SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A1
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This Amendment No.1 to NBT BANCORP INC. FORM 10-Q filed with the Commission
on August 14, 1995 corrects the AVERAGE BALANCES table on page 9 Total
Securities Six months 1994 amount to 334,660 and the NONTINTEREST INCOME
table on page 18 Total noninterest income Twelve months 1994 amount to
$7,039.
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(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995.
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________.
COMMISSION FILE NUMBER 0-14703
NBT BANCORP INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 16-1268674
(State of Incorporation) (I.R.S. Employer Identification No.)
52 SOUTH BROAD STREET NORWICH, NEW YORK 13815
(Address of Principal Executive Offices)(Zip Code)
Registrant's Telephone Number, Including Area Code: (607)-337-6000
Indicate by check mark whether the registrant (1) has filed all reports
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
As of July 31, 1995, there were 8,049,618 shares outstanding, including
136,084 shares held in the treasury, of the Registrant's common stock,
No Par, Stated Value $1.00. There were no shares of the Registrant's
preferred stock, No Par, Stated Value $1.00, outstanding at that date.
An index to exhibits follows the signature page of this Form 10-Q.
NBT BANCORP INC.
Form 10-Q --Quarter Ended June 30, 1995
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
Consolidated Balance Sheets at June 30, 1995, December 31,
1994, and June 30, 1994
Consolidated Statements of Income for the three month and six
month periods ended June 30, 1995 and 1994
Consolidated Statements of Cash Flows for the six month
periods ended June 30, 1995 and 1994
Notes to Consolidated Financial Statements at June 30, 1995
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II OTHER INFORMATION
Item 1 Legal Proceedings
Item 2 Changes in Securities
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote
of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
SIGNATURES
INDEX TO EXHIBITS
-2-
NBT BANCORP INC. and Subsidary June 30, December 31, June 30,
CONSOLIDATED BALANCE SHEETS 1995 1994 1994
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(dollars in thousands) (Unaudited) (Notes) (Unaudited)
ASSETS
Cash and due from banks $ 45,056 $ 42,110 $ 43,185
Loans available for sale 5,962 10,921 9,224
Securities available for sale 131,096 109,777 122,091
Securities held to maturity (market
value-$260,993, $261,913 and $262,653) 259,825 272,466 267,683
Loans:
Commercial and agricultural 227,654 215,380 214,938
Real estate mortgage 127,279 129,275 130,655
Consumer 217,325 230,063 222,200
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Total loans 572,258 574,718 567,793
Less allowance for loan losses 9,280 9,026 8,799
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Net loans 562,978 565,692 558,994
Premises and equipment, net 15,585 15,383 16,122
Goodwill and other intangibles, net 9,232 9,862 11,148
Other assets 14,988 18,346 19,661
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TOTAL ASSETS $1,044,722 $1,044,557 $1,048,108
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LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest bearing $ 705,769 $ 669,007 $ 690,737
Non-interest bearing 124,477 122,436 125,571
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Total deposits 830,246 791,443 816,308
Short-term borrowings 103,225 140,587 114,238
Long-term debt 3,730 8,734 14,453
Other liabilities 5,669 5,486 4,594
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Total liabilities 942,870 946,250 949,593
Commitments and contingencies
Stockholders' equity:
Preferred stock, no par, stated value $1.00;
shares authorized-2,500,000 in 1995,
2,000,000 in 1994 - - -
Common stock, no par, stated value $1.00;
shares authorized-12,500,000 in 1995,
12,000,000 in 1994; issued 8,049,618,
8,049,618 and 8,053,187 8,050 8,050 7,670
Capital surplus 69,209 69,669 64,381
Retained earnings 27,655 25,446 30,290
Unrealized loss on securities
available for sale, net of income tax
effect (1,106) (4,273) (2,579)
Common stock in treasury at cost, 121,473,
36,130, and 72,287 shares (1,956) (585) (1,247)
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Total stockholders' equity 101,852 98,307 98,515
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,044,722 $1,044,557 $1,048,108
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See notes to consolidated financial statements.
-3-
Three months ended Six months ended
NBT BANCORP INC. and Subsidiary June 30, June 30,
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CONSOLIDATED STATEMENTS OF INCOME 1995 1994 1995 1994
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(dollars in thousands, except per share amounts) (Unaudited)
Interest and fee income:
Loans $13,248 $11,922 $25,458 $23,772
Securities held to maturity-
taxable 3,525 2,968 7,069 4,746
Securities held to maturity-
tax-exempt 346 306 736 538
Assets available for sale 2,015 2,106 3,804 4,681
Other 9 2 18 12
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Total interest and fee income 19,143 17,304 37,085 33,749
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Interest expense:
Deposits 7,217 5,194 13,828 10,294
Short-term borrowings 1,221 711 2,440 992
Long-term debt 128 237 279 473
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Total interest expense 8,566 6,142 16,547 11,759
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Net interest income 10,577 11,162 20,538 21,990
Provision for loan losses 508 942 838 1,752
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Net interest income after provision
for loan losses 10,069 10,220 19,700 20,238
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Noninterest income:
Trust income 643 800 1,305 1,599
Service charges on deposit accounts 747 778 1,478 1,432
Securities gains 11 - 11 555
Other income 353 306 727 734
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Total noninterest income 1,754 1,884 3,521 4,320
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Noninterest expense:
Salaries and employee benefits 3,950 4,170 7,974 8,254
Net occupancy expense 586 506 1,189 1,136
Equipment expense 424 560 835 1,102
FDIC insurance 452 457 903 914
Amortization of goodwill and other
intangibles 314 893 629 1,935
Other operating expense 2,509 2,570 5,118 5,310
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Total noninterest expense 8,235 9,156 16,648 18,651
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Income before income taxes 3,588 2,948 6,573 5,907
Income taxes 1,367 1,134 2,445 2,290
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Net income $ 2,221 $ 1,814 $ 4,128 $ 3,617
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Net income per common share $0.27 $0.22 $0.51 $0.44
Cash dividends per common share $0.120 $0.110 0.240 0.219
Average common shares outstanding 8,021,829 8,132,254 8,036,601 8,147,172
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See notes to consolidated financial statements.
-4-
CONSOLIDATED STATEMENTS OF CASH FLOWS
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Six Months Ended June 30, 1995 1994
(dollars in thousands) (Unaudited)
Operating activities:
Net income $ 4,128 $ 3,617
Adjustments to reconcile net income to the
cash provided by operating activities:
Provision for loan losses 838 1,752
Depreciation and amortization 743 865
Amortization of premiums and accretion
of discounts on securities (60) 429
Amortization of goodwill and other intangibles 629 1,935
Proceeds from sales of loans originated for sale 10,074 8,800
Loans originated for sale (5,091) (8,021)
Realized gains on sales of securities (11) (555)
(Increase) decrease in interest receivable 1,068 (2,371)
Increase in interest payable 328 3
Payments of restructuring liabilities (941) -
Other, net 889 (962)
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Net cash provided by operating activities 12,594 5,492
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Investing activities:
Securities available for sale:
Proceeds from maturities 17,475 13,162
Proceeds from sales 1,011 67,974
Purchases (35,390) -
Securities held to maturity:
Proceeds from maturities 38,402 14,941
Purchases (25,586) (174,707)
(Increase) decrease in loans 1,876 (9,538)
Purchase of premises and equipment, net (947) (1,301)
Other investing activities - (1,781)
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Net cash used in investing activities (3,159) (91,250)
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Financing activities:
Net increase in deposits 38,803 9,080
Net increase (decrease) in short-term borrowings
with original maturities of three months or less (37,363) 87,537
Repayments of long-term debt (5,004) (4)
Common stock issued, including treasury shares reissued 3,232 1,514
Purchase of treasury stock (5,063) (2,618)
Cash dividends and payment for fractional shares (1,919) (1,759)
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Net cash provided by financing activities (7,314) 93,750
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Net increase (decrease) in cash and cash equivalents 2,121 7,992
Cash and cash equivalents at beginning of year 43,410 36,118
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Cash and cash equivalents at end of period $ 45,531 $44,110
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Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 16,219 $11,762
Income taxes 1,168 1,750
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See notes to consolidated financial statements.
-5-
NBT BANCORP INC. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include
the accounts of NBT BANCORP INC. (the Registrant or NBT) and its
wholly-owned subsidiary, NBT Bank, National Association. All
intercompany transactions have been eliminated in consolidation.
Certain amounts previously reported in the financial statements have
been reclassified to conform with the current presentation.
The determination of the allowance for loan losses is a material
estimate that is particularly susceptible to significant change in the
near term. In connection with the determination of the allowance for
loan losses management obtains independent appraisals for significant
properties.
Net income per common share is computed based on the weighted average
number of common shares and common share equivalents outstanding during
each period after giving retroactive effect to stock dividends. Cash
dividends per common share are computed based on declared rates
adjusted retroactively for stock dividends.
The balance sheet at December 31, 1994 has been derived from audited
financial statements at that date. The accompanying unaudited
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results
for the six month period ended June 30, 1995 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1995. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Registrant's
annual report on Form 10-K for the year ended December 31, 1994.
RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS
In May 1993, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 114 (SFAS 114),
"Accounting by Creditors for Impairment of a Loan". SFAS 114 requires
the creation of a valuation allowance for impaired loans based on the
present value of expected future cash flows discounted at the loan's
effective interest rate, or based on the loan's observable market price
or fair value of the collateral, if the loan is collateral-dependent.
For purposes of SFAS 114, a loan is impaired when, based on current
information and events, it is probable that a creditor will be unable
to collect all contractual interest and principal payments according
to the terms of the loan agreement. Additionally, the FASB issued SFAS
118, "Accounting by Creditors for Impairment of a Loan-Income
Recognition and Disclosures", which amends SFAS 114 to indicate that
guidance is not provided concerning how a creditor should recognize,
measure or display interest income on an impaired loan.
The Registrant adopted SFAS 114 and 118 January 1, 1995, on a
prospective basis. The adoption resulted in the allocation of a portion
of the existing allowance for loan losses to impaired loans with no
resulting impact at that date on net income, stockholders' equity or
total assets.
-6-
COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, various commitments and contingent
liabilities arise, including commitments to extend credit and standby
letters of credit. Also, off-balance sheet financial instruments such
as interest rate swaps, forward contracts, futures, options on
financial futures, and interest rate caps, collars and floors bear risk
based on financial market conditions. The following table summarizes
the Registrant's exposure to these off-balance sheet commitments and
contingent liabilities as of June 30, 1995, in thousands of dollars:
Contractual or
Notional Value
at June 30, 1995
Financial instruments with off-balance
sheet credit risk:
Commitments to extend credit $83,041,000
Standby letters of credit 2,228,000
Financial instruments with off-balance
sheet market risk None
-7-
NBT BANCORP INC. AND SUBSIDIARY
Item 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The purpose of this discussion is to focus on material information
about the Registrant's financial condition and results of operations.
Reference should be made to the Registrant's consolidated financial
statements and footnotes thereto included in this Form 10-Q as well as
to the Registrant's 1994 Form 10-K for an understanding of the
following discussion and analysis. The Registrant has a long history
of distributing stock dividends; in December, 1994 a 5% stock dividend
was distributed for the thirty-fifth consecutive year. Throughout this
discussion and analysis, amounts per common share have been adjusted
retroactively for stock dividends and splits for purposes of
comparability.
HIGHLIGHTS OF THE REGISTRANT'S 1995 PERFORMANCE
Net income of $2.2 million ($0.27 per share) was realized in the second
quarter of 1995, representing a 22% increase from second quarter 1994
net income of $1.8 million ($0.22 per share). The major contributing
factors for the increase in net income were decreased provision for
loan losses, as net charge-offs declined in 1995, and decreased
noninterest expenses. The decrease in noninterest expense is a result
of the restructuring that the Company undertook in 1994, ongoing
expense control efforts, and the decline in intangible amortization.
Offsetting these positive trends was a decline in net interest income
as liability cost rises exceeded increased earnings on assets in the
rising interest rate environment.
Net income of $4.1 million ($0.51 per share) was realized for the six
month period ended June 30, 1995, a 14% increase from 1994 six month
net income of $3.6 million ($0.44 per share). Decreased provisions for
loan losses and noninterest expenses were partially offset by decreased
realized security gains and a decline in net interest income resulting
from rising interest rates and a one-time write off of accrued interest
on loans put on nonaccrual or previously written-off loans.
The following table depicts several measurements of performance on an
annualized basis. Return on average assets and equity measure how
effectively an entity utilizes its total resources and capital,
respectively. Both the return on average assets and the return on
average equity ratios increased for the quarter and six month periods
compared to the same periods a year previous and compared to the first
quarter of 1995.
Net interest margin, net federal taxable equivalent (FTE) interest
income divided by average interest-earning assets, is a measure of an
entity's ability to utilize its earning assets in relation to the
interest cost of funding. Taxable equivalency adjusts income by
increasing tax exempt income to a level that is comparable to taxable
income before taxes are applied.
PERFORMANCE MEASUREMENTS
First Second Six Third Fourth Twelve
Quarter Quarter Months Quarter Quarter Months
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1995
Return on average assets 0.76% 0.87% 0.81%
Return on average common equity 7.83% 8.79% 8.32%
Net interest margin 4.30% 4.49% 4.40%
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1994
Return on average assets 0.76% 0.72% 0.74% 0.38% 0.73% 0.64%
Return on average common equity 7.24% 7.31% 7.27% 4.00% 7.59% 6.53%
Net interest margin 4.99% 4.85% 4.91% 4.82% 4.64% 4.81%
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-8-
FINANCIAL CONDITION
The following table highlights the changes in the balance sheet. Since
period end balances can be distorted by one-day fluctuations, the
discussion and analysis concentrates on average balances when
appropriate to give a better indication of balance sheet trends.
AVERAGE BALANCES
Three months Six months
(dollars in thousands) 1995 1994 1995 1994
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Securities available for sale $118,864 $125,244 $112,009 $151,111
Securities held to maturity 265,934 238,544 269,242 193,549
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Total Securities 384,798 363,788 381,251 344,660
Loans available for sale 7,261 10,789 8,021 10,346
Loans 567,034 563,566 567,634 560,445
Deposits 830,103 822,119 826,449 813,901
Short-term borrowings 81,009 67,862 83,528 50,180
Long-term debt 6,314 14,453 7,518 14,454
Stockholders' equity 101,401 99,545 100,103 100,283
Assets 1,024,655 1,009,061 1,023,235 984,836
Earning assets 961,530 937,330 960,884 915,199
Interest-bearing liabilities $797,539 $789,300 $798,394 $764,874
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Loans: Average loans for the second quarter of 1995 increased $3
million, or 1%, from the comparable period of the previous year. A
similar volume increase was experienced for the six month period as
loans averaged $568 million, up $7 million or 1%, from the comparable
period of the previous year. The increase in the portfolio volume
occurred primarily in commercial loans. Real estate loans decreased as
the volume of mortgage refinancing has diminished and new mortgage loan
origination has been very weak. Commercial, consumer and real estate
loans comprised 38%, 39%, and 23% of the average portfolio for the six
months ended June 30, 1995. Comparable measures for a year previous
were 38%, 38%, and 24%.
Allowance and provision for loan losses: The allowance for loan losses
is a valuation allowance offset against total loans which has been
established to provide for the estimated possible losses related to the
collection of the Bank's loan portfolio. The allowance is maintained
at a level considered adequate to provide for loan loss exposure based
on management's estimate of potential future losses considering an
evaluation of portfolio risk, prevailing and anticipated economic
factors, and past loss experience. Management determines the provision
and allowance for loan losses based on a number of factors including
a comprehensive in-house loan review program conducted throughout the
year. The loan portfolio is continually evaluated in order to identify
potential problem loans, credit concentration, and other risk factors
such as current and projected economic conditions locally and
nationally. The levels of risk for which allowances are established are
based on estimates of losses on larger specifically identified loans,
and on loan categories analyzed in total where, based on past
experience, risk factors can be assessed. General economic trends can
greatly affect loan losses and there are no assurances that further
changes to the allowance for loan losses may not be significant in
relation to the amount provided during a particular period. Management
does, however, consider the allowance for loan losses to be adequate
for the reporting periods based on evaluation and analysis of the loan
portfolio.
The table entitled ALLOWANCE FOR LOAN LOSSES portrays activity for the
periods presented. The allowance is increased by provisions for losses
charged to operations and is reduced by net charge-offs, the amount of
loans written off as uncollectible less recoveries of loans previously
written off. Charge-offs are made when the collectiblity of loan
principal within a reasonable time is unlikely. Any recoveries of
previously charged-off loans are credited directly to the allowance for
loan losses. Net charge-offs have decreased from both the prior year's
comparable period and the full year 1994 measure both as a dollar
amount and as a percentage of average loan balances. The provision for
loan losses decreased by $0.4 million, 46%, for the second quarter of
-9-
1995 from the comparable period a year ago; the provision for the six
month period of 1995 reflects a similar decrease, $0.9 million, 52%,
from the comparable period a year ago.
The improvement in asset quality depicted in the table NONPERFORMING
ASSETS is the driving force underlying the reduced provision for loan
losses. Nonperforming loans have decreased and the percentage
relationship of the allowance for loan losses to both nonperforming and
total loans has improved. Annualized net loan charge-offs compared to
average total loans have fallen for the second quarter and first six
months of 1995 when compared to the same periods of the prior year and
the year ended December 31, 1994.
The allowance has been allocated based on identified problem credits
or categorical trends. After allocation, the unallocated portion at
June 30, 1995, was approximately $2 million. The unallocated portion
is available for further unforeseen or unexpected losses or
unidentified problem credits. Management will continue to target and
maintain a minimum allowance equal to the allocated requirement plus
an unallocated portion, as appropriate.
ALLOWANCE FOR LOAN LOSSES
Three months ended Six months ended
June 30, June 30,
(dollars in thousands) 1995 1994 1995 1994
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Balance, beginning of period $9,038 $8,652 $9,026 $ 8,652
Recoveries 189 269 395 496
Charge-offs (455) (1,064) (979) (2,101)
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Net charge-offs (266) (795) (584) (1,605)
Provision for loan losses 508 942 838 1,752
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Balance, end of period $9,280 $8,799 $9,280 $ 8,799
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COMPOSITION OF NET CHARGE-OFFS
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Commercial and agricultural $ (84) 32% $ (386) 49% $ (195) 33% $ (656) 41%
Real estate (49) 18% (32) 4% (52) 9% (47) 3%
Consumer and other (133) 50% (377) 47% (337) 58% (902) 56%
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Net (charge-offs) recoveries $ (266) 100% $ (795) 100% $ (584) 100% $(1,605) 100%
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Annualized net charge-offs
to average loans 0.19% 0.57% 0.21% 0.58%
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Annualized net charge-offs to average loans for the year ended
December 31, 1994 0.48%
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Asset Quality: NBT has maintained its focus on sound credit quality in
the loan portfolio, reflecting conservative lending practices and
policies. The measurement of asset quality is the responsibility of the
Registrant's loan review function which also determines the adequacy
of the allowance for loan losses. Loan review utilizes a loan rating
system to rate substantially all of its loans based on risks which
include internal loan classifications, historical analysis of prior
period charge-offs, and evaluation of expected losses on internally
classified credits. Loan ratings are continually reviewed to determine
their propriety. Reporting separately from the loan review function,
the banking and credit function is responsible for lending credit
policy, systems and procedures, collections, recovery and workout
policies and systems.
Classified and special mention loans, excluding those on non-accrual
status, totalled $24.2 million, $26.3 million, and $21.3 million, 4.2%,
4.6%, and 3.8% of outstanding loans, at June 30, 1995, December 31,
1994 and June 30, 1994, respectively. A significant portion of the
outstanding balances are secured with various forms of collateral. In
this regard, management has determined that there are no material
adverse trends or material potential losses not already considered in
the allowance calculation, nor indications of trends or events that
would have a material effect on the Registrant's operations, capital
or liquidity. The Registrant does not have any material loans
classified as doubtful or loss and the loan portfolio does not contain
-10-
any highly leveraged or foreign loans. A substantial portion of the
Registrant's loans are secured by real estate located in central and
northern New York State. Accordingly, the ultimate collectibility of
a substantial portion of the Registrant's portfolio is susceptible to
changes in real estate market conditions in those areas.
The Bank's classification of a loan as a non-accruing loan is based in
part on bank regulatory guidelines. Non-accrual classification does not
mean that the loan principal will not be collected; rather, that timely
collection of interest is doubtful. When, in the opinion of management
the collection of principal appears unlikely, the loan balance is
charged-off in total or in part. Loans are transferred to a
non-accruing basis generally when principal or interest payments become
ninety days delinquent, or when management concludes circumstances
indicate that collection of interest is doubtful. When a loan is
transferred to a non-accrual status, any unpaid accrued interest is
reversed and charged against income. Interest income on non-accruing
loans is recognized on a cash basis, only when cash payments are
received which are not applied to principal. Non-accruing loans are
restored to an accrual status when, in the opinion of management, the
financial condition of the borrower has improved significantly so that
the collectibility of both interest and principal appears assured and
the loan is brought current.
NONPERFORMING ASSETS AND PAST DUE LOANS
June 30, December 31, June 30,
(dollars in thousands) 1995 1994 1994
------------------------------------------------------------------------------
Nonaccrual loans:
Commercial and agricultural $1,449 33% $1,415 31% $1,931 42%
Real estate 2,600 59% 2,950 63% 2,338 51%
Consumer and other 353 8% 274 6% 335 7%
------------------------------------------------------------------------------
Total 4,402 100% 4,639 100% 4,604 100%
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Other real estate owned and
in-substance foreclosures 1,095 840 744
------------------------------------------------------------------------------
Total nonperforming assets 5,497 5,479 5,348
------------------------------------------------------------------------------
Loans past due 90 days or more and still accruing:
Commercial and agricultural 96 8% - - 117 14%
Real estate 978 84% 523 60% 436 53%
Consumer and other 96 8% 348 40% 273 33%
------------------------------------------------------------------------------
Total $1,170 100% $ 871 100% $ 826 100%
------------------------------------------------------------------------------
Nonperforming loans to total loans 0.77% 0.81% 0.81%
Nonperforming assets to total assets 0.53% 0.52% 0.51%
Allowance for loan losses to
nonperforming loans 211% 195% 191%
Allowance as a percentage of
period end loans 1.62% 1.57% 1.55%
------------------------------------------------------------------------------
The increase in nonperforming assets (NPA) was attributable to
increased Other Real Estate Owned (OREO) related to both commercial and
residential real estate foreclosures. The Registrant did not hold any
restructured loans, loans whose, repayment criteria was renegotiated
to less than the original agreement terms because of the borrower's
financial difficulties, at June 30, 1995, December 31, 1994, and June
30, 1994. Loans 90 days past due and not included in nonperforming
loans have increased in the real estate category for which collateral
value supports continued interest accrual.
The tables below depict the changes in both nonaccrual loans and OREO.
Charge-offs flowing through the allowance for loan losses depicted in
the SUMMARY OF CHANGES IN NONACCRUAL LOANS represent gross charge-offs
taken against nonaccrual loans; excluded are charge-offs taken against
accruing loans and interest reversals. When real estate collateralizing
a loan is foreclosed upon the difference between the fair value of the
collateral property and the book value of the loan, if any, is charged-
-11-
off through the allowance for loan losses. Any subsequent write-downs
or charge-offs due to a decline in the fair value of the OREO property
after foreclosure is reflected in noninterest expense.
SUMMARY OF CHANGES IN NONACCRUAL LOANS
Three months ended Six months ended
(in thousands) June 30, June 30,
-------------------------------------------
1995 1994 1995 1994
------------------------------------------------------------------------------
Balance at beginning of period $4,495 $4,790 $4,639 $4,170
Loans placed on nonaccrual 648 982 1,379 2,452
Charge-offs (203) (557) (392) (876)
Payments (538) (469) (841) (646)
Transfers to OREO - (142) (383) (496)
Loans returned to accrual - - - -
------------------------------------------------------------------------------
Balance at end of period $4,402 $4,604 $4,402 $4,604
------------------------------------------------------------------------------
SUMMARY OF CHANGES IN OREO
Three months ended Six months ended
(in thousands) June 30, June 30,
------------------------------------------
1995 1994 1995 1994
-----------------------------------------------------------------------------
Balance at beginning of period $1,189 $686 $ 840 $430
Additions - 161 383 516
Sales (78) (56) (91) (99)
Charge-offs and writedowns (16) (47) (37) (103)
-----------------------------------------------------------------------------
Balance at end of period $1,095 $744 $1,095 $744
-----------------------------------------------------------------------------
Securities: The total average balance of securities available for sale
and held to maturity for the three month period ending June 30, 1995
increased $21 million, or 6%, from the comparable period a year ago.
This increase occurred for two reasons: the lack of high loan demand
required the liquidity of the Bank to be invested in the security
portfolios, and the Asset Liability Management Committee (ALCO) strategy
in the second quarter of 1994 whereby $60 million of lower cost funds
were borrowed and invested in securities yielding a higher rate to
improve net interest income. Average securities held to maturity increased
for both the second quarter and six month period of 1995 compared to the
comparable periods of 1994 due to the aforementioned purchase. Average
securities available for sale for the second quarter and six month period
of 1995 decreased from the comparable period a year ago as securities
matured and a substantial portion of new purchases throughout 1994 were
classified as held to maturity.
The unrealized loss on securities available for sale at June 30, 1995,
has decreased from December 31, 1994, due to recent declining interest
rates. At June 30, 1995, the amortized cost of securities available for
sale, $132 million, exceeded their fair market value by $1 million of
market depreciation while at December 31, 1994 the amortized cost of
$117 million exceeded their fair market value by $7 million. At June
30, 1994 the amortized cost of securities available for sale, $126
million, exceeded their fair market value by $4 million of market
depreciation. Throughout most of 1994, most financial institutions
experienced similar patterns of declining market value of securities
due to a general increase in interest rates.
Tax-exempt securities averaged $33 million for the six month period
ended June 30, 1995, increased $4 million or 15% from the comparable
period of 1994. Tax-exempt securities comprised 12% and 15% of the
securities portfolio for the six month periods ended June 30, 1995 and
1994, respectively. Obligations of the State of New York and its
political subdivisions constitute 100% of the Bank's tax-exempt
securities portfolio. The portfolio did not include any direct
obligations of the State of New York as the entire tax-exempt
securities portfolio was comprised of non-rated investments in the
local communities within the twenty county market area served by the
Bank's Municipal Banking Department. It remains the Registrant's
-12-
practice to invest, subject to availability, in qualified and
designated local municipal issues which receive favorable federal
income tax treatment. The Registrant highly values its business
relationships with a variety of municipalities within its local service
area and meeting their funding needs through investment in their
security issues is a meaningful way to develop such business
relationships.
Deposits: Average total deposits for the quarter ended June 30, 1995,
increased $8 million or 1% from the comparable period in 1994. Average
total deposits for the six months ended June 30, 1995 increased $13
million or 2%, from the comparable period in 1994.
For both the three and six months periods of 1995 compared to 1994,
similar trends in the deposit portfolio shifting were experienced. The
increase occurred in the demand and certificate of deposit components
of the portfolio while NOW, MMDA, and savings account balances
decreased as funds in these lower yielding products were moved to
higher yielding certificates as rates have risen. Average municipal and
negotiated term certificates of deposit increased $63 million, or 105%
for the first six months of 1995 compared to the similar period of
1994. Municipal deposits tend to flow into the Bank as taxes are
collected and flow out as the municipalities make payments over time.
These deposits can be utilized to augment short-term borrowings when
interest rates and security pledging requirements render this temporary
substitution beneficial.
Average retail certificates increased $17 million, or 10%, for the
first six months of 1995 compared to the similar period of 1994 while
average demand deposits increased $5 million, or 5%, for the comparable
periods. Approximately 43% of the portfolio for the six months ending
June 30, 1995 consisted of time deposits, 19% savings deposits, 14%
money market demand deposits, 10% interest-bearing NOW checking
deposits, and 14% non-interest bearing demand deposits. Comparable 1994
portfolio percentages were 34%, 22%, 19%, 11%, and 14%.
Borrowed funds: Short-term borrowings include federal funds purchased,
securities sold under agreements to repurchase, and other short-term
borrowings, which consist primarily of FHLB advances with an original
maturity of one year or less. Total borrowed funds, including long-term
debt, have decreased from a high of $149 million at December 31, 1994
to $107 million at June 30, 1995. The decrease occurred as deposits
increased in the first six months of 1995. Borrowed funds have
increased from their March 31, 1995 level of $52 million to supplant
invested funds as deposits, specifically municipal and negotiated term
certificates of deposit, have decreased due to the outflow of such
deposits to meet the municipalities cash flow requirements.
Borrowed funds averaged $87 million and $91 million for the three and
six month periods ending June 30, 1995, up $5 million or 6% and $26
million or 41%, respectively, from the comparable periods of 1994.
LIQUIDITY AND INTEREST RATE SENSITIVITY MANAGEMENT
Liquidity management requires the ability to raise cash quickly at a
reasonable cost without principal loss to meet the cash flow
requirements of depositors desiring to withdraw funds or borrowers
requiring funds to meet their credit needs. The Asset-Liability
Management Committee of the Registrant is responsible for liquidity
management. This committee of the Registrant's senior staff has
developed liquidity guidelines which cover all assets and liabilities,
as well as off-balance sheet items that are potential sources or uses
of liquidity. The Registrant's funding needs are evaluated
continually, measuring the adequacy of reliable sources of cash
relative to the stability of deposits and borrowing capacity. The
liquidity position is managed by maintaining adequate levels of liquid
assets. Additional liquidity is available through the Bank's access
to borrowed funds. The Bank has unused lines of credit available for
short-term financing of $58 million, $300 million for repurchase
agreements, and the capacity for additional FHLB advances of $82
million, at June 30, 1995.
Interest rate risk is determined by the relative sensitivities of
earning asset yields and interest-bearing liability rates to changes
in interest rates. The Registrant utilizes a funding matrix to identify
repricing opportunities, the ability to adjust loan and deposit product
-13-
rates as well as cash flow from maturities and repayments, along a time
line for both assets and liabilities. The funding matrix indicates that
the Registrant is asset sensitive and, in management's opinion, is
positioned to benefit over time from a rising interest rate
environment; however, the nature and timing of the benefit will be
initially impacted by the extent to which core deposit rates are
increased as rates rise. Based on the most recent analysis performed
as of May 31, 1995, given the scenario of 200 basis point increase or
decline in interest rates occurring over an extended time horizon, the
Registrant estimated that there would be less than a 5% impact on net
interest income relative to a flat rate environment over the next
twelve month period.
CAPITAL RESOURCES AND DIVIDENDS
Stockholders' equity of $102 million represents 9.7% of total assets
at June 30, 1995 compared with $99 million, or 9.4%, a year previous,
and $98 million, or 9.4%, at December 31, 1994. The improved dollar
amounts and percentage relationships since December 31, 1994 are due
to the improved pricing reflected in the mark to market effect of the
securities available for sale portfolio and earnings retention,
partially offset by additional shares held in the treasury. Similar to
the effects experienced by many other financial institutions, the
decline in the current market value of the Bank's securities available
for sale portfolio throughout 1994, whose unrealized loss is reflected
net of taxes in stockholders' equity, has impacted the equity balances
and ratios. The unrealized loss would only be recognized in income if
securities available for sale were, in fact, actually sold. It is
highly unlikely that the Registrant would require such a sale to meet
its liquidity needs. Both book and tangible book value, stockholders'
equity (less intangible assets) divided by the number of common shares
outstanding, depicted in the table below have been affected by the
aforementioned decline in the current market value of the securities
available for sale portfolio; however tangible book value increased due
to the offsetting decrease in intangible assets through amortization.
On a per share basis, cash dividends declared have been increased twice
since the second quarter of 1994 as the Registrant declared a 5% stock
dividend in November 1994 followed by a 10% increase in the cash
dividend to $0.12 per share. Cash dividend per share amounts and total
cash dividends paid as a percentage of net income, dividend payout
ratio, are set forth in the following tables. The Board of Directors
considers the Registrant's earnings position and earnings potential
when making dividend decisions.
Capital is an important factor in ensuring the safety of depositors'
accounts. The Registrant remains well capitalized with capital ratios
that are significantly in excess of regulatory guidelines. During 1994,
the Registrant's wholly owned banking subsidiary earned the highest
possible national safety and soundness rating from two national bank-
rating services. Bauer Financial Services and Veribanc, Inc. base their
ratings on capital levels, loan portfolio quality, and security
portfolio strength.
The Tier 1 Risk-Based Capital Ratio and Total Risk-Based Capital Ratio
presented below measure the amount of capital in relation to the degree
of risk perceived in assets and off-balance sheet exposure. This
concept recognizes that certain higher risk assets require more capital
to support them than lower risk assets. Both ratios were well in excess
of the minimum Regulatory guidelines of 4% and 8%, respectively. Both
capital and the degree of risk used to weight assets and off-balance
sheet items are defined by bank holding company regulatory agencies.
As defined, capital may exclude most intangible assets as well as a
portion of the allowance for loan losses in excess of delineated
percentages of loan balances; unrealized gains and losses on securities
classified as available for sale, net of the tax effect, for financial
reporting purposes are excluded from capital for the computation of
capital adequacy ratios. There are limitations for the amount of the
allowance for loan losses that can be considered for capital ratios and
for the amount of deferred tax assets that can be used to meet capital
requirements. For all periods presented the Registrant was permitted
to include all of its deferred tax assets in its capital ratio
computations. Risk factors used to weight assets and off-balance sheet
credit equivalent items range from 0% for cash, amounts due from the
Federal Reserve and securities issued by the U.S. Treasury to 100% for
certain types of loans and securities. Regulations promulgated by bank
-14-
and bank holding company regulatory agencies are intended primarily for
the protection of the Bank's depositors and customers rather than the
holders of the Registrant's securities.
The Tier 1 Leverage Ratio depicted below compares capital, as defined
for regulatory purposes, to quarterly average assets without regard to
risk weights and certain intangible assets. This ratio measures the
utilization of capital to support the balance sheet and is well in
excess of the minimum Regulatory guideline of 4%.
First Second Third Fourth
Quarter Quarter Quarter Quarter
----------------------------------------------------------------------
1995
Tier 1 leverage ratio 9.19% 9.21%
Tier 1 capital ratio 16.13% 16.03%
Total risk-based capital ratio 17.39% 17.28%
Cash dividends as a percentage
of net income 50.50% 43.57%
Per common share:
Book value $12.55 $12.85
Tangible book value $11.36 $11.68
----------------------------------------------------------------------
1994
Tier 1 leverage ratio 9.44% 8.99% 8.85% 9.05%
Tier 1 capital ratio 15.82% 15.34% 15.95% 16.09%
Total risk-based capital ratio 17.07% 16.59% 17.21% 17.35%
Cash dividends as a percentage
of net income 48.81% 48.46% 87.53% 50.77%
Per common share:
Book value $12.45 $12.35 $12.30 $12.27
Tangible book value $10.96 $10.95 $11.01 $11.04
----------------------------------------------------------------------
The common shares of NBT BANCORP INC. are traded in the NASDAQ National
Market System under the symbol NBTC. High, low, and closing stock
prices, and cash dividends declared by quarter, restated to give
retroactive effect to stock dividends, are depicted in the table
following. At June 30, 1995 the total market capitalization of NBT's
common stock was approximately $129 million, compared with $125 million
a year ago and $132 million at December 31, 1994. The change in market
capitalization is due to a decrease in the number of shares
outstanding, resulting from the increased number of shares held as
treasury stock, and changes in the market price.
Cash
Dividends
Quarter Ending High Low Close Declared
-------------------------------------------------------------------------
1994
-------------------------------------------------------------------------
Mar 31 $17.62 $16.67 $16.67 $0.109
Jun 30 17.02 14.52 15.71 0.110
Sept 30 15.71 14.29 15.24 0.110
Dec 31 17.00 15.00 16.50 0.120
-------------------------------------------------------------------------
1995
-------------------------------------------------------------------------
Mar 31 $17.00 $16.00 $16.00 $0.120
Jun 30 16.50 15.75 16.25 0.120
-------------------------------------------------------------------------
RESULTS OF OPERATIONS
Net Interest Income and Net Interest Margin: The most significant
impact on the Registrant's net income between periods is derived from
the interaction of changes in the volume of and rates earned on
interest earning assets and paid on interest bearing liabilities. The
-15-
volume of earning securities and loans, compared to the volume of
interest bearing liabilities represented by deposits and borrowings,
combined with interest rate spread, produces the changes in the net
interest income between periods. Interest rate spread is the difference
between FTE yield on average earning assets and cost on average
interest bearing liabilities. The tables, Comparative Analysis of
Federal Taxable Equivalent Net Interest Income, present the relative
contribution of changes in average interest rates and average volume
of interest earning assets and interest bearing liabilities on FTE net
interest income between periods. Changes in interest income and expense
arising from the combination of rate and volume variances, which cannot
be segregated, are allocated proportionally to rate and volume based
on their relative absolute magnitudes.
FTE interest income increased for both the second quarter and first six
months of 1995 compared to the same period of 1994 due to a combination
of favorable rate and volume variances. The volume of average earning
assets increased from $937 million for the second quarter of 1994 to
$962 million for the same period of 1995 and from $915 million for the
first six months of 1994 to $961 million for the same period of 1995.
Reducing the increased yield for the first six months of 1995 was a
non-recurring write-off of $0.5 million of accrued interest receivable
on loans previously charged-off or on nonaccrual status. The decline
in FTE net interest income for both the second quarter and first six
months of 1995 can be attributed to increased rates for interest
bearing liabilities as interest rates in general increased. The rate
of increase was greater for interest bearing liabilities than for
interest earning assets and interest rate spread declined. While lower
costing deposit products experienced a decrease in average volume,
certificates of deposit volume increased as customers moved funds into
this more costly deposit product. Additionally, the average volume of
interest bearing liabilities increased to $798 million for the second
quarter of 1995, compared to $789 million during the same period a year
ago. For the first six months of 1995 average interest bearing
liabilities increased to $798 million, compared to $765 million during
the same period a year ago.
During the second quarter of 1994 the Registrant's asset-liability
management committee undertook several steps to improve net interest
income which, because of the rate environment and portfolio maturities
of higher yielding funds purchased previously, would not necessarily
improve net interest margin. Remaining well within its established
liquidity guidelines, the Registrant utilized $60 million of its access
to lower cost funds to purchase securities to be held to maturity
yielding a higher rate than its incremental borrowing rate and
improving net interest income. This leveraging of the balance sheet has
had a continuing positive impact on net interest income throughout 1994
and 1995. Average earning assets and interest bearing liabilities for
the period increased due to this leveraged transaction.
Net interest margin has declined throughout 1994 and 1995 as portrayed
in the above tables and in the table of PERFORMANCE MEASUREMENTS. The
effects of soft loan demand and competitive pricing are reflected in
the compressed net interest margin. A strong net interest margin is
critical to the ability to cover noninterest expenses and produce an
acceptable level of net income. Net interest margin for the first
quarter and six months of 1995 was 4.50% excluding the effect of the
previously mentioned accrued interest receivable write-off that
occurred in the first quarter of 1995.
-16-
COMPARATIVE ANALYSES OF FEDERAL TAXABLE EQUIVALENT NET INTEREST INCOME
THREE MONTHS ENDED JUNE 30,
ANNUALIZED
YIELD/RATE AMOUNTS VARIANCE
--------------------------
1995 1994 (dollars in thousands) 1995 1994 TOTAL VOLUME RATE
---- ---- ---- ---- ----- ------ ----
4.20% -% INTEREST BEARING DEPOSITS $ 5 $ - $ 5 $ 5 $ -
5.76% 3.50% FEDERAL FUNDS SOLD 4 2 2 - 2
5.94% 3.71% OTHER SHORT TERM INVESTMENTS 50 18 32 17 15
6.13% 5.88% SECURITIES AVAILABLE FOR SALE 1,814 1,854 (40) (118) 78
9.91% 7.61% LOANS AVAILABLE FOR SALE 151 191 (40) (88) 48
SECURITIES HELD TO MATURITY
6.01% 5.84% TAXABLE 3,526 3,013 513 422 91
6.94% 5.96% TAX-EXEMPT 532 470 62 (13) 75
9.38% 8.49% LOANS 13,258 11,934 1,324 75 1,249
-------------------------------------------------------------------------
8.07% 7.45% TOTAL INTEREST INCOME 19,340 17,482 1,858 300 1,558
2.88% 2.55% MONEY MARKET DEPOSIT ACCOUNTS 773 1,001 (228) (348) 120
1.65% 1.60% NOW ACCOUNTS 335 346 (11) (21) 10
2.95% 2.60% SAVINGS ACCOUNTS 1,127 1,172 (45) (191) 146
5.43% 3.81% CERTIFICATES OF DEPOSIT 4,982 2,675 2,307 964 1,343
6.05% 4.20% OTHER BORROWED FUNDS 1,221 711 510 156 354
8.13% 6.58% LONG TERM DEBT 128 237 (109) (156) 47
-------------------------------------------------------------------------
4.31% 3.12% TOTAL INTEREST EXPENSE 8,566 6,142 2,424 404 2,020
-------------------------------------------------------------------------
NET INTEREST INCOME $10,774 $11,340 $ (566) $ (104) $ (462)
=========================================================================
3.76% 4.33% INTEREST RATE SPREAD
==== ===== ====================
4.49% 4.83% NET INTEREST MARGIN
==== ===== ===================
FTE ADJUSTMENT $ 197 $ 178
============== ======= =======
SIX MONTHS ENDED JUNE 30,
ANNUALIZED
YIELD/RATE AMOUNTS VARIANCE
-----------------------
1995 1994 (dollars in thousands) 1995 1994 TOTAL VOLUME RATE
---- ---- ---- ---- ----- ------ ----
4.25% 5.31% INTEREST BEARING DEPOSITS $ 10 $ 1 $ 9 $ 9 $ -
5.72% 3.16% FEDERAL FUNDS SOLD 8 11 (3) (9) 6
5.94% 3.34% OTHER SHORT TERM INVESTMENTS 72 63 9 (28) 37
6.05% 5.74% SECURITIES AVAILABLE FOR SALE 3,426 4,225 (799) (1,019) 220
8.84% 8.19% LOANS AVAILABLE FOR SALE 308 396 (88) (117) 29
SECURITIES HELD TO MATURITY
6.04% 5.81% TAXABLE 7,069 4,746 2,323 2,129 194
6.88% 5.79% TAX-EXEMPT 1,132 827 305 137 168
9.06% 8.57% LOANS 25,478 23,796 1,682 311 1,371
-------------------------------------------------------------------------
7.87% 7.50% TOTAL INTEREST INCOME 37,503 34,065 3,438 1,413 2,025
2.80% 2.58% MONEY MARKET DEPOSIT ACCOUNTS 1,576 2,000 (424) (582) 158
1.63% 1.62% NOW ACCOUNTS 665 699 (34) (41) 7
2.95% 2.65% SAVINGS ACCOUNTS 2,294 2,360 (66) (320) 254
5.28% 3.81% CERTIFICATES OF DEPOSIT 9,293 5,235 4,058 1,711 2,347
5.89% 3.96% OTHER BORROWED FUNDS 2,440 992 1,448 842 606
7.48% 6.60% LONG TERM DEBT 279 473 (194) (251) 57
-------------------------------------------------------------------------
4.18% 3.10% TOTAL INTEREST EXPENSE 16,547 11,759 4,788 1,359 3,429
-------------------------------------------------------------------------
NET INTEREST INCOME $20,956 $22,306 $(1,350) $ 54 $(1,404)
=========================================================================
3.69% 4.40% INTEREST RATE SPREAD
==== ===== ====================
4.40% 4.91% NET INTEREST MARGIN
==== ===== ===================
FTE ADJUSTMENT $ 418 $ 316
============== ======= =======
-17-
Noninterest Income: The tables below present quarterly and period to
date amounts of noninterest income. Second quarter 1995 noninterest
income fell from the comparable period of 1994 predominately due to a
decline in trust income. The decrease in third and fourth quarter 1994
and first quarter 1995 trust income is related to a decline in fees
from estates and personal agency accounts. Trust income is anticipated
to remain at the lower levels attained in the first and second quarter
of 1995 for the remainder of the year. Reflected in other income for
the fourth quarter of 1994 is a $0.5 million charge to record real
estate loans available for sale at their then current market value.
NONINTEREST INCOME
First Second Six Third Fourth Twelve
(dollars in thousands)Quarter Quarter Months Quarter Quarter Months
------------------------------------------------------------------------------
1995
Trust income $ 662 $ 643 $1,305
Service charges on
deposit accounts 731 747 1,478
Securities gains - 11 11
Other income 374 353 727
------------------------------------------------------------------------------
Total noninterest
income $1,767 $1,754 $3,521
------------------------------------------------------------------------------
1994
Trust income $ 799 $ 800 $1,599 $ 661 $251 $2,511
Service charges on
deposit accounts 654 778 1,432 797 803 3,032
Securities gains 555 - 555 - - 555
Other income 428 306 734 350 (143) 941
------------------------------------------------------------------------------
Total noninterest
income $2,436 $1,884 $4,320 $1,808 $911 $7,039
------------------------------------------------------------------------------
-18-
NONINTEREST EXPENSE AND PRODUCTIVITY MEASUREMENTS
First Second Six Third Fourth Twelve
(dollars in thousands)Quarter Quarter Months Quarter Quarter Months
-----------------------------------------------------------------------------
1995
Salaries and wages $2,966 $3,047 $6,013
Employee benefits 1,058 903 1,961
Net occupancy expense 603 586 1,189
Equipment expense 411 424 835
FDIC insurance 451 452 903
Legal, audit, and
outside services 941 908 1,849
Loan collection and
other loan related
expenses 345 352 697
Amortization of
goodwill and other
intangibles 315 314 629
Other operating
expense 1,323 1,249 2,572
-----------------------------------------------------------------------------
Total noninterest
expense $8,413 $8,235 $16,648
-----------------------------------------------------------------------------
Efficiency ratio 70.40% 65.79% 68.04%
Expense ratio 2.64% 2.54% 2.59%
Average full-time
equivalent employees 535 542 539
Average assets per
average full-time
equivalent employee
(millions) $1.9 $1.9 $1.9
-----------------------------------------------------------------------------
1994
Salaries and wages $3,293 $3,149 $6,442 $ 3,103 $3,041 $12,586
Employee benefits 791 1,021 1,812 1,009 750 3,571
Net occupancy expense 630 506 1,136 571 588 2,295
Equipment expense 542 560 1,102 472 459 2,033
FDIC insurance 457 457 914 457 458 1,829
Legal, audit, and
outside services 963 965 1,928 1,196 941 4,065
Loan collection and
other loan related
expenses 408 436 844 498 299 1,641
Amortization of
goodwill and other
intangibles 1,042 893 1,935 881 406 3,222
Other operating
expense 1,369 1,169 2,538 1,413 1,217 5,168
Restructuring expense - - - 1,367 897 2,264
-----------------------------------------------------------------------------
Total noninterest
expense $9,495 $9,156 $18,651 $10,967 $9,056 $38,674
-----------------------------------------------------------------------------
Efficiency ratio 73.91% 69.23% 71.54% 70.82% 66.73% 70.22%
Expense ratio 3.22% 2.89% 3.05% 2.98% 2.79% 2.96%
Average full-time
equivalent employees 613 589 601 562 540 576
Average assets per
average full-time
equivalent employee
(millions) $1.6 $1.7 $1.6 $1.8 $1.9 $1.8
-----------------------------------------------------------------------------
-19-
Noninterest expense: The tables preceding present noninterest expense
for the periods indicated. Noninterest expense for the both the second
quarter and first six months of 1995 has decreased significantly from
the comparable period a year previous. The decrease was spread through
all components of noninterest expense and are the result of several
factors, including ongoing expense control efforts. Decreased
intangible amortization was the primary reason for the significant
change; during 1994, some components of intangibles incurred as a
result of the acquisition of four commercial banks in 1989 reached the
point at which they were fully amortized. There are no further dramatic
changes in such amortization anticipated in the future, the
amortization of the remaining components lapses off gradually over
time.
Salary, wages and benefits expense are the second largest expense after
interest expense. Full-time equivalent employees have fallen throughout
1994 and 1995. During 1994, the Registrant implemented a restructuring
plan that included a reduction in the work force and the closing of
three offices. Charges of $1.2 million related to the termination
benefits of 35 employees and exit costs related to the closure of three
offices and professional fees related to the terminations totalling
$1.1 million, including $0.7 million for the impairment of long-lived
assets, were recognized. Of the activities considered in the exit plan
all the employees have been terminated and offices have been closed or
converted to a different level of service. One office remains to be
disposed of, the Registrant is negotiating its sale as expediently as
possible.
Through June 30, 1995, termination benefits of $1.1 million and exit
costs totalling $0.3 million have been paid and charged to the
liability under the restructuring plan. Long-lived assets were disposed
of at a loss of $0.2 million which was charged to the valuation
allowance related to the restructuring. No adjustments have been made
to either the restructuring liability or the valuation allowance
related to the impairment of long-lived assets due to the
restructuring.
Provision for Income Taxes: The provision for income taxes has
increased for both the second quarter and first six months of 1995 as
income subject to taxes has increased. The effective tax rate for the
second quarter of 1995 and 1994 was 38%. For the first six months of
1995 the effective tax rate was 37% compared to 39% for the comparable
period of 1994; increased tax-exempt income was the primary reason for
the decrease in the effective tax rate.
-20-
----------------------------------------------------------------------------------------
SELECTED FIVE YEAR DATA 1990 1991 1992 1993 1994
----------------------------------------------------------------------------------------
(dollars in thousands, except per share amounts)
Net income $7,540 $7,179 $8,043 $8,505 $6,508
Return on average assets 0.91% 0.85% 0.94% 0.93% 0.64%
Return on average equity 9.42% 8.45% 8.89% 8.79% 6.53%
Net interest margin 5.71% 5.64% 5.52% 5.26% 4.81%
Efficiency Ratio 68.84% 68.52% 69.48% 71.05% 70.22%
Expense Ratio 3.24% 3.23% 3.19% 3.21% 2.96%
Tier 1 leverage ratio 6.70% 7.92% 9.01% 9.24% 9.05%
Tier 1 capital ratio 12.66% 14.12% 15.30% 15.40% 16.09%
Total risk-based capital ratio 12.66% 14.12% 16.61% 16.66% 17.35%
Cash dividends as a percentage
of net income 34.77% 38.58% 36.94% 38.82% 55.22%
Per Common Share:
Net income $ 0.97 $ 0.92 $ 1.02 $ 1.05 $ 0.80
Cash dividends declared $ 0.338 $ 0.355 $ 0.376 $ 0.413 $ 0.449
Book value $10.62 $11.18 $11.82 $12.58 $12.27
Tangible book value $ 7.26 $ 8.43 $ 9.64 $10.95 $11.04
Stock dividends distributed 5.00% 5.00% 5.00% 5.00% 5.00%
Stock splits distributed 3 for 2 none none none none
Market price:
High $15.22 $12.95 $14.51 $18.50 $17.62
Low $11.88 $ 9.93 $ 9.98 $12.62 $14.29
End of year $12.34 $ 9.93 $13.15 $17.38 $16.50
Price/earnings multiple 20.63x 16.55x 12.89x 10.79x 12.72x
Price/book value multiple 1.16x 0.89x 1.11x 1.38x 1.34x
Total assets 849,942 838,884 868,616 953,907 1,044,557
Total stockholders' equity 82,405 87,826 94,012 101,108 98,307
Average common shares
outstanding (thousands) 7,786 7,804 7,920 8,070 8,108
-21-
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings
There have been no material legal proceedings initiated or settled
during the quarter ended June 30, 1995. The Registrant and its
principal subsidiary, NBT Bank, National Association (collectively
NBT), initiated a suit in the Supreme Court of the State of New York,
Chenango County, on October 28, 1988, against Fleet/Norstar Financial
Group, Inc., Fleet/Norstar New York, Inc., and Norstar Bank of Upstate
N.Y. (collectively NORSTAR) for tortious interference with NBT's
contract rights and prospective business relationship with Central
National Bank, Canajoharie, New York. NBT is seeking damages from
NORSTAR for lost profits and special and punitive damages. On June 20,
1989, the Court dismissed all three counts of the complaint for failure
to state a cause for action. On March 29, 1990 the Appellate Division
of the Supreme Court of New York reversed the trial court's dismissal
of NBT's third cause of action for tortious interference with
prospective business relations and affirmed the dismissal of NBT's
first two causes of action. The New York Court of Appeals denied NBT's
petition for review of the dismissal of the first two causes of action
on the ground that the order appealed from did not finally determine
the action. NBT's motion for reargument of its petition for review was
also denied and NBT's third cause of action was remanded to the trial
court. On March 9, 1994, NBT filed with the trial court a Note of Issue
indicating the amount demanded as $74,212,288. On July 27, 1994, the
trial court granted Norstar's motion for summary judgement as to the
third cause of action, and on May 25, 1995 the Appellate Division
affirmed the order of the Supreme Court. NBT has moved for permission
to appeal to the New York Court of Appeals.
Item 2 -- Changes in Securities
Following are listed changes in the Registrant's Common Stock
outstanding during the quarter ended June 30, 1995 as well as certain
actions which have been taken which may affect the number of shares of
Common Stock (shares) outstanding in the future. There was no Preferred
Stock outstanding during the quarter ended June 30, 1995.
The Registrant has Stock Option Plans. Outstanding at June 30, 1995 are
non-qualified stock options covering 268,578 shares at exercise prices
ranging between $9.46 and $16.90 with expiration dates between January
12, 1996, and February 22, 2005. There are 603,790 shares of authorized
common stock designated for possible issuance under the Plans,
including the aforementioned shares. The number of shares designated
for the Plans, the number of shares under existing options and the
option price per share may be adjusted upon certain changes in
capitalization, such as stock dividends, stock splits and other
occurrences as enumerated in the Plans. (Forms S-8, Registration
Statement Nos. 33-18976 and 33-77410, filed with the Commission on
December 9, 1987 and April 6, 1994, respectively.)
The Registrant has agreed to grant its former Chairman stock options
in connection with the discharge of severance obligations of the
Registrant and the Bank under the employment agreement with its former
Chairman. The agreement calls for the issuance of options covering
123,798 and 25,935 shares with exercise prices of $16.188 and $16.90,
respectively and an expiration date of January 31, 1997. The number of
shares under option and the option price per share may be adjusted upon
certain changes in capitalization, such as stock dividends, stock
splits and other occurrences. The Registrant will file a registration
statement relating to these option shares which would be issued, upon
payment of the exercise price, from authorized, but unissued common
stock, or shares held in the treasury. These stock options do not serve
to reduce the number available under the previously mentioned Stock
Option Plans.
The Registrant has a Dividend Reinvestment Plan. There are 134,003
additional shares of authorized but unissued common stock designated
for possible issuance under the Plan. (Form S-3, Registration Statement
No. 33-12247, filed with the Commission on February 26, 1987).
-22-
The Registrant's Board of Directors has authorized the purchase on the
open market by the Registrant of additional shares of treasury stock.
These treasury shares are to be used for a variety of corporate
purposes, primarily to meet the needs of the Registrant's Employee
Stock Ownership Plan, Automatic Dividend Reinvestment and Stock
Purchase Plan, Stock Option Plans and Bank Trust Department directed
IRA and HR-10 accounts. Purchases and sales during 1995 totalled
312,693 and 227,350, respectively, with 121,473 of treasury shares at
June 30, 1995. Purchases were made at the prevailing market price in
effect at the dates of the transactions. Subsequent sales to both the
Registrant's Employee Stock Ownership Plan and Dividend Reinvestment
and Stock Purchase Plan, if any, were made at the five day average of
the highest and lowest quoted selling price of the Registrant's common
stock on the National Market System of NASDAQ. Sales under the
Registrant's Stock Option Plans were made at the option price. The
price per common share ranged between $12.98 and $16.50; any difference
between cost and sales price was recorded in capital surplus.
As approved at the April 22, 1995 annual meeting the Registrant is
authorized to issue 2.5 million shares of preferred stock, no par
value, $1.00 stated value. The Board of Directors is authorized to fix
the particular designations, preferences, rights, qualifications, and
restrictions for each series of preferred stock issued. The Registrant
has a Stockholder Rights Plan (Plan) designed to ensure that any
potential acquiror of the Registrant negotiate with the Board of
Directors and that all Registrant stockholders are treated equitably
in the event of a takeover attempt. When the Plan was adopted, the
Registrant paid a dividend of one Preferred Share Purchase Right
(Right) for each outstanding share of common stock of the Registrant.
Similar Rights are attached to each share of the Registrant's common
stock issued after November 15, 1994, the date of adoption subject to
adjustment. Under the Plan, the Rights will not be exercisable until
a person or group acquires beneficial ownership of 20 percent or more
of the Registrant's outstanding common stock, begins a tender or
exchange offer for 25 percent or more of the Registrant's outstanding
common stock, or an adverse person, as declared by the Board of
Directors, acquires 10 percent or more of the Registrant's outstanding
common stock. Additionally, until the occurrence of such an event, the
Rights are not severable from the Registrant's common stock and
therefore, the Rights will be transferred upon the transfer of shares
of the Registrant's common stock. Upon the occurrence of such events,
each Right entitles the holder to purchase one one-hundredth of a share
of Series R Preferred Stock, no par value, and $1.00 stated value per
share of the Company at a price of $100.
The Plan also provides that upon the occurrence of certain specified
events, the holders of Rights will be entitled to acquire additional
equity interests in the Company or in the acquiring entity, such
interests having a market value of two times the Right's exercise price
of $100. The Rights, which expire November 14, 2004, are redeemable in
whole, but not in part, at the Company's option prior to the time they
are exercisable, for a price of $0.01 per Right.
Item 3 -- Defaults Upon Senior Securities
This item is omitted because there were no defaults upon the
Registrant' senior securities during the quarter ended June 30, 1995.
Item 4 -- Submission of Matters to a Vote of Security Holders
This item is omitted as there is no disclosure required for the quarter
ended June 30, 1994. The results of the election of director's and
ratification of auditors at the Annual Meeting of Stockholders held
April 23, 1994 was previously reported in Form 10-Q, March 31, 1994.
Item 5 -- Other Information
On June 1, 1995, the Registrant's wholly-owned subsidiary changed its
name to NBT BANK, National Association from The National Bank and Trust
Company, formerly The National Bank and Trust Company of Norwich.
-23-
Item 6 -- Exhibits and Reports on Form 8-K
An exhibits index follows the signature page of this Form 10-Q.
No reports on Form 8-K were filed by the Registrant during the quarter
ended June 30, 1995.
-24-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report on Form 10-Q to be signed
on its behalf by the undersigned thereunto duly authorized, this 11th
day of August, 1995.
NBT BANCORP INC.
/s/ JOE C. MINOR
By: ----------------------------------------
Joe C. Minor
Assistant Treasurer
Chief Accounting Officer
-25-
INDEX TO EXHIBITS
The following documents are attached as Exhibits to this Form 10-Q or, if
annotated by the symbol *, are incorporated by reference as Exhibits as
indicated by the page Number or exhibit cross-reference to the prior
filings of the Registrant with the Commission.
Form 10-Q Exhibit
Exhibit Cross-Reference
Number Number
10.1 Amendment #1 dated February 21, 1995 to NBT BANCORP INC. Herein
Defined Benefit Pension Plan Amended and restated as of
October 1, 1989, including Amendments adopted through
December 31, 1994
10.2 Amendment #2 dated May 23, 1995 to NBT BANCORP INC. Herein
Defined Benefit Pension Plan Amended and restated as of
October 1, 1989, including Amendments adopted through
December 31, 1994
10.3 Amendment dated November 11, 1994 to the Scudder Herein
Prototype 401(k) Plan adopted as the NBT Bancorp Inc.
401(k) Retirement Plan
10.4 Amendment dated November 15, 1994 to the 401(K) Plan Herein
Adoption Agreement for the NBT Bancorp Inc. 401(k)
Retirement Plan
10.5 Amendment #1 dated February 21, 1995 to the NBT Bancorp Herein
Inc. 401(k) Retirement Plan
27. Financial Data Schedule Herein
-26-
EXHIBIT 10.1
Amendment #1 Defined Benefit Pension Plan
AMENDMENT #1
NBT BANCORP, INC.
DEFINED BENEFIT PENSION PLAN
This sets forth Amendment #1 to the NBT Bancorp, Inc. Defined
Benefit Pension Plan, as amended and restated through December 31, 1994
("Plan").
Effective July 1, 1995, the Plan shall be amended as follows:
1. A new Section 7.08 shall be added to the Plan to provide a
five percent cost-of-living increase to all Plan participants who: (a)
terminated employment with The National Bank and Trust Company prior to
January 1, 1990, (b) at the time employment terminated, fulfilled the
requirements for a normal, early or disability retirement benefit, and
(c) are receiving or are eligible to receive monthly payments from the
Plan as of July 1, 1995. The five percent increase shall be added to
an eligible participant's benefit prior to any adjustments for benefit
commencement date and/or optional form of payment. New Section 7.08
shall provide in its entirety as follows:
7.08 July 1, 1995 Cost-of-Living Increase. Effective as
of July 1, 1995, the benefit otherwise determined pursuant to
Section 7.01 for each Participant (a) whose employment with the
Employer terminated for any reason prior to January 1, 1990, (b)
who, at the time employment terminated, had already fulfilled all
requirements for a normal, early, or disability retirement
benefit, and (c) who is receiving (or upon filing appropriate
election forms would be eligible to receive) monthly benefit
payments from the Plan as of July 1, 1995, shall be increased
by five percent. The foregoing increase shall be applied prior
to any adjustment for the date distributions commence and/or for
optional forms of payment.
2. A new Section 12.07 shall be added to the Plan to provide
that, effective July 1, 1995, any participant whose benefit is limited
by the maximum benefit limitations of Internal Revenue Code Section 415
shall have their benefit adjusted as of the beginning of each Plan year
to reflect cost-of-living increases in the Internal Revenue Code
Section 415 limits. New Section 12.07 shall apply prospectively only:
no retroactive adjustments will be made.
Section 12.07 shall provide in its entirety as follows:
12.07 Increases in the Maximum Retirement Benefit.
Notwithstanding the foregoing of this Article XII, and to the
extent permitted by Code Section 415, the Maximum Retirement
Benefit shall be increased each Plan year beginning July 1, 1995
to reflect cost-of-living adjustments in the limits imposed by
Code Section 415. In no event, however, shall the benefit payable
to or on behalf of a Participant exceed the benefit which is
otherwise payable under the Plan.
Executed this 21st day of February, 1995.
NBT BANCORP INC.
By: /s/ Daryl R. Forsyte
----------------
EXHIBIT 10.2
Amendment #2 Defined Benefit Pension Plan
AMENDMENT #2
NBT BANCORP INC.
DEFINED BENEFIT PENSION PLAN
This sets forth Amendment #2 to the NBT Bancorp Inc. Defined Benefit
Pension Plan, as amended and restated through December 31, 1994 ("Plan").
Effective January 1, 1995, the Plan shall be amended as follows:
1. Section 1.01(a) of the Plan shall be amended so that a Participant's
Benefit Service shall be recognized beginning on the later of May 9, 1945,
or the date the Participant first became a Participant. Section 4.01(a),
as amended, shall provide in its entirety as follows:
4.01 Benefit Service
a. For service rendered prior to January 1, 1995, a
Participant shall be entitled to a Year of Benefit Service
for each 12-month period of service with the Employer,
beginning on the later of May 9, 1945, or the date the
Participant first became a Participant. To the extent not
taken into account under the preceding sentence, a
Participant shall also receive credit for each completed
month (counted as 1/12th of a year) of service with the
Employer after the applicable date described in the preceding
sentence and before January 1, 1995.
Executed this 23rd day of May, 1995.
NBT BANCORP INC.
By: /s/ John D. Roberts
---------------
EXHIBIT 10.3
The Scudder Prototype 401 (k) Plan
AMENDMENT
TO THE
SCUDDER PROTOTYPE 401(k) PLAN
1. Section 2.09 of the Scudder Prototype 401(k) Plan (the "Plan") is hereby
amended by adding the following to the end thereof:
"In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994,
the annual Compensation of each employee taken into account under
the Plan shall not exceed the OBRA `93 annual compensation limit.
The OBRA `93 annual compensation limit is $150,000, as adjusted by
the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Code. The cost-of-living
adjustment in effect for a calendar year applies to any period,
not exceeding 12 months, beginning in such calendar year over
which compensation is determined (determination period). If a
determination period consists of fewer than 12 months, the OBRA
`93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17)
of the Code shall mean the OBRA `93 annual compensation limit set
forth in this provision."
2. Section 2.19 of the Plan is amended by adding the following to the
end thereof:
"In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994,
the annual Earned Income of each employee taken into account under
the Plan shall not exceed the OBRA `93 annual compensation limit.
The OBRA `93 annual compensation limit is $150,000, as adjusted by
the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Code. The cost-of-living
adjustment in effect for a calendar year applies to any period,
not exceeding 12 months, beginning in such calendar year over
which compensation is determined (determination period). If a
determination period consists of fewer than 12 months, the OBRA
`93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17)
of the Code shall mean the OBRA `93 annual compensation limit set
forth in this provision."
3. Article XXV of the Plan is amended by adding the following Section
25.12:
"25.12 Direct Rollovers. This Section applies to
distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Section,
a distributee may elect, at the time and in the manner prescribed
by the Plan Administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
Definitions: Whenever used in this Section, the following
words shall have the following meanings:
(a) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or
for a specified period of ten years or more; any
distribution to the extent such distribution is required
under section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income
(determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(b) Eligible retirement plan: An eligible retirement plan
is an individual retirement account described in section
408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.
(c) Distributee: A distributee includes an employee or
former employee. In addition, the employee's or former
employee's surviving spouse and the employee's or former
employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in
section 414(p) of the Code, are distributees with regard to
the interest of the spouse or former spouse.
(d) Direct Rollover: A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the distributee."
SCUDDER INVESTOR SERVICES, INC.
By: /s/ David S. Lee
------------------------
Title: President
------------------------
Date: November 11, 1994
------------------------
EXHIBIT 10.4
Amendment to the 401(K) Plan Adoption Agreement
The National Bank and Trust Company
52 South Broad Street
Norwich, New York 13815
607/337-6000
I hereby certify that the following is a true copy of a portion of the
Minutes of the Board of Directors Meeting held on November 15, 1994
Date: 2/15/94 /s/ Richard I. Linhart
----------------------
Richard I. Linhart
Executive Vice President,
Chief Administrative Officer &
Chief Financial Officer
AMENDMENT TO THE 401(K) PLAN ADOPTION AGREEMENT
Whereas, on April 1, 1994, an Adoption Agreement was made and executed
by and between The National Bank and Trust Company having its principal
place of business in the City of Norwich, County of Chenango, State of
New York ("Corporation") and Scudder Trust Company.
Whereas, the Corporation wishes to amend said instrument pursuant to
Article XX of the 401(k) Plan.
Whereas, it is the intention of the above parties to make the following
amendment to the 401(k) Plan Agreement effective January 1, 1995.
Now therefore, the following resolutions are made:
1. Effective January 1, 1995, the Employer Matching Contribution made
on behalf of each Participant shall be equal to the sum of 50% of
the Participant's contributions which are not in excess of 4% of
the Participant's Compensation, plus 0% of such contributions
which are in excess of 4% of compensation, but not in excess of
15% of the Participant's Compensation.
2. That the Corporation's Senior Vice President of Human Resources
be, and the Senior Vice President hereby is, authorized and
directed to execute and deliver for and on behalf of the
Corporation all such other agreements, documents and
certifications and to do and to perform all such other acts and
things as the Senior Vice President shall determine to be
necessary, appropriate or advisable to carry out the intents and
purposes of the foregoing resolutions, including the preparation
and execution of a Plan amendment, ensuring that the amendment
does not adversely impact the Plan's tax-qualified status,
submitting the amendment to the Internal Revenue Service for
approval, and preparing and distributing a Summary of Material
Modification.
EXHIBIT 10.5
Amendment #1 to the NBT Bancorp Inc. 401(k) Retirement Plan
AMENDMENT # 1
401(k) PLAN
CERTIFIED COPY OF RESOLUTIONS
OF
THE BOARD OF DIRECTORS
OF
NBT BANCORP, INC.
The undersigned certifies that the following resolutions were duly
adopted at a meeting of the Board of Directors of NBT Bancorp, Inc. held
February 21, 1995, at which a quorum was present and acted throughout:
WHEREAS, on April 1, 1994 an Adoption Agreement was made and
executed by and between The National Bank and Trust Company having
its principal place of business in the City of Norwich, County of
Chenango, State of New York ("Corporation") and Scudder Trust
Company and on November 15, 1994 said Adoption Agreement was
adopted by NBT Bancorp, Inc.
WHEREAS, the Corporation wishes to amend said instrument pursuant
to Article XX of the 401(k) Plan.
WHEREAS, it is the intention of the above parties to make the
following amendment to the 401(k) Plan Agreement effective immediately.
NOW, THEREFORE, BE IT RESOLVED that the following amendment is made:
1. Any forfeiture which results from a Participant's
Termination of Service shall be deemed to be an Employer
Matching Contribution, and applied to reduce the aggregate
amount the Employer must contribute in Employer Matching
Contributions for the Plan Year during which the forfeiture
occurs.
2. That the Corporation's Senior Vice President of Human
Resources be, and the Senior Vice President hereby is,
authorized and directed to execute and deliver for and on
behalf of the Corporation all such other agreements,
documents and certifications and to do and to perform all
such other acts and things as the Senior Vice President shall
determine to be necessary, appropriate or advisable to carry
out the intents and purposes of the foregoing resolution,
including the preparation and execution of a Plan amendment,
ensuring that the amendment does not adversely impact the
Plan's tax-qualified status, submitting the amendment to the
Internal Revenue Service for approval, and preparing and
distributing a Summary of Material Modification.
Dated: March 10, 1995 /s/ Shirley M. Walsh
---------------------
Assistant Secretary
EXHIBIT 27
Financial Data Schedule
9
1,000
6-MOS
DEC-31-1995
JUN-30-1995
44,549
507
0
0
131,096
259,825
260,993
572,258
9,280
1,044,722
830,246
103,225
5,669
3,730
8,050
0
0
93,802
1,044,722
25,458
7,805
3,822
37,085
13,828
2,719
20,538
838
11
16,648
6,573
4,128
0
0
4,128
0.51
0.51
0.044
4,402
1,170
0
24,202
9,026
979
395
9,280
7,166
0
2,114
