insurance revenue for the three months ended September 30, 2006, increased $0.5 million in large part due to the growth in brokerage income from retail financial services as well as the addition of Hathaway Insurance Agency as part of the acquisition of CNB. Net securities gains for the three months ended September 30, 2006, were $7 thousand, compared to a $0.7 million loss in the 3rd quarter of 2005. This loss resulted from the sale of $25 million in securities available for sale. Excluding the effect of these securities transactions, noninterest income increased $1.4 million, or 12.8%, for the quarter ended September 30, 2006, compared with the same period in 2005.

Noninterest income for the nine months ended September 30, 2006, was $36.3 million, up $4.2 million or 13.0% from $32.1 million for the same period in 2005. Fees from service charges on deposit accounts and ATM and debit cards increased $1.4 million from solid growth in demand deposit accounts. Retirement plan administration fees for the nine months ended September 30, 2006, increased $0.9 million, compared with the same period in 2005, as our client base grew. Trust administration income increased $0.4 million for the nine months ended September 30, 2006, compared with the same period in 2005, stemming from the increased market value of accounts generating greater fees, an increase in customer accounts as a result of the acquisition of CNB and successful business development. For the nine months ended September 30, 2006, broker/dealer and insurance revenue increased by $0.2 million, compared with the same period in 2005. While the Company experienced growth in brokerage income from retail financial services and acquired Hathaway Insurance Agency during the period in 2006, these increases over 2005 were partially offset by the sale of M. Griffith, Inc. in the first quarter of 2005. Other noninterest income increased $1.2 million for the nine months ended September 30, 2006, compared with the same period in 2005, due primarily to increases in loan fees, mortgage banking income, and a gain on the sale of a branch during the period. Included in noninterest income for the nine months ended September 30, 2006, and September 30, 2005, were $0.9 million and $0.7 million in net losses, respectively, from investment securities sales. Excluding the effect of these securities transactions, noninterest income increased $4.4 million or 13.4% for the nine months ended September 30, 2006, compared with the same period in 2005.

Noninterest Expense and Income Tax Expense

Noninterest expense for the quarter ended September 30, 2006, was $29.9 million, up from $28.6 million for the same period in 2005. Office expenses such as supplies and postage, occupancy, equipment and data processing and communications charges increased by $0.9 million for the quarter ended September 30, 2006, compared with the same period in 2005. This 10.5% increase resulted primarily from the acquisition of CNB Bancorp on February 10, 2006. Professional fees and services increased $0.2 million for the quarter ended September 30, 2006, compared with the same period in 2005. This increase was due to several factors, including an increase in courier service expenses due to the acquisition of CNB, as well as other increasing transportation costs. In addition, item processing fees during the quarter ended September 30, 2006, increased over the same period in 2005 because the Company outsourced a portion of its item processing work as a result of flood-related damage to one of its processing centers. Amortization expense increased $0.3 million for the quarter ended September 30, 2006, over the same period in 2005. This increase was due primarily to the acquisition of CNB. Other operating expense for the quarter ended September 30, 2006, decreased $0.3 million compared with the same period in 2005, primarily due to flood-related insurance recoveries. Income tax expense for the quarter ended September 30, 2006, was $6.5 million, up from $5.4 million for the same period in 2005. The effective rate for the quarter ended September 30, 2006, was 30.9%, up from 28.7% for the same period in 2005. The increase in the effective tax rate during the third quarter of 2006 versus the same period in 2005 is due to the reversal in the quarter ended September 30, 2005, of a previously accrued $0.7 million liability that was determined to no longer be required.

Noninterest expense for the nine months ended September 30, 2006, was $92.1 million, up from $86.2 million for the same period in 2005. Salaries and employee benefits for the nine months ended September 30, 2006, increased $1.6 million over the same period in 2005, mainly from higher salaries from merit increases, the acquisition of CNB and stock-based compensation costs associated with the adoption of FAS 123R. Office expenses such as supplies and postage, occupancy, equipment and data processing and communications charges increased by $2.0 million for the nine months ended September 30, 2006, compared with the same period in 2005. This 7.9% increase resulted primarily from the overall growth of the Company as well as the acquisition of CNB Bancorp on February 10, 2006. Professional fees and services increased $0.8 million for the nine months ended September 30, 2006, compared with the same period in 2005. This increase was due to several factors, including an increase in courier service expenses due to the acquisition of CNB as well as increasing transportation costs. In addition, item processing fees during the nine months ended September 30, 2006, increased over the same period in 2005 because the Company outsourced a portion of its item processing work as a result of flood-related damage to one of its processing centers. In addition, legal fees incurred during the period increased over the same period in 2005 as the Company was reimbursed during the second quarter of 2005 for legal fees associated with prior litigation. Amortization expense increased $0.9 million for the nine months ended September 30, 2006, over the same period in 2005. This increase was due primarily to the acquisition of CNB. Other operating expense for the nine months ended September 30, 2006, increased $0.8 million compared with the same period in 2005, due to several factors including flood related expenses, Pennstar advertising campaign, fixed asset write-offs, increased contributions, and merger expenses incurred as a result of the acquisition of CNB. These expenses were partially offset by flood-related insurance recoveries. Income tax expense for the nine months ended September 30, 2006, was $18.4 million, up from $17.7 million for the same period in 2005. The effective rate for the nine months ended September 30, 2006, was 30.3%, down from 31.0% for the same period in 2005. The decrease in the effective tax rate for the nine months ended September 30, 2006, resulted primarily from an increase in interest income from tax-exempt sources.

Balance Sheet

Total assets were $5.1 billion at September 30, 2006, up $0.7 billion from $4.4 billion at September 30, 2005. Loans and leases increased $0.4 billion or 12% from $3.0 billion at September 30, 2005, to $3.4 billion at September 30, 2006, due in large part to the acquisition of CNB. In addition, loan growth was fueled by solid production from consumer and commercial loan products. Total deposits were $3.8 billion at September 30, 2006, up 18% from the same period at September 30, 2005, also due in large part to the acquisition of CNB. Stockholders' equity was $399.5 million, representing total equity to total assets of 7.90% at September 30, 2006, compared with $332.2 million or a total equity to total asset ratio of 7.57% at September 30, 2005.

Stock Repurchase Program

Under previously disclosed stock repurchase plans, the Company purchased 27,500 shares of its common stock during the quarter ended September 30, 2006, for a total of $0.6 million at an average price of $22.15 per share. For the nine-month period ended September 30, 2006, the Company purchased 766,004 shares of its common stock for a total of $17.1 million at an average price of $22.34 per share. At September 30, 2006, there were 737,147 shares available for repurchase under previously announced plans.

Dividend Declared

The NBT Board of Directors declared a third-quarter cash dividend of $0.19 per share at a meeting held today. The dividend will be paid on December 15, 2006, to shareholders of record as of December 1, 2006.

Corporate Overview

NBT is a financial holding company headquartered in Norwich, NY, with total assets of $5.1 billion at September 30, 2006. The Company primarily operates through NBT Bank, N.A., a full-service community bank with two divisions, and through two financial services companies. NBT Bank, N.A. has 118 locations, including 80 NBT Bank offices in upstate New York and 38 Pennstar Bank offices in northeastern Pennsylvania. EPIC Advisors, Inc., based in Rochester, NY, is a full-service 401(k) plan recordkeeping firm. Hathaway Insurance Agency, Inc., based in Gloversville, NY, is a full service insurance agency. More information about NBT and its divisions can be found on the Internet at www.nbtbancorp.com, www.nbtbank.com, www.pennstarbank.com, www.epic1st.com and www.hathawayagency.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; (7) NBT may fail to realize projected cost savings, revenue enhancements and the accretive effect of the CNB acquisition on our earnings; and (8) 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. and Subsidiaries
                      SELECTED FINANCIAL HIGHLIGHTS
                                (unaudited)
                                                              Net   Percent
                                      2006        2005       Change  Change
                                   ----------  ----------  ----------  ---
                                   (dollars in thousands,
                                   except per share data)
Three Months Ended September 30,
Net Income                         $   14,542  $   13,526  $    1,016    8%
Diluted Earnings Per Share         $     0.43  $     0.41  $     0.02    5%
Weighted Average Diluted
   Common Shares Outstanding       34,196,917  32,729,000   1,467,917    4%
Return on Average Assets                 1.15%       1.23%      -0.08%  -7%
Return on Average Equity                14.89%      16.06%      -1.17%  -7%
Net Interest Margin *                    3.60%       3.99%      -0.39% -10%
                                   ==========  ==========  ==========  ===
Nine Months Ended September 30,
Net Income                         $   42,299  $   39,443  $    2,856    7%
Diluted Earnings Per Share         $     1.24  $     1.20  $     0.04    3%
Weighted Average Diluted
   Common Shares Outstanding       34,140,004  32,762,417   1,377,587    4%
Return on Average Assets                 1.16%       1.23%      -0.07%  -6%
Return on Average Equity                14.93%      16.03%      -1.10%  -7%
Net Interest Margin *                    3.73%       4.04%      -0.31%  -8%
                                   ==========  ==========  ==========  ===
Asset Quality                    September 30, December 31, September 30,
                                      2006         2005        2005
                                   ----------  ----------  ----------
Nonaccrual Loans                   $   12,403  $   13,419  $   12,412
90 Days Past Due and Still
 Accruing                          $    2,047  $      878  $      913
Total Nonperforming Loans          $   14,450  $   14,297  $   13,325
Other Real Estate Owned (OREO)     $      395  $      265  $      235
Total Nonperforming Assets         $   14,845  $   14,562  $   13,560
Allowance for Loan and Lease
 Losses                            $   50,646  $   47,455  $   47,550
Year-to-Date (YTD) Net Charge-Offs $    5,130  $    6,941  $    4,250
Allowance for Loan and Lease Losses
 to Total Loans and Leases               1.50%       1.57%       1.58%
Total Nonperforming Loans to Total
 Loans and Leases                        0.43%       0.47%       0.44%
Total Nonperforming Assets to Total
 Assets                                  0.29%       0.33%       0.31%
Allowance for Loan and Lease Losses
 to Total Nonperforming Loans          350.49%     331.92%     356.85%
Annualized Net Charge-Offs to
   YTD Average Loans and Leases          0.21%       0.23%       0.19%
                                   ==========  ==========  ==========
Capital
Equity to Assets                         7.90%       7.54%       7.57%
Book Value Per Share               $    11.73  $    10.34  $    10.25
Tangible Book Value Per Share      $     8.33  $     8.75  $     8.66
Tier 1 Leverage Ratio                    7.38%       7.16%       6.99%
Tier 1 Capital Ratio                    10.15%       9.80%       9.56%
Total Risk-Based Capital Ratio          11.40%      11.05%      10.82%
                                   ==========  ==========  ==========
Quarterly Common Stock Price
                                2006             2005             2004
Quarter End                High      Low    High      Low    High      Low
                         -------- ------- -------- ------- -------- -------
March 31                 $ 23.90  $ 21.02 $ 25.66  $ 21.48 $ 23.00  $ 21.21
June 30                  $ 23.24  $ 21.03   24.15    20.10   23.18    19.92
September 30             $ 24.57  $ 21.44   25.50    22.79   24.34    21.02
December 31                                 23.79    20.75   26.84    21.94
                         -------- ------- -------- ------- -------- -------
*  Calculated on a Federal Taxable Equivalent (FTE) basis
                    NBT Bancorp Inc. and Subsidiaries
                      SELECTED FINANCIAL HIGHLIGHTS
                                (unaudited)
                                                              Net   Percent
                                       2006       2005       Change  Change
                                     ---------- ---------- ---------  ----
                                    (dollars in thousands,
                                     except per share data)
Balance Sheet as of September 30,
Loans and Leases                     $3,369,732 $3,003,103 $ 366,629    12%
Earning Assets                       $4,673,441 $4,085,590 $ 587,851    14%
Total Assets                         $5,059,171 $4,385,621 $ 673,550    15%
Deposits                             $3,787,863 $3,212,173 $ 575,690    18%
Stockholders' Equity                 $  399,549 $  332,168 $  67,381    20%
                                     ========== ========== =========  ====
Average Balances
Quarter Ended September 30,
Loans and Leases                     $3,361,676 $3,002,017 $ 359,659    12%
Securities Available For Sale
(excluding unrealized gains or
 losses)                             $1,134,668 $  944,062 $ 190,606    20%
Securities Held To Maturity          $  126,654 $   87,663 $  38,991    44%
Regulatory Equity Investment         $   40,070 $   37,965 $   2,105     6%
Short-Term Interest Bearing Accounts $    9,869 $    8,357 $   1,512    18%
Total Earning Assets                 $4,672,937 $4,080,064 $ 592,873    15%
Total Assets                         $5,029,197 $4,364,715 $ 664,482    15%
Interest Bearing Deposits            $3,154,865 $2,599,750 $ 555,115    21%
Non-Interest Bearing Deposits        $  625,282 $  572,450 $  52,832     9%
Short-Term Borrowings                $  313,099 $  367,737 $ (54,638)  -15%
Long-Term Borrowings                 $  493,580 $  438,087 $  55,493    13%
Total Interest Bearing Liabilities   $3,961,544 $3,405,574 $ 555,970    16%
Stockholders' Equity                 $  387,771 $  334,426 $  53,345    16%
                                     ========== ========== =========  ====
Average Balances
Nine Months Ended September 30,
Loans and Leases                     $3,271,095 $2,941,292 $ 329,803    11%
Securities Available For Sale
(excluding unrealized gains or
 losses)                             $1,107,417 $  950,660 $ 156,757    16%
Securities Held To Maturity          $  108,601 $   86,959 $  21,642    25%
Regulatory Equity Investment         $   40,260 $   37,044 $   3,216     9%
Short-Term Interest Bearing Accounts $    8,327 $    7,171 $   1,156    16%
Total Earning Assets                 $4,535,700 $4,023,126 $ 512,574    13%
Total Assets                         $4,878,785 $4,303,581 $ 575,204    13%
Interest Bearing Deposits            $3,002,756 $2,620,446 $ 382,310    15%
Non-Interest Bearing Deposits        $  610,265 $  533,330 $  76,935    14%
Short-Term Borrowings                $  343,557 $  339,344 $   4,213     1%
Long-Term Borrowings                 $  489,710 $  427,348 $  62,362    15%
Total Interest Bearing Liabilities   $3,836,023 $3,387,138 $ 448,885    13%
Stockholders' Equity                 $  379,740 $  329,741 $  49,999    15%
                                     ========== ========== =========  ====
NBT Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets        September 30, December 31, September 30,
 (unaudited)                             2006         2005         2005
                                     ------------ ------------ ------------
(in thousands)
ASSETS
Cash and due from banks              $    143,678 $    134,501 $    134,131
Short term interest bearing accounts        7,999        7,987        7,515
Securities available for sale, at
 fair value                             1,111,473      954,474      942,770
Securities held to maturity (fair
 value of $134,775, $93,701 and
 $89,887 at September 30, 2006,
 December 31, 2005 and September 30,
 2005, respectively)                      134,608       93,709       89,660
Federal Reserve and Federal Home Loan
 Bank stock                                39,488       40,259       36,842
Loans and leases                        3,369,732    3,022,657    3,003,103
Less allowance for loan and lease
 losses                                    50,646       47,455       47,550
                                     ============ ============ ============
   Net loans and leases                 3,319,086    2,975,202    2,955,553
Premises and equipment, net                66,988       63,693       63,611
Goodwill                                  102,858       47,544       47,544
Intangible assets, net                     12,873        3,808        3,950
Bank owned life insurance                  41,344       33,648       33,306
Other assets                               78,776       71,948       70,739
                                     ------------ ------------ ------------
TOTAL ASSETS                         $  5,059,171 $  4,426,773 $  4,385,621
                                     ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
   Demand (noninterest bearing)      $    634,308 $    593,422 $    583,289
   Savings, NOW, and money market       1,577,510    1,325,166    1,409,114
   Time                                 1,576,045    1,241,608    1,219,770
                                     ------------ ------------ ------------
     Total deposits                     3,787,863    3,160,196    3,212,173
Short-term borrowings                     324,461      444,977      356,193
Long-term debt                            417,753      414,330      419,353
Trust preferred debentures                 75,422       23,875       18,720
Other liabilities                          54,123       49,452       47,014
                                     ------------ ------------ ------------
     Total liabilities                  4,659,622    4,092,830    4,053,453
Total stockholders' equity                399,549      333,943      332,168
                                     ============ ============ ============
TOTAL LIABILITIES AND STOCKHOLDERS'
 EQUITY                              $  5,059,171 $  4,426,773 $  4,385,621
                                     ============ ============ ============
NBT Bancorp Inc. and Subsidiaries    Three months ended  Nine months ended
Consolidated Statements of Income      September 30,       September 30,
 (unaudited)                          2006      2005      2006      2005
                                    --------- --------  --------  --------
(in thousands, except per share data)
Interest, fee and dividend income:
Loans and leases                    $  59,329 $ 48,784  $169,247  $138,988
Securities available for sale          13,342   10,103    38,303    30,576
Securities held to maturity             1,293      860     3,321     2,494
Other                                     724      535     1,954     1,551
                                    --------- --------  --------  --------
   Total interest, fee and dividend
    income                             74,688   60,282   212,825   173,609
                                    --------- --------  --------  --------
Interest expense:
Deposits                               24,052   12,842    62,146    35,580
Short-term borrowings                   3,828    3,005    11,876     7,073
Long-term debt                          4,603    4,176    12,972    12,016
Trust preferred debentures              1,285      308     3,423       851
                                    --------- --------  --------  --------
   Total interest expense              33,768   20,331    90,417    55,520
                                    --------- --------  --------  --------
Net interest income                    40,920   39,951   122,408   118,089
Provision for loan and lease losses     2,480    2,752     5,911     6,868
                                    --------- --------  --------  --------
Net interest income after provision
 for loan and lease losses             38,440   37,199   116,497   111,221
                                    --------- --------  --------  --------
Noninterest income:
Trust                                   1,425    1,292     4,242     3,795
Service charges on deposit accounts     4,460    4,314    13,172    12,554
ATM and debit card fees                 1,888    1,631     5,322     4,575
Broker/dealer and insurance revenue     1,024      571     2,899     2,659
Net securities gains (losses)               7     (737)     (905)     (690)
Bank owned life insurance income          431      339     1,204     1,005
Retirement plan administration fees     1,450    1,195     4,112     3,214
Other                                   1,832    1,746     6,251     5,005
                                    --------- --------  --------  --------
   Total noninterest income            12,517   10,351    36,297    32,117
                                    --------- --------  --------  --------
Noninterest expense:
Salaries and employee benefits         15,628   15,438    47,711    46,142
Office supplies and postage             1,275    1,135     3,912     3,406
Occupancy                               3,044    2,425     8,779     7,763
Equipment                               2,040    1,971     6,263     5,998
Professional fees and outside
 services                               1,627    1,447     5,259     4,503
Data processing and communications      2,637    2,613     7,988     7,801
Amortization of intangible assets         471      142     1,260       402
Loan collection and other real
 estate owned                             222      115       722       724
Other operating                         2,974    3,293    10,190     9,417
                                    --------- --------  --------  --------
   Total noninterest expense           29,918   28,579    92,084    86,156
                                    --------- --------  --------  --------
Income before income taxes             21,039   18,971    60,710    57,182
Income taxes                            6,497    5,445    18,411    17,739
                                    --------- --------  --------  --------
   Net income                       $  14,542 $ 13,526  $ 42,299  $ 39,443
                                    --------- --------  --------  --------
Earnings Per Share:
   Basic                            $    0.43 $   0.42  $   1.25  $   1.21
   Diluted                          $    0.43 $   0.41  $   1.24  $   1.20
                                    ========= ========  ========  ========
NBT Bancorp Inc. and Subsidiaries
Quarterly Consolidated              3Q      2Q      1Q       4Q       3Q
 Statements of Income (unaudited)  2006    2006    2006     2005     2005
                                 ------- ------- -------  -------  -------
(in thousands, except
 per share data)
Interest, fee and dividend income:
Loans and leases                 $59,329 $57,085 $52,833  $50,726  $48,784
Securities available for sale     13,342  13,084  11,877   10,544   10,103
Securities held to maturity        1,293   1,043     985      913      860
Other                                724     619     611      575      535
                                 ------- ------- -------  -------  -------
   Total interest, fee and
    dividend income               74,688  71,831  66,306   62,758   60,282
                                 ------- ------- -------  -------  -------
Interest expense:
Deposits                          24,052  20,869  17,225   14,352   12,842
Short-term borrowings              3,828   4,111   3,937    3,911    3,005
Long-term debt                     4,603   4,227   4,142    4,098    4,176
Trust preferred debentures         1,285   1,255     883      375      308
                                 ------- ------- -------  -------  -------
   Total interest expense         33,768  30,462  26,187   22,736   20,331
                                 ------- ------- -------  -------  -------
Net interest income               40,920  41,369  40,119   40,022   39,951
Provision for loan and lease
 losses                            2,480   1,703   1,728    2,596    2,752
                                 ------- ------- -------  -------  -------
Net interest income after
 provision for loan and lease
 losses                           38,440  39,666  38,391   37,426   37,199
                                 ------- ------- -------  -------  -------
Noninterest income:
Trust                              1,425   1,459   1,358    1,234    1,292
Service charges on deposit
 accounts                          4,460   4,493   4,219    4,340    4,314
ATM and debit card fees            1,888   1,789   1,645    1,587    1,631
Broker/dealer and insurance fees   1,024     967     908      527      571
Net securities gains (losses)          7      22    (934)    (546)    (737)
Bank owned life insurance income     431     392     381      342      339
Retirement plan administration
 fees                              1,450   1,431   1,231    1,212    1,195
Other                              1,832   2,003   2,416    1,736    1,746
                                 ------- ------- -------  -------  -------
   Total noninterest income       12,517  12,556  11,224   10,432   10,351
                                 ------- ------- -------  -------  -------
Noninterest expense:
Salaries and employee benefits    15,628  16,335  15,748   13,863   15,438
Office supplies and postage        1,275   1,456   1,181    1,222    1,135
Occupancy                          3,044   2,747   2,988    2,689    2,425
Equipment                          2,040   2,067   2,156    2,120    1,971
Professional fees and outside
 services                          1,627   1,800   1,832    1,584    1,447
Data processing and
 communications                    2,637   2,649   2,702    2,548    2,613
Amortization of intangible assets    471     466     323      142      142
Loan collection and other real
 estate owned                        222     289     211      278      115
Other operating                    2,974   3,885   3,331    4,703    3,293
                                 ------- ------- -------  -------  -------
   Total noninterest expense      29,918  31,694  30,472   29,149   28,579
                                 ------- ------- -------  -------  -------
Income before income taxes        21,039  20,528  19,143   18,709   18,971
Income taxes                       6,497   6,359   5,555    5,714    5,445
                                 ------- ------- -------  -------  -------
   Net income                    $14,542 $14,169 $13,588  $12,995  $13,526
                                 ======= ======= =======  =======  =======
Earnings per share:
   Basic                         $  0.43 $  0.41 $  0.41  $  0.40  $  0.42
   Diluted                       $  0.43 $  0.41 $  0.40  $  0.40  $  0.41
                                 ======= ======= =======  =======  =======

Contact:
Martin A. Dietrich
CEO

Michael J. Chewens
CFO

NBT Bancorp Inc.
52 South Broad Street
Norwich, NY 13815
607-337-6119

SOURCE: NBT Bancorp Inc.

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