NBT Bancorp Inc. 8-K 1-24-2006

NORWICH, NY (January 23, 2006) - NBT Bancorp Inc. (NBT) (NASDAQ: NBTB) reported today that net income for the year ended December 31, 2005, was $52.4 million, or $1.60 per diluted share, up 6% on a diluted per share basis compared with $50.0 million or $1.51 per diluted share for the same period in 2004. The increase in net income for the year ended December 31, 2005, was primarily the result of increases in net interest income of $7.6 million and noninterest income of $1.6 million partially offset by a $5.5 million increase in noninterest expense. Return on average assets and return on average equity were 1.21% and 15.86%, respectively, for the year ended December 31, 2005, compared with 1.21% and 15.69%, respectively, for the same period in 2004.

Net income for the quarter ended December 31, 2005, was $13.0 million, or $0.40 per diluted share, up 5% on a per diluted share basis from $12.5 million, or $0.38 per diluted share for the same period a year ago. The increase in net income for the quarter ended December 31, 2005, was primarily the result of an increase in net interest income of $1.4 million offset by an increase in income tax expense of $1.3 million. Annualized return on average assets and return on average equity were 1.17% and 15.47%, respectively, for the quarter ended December 31, 2005, compared with 1.18% and 15.08%, respectively, for the same period in 2004.

NBT CEO and President Martin A. Dietrich stated, “I am pleased to see the improvement in earnings over the same periods in 2004. Solid loan growth, supported by strong asset quality, has enabled us to achieve another solid year of results. During 2004 and 2005, we made several investments to expand our presence in the Albany, Binghamton and northeastern Pennsylvania markets. We are pleased with the loan and deposit growth we have experienced in these newer markets. We anticipate that the acquisition of City National Bank and Trust Company will close in the first quarter of 2006. This acquisition coupled with our branch expansion program is an important component for our plan of continued growth. Our team remains committed to increasing our market share through quality growth while focusing on our ultimate goals: to be the premier provider of community banking services in the markets we serve and to enhance our shareholders’ value.”

Nonperforming loans at December 31, 2005 were $14.3 million or 0.47% of total loans and leases compared with $16.2 million or 0.56% of total loans and leases at December 31, 2004. The Company’s allowance for loan and lease losses was 1.57% of total loans and leases at December 31, 2005 and 2004. The ratio of the allowance for loan and lease losses to nonperforming loans was 331.92% at December 31, 2005 compared with 277.75% at December 31, 2004. Net charge-offs to average loans and leases for the year ended December 31, 2005, was 0.23% compared with 0.27% for the same period in 2004. For the year and quarter ended December 31, 2005, the provision for loan and lease losses totaled $9.5 million and $2.6 million, respectively, compared with the $9.6 million and $2.8 million for the same periods in 2004.

Net interest income for the year ended December 31, 2005 increased 5% to $158.1 million from $150.5 million in the same period for 2004. The Company’s net interest margin was 4.01% for the year ended December 31, 2005 compared with 4.03% in 2004. Net interest income was up 4% to $40.0 million for the quarter ended December 31, 2005, compared with $38.7 million for the same period a year ago. The increase in net interest income was due primarily to a 5% increase in average earning assets offset by a slight decline in the Company’s net interest margin, which was 3.97% for the quarter ended December 31, 2005, down from 4.03% for the same period in 2004. The increase in average earning assets was due primarily to loan growth, since average loans were up 6% for the quarter ended December 31, 2005, compared with the same period in 2004. The decrease in net interest margin is primarily attributable to the flattening yield curve, resulting in relatively flat reinvestment rates on investment securities and loans and increasing short-term borrowing and deposit costs. Dietrich added “Our expectation going forward is that our net interest margin will continue to decline given the flat yield curve and pressure on deposit pricing. Continuing the trend in loan growth we’ve experienced the last four years will be a key factor in overcoming this challenge.”

Noninterest income for the year ended December 31, 2005, was $42.5 million, up $1.6 million from $40.9 million for the same period in 2004. Excluding net securities losses of $1.2 million for 2005, total noninterest income increased $2.9 million or 7% from the same period in 2004. Net securities losses of $1.2 million resulted from the sale of $47.8 million in securities available for sale to improve investment portfolio yield going forward. Retirement plan administration fees were $4.4 million. This is a new service from the acquisition of EPIC Advisors, Inc. in January 2005. ATM and debit card fees increased $0.6 million compared with the same period a year ago, due to growth from transaction deposit accounts, which has led to an increase in the Company’s debit card base. Other income increased $0.9 million from increases in consumer banking fees, mortgage banking income and title insurance revenue. Offsetting these increases was a $3.6 million decrease in broker/dealer and insurance revenue due to the sale of the Company’s broker/dealer subsidiary, M. Griffith, Inc. in March 2005.

Noninterest income for the quarter ended December 31, 2005, was $10.4 million, up $0.1 million from $10.3 million for the same period in 2004. Excluding net securities losses of $0.5 million during the quarter ended December 31, 2005, total noninterest income increased $0.6 million or 6% from the same period in 2004. Net securities losses of $0.5 million resulted from the previously mentioned sale of certain securities available for sale, which totaled $22.8 million for the quarter to improve investment portfolio yield going forward. Retirement plan administration fees totaled $1.2 million, from the previously mentioned acquisition of EPIC Advisors, Inc. in January 2005. Offsetting this increase was a $1.0 million decrease in broker/dealer and insurance revenue due to the previously mentioned sale of the Company’s broker/dealer subsidiary, M. Griffith, Inc. in March 2005.

Noninterest expense for the year ended December 31, 2005, was $115.3 million, up $5.5 million or 5% from $109.8 million for the same period in 2004. The increase in noninterest expense was due largely to increases in salaries and employee benefits and other expense. Also, 2004 included a $2.0 million goodwill impairment charge. Salaries and employee benefits increased $4.8 million primarily from increases in full-time-equivalent employees and merit increases as well as an increase in retirement costs and incentive compensation. Other operating expense increased $2.1 million, principally from the reversal of a previously accrued $1.4 million liability that was determined in the fourth quarter of 2004 to no longer be required. The $2.0 million goodwill impairment charge in 2004 resulted from the expected sale of the Company’s broker/dealer subsidiary, M Griffith, Inc. in the first quarter of 2005.

Income tax expense for the quarter ended December 31, 2005, was $5.7 million, up $1.3 million from the $4.4 million recorded during the same period in 2004. The effective rate for the quarter ended December 31, 2005, was 30.5%, compared with 25.8% for the same period in 2004. The increase in tax expense and the effective tax rate for the quarter ended December 31, 2005, compared with the same period in 2004, was due to the reversal of a previously accrued $0.8 million liability that was determined to no longer be required for the quarter ended December 31, 2004.

Total assets were $4.4 billion at December 31, 2005 up $0.2 billion from $4.2 billion at December 31, 2004. Loans and leases increased $0.1 billion or 5% from $2.9 billion at December 31, 2004, to $3.0 billion at December 31, 2005. Loan growth was driven predominantly by consumer loans and commercial loans. Total deposits were $3.2 billion at December 31, 2005, up $0.1 billion from $3.1 billion at December 31, 2004. Stockholders’ equity was $333.9 million, representing a total-equity-to-total-assets ratio of 7.54% at December 31, 2005 compared with $332.2 million or a total-equity-to-total-assets ratio of 7.89% at December 31, 2004.

NBT announced today that the NBT Board of Directors authorized a new repurchase program whereby NBT intends to repurchase up to an additional 1,000,000 shares (approximately 3%) of its outstanding common stock from time to time as market conditions warrant in open market and privately negotiated transactions. Currently, there are 503,151 shares remaining under a previous authorization that will be combined with the new authorization, increasing the total shares available for repurchase to 1,503,151. Under the program no shares will knowingly be repurchased from officers and directors of NBT or from persons who hold in excess of five percent of its outstanding shares of common stock. The Company acquired 1,008,114 shares of its common stock at an average price of $22.97 per share, totaling $23.2 million for the year ended December 31, 2005.

NBT is a financial holding company headquartered in Norwich, NY, with total assets of $4.4 billion at December 31, 2005. The Company primarily operates through NBT Bank, N.A., a full-service community bank with two divisions, and through a financial services company. NBT Bank, N.A. has 113 locations, including 74 NBT Bank offices in upstate New York and 39 Pennstar Bank offices in northeastern Pennsylvania. EPIC Advisors, Inc., based in Rochester, NY, is a full-service 401(k) plan recordkeeping firm. In June 2005, NBT announced that it had agreed to acquire CNB Bancorp, Inc. (CNB), which has total assets of approximately $400 million and is headquartered in Gloversville, NY. The merger is subject to CNB shareholder approval and is expected to close in the first quarter of 2006. More information about NBT and its divisions can be found on the Internet at www.nbtbancorp.com, www.nbtbank.com, www.pennstarbank.com and www.epic1st.com.

This news release contains forward-looking statements. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of NBT Bancorp and its subsidiaries and on the information available to management at the time that these statements were made. There are a number of factors, many of which are beyond NBT’s control, that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressures among depository and other financial institutions may increase significantly; (2) revenues may be lower than expected; (3) changes in the interest rate environment may reduce interest margins; (4) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit; (5) legislative or regulatory changes, including changes in accounting standards and tax laws, may adversely affect the businesses in which NBT is engaged; (6) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than NBT; (7) the costs that will be incurred from the CNB acquisition and the risk of not obtaining CNB shareholder approval; and (8) adverse changes may occur in the securities markets or with respect to inflation. Forward-looking statements speak only as of the date they are made. Except as required by law, NBT does not undertake to update forward-looking statements to reflect subsequent circumstances or events.

NBT Bancorp Inc.
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
	2005		2004		Net Change		Percent Change
(dollars in thousands, except share and per share data)

Three Months Ended December 31,
Net Income	$	12,995	$	12,491	$	504		4%
Diluted Earnings Per Share	$	0.40	$	0.38	$	0.02		5%
Weighted Average Diluted
Common Shares Outstanding		32,556,147		33,155,085		(598,938)		-2%
Return on Average Assets		1.17%		1.18%		-0.01%		-1%
Return on Average Equity		15.47%		15.08%		0.39%		3%
Net Interest Margin		3.97%		4.03%		-0.06%		-1%

Twelve Months Ended December 31,
Net Income	$	52,438	$	50,047	$	2,391		5%
Diluted Earnings Per Share	$	1.60	$	1.51	$	0.09		6%
Weighted Average Diluted
Common Shares Outstanding		32,710,425		33,086,716		(376,291)		-1%
Return on Average Assets		1.21%		1.21%		0.00%		0%
Return on Average Equity		15.86%		15.69%		0.17%		1%
Net Interest Margin		4.01%		4.03%		-0.02%		0%

Asset Quality		December 31, 2005		December 31, 2004
Nonaccrual Loans	$	13,419	$	14,991
90 Days Past Due and Still Accruing	$	878	$	1,186
Total Nonperforming Loans	$	14,297	$	16,177
Other Real Estate Owned (OREO)	$	265	$	428
Total Nonperforming Assets	$	14,562	$	16,605
Allowance for Loan and Lease Losses	$	47,455	$	44,932
Year-to-Date (YTD) Net Charge-Offs	$	6,941	$	7,334
Allowance to Loans and Leases		1.57%		1.57%
Total Nonperforming Loans to Loans and Leases		0.47%		0.56%
Total Nonperforming Assets to Assets		0.33%		0.39%
Allowance to Nonperforming Loans		331.92%		277.75%
Net Charge-Offs to
YTD Average Loans and Leases		0.23%		0.27%

Capital
Equity to Assets		7.54%		7.89%
Book Value Per Share	$	10.34	$	10.11
Tangible Book Value Per Share	$	8.75	$	8.66
Tier 1 Leverage Ratio		7.16%		7.13%
Tier 1 Capital Ratio		9.80%		9.78%
Total Risk-Based Capital Ratio		11.05%		11.04%

NBT Bancorp Inc.
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
	2005		2004		Net Change			Percent Change
(dollars in thousands, except share and per share data)
Balance Sheet as of December 31,
Loans	$	3,022,657	$	2,869,921	$	152,736			5	%
Earning Assets	$	4,129,350	$	3,940,565	$	188,785			5	%
Total Assets	$	4,426,773	$	4,212,304	$	214,469			5	%
Deposits	$	3,160,196	$	3,073,838	$	86,358			3	%
Stockholders’ Equity	$	333,943	$	332,233	$	1,710			1	%

Average Balances
Quarter Ended December 31,
Loans	$	3,012,561	$	2,843,841	$	168,720			6	%
Securities AFS (excluding unrealized gains or losses)	$	965,742	$	956,183	$	9,559			1	%
Securities HTM	$	92,054	$	81,152	$	10,902			13	%
Regulatory Equity Investment	$	39,277	$	34,920	$	4,357			12	%
Short-Term Interest Bearing Accounts	$	7,676	$	7,419	$	257			3	%
Total Earning Assets	$	4,117,310	$	3,923,514	$	193,796			5	%
Total Assets	$	4,393,140	$	4,206,900	$	186,240			4	%
Interest Bearing Deposits	$	2,602,145	$	2,593,393	$	8,752			0	%
Non-Interest Bearing Deposits	$	571,999	$	513,795	$	58,204			11	%
Short-Term Borrowings	$	396,077	$	299,372	$	96,705			32	%
Long-Term Borrowings	$	439,798	$	413,255	$	26,543			6	%
Total Interest Bearing Liabilities	$	3,438,020	$	3,306,021	$	131,999			4	%
Stockholders’ Equity	$	333,450	$	329,543	$	3,907			1	%

Average Balances
Twelve Months Ended December 31,
Loans	$	2,959,256	$	2,743,753	$	215,503			8	%
Securities AFS (excluding unrealized gains or losses)	$	954,461	$	970,024	$	(15,563	)		-2	%
Securities HTM	$	88,244	$	85,771	$	2,473			3	%
Regulatory Equity Investment	$	37,607	$	34,813	$	2,794			8	%
Short-Term Interest Bearing Accounts	$	7,298	$	7,583	$	(285	)		-4	%
Total Earning Assets	$	4,046,866	$	3,841,944	$	204,922			5	%
Total Assets	$	4,326,155	$	4,120,547	$	205,608			5	%
Interest Bearing Deposits	$	2,615,833	$	2,555,384	$	60,449			2	%
Non-Interest Bearing Deposits	$	543,077	$	492,746	$	50,331			10	%
Short-Term Borrowings	$	353,644	$	302,276	$	51,368			17	%
Long-Term Borrowings	$	430,487	$	400,053	$	30,434			8	%
Total Interest Bearing Liabilities	$	3,399,964	$	3,257,713	$	142,251			4	%
Stockholders’ Equity	$	330,676	$	318,901	$	11,775			4	%

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

ASSETS
Cash and due from banks	$	134,501	$	98,437
Short term interest bearing accounts		7,987		8,286
Securities available for sale, at fair value		954,474		952,542
Securities held to maturity (fair value of $93,701 and $82,712 at December 31, 2005 and December 31, 2004, respectively)		93,709		81,782
Federal Reserve and Federal Home Loan Bank stock		40,259		36,842
Loans and leases		3,022,657		2,869,921
Less allowance for loan and lease losses		47,455		44,932
Net loans and leases		2,975,202		2,824,989
Premises and equipment, net		63,693		63,743
Goodwill		47,544		45,570
Intangible assets, net		3,808		2,013
Bank owned life insurance		33,648		32,302
Other assets		71,948		65,798
TOTAL ASSETS	$	4,426,773	$	4,212,304

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand (noninterest bearing)	$	593,422	$	520,218
Savings, NOW, and money market		1,325,166		1,435,561
Time		1,241,608		1,118,059
Total deposits		3,160,196		3,073,838
Short-term borrowings		444,977		338,823
Long-term debt		414,330		394,523
Trust preferred debentures		23,875		18,720
Other liabilities		49,452		54,167
Total liabilities		4,092,830		3,880,071


Total stockholders' equity		333,943		332,233

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	4,426,773	$	4,212,304

NBT Bancorp Inc. and Subsidiaries	Three months ended December 31,					Twelve months ended December 31,
Consolidated Statements of Income (unaudited)	2005			2004		2005			2004
(in thousands, except per share data)
Interest, fee and dividend income:
Loans and leases	$	50,726		$	42,983	$	189,714		$	163,795
Securities available for sale		10,544			10,398		41,120			42,264
Securities held to maturity		913			761		3,407			3,044
Other		575			279		2,126			1,076
Total interest, fee and dividend income		62,758			54,421		236,367			210,179
Interest expense:
Deposits		14,352			10,299		49,932			39,761
Short-term borrowings		3,911			1,307		10,984			4,086
Long-term debt		4,098			3,919		16,114			15,022
Trust preferred debentures		375			235		1,226			823
Total interest expense		22,736			15,760		78,256			59,692
Net interest income		40,022			38,661		158,111			150,487
Provision for loan and lease losses		2,596			2,750		9,464			9,615
Net interest income after provision for loan and lease losses		37,426			35,911		148,647			140,872
Noninterest income:
Trust		1,234			1,174		5,029			4,605
Service charges on deposit accounts		4,340			4,184		16,894			16,470
ATM and debit card fees		1,587			1,402		6,162			5,530
Broker/dealer and insurance revenue		527			1,572		3,186			6,782
Net securities (losses) gains		(546	)		160		(1,236	)		216
Bank owned life insurance income		342			345		1,347			1,487
Retirement plan administration fees		1,212			-		4,426			-
Other		1,736			1,503		6,741			5,799
Total noninterest income		10,432			10,340		42,549			40,889
Noninterest expense:
Salaries and employee benefits		13,863			14,308		60,005			55,204
Office supplies and postage		1,222			1,118		4,628			4,459
Occupancy		2,689			2,416		10,452			9,905
Equipment		2,120			1,998		8,118			7,573
Professional fees and outside services		1,584			1,583		6,087			6,175
Data processing and communications		2,548			2,740		10,349			10,972
Amortization of intangible assets		142			71		544			284
Loan collection and other real estate owned		278			431		1,002			1,241
Goodwill impairment		-			1,950		-			1,950
Other operating		4,703			2,792		14,120			12,014
Total noninterest expense		29,149			29,407		115,305			109,777
Income before income taxes		18,709			16,844		75,891			71,984
Income taxes		5,714			4,353		23,453			21,937
Net income	$	12,995		$	12,491	$	52,438		$	50,047
Earnings Per Share:
Basic	$	0.40		$	0.38	$	1.62		$	1.53
Diluted	$	0.40		$	0.38	$	1.60		$	1.51

NBT Bancorp Inc. and Subsidiaries Quarterly Consolidated Statements of Income (unaudited)	4Q 2005			3Q 2005			2Q 2005		1Q 2005			4Q 2004
(in thousands, except per share data)
Interest, fee and dividend income:
Loans	$	50,726		$	48,784		$	46,260	$	43,944		$	42,983
Securities available for sale		10,544			10,103			10,226		10,247			10,398
Securities held to maturity		913			860			831		803			761
Other		575			535			549		467			279
Total interest, fee and dividend income		62,758			60,282			57,866		55,461			54,421
Interest expense:
Deposits		14,352			12,842			12,018		10,720			10,299
Short-term borrowings		3,911			3,005			2,207		1,861			1,307
Long-term debt		4,098			4,176			4,032		3,808			3,919
Trust preferred debentures		375			308			285		258			235
Total interest expense		22,736			20,331			18,542		16,647			15,760
Net interest income		40,022			39,951			39,324		38,814			38,661
Provision for loan and lease losses		2,596			2,752			2,320		1,796			2,750
Net interest income after provision for loan and lease losses		37,426			37,199			37,004		37,018			35,911
Noninterest income:
Trust		1,234			1,292			1,251		1,252			1,174
Service charges on deposit accounts		4,340			4,314			4,311		3,929			4,184
ATM and debit card fees		1,587			1,631			1,544		1,400			1,402
Broker/dealer and insurance fees		527			571			736		1,352			1,572
Net securities (losses) gains		(546	)		(737	)		51		(4	)		160
Bank owned life insurance income		342			339			333		333			345
Retirement plan administration fees		1,212			1,195			1,156		863			-
Other		1,736			1,746			1,673		1,586			1,503
Total noninterest income		10,432			10,351			11,055		10,711			10,340
Noninterest expense:
Salaries and employee benefits		13,863			15,438			15,253		15,451			14,308
Office supplies and postage		1,222			1,135			1,121		1,150			1,118
Occupancy		2,689			2,425			2,550		2,788			2,416
Equipment		2,120			1,971			1,931		2,096			1,998
Professional fees and outside services		1,584			1,447			1,381		1,675			1,583
Data processing and communications		2,548			2,613			2,530		2,658			2,740
Amortization of intangible assets		142			142			142		118			71
Loan collection and other real estate owned		278			115			208		401			431
Goodwill impairment		-			-			-		-			1,950
Other operating		4,703			3,293			3,580		2,544			2,792
Total noninterest expense		29,149			28,579			28,696		28,881			29,407
Income before income taxes		18,709			18,971			19,363		18,848			16,844
Income taxes		5,714			5,445			6,235		6,059			4,353
Net income	$	12,995		$	13,526		$	13,128	$	12,789		$	12,491
Earnings per share:
Basic	$	0.40		$	0.42		$	0.41	$	0.39		$	0.38
Diluted	$	0.40		$	0.41		$	0.40	$	0.39		$	0.38

DELAWARE		0-14703		16-1268674
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

Exhibit No.		Exhibit Description
99.1		Press release text of NBT Bancorp Inc. dated January 23, 2006

	NBT BANCORP INC.
	(Registrant)



	/s/ Michael J. Chewens
	Michael J. Chewens
	Senior Executive Vice President,
	Chief Financial Officer and Corporate Secretary


Date: January 24, 2006

Contact:	Martin A. Dietrich, CEO
	Michael J. Chewens, CFO
	NBT Bancorp Inc.
	52 South Broad Street
	Norwich, NY 13815
	607-337-6119

Quarterly Common Stock Price	2005				2004				2003
Quarter End	High		Low		High		Low		High		Low
March 31		$25.66		$21.48		$23.00		$21.21		$18.60		$16.76
June 30		$24.15		$20.10		23.18		19.92		19.94		17.37
September 30		$25.50		$22.79		24.34		21.02		21.76		19.24
December 31		$23.79		$20.75		26.84		21.94		22.78		19.50

		NBT BANCORP INC.
		(Exact name of registrant as specified in its charter)

	52 SOUTH BROAD STREET, NORWICH, NEW YORK 13815
	(Address of principal executive offices)

Registrant's telephone number, including area code: (607) 337-2265