-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BcuvHZ6l90nTVXDchaORJr9adLQjSBfzhojSNksHSRcja8COqgjrEtfB0UDy3rSl c/pIyLTGx35WC+wBf3UXRw== 0001140361-05-007692.txt : 20060829 0001140361-05-007692.hdr.sgml : 20060829 20050926154524 ACCESSION NUMBER: 0001140361-05-007692 CONFORMED SUBMISSION TYPE: CORRESP PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20050926 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NBT BANCORP INC CENTRAL INDEX KEY: 0000790359 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 161268674 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: CORRESP BUSINESS ADDRESS: STREET 1: 52 S BROAD ST CITY: NORWICH STATE: NY ZIP: 13815 BUSINESS PHONE: 6073372265 MAIL ADDRESS: STREET 1: 52 S. BROAD STREET CITY: NORWICH STATE: NY ZIP: 13815 CORRESP 1 filename1.txt [NBT BANCORP LETTERHEAD] September 26, 2005 BY EDGAR AND OVERNIGHT DELIVERY Mr. Donald Walker Senior Assistant Chief Accountant United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 RE: NBT BANCORP INC. FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004 FILED MARCH 16, 2005 FILE NO. 000-14703 Dear Mr. Walker: I am writing in response to the Staff's letter of comment dated September 15, 2005 (the "Comment Letter") to Mr. Daryl R. Forsythe of NBT Bancorp Inc. (the "Company"). The responses to the Comment Letter set forth below are keyed to the sequence of the comments in the Comment Letter. ITEM 1. BUSINESS - ---------------- NONPERFORMING ASSETS - -------------------- 1. We note your disclosures regarding the determination of your allowance for loan losses. Please tell us: - the amount of the specific allowance attributable to your non-performing loans, if any; - why your provision for loan losses has remained constant over the past several years in veiw of your net charge-off history; and - how you have considered the $48.0 million in potential problem loans as of December 31, 2004 in determining your allowance. RESPONSE: a) Specific allocations are established in compliance with Financial Accounting Standard Board (FASB) Statement of Financial Accounting Standards (FAS) No. 114, " Accounting by Creditors for Impairment of a Loan". At December 31, 2004, and 2003 the Company had $10.5 million and $8.7 million, respectively, in nonaccrual commercial and agricultural loans and real estate loans, that were considered impaired with a specific allocation of $0.2 million for both periods. b) The following represents Tables 7 (Nonperforming Assets) and 8 (Allowance for Loan and Lease Losses) from the Company's Form 10-K for the fiscal year ended December 31, 2004 ("Form 10-K"):
TABLE 7. NONPERFORMING ASSETS - ----------------------------------------------------------------------------------------------------- As of December 31, ------------------------------------------------ (Dollars in thousands) 2004 2003 2002 2001 2000 - ----------------------------------------------------------------------------------------------------- NONACCRUAL LOANS Commercial and agricultural loans and real estate $10,550 $ 8,693 $16,980 $31,372 $14,054 Real estate mortgages 2,553 2,483 5,522 5,119 647 Consumer 1,888 2,685 1,507 3,719 2,402 ------------------------------------------------ Total nonaccrual loans 14,991 13,861 24,009 40,210 17,103 ------------------------------------------------ LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING Commercial and agricultural loans and real estate - 242 237 198 4,523 Real estate mortgages 737 244 1,325 1,844 3,042 Consumer 449 482 414 933 865 ------------------------------------------------ Total loans 90 days or more past due and still accruing 1,186 968 1,976 2,975 8,430 Restructured loans - - 409 603 656 ------------------------------------------------ Total nonperforming loans 16,177 14,829 26,394 43,788 26,189 Other real estate owned 428 1,157 2,947 1,577 1,856 ------------------------------------------------ Total nonperforming loans and other real estate owned 16,605 15,986 29,341 45,365 28,045 Nonperforming securities - 395 1,122 4,500 1,354 ------------------------------------------------ Total nonperforming loans, securities, and other real estate owned $16,605 $16,381 $30,463 $49,865 $29,399 ================================================ Total nonperforming loans to loans and leases 0.56% 0.56% 1.12% 1.87% 1.17% Total nonperforming loans and other real estate owned to total assets 0.39% 0.40% 0.79% 1.25% 0.78% Total nonperforming loans, securities, and other real estate owned to total assets 0.39% 0.40% 0.82% 1.37% 0.82% Total allowance for loan and lease losses to nonperforming loans 277.75% 287.62% 152.18% 102.19% 124.07%
TABLE 8. ALLOWANCE FOR LOAN AND LEASE LOSSES - --------------------------------------------------------------------------------------------- (Dollars in thousands) 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------- Balance at January 1 $42,651 $40,167 $44,746 $32,494 $28,240 LOANS AND LEASES CHARGED-OFF Commercial and agricultural 4,595 5,619 9,970 17,097 3,949 Real estate mortgages 772 362 2,547 783 1,007 Consumer* 6,239 5,862 5,805 4,491 2,841 ------------------------------------------------ Total loans and leases charged-off 11,606 11,843 18,322 22,371 7,797 ------------------------------------------------ RECOVERIES Commercial and agricultural 2,547 3,185 3,394 1,063 503 Real estate mortgages 215 430 104 122 141 Consumer* 1,510 1,601 1,172 1,004 739 ------------------------------------------------ Total recoveries 4,272 5,216 4,670 2,189 1,383 ------------------------------------------------ Net loans and leases charged-off 7,334 6,627 13,652 20,182 6,414 Allowance related to purchase acquisitions - - - 505 525 Provision for loan and lease losses 9,615 9,111 9,073 31,929 10,143 ------------------------------------------------ Balance at December 31 $44,932 $42,651 $40,167 $44,746 $32,494 ================================================ Allowance for loan and lease losses to loans and leases outstanding at end of year 1.57% 1.62% 1.70% 1.91% 1.45% Net charge-offs to average loans and leases outstanding 0.27% 0.27% 0.58% 0.87% 0.31% * Consumer charge-off and recoveries include consumer, home equity, and lease financing.
Our provision for loan losses, net charge-offs, loan growth, and nonperforming loans, have remained relatively consistent over the past several years, with the exception of 2001 and 2002. During 2001, the provision for loan losses was increased to $31.9 million from $10.1 million in 2000 in consideration of following: the significant increase in non-performing loans and net charge-offs that occurred in 2001; the growth in higher credit risk loan types in 2001, as the Company's strategic focus on loan growth, particularly commercial lending, was also the focus of the banks acquired by the Company in 2001 and 2000 (commercial loans grew from $755.4 million at December 31, 1999 to $958.1 million at December 31, 2001); the fact that recently acquired banks appeared to have used generally less conservative underwriting and monitoring standards than the Company (the Company acquired CNB Bank in 2001 and LA Bank, NA and Pioneer American Bank in 2000); and the significant downturn in economic conditions in the Company's market areas during 2001. Non-performing loans increased from $26.2 million at December 31, 2000 to $43.8 million at December 31, 2001. Net charge-offs increased from $6.4 million in 2000 to $20.2 million in 2001. During 2002, the provision decreased to $9.1 million. Net charge-offs decreased to $13.7 million during 2002. Net charge-offs in 2002 exceeded the 2002 provision for loan and lease losses because the Company had provided for certain of the 2002 charge-offs in previous years. Since 2002, both the provision for loan losses and net charge-offs have returned to more normalized levels and have remained relatively consistent. The levels of provisions in recent years reflect in large part loan growth, as loans grew at a 12% rate in 2003 and a 9% rate in 2004. Although 2004 loan growth was somewhat less than 2003, that loan growth was significantly in higher credit risk type loans. c) As disclosed under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations - Nonperforming Assets" in the Form 10-K, potential problem loans are performing loans, but known information exists about possible credit problems of the related borrowers that causes management to have doubts as to the ability of such borrowers to comply with the present loan repayment terms and which may result in disclosure of such loans as nonperforming at some time in the future. Potential problem loans are loans that are performing but are classified by the Company's loan rating system as "substandard." Loans so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected. These criticized loans are assigned a loss factor by the severity of classification utilizing the bank's allowance methodology that is established based upon consideration of historical charge-off experience among other relevant factors. * * * * The Company hereby acknowledges that: - the company is responsible for the adequacy and accuracy of the disclosure in the filing; - staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and - the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. If you have any questions or would like further information concerning the foregoing please do not hesitate to contact me at (607) 337-6520. Sincerely, Michael J. Chewens Senior Executive Vice President Chief Financial Officer and Corporate Secretary cc: Daryl R. Forsythe NBT Bancorp Inc. -----END PRIVACY-ENHANCED MESSAGE-----