10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(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, 2011.

OR

o 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) 337-2265

None

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period 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  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   x   No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer x    Accelerated filer o     Non-accelerated filer o      Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   o   No   x

As of July 31, 2011, there were 33,594,285 shares outstanding of the Registrant's common stock, $0.01 par value per share.

1

NBT BANCORP INC.

FORM 10-Q--Quarter Ended June 30, 2011

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION
Item 1	Financial Statements	3
	Consolidated Balance Sheets at June 30, 2011 and December 31, 2010	3
	Consolidated Statements of Income for the three and six month periods ended June 30, 2011 and 2010	4
	Consolidated Statements of Stockholders’ Equity for the six month periods ended June 30, 2011 and 2010	5
	Consolidated Statements of Cash Flows for the six month periods ended June 30, 2011 and 2010	6
	Consolidated Statements of Comprehensive Income for the three and six month periods ended June 30, 2011 and 2010	5
	Notes to Unaudited Interim Consolidated Financial Statements	8
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3	Quantitative and Qualitative Disclosures about Market Risk	55
Item 4	Controls and Procedures	55
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	56
Item 1A	Risk Factors	56
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3	Defaults Upon Senior Securities	56
Item 4	[Removed and Reserved]	56
Item 5	Other Information	57
Item 6	Exhibits	57
SIGNATURES		58
INDEX TO EXHIBITS		59

2

Item 1 – FINANCIAL STATEMENTS

NBT Bancorp Inc. and Subsidiaries

Consolidated Balance Sheets (unaudited)

	June 30,			December 31,
(In thousands, except share and per share data)	2011			2010
Assets
Cash and due from banks	$	101,936		$	99,673
Short-term interest bearing accounts		830			69,119
Securities available for sale, at fair value		1,156,679			1,129,368
Securities held to maturity (fair value $78,357 and $98,759, respectively)		76,878			97,310
Trading securities		3,276			2,808
Federal Reserve and Federal Home Loan Bank stock		27,425			27,246
Loans and leases		3,664,517			3,610,006
Less allowance for loan and lease losses		70,484			71,234
Net loans and leases		3,594,033			3,538,772
Premises and equipment, net		66,898			67,404
Goodwill		116,127			114,841
Intangible assets, net		18,402			17,543
Bank owned life insurance		76,996			75,301
Other assets		97,516			99,471
Total assets	$	5,336,996		$	5,338,856
Liabilities
Demand (noninterest bearing)	$	930,292		$	911,741
Savings, NOW, and money market		2,288,515			2,291,833
Time		895,806			930,778
Total deposits		4,114,613			4,134,352
Short-term borrowings		175,958			159,434
Long-term debt		370,350			369,874
Trust preferred debentures		75,422			75,422
Other liabilities		65,390			66,202
Total liabilities		4,801,733			4,805,284
Stockholders’ equity
Preferred stock, $0.01 par value. Authorized 2,500,000 shares at June 30, 2011 and December 31, 2010		-			-
Common stock, $0.01 par value. Authorized 50,000,000 shares at June 30, 2011 and December 31, 2010; issued 38,035,539 at June 30, 2011 and December 31, 2010		380			380
Additional paid-in-capital		315,455			314,023
Retained earnings		314,873			299,797
Accumulated other comprehensive loss		(213	)		(5,335	)
Common stock in treasury, at cost, 4,447,490 and 3,532,732 shares at June 30, 2011 and December 31, 2010, respectively		(95,232	)		(75,293	)
Total stockholders’ equity		535,263			533,572
Total liabilities and stockholders’ equity	$	5,336,996		$	5,338,856

See accompanying notes to unaudited interim consolidated financial statements.

3

NBT Bancorp Inc. and Subsidiaries	Three months ended June 30,				Six months ended June 30,
Consolidated Statements of Income (unaudited)	2011		2010		2011		2010
(In thousands, except per share data)
Interest, fee, and dividend income
Interest and fees on loans and leases	$	51,126	$	53,503	$	101,986	$	107,195
Securities available for sale		7,947		9,556		15,851		19,602
Securities held to maturity		745		1,078		1,545		2,215
Other		440		469		933		1,065
Total interest, fee, and dividend income		60,258		64,606		120,315		130,077
Interest expense
Deposits		6,051		7,999		12,338		16,453
Short-term borrowings		52		123		110		247
Long-term debt		3,591		4,850		7,162		9,915
Trust preferred debentures		400		1,033		1,289		2,060
Total interest expense		10,094		14,005		20,899		28,675
Net interest income		50,164		50,601		99,416		101,402
Provision for loan and lease losses		6,021		6,350		9,986		15,593
Net interest income after provision for loan and lease losses		44,143		44,251		89,430		85,809
Noninterest income
Service charges on deposit accounts		5,455		6,301		10,527		12,431
Insurance and other financial services revenue		5,025		4,700		10,798		9,945
Trust		2,258		1,909		4,294		3,675
Net securities gains		59		63		86		91
Bank owned life insurance		660		808		1,695		1,789
ATM and debit card fees		2,928		2,462		5,596		4,829
Retirement plan administration fees		2,268		2,595		4,439		4,985
Other		1,208		1,482		2,552		2,916
Total noninterest income		19,861		20,320		39,987		40,661
Noninterest expense
Salaries and employee benefits		24,035		24,224		49,039		46,428
Occupancy		3,987		3,666		8,509		7,818
Equipment		2,180		2,041		4,370		4,141
Data processing and communications		3,117		3,265		6,031		6,483
Professional fees and outside services		2,088		2,191		4,154		4,475
Office supplies and postage		1,342		1,454		2,887		2,996
Amortization of intangible assets		771		780		1,504		1,561
Loan collection and other real estate owned		443		668		1,162		1,727
Advertising		1,033		825		1,601		1,492
FDIC expenses		965		1,560		2,461		3,113
Other		3,196		3,523		6,500		6,123
Total noninterest expense		43,157		44,197		88,218		86,357
Income before income tax expense		20,847		20,374		41,199		40,113
Income tax expense		6,192		5,950		12,237		11,713
Net income	$	14,655	$	14,424	$	28,962	$	28,400
Earnings per share
Basic	$	0.43	$	0.42	$	0.85	$	0.83
Diluted	$	0.43	$	0.42	$	0.84	$	0.82

See accompanying notes to unaudited interim consolidated financial statements.

4

	Three months ended June 30,						Six months ended June 30,
Consolidated Statements of Comprehensive Income (unaudited)	2011			2010			2011			2010
(In thousands)
Net income	$	14,655		$	14,424		$	28,962		$	28,400
Other comprehensive (loss) income, net of tax  Unrealized net holding gains arising during the period (pre-tax amounts of $10,392, $3,733,   $7,741 and $5,749)		6,274			2,254			4,672			3,468
Reclassification adjustment for net gains related to securities available for sale included in net income (pre-tax amounts of $59, $63, $86 and $91)		(36	)		(38	)		(52	)		(55	)
Pension and other benefits:
Amortization of prior service cost and actuarial gains (pre-tax amounts of $416, $393,   $831 and $786)		251			236			502			472
Total other comprehensive income		6,489			2,452			5,122			3,885
Comprehensive income	$	21,144		$	16,876		$	34,084		$	32,285

See accompanying notes to unaudited interim consolidated financial statements

NBT Bancorp Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity (unaudited

									Accumulated
			Additional						Other			Common
	Common		Paid-in-			Retained			Comprehensive			Stock
	Stock		Capital			Earnings			Income (Loss)			in Treasury			Total
(in thousands, except share and per share data)
Balance at December 31, 2009	$	380	$	311,164		$	270,232		$	1,163		$	(77,816	)	$	505,123
Net income		-		-			28,400			-			-			28,400
Cash dividends - $0.40 per share		-		-			(13,781	)		-			-			(13,781	)
Net issuance of 75,963 shares to employee benefit
plans and other stock plans, including tax benefit		-		24			(229	)		-			1,616			1,411
Stock-based compensation		-		1,984			-			-			-			1,984
Issuance of 27,112 shares of restricted stock awards		-		(577	)		-			-			577			-
Forfeiture of 2,000 shares of restricted stock		-		46			-			-			(46	)		-
Other comprehensive income		-		-			-			3,885			-			3,885
Balance at June 30, 2010	$	380	$	312,641		$	284,622		$	5,048		$	(75,669	)	$	527,022
Balance at December 31, 2010	$	380	$	314,023		$	299,797		$	(5,335	)	$	(75,293	)	$	533,572
Net income		-		-			28,962			-			-			28,962
Cash dividends - $0.40 per share		-		-			(13,752	)		-			-			(13,752	)
Purchase of 976,190 treasury shares		-		-			-			-			(21,164	)		(21,164	)
Net issuance of 47,420 shares to employee benefit
plans and other stock plans, including tax benefit		-		(34	)		(134	)		-			968			800
Stock-based compensation		-		1,723			-			-			-			1,723
Issuance of 26,012 shares of restricted stock awards		-		(554	)		-			-			554			-
Forfeiture of 12,000 shares of restricted stock		-		297			-			-			(297	)		-
Other comprehensive income		-		-			-			5,122			-			5,122
Balance at June 30, 2011	$	380	$	315,455		$	314,873		$	(213	)	$	(95,232	)	$	535,263

See accompanying notes to unaudited interim consolidated financial statements.

5

NBT Bancorp Inc. and Subsidiaries	Six Months Ended June 30,
Consolidated Statements of Cash Flows (unaudited)	2011			2010
(In thousands, except per share data)
Operating activities
Net income	$	28,962		$	28,400
Adjustments to reconcile net income to net cash provided by operating activities
Provision for loan and lease losses		9,986			15,593
Depreciation and amortization of premises and equipment		2,652			2,663
Net accretion on securities		512			388
Amortization of intangible assets		1,504			1,561
Stock based compensation		1,723			1,984
Bank owned life insurance income		(1,695	)		(1,789	)
Purchases of trading securities		(353	)		(116	)
Unrealized (gains) losses in trading securities		(115	)		31
Deferred income tax benefit		(4,003	)		(7,938	)
Proceeds from sales of loans held for sale		2,477			40,396
Originations and purchases of loans held for sale		(875	)		(39,028	)
Net gains on sales of loans held for sale		-			(478	)
Net security gains		(86	)		(91	)
Net gain on sales of other real estate owned		(461	)		(114	)
Net decrease in other assets		2,696			4,592
Net increase (decrease) in other liabilities		158			(1,492	)
Net cash provided by operating activities		43,082			44,562
Investing activities
Net cash used in Lattremore acquisition		(1,000	)		-
Securities available for sale:
Proceeds from maturities, calls, and principal paydowns		247,959			285,615
Proceeds from sales		118			702
Purchases		(268,154	)		(302,152	)
Securities held to maturity:
Proceeds from maturities, calls, and principal paydowns		29,288			66,327
Purchases		(9,192	)		(28,962	)
Net increase in loans		(67,474	)		(15,452	)
Net (increase) decrease in Federal Reserve and FHLB stock		(179	)		3,801
Proceeds from bank owned life insurance		-			2,767
Purchases of premises and equipment		(2,112	)		(2,747	)
Proceeds from sales of other real estate owned		953			1,678
Net cash (used in) provided by investing activities		(69,793	)		11,577
Financing activities
Net (decrease) increase in deposits		(19,739	)		8,285
Net increase in short-term borrowings		16,524			3,059
Repayments of long-term debt		(2,140	)		(75,237	)
Issuance of long-term debt		156			-
Excess tax benefit from exercise of stock options		33			123
Proceeds from the issuance of shares to employee benefit plans and other stock plans		767			1,288
Purchase of treasury stock		(21,164	)		-
Cash dividends and payment for fractional shares		(13,752	)		(13,781	)
Net cash used in financing activities		(39,315	)		(76,263	)
Net decrease in cash and cash equivalents		(66,026	)		(20,124	)
Cash and cash equivalents at beginning of period		168,792			187,161
Cash and cash equivalents at end of period	$	102,766		$	167,037

6

Supplemental disclosure of cash flow information

Cash paid during the period for:
Interest	$	21,120	$	29,443
Income taxes paid		14,834		21,149
Noncash investing activities:
Loans transferred to OREO	$	625	$	672
Acquisitions:
Fair value of assets acquired	$	3,460	$	-
Goodwill and identifiable intangible assets recognized in purchase combination		3,426		-
Fair value of debt issued in purchase combination		2,460		-

See accompanying notes to unaudited interim consolidated financial statements.

7

NBT BANCORP INC. and Subsidiaries

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

Note 1.  Description of Business

NBT Bancorp Inc. (the “Registrant”) is a registered financial holding company incorporated in the State of Delaware in 1986, with its principal headquarters located in Norwich, New York. The Registrant is the parent holding company of NBT Bank, N.A. (the “Bank”), NBT Financial Services, Inc. (“NBT Financial”), NBT Holdings, Inc. (“NBT Holdings”), CNBF Capital Trust I, NBT Statutory Trust I and NBT Statutory Trust II (the “Trusts”).  Through the Bank, the Company is focused on community banking operations.  Through NBT Financial, the Company operates EPIC Advisors, Inc. (“EPIC”), a retirement plan administrator.  Through NBT Holdings, the Company operates Mang Insurance Agency, LLC (“Mang”), a full-service insurance agency.  The Trusts were organized to raise additional regulatory capital and to provide funding for certain acquisitions. The Registrant’s primary business consists of providing commercial banking and financial services to customers in its market area. The principal assets of the Registrant are all of the outstanding shares of common stock of its direct subsidiaries, and its principal sources of revenue are the management fees and dividends it receives from the Bank, NBT Financial, and NBT Holdings.

The Bank is a full service commercial bank formed in 1856, which provides a broad range of financial products to individuals, corporations and municipalities throughout the upstate New York, northeastern Pennsylvania, and northwestern Vermont market areas.  The Bank has entered into an agreement to purchase four branches in western Massachusetts, which is expected to close in the fourth quarter of 2011.

Note 2.  Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of the Registrant and its wholly owned subsidiaries, the Bank, NBT Financial and NBT Holdings.  Collectively, the Registrant and its subsidiaries are referred to herein as “the Company.”  All intercompany transactions have been eliminated in consolidation. Amounts in the prior period financial statements are reclassified whenever necessary to conform to current period presentation.

Note 3. Use of Estimates

Preparing financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period, as well as the disclosures provided. Actual results could differ from those estimates. Estimates associated with the allowance for loan and lease losses, other real estate owned (“OREO”), income taxes, pension expense, fair values of financial instruments and status of contingencies are particularly susceptible to material change in the near term.

The allowance for loan and lease losses is the amount which, in the opinion of management, is necessary to absorb probable losses inherent in the loan and lease portfolio. The allowance is determined based upon numerous considerations, including local and national economic conditions, the growth and composition of the loan portfolio with respect to the mix between the various types of loans and their related risk characteristics, a review of the value of collateral supporting the loans, comprehensive reviews of the loan portfolio by the independent loan review staff and management, as well as consideration of volume and trends of delinquencies, nonperforming loans, and loan charge-offs.  As a result of the review of these factors and historical and current indicators, required additions or reductions to the allowance for loan and lease losses are made periodically by charges or credits to the provision for loan and lease losses.

8

The allowance for loan and lease losses related to impaired loans is based on discounted cash flows using the loan’s initial effective interest rate or the fair value of the collateral for certain loans where repayment of the loan is expected to be provided solely by the underlying collateral (collateral dependent loans). The Company’s impaired loans are generally collateral dependent loans. The Company considers the estimated cost to sell, on a discounted basis, when determining the fair value of collateral in the measurement of impairment if those costs are expected to reduce the cash flows available to repay or otherwise satisfy the loans.

Management believes that the allowance for loan and lease losses is adequate. While management uses available information to recognize loan and lease losses, future additions or reductions to the allowance for loan and lease losses may be necessary based on changes in economic conditions or changes in the values of properties securing loans in the process of foreclosure. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan and lease losses. Such agencies may require the Company to recognize additions to the allowance for loan and lease losses based on their judgments about information available to them at the time of their examination which may not be currently available to management.  In determining that we will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreements, we consider factors such as payment history and changes in the financial condition of individual borrowers, local economic conditions, historical loss experience and the conditions of the various markets in which the collateral may be liquidated.

OREO consists of properties acquired through foreclosure or by acceptance of a deed in lieu of foreclosure. These assets are recorded at the lower of fair value of the asset acquired less estimated costs to sell or “cost” (cost is defined as the fair value less costs to sell at initial foreclosure). At the time of foreclosure, or when foreclosure occurs in-substance, the excess, if any, of the loan over the fair value of the assets received, less estimated selling costs, is charged to the allowance for loan and lease losses and any subsequent valuation write-downs are charged to other expense. Operating costs associated with the properties are charged to expense as incurred. Gains on the sale of OREO are included in income when title has passed and the sale has met the minimum down payment requirements prescribed by U.S. GAAP.

Income taxes are accounted for under the asset and liability method. The Company files consolidated tax returns on the accrual basis. Deferred income taxes are recognized for the future tax consequences and benefits attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the available carryback period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Based on available carrybacks and expected future income, gross deferred tax assets will ultimately be realized and a valuation allowance was not deemed necessary at June 30, 2011 or December 31, 2010. The effect of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date.  Uncertain tax positions are recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities.  Tax positions that meet the more than likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement.

Management is required to make various assumptions in valuing its pension assets and liabilities. These assumptions include the expected long-term rate of return on plan assets, the discount rate, and the rate of increase in future compensation levels. Changes to these assumptions could impact earnings in future periods. The Company takes into account the plan asset mix, funding obligations, and expert opinions in determining the various assumptions used to compute pension expense. The Company also considers relevant indices and market interest rates in selecting an appropriate discount rate. A cash flow analysis for expected benefit payments from the plan is performed each year to assist in selecting the discount rate.  In addition, the Company reviews expected inflationary and merit increases to compensation in determining the expected rate of increase in future compensation levels.

9

Management is required to make various assumptions in determining the fair values of financial instruments.  Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Management is required to make various assumptions in determining the credit risk involved in issuing contingent obligations such as standby letters of credit, commercial letters of credit, and other lines of credit.  Since commitments to extend credit and unused lines of credit may expire without being fully drawn upon, this amount does not necessarily represent future cash commitments.  Based on historical experience and economic factors, the Company makes estimates of future cash commitments from these contingent obligations to determine their fair value and establish an allowance if necessary.

Note 4.  Commitments and Contingencies

The Company is a party to financial instruments in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuating interest rates. These financial instruments include commitments to extend credit, unused lines of credit, and standby letters of credit. Exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to make loans and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit origination guidelines, portfolio maintenance and management procedures as other credit and off-balance sheet products.  Commitments to extend credit and unused lines of credit totaled $642.8 million at June 30, 2011 and $643.6 million at December 31, 2010.  Since commitments to extend credit and unused lines of credit may expire without being fully drawn upon, this amount does not necessarily represent future cash commitments. Collateral obtained upon exercise of the commitment is determined using management’s credit evaluation of the borrower and may include accounts receivable, inventory, property, land and other items.

The Company guarantees the obligations or performance of customers by issuing standby letters of credit to third parties. These standby letters of credit are frequently issued in support of third party debt, such as corporate debt issuances, industrial revenue bonds and municipal securities. The credit risk involved in issuing standby letters of credit is essentially the same as the credit risk involved in extending loan facilities to customers, and they are subject to the same credit origination guidelines, portfolio maintenance and management procedures as other credit and off-balance sheet products. Typically, these instruments have terms of five years or less and expire unused; therefore, the total amounts do not necessarily represent future cash commitments. Standby letters of credit totaled $26.3 million at June 30, 2011 and $26.2 million at December 31, 2010. As of June 30, 2011, the fair value of standby letters of credit was not significant to the Company’s consolidated financial statements.

The Company has also entered into commercial letter of credit agreements on behalf of its customers.  Under these agreements, the Company, on the request of its customer, opens the letter of credit and makes a commitment to honor draws made under the agreement, whereby the beneficiary is normally the provider of goods and/or services and the Company essentially replaces the customer as the payee.  The credit risk involved in issuing commercial letters of credit is essentially the same as the credit risk involved in extending loan facilities to customers, and they are subject to the same credit origination guidelines, portfolio maintenance and management procedures as other credit and off-balance sheet products.  Typically, these agreements vary in terms and the total amounts do not necessarily represent future cash commitments.  Commercial letters of credit totaled $15.7 million at June 30, 2011 and $16.3 million at December 31, 2010.  As of June 30, 2011, the fair value of commercial letters of credit was not significant to the Company’s consolidated financial statements.

10

Note  5. Allowance for Loan and Lease Losses and Credit Quality of Loans and Leases

Allowance for Loan and Lease Losses

The allowance for loan and lease losses is maintained at a level estimated by management to provide adequately for risk of probable losses inherent in the current loan and lease portfolio. The adequacy of the allowance for loan and lease losses is continuously monitored.  It is assessed for adequacy using a methodology designed to ensure the level of the allowance reasonably reflects the loan and lease portfolio’s risk profile. It is evaluated to ensure that it is sufficient to absorb all reasonably estimable credit losses inherent in the current loan and lease portfolio.

To develop and document a systematic methodology for determining the allowance for loan and lease losses, the Company has divided the loan portfolio into three portfolio segments, each with different risk characteristics and methodologies for assessing risk.  Each portfolio segment is broken down into class segments where appropriate.  Class segments contain unique measurement attributes, risk characteristics and methods for monitoring and assessing risk that are necessary to develop the allowance for loan and lease losses.  Unique characteristics such as borrower type, loan type, collateral type, and risk characteristics define each class segment.  The following table illustrates the portfolio and class segments for the Company’s loan portfolio:

Portfolio	Class
Commercial Loans	Commercial
	Commercial Real Estate
	Agricultural
	Agricultural Real Estate
	Small Business
Consumer Loans	Indirect
	Home Equity
	Direct
Residential Real Estate Mortgages

Commercial – The Company offers a variety of loan options to meet the specific needs of our commercial customers including term loans, time notes and lines of credit.  Such loans are made available to businesses for working capital such as inventory and receivables, business expansion and equipment purchases. Generally, a collateral lien is placed on equipment or other assets owned by the borrower.  These loans carry a higher risk than commercial real estate loans due to the nature of the underlying collateral, which can be business assets such as equipment and accounts receivable and is generally less liquid than real estate. To reduce the risk, management also attempts to secure real estate as collateral and obtain personal guarantees of the borrowers.

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Commercial Real Estate – The Company offers commercial real estate loans to finance real estate purchases, refinancings, expansions and improvements to commercial properties.  Commercial real estate loans are made to finance the purchases of real property which generally consists of real estate with completed structures. These commercial real estate loans are secured by first liens on the real estate, which may include apartments, commercial structures, housing businesses, healthcare facilities, and other non owner-occupied facilities.  These loans are typically less risky than commercial loans, since they are secured by real estate and buildings. The Company’s underwriting analysis includes credit verification, independent appraisals, a review of the borrower's financial condition, and a detailed analysis of the borrower’s underlying cash flows. These loans are typically originated in amounts of no more than 80% of the appraised value of the property.

Agricultural – The Company offers a variety of agricultural loans to meet the needs of our agricultural customers including term loans, time notes, and lines of credit.  These loans are made to purchase livestock, purchase and modernize equipment, and finance seasonal crop expenses.  Generally, a collateral lien is placed on the livestock, equipment, produce inventories, and/or receivables owned by the borrower.  These loans may carry a higher risk than commercial and agricultural real estate loans due to the industry price volatility, and in some cases, the perishable nature of the underlying collateral.  To reduce these risks, management may attempt to secure these loans with additional real estate collateral, obtain personal guarantees of the borrowers, or obtain government loan guarantees to provide further support.

Agricultural Real Estate – The Company offers real estate loans to our agricultural customers to finance farm related real estate purchases, refinancings, expansions, and improvements to agricultural properties such as barns, production facilities, and land.  The agricultural real estate loans are secured by first liens on the farm real estate.  Because they are secured by land and buildings, these loans may be less risky than agricultural loans.  The Company's underwriting analysis includes credit verification, independent appraisals, a review of the borrower's financial condition, and a detailed analysis of the borrower’s underlying cash flows.  These loans are typically originated in amounts of no more than 75% of the appraised value of the property.  Government loan guarantees may be obtained to provide further support.

Small Business - The Company offers a variety of loan options to meet the specific needs of our small business customers including term loans, small business mortgages and lines of credit.  Such loans are generally less than $350 thousand and are made available to businesses for working capital such as inventory and receivables, business expansion, equipment purchases, and agricultural needs.  Generally, a collateral lien is placed on equipment or other assets owned by the borrower such as inventory and/or receivables.  These loans carry a higher risk than commercial loans due to the smaller size of the borrower and lower levels of capital.  To reduce the risk, the Company obtains personal guarantees of the owners for a majority of the loans.

Indirect – The Company maintains relationships with many dealers primarily in the communities that we serve.  Through these relationships, the company finances the purchases of automobiles and recreational vehicles (such as campers, boats, etc.) indirectly through dealer relationships.  Approximately 69% of the indirect relationships represent automobile financing.  Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from three to six years, based upon the nature of the collateral and the size of the loan. The majority of indirect consumer loans are underwritten on a secured basis using the underlying collateral being financed.

Home Equity –The Company offers fixed home equity loans as well as home equity lines of credit to consumers to finance home improvements, debt consolidation, education and other uses.  Consumers are able to borrower up to 85% of the equity in their homes.  The Company originates home equity lines of credit and second mortgage loans (loans secured by a second [junior] lien position on one-to-four-family residential real estate).  These loans carry a higher risk than first mortgage residential loans as they are in a second position with respect to collateral.  Risk is reduced through underwriting criteria, which include credit verification, appraisals, a review of the borrower's financial condition, and personal cash flows.  A security interest, with title insurance when necessary, is taken in the underlying real estate.

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Direct – The Company offers a variety of consumer installment loans to finance vehicle purchases, mobile home purchases and personal expenditures.  Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from one to ten years, based upon the nature of the collateral and the size of the loan. The majority of consumer loans are underwritten on a secured basis using the underlying collateral being financed or a customer's deposit account. In addition to installment loans, the Company also offers personal lines of credit and overdraft protection.  A minimal amount of loans are unsecured, which carry a higher risk of loss.

Residential Real Estate – Residential real estate loans consist primarily of loans secured by first or second deeds of trust on primary residences.  We originate adjustable-rate and fixed-rate, one-to-four-family residential real estate loans for the construction, purchase or refinancing of a mortgage.  These loans are collateralized by owner-occupied properties located in the Company’s market area. When market conditions are favorable, for longer term, fixed-rate residential mortgages without escrow, the Company retains the servicing, but sells the right to receive principal and interest to Freddie Mac.   This practice allows the Company to manage interest rate risk, liquidity risk, and credit risk.  Loans on one-to-four-family residential real estate are generally originated in amounts of no more than 85% of the purchase price or appraised value (whichever is lower), or have private mortgage insurance.  Mortgage title insurance and hazard insurance are normally required. Construction loans have a unique risk, because they are secured by an incomplete dwelling. This risk is reduced through periodic site inspections, including one at each loan draw period.

Allowance for Loan and Lease Loss Calculation

Management considers the accounting policy related to the allowance for loan and lease losses to be a critical accounting policy given the inherent uncertainty in evaluating the levels of the allowance required to cover credit losses in the portfolio and the material effect that such judgments can have on the consolidated results of operations.

For purposes of evaluating the adequacy of the allowance, the Company considers a number of significant factors that affect the collectibility of the portfolio.  For individually analyzed loans, these include estimates of loss exposure, which reflect the facts and circumstances that affect the likelihood of repayment of such loans as of the evaluation date. For homogeneous pools of loans and leases, estimates of the Company’s exposure to credit loss reflect a current assessment of a number of factors, which could affect collectibility.  These factors include:  past loss experience;  size, trend, composition, and nature of loans;  changes in lending policies and procedures, including underwriting standards and collection,  charge-offs  and  recoveries; trends experienced in nonperforming and delinquent loans; current economic conditions in the Company’s market;  portfolio concentrations that may affect loss experienced across one or more components of the portfolio; the effect of external factors such as competition, legal and regulatory requirements; and the experience, ability, and depth of lending management and staff. In addition, various regulatory agencies, as an integral component of their examination process, periodically review the Company’s allowance for loan and lease losses.  Such agencies may require the Company to make loan grade changes as well as recognize additions to the allowance based on their examinations.

13

After a thorough consideration of the factors discussed above, any required additions or reductions to the allowance for loan and lease losses are made periodically by charges or credits to the provision for loan and lease losses. These charges or credits are necessary to maintain the allowance at a level which management believes is reasonably reflective of overall inherent risk of probable loss in the portfolio. While management uses available information to recognize losses on loans and leases, additions and reductions of the allowance may fluctuate from one reporting period to another.  These fluctuations are reflective of changes in risk associated with portfolio content and/or changes in management’s assessment of any or all of the determining factors discussed above.  The following table illustrates the changes in the allowance for loan and lease losses by portfolio segment for the three and six months ended June 30, 2011 and June 30, 2010:

Allowance for Loan and Lease Losses

(in thousands)

Three months ended June 30							Residential
	Commercial			Consumer			Real Estate
	Loans			Loans			Mortgages			Unallocated			Total
Balance as of March 31, 2011	$	37,937		$	26,219		$	5,338		$	440		$	69,934
Charge-offs		(2,588	)		(3,600	)		(414	)		-			(6,602	)
Recoveries		474			654			3			-			1,131
Provision		3,324			2,445			446			(194	)		6,021
Ending Balance as of June 30, 2011	$	39,147		$	25,718		$	5,373		$	246		$	70,484
Balance as of March 31, 2010	$	41,249		$	25,809		$	2,838		$	254		$	70,150
Charge-offs		(3,311	)		(3,982	)		(410	)		-			(7,703	)
Recoveries		711			791			1			-			1,503
Provision		236			5,214			866			34			6,350
Ending Balance as of June 30, 2010	$	38,885		$	27,832		$	3,295		$	288		$	70,300
Six months ended June 30							Residential
	Commercial			Consumer			Real Estate
	Loans			Loans			Mortgages			Unallocated			Total
Balance as of December 31, 2010	$	40,101		$	26,126		$	4,627		$	380		$	71,234
Charge-offs		(5,458	)		(6,893	)		(513	)		-			(12,864	)
Recoveries		894			1,230			4			-			2,128
Provision		3,610			5,255			1,255			(134	)		9,986
Ending Balance as of June 30, 2011	$	39,147		$	25,718		$	5,373		$	246		$	70,484
Balance as of December 31, 2009	$	36,598		$	26,664		$	3,002		$	286		$	66,550
Charge-offs		(6,141	)		(7,925	)		(522	)		-			(14,588	)
Recoveries		1,236			1,502			7			-			2,745
Provision		7,192			7,591			808			2			15,593
Ending Balance as of June 30, 2010	$	38,885		$	27,832		$	3,295		$	288		$	70,300

14

The following tables illustrate the allowance for loan and lease losses and the recorded investment by portfolio segment as of June 30, 2011 and December 31, 2010:

Allowance for Loan and Lease Losses and Recorded Investment in Loans and Leases

(in thousands)

					Residential
	Commercial		Consumer		Real Estate
	Loans		Loans		Mortgages		Unallocated		Total
As of June 30, 2011
Allowance loan and lease losses	$	39,147	$	25,718	$	5,373	$	246	$	70,484
Allowance for loans and leases individually evaluated for impairment	$	352	$	-	$	-			$	352
Allowance for loans and leases collectively evaluated for impairment	$	38,795	$	25,718	$	5,373	$	246	$	70,132
Ending balance of loans and leases	$	1,631,097	$	1,469,075	$	564,345			$	3,664,517
Ending balance of loans and leases individually evaluated for impairment	$	7,718	$	-	$	-			$	7,718
Ending balance of loans and leases collectively evaluated for impairment	$	1,623,379	$	1,469,075	$	564,345			$	3,656,799
As of December 31, 2010
Allowance loan and lease losses	$	40,101	$	26,126	$	4,627	$	380	$	71,234
Allowance for loans and leases individually evaluated for impairment	$	2,211	$	-	$	-			$	2,211
Allowance for loans and leases collectively evaluated for impairment	$	37,890	$	26,126	$	4,627	$	380	$	69,023
Ending balance of loans and leases	$	1,580,371	$	1,481,241	$	548,394			$	3,610,006
Ending balance of loans and leases individually evaluated for impairment	$	11,419	$	-	$	-			$	11,419
Ending balance of loans and leases collectively evaluated for impairment	$	1,568,952	$	1,481,241	$	548,394			$	3,598,587

15

Credit Quality of Loans and Leases

Loans and leases are placed on nonaccrual status when timely collection of principal and interest in accordance with contractual terms is doubtful. Loans and leases are transferred to nonaccrual status generally when principal or interest payments become ninety days delinquent, unless the loan is well secured and in the process of collection, or sooner when management concludes or circumstances indicate that borrowers may be unable to meet contractual principal or interest payments.  When a loan or lease is transferred to a nonaccrual status, all interest previously accrued in the current period but not collected is reversed against interest income in that period. Interest accrued in a prior period and not collected is charged-off against the allowance for loan and lease losses.  The Company’s nonaccrual policies are the same for all classes of financing receivable.

If ultimate repayment of a nonaccrual loan is expected, any payments received are applied in accordance with contractual terms. If ultimate repayment of principal is not expected, any payment received on a nonaccrual loan is applied to principal until ultimate repayment becomes expected.  Nonaccrual loans are returned to accrual status when they become current as to principal and interest and demonstrate a period of performance under the contractual terms and, in the opinion of management, are fully collectible as to principal and interest.  When in the opinion of management the collection of principal appears unlikely, the loan balance is charged-off in total or in part.  For loans in all portfolios, the principal amount is charged off in full or in part as soon as management determines, based on available facts, that the collection of principal in full is improbable.  For commercial loans, management considers specific facts and circumstances relative to individual credits in making such a determination.  For consumer and residential loan classes, management uses specific guidance and thresholds from the Federal Financial Institutions Examination Council’s Uniform Retail Credit Classification and Account Management Policy.

The following table illustrates the Company’s nonaccrual loans by loan class:

Loans on Nonaccrual Status

(In thousands)	June 30, 2011		December 31, 2010
Commercial Loans
Commercial	$	2,424	$	5,837
Commercial Real Estate		5,871		5,687
Agricultural		3,706		4,065
Agricultural Real Estate		1,886		2,429
Small Business		7,695		7,033
		21,582		25,051
Consumer Loans
Indirect		1,185		1,971
Home Equity		8,046		6,395
Direct		410		399
		9,641		8,765
Residential Real Estate Mortgages		8,968		8,651
Total Nonaccrual	$	40,191	$	42,467

16

The following tables set forth information with regard to past due and nonperforming loans by loan class as of June 30, 2011 and December 31, 2010:

Age Analysis of Past Due Loans

As of June 30, 2011

(in thousands)

					Greater Than								Recorded
	31-60 Days		61-90 Days		90 Days		Total						Total
	Past Due		Past Due		Past Due		Past Due						Loans and
	Accruing		Accruing		Accruing		Accruing		Non-Accrual		Current		Leases
Commercial Loans
Commercial	$	203	$	401	$	-	$	604	$	2,424	$	518,065	$	521,093
Commercial Real Estate		2,075		1,739		-		3,814		5,871		740,617		750,302
Agricultural		-		3		-		3		3,706		62,131		65,840
Agricultural Real Estate		161		-		-		161		1,886		32,391		34,438
Small Business		1,479		310		-		1,789		7,695		249,940		259,424
		3,918		2,453		-		6,371		21,582		1,603,144		1,631,097
Consumer Loans
Indirect		7,248		1,542		893		9,683		1,185		826,337		837,205
Home Equity		4,717		1,169		273		6,159		8,046		543,894		558,099
Direct		741		254		107		1,102		410		72,259		73,771
		12,706		2,965		1,273		16,944		9,641		1,442,490		1,469,075
Residential Real Estate Mortgages		1,507		391		186		2,084		8,968		553,293		564,345
	$	18,131	$	5,809	$	1,459	$	25,399	$	40,191	$	3,598,927	$	3,664,517

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Age Analysis of Past Due Loans

As of December 31, 2010

(in thousands)

					Greater Than								Recorded
	31-60 Days		61-90 Days		91 Days		Total						Total
	Past Due		Past Due		Past Due		Past Due						Loans and
	Accruing		Accruing		Accruing		Accruing		Non-Accrual		Current		Leases
Commercial
Commercial	$	136	$	55	$	94	$	285	$	5,837	$	461,633	$	467,755
Commercial
Real Estate		1,263		-		-		1,263		5,687		730,285		737,235
Agricultural		63		92		-		155		4,065		63,336		67,556
Agricultural
Real Estate		108		-		-		108		2,429		33,400		35,937
Small Business		2,570		1,183		-		3,753		7,033		261,102		271,888
		4,140		1,330		94		5,564		25,051		1,549,756		1,580,371
Consumer
Indirect		9,307		2,193		862		12,362		1,971		814,594		828,927
Home Equity		5,740		1,756		396		7,892		6,395		561,391		575,678
Direct		927		158		54		1,139		399		75,098		76,636
		15,974		4,107		1,312		21,393		8,765		1,451,083		1,481,241
Residential Real  Estate Mortgages		3,002		126		919		4,047		8,651		535,696		548,394
	$	23,116	$	5,563	$	2,325	$	31,004	$	42,467	$	3,536,535	$	3,610,006

There were no material commitments to extend further credit to borrowers with nonperforming loans. Within nonaccrual loans, there are approximately $4.0 million of troubled debt restructured loans at June 30, 2011.

Impaired loans, which primarily consist of nonaccruing commercial, commercial real estate, agricultural, agricultural real estate and small business loans were $21.6 million at June 30, 2011 and $17.2 million at December 31, 2010.

The methodology used to establish the allowance for loan and lease losses on impaired loans incorporates specific allocations on loans analyzed individually.  Classified loans with outstanding balances of $500 thousand or more are evaluated for impairment through the Company’s quarterly status review process.  In determining that we will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreements, we consider factors such as payment history and changes in the financial condition of individual borrowers, local economic conditions, historical loss experience and the conditions of the various markets in which the collateral may be liquidated.  For loans that are impaired as defined by accounting standards, impairment is measured by one of three methods: 1) the fair value of collateral less cost to sell, 2) present value of expected future cash flows or 3) the loan’s observable market price.  All impaired loans are reviewed on a quarterly basis for changes in the measurement of impairment.  For impaired loans measured using the present value of expected cash flow method, any change to the previously recognized impairment loss is recognized as a change to the allowance account and recorded in the consolidated statement of income as a component of the provision for credit losses.  At June 30, 2011, $2.8 million of the total impaired loans had a specific reserve allocation of $0.4 million compared to $5.7 million of impaired loans at December 31, 2010 which had a specific reserve allocation of $2.2 million.

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The following table provides additional information on impaired loans and specific reserve allocations as of June 30, 2011 and December 31, 2010:

Impaired Loans

	June 30, 2011						December 31, 2010
	Recorded		Unpaid				Recorded		Unpaid
	Investment		Principal				Investment		Principal
	Balance		Balance		Related		Balance		Balance		Related
(in thousands)	(Book)		(Legal)		Allowance		(Book)		(Legal)		Allowance
With no related allowance recorded:
Commercial Loans
Commercial	$	2,746	$	5,956			$	1,794	$	2,145
Commercial Real Estate		4,464		7,116				3,787		4,467
Agricultural		2,451		3,009				2,657		3,145
Agricultural Real Estate		1,606		2,242				1,283		1,382
Small Business		7,552		10,712				1,982		2,334
	$	18,819	$	29,035			$	11,503	$	13,473
With an allowance recorded:
Commercial Loans
Commercial	$	553	$	868	$	275	$	3,925	$	4,962	$	1,907
Commercial Real Estate		-		-		-		-		-		-
Agricultural		1,508		1,866		74		1,671		1,918		281
Agricultural Real Estate		702		777		3		728		784		23
		2,763		3,511		352		6,324		7,664		2,211
Total:	$	21,582	$	32,546	$	352	$	17,827	$	21,137	$	2,211

The decrease in commercial loans with a related allowance recorded from December 31, 2010 to June 30, 2011 is primarily due to the repayment of a large commercial credit and the charge-off of another large commercial credit.

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The following table summarizes the average recorded investments on impaired loans and the interest income recognized for the three months ended June 30, 2011 and June 30, 2010:

	June 30, 2011						June 30, 2010
	Average		Interest Income				Average		Interest Income
	Recorded		Recognized				Recorded		Recognized
(in thousands)	Investment		Accrual		Cash		Investment		Accrual		Cash
With no related allowance recorded: Commercial Loans
Commercial	$	3,349	$	26	$	26	$	1,754	$	24	$	24
Commercial Real Estate		4,315		24		24		3,401		5		5
Agricultural		2,485		18		18		2,770		16		16
Agricultural Real Estate		1,720		21		21		2,652		35		35
Small Business		7,930		89		89		5,337		46		46
	$	19,799	$	178	$	178	$	15,914	$	126	$	126
With an allowance recorded: Commercial Loans
Commercial	$	558	$	19	$	19	$	2,308	$	-	$	-
Commercial Real Estate		-		-		-		2,373		-		-
Agricultural		1,521		67		67		1,847		46		46
Agricultural Real Estate		706		13		13		767		13		13
	$	2,785	$	99	$	99	$	7,295	$	59	$	59
Total:	$	22,584	$	277	$	277	$	23,209	$	185	$	185

The following table summarizes the average recorded investments on impaired loans and the interest income recognized for the six months ended June 30, 2011 and June 30, 2010:

	June 30, 2011						June 30, 2010
	Average		Interest Income				Average		Interest Income
	Recorded		Recognized				Recorded		Recognized
(in thousands)	Investment		Accrual		Cash		Investment		Accrual		Cash
With no related allowance recorded: Commercial Loans
Commercial	$	3,041	$	73	$	73	$	1,813	$	29	$	29
Commercial Real Estate		4,039		45		45		3,785		14		14
Agricultural		2,597		45		45		2,515		28		28
Agricultural Real Estate		1,496		38		38		2,311		64		64
Small Business		4,666		102		102		2,995		47		47
	$	15,839	$	303	$	303	$	13,419	$	182	$	182
With an allowance recorded: Commercial Loans
Commercial	$	1,226	$	49	$	49	$	2,477	$	1	$	1
Commercial Real Estate		573		-		-		2,107		-		-
Agricultural		1,571		67		67		1,886		58		58
Agricultural Real Estate		713		18		18		775		42		42
	$	4,083	$	134	$	134	$	7,245	$	101	$	101
Total:	$	19,922	$	437	$	437	$	20,664	$	283	$	283

20

There has been significant disruption and volatility in the financial and capital markets since the second half of 2008.  Turmoil in the mortgage industry adversely impacted both domestic and global economies and led to a significant credit and liquidity crisis in many domestic markets.  These conditions were attributable to a variety of factors, in particular the fallout associated with subprime mortgage loans (a type of lending we have never actively pursued).  The disruption was exacerbated by the decline of the real estate and housing market.  However, in the markets in which the Company does business, the disruption has been somewhat delayed and less significant than in the national market.  For example, our real estate market has not suffered the extreme declines seen nationally and our unemployment rate, while notably higher than in prior periods, is still below the national average.

While we continue to adhere to prudent underwriting standards, as a lender we may be adversely impacted by general economic weaknesses and, in particular, a sharp downturn in the housing market nationally.  Decreases in real estate values could adversely affect the value of property used as collateral for our loans.  Adverse changes in the economy may have a negative effect on the ability of our borrowers to make timely loan payments, which would have an adverse impact on our earnings.  An adverse impact on loan delinquencies would decrease our net interest income and adversely impact our loan loss experience, causing increases in our provision and allowance for loan and lease losses.

The Company has developed an internal loan grading system to evaluate and quantify the Bank’s loan portfolio with respect to quality and risk.  The system focuses on, among other things, financial strength of borrowers, experience and depth of borrower’s management, primary and secondary sources of repayment, payment history, nature of the business, and outlook on particular industries.  The internal grading system enables the Company to monitor the quality of the entire loan portfolio on a consistent basis and provide management with an early warning system, enabling recognition and response to problem loans and potential problem loans.

Commercial Grading System

For commercial and agricultural loans, the Company uses a grading system that relies on quantifiable and measurable characteristics when available.  This would include comparison of financial strength to available industry averages, comparison of transaction factors (loan terms and conditions) to loan policy, and comparison of credit history to stated repayment terms and industry averages. Some grading factors are necessarily more subjective such as economic and industry factors, regulatory environment, and management.  Classified commercial loans consist of loans graded substandard and below.  All classified loans with outstanding balances of $500 thousand or more are evaluated individually for impairment through the quarterly review process.  The grading system for commercial and agricultural loans is as follows:

· 4 – Doubtful

A doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as a loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral, and refinancing. Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new information. Nonaccrual treatment is required for doubtful assets because of the high probability of loss.

· 3 – Substandard

Substandard loans have a high probability of payment default, or they have other well-defined weaknesses. They require more intensive supervision by bank management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization. Repayment may depend on collateral or other credit risk mitigants. For some Substandard loans, the likelihood of full collection of interest and principal may be in doubt and should be placed on nonaccrual. Although Substandard assets in the aggregate will have a distinct potential for loss, an individual asset’s loss potential does not have to be distinct for the asset to be rated Substandard.

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· 2 – Special Mention

Special Mention loans have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position at some future date. These loans pose elevated risk, but their weakness does not yet justify a Substandard classification. Borrowers may be experiencing adverse operating trends (declining revenues or margins) or may be struggling with an ill-proportioned balance sheet (e.g., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a Special Mention rating. Although a Special Mention loan has a higher probability of default than a pass asset, its default is not imminent.

· 1 – Pass

Loans graded as Pass encompass all loans not graded as Doubtful, Substandard, or Special Mention.  Pass loans are in compliance with loan covenants, and payments are generally made as agreed.  Pass loans range from superior quality to fair quality.

Small Business Grading System

Small Business loans are graded as either Classified or Non-classified:

· Classified

Classified loans are inadequately protected by the current worth and paying capacity of the obligor or, if applicable, the collateral pledged.   These loans have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt, or in some cases make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.   Classified loans have a high probability of payment default, or a high probability of total or substantial loss.  These loans require more intensive supervision by management and are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization.  Repayment may depend on collateral or other credit risk mitigants.  When the likelihood of full collection of interest and principal may be in doubt; classified loans are considered to have a nonaccrual status.   In some cases, Classified loans are considered uncollectible and of such little value that their continuance as assets is not warranted.

· Non-classified

Loans graded as Non-classified encompass all loans not graded as Classified.  Non-classified loans are in compliance with loan covenants, and payments are generally made as agreed.

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Consumer and Residential Mortgage Grading System

Consumer and Residential Mortgage loans are graded as either Performing or Nonperforming.   Nonperforming loans are loans that are 1) over 90 days past due and interest is still accruing, 2) on nonaccrual status or 3) restructured.  All loans not meeting any of these three criteria are considered Performing.

The following tables illustrate the Company’s credit quality by loan class as of June 30, 2011 and December 31, 2010:

Credit Quality Indicators

As of June 30, 2011

Commercial Credit Exposure			Commercial				Agricultural
By Internally Assigned Grade:	Commercial		Real Estate		Agricultural		Real Estate		Total
1 - Pass	$	487,398	$	658,469	$	57,263	$	29,415	$	1,232,545
2 - Special Mention		6,175		35,810		366		463		42,814
3 - Substandard		26,967		56,023		8,128		4,560		95,678
4 - Doubtful		553		-		83		-		636
Total	$	521,093	$	750,302	$	65,840	$	34,438	$	1,371,673
Small Business Credit Exposure
By Internally Assigned Grade:	Small Business								Total
Non-classified	$	241,417							$	241,417
Classified		18,007								18,007
Total	$	259,424							$	259,424
Consumer Credit Exposure
By Payment Activity:	Indirect		Home Equity		Direct				Total
Performing	$	835,127	$	549,780	$	73,254			$	1,458,161
Nonperforming		2,078		8,319		517				10,914
Total	$	837,205	$	558,099	$	73,771			$	1,469,075
Residential Mortgage Credit Exposure	Residential
By Payment Activity:	Mortgage								Total
Performing	$	555,191							$	555,191
Nonperforming		9,154								9,154
Total	$	564,345							$	564,345

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Credit Quality Indicators

As of December 31, 2010

Commercial Credit Exposure			Commercial				Agricultural
By Internally Assigned Grade:	Commercial		Real Estate		Agricultural		Real Estate		Total
1 - Pass	$	441,834	$	654,974	$	61,195	$	30,483	$	1,188,486
2 - Special Mention		4,830		35,461		660		936		41,887
3 - Substandard		21,091		46,800		5,606		4,518		78,015
4 - Doubtful		-		-		95		-		95
Total	$	467,755	$	737,235	$	67,556	$	35,937	$	1,308,483
Small Business Credit Exposure
By Internally Assigned Grade:	Small Business								Total
Non-classified	$	253,120							$	253,120
Classified		18,768								18,768
Total	$	271,888							$	271,888
Consumer Credit Exposure
By Payment Activity:	Indirect		Home Equity		Direct				Total
Performing	$	826,956	$	569,283	$	76,237			$	1,472,476
Nonperforming		1,971		6,395		399				8,765
Total	$	828,927	$	575,678	$	76,636			$	1,481,241
Residential Mortgage Credit Exposure	Residential
By Payment Activity:	Mortgage								Total
Performing	$	539,743							$	539,743
Nonperforming		8,651								8,651
Total	$	548,394							$	548,394

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Note 6. Earnings Per Share

Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity (such as the Company’s dilutive stock options and restricted stock units).

The following is a reconciliation of basic and diluted earnings per share for the periods presented in the consolidated statements of income.

Three months ended June 30,	2011		2010
(in thousands, except per share data)
Basic EPS:
Weighted average common shares outstanding		34,044		34,288
Net income available to common shareholders		14,655		14,424
Basic EPS	$	0.43	$	0.42
Diluted EPS:
Weighted average common shares outstanding		34,044		34,288
Dilutive effect of common stock options and restricted stock		276		277
Weighted average common shares and common share equivalents		34,320		34,565
Net income available to common shareholders		14,655		14,424
Diluted EPS	$	0.43	$	0.42
Six months ended June 30,		2011		2010
(in thousands, except per share data)
Basic EPS:
Weighted average common shares outstanding		34,189		34,259
Net income available to common shareholders		28,962		28,400
Basic EPS	$	0.85	$	0.83
Diluted EPS:
Weighted average common shares outstanding		34,189		34,259
Dilutive effect of common stock options and restricted stock		303		226
Weighted average common shares and common share equivalents		34,492		34,485
Net income available to common shareholders		28,962		28,400
Diluted EPS	$	0.84	$	0.82

There were 1,240,099 stock options for the quarter ended June 30, 2011 and 1,039,676stock options for the quarter ended June 30, 2010 that were not considered in the calculation of diluted earnings per share since the stock options’ exercise price was greater than the average market price during these periods.

There were 867,397 stock options for the six months ended June 30, 2011 and 1,293,469stock options for the six months ended June 30, 2010 that were not considered in the calculation of diluted earnings per share since the stock options’ exercise price was greater than the average market price during these periods.

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Note 7.  Defined Benefit Postretirement Plans

The Company has a qualified, noncontributory, defined benefit pension plan covering substantially all of its employees at June 30, 2011.  Benefits paid from the plan are based on age, years of service, compensation and social security benefits, and are determined in accordance with defined formulas. The Company’s policy is to fund the pension plan in accordance with Employee Retirement Income Security Act (“ERISA”) standards. Assets of the plan are invested in publicly traded stocks and bonds. Prior to January 1, 2000, the Company’s plan was a traditional defined benefit plan based on final average compensation.  On January 1, 2000, the plan was converted to a cash balance plan with grandfathering provisions for existing participants.

In addition to the pension plan, the Company also provides supplemental employee retirement plans to certain current and former executives.  These supplemental employee retirement plans and the defined benefit pension plan are collectively referred to herein as “Pension Benefits.”

Also, the Company provides certain health care benefits for retired employees.  Benefits are accrued over the employees’ active service period. Only employees that were employed by the Company on or before January 1, 2000 are eligible to receive postretirement health care benefits.  The plan is contributory for participating retirees, requiring participants to absorb certain deductibles and coinsurance amounts with contributions adjusted annually to reflect cost sharing provisions and benefit limitations called for in the plan.  Eligibility is contingent upon the direct transition from active employment status to retirement without any break in employment from the Company.  Employees also must be participants in the Company’s medical plan prior to their retirement.  The Company funds the cost of postretirement health care as benefits are paid. The Company elected to recognize the transition obligation on a delayed basis over twenty years.  These postretirement benefits are referred to herein as “Other Benefits.”

The components of expense for Pension Benefits and Other Benefits are set forth below (in thousands):

	Pension Benefits						Other Benefits
	Three months ended June 30,						Three months ended June 30,
Components of net periodic benefit cost:	2011			2010			2011		2010
Service cost	$	668		$	462		$	5	$	5
Interest cost		874			873			57		53
Expected return on plan assets		(1,914	)		(1,778	)		-		-
Net amortization		407			401			9		(8	)
Total cost (benefit)	$	35		$	(42	)	$	71	$	50
	Pension Benefits						Other Benefits
	Six months ended June 30,						Six months ended June 30,
Components of net periodic benefit cost:		2011			2010			2011		2010
Service cost	$	1,335		$	924		$	10	$	10
Interest cost		1,747			1,744			114		106
Expected return on plan assets		(3,828	)		(3,555	)		-		-
Net amortization		813			802			18		(16	)
Total cost (benefit)	$	67		$	(85	)	$	142	$	100

The Company is not required to make contributions to the plans in 2011, and did not do so during the six months ended June 30, 2011.  The Company recorded approximately $0.3 million and $0.5 million, net of tax, as amortization of pension amounts previously recognized in Accumulated Other Comprehensive Income during the six months ended June 30, 2011 and 2010, respectively.

Market conditions can result in an unusually high degree of volatility and increase the risks and short term liquidity associated with certain investments held by the Company’s defined benefit pension plan (“the Plan”) which could impact the value of these investments.

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Note 8.  Trust Preferred Debentures

CNBF Capital Trust I is a Delaware statutory business trust formed in 1999, for the purpose of issuing $18 million in trust preferred securities and lending the proceeds to the Company. NBT Statutory Trust I is a Delaware statutory business trust formed in 2005, for the purpose of issuing $5 million in trust preferred securities and lending the proceeds to the Company.  NBT Statutory Trust II is a Delaware statutory business trust formed in 2006, for the purpose of issuing $50 million in trust preferred securities and lending the proceeds to the Company to provide funding for the acquisition of CNB Bancorp, Inc. These three statutory business trusts are collectively referred herein to as “the Trusts.”  The Company guarantees, on a limited basis, payments of distributions on the trust preferred securities and payments on redemption of the trust preferred securities.  The Trusts are variable interest entities (“VIEs”) for which the Company is not the primary beneficiary, as defined by U.S. GAAP.  In accordance with U.S. GAAP, the accounts of the Trusts are not included in the Company’s consolidated financial statements.  On January 1, 2010, the Company adopted Accounting Standards Update (“ASU”) 2009-17, Consolidations: Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (“Topic 810”), which had no impact on the Company’s financial statements.

As of June 30, 2011, the Trusts had the following issues of trust preferred debentures, all held by the Trusts, outstanding (dollars in thousands):

Description	Issuance Date	Trust Preferred Securities Outstanding		Interest Rate	Trust Preferred Debt Owed To Trust		Final Maturity date
CNBF Capital Trust I	June 1999		18,000	3-month LIBOR plus 2.75%	$	18,720	August 2029
NBT Statutory Trust I	November 2005		5,000	3-month LIBOR plus 1.40%		5,155	December 2035
NBT Statutory Trust II	February 2006		50,000	3-month LIBOR plus 1.40%		51,547	March 2036

The Company owns all of the common stock of the Trusts, which have issued trust preferred securities in conjunction with the Company issuing trust preferred debentures to the Trusts. The terms of the trust preferred debentures are substantially the same as the terms of the trust preferred securities.

Note 9.    Fair Value Measurements and Fair Value of Financial Instruments

U.S. GAAP states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  Fair value measurements are not adjusted for transaction costs.  A fair value hierarchy exists within U.S. GAAP that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below:

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Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 -  Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities, many other sovereign government obligations, liquid mortgage products, active listed equities and most money market securities. Such instruments are generally classified within level 1 or level 2 of the fair value hierarchy.  The Company does not adjust the quoted price for such instruments.

The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency include most investment-grade and high-yield corporate bonds, less liquid mortgage products, less liquid agency securities, less liquid listed equities, state, municipal and provincial obligations, and certain physical commodities. Such instruments are generally classified within level 2 of the fair value hierarchy.

Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate will be used. Management’s best estimate consists of both internal and external support on certain Level 3 investments. Subsequent to inception, management only changes level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, offerings in the equity or debt markets, and changes in financial ratios or cash flows.

For the six months ended June 30, 2011, the Company has made no transfers of assets between Level 1 and Level 2, and has had no Level 3 activity.

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The following tables set forth the Company’s financial assets and liabilities measured on a recurring basis that were accounted for at fair value.  Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):

June 30, 2011:

	Quoted Prices in		Significant		Significant
	Active Markets for		Other		Unobservable		Balance
	Identical Assets		Observable Inputs		Inputs		as of
	(Level 1)		(Level 2)		(Level 3)		June 30, 2011
Assets:
Securities Available for Sale:
U.S. Treasury		81,813		-		-		81,813
Federal Agency		-		240,374		-		240,374
State & municipal		-		108,795		-		108,795
Mortgage-backed		-		339,323		-		339,323
Collateralized mortgage obligations		-		355,140		-		355,140
Corporate		-		20,247		-		20,247
Other securities		8,948		2,039		-		10,987
Total Securities Available for Sale	$	90,761	$	1,065,918	$	-	$	1,156,679
Trading Securities		3,276		-		-		3,276
Total	$	94,037	$	1,065,918	$	-	$	1,159,955

December 31, 2010:

	Quoted Prices in		Significant		Significant
	Active Markets for		Other		Unobservable		Balance
	Identical Assets		Observable Inputs		Inputs		as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2010
Assets:
Securities Available for Sale:
U.S. Treasury	$	91,280	$	-	$	-	$	91,280
Federal Agency		-		349,750		-		349,750
State & municipal		-		114,937		-		114,937
Mortgage-backed		-		244,808		-		244,808
Collateralized mortgage obligations		-		297,888		-		297,888
Corporate		-		20,489		-		20,489
Other securities		8,190		2,026		-		10,216
Total Securities Available for Sale	$	99,470	$	1,029,898	$	-	$	1,129,368
Trading Securities		2,808		-		-		2,808
Total	$	102,278	$	1,029,898	$	-	$	1,132,176

Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices).  The majority of the other investment securities are reported at fair value utilizing Level 2 inputs.  The prices for these instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases and sales of investment securities.  Prices obtained from these sources include prices derived from market quotations and matrix pricing.  The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.  Management reviews the methodologies used in pricing the securities by its third party providers.

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U.S. GAAP requires disclosure of assets and liabilities measured and recorded at fair value on a nonrecurring basis such as goodwill, loans held for sale, other real estate owned, lease residuals, collateral-dependent impaired loans, mortgage servicing rights, and held-to-maturity securities.  The only nonrecurring fair value measurement recorded during the six month period ended June 30, 2011 was related to impaired loans.  During the six month period ended June 30, 2011, the Company established specific reserves on impaired loans of approximately $1.0 million, which were included in the provision for loan and lease losses for the respective period.  The Company uses the fair value of underlying collateral, less costs to sell, to estimate the specific reserves for collateral dependent impaired loans.  Based on the valuation techniques used, the fair value measurements for collateral dependent impaired loans are classified as Level 3.

The following table sets forth information with regard to estimated fair values of financial instruments at June 30, 2011 and December 31, 2010:

	June 30, 2011				December 31, 2010
(In thousands)	Carrying amount		Estimated fair value		Carrying amount		Estimated fair value
Financial assets
Cash and cash equivalents	$	102,766	$	102,766	$	168,792	$	168,792
Securities available for sale		1,156,679		1,156,679		1,129,368		1,129,368
Securities held to maturity		76,878		78,357		97,310		98,759
Trading securities		3,276		3,276		2,808		2,808
Loans (1)		3,664,517		3,674,736		3,610,006		3,626,603
Less allowance for loan losses		70,484		-		71,234		-
Net loans		3,594,033		3,674,736		3,538,772		3,626,603
Accrued interest receivable		17,719		17,719		19,130		19,130
Financial liabilities
Savings, NOW, and money market	$	2,288,515	$	2,288,515	$	2,291,833	$	2,291,833
Time deposits		895,806		906,222		930,778		943,988
Noninterest bearing		930,292		930,292		911,741		911,741
Short-term borrowings		175,958		175,958		159,434		159,434
Long-term debt		370,350		427,895		369,874		423,350
Accrued interest payable		4,135		4,135		4,356		4,356
Trust preferred debentures		75,422		75,422		75,422		71,148

1. Lease receivables, although excluded from the scope of ASC 825-10-50-10, are included in the estimated fair value amounts at their carrying amounts.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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Fair value estimates are based on existing on and off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, the Company has a substantial trust and investment management operation that contributes net fee income annually. The trust and investment management operation is not considered a financial instrument, and its value has not been incorporated into the fair value estimates. Other significant assets and liabilities include the benefits resulting from the low-cost funding of deposit liabilities as compared to the cost of borrowing funds in the market, and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimate of fair value.

Note 10.  Securities

The amortized cost, estimated fair value, and unrealized gains and losses of securities available for sale are as follows:

(In thousands)	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
June 30, 2011
U.S. Treasury	$	81,171	$	708	$	66	$	81,813
Federal Agency		239,815		1,184		625		240,374
State & municipal		105,449		3,556		210		108,795
Mortgage-backed		326,777		12,713		167		339,323
Collateralized mortgage obligations		348,812		6,555		227		355,140
Corporate		20,002		245		-		20,247
Other securities		8,920		2,067		-		10,987
Total securities available for sale	$	1,130,946	$	27,028	$	1,295	$	1,156,679
December 31, 2010
U.S. Treasury	$	91,338	$	424	$	482	$	91,280
Federal Agency		350,641		1,905		2,796		349,750
State & municipal		113,821		1,771		655		114,937
Mortgage-backed		233,861		11,666		719		244,808
Collateralized mortgage obligations		293,565		6,574		2,251		297,888
Corporate		20,005		484		-		20,489
Other securities		8,059		2,162		5		10,216
Total securities available for sale	$	1,111,290	$	24,986	$	6,908	$	1,129,368

In the available for sale category at June 30, 2011, federal agency securities were comprised of Government-Sponsored Enterprise (“GSE”) securities; mortgaged-backed securities were comprised of GSE securities with an amortized cost of $304.0 million and a fair value of $314.6 million and US Government Agency securities with an amortized cost of $22.7 million and a fair value of $24.7 million; collateralized mortgage obligations were comprised of GSE securities with an amortized cost of $275.7 million and a fair value of $279.3 million and US Government Agency securities with an amortized cost of $73.1 million and a fair value of $75.9 million.

In the available for sale category at December 31, 2010, federal agency securities were comprised of GSE securities; mortgaged-backed securities were comprised of GSE securities with an amortized cost of $208.9 million and a fair value of $217.9 million and US Government Agency securities with an amortized cost of $25.0 million and a fair value of $26.9 million; collateralized mortgage obligations were comprised of GSE securities with an amortized cost of $206.0 million and a fair value of $207.0 million and US Government Agency securities with an amortized cost of $87.6 million and a fair value of $90.8 million.

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Others securities primarily represent marketable equity securities.

Proceeds from the sales of securities available for sale were nominal during the six months ended June 30, 2011, and gains on the sales were negligible.  Proceeds from the sales of securities available for sale totaled $0.7 million during the six month period ending June 30, 2010.  Gains on these sales were negligible for the six months ended June 30, 2010.

Securities available for sale with amortized costs totaling $1.1 billion at June 30, 2011 and $0.9 billion at December 31, 2010, were pledged to secure public deposits and for other purposes required or permitted by law.  Additionally, at June 30, 2011 and December 31, 2010, securities available for sale with an amortized cost of $195.3 million and $187.7 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

The amortized cost, estimated fair value, and unrealized gains and losses of securities held to maturity are as follows:

	Amortized		Unrealized		Unrealized		Estimated
(In thousands)	cost		gains		losses		fair value
June 30, 2011
Mortgage-backed	$	1,587	$	207	$	-	$	1,794
State & municipal		75,291		1,272		-		76,563
Total securities held to maturity	$	76,878	$	1,479	$	-	$	78,357
December 31, 2010
Mortgage-backed	$	1,719	$	200	$	-	$	1,919
State & municipal		95,591		1,249		-		96,840
Total securities held to maturity	$	97,310	$	1,449	$	-	$	98,759

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The following table sets forth information with regard to investment securities with unrealized losses at June 30, 2011 and December 31, 2010:

	Less than 12 months							12 months or longer							Total
Security Type:	Fair Value		Unrealized losses			Number of Positions		Fair Value		Unrealized losses			Number of Positions		Fair Value		Unrealized losses			Number of Positions
June 30, 2011
U.S. Treasury	$	10,170	$	(66	)		1	$	-	$	-			-	$	10,170	$	(66	)		1
Federal agency		89,252		(625	)		6		-		-			-		89,252		(625	)		6
State & municipal		397		(2	)		1		5,445		(208	)		12		5,842		(210	)		13
Mortgage-backed		43,314		(167	)		3		-		-			-		43,314		(167	)		3
Collateralized mortgage obligations		47,328		(227	)		4		-		-			-		47,328		(227	)		4
Other securities		-		-			-		-		-			-		-		-			-
Total securities with unrealized losses	$	190,461	$	(1,087	)		15	$	5,445	$	(208	)		12	$	195,906	$	(1,295	)		27
December 31, 2010
U.S. Treasury	$	40,741	$	(482	)		4	$	-	$	-			-	$	40,741	$	(482	)		4
Federal agency		147,012		(2,796	)		12		-		-			-		147,012		(2,796	)		12
State & municipal		22,273		(317	)		31		7,533		(338	)		19		29,806		(655	)		50
Mortgage-backed		44,340		(719	)		3		-		-			-		44,340		(719	)		3
Collateralized mortgage obligations		72,595		(2,251	)		3		-		-			-		72,595		(2,251	)		3
Other securities		95		(5	)		1		-		-			-		95		(5	)		1
Total securities with unrealized losses	$	327,056	$	(6,570	)		54	$	7,533	$	(338	)		19	$	334,589	$	(6,908	)		73

Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses or in other comprehensive income, depending on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss.  If the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date.  If the Company does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment shall be separated into (a) the amount representing the credit loss and (b) the amount related to all other factors.  The amount of the total other-than-temporary impairment related to the credit loss shall be recognized in earnings. The amount of the total other-than-temporary impairment related to other factors shall be recognized in other comprehensive income, net of applicable taxes.

In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the historical and implied volatility of the fair value of the security.

33

Management has the intent to hold the securities classified as held to maturity until they mature, at which time it is believed the Company will receive full value for the securities. Furthermore, as of June 30, 2011, management also had the intent to hold, and will not be required to sell, the securities classified as available for sale for a period of time sufficient for a recovery of cost, which may be until maturity.  The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. When necessary, the Company has performed a discounted cash flow analysis to determine whether or not it will receive the contractual principal and interest on certain securities.  The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline.  As of June 30, 2011, management believes the impairments detailed in the table above are temporary and no other-than-temporary impairment losses have been realized in the Company’s consolidated statements of income.

The following tables set forth information with regard to contractual maturities of debt securities at June 30, 2011:

(In thousands)	Amortized cost		Estimated fair value
Debt securities classified as available for sale
Within one year	$	33,084	$	33,420
From one to five years		311,206		312,850
From five to ten years		265,352		275,182
After ten years		512,384		524,240
	$	1,122,026	$	1,145,692
Debt securities classified as held to maturity
Within one year	$	28,556	$	28,604
From one to five years		35,870		36,942
From five to ten years		8,660		8,812
After ten years		3,792		3,999
	$	76,878	$	78,357

Maturities of mortgage-backed, collateralized mortgage obligations and asset-backed securities are stated based on their estimated average lives.  Actual maturities may differ from estimated average lives or contractual maturities because, in certain cases, borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Except for U.S. Government securities, there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders’ equity at June 30, 2011.

34

NBT BANCORP INC. AND SUBSIDIARIES

Item 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The purpose of this discussion and analysis is to provide a concise description of the financial condition and results of operations of NBT Bancorp Inc. and its wholly owned consolidated subsidiaries, NBT Bank, N.A. (the “Bank”), NBT Financial Services, Inc. (“NBT Financial”), and NBT Holdings, Inc. (“NBT Holdings”) (collectively referred to herein as the “Company”). This discussion will focus on results of operations, financial condition, capital resources and asset/liability management. Reference should be made to the Company's consolidated financial statements and footnotes thereto included in this Form 10-Q as well as to the Company's Annual Report on Form 10-K for the year ended December 31, 2010 for an understanding of the following discussion and analysis.  Operating results for the three and six month periods ended June 30, 2011 are not necessarily indicative of the results of the full year ending December 31, 2011 or any future period.

Forward-looking Statements

Certain statements in this filing and future filings by the Company with the Securities and Exchange Commission, in the Company’s press releases or other public or shareholder communications, contain forward-looking statements, as defined in the Private Securities Litigation Reform Act. These statements may be identified by the use of phrases such as “anticipate,” “believe,” “expect,” “forecasts,” “projects,” “could,” or other similar terms.   There are a number of factors, many of which are beyond the Company’s control, that could cause actual results to differ materially from those contemplated by 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: (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 affect 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 or tax laws, may adversely affect the businesses in which the Company is engaged; (6) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than the Company; (7) adverse changes may occur in the securities markets or with respect to inflation; (8) acts of war or terrorism; (9) the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; (10) internal control failures; and (11) the Company’s success in managing the risks involved in the foregoing.

The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made, and advises readers that various factors, including those described above and other factors discussed in the Company’s annual and quarterly reports previously filed with the Securities and Exchange Commission, could affect the Company’s financial performance and could cause the Company’s actual results or circumstances for future periods to differ materially from those anticipated or projected.

Unless required by law, the Company does not undertake, and specifically disclaims any obligations to publicly release any revisions to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

35

Critical Accounting Policies

Management of the Company considers the accounting policy relating to the allowance for loan and lease losses to be a critical accounting policy given the judgment in evaluating the level of the allowance required to cover credit losses inherent in the loan and lease portfolio and the material effect that such judgments can have on the results of operations. While management’s current evaluation of the allowance for loan and lease losses indicates that the allowance is adequate, under different conditions or assumptions, the allowance may need to be increased or decreased. For example, if historical loan and lease loss experience significantly changed or if current economic conditions deteriorated or improved, particularly in the Company’s primary market area, provisions for loan and lease losses may be increased or decreased to adjust the allowance. In addition, the assumptions and estimates relating to loss experience, ability to collect and economic conditions used in the internal reviews of the Company’s nonperforming loans and potential problem loans has a significant impact on the overall analysis of the adequacy of the allowance for loan and lease losses. While management has concluded that the current evaluation of collateral values is reasonable under the circumstances, if collateral valuations were significantly changed, the Company’s allowance for loan and lease policy may require increases or decreases in the provision for loan and lease losses.

Management of the Company considers the accounting policy relating to pension accounting to be a critical accounting policy. Management is required to make various assumptions in valuing its pension assets and liabilities. These assumptions include the expected rate of return on plan assets, the discount rate, and the rate of increase in future compensation levels. Changes to these assumptions could impact earnings in future periods. The Company takes into account the plan asset mix, funding obligations, and expert opinions in determining the various rates used to estimate pension expense. The Company also considers relevant indices and market interest rates in setting the appropriate discount rate. In addition, the Company reviews expected inflationary and merit increases to compensation in determining the rate of increase in future compensation levels.

Management of the Company considers the accounting policy relating to other-than-temporary impairment to be a critical accounting policy.  Management systematically evaluates certain assets for other-than-temporary declines in fair value, primarily investment securities.  Management considers historical values and current market conditions as a part of the assessment.  The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings and the amount of the total other-than-temporary impairment related to other factors is recognized in other comprehensive income, net of applicable taxes.

Overview

Significant factors management reviews to evaluate the Company’s operating results and financial condition include, but are not limited to:  net income and earnings per share, return on assets and equity, net interest margin, noninterest income, operating expenses, asset quality indicators, loan and deposit growth, capital management, liquidity and interest rate sensitivity, enhancements to customer products and services, technology advancements, market share and peer comparisons.  The following information should be considered in connection with the Company's results for the first six months of 2011:

· Net income for the six months ended June 30, 2011 was $29.0 million, up $0.6 million, or 2.0%, from the six months ended June 30, 2010.  Net income per diluted share for the six months ended June 30, 2011 was $0.84 per share, up $0.02 from the six months ended June 30, 2010.

· Net interest margin (on a fully taxable equivalent basis (“FTE”)) was 4.12% for the six months ended June 30, 2011 as compared to 4.17% for the same period in 2010.

36

· Capital ratios decreased slightly from December 31, 2010 to June 30, 2011 due in large part to the repurchase of approximately $21.2 million worth of stock during the six months ended June 30, 2011:

o Tier 1 Leverage ratio decreased from 9.16% to 9.13%

o Tier 1 Capital ratio decreased from 12.44% to 12.23%

o Total Risk-Based Capital Ratio decreased from 13.70% to 13.49%

· Past due loans as a percentage of total loans improved notably to 0.69% at June 30, 2011, as compared with 0.86% at December 31, 2010.

· Net charge-offs for the six months ended June 30, 2011 were $10.7 million, down from $11.8 million for the same period in 2010.

· The provision for loan and lease losses was $10.0 million for the six months ended June 30, 2011, down from $15.6 million for the same period in 2010.

· Annualized return on average assets was 1.08% for the six months ended June 30, 2011, up from 1.04% for the six months ended June 30, 2010.

· Noninterest income decreased slightly from $40.7 million for the six months ended June 30, 2010 to $40.0 million for the six months ended June 30, 2011.  Service charges on deposit accounts were down $1.9 million, or 15.3%, for the six months ended June 30, 2011 as compared with the six months ended June 30, 2010 as a result of the effects of implementing new regulations regarding overdraft fees in the third quarter of 2010.  This decrease was offset by increases in insurance and other financial services revenue, trust income, and ATM and debit card fees.

The following table depicts several annualized measurements of performance using U.S. GAAP net income that management reviews in analyzing the Company’s performance. Returns on average assets and average equity measure how effectively an entity utilizes its total resources and capital, respectively. Net interest margin, which is the net federal taxable equivalent (FTE) interest income divided by average earning assets, is a measure of an entity's ability to utilize its earning assets in relation to the cost of funding. Interest income for tax-exempt securities and loans is adjusted to a taxable equivalent basis using the statutory Federal income tax rate of 35%.

2011	First Quarter			Second Quarter			Six Months
Return on average assets (ROAA)		1.08	%		1.09	%		1.08	%
Return on average equity (ROAE)		10.78	%		10.86	%		10.82	%
Net Interest Margin		4.11	%		4.13	%		4.12	%
2010
Return on average assets (ROAA)		1.03	%		1.06	%		1.04	%
Return on average equity (ROAE)		11.05	%		11.09	%		11.07	%
Net Interest Margin		4.21	%		4.14	%		4.17	%

Net Interest Income

Net interest income is the difference between interest income on earning assets, primarily loans and securities, and interest expense on interest bearing liabilities, primarily deposits and borrowings.  Net interest income is affected by the interest rate spread, the difference between the yield on earning assets and cost of interest bearing liabilities, as well as the volumes of such assets and liabilities. Net interest income is one of the key determining factors in a financial institution’s performance as it is the principal source of earnings.

37

FTE net interest income decreased $0.7 million, or 1.4%, during the three months ended June 30, 2011, compared to the same period of 2010.  The decrease in FTE net interest income resulted primarily from a decrease in the yield on interest earning assets of 32 bp to 4.94% for the three months ended June 30, 2011 from 5.26% for the same period in 2010.  This decrease was partially offset by a decrease of 32 bp on the rate paid on interest bearing liabilities for the three months ended June 30, 2011 period as compared to the same period in 2010. The interest rate spread remained at 3.89% during the three months ended June 30, 2011 compared to the same period in 2010.  The net interest margin decreased by 1 bp to 4.13% for the three months ended June 30, 2011, compared with 4.14% for the same period in 2010.

For the three months ended June 30, 2011, total interest income decreased $4.3 million, or 6.7%, from the same period in 2010 primarily as a result of the decrease in the yield earned on earning assets.  The yield on securities available for sale decreased 59 bp to 3.11% for the three months ended June 30, 2011 from 3.70% for the three months ended June 30, 2010.  This decrease was due to the decreasing rate environment from June 30, 2010 to June 30, 2011 resulting in reinvestment of cash flows from maturing securities into lower yielding securities.  In addition, the yield on loans and leases decreased 27 bp to 5.65% for the three months ended June 30, 2011 from 5.92% for the three months ended June 30, 2010.  Average interest earning assets decreased approximately $55.0 million, or 1.1%, for the three months ended June 30, 2011 as compared to the same period in 2010, which also contributed to the decrease in total interest income.

For the three months ended June 30, 2011, total interest expense decreased $3.9 million, or 27.9%, from the three months ended June 30, 2010.  This decrease was due in large part to a decrease in average interest bearing liabilities of $230.5 million, or 5.6%, for the three months ended June 30, 2011 as compared with the three months ended June 30, 2010.  The lower average balance was due primarily to a decrease in average long-term debt for the three months ended June 30, 2011 as the Company paid down long term borrowings in the second half of 2010, in addition to lower total average interest bearing deposits, which decreased $81.8 million, or 2.4%, for the three months ended June 30, 2011 when compared to the same period in 2010.

The aforementioned decrease in total interest expense was also due to the decrease in the rate paid on average interest bearing liabilities from 1.37% for the three months ended June 30, 2010 to 1.05% for the three months ended June 30, 2011.  The rate paid on average interest bearing deposits decreased 21 bp from 0.95% for the three months ended June 30, 2010 to 0.74% for the same period in 2011.  The rate paid on average time deposits decreased from 2.12% for the three months ended June 30, 2010 to 1.85% for the three months ended June 30, 2011.  The rate paid on average money market deposit accounts decreased from 0.62% for the three months ended June 30, 2010 to 0.37% for the three months ended June 30, 2011.  Going forward, additional rate reductions on deposits could be more difficult as deposit rates are at or near their floors.

Total average borrowings, including trust preferred debentures, decreased $148.7 million, or 20.4%, for the three months ended June 30, 2011 compared with the same period in 2010, primarily due to the aforementioned pay down of long term borrowings.  Given the funds sold position, the Company elected to prepay FHLB borrowings during 2009 and 2010.  The rate paid on long-term debt increased slightly to 3.90% for the three months ended June 30, 2011 as compared to 3.88% for the three months ended June 30, 2010.  As a result of the decrease in the average balance, interest paid on long-term debt decreased $1.3 million, or 26.0%, for the three months ended June 30, 2011 as compared to the same period in 2010.

FTE net interest income decreased $2.6 million, or 2.5%, during the six months ended June 30, 2011, compared to the same period of 2010.  The decrease in FTE net interest income resulted primarily from a decrease in the yield on interest earning assets of 35 bp to 4.97% for the six months ended June 30, 2011 from 5.32% for the same period in 2010.  This decrease was partially offset by a decrease of 31 bp on the rate paid on interest bearing liabilities for the six months ended June 30, 2011 period as compared to the same period in 2010. The interest rate spread decreased 4 bp during the six months ended June 30, 2011 compared to the same period in 2010.  The net interest margin decreased by 5 bp to 4.12% for the six months ended June 30, 2011, compared with 4.17% for the same period in 2010.

38

For the six months ended June 30, 2011, total interest income decreased $9.8 million, or 7.5%, from the same period in 2010 primarily as a result of the decrease in the yield earned on earning assets.  The yield on securities available for sale decreased 74 bp to 3.12% for the six months ended June 30, 2011 from 3.86% for the six months ended June 30, 2010.  This decrease was due to the decreasing rate environment from June 30, 2010 to June 30, 2011 resulting in reinvestment of cash flows from maturing securities into lower yielding securities.  In addition, the yield on loans and leases decreased 27 bp to 5.69% for the six months ended June 30, 2011 from 5.96% for the six months ended June 30, 2010.  Average interest earning assets decreased approximately $60.7 million, or 1.2%, for the six months ended June 30, 2011 as compared to the same period in 2010, which also contributed to the decrease in total interest income.

For the six months ended June 30, 2011, total interest expense decreased $7.8 million, or 27.1%, from the six months ended June 30, 2010.  This decrease was due in large part to a decrease in average interest bearing liabilities of $238.4 million, or 5.8%, for the six months ended June 30, 2011 as compared with the six months ended June 30, 2010.  The lower average balance was due primarily to a decrease in average long-term debt for the six months ended June 30, 2011 as the Company paid down long term borrowings in the second half of 2010, in addition to lower total average interest bearing deposits, which decreased $84.0 million, or 2.5%, for the six months ended June 30, 2011 when compared to the same period in 2010.

The aforementioned decrease in total interest expense was also due to the decrease in the rate paid on average interest bearing liabilities from 1.40% for the six months ended June 30, 2010 to 1.09% for the six months ended June 30, 2011.  The rate paid on average interest bearing deposits decreased 22 bp from 0.98% for the six months ended June 30, 2010 to 0.76% for the same period in 2011.  The rate paid on average time deposits decreased from 2.16% for the six months ended June 30, 2010 to 1.87% for the six months ended June 30, 2011.  The rate paid on average money market deposit accounts decreased from 0.66% for the six months ended June 30, 2010 to 0.39% for the six months ended June 30, 2011.  Going forward, additional rate reductions on deposits could be more difficult as deposit rates are at or near their floors.

Total average borrowings, including trust preferred debentures, decreased $154.4 million, or 20.8%, for the six months ended June 30, 2011 compared with the same period in 2010, primarily due to the aforementioned pay down of long term borrowings.  Given the funds sold position, the Company elected to prepay FHLB borrowings during 2009 and 2010.  The rate paid on long-term debt increased slightly to 3.91% for the six months ended June 30, 2011 as compared to 3.89% for the six months ended June 30, 2010.  As a result of the decrease in the average balance, interest paid on long-term debt decreased $2.8 million, or 27.8%, for the six months ended June 30, 2011 as compared to the same period in 2010.

39

Average Balances and Net Interest Income

The following tables include the condensed consolidated average balance sheet, an analysis of interest income/expense and average yield/rate for each major category of earning assets and interest bearing liabilities on a taxable equivalent basis. Interest income for tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory Federal income tax rate of 35%.

Three Months ended June 30,
			2011							2010
	Average				Yield/			Average				Yield/
(dollars in thousands)	Balance		Interest		Rates			Balance		Interest		Rates
ASSETS
Short-term interest bearing accounts	$	128,799	$	111		0.35	%	$	106,784	$	75		0.28	%
Securities available for sale (1)(excluding unrealized gains or losses)		1,098,964		8,512		3.11	%		1,114,315		10,286		3.70	%
Securities held to maturity (1)		85,615		1,125		5.27	%		148,568		1,624		4.38	%
Investment in FRB and FHLB Banks		27,071		329		4.87	%		33,199		394		4.76	%
Loans and leases (2)		3,648,343		51,359		5.65	%		3,640,915		53,713		5.92	%
Total interest earning assets	$	4,988,792	$	61,436		4.94	%	$	5,043,781	$	66,092		5.26	%
Other assets		424,187							438,555
Total assets	$	5,412,979						$	5,482,336
LIABILITIES AND STOCKHOLDERS' EQUITY
Money market deposit accounts	$	1,091,001		1,009		0.37	%	$	1,130,124	$	1,743		0.62	%
NOW deposit accounts		672,345		627		0.37	%		689,079		770		0.45	%
Savings deposits		607,533		182		0.12	%		557,109		214		0.15	%
Time deposits		919,590		4,233		1.85	%		995,985		5,272		2.12	%
Total interest bearing deposits	$	3,290,469	$	6,051		0.74	%	$	3,372,297	$	7,999		0.95	%
Short-term borrowings		135,618		52		0.15	%		151,985		123		0.32	%
Trust preferred debentures		75,422		400		2.13	%		75,422		1,033		5.49	%
Long-term debt		369,459		3,591		3.90	%		501,757		4,850		3.88	%
Total interest bearing liabilities	$	3,870,968	$	10,094		1.05	%	$	4,101,461	$	14,005		1.37	%
Demand deposits		932,066							779,841
Other liabilities		68,596							79,402
Stockholders' equity		541,349							521,632
Total liabilities and stockholders' equity	$	5,412,979						$	5,482,336
Net interest income (FTE)				51,342							52,087
Interest rate spread						3.89	%						3.89	%
Net interest margin						4.13	%						4.14	%
Taxable equivalent adjustment				1,178							1,486
Net interest income			$	50,164						$	50,601

(1) Securities are shown at average amortized cost

(2) For purposes of these computations, nonaccrual loans are included in the average loan balances outstanding

40

Six Months ended June 30,
			2011							2010
	Average				Yield/			Average				Yield/
(dollars in thousands)	Balance		Interest		Rates			Balance		Interest		Rates
ASSETS
Short-term interest bearing accounts	$	135,019	$	180		0.27	%	$	115,354	$	142		0.25	%
Securities available for sale (1)(excluding unrealized gains or losses)		1,098,506		17,013		3.12	%		1,101,530		21,068		3.86	%
Securities held to maturity (1)		89,833		2,327		5.22	%		152,164		3,338		4.42	%
Investment in FRB and FHLB Banks		27,158		754		5.60	%		33,959		924		5.48	%
Loans and leases (2)		3,632,355		102,451		5.69	%		3,640,528		107,591		5.96	%
Total interest earning assets	$	4,982,871	$	122,725		4.97	%	$	5,043,535	$	133,063		5.32	%
Other assets		422,191							442,385
Total assets	$	5,405,062						$	5,485,920
LIABILITIES AND STOCKHOLDERS' EQUITY
Money market deposit accounts	$	1,088,456		2,125		0.39	%	$	1,112,154	$	3,639		0.66	%
NOW deposit accounts		685,171		1,261		0.37	%		705,538		1,591		0.45	%
Savings deposits		591,043		347		0.12	%		544,961		407		0.15	%
Time deposits		925,528		8,605		1.87	%		1,011,578		10,816		2.16	%
Total interest bearing deposits	$	3,290,198	$	12,338		0.76	%	$	3,374,231	$	16,453		0.98	%
Short-term borrowings		144,447		110		0.15	%		154,605		247		0.32	%
Trust preferred debentures		75,422		1,289		3.45	%		75,422		2,060		5.51	%
Long-term debt		369,717		7,162		3.91	%		513,974		9,915		3.89	%
Total interest bearing liabilities	$	3,879,784	$	20,899		1.09	%	$	4,118,232	$	28,675		1.40	%
Demand deposits		918,483							769,744
Other liabilities		67,006							80,518
Stockholders' equity		539,789							517,426
Total liabilities and stockholders' equity	$	5,405,062						$	5,485,920
Net interest income (FTE)				101,826							104,388
Interest rate spread						3.88	%						3.92	%
Net interest margin						4.12	%						4.17	%
Taxable equivalent adjustment				2,410							2,986
Net interest income			$	99,416						$	101,402

(1) Securities are shown at average amortized cost

(2) For purposes of these computations, nonaccrual loans are included in the average loan balances outstanding

41

The following table presents changes in interest income and interest expense attributable to changes in volume (change in average balance multiplied by prior year rate), changes in rate (change in rate multiplied by prior year volume), and the net change in net interest income. The net change attributable to the combined impact of volume and rate has been allocated to each in proportion to the absolute dollar amounts of change.

Analysis of Changes in Taxable Equivalent Net Interest Income
Three months ended June 30,
	Increase (Decrease)
	2011 over 2010
(in thousands)	Volume			Rate			Total
Short-term interest bearing accounts	$	17		$	19		$	36
Securities available for sale		(140	)		(1,634	)		(1,774	)
Securities held to maturity		(2,121	)		1,622			(499	)
Investment in FRB and FHLB Banks		(125	)		60			(65	)
Loans and leases		741			(3,095	)		(2,354	)
Total interest income		(1,628	)		(3,028	)		(4,656	)
Money market deposit accounts		(58	)		(676	)		(734	)
NOW deposit accounts		(18	)		(125	)		(143	)
Savings deposits		101			(133	)		(32	)
Time deposits		(385	)		(654	)		(1,039	)
Short-term borrowings		(12	)		(59	)		(71	)
Trust preferred debentures		-			(633	)		(633	)
Long-term debt		(1,444	)		185			(1,259	)
Total interest expense		(1,816	)		(2,095	)		(3,911	)
Change in FTE net interest income	$	188		$	(933	)	$	(745	)

Six months ended June 30,
	Increase (Decrease)
	2011 over 2010
(in thousands)	Volume			Rate			Total
Short-term interest bearing accounts	$	26		$	12		$	38
Securities available for sale		(58	)		(3,997	)		(4,055	)
Securities held to maturity		(2,390	)		1,379			(1,011	)
Investment in FRB and FHLB Banks		(223	)		53			(170	)
Loans and leases		(241	)		(4,899	)		(5,140	)
Total interest income		(2,886	)		(7,452	)		(10,338	)
Money market deposit accounts		(76	)		(1,438	)		(1,514	)
NOW deposit accounts		(45	)		(285	)		(330	)
Savings deposits		82			(142	)		(60	)
Time deposits		(873	)		(1,338	)		(2,211	)
Short-term borrowings		(15	)		(122	)		(137	)
Trust preferred debentures		-			(771	)		(771	)
Long-term debt		(2,877	)		124			(2,753	)
Total interest expense		(3,804	)		(3,972	)		(7,776	)
Change in FTE net interest income	$	918		$	(3,480	)	$	(2,562	)

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Noninterest Income

Noninterest income is a significant source of revenue for the Company and an important factor in the Company’s results of operations.  The following table sets forth information by category of noninterest income for the periods indicated:

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
(in thousands)
Service charges on deposit accounts	$	5,455	$	6,301	$	10,527	$	12,431
Insurance and other financial services revenue		5,025		4,700		10,798		9,945
Trust		2,258		1,909		4,294		3,675
Net securities gains		59		63		86		91
Bank owned life insurance		660		808		1,695		1,789
ATM and debit card fees		2,928		2,462		5,596		4,829
Retirement plan administration fees		2,268		2,595		4,439		4,985
Other		1,208		1,482		2,552		2,916
Total noninterest income	$	19,861	$	20,320	$	39,987	$	40,661

Noninterest income for the three months ended June 30, 2011 was $19.9 million, down slightly from $20.3 million for the same period in 2010.  Insurance and other financial services revenue increased approximately $0.3 million for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, due primarily to new business generated from markets where we have recently expanded and improved market conditions.  Trust revenue increased approximately $0.3 million for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, due primarily to the addition of new business generated from markets where we have recently expanded, and an increase in the fair market value of trust assets under administration.  ATM and debit card fees also increased approximately $0.5 million for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010.  These increases were offset by a decrease in service charges on deposit accounts of approximately $0.8 million, or 13.4%, for the three months ended June 30, 2011, as compared with the same period in 2010.  The decrease in service charges was the result of a decrease in overdraft activity due to the effects of implementing new regulations regarding overdraft fees in the third quarter of 2010.  In addition, retirement plan administration fees decreased by $0.3 million, or 12.6%, for the three months ended June 30, 2011 as compared to the same period in 2010.  We experienced increases in new business and market-based fees, yet these were offset by the loss of one client.

Noninterest income for the six months ended June 30, 2011 was $40.0 million, down slightly from $40.7 million for the same period in 2010.  Insurance and other financial services revenue increased approximately $0.9 million for the six months ended June 30, 2011, as compared to the six months ended June 30, 2010, due primarily to new business generated from markets where we have recently expanded and improved market conditions.  Trust revenue increased approximately $0.6 million for the six months ended June 30, 2011, as compared to the six months ended June 30, 2010, due primarily to the addition of new business generated from markets where we have recently expanded, and an increase in the fair market value of trust assets under administration.  ATM and debit card fees also increased approximately $0.8 million for the six months ended June 30, 2011, as compared to the six months ended June 30, 2010 due to an increase in activity.  These increases were offset by a decrease in service charges on deposit accounts of approximately $1.9 million, or 15.3%, for the six months ended June 30, 2011, as compared with the same period in 2010.  The decrease in service charges was the result of a decrease in overdraft activity due to the effects of implementing new regulations regarding overdraft fees in the third quarter of 2010.  In addition, retirement plan administration fees decreased by $0.5 million, or 11.0%, for the six months ended June 30, 2011 as compared to the same period in 2010.  We experienced increases in new business and market-based fees, yet these were offset by the loss of one client.

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Noninterest Expense

Noninterest expenses are also an important factor in the Company’s results of operations.  The following table sets forth the major components of noninterest expense for the periods indicated:

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
(in thousands)
Salaries and employee benefits	$	24,035	$	24,224	$	49,039	$	46,428
Occupancy		3,987		3,666		8,509		7,818
Equipment		2,180		2,041		4,370		4,141
Data processing and communications		3,117		3,265		6,031		6,483
Professional fees and outside services		2,088		2,191		4,154		4,475
Office supplies and postage		1,342		1,454		2,887		2,996
Amortization of intangible assets		771		780		1,504		1,561
Loan collection and other real estate owned		443		668		1,162		1,727
Advertising		1,033		825		1,601		1,492
FDIC expenses		965		1,560		2,461		3,113
Other		3,196		3,523		6,500		6,123
Total noninterest expense	$	43,157	$	44,197	$	88,218	$	86,357

Noninterest expense for the three months ended June 30, 2011 was $43.2 million, down from $44.2 million, or 2.4%, for the same period in 2010.  Federal Deposit Insurance Corporation (FDIC) expenses decreased approximately $0.6 million for the three months ended June 30, 2011 as compared to the same period in 2010, due to the FDIC redefining the deposit insurance assessment base.  In addition, loan collection and other real estate owned expenses decreased approximately $0.2 million for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010.  This decrease was due primarily to sales of certain properties classified as other real estate owned resulting in a reduction in maintenance expenses on properties owned by the Company.  Other operating expenses consisting of various items decreased approximately $0.3 million for the three months ended June 30, 2011, as compared to the same period in 2010 with no significant driver.  These decreases were partially offset by an increase in occupancy expenses of approximately $0.3 million for the three months ended June 30, 2011, as compared to the same period in 2010, primarily due to continued branch expansion.

Noninterest expense for the six months ended June 30, 2011 was $88.2 million, up from $86.4 million, or 2.2%, for the same period in 2010.  Salaries and employee benefits increased $2.6 million, or 5.6%, for the six months ended June 30, 2011, compared with the same period in 2010.  This increase was due to increases in full-time-equivalent employees, merit increases and other employee benefits.  In addition, occupancy expenses increased approximately $0.7 million for the six months ended June 30, 2011, as compared to the same period in 2010, primarily due to continued branch expansion and expenses related to the harsh winter.  Other operating expenses consisting of various items increased approximately $0.4 million for the six months ended June 30, 2011, as compared to the same period in 2010 with no significant driver.  These increases were partially offset by a decrease in data processing and communications expenses of approximately $0.5 million for the six months ended June 30, 2011, as compared to the six months ended June 30, 2010.  This decrease was due to the renegotiation of a data processing contract resulting in a decrease in processing fees.  FDIC expenses decreased approximately $0.7 million for the first six months of 2011 as compared to the same period in 2010 due to the aforementioned redefined deposit insurance assessment base.  In addition, loan collection and other real estate owned expenses decreased approximately $0.6 million for the six months ended June 30, 2011, as compared to the six months ended June 30, 2010.  This decrease was due primarily to sales of certain properties classified as other real estate owned resulting in a reduction in maintenance expenses on properties owned by the Company.

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Income Taxes

Income tax expense for the three month period ended June 30, 2011 was $6.2 million, up from $6.0 million for the same period in 2010.  Income tax expense for the six month period ended June 30, 2011 was $12.2 million, up from $11.7 million for the same period in 2010.  The effective tax rates were 29.7% for the three and six months ended June 30, 2011, as compared to 29.2% for the same periods in 2010.

ANALYSIS OF FINANCIAL CONDITION

Securities

The Company classifies its securities at date of purchase as available for sale, held to maturity or trading.  Held to maturity debt securities are those that the Company has the ability and intent to hold until maturity.  Held to maturity securities are recorded at amortized cost.  Available for sale securities are recorded at fair value.  Unrealized holding gains and losses, net of the related tax effect, on available for sale securities are excluded from earnings and are reported in stockholders’ equity as a component of accumulated other comprehensive income or loss.  For the securities that the Company does not have the intent to sell and will not be more likely than not required to sell, the amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings and the amount of the total other-than-temporary impairment related to other factors is recognized in other comprehensive income, net of applicable taxes.  Securities with an other-than-temporary impairment are generally placed on nonaccrual status.  Trading securities are recorded at fair value, with net unrealized gains and losses recognized currently in income.  Transfers of securities between categories are recorded at fair value at the date of transfer.

Average total earning securities decreased $78.3 million, or 6.2%, for the three months ended June 30, 2011 when compared to the same period in 2010.  The average balance of securities available for sale decreased $15.4 million, or 1.4%, for the three months ended June 30, 2011 when compared to the same period in 2010.  The average balance of securities held to maturity decreased $63.0 million, or 42.4%, for the three months ended June 30, 2011, compared to the same period in 2010.  This decrease was due primarily to the scheduled run-off of municipal securities in the held to maturity portfolio.  The average total securities portfolio represents 23.7% of total average earning assets for the three months ended June 30, 2011, down from 25.0% for the same period in 2010.

Average total earning securities decreased $65.4 million, or 5.2%, for the six months ended June 30, 2011 when compared to the same period in 2010.  The average balance of securities available for sale decreased $3.0 million, or 0.3%, for the six months ended June 30, 2011 when compared to the same period in 2010.  The average balance of securities held to maturity decreased $62.3 million, or 41.0%, for the six months ended June 30, 2011, compared to the same period in 2010.  This decrease was due primarily to the scheduled run-off of municipal securities in the held to maturity portfolio.  The average total securities portfolio represents 23.8% of total average earning assets for the six months ended June 30, 2011, down from 24.9% for the same period in 2010.

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The following table details the composition of securities available for sale, securities held to maturity and regulatory investments for the periods indicated:

	June 30, 2011			December 31, 2010
Mortgage-backed securities:
With maturities 15 years or less		24	%		16	%
With maturities greater than 15 years		3	%		4	%
Collateral mortgage obligations		28	%		24	%
Municipal securities		15	%		17	%
US agency notes		25	%		35	%
Other		5	%		4	%
Total		100	%		100	%

The Company’s mortgage backed securities, U.S. agency notes, and collateralized mortgage obligations are all “prime/conforming” and are guaranteed by Fannie Mae, Freddie Mac, Federal Home Loan Bank, Federal Farm Credit Banks, or Ginnie Mae (“GNMA”).  GNMA securities are considered equivalent to U.S. Treasury securities, as they are backed by the full faith and credit of the U.S. government.  Currently, there are no subprime mortgages in our investment portfolio.

During the six months ended June 30, 2011, the Company experienced a shift from U.S. agency notes to mortgage-backed securities.  As of June 30, 2011, mortgage-backed securities with maturities of 15 years or less comprised 24% of the securities portfolio as compared to 16% as of December 31, 2010.  As of June 30, 2011, US agency notes comprised 25% of the Company’s securities as compared to 35% as of December 31, 2010.

Loans and Leases

A summary of loans and leases, net of deferred fees and origination costs, by category for the periods indicated follows:

(In thousands)	June 30, 2011		December 31, 2010
Residential real estate mortgages	$	564,345	$	548,394
Commercial		623,832		577,731
Commercial real estate mortgages		834,524		844,458
Real estate construction and development		64,245		45,444
Agricultural and agricultural real estate mortgages		108,496		112,738
Consumer		910,976		905,563
Home equity		558,099		575,678
Total loans and leases	$	3,664,517	$	3,610,006

Total loans and leases increased by $54.5 million, or 1.5%, at June 30, 2011 from December 31, 2010, and represent approximately 68.7% of assets, as compared to 67.6% of total assets at December 31, 2010.  Commercial loans increased approximately $46.1 million, or 8.0%, from December 31, 2010 to June 30, 2011.  Real estate construction and development loans increased by approximately $18.8 million, or 41.4%, from December 31, 2010 to June 30, 2011, due primarily to the origination of two large construction loans in the first quarter of 2011.  These increases were slightly offset by a decrease in home equity loans of approximately $17.6 million, or 3.1%, from December 31, 2010 to June 30, 2011.

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Allowance for Loan and Lease Losses, Provision for Loan and Lease Losses, and Nonperforming Assets

The allowance for loan and lease losses is maintained at a level estimated by management to provide adequately for risk of probable losses inherent in the current loan and lease portfolio.  The adequacy of the allowance for loan and lease losses is continuously monitored using a methodology designed to ensure that the level of the allowance reasonably reflects the loan portfolio’s risk profile. It is evaluated to ensure that it is sufficient to absorb all reasonably estimable credit losses inherent in the current loan and lease portfolio.

Management considers the accounting policy relating to the allowance for loan and lease losses to be a critical accounting policy given the degree of judgment exercised in evaluating the level of the allowance required to cover credit losses in the portfolio and the material effect that such judgments can have on the consolidated results of operations.

For purposes of evaluating the adequacy of the allowance, the Company considers a number of significant factors that affect the collectibility of the portfolio.  For individually analyzed loans, these factors include estimates of loss exposure, which reflect the facts and circumstances that affect the likelihood of repayment of such loans as of the evaluation date.  For homogeneous pools of loans and leases, estimates of the Company’s exposure to credit loss reflect a thorough current assessment of a number of factors, which could affect collectibility. These factors include: past loss experience; the size, trend, composition, and nature of the loans and leases; changes in lending policies and procedures, including underwriting  standards and collection, charge-off and recovery practices;  trends experienced in nonperforming and delinquent loans and leases; current economic conditions in the Company’s market; portfolio concentrations that may affect loss experienced across one or more components of the portfolio; the effect of external factors such as competition, legal and regulatory requirements; and the experience, ability, and depth of lending management and staff.  In addition, various regulatory agencies, as an integral component of their examination process, periodically review the Company’s allowance for loan and lease losses.  Such agencies may require the Company to recognize additions to the allowance based on their judgment about information available to them at the time of their examination, which may not be currently available to management.

After a thorough consideration and validation of the factors discussed above, required additions or reductions to the allowance for loan and lease losses are made periodically by charges or credits to the provision for loan and lease losses.  These charges are necessary to maintain the allowance at a level which management believes is reasonably reflective of the overall inherent risk of probable loss in the portfolio.  While management uses available information to recognize losses on loans and leases, additions or reductions to the allowance may fluctuate from one reporting period to another.  These fluctuations are reflective of changes in risk associated with portfolio content and/or changes in management’s assessment of any or all of the determining factors discussed above.  The allowance for loan and lease losses to outstanding loans and leases decreased slightly to 1.92% as of June 30, 2011 as compared to 1.97% at December 31, 2010.  Management considers the allowance for loan losses to be adequate based on evaluation and analysis of the loan portfolio.

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The following table reflects changes to the allowance for loan and lease losses for the periods presented. The allowance is increased by provisions for losses charged to operations and is reduced by net charge-offs. Charge-offs are made when the ability to collect loan principal within a reasonable time becomes unlikely. Any recoveries of previously charged-off loans are credited directly to the allowance for loan and lease losses.

Allowance For Loan and Lease Losses
	Three months ended
(dollars in thousands)	June 30, 2011					June 30, 2010
Balance, beginning of period	$	69,934				$	70,150
Recoveries		1,131					1,503
Chargeoffs		(6,602	)				(7,703	)
Net chargeoffs		(5,471	)				(6,200	)
Provision for loan losses		6,021					6,350
Balance, end of period	$	70,484				$	70,300
Composition of Net Chargeoffs
Commercial and agricultural	$	(2,114	)	39	%	$	(2,600	)	42	%
Real estate mortgage		(411	)	8	%		(409	)	7	%
Consumer		(2,946	)	53	%		(3,191	)	51	%
Net chargeoffs	$	(5,471	)	100	%	$	(6,200	)	100	%
Annualized net chargeoffs  to average loans and leases		0.60	%				0.68	%
Allowance For Loan and Lease Losses
	Six months ended
(dollars in thousands)	June 30, 2011					June 30, 2010
Balance, beginning of period	$	71,234				$	66,550
Recoveries		2,128					2,745
Chargeoffs		(12,864	)				(14,588	)
Net chargeoffs		(10,736	)				(11,843	)
Provision for loan losses		9,986					15,593
Balance, end of period	$	70,484				$	70,300
Composition of Net Chargeoffs
Commercial and agricultural	$	(4,564	)	43	%	$	(4,905	)	41	%
Real estate mortgage		(509	)	5	%		(516	)	4	%
Consumer		(5,663	)	52	%		(6,422	)	55	%
Net chargeoffs	$	(10,736	)	100	%	$	(11,843	)	100	%
Annualized net chargeoffs to average loans and leases		0.60	%				0.66	%

Nonperforming assets consist of nonaccrual loans, loans 90 days or more past due and still accruing, restructured loans, OREO, and nonperforming securities. Loans are generally placed on nonaccrual when principal or interest payments become ninety days past due, unless the loan is well secured and in the process of collection. Loans may also be placed on nonaccrual when circumstances indicate that the borrower may be unable to meet the contractual principal or interest payments. OREO represents property acquired through foreclosure and is valued at the lower of the carrying amount or fair value, less any estimated disposal costs.  Nonperforming securities include securities which management believes are other-than-temporarily impaired, are carried at their estimated fair value and are not accruing interest.

48

Nonperforming Assets
	June 30,						December 31,
(Dollars in thousands)	2011						2010
Nonaccrual loans	Amount			%			Amount			%
Commercial and agricultural loans and real estate	$	21,028			52	%	$	24,402			57	%
Real estate mortgages		7,888			20	%		8,338			20	%
Consumer		7,243			18	%		8,765			21	%
Troubled debt restructured loans		4,032			10	%		962			2	%
Total nonaccrual loans		40,191			100	%		42,467			100	%
Loans 90 days or more past due and still accruing
Commercial and agricultural loans and  real estate		-			0	%		94			4	%
Real estate mortgages		186			13	%		919			40	%
Consumer		1,273			87	%		1,312			56	%
Total loans 90 days or more past due and still accruing		1,459			100	%		2,325			100	%
Total nonperforming loans		41,650						44,792
Other real estate owned (OREO)		1,034						901
Total nonperforming assets		42,684						45,693
Total nonperforming loans to total loans and leases		1.14	%					1.24	%
Total nonperforming assets to total assets		0.80	%					0.86	%
Total allowance for loan and lease losses to nonperforming loans		169.23	%					159.03	%

Loans over 60 days past due but not over 90 days past due were 0.16% of total loans as of June 30, 2011, compared to 0.15% of total loans as of December 31, 2010.  In addition to nonperforming loans, the Company has also identified approximately $92.7 million in potential problem loans at June 30, 2011 as compared to $82.2 million at December 31, 2010.  Potential problem loans are loans that are currently performing, but known information about possible credit problems of the borrowers causes management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms and which may result in classification of such loans as nonperforming at some time in the future.  Potential problem loans are typically defined as loans that are performing but are classified by the Company’s loan rating system as “substandard.”  At June 30, 2011, potential problem loans primarily consisted of commercial real estate and commercial and agricultural loans. Potential problem loans were up $13.4 million from March 31, 2011. This increase was due primarily to the migration of certain commercial credits to classified status during the second quarter of 2011, which management believes have been adequately reserved for in the allowance for loan and lease losses. Management cannot predict the extent to which economic conditions may worsen or other factors which may impact borrowers and the potential problem loans.  Accordingly, there can be no assurance that other loans will not become 90 days or more past due, be placed on nonaccrual, become restructured, or require increased allowance coverage and provision for loan losses.

The Company recorded a provision for loan and lease losses of $6.0 million during the second quarter of 2011 compared with $6.4 million during the second quarter of 2010.  Annualized net charge-offs to average loans and leases for the three months ended June 30, 2011 were 0.60%, compared with 0.68% for three months ended June 30, 2010.  The Company’s allowance for loan and lease losses decreased slightly to 1.92% of loans and leases at June 30, 2011, compared with 1.97% at December 31, 2010.  Specific reserves on impaired loans totaled $0.4 million at June 30, 2011 and $2.2 million at December 31, 2010.  General allocations increased slightly to $70.1 million at June 30, 2011 from $69.0 million at December 31, 2010.

The Company recorded a provision for loan and lease losses of $10.0 million during the six months ended June 30, 2011 compared with $15.6 million during the six months ended June 30, 2010.  Annualized net charge-offs to average loans and leases for the six months ended June 30, 2011 were 0.60%, compared with 0.66% for six months ended June 30, 2010.

49

Subprime mortgage lending, which has been the riskiest sector of the residential housing market, is not a market that the Company has ever actively pursued.  The market does not apply a uniform definition of what constitutes “subprime” lending.  Our reference to subprime lending relies upon the “Statement on Subprime Mortgage Lending” issued by the Office of Thrift Supervision and the other federal bank regulatory agencies, or the Agencies, on June 29, 2007, which further referenced the “Expanded Guidance for Subprime Lending Programs,” or the Expanded Guidance, issued by the Agencies by press release dated January 31, 2001.  In the Expanded Guidance, the Agencies indicated that subprime lending does not refer to individual subprime loans originated and managed, in the ordinary course of business, as exceptions to prime risk selection standards.  The Agencies recognize that many prime loan portfolios will contain such accounts.  The Agencies also excluded prime loans that develop credit problems after acquisition and community development loans from the subprime arena.  According to the Expanded Guidance, subprime loans are other loans to borrowers which display one or more characteristics of reduced payment capacity.  Five specific criteria, which are not intended to be exhaustive and are not meant to define specific parameters for all subprime borrowers and may not match all markets or institutions’ specific subprime definitions, are set forth, including having a FICO score of 660 or below.  Based upon the definition and exclusions described above, management believes that the Company is a prime lender.  Within the loan portfolio, there are loans that, at the time of origination, had FICO scores of 660 or below.  However, since the Company is a portfolio lender, it reviews all data contained in borrower credit reports and does not base underwriting decisions solely on FICO scores.  We believe the aforementioned loans, when made, were amply collateralized and otherwise conformed to our prime lending standards.  The Company has not originated Alt A loans or no interest loans.

Deposits

Total deposits were $4.1 billion at June 30, 2011, down $19.7 million, or 0.5%, from December 31, 2010.  Savings, NOW and money market accounts remained at $2.3 billion as of June 30, 2011 and December 31, 2010.  Time deposits decreased $35.0 million, or 3.8%, from December 31, 2010 to June 30, 2011.  Demand deposits increased by $18.6 million, or 2.0%, from December 31, 2010 to June 30, 2011.

Total average deposits for the three months ended June 30, 2011 increased $70.4 million, or 1.7%, from the same period in 2010.  The Company experienced a decrease in average money market accounts of $39.1 million, or 3.5%, for the three months ended June 30, 2011 compared to the same period in 2010.  Average NOW accounts decreased $16.7 million, or 2.4%, for the three months ended June 30, 2011 as compared to the same period in 2010.  Average savings accounts increased $50.4 million, or 9.1%, for the three month period ending June 30, 2011 as compared to the same period in 2010.  This increase in average savings accounts was primarily due to a transition from a run-off of time deposit accounts into savings accounts, due to a decline in interest rates offered on time deposits.  Average time deposits decreased $76.4 million, or 7.7%, for the three months ended June 30, 2011 from the same period in 2010.  Average demand deposit accounts increased $152.2 million, or 19.5%, for the three months ended June 30, 2011 as compared to the same period in 2010.  This was due primarily to an increasing customer base, as the Company continues to expand into new markets.

Total average deposits for the six months ended June 30, 2011 increased $64.7 million, or 1.6%, from the same period in 2010.  The Company experienced a decrease in average money market accounts of $23.7 million, or 2.1%, for the six months ended June 30, 2011 compared to the same period in 2010.  Average NOW accounts decreased $20.4 million, or 2.9%, for the six months ended June 30, 2011 as compared to the same period in 2010.  Average savings accounts increased $46.1 million, or 8.5%, for the six month period ending June 30, 2011 as compared to the same period in 2010.  This increase in average savings accounts was primarily due to the aforementioned transition from a run-off of time deposit accounts into savings accounts, due to a decline in interest rates offered on time deposits.  Average time deposits decreased $86.1 million, or 8.5%, for the six months ended June 30, 2011 from the same period in 2010.  Average demand deposit accounts increased $148.7 million, or 19.3%, for the six months ended June 30, 2011 as compared to the same period in 2010.  This was due primarily to an increasing customer base, as the Company continues to expand into new markets.

50

Borrowed Funds

The Company's borrowed funds consist of short-term borrowings and long-term debt. Short-term borrowings totaled $176.0 million at June 30, 2011 compared to $159.4 million at December 31, 2010.  Long-term debt was $370.4 million at June 30, 2011, as compared to $369.9 million at December 31, 2010.  For more information about the Company’s borrowing capacity and liquidity position, see “Liquidity Risk” below.

Capital Resources

Stockholders' equity of $535.3 million represented 10.03% of total assets at June 30, 2011, compared with $533.6 million, or 9.99% as of December 31, 2010.  Under a previously disclosed stock repurchase plan, the Company purchased 976,190 shares of its common stock during the six month period ended June 30, 2011, for a total of $21.2 million at an average price of $21.68 per share.  At June 30, 2011, there were no shares available for repurchase under this plan.

On July 25, 2011, the NBT Board of Directors authorized a new repurchase program for NBT to repurchase up to an additional 1,000,000 shares (approximately 3%) of its outstanding common stock, effective July 25, 2011, as market conditions warrant in open market and privately negotiated transactions.  The plan expires on December 31, 2013.

The Board of Directors considers the Company's earnings position and earnings potential when making dividend decisions.  The Company does not have a target dividend pay out ratio.

As the capital ratios in the following table indicate, the Company remained “well capitalized” at June 30, 2011 under applicable bank regulatory requirements.  Capital measurements are well in excess of regulatory minimum guidelines and meet the requirements to be considered well capitalized for all periods presented. Tier 1 leverage, Tier 1 capital and Total risk-based capital ratios have regulatory minimum guidelines of 3%, 4% and 8% respectively, with requirements to be considered well capitalized of 5%, 6% and 10%, respectively.

Capital Measurements	June 30, 2011			December 31, 2010
Tier 1 leverage ratio		9.13	%		9.16	%
Tier 1 capital ratio		12.23	%		12.44	%
Total risk-based capital ratio		13.49	%		13.70	%
Cash dividends as a percentage of net income		47.48	%		48.04	%
Per common share:
Book value	$	15.94		$	15.51
Tangible book value	$	11.93		$	11.67

Liquidity and Interest Rate Sensitivity Management

Market Risk

Interest rate risk is the primary market risk affecting the Company.  Other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of the Company’s business activities.  Interest rate risk is defined as an exposure to a movement in interest rates that could have an adverse effect on the Company’s net interest income.  Net interest income is susceptible to interest rate risk to the degree that interest bearing liabilities mature or reprice on a different basis than earning assets.  When interest bearing liabilities mature or reprice more quickly than earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income.  Similarly, when earning assets mature or reprice more quickly than interest bearing liabilities, falling interest rates could result in a decrease in net interest income.

51

In an attempt to manage the Company's exposure to changes in interest rates, management monitors the Company’s interest rate risk.  Management’s Asset Liability Committee (“ALCO”) meets monthly to review the Company’s interest rate risk position and profitability, and to recommend strategies for consideration by the Board of Directors.  Management also reviews loan and deposit pricing and the Company’s securities portfolio, formulates investment and funding strategies, and oversees the timing and implementation of transactions to assure attainment of the Board’s objectives in the most effective manner. Notwithstanding the Company’s interest rate risk management activities, the potential for changing interest rates is an uncertainty that can have an adverse effect on net income.

In adjusting the Company’s asset/liability position, the Board and management attempt to manage the Company’s interest rate risk while minimizing net interest margin compression.  At times, depending on the level of general interest rates, the relationship between long- and short-term interest rates, market conditions and competitive factors, the Board and management may determine to increase the Company’s interest rate risk position somewhat in order to increase its net interest margin.  The Company’s results of operations and net portfolio values remain vulnerable to changes in interest rates and fluctuations in the difference between long- and short-term interest rates.  Assuming interest rates remain at or near current historical lows, net interest margin will continue to experience compression.  Additional rate reductions on deposits are becoming more difficult as deposit rates are at or near their floors, and with asset yields continuing to reprice at lower rates, this could result in additional margin pressure as well as a decrease in net interest income.

The primary tool utilized by ALCO to manage interest rate risk is a balance sheet/income statement simulation model (interest rate sensitivity analysis).  Information such as principal balance, interest rate, maturity date, cash flows, next repricing date (if needed), and current rates is uploaded into the model to create an ending balance sheet.  In addition, ALCO makes certain assumptions regarding prepayment speeds for loans and leases and mortgage related investment securities along with any optionality within the deposits and borrowings.

The model is first run under an assumption of a flat rate scenario (i.e. no change in current interest rates) with a static balance sheet over a 12-month period.  Two additional models are run with static balance sheets: (1) a gradual increase of 200 bp, and (2) a gradual decrease of 100 bp taking place over a 12-month period. Under these scenarios, assets subject to prepayments are adjusted to account for faster or slower prepayment assumptions.  Any investment securities or borrowings that have callable options embedded into them are handled accordingly based on the interest rate scenario. The resulting changes in net interest income are then measured against the flat rate scenario.

In the declining rate scenario, net interest income is projected to decrease when compared to the forecasted net interest income in the flat rate scenario through the simulation period. The decrease in net interest income is a result of earning assets repricing downward at a faster rate than interest bearing liabilities. The inability to effectively lower deposit rates will likely reduce or eliminate the benefit of lower interest rates. In the rising rate scenarios, net interest income is projected to experience a decline from the flat rate scenario. Net interest income is projected to remain at lower levels than in a flat rate scenario through the simulation period primarily due to a lag in assets repricing while funding costs increase. The potential impact on earnings is dependent on the ability to lag deposit repricing. If short-term rates continue to increase, the Company expects competitive pressures will likely lead to core deposit pricing increases, which will likely continue compression of the net interest margin.

52

Net interest income for the next 12 months in the + 200/- 100 bp scenarios, as described above, is within the internal policy risk limits of not more than a 7.5% change in net interest income. The following table summarizes the percentage change in net interest income in the rising and declining rate scenarios over a 12-month period from the forecasted net interest income in the flat rate scenario using the June 30, 2011 balance sheet position:

Interest Rate Sensitivity Analysis
Change in interest rates		Percent change in
(in bp points)		net interest income
	+200	(2.18%)
	-100	(1.03%)

Liquidity Risk

Liquidity involves the ability to meet the cash flow requirements of customers who may be depositors wanting to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs. The ALCO is responsible for liquidity management and has developed guidelines which cover all assets and liabilities, as well as off balance sheet items that are potential sources or uses of liquidity.  Liquidity policies must also provide the flexibility to implement appropriate strategies and tactical actions. Requirements change as loans and leases grow, deposits and securities mature, and payments on borrowings are made. Liquidity management includes a focus on interest rate sensitivity management with a goal of avoiding widely fluctuating net interest margins through periods of changing economic conditions.

The primary liquidity measurement the Company utilizes is called the Basic Surplus, which captures the adequacy of its access to reliable sources of cash relative to the stability of its funding mix of average liabilities.  Basic Surplus is calculated by subtracting short-term liabilities from liquid assets.  This approach recognizes the importance of balancing levels of cash flow liquidity from short- and long-term securities with the availability of dependable borrowing sources which can be accessed when necessary.  At June 30, 2011, the Company’s Basic Surplus measurement was 11.3% of total assets or $604 million as compared to the December 31, 2010 Basic Surplus of 9.7%, and was above the Company’s minimum of 5% or $267 million set forth in its liquidity policies.  Since March 2009, the Company has been in a Fed Funds sold position as a result of excess liquidity.

This Basic Surplus approach enables the Company to adequately manage liquidity from both operational and contingency perspectives. By tempering the need for cash flow liquidity with reliable borrowing facilities, the Company is able to operate with a more fully invested and, therefore, higher interest income generating securities portfolio. The makeup and term structure of the securities portfolio is, in part, impacted by the overall interest rate sensitivity of the balance sheet. Investment decisions and deposit pricing strategies are impacted by the liquidity position.

The Company’s primary source of funds is the Bank. Certain restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends. The approval of the Office of Comptroller of the Currency (OCC) is required to pay dividends when a bank fails to meet certain minimum regulatory capital standards or when such dividends are in excess of a subsidiary bank’s earnings retained in the current year plus retained net profits for the preceding two years (as defined in the regulations). At June 30, 2011, approximately $85.1 million of the total stockholders’ equity of the Bank was available for payment of dividends to the Company without approval by the OCC.  The Bank’s ability to pay dividends is also subject to the Bank being in compliance with regulatory capital requirements. The Bank is currently in compliance with these requirements. Under the General Corporation Law of the State of Delaware, the Company may declare and pay dividends either out of its surplus or, in case there is no surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.

At June 30, 2011 and December 31, 2010, FHLB advances outstanding totaled $343 million.  The Bank is a member of the FHLB system and had additional borrowing capacity from the FHLB of approximately $322 million at June 30, 2011 and $284 million at December 31, 2010.  In addition, unpledged securities could have been used to increase borrowing capacity at the FHLB by an additional $352 million at June 30, 2011, or used to collateralize other borrowings, such as repurchase agreements.  At June 30, 2011 the Bank also had additional borrowing capacity from unused collateral at the Federal Reserve of $462 million.

53

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (ASU) No. 2011-05 "Comprehensive Income (Topic 220) - Presentation of Comprehensive Income." ASU 2011-05 requires that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income.  ASU 2011-05 is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2011.  Early adoption is permitted.  The Company adopted ASU 2011-05 during the second quarter of 2011 and there was minimal impact on our comprehensive income presentation.

In May 2011, the FASB issued ASU No. 2011-04 "Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs."  ASU 2011-04 changes the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements.  Consequently, the amendments in this update result in common fair value measurement and disclosure requirements in GAAP and IFRSs (International Financial Reporting Standards).  ASU 2011-04 is effective prospectively during interim and annual periods beginning on or after December 15, 2011.  Early application by public entities is not permitted.  The Company is assessing the impact of ASU 2011-04 on its fair value disclosures.

In April 2011, the FASB issued ASU No. 2011-03 "Transfers and Servicing (Topic 860) - Reconsideration of Effective Control for Repurchase Agreement."  ASU 2011-03 removes from the assessment of effective control the criterion relating to the transferor's ability to repurchase or redeem financial assets on substantially the agreed terms, even in the event of default by the transferee.  ASU 2011-03 is effective for the first interim or annual period beginning on or after December 15, 2011.  The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date.  Early adoption is not permitted.  The Company believes that the adoption of the standard will not have a significant impact on the Company's consolidated financial statements.

In April 2011, the FASB issued ASU No. 2011-02, “A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring (Topic 310)”, was issued in April 2011.  The amendments in this Update provide guidance in evaluating whether a restructuring constitutes a troubled debt restructuring.  A creditor must separately conclude that both of the following exist: 1. The restructuring constitutes a concession. 2. The debtor is experiencing financial difficulties. The amendments to Topic 310 clarify the guidance on a creditor’s evaluation of whether it has granted a concession as follows: 1. If a debtor does not otherwise have access to funds at a market rate for debt with similar risk characteristics as the restructured debt, the restructuring would be considered to be at a below-market rate, which may indicate that the creditor has granted a concession. In that circumstance, a creditor should consider all aspects of the restructuring in determining whether it has granted a concession. If a creditor determines that it has granted a concession, the creditor must make a separate assessment about whether the debtor is experiencing financial difficulties to determine whether the restructuring constitutes a troubled debt restructuring. 2. A temporary or permanent increase in the contractual interest rate as a result of a restructuring does not preclude the restructuring from being considered a concession because the new contractual interest rate on the restructured debt could still be below the market interest rate for new debt with similar risk characteristics. In such situations, a creditor should consider all aspects of the restructuring in determining whether it has granted a concession.

54

If a creditor determines that it has granted a concession, the creditor must make a separate assessment about whether the debtor is experiencing financial difficulties to determine whether the restructuring constitutes a troubled debt restructuring. 3. A restructuring that results in a delay in payment that is insignificant is not a concession. However, an entity should consider various factors in assessing whether a restructuring resulting in a delay in payment is insignificant. The amendments include examples illustrating the assessment of whether a restructuring results in a delay in payment that is insignificant. The amendments to Topic 310 also clarify the guidance on a creditor’s evaluation of whether a debtor is experiencing financial difficulties as follows:  A creditor may conclude that a debtor is experiencing financial difficulties, even though the debtor is not currently in payment default. A creditor should evaluate whether it is probable that the debtor would be in payment default on any of its debt in the foreseeable future without the modification. In addition, the amendments to Topic 310 clarify that a creditor is precluded from using the effective interest rate test in the debtor’s guidance on restructuring of payables when evaluating whether a restructuring constitutes a troubled debt restructuring.  The amendments in this Update are effective for the first interim or annual period beginning on or after June 15, 2011 and should be applied retrospectively to the beginning of the annual period of adoption.  The amendments in this Update require disclosures consistent with its effective date.  The implementation of this amendment did not have a material effect on the Company’s financial statements, but did have a significant effect on disclosures in our interim and annual reports.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information called for by Item 3 is contained in the Liquidity and Interest Rate Sensitivity Management section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 4.  CONTROLS AND PROCEDURES

The  Company's  management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of  the  Company's  disclosure  controls  and  procedures  (as  defined  in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2011, the Company's disclosure controls and procedures were effective.

There  were  no changes made in the Company's internal control over financial  reporting  that  occurred  during  the  Company's  most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

55

PART II.  OTHER INFORMATION

Item 1 – LEGAL PROCEEDINGS

There are no material legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of their property is subject.

Item 1A – RISK FACTORS

Management of the Company does not believe there have been any material changes in the risk factors that were disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed with the Securities and Exchange Commission on March 1, 2011.

Item 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Not applicable

(b) Not applicable

(c) The table below sets forth the information with respect to purchases made by the Company (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during the quarter ended June 30, 2011:

Period	Total Number of Shares Purchased		Average Price Paid Per Share			Total Number of Shares Purchased as Part of Publicly Announced Plans		Maximum Number of Shares That May Yet be Purchased Under The Plans (1)
1/1/11 - 1/31/11		-		$	-		-		976,190
2/1/11 - 2/28/11		-			-		-		976,190
3/1/11 - 3/31/11		107,871			21.96		107,871		868,319
4/1/11 - 4/30/11		21,050			22.29		21,050		847,269
5/1/11 - 5/31/11		306,756			21.90		306,756		540,513
6/1/11 - 6/30/11		540,513			21.47		540,513		-
Total		976,190		$	21.68		976,190		-

1. Under a previously disclosed stock repurchase plan, the Company purchased 976,190 shares of its common stock during the six month period ended June 30, 2011, for a total of $21.2 million at an average price of $21.68 per share.  At June 30, 2011, there were no shares available for repurchase under this plan.  On July 25, 2011, the NBT Board of Directors authorized a new repurchase program for NBT to repurchase up to an additional 1,000,000 shares (approximately 3%) of its outstanding common stock, effective July 25, 2011, as market conditions warrant in open market and privately negotiated transactions.  The plan expires on December 31, 2013.

Item 3 – DEFAULTS UPON SENIOR SECURITIES

None

Item 4 – [REMOVED AND RESERVED]

None

56

Item 5 – OTHER INFORMATION

None

Item 6 – EXHIBITS

3.1   Certificate of Incorporation of NBT Bancorp Inc. as amended through July 23, 2001 (filed as Exhibit 3.1 to Registrant's Form 10-K for the year ended December 31, 2008, filed on March 2, 2009 and incorporated herein by reference).

3.2   By-laws of NBT Bancorp Inc. as amended and restated through July 23, 2001 (filed as Exhibit 3.2 to Registrant's Form 10-K for the year ended December 31, 2008, filed on March 2, 2009 and incorporated herein by reference).

3.3   Certificate of Designation of the Series A Junior Participating Preferred Stock (filed as Exhibit A to Exhibit 4.1 of the Registration's Form 8-K, file Number 0-14703, filed on November 18, 2004, and incorporated herein by reference).

4.1   Specimen common stock certificate for NBT's common stock (filed as exhibit 4.3 to the Registrant's Amendment No. 1 to Registration Statement on Form S-4 filed on December 27, 2005 and incorporated herein by reference).

4.2   Rights Agreement, dated as of November 15, 2004, between NBT Bancorp Inc. and Registrar and Transfer Company, as Rights Agent (filed as Exhibit 4.1 to Registrant's Form 8-K, file number 0-14703, filed on November 18, 2004, and incorporated by reference herein).

31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Written Statement of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Written Statement of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

57

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, this 9th day of August 2011.

	NBT BANCORP INC.
By:	/s/ Michael J. Chewens
	Michael J. Chewens, CPA
	Senior Executive Vice President
	Chief Financial Officer

58

EXHIBIT INDEX

3.1   Certificate of Incorporation of NBT Bancorp Inc. as amended through July 23, 2001 (filed as Exhibit 3.1 to Registrant's Form 10-K for the year ended December 31, 2008, filed on March 2, 2009 and incorporated herein by reference).

3.2   By-laws of NBT Bancorp Inc. as amended and restated through July 23, 2001 (filed as Exhibit 3.2 to Registrant's Form 10-K for the year ended December 31, 2008, filed on March 2, 2009 and incorporated herein by reference).

3.3   Certificate of Designation of the Series A Junior Participating Preferred Stock (filed as Exhibit A to Exhibit 4.1 of the Registration's Form 8-K, file Number 0-14703, filed on November 18, 2004, and incorporated herein by reference).

4.1  Specimen common stock certificate for NBT's common stock (filed as exhibit 4.3 to the Registrant's Amendment No. 1 to Registration Statement on Form S-4 filed on December 27, 2005 and incorporated herein by reference).

4.2   Rights Agreement, dated as of November 15, 2004, between NBT Bancorp Inc. and Registrar and Transfer Company, as Rights Agent (filed as Exhibit 4.1 to Registrant's Form 8-K, file number 0-14703, filed on November 18, 2004, and incorporated by reference herein).

31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Written Statement of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Written Statement of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 59

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Martin A. Dietrich, certify that:

1. I have reviewed this quarterly report on Form 10-Q of NBT Bancorp Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over

financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 9, 2011
By:	/s/ Martin A. Dietrich
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael J. Chewens, certify that:

1. I have reviewed this quarterly report on Form 10-Q of NBT Bancorp Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over

financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 9, 2011
By:	/s/ Michael J. Chewens
	Senior Executive Vice President and
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Written Statement of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Executive Officer of NBT Bancorp Inc. (the "Company"), hereby certifies that to his knowledge on the date hereof:

(a) the Form 10-Q of the Company for the Quarterly Period Ended June 30, 2011, filed on the date hereof with the Securities and Exchange Commission (the "Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Martin A. Dietrich

Martin A. Dietrich

Chief Executive Officer

August 9, 2011

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to NBT Bancorp Inc. and will be retained by NBT Bancorp Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

Written Statement of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Financial Officer of NBT Bancorp Inc. (the "Company"), hereby certifies that to his knowledge on the date hereof:

(a)  the  Form 10-Q of the Company for the Quarterly Period Ended June 30, 2011,  filed  on  the  date  hereof  with  the Securities and Exchange Commission  (the  "Report"),  fully  complies  with the requirements of Section  13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b)  the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael J. Chewens

Michael J. Chewens

Senior Executive Vice President and Chief Financial Officer

August 9, 2011

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to NBT Bancorp Inc. and will be retained by NBT Bancorp Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML



Consolidated Balance Sheets (Unaudited) Parenthetical (USD $) In Thousands, except Share data	Jun. 30, 2011	Dec. 31, 2010
Assets
Securities held to maturity fair value	$ 78,357	$ 98,759
Stockholders' equity
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	2,500,000	2,500,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	38,035,539	38,035,539
Common stock in treasury, at cost shares (in shares)	4,447,490	3,532,732

XML



Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Interest, fee, and dividend income
Interest and fees on loans and leases	$ 51,126	$ 53,503	$ 101,986	$ 107,195
Securities available for sale	7,947	9,556	15,851	19,602
Securities held to maturity	745	1,078	1,545	2,215
Other	440	469	933	1,065
Total interest, fee, and dividend income	60,258	64,606	120,315	130,077
Interest expense
Deposits	6,051	7,999	12,338	16,453
Short-term borrowings	52	123	110	247
Long-term debt	3,591	4,850	7,162	9,915
Trust preferred debentures	400	1,033	1,289	2,060
Total interest expense	10,094	14,005	20,899	28,675
Net interest income	50,164	50,601	99,416	101,402
Provision for loan and lease losses	6,021	6,350	9,986	15,593
Net interest income after provision for loan and lease losses	44,143	44,251	89,430	85,809
Noninterest income
Service charges on deposit accounts	5,455	6,301	10,527	12,431
Insurance and other financial services revenue	5,025	4,700	10,798	9,945
Trust	2,258	1,909	4,294	3,675
Net securities gains	59	63	86	91
Bank owned life insurance	660	808	1,695	1,789
ATM and debit card fees	2,928	2,462	5,596	4,829
Retirement plan administration fees	2,268	2,595	4,439	4,985
Other	1,208	1,482	2,552	2,916
Total noninterest income	19,861	20,320	39,987	40,661
Noninterest expense
Salaries and employee benefits	24,035	24,224	49,039	46,428
Occupancy	3,987	3,666	8,509	7,818
Equipment	2,180	2,041	4,370	4,141
Data processing and communications	3,117	3,265	6,031	6,483
Professional fees and outside services	2,088	2,191	4,154	4,475
Office supplies and postage	1,342	1,454	2,887	2,996
Amortization of intangible assets	771	780	1,504	1,561
Loan collection and other real estate owned	443	668	1,162	1,727
Advertising	1,033	825	1,601	1,492
FDIC expenses	965	1,560	2,461	3,113
Other	3,196	3,523	6,500	6,123
Total noninterest expense	43,157	44,197	88,218	86,357
Income before income tax expense	20,847	20,374	41,199	40,113
Income tax expense	6,192	5,950	12,237	11,713
Net income	$ 14,655	$ 14,424	$ 28,962	$ 28,400
Earnings per share
Basic	$ 0.43	$ 0.42	$ 0.85	$ 0.83
Diluted	$ 0.43	$ 0.42	$ 0.84	$ 0.82

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Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2011

Employee Benefit Plans [Abstract]

Components of Net Periodic Pension Benefits and Other Benefit Costs

	Pension Benefits		Other Benefits
	Three months ended June 30,		Three months ended June 30,
Components of net periodic benefit cost:	2011	2010	2011	2010
Service cost	$               668	$            462	$                 5	$                  5
Interest cost	874	873	57	53
Expected return on plan assets	(1,914)	(1,778)	-	-
Net amortization	407	401	9	(8)
Total cost (benefit)	$                 35	$            (42)	$               71	$                50
	Pension Benefits		Other Benefits
	Six months ended June 30,		Six months ended June 30,
Components of net periodic benefit cost:	2011	2010	2011	2010
Service cost	$            1,335	$            924	$               10	$                10
Interest cost	1,747	1,744	114	106
Expected return on plan assets	(3,828)	(3,555)	-	-
Net amortization	813	802	18	(16)
Total cost (benefit)	$                 67	$            (85)	$             142	$               100

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Document And Entity Information (USD $)	6 Months Ended
	Jun. 30, 2011
Entity Registrant Name	NBT BANCORP INC.
Entity Central Index Key	0000790359
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float	$ 673,845,411
Entity Common Stock, Shares Outstanding	33,594,285
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011

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Securities (Tables)

6 Months Ended

Jun. 30, 2011

Securities [Abstract]

Schedule of securities available for sale

(In thousands)	Amortized cost	Unrealized gains	Unrealized losses	Estimated fair value
June 30, 2011
U.S. Treasury	$          81,171	$                708	$                   66	$                 81,813
Federal Agency	239,815	1,184	625	240,374
State & municipal	105,449	3,556	210	108,795
Mortgage-backed	326,777	12,713	167	339,323
Collateralized mortgage obligations	348,812	6,555	227	355,140
Corporate	20,002	245	-	20,247
Other securities	8,920	2,067	-	10,987
Total securities available for sale	$    1,130,946	$           27,028	$             1,295	$            1,156,679
December 31, 2010
U.S. Treasury	$           91,338	$                 424	$                  482	$                   91,280
Federal Agency	350,641	1,905	2,796	349,750
State & municipal	113,821	1,771	655	114,937
Mortgage-backed	233,861	11,666	719	244,808
Collateralized mortgage obligations	293,565	6,574	2,251	297,888
Corporate	20,005	484	-	20,489
Other securities	8,059	2,162	5	10,216
Total securities available for sale	$      1,111,290	$            24,986	$               6,908	$              1,129,368

Schedule of securities held to maturity

(In thousands)	Amortized cost	Unrealized gains	Unrealized losses	Estimated fair value
June 30, 2011
Mortgage-backed	$        1,587	$           207	$                -	$        1,794
State & municipal	75,291	1,272	-	76,563
Total securities held to maturity	$      76,878	$        1,479	$                -	$      78,357
December 31, 2010
Mortgage-backed	$         1,719	$            200	$                -	$         1,919
State & municipal	95,591	1,249	-	96,840
Total securities held to maturity	$        97,310	$         1,449	$                -	$        98,759

Schedule of investment securities with unrealized losses

	Less than 12 months			12 months or longer			Total
Security Type:	Fair Value	Unrealized losses	Number of Positions	Fair Value	Unrealized losses	Number of Positions	Fair Value	Unrealized losses	Number of Positions
June 30, 2011
U.S. Treasury	$ 10,170	$      (66)	1	$       -	$        -	-	$ 10,170	$      (66)	1
Federal agency	89,252	(625)	6	-	-	-	89,252	(625)	6
State & municipal	397	(2)	1	5,445	(208)	12	5,842	(210)	13
Mortgage-backed	43,314	(167)	3	-	-	-	43,314	(167)	3
Collateralized mortgage obligations	47,328	(227)	4	-	-	-	47,328	(227)	4
Other securities	-	-	-	-	-	-	-	-	-
Total securities with     unrealized losses	$190,461	$   (1,087)	15	$   5,445	$      (208)	12	$195,906	$   (1,295)	27
December 31, 2010
U.S. Treasury	$   40,741	$        (482)	4	$           -	$            -	-	$ 40,741	$      (482)	4
Federal agency	147,012	(2,796)	12	-	-	-	147,012	(2,796)	12
State & municipal	22,273	(317)	31	7,533	(338)	19	29,806	(655)	50
Mortgage-backed	44,340	(719)	3	-	-	-	44,340	(719)	3
Collateralized mortgage obligations	72,595	(2,251)	3	-	-	-	72,595	(2,251)	3
Other securities	95	(5)	1	-	-	-	95	(5)	1
Total securities with unrealized losses	$327,056	$   (6,570)	54	$   7,533	$      (338)	19	$334,589	$   (6,908)	73

Schedule of contractual maturities of debt securities

(In thousands)	Amortized cost	Estimated fair value
Debt securities classified as available for sale
Within one year	$33,084	$33,420
From one to five years	311,206	312,850
From five to ten years	265,352	275,182
After ten years	512,384	524,240
	$1,122,026	$1,145,692
Debt securities classified as held to maturity
Within one year	$28,556	$28,604
From one to five years	35,870	36,942
From five to ten years	8,660	8,812
After ten years	3,792	3,999
	$76,878	$78,357

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Use of Estimates

6 Months Ended

Jun. 30, 2011

Use of Estimates [Abstract]

Use of Estimates

Note 3.                                Use of Estimates

Preparing financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period, as well as the disclosures provided. Actual results could differ from those estimates. Estimates associated with the allowance for loan and lease losses, other real estate owned ("OREO"), income taxes, pension expense, fair values of financial instruments and status of contingencies are particularly susceptible to material change in the near term.

The allowance for loan and lease losses is the amount which, in the opinion of management, is necessary to absorb probable losses inherent in the loan and lease portfolio. The allowance is determined based upon numerous considerations, including local and national economic conditions, the growth and composition of the loan portfolio with respect to the mix between the various types of loans and their related risk characteristics, a review of the value of collateral supporting the loans, comprehensive reviews of the loan portfolio by the independent loan review staff and management, as well as consideration of volume and trends of delinquencies, nonperforming loans, and loan charge-offs.  As a result of the review of these factors and historical and current indicators, required additions or reductions to the allowance for loan and lease losses are made periodically by charges or credits to the provision for loan and lease losses.

The allowance for loan and lease losses related to impaired loans is based on discounted cash flows using the loan's initial effective interest rate or the fair value of the collateral for certain loans where repayment of the loan is expected to be provided solely by the underlying collateral (collateral dependent loans). The Company's impaired loans are generally collateral dependent loans. The Company considers the estimated cost to sell, on a discounted basis, when determining the fair value of collateral in the measurement of impairment if those costs are expected to reduce the cash flows available to repay or otherwise satisfy the loans.

Management believes that the allowance for loan and lease losses is adequate. While management uses available information to recognize loan and lease losses, future additions or reductions to the allowance for loan and lease losses may be necessary based on changes in economic conditions or changes in the values of properties securing loans in the process of foreclosure. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan and lease losses. Such agencies may require the Company to recognize additions to the allowance for loan and lease losses based on their judgments about information available to them at the time of their examination which may not be currently available to management.  In determining that we will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreements, we consider factors such as payment history and changes in the financial condition of individual borrowers, local economic conditions, historical loss experience and the conditions of the various markets in which the collateral may be liquidated.

OREO consists of properties acquired through foreclosure or by acceptance of a deed in lieu of foreclosure. These assets are recorded at the lower of fair value of the asset acquired less estimated costs to sell or "cost" (cost is defined as the fair value less costs to sell at initial foreclosure). At the time of foreclosure, or when foreclosure occurs in-substance, the excess, if any, of the loan over the fair value of the assets received, less estimated selling costs, is charged to the allowance for loan and lease losses and any subsequent valuation write-downs are charged to other expense. Operating costs associated with the properties are charged to expense as incurred. Gains on the sale of OREO are included in income when title has passed and the sale has met the minimum down payment requirements prescribed by U.S. GAAP.

Income taxes are accounted for under the asset and liability method. The Company files consolidated tax returns on the accrual basis. Deferred income taxes are recognized for the future tax consequences and benefits attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the available carryback period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Based on available carrybacks and expected future income, gross deferred tax assets will ultimately be realized and a valuation allowance was not deemed necessary at June 30, 2011 or December 31, 2010. The effect of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date.  Uncertain tax positions are recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities.  Tax positions that meet the more than likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement.

Management is required to make various assumptions in valuing its pension assets and liabilities. These assumptions include the expected long-term rate of return on plan assets, the discount rate, and the rate of increase in future compensation levels. Changes to these assumptions could impact earnings in future periods. The Company takes into account the plan asset mix, funding obligations, and expert opinions in determining the various assumptions used to compute pension expense. The Company also considers relevant indices and market interest rates in selecting an appropriate discount rate. A cash flow analysis for expected benefit payments from the plan is performed each year to assist in selecting the discount rate.  In addition, the Company reviews expected inflationary and merit increases to compensation in determining the expected rate of increase in future compensation levels.

Management is required to make various assumptions in determining the fair values of financial instruments.  Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Management is required to make various assumptions in determining the credit risk involved in issuing contingent obligations such as standby letters of credit, commercial letters of credit, and other lines of credit.  Since commitments to extend credit and unused lines of credit may expire without being fully drawn upon, this amount does not necessarily represent future cash commitments.  Based on historical experience and economic factors, the Company makes estimates of future cash commitments from these contingent obligations to determine their fair value and establish an allowance if necessary.

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Use of Estimates (Details)	6 Months Ended
	Jun. 30, 2011
Use of Estimates [Abstract]
Uncertain tax positions are recognized threshold estimate (in hundredths)	50.00%

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Fair Values of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2011

Fair Values of Financial Instruments [Abstract]

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

June 30, 2011:

			Quoted Prices in	Significant	Significant
			Active Markets for	Other	Unobservable	Balance
			Identical Assets	Observable Inputs	Inputs	as of
			(Level 1)	(Level 2)	(Level 3)	June 30, 2011
Assets:
	Securities Available for Sale:
		U.S. Treasury	81,813	-	-	81,813
		Federal Agency	-	240,374	-	240,374
		State & municipal	-	108,795	-	108,795
		Mortgage-backed	-	339,323	-	339,323
		Collateralized mortgage obligations	-	355,140	-	355,140
		Corporate	-	20,247	-	20,247
		Other securities	8,948	2,039	-	10,987
	Total Securities Available for Sale		$                90,761	$          1,065,918	$               -	$              1,156,679
	Trading Securities		3,276	-	-	3,276
Total			$                94,037	$          1,065,918	$               -	$              1,159,955

December 31, 2010:

			Quoted Prices in	Significant	Significant
			Active Markets for	Other	Unobservable	Balance
			Identical Assets	Observable Inputs	Inputs	as of
			(Level 1)	(Level 2)	(Level 3)	December 31, 2010
Assets:
	Securities Available for Sale:
		U.S. Treasury	$                 91,280	$                      -	$                -	$                   91,280
		Federal Agency	-	349,750	-	349,750
		State & municipal	-	114,937	-	114,937
		Mortgage-backed	-	244,808	-	244,808
		Collateralized mortgage obligations	-	297,888	-	297,888
		Corporate	-	20,489	-	20,489
		Other securities	8,190	2,026	-	10,216
	Total Securities Available for Sale		$                99,470	$          1,029,898	$               -	$              1,129,368
	Trading Securities		2,808	-	-	2,808
Total			$               102,278	$          1,029,898	$               -	$              1,132,176

Fair Value of Financial Instruments By Balance Sheet Grouping

	June 30, 2011		December 31, 2010
(In thousands)	Carrying amount	Estimated fair value	Carrying amount	Estimated fair value
Financial assets
Cash and cash equivalents	$     102,766	$     102,766	$     168,792	$     168,792
Securities available for sale	1,156,679	1,156,679	1,129,368	1,129,368
Securities held to maturity	76,878	78,357	97,310	98,759
Trading securities	3,276	3,276	2,808	2,808
Loans (1)	3,664,517	3,674,736	3,610,006	3,626,603
Less allowance for loan losses	70,484	-	71,234	-
Net loans	3,594,033	3,674,736	3,538,772	3,626,603
Accrued interest receivable	17,719	17,719	19,130	19,130
Financial liabilities
Savings, NOW, and money market	$ 2,288,515	$ 2,288,515	$  2,291,833	$  2,291,833
Time deposits	895,806	906,222	930,778	943,988
Noninterest bearing	930,292	930,292	911,741	911,741
Short-term borrowings	175,958	175,958	159,434	159,434
Long-term debt	370,350	427,895	369,874	423,350
Accrued interest payable	4,135	4,135	4,356	4,356
Trust preferred debentures	75,422	75,422	75,422	71,148
1. Lease receivables, although excluded from the scope of ASC 825-10-50-10, are included in the estimated fair value
amounts at their carrying amounts.

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Trust Preferred Debentures

6 Months Ended

Jun. 30, 2011

Trust Preferred Debentures [Abstract]

Trust Preferred Debentures

Note 8.                      Trust Preferred Debentures

CNBF Capital Trust I is a Delaware statutory business trust formed in 1999, for the purpose of issuing $18 million in trust preferred securities and lending the proceeds to the Company. NBT Statutory Trust I is a Delaware statutory business trust formed in 2005, for the purpose of issuing $5 million in trust preferred securities and lending the proceeds to the Company.  NBT Statutory Trust II is a Delaware statutory business trust formed in 2006, for the purpose of issuing $50 million in trust preferred securities and lending the proceeds to the Company to provide funding for the acquisition of CNB Bancorp, Inc. These three statutory business trusts are collectively referred herein to as "the Trusts."  The Company guarantees, on a limited basis, payments of distributions on the trust preferred securities and payments on redemption of the trust preferred securities.  The Trusts are variable interest entities ("VIEs") for which the Company is not the primary beneficiary, as defined by U.S. GAAP.  In accordance with U.S. GAAP, the accounts of the Trusts are not included in the Company's consolidated financial statements.  On January 1, 2010, the Company adopted Accounting Standards Update ("ASU") 2009-17, Consolidations: Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities ("Topic 810"), which had no impact on the Company's financial statements.

As of June 30, 2011, the Trusts had the following issues of trust preferred debentures, all held by the Trusts, outstanding (dollars in thousands):

Description	Issuance Date	Trust Preferred Securities Outstanding	Interest Rate	Trust Preferred Debt Owed To Trust	Final Maturity date
CNBF Capital Trust I	June 1999	18,000	3-month LIBOR plus 2.75%	$18,720	August 2029
NBT Statutory Trust I	November 2005	5,000	3-month LIBOR plus 1.40%	5,155	December 2035
NBT Statutory Trust II	February 2006	50,000	3-month LIBOR plus 1.40%	51,547	March 2036

The Company owns all of the common stock of the Trusts, which have issued trust preferred securities in conjunction with the Company issuing trust preferred debentures to the Trusts. The terms of the trust preferred debentures are substantially the same as the terms of the trust preferred securities.

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Consolidated Statements of Stockholders' Equity (Unaudited) Parenthetical (USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Consolidated Statements of Stockholders' Equity (Unaudited) Parenthetical [Abstract]
Cash dividends - per share (in dollars per share)	$ 0.40	$ 0.40
Purchase of Treasury Shares (in shares)	976,190	0
Net issuance of shares to employee benefit plans and other stock plans, including tax benefit (in shares)	47,420	75,963
Net issuance of shares of restricted stock awards (in shares)	26,012	27,112
Forfeiture of shares of restricted stock (in shares)	12,000	2,000

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Trust Preferred Debentures (Details) (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011
CNBF Capital Trust I VIE Entity Not Primary Beneficiary [Member] | CNBF Capital Trust I Debenture [Member]
Limited Guarantee Trust Preferred Debentures [Abstract]
Issuance Date	June 1999
Trust Preferred Securities Outstanding	$ 18,000
Interest Rate	3-month LIBOR plus 2.75%
Trust Preferred Debt Owed To Trust	18,720
Final Maturity date	August 2029
NBT Statutory Trust I VIE Entity Not Primary Beneficiary [Member] | NBT Statutory Trust I Debenture [Member]
Limited Guarantee Trust Preferred Debentures [Abstract]
Issuance Date	November 2005
Trust Preferred Securities Outstanding	5,000
Interest Rate	3-month LIBOR plus 1.40%
Trust Preferred Debt Owed To Trust	5,155
Final Maturity date	December 2035
NBT Statutory Trust II VIE Entity Not Primary Beneficiary [Member] | NBT Statutory Trust II Debenture [Member]
Limited Guarantee Trust Preferred Debentures [Abstract]
Issuance Date	February 2006
Trust Preferred Securities Outstanding	50,000
Interest Rate	3-month LIBOR plus 1.40%
Trust Preferred Debt Owed To Trust	$ 51,547
Final Maturity date	March 2036

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Allowance for Loan and Lease Losses and Credit Quality of Loans and Leases

6 Months Ended

Jun. 30, 2011

Allowance for Loan and Lease Losses and Credit Quality of Loans and Leases [Abstract]

Allowance for Loan and Lease Losses and Credit Quality of Loans and Leases

Note  5.                      Allowance for Loan and Lease Losses and Credit Quality of Loans and Leases

Allowance for Loan and Lease Losses

The allowance for loan and lease losses is maintained at a level estimated by management to provide adequately for risk of probable losses inherent in the current loan and lease portfolio. The adequacy of the allowance for loan and lease losses is continuously monitored.  It is assessed for adequacy using a methodology designed to ensure the level of the allowance reasonably reflects the loan and lease portfolio's risk profile. It is evaluated to ensure that it is sufficient to absorb all reasonably estimable credit losses inherent in the current loan and lease portfolio.

To develop and document a systematic methodology for determining the allowance for loan and lease losses, the Company has divided the loan portfolio into three portfolio segments, each with different risk characteristics and methodologies for assessing risk.  Each portfolio segment is broken down into class segments where appropriate.  Class segments contain unique measurement attributes, risk characteristics and methods for monitoring and assessing risk that are necessary to develop the allowance for loan and lease losses.  Unique characteristics such as borrower type, loan type, collateral type, and risk characteristics define each class segment.  The following table illustrates the portfolio and class segments for the Company's loan portfolio:

Portfolio	Class
Commercial Loans	Commercial
	Commercial Real Estate
	Agricultural
	Agricultural Real Estate
	Small Business
Consumer Loans	Indirect
	Home Equity
	Direct
Residential Real Estate Mortgages

Commercial - The Company offers a variety of loan options to meet the specific needs of our commercial customers including term loans, time notes and lines of credit.  Such loans are made available to businesses for working capital such as inventory and receivables, business expansion and equipment purchases. Generally, a collateral lien is placed on equipment or other assets owned by the borrower.  These loans carry a higher risk than commercial real estate loans due to the nature of the underlying collateral, which can be business assets such as equipment and accounts receivable and is generally less liquid than real estate. To reduce the risk, management also attempts to secure real estate as collateral and obtain personal guarantees of the borrowers.

Commercial Real Estate - The Company offers commercial real estate loans to finance real estate purchases, refinancings, expansions and improvements to commercial properties.  Commercial real estate loans are made to finance the purchases of real property which generally consists of real estate with completed structures. These commercial real estate loans are secured by first liens on the real estate, which may include apartments, commercial structures, housing businesses, healthcare facilities, and other non owner-occupied facilities.  These loans are typically less risky than commercial loans, since they are secured by real estate and buildings. The Company's underwriting analysis includes credit verification, independent appraisals, a review of the borrower's financial condition, and a detailed analysis of the borrower's underlying cash flows. These loans are typically originated in amounts of no more than 80% of the appraised value of the property.

Agricultural - The Company offers a variety of agricultural loans to meet the needs of our agricultural customers including term loans, time notes, and lines of credit.  These loans are made to purchase livestock, purchase and modernize equipment, and finance seasonal crop expenses.  Generally, a collateral lien is placed on the livestock, equipment, produce inventories, and/or receivables owned by the borrower.  These loans may carry a higher risk than commercial and agricultural real estate loans due to the industry price volatility, and in some cases, the perishable nature of the underlying collateral.  To reduce these risks, management may attempt to secure these loans with additional real estate collateral, obtain personal guarantees of the borrowers, or obtain government loan guarantees to provide further support.

Agricultural Real Estate - The Company offers real estate loans to our agricultural customers to finance farm related real estate purchases, refinancings, expansions, and improvements to agricultural properties such as barns, production facilities, and land.  The agricultural real estate loans are secured by first liens on the farm real estate.  Because they are secured by land and buildings, these loans may be less risky than agricultural loans.  The Company's underwriting analysis includes credit verification, independent appraisals, a review of the borrower's financial condition, and a detailed analysis of the borrower's underlying cash flows.  These loans are typically originated in amounts of no more than 75% of the appraised value of the property.  Government loan guarantees may be obtained to provide further support.

Small Business - The Company offers a variety of loan options to meet the specific needs of our small business customers including term loans, small business mortgages and lines of credit.  Such loans are generally less than $350 thousand and are made available to businesses for working capital such as inventory and receivables, business expansion, equipment purchases, and agricultural needs.  Generally, a collateral lien is placed on equipment or other assets owned by the borrower such as inventory and/or receivables.  These loans carry a higher risk than commercial loans due to the smaller size of the borrower and lower levels of capital.  To reduce the risk, the Company obtains personal guarantees of the owners for a majority of the loans.

Indirect - The Company maintains relationships with many dealers primarily in the communities that we serve.  Through these relationships, the company finances the purchases of automobiles and recreational vehicles (such as campers, boats, etc.) indirectly through dealer relationships.  Approximately 69% of the indirect relationships represent automobile financing.  Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from three to six years, based upon the nature of the collateral and the size of the loan. The majority of indirect consumer loans are underwritten on a secured basis using the underlying collateral being financed.

Home Equity -The Company offers fixed home equity loans as well as home equity lines of credit to consumers to finance home improvements, debt consolidation, education and other uses.  Consumers are able to borrower up to 85% of the equity in their homes.  The Company originates home equity lines of credit and second mortgage loans (loans secured by a second [junior] lien position on one-to-four-family residential real estate).  These loans carry a higher risk than first mortgage residential loans as they are in a second position with respect to collateral.  Risk is reduced through underwriting criteria, which include credit verification, appraisals, a review of the borrower's financial condition, and personal cash flows.  A security interest, with title insurance when necessary, is taken in the underlying real estate.

Direct - The Company offers a variety of consumer installment loans to finance vehicle purchases, mobile home purchases and personal expenditures.  Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from one to ten years, based upon the nature of the collateral and the size of the loan. The majority of consumer loans are underwritten on a secured basis using the underlying collateral being financed or a customer's deposit account. In addition to installment loans, the Company also offers personal lines of credit and overdraft protection.  A minimal amount of loans are unsecured, which carry a higher risk of loss.

Residential Real Estate - Residential real estate loans consist primarily of loans secured by first or second deeds of trust on primary residences.  We originate adjustable-rate and fixed-rate, one-to-four-family residential real estate loans for the construction, purchase or refinancing of a mortgage.  These loans are collateralized by owner-occupied properties located in the Company's market area. When market conditions are favorable, for longer term, fixed-rate residential mortgages without escrow, the Company retains the servicing, but sells the right to receive principal and interest to Freddie Mac.   This practice allows the Company to manage interest rate risk, liquidity risk, and credit risk.  Loans on one-to-four-family residential real estate are generally originated in amounts of no more than 85% of the purchase price or appraised value (whichever is lower), or have private mortgage insurance.  Mortgage title insurance and hazard insurance are normally required. Construction loans have a unique risk, because they are secured by an incomplete dwelling. This risk is reduced through periodic site inspections, including one at each loan draw period.

Allowance for Loan and Lease Loss Calculation

Management considers the accounting policy related to the allowance for loan and lease losses to be a critical accounting policy given the inherent uncertainty in evaluating the levels of the allowance required to cover credit losses in the portfolio and the material effect that such judgments can have on the consolidated results of operations.

For purposes of evaluating the adequacy of the allowance, the Company considers a number of significant factors that affect the collectibility of the portfolio.  For individually analyzed loans, these include estimates of loss exposure, which reflect the facts and circumstances that affect the likelihood of repayment of such loans as of the evaluation date. For homogeneous pools of loans and leases, estimates of the Company's exposure to credit loss reflect a current assessment of a number of factors, which could affect collectibility.  These factors include:  past loss experience;  size, trend, composition, and nature of loans;  changes in lending policies and procedures, including underwriting standards and collection,  charge-offs  and  recoveries; trends experienced in nonperforming and delinquent loans; current economic conditions in the Company's market;  portfolio concentrations that may affect loss experienced across one or more components of the portfolio; the effect of external factors such as competition, legal and regulatory requirements; and the experience, ability, and depth of lending management and staff. In addition, various regulatory agencies, as an integral component of their examination process, periodically review the Company's allowance for loan and lease losses.  Such agencies may require the Company to make loan grade changes as well as recognize additions to the allowance based on their examinations.

After a thorough consideration of the factors discussed above, any required additions or reductions to the allowance for loan and lease losses are made periodically by charges or credits to the provision for loan and lease losses. These charges or credits are necessary to maintain the allowance at a level which management believes is reasonably reflective of overall inherent risk of probable loss in the portfolio. While management uses available information to recognize losses on loans and leases, additions and reductions of the allowance may fluctuate from one reporting period to another.  These fluctuations are reflective of changes in risk associated with portfolio content and/or changes in management's assessment of any or all of the determining factors discussed above.  The following table illustrates the changes in the allowance for loan and lease losses by portfolio segment for the three and six months ended June 30, 2011 and June 30, 2010:

Allowance for Loan and Lease Losses
(in thousands)
Three months ended June 30			Residential
	Commercial	Consumer	Real Estate
	Loans	Loans	Mortgages	Unallocated	Total
Balance as of March 31, 2011	$        37,937	$      26,219	$           5,338	$             440	$      69,934
Charge-offs	(2,588)	(3,600)	(414)	-	(6,602)
Recoveries	474	654	3	-	1,131
Provision	3,324	2,445	446	(194)	6,021
Ending Balance as of June 30, 2011	$        39,147	$      25,718	$           5,373	$             246	$      70,484
Balance as of March 31, 2010	$        41,249	$      25,809	$           2,838	$             254	$      70,150
Charge-offs	(3,311)	(3,982)	(410)	-	(7,703)
Recoveries	711	791	1	-	1,503
Provision	236	5,214	866	34	6,350
Ending Balance as of June 30, 2010	$        38,885	$      27,832	$           3,295	$             288	$      70,300
Six months ended June 30			Residential
	Commercial	Consumer	Real Estate
	Loans	Loans	Mortgages	Unallocated	Total
Balance as of December 31, 2010	$        40,101	$      26,126	$           4,627	$             380	$      71,234
Charge-offs	(5,458)	(6,893)	(513)	-	(12,864)
Recoveries	894	1,230	4	-	2,128
Provision	3,610	5,255	1,255	(134)	9,986
Ending Balance as of June 30, 2011	$        39,147	$      25,718	$           5,373	$             246	$      70,484
Balance as of December 31, 2009	$        36,598	$      26,664	$           3,002	$             286	$      66,550
Charge-offs	(6,141)	(7,925)	(522)	-	(14,588)
Recoveries	1,236	1,502	7	-	2,745
Provision	7,192	7,591	808	2	15,593
Ending Balance as of June 30, 2010	$        38,885	$      27,832	$           3,295	$             288	$      70,300

The following tables illustrate the allowance for loan and lease losses and the recorded investment by portfolio segment as of June 30, 2011 and December 31, 2010:

Allowance for Loan and Lease Losses and Recorded Investment in Loans and Leases
(in thousands)
			Residential
	Commercial	Consumer	Real Estate
	Loans	Loans	Mortgages	Unallocated	Total
As of June 30, 2011
Allowance loan and lease losses	$         39,147	$       25,718	$           5,373	$              246	$       70,484
Allowance for loans and leases individually evaluated for impairment	$               352	$                 -	$                  -		$             352
Allowance for loans and leases collectively evaluated for impairment	$         38,795	$       25,718	$           5,373	$              246	$       70,132
Ending balance of loans and leases	$   1,631,097	$  1,469,075	$       564,345		$  3,664,517
Ending balance of loans and leases individually evaluated for impairment	$           7,718	$                 -	$                  -		$          7,718
Ending balance of loans and leases collectively evaluated for impairment	$   1,623,379	$  1,469,075	$       564,345		$  3,656,799
As of December 31, 2010
Allowance loan and lease losses	$         40,101	$       26,126	$           4,627	$              380	$       71,234
Allowance for loans and leases individually evaluated for impairment	$           2,211	$                 -	$                  -		$          2,211
Allowance for loans and leases collectively evaluated for impairment	$         37,890	$       26,126	$           4,627	$              380	$       69,023
Ending balance of loans and leases	$   1,580,371	$  1,481,241	$       548,394		$  3,610,006
Ending balance of loans and leases individually evaluated for impairment	$         11,419	$                 -	$                  -		$       11,419
Ending balance of loans and leases collectively evaluated for impairment	$   1,568,952	$  1,481,241	$       548,394		$  3,598,587

Credit Quality of Loans and Leases

Loans and leases are placed on nonaccrual status when timely collection of principal and interest in accordance with contractual terms is doubtful. Loans and leases are transferred to nonaccrual status generally when principal or interest payments become ninety days delinquent, unless the loan is well secured and in the process of collection, or sooner when management concludes or circumstances indicate that borrowers may be unable to meet contractual principal or interest payments.  When a loan or lease is transferred to a nonaccrual status, all interest previously accrued in the current period but not collected is reversed against interest income in that period. Interest accrued in a prior period and not collected is charged-off against the allowance for loan and lease losses.  The Company's nonaccrual policies are the same for all classes of financing receivable.

If ultimate repayment of a nonaccrual loan is expected, any payments received are applied in accordance with contractual terms. If ultimate repayment of principal is not expected, any payment received on a nonaccrual loan is applied to principal until ultimate repayment becomes expected.  Nonaccrual loans are returned to accrual status when they become current as to principal and interest and demonstrate a period of performance under the contractual terms and, in the opinion of management, are fully collectible as to principal and interest.  When in the opinion of management the collection of principal appears unlikely, the loan balance is charged-off in total or in part.  For loans in all portfolios, the principal amount is charged off in full or in part as soon as management determines, based on available facts, that the collection of principal in full is improbable.  For commercial loans, management considers specific facts and circumstances relative to individual credits in making such a determination.  For consumer and residential loan classes, management uses specific guidance and thresholds from the Federal Financial Institutions Examination Council's Uniform Retail Credit Classification and Account Management Policy.

The following table illustrates the Company's nonaccrual loans by loan class:

Loans on Nonaccrual Status
(In thousands)		June 30, 2011	December 31, 2010
Commercial Loans
	Commercial	$         2,424	$            5,837
	Commercial Real Estate	5,871	5,687
	Agricultural	3,706	4,065
	Agricultural Real Estate	1,886	2,429
	Small Business	7,695	7,033
		21,582	25,051
Consumer Loans
	Indirect	1,185	1,971
	Home Equity	8,046	6,395
	Direct	410	399
		9,641	8,765
Residential Real Estate Mortgages		8,968	8,651
Total Nonaccrual		$       40,191	$          42,467

The following tables set forth information with regard to past due and nonperforming loans by loan class as of June 30, 2011 and December 31, 2010:

Age Analysis of Past Due Loans
As of June 30, 2011
(in thousands)
				Greater Than				Recorded
		31-60 Days	61-90 Days	90 Days	Total			Total
		Past Due	Past Due	Past Due	Past Due			Loans and
		Accruing	Accruing	Accruing	Accruing	Non-Accrual	Current	Leases
Commercial Loans
	Commercial	$          203	$          401	$                 -	$       604	$           2,424	$   518,065	$   521,093
	Commercial Real Estate	2,075	1,739	-	3,814	5,871	740,617	750,302
	Agricultural	-	3	-	3	3,706	62,131	65,840
	Agricultural Real Estate	161	-	-	161	1,886	32,391	34,438
	Small Business	1,479	310	-	1,789	7,695	249,940	259,424
		3,918	2,453	-	6,371	21,582	1,603,144	1,631,097
Consumer Loans
	Indirect	7,248	1,542	893	9,683	1,185	826,337	837,205
	Home Equity	4,717	1,169	273	6,159	8,046	543,894	558,099
	Direct	741	254	107	1,102	410	72,259	73,771
		12,706	2,965	1,273	16,944	9,641	1,442,490	1,469,075
Residential Real Estate Mortgages		1,507	391	186	2,084	8,968	553,293	564,345
		$     18,131	$       5,809	$            1,459	$  25,399	$         40,191	$3,598,927	$3,664,517

Age Analysis of Past Due Loans
As of December 31, 2010
(in thousands)
					Greater Than					Recorded
		31-60 Days		61-90 Days	91 Days	Total				Total
		Past Due		Past Due	Past Due	Past Due				Loans and
		Accruing		Accruing	Accruing	Accruing	Non-Accrual	Current		Leases
Commercial
	Commercial		$          136	$            55	$            94	$      285	$         5,837	$    461,633		$    467,755
	Commercial
	Real Estate		1,263	-	-	1,263	5,687	730,285		737,235
	Agricultural		63	92	-	155	4,065	63,336		67,556
	Agricultural
	Real Estate		108	-	-	108	2,429	33,400		35,937
	Small Business		2,570	1,183	-	3,753	7,033	261,102		271,888
			4,140	1,330	94	5,564	25,051	1,549,756		1,580,371
Consumer
	Indirect		9,307	2,193	862	12,362	1,971	814,594		828,927
	Home Equity		5,740	1,756	396	7,892	6,395	561,391		575,678
	Direct		927	158	54	1,139	399	75,098		76,636
			15,974	4,107	1,312	21,393	8,765	1,451,083		1,481,241
Residential Real  Estate Mortgages			3,002	126	919	4,047	8,651		535,696		548,394
		$    23,116		$       5,563	$       2,325	$ 31,004	$       42,467	$ 3,536,535		$ 3,610,006

There were no material commitments to extend further credit to borrowers with nonperforming loans. Within nonaccrual loans, there are approximately $4.0 million of troubled debt restructured loans at June 30, 2011.

Impaired loans, which primarily consist of nonaccruing commercial, commercial real estate, agricultural, agricultural real estate and small business loans were $21.6 million at June 30, 2011 and $17.2 million at December 31, 2010.

The methodology used to establish the allowance for loan and lease losses on impaired loans incorporates specific allocations on loans analyzed individually.  Classified loans with outstanding balances of $500 thousand or more are evaluated for impairment through the Company's quarterly status review process.  In determining that we will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreements, we consider factors such as payment history and changes in the financial condition of individual borrowers, local economic conditions, historical loss experience and the conditions of the various markets in which the collateral may be liquidated.  For loans that are impaired as defined by accounting standards, impairment is measured by one of three methods: 1) the fair value of collateral less cost to sell, 2) present value of expected future cash flows or 3) the loan's observable market price.  All impaired loans are reviewed on a quarterly basis for changes in the measurement of impairment.  For impaired loans measured using the present value of expected cash flow method, any change to the previously recognized impairment loss is recognized as a change to the allowance account and recorded in the consolidated statement of income as a component of the provision for credit losses.  At June 30, 2011, $2.8 million of the total impaired loans had a specific reserve allocation of $0.4 million compared to $5.7 million of impaired loans at December 31, 2010 which had a specific reserve allocation of $2.2 million.

The following table provides additional information on impaired loans and specific reserve allocations as of June 30, 2011 and December 31, 2010:

Impaired Loans
			June 30, 2011			December 31, 2010
			Recorded	Unpaid		Recorded	Unpaid
			Investment	Principal		Investment	Principal
			Balance	Balance	Related	Balance	Balance	Related
(in thousands)			(Book)	(Legal)	Allowance	(Book)	(Legal)	Allowance
With no related allowance recorded:
	Commercial Loans
		Commercial	$       2,746	$   5,956		$       1,794	$   2,145
		Commercial Real Estate	4,464	7,116		3,787	4,467
		Agricultural	2,451	3,009		2,657	3,145
		Agricultural Real Estate	1,606	2,242		1,283	1,382
		Small Business	7,552	10,712		1,982	2,334
			$      18,819	$  29,035		$     11,503	$ 13,473
With an allowance recorded:
	Commercial Loans
		Commercial	$          553	$      868	$        275	$       3,925	$   4,962	$     1,907
		Commercial Real Estate	-	-	-	-	-	-
		Agricultural	1,508	1,866	74	1,671	1,918	281
		Agricultural Real Estate	702	777	3	728	784	23
			2,763	3,511	352	6,324	7,664	2,211
Total:			$     21,582	$ 32,546	$        352	$    17,827	$ 21,137	$     2,211

The decrease in commercial loans with a related allowance recorded from December 31, 2010 to June 30, 2011 is primarily due to the repayment of a large commercial credit and the charge-off of another large commercial credit.

The following table summarizes the average recorded investments on impaired loans and the interest income recognized for the three months ended June 30, 2011 and June 30, 2010:

			June 30, 2011			June 30, 2010
			Average	Interest Income		Average	Interest Income
			Recorded	Recognized		Recorded	Recognized
(in thousands)			Investment	Accrual	Cash	Investment	Accrual	Cash
With no related allowance recorded:
	Commercial Loans
		Commercial	$       3,349	$      26	$ 26	$       1,754	$      24	$ 24
		Commercial Real Estate	4,315	24	24	3,401	5	5
		Agricultural	2,485	18	18	2,770	16	16
		Agricultural Real Estate	1,720	21	21	2,652	35	35
		Small Business	7,930	89	89	5,337	46	46
			$    19,799	$    178	$178	$    15,914	$    126	$126
With an allowance recorded:
	Commercial Loans
		Commercial	$          558	$      19	$ 19	$       2,308	$       -	$    -
		Commercial Real Estate	-	-	-	2,373	-	-
		Agricultural	1,521	67	67	1,847	46	46
		Agricultural Real Estate	706	13	13	767	13	13
			$       2,785	$      99	$ 99	$       7,295	$      59	$ 59
Total:			$    22,584	$    277	$277	$    23,209	$    185	$185

The following table summarizes the average recorded investments on impaired loans and the interest income recognized for the six months ended June 30, 2011 and June 30, 2010:

			June 30, 2011			June 30, 2010
			Average	Interest Income		Average	Interest Income
			Recorded	Recognized		Recorded	Recognized
(in thousands)			Investment	Accrual	Cash	Investment	Accrual	Cash
With no related allowance recorded:
	Commercial Loans
		Commercial	$       3,041	$      73	$ 73	$       1,813	$      29	$ 29
		Commercial Real Estate	4,039	45	45	3,785	14	14
		Agricultural	2,597	45	45	2,515	28	28
		Agricultural Real Estate	1,496	38	38	2,311	64	64
		Small Business	4,666	102	102	2,995	47	47
			$    15,839	$    303	$303	$    13,419	$    182	$182
With an allowance recorded:
	Commercial Loans
		Commercial	$       1,226	$      49	$ 49	$       2,477	$        1	$   1
		Commercial Real Estate	573	-	-	2,107	-	-
		Agricultural	1,571	67	67	1,886	58	58
		Agricultural Real Estate	713	18	18	775	42	42
			$       4,083	$    134	$134	$       7,245	$    101	$101
Total:			$    19,922	$    437	$437	$    20,664	$    283	$283

There has been significant disruption and volatility in the financial and capital markets since the second half of 2008.  Turmoil in the mortgage industry adversely impacted both domestic and global economies and led to a significant credit and liquidity crisis in many domestic markets.  These conditions were attributable to a variety of factors, in particular the fallout associated with subprime mortgage loans (a type of lending we have never actively pursued).  The disruption was exacerbated by the decline of the real estate and housing market.  However, in the markets in which the Company does business, the disruption has been somewhat delayed and less significant than in the national market.  For example, our real estate market has not suffered the extreme declines seen nationally and our unemployment rate, while notably higher than in prior periods, is still below the national average.

While we continue to adhere to prudent underwriting standards, as a lender we may be adversely impacted by general economic weaknesses and, in particular, a sharp downturn in the housing market nationally.  Decreases in real estate values could adversely affect the value of property used as collateral for our loans.  Adverse changes in the economy may have a negative effect on the ability of our borrowers to make timely loan payments, which would have an adverse impact on our earnings.  An adverse impact on loan delinquencies would decrease our net interest income and adversely impact our loan loss experience, causing increases in our provision and allowance for loan and lease losses.

The Company has developed an internal loan grading system to evaluate and quantify the Bank's loan portfolio with respect to quality and risk.  The system focuses on, among other things, financial strength of borrowers, experience and depth of borrower's management, primary and secondary sources of repayment, payment history, nature of the business, and outlook on particular industries.  The internal grading system enables the Company to monitor the quality of the entire loan portfolio on a consistent basis and provide management with an early warning system, enabling recognition and response to problem loans and potential problem loans.

Commercial Grading System

For commercial and agricultural loans, the Company uses a grading system that relies on quantifiable and measurable characteristics when available.  This would include comparison of financial strength to available industry averages, comparison of transaction factors (loan terms and conditions) to loan policy, and comparison of credit history to stated repayment terms and industry averages. Some grading factors are necessarily more subjective such as economic and industry factors, regulatory environment, and management.  Classified commercial loans consist of loans graded substandard and below.  All classified loans with outstanding balances of $500 thousand or more are evaluated individually for impairment through the quarterly review process.  The grading system for commercial and agricultural loans is as follows:

4 - Doubtful

A doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as a loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral, and refinancing. Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new information. Nonaccrual treatment is required for doubtful assets because of the high probability of loss.

3 - Substandard

Substandard loans have a high probability of payment default, or they have other well-defined weaknesses. They require more intensive supervision by bank management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization. Repayment may depend on collateral or other credit risk mitigants. For some Substandard loans, the likelihood of full collection of interest and principal may be in doubt and should be placed on nonaccrual. Although Substandard assets in the aggregate will have a distinct potential for loss, an individual asset's loss potential does not have to be distinct for the asset to be rated Substandard.

2 - Special Mention

Special Mention loans have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company's position at some future date. These loans pose elevated risk, but their weakness does not yet justify a Substandard classification. Borrowers may be experiencing adverse operating trends (declining revenues or margins) or may be struggling with an ill-proportioned balance sheet (e.g., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a Special Mention rating. Although a Special Mention loan has a higher probability of default than a pass asset, its default is not imminent.

1 - Pass

Loans graded as Pass encompass all loans not graded as Doubtful, Substandard, or Special Mention.  Pass loans are in compliance with loan covenants, and payments are generally made as agreed.  Pass loans range from superior quality to fair quality.

Small Business Grading System

Small Business loans are graded as either Classified or Non-classified:

Classified

Classified loans are inadequately protected by the current worth and paying capacity of the obligor or, if applicable, the collateral pledged.   These loans have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt, or in some cases make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.   Classified loans have a high probability of payment default, or a high probability of total or substantial loss.  These loans require more intensive supervision by management and are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization.  Repayment may depend on collateral or other credit risk mitigants.  When the likelihood of full collection of interest and principal may be in doubt; classified loans are considered to have a nonaccrual status.   In some cases, Classified loans are considered uncollectible and of such little value that their continuance as assets is not warranted.

Non-classified

Loans graded as Non-classified encompass all loans not graded as Classified.  Non-classified loans are in compliance with loan covenants, and payments are generally made as agreed.

Consumer and Residential Mortgage Grading System

Consumer and Residential Mortgage loans are graded as either Performing or Nonperforming.   Nonperforming loans are loans that are 1) over 90 days past due and interest is still accruing, 2) on nonaccrual status or 3) restructured.  All loans not meeting any of these three criteria are considered Performing.

The following tables illustrate the Company's credit quality by loan class as of June 30, 2011 and December 31, 2010:

Credit Quality Indicators
As of June 30, 2011
Commercial Credit Exposure			Commercial		Agricultural
By Internally Assigned Grade:		Commercial	Real Estate	Agricultural	Real Estate	Total
	1 - Pass	$           487,398	$    658,469	$       57,263	$      29,415	$  1,232,545
	2 - Special Mention	6,175	35,810	366	463	42,814
	3 - Substandard	26,967	56,023	8,128	4,560	95,678
	4 - Doubtful	553	-	83	-	636
Total		$           521,093	$    750,302	$       65,840	$      34,438	$  1,371,673
Small Business Credit Exposure
By Internally Assigned Grade:		Small Business				Total
	Non-classified	$           241,417				$     241,417
	Classified	18,007				18,007
Total		$           259,424				$     259,424
Consumer Credit Exposure
By Payment Activity:		Indirect	Home Equity	Direct		Total
	Performing	$           835,127	$    549,780	$       73,254		$  1,458,161
	Nonperforming	2,078	8,319	517		10,914
Total		$           837,205	$    558,099	$       73,771		$  1,469,075
Residential Mortgage Credit Exposure		Residential
By Payment Activity:		Mortgage				Total
	Performing	$           555,191				$     555,191
	Nonperforming	9,154				9,154
Total		$           564,345				$     564,345

Credit Quality Indicators
As of December 31, 2010
Commercial Credit Exposure			Commercial		Agricultural
By Internally Assigned Grade:		Commercial	Real Estate	Agricultural	Real Estate	Total
	1 - Pass	$           441,834	$    654,974	$       61,195	$     30,483	$1,188,486
	2 - Special Mention	4,830	35,461	660	936	41,887
	3 - Substandard	21,091	46,800	5,606	4,518	78,015
	4 - Doubtful	-	-	95	-	95
Total		$           467,755	$    737,235	$       67,556	$     35,937	$1,308,483
Small Business Credit Exposure
By Internally Assigned Grade:		Small Business				Total
	Non-classified	$           253,120				$   253,120
	Classified	18,768				18,768
Total		$           271,888				$   271,888
Consumer Credit Exposure
By Payment Activity:		Indirect	Home Equity	Direct		Total
	Performing	$           826,956	$    569,283	$       76,237		$1,472,476
	Nonperforming	1,971	6,395	399		8,765
Total		$           828,927	$    575,678	$       76,636		$1,481,241
Residential Mortgage Credit Exposure		Residential
By Payment Activity:		Mortgage				Total
	Performing	$           539,743				$   539,743
	Nonperforming	8,651				8,651
Total		$           548,394				$   548,394

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Securities

6 Months Ended

Jun. 30, 2011

Securities [Abstract]

Securities

Note 10.  Securities

The amortized cost, estimated fair value, and unrealized gains and losses of securities available for sale are as follows:

(In thousands)	Amortized cost	Unrealized gains	Unrealized losses	Estimated fair value
June 30, 2011
U.S. Treasury	$          81,171	$                708	$                   66	$                 81,813
Federal Agency	239,815	1,184	625	240,374
State & municipal	105,449	3,556	210	108,795
Mortgage-backed	326,777	12,713	167	339,323
Collateralized mortgage obligations	348,812	6,555	227	355,140
Corporate	20,002	245	-	20,247
Other securities	8,920	2,067	-	10,987
Total securities available for sale	$    1,130,946	$           27,028	$             1,295	$            1,156,679
December 31, 2010
U.S. Treasury	$           91,338	$                 424	$                  482	$                   91,280
Federal Agency	350,641	1,905	2,796	349,750
State & municipal	113,821	1,771	655	114,937
Mortgage-backed	233,861	11,666	719	244,808
Collateralized mortgage obligations	293,565	6,574	2,251	297,888
Corporate	20,005	484	-	20,489
Other securities	8,059	2,162	5	10,216
Total securities available for sale	$      1,111,290	$            24,986	$               6,908	$              1,129,368

In the available for sale category at June 30, 2011, federal agency securities were comprised of Government-Sponsored Enterprise ("GSE") securities; mortgaged-backed securities were comprised of GSE securities with an amortized cost of $304.0 million and a fair value of $314.6 million and US Government Agency securities with an amortized cost of $22.7 million and a fair value of $24.7 million; collateralized mortgage obligations were comprised of GSE securities with an amortized cost of $275.7 million and a fair value of $279.3 million and US Government Agency securities with an amortized cost of $73.1 million and a fair value of $75.9 million.

In the available for sale category at December 31, 2010, federal agency securities were comprised of GSE securities; mortgaged-backed securities were comprised of GSE securities with an amortized cost of $208.9 million and a fair value of $217.9 million and US Government Agency securities with an amortized cost of $25.0 million and a fair value of $26.9 million; collateralized mortgage obligations were comprised of GSE securities with an amortized cost of $206.0 million and a fair value of $207.0 million and US Government Agency securities with an amortized cost of $87.6 million and a fair value of $90.8 million.

Others securities primarily represent marketable equity securities.

Proceeds from the sales of securities available for sale were nominal during the six months ended June 30, 2011, and gains on the sales were negligible.  Proceeds from the sales of securities available for sale totaled $0.7 million during the six month period ending June 30, 2010.  Gains on these sales were negligible for the six months ended June 30, 2010.

Securities available for sale with amortized costs totaling $1.1 billion at June 30, 2011 and $0.9 billion at December 31, 2010, were pledged to secure public deposits and for other purposes required or permitted by law.  Additionally, at June 30, 2011 and December 31, 2010, securities available for sale with an amortized cost of $195.3 million and $187.7 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

The amortized cost, estimated fair value, and unrealized gains and losses of securities held to maturity are as follows:

(In thousands)	Amortized cost	Unrealized gains	Unrealized losses	Estimated fair value
June 30, 2011
Mortgage-backed	$        1,587	$           207	$                -	$        1,794
State & municipal	75,291	1,272	-	76,563
Total securities held to maturity	$      76,878	$        1,479	$                -	$      78,357
December 31, 2010
Mortgage-backed	$         1,719	$            200	$                -	$         1,919
State & municipal	95,591	1,249	-	96,840
Total securities held to maturity	$        97,310	$         1,449	$                -	$        98,759

The following table sets forth information with regard to investment securities with unrealized losses at June 30, 2011 and December 31, 2010:

	Less than 12 months			12 months or longer			Total
Security Type:	Fair Value	Unrealized losses	Number of Positions	Fair Value	Unrealized losses	Number of Positions	Fair Value	Unrealized losses	Number of Positions
June 30, 2011
U.S. Treasury	$ 10,170	$      (66)	1	$       -	$        -	-	$ 10,170	$      (66)	1
Federal agency	89,252	(625)	6	-	-	-	89,252	(625)	6
State & municipal	397	(2)	1	5,445	(208)	12	5,842	(210)	13
Mortgage-backed	43,314	(167)	3	-	-	-	43,314	(167)	3
Collateralized mortgage obligations	47,328	(227)	4	-	-	-	47,328	(227)	4
Other securities	-	-	-	-	-	-	-	-	-
Total securities with     unrealized losses	$190,461	$   (1,087)	15	$   5,445	$      (208)	12	$195,906	$   (1,295)	27
December 31, 2010
U.S. Treasury	$   40,741	$        (482)	4	$           -	$            -	-	$ 40,741	$      (482)	4
Federal agency	147,012	(2,796)	12	-	-	-	147,012	(2,796)	12
State & municipal	22,273	(317)	31	7,533	(338)	19	29,806	(655)	50
Mortgage-backed	44,340	(719)	3	-	-	-	44,340	(719)	3
Collateralized mortgage obligations	72,595	(2,251)	3	-	-	-	72,595	(2,251)	3
Other securities	95	(5)	1	-	-	-	95	(5)	1
Total securities with unrealized losses	$327,056	$   (6,570)	54	$   7,533	$      (338)	19	$334,589	$   (6,908)	73

Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses or in other comprehensive income, depending on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss.  If the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment shall be recognized in earnings equal to the entire difference between the investment's amortized cost basis and its fair value at the balance sheet date.  If the Company does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment shall be separated into (a) the amount representing the credit loss and (b) the amount related to all other factors.  The amount of the total other-than-temporary impairment related to the credit loss shall be recognized in earnings. The amount of the total other-than-temporary impairment related to other factors shall be recognized in other comprehensive income, net of applicable taxes.

In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the historical and implied volatility of the fair value of the security.

Management has the intent to hold the securities classified as held to maturity until they mature, at which time it is believed the Company will receive full value for the securities. Furthermore, as of June 30, 2011, management also had the intent to hold, and will not be required to sell, the securities classified as available for sale for a period of time sufficient for a recovery of cost, which may be until maturity.  The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. When necessary, the Company has performed a discounted cash flow analysis to determine whether or not it will receive the contractual principal and interest on certain securities.  The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline.  As of June 30, 2011, management believes the impairments detailed in the table above are temporary and no other-than-temporary impairment losses have been realized in the Company's consolidated statements of income.

The following tables set forth information with regard to contractual maturities of debt securities at June 30, 2011:

(In thousands)	Amortized cost	Estimated fair value
Debt securities classified as available for sale
Within one year	$33,084	$33,420
From one to five years	311,206	312,850
From five to ten years	265,352	275,182
After ten years	512,384	524,240
	$1,122,026	$1,145,692
Debt securities classified as held to maturity
Within one year	$28,556	$28,604
From one to five years	35,870	36,942
From five to ten years	8,660	8,812
After ten years	3,792	3,999
	$76,878	$78,357

Maturities of mortgage-backed, collateralized mortgage obligations and asset-backed securities are stated based on their estimated average lives.  Actual maturities may differ from estimated average lives or contractual maturities because, in certain cases, borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Except for U.S. Government securities, there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders' equity at June 30, 2011.

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Earnings Per Share

6 Months Ended

Jun. 30, 2011

Earnings Per Share [Abstract]

Earnings Per Share

Note 6.                      Earnings Per Share

Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity (such as the Company's dilutive stock options and restricted stock units).

The following is a reconciliation of basic and diluted earnings per share for the periods presented in the consolidated statements of income.

Three months ended June 30,	2011	2010
(in thousands, except per share data)
Basic EPS:
Weighted average common shares outstanding	34,044	34,288
Net income available to common shareholders	14,655	14,424
Basic EPS	$0.43	$0.42
Diluted EPS:
Weighted average common shares outstanding	34,044	34,288
Dilutive effect of common stock options and restricted stock	276	277
Weighted average common shares and common
share equivalents	34,320	34,565
Net income available to common shareholders	14,655	14,424
Diluted EPS	$0.43	$0.42
Six months ended June 30,	2011	2010
(in thousands, except per share data)
Basic EPS:
Weighted average common shares outstanding	34,189	34,259
Net income available to common shareholders	28,962	28,400
Basic EPS	$0.85	$0.83
Diluted EPS:
Weighted average common shares outstanding	34,189	34,259
Dilutive effect of common stock options and restricted stock	303	226
Weighted average common shares and common
share equivalents	34,492	34,485
Net income available to common shareholders	28,962	28,400
Diluted EPS	$0.84	$0.82

There were 1,240,099 stock options for the quarter ended June 30, 2011 and 1,039,676stock options for the quarter ended June 30, 2010 that were not considered in the calculation of diluted earnings per share since the stock options' exercise price was greater than the average market price during these periods.

There were 867,397 stock options for the six months ended June 30, 2011 and 1,293,469stock options for the six months ended June 30, 2010 that were not considered in the calculation of diluted earnings per share since the stock options' exercise price was greater than the average market price during these periods.

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Allowance for Loan and Lease Losses and Credit Quality of Loans and Leases (Details) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	$ 1,631,097	$ 1,580,371
Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	1,232,545	1,188,486
Commercial Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	42,814	41,887
Commercial Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	95,678	78,015
Commercial Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	636	95
Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	1,469,075	1,481,241
Consumer Portfolio Segment [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	1,458,161	1,472,476
Consumer Portfolio Segment [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	10,914	8,765
Residential Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	564,345	548,394
Residential Portfolio Segment [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	555,191	539,743
Residential Portfolio Segment [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	9,154	8,651
Commercial Financing Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	521,093	467,755
Commercial Financing Receivable [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	487,398	441,834
Commercial Financing Receivable [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	6,175	4,830
Commercial Financing Receivable [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	26,967	21,091
Commercial Financing Receivable [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	553	0
Commercial Real Estate Other Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	750,302	737,235
Commercial Real Estate Other Receivable [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	658,469	654,974
Commercial Real Estate Other Receivable [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	35,810	35,461
Commercial Real Estate Other Receivable [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	56,023	46,800
Commercial Real Estate Other Receivable [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	0	0
Agricultural Financing Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	65,840	67,556
Agricultural Financing Receivable [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	57,263	61,195
Agricultural Financing Receivable [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	366	660
Agricultural Financing Receivable [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	8,128	5,606
Agricultural Financing Receivable [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	83	95
Agricultural Real Estate Financing Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	34,438	35,937
Agricultural Real Estate Financing Receivable [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	29,415	30,483
Agricultural Real Estate Financing Receivable [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	463	936
Agricultural Real Estate Financing Receivable [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	4,560	4,518
Agricultural Real Estate Financing Receivable [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	0	0
Small Business Financing Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	259,424	271,888
Small Business Financing Receivable [Member] | Classified [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	18,007	18,768
Small Business Financing Receivable [Member] | Non-classified [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	241,417	253,120
Indirect Financing Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	837,205	828,927
Indirect Financing Receivable [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	835,127	826,956
Indirect Financing Receivable [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	2,078	1,971
Home Equity Financing Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	558,099	575,678
Home Equity Financing Receivable [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	549,780	569,283
Home Equity Financing Receivable [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	8,319	6,395
Direct Financing Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	73,771	76,636
Direct Financing Receivable [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	73,254	76,237
Direct Financing Receivable [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	517	399
Classified [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	18,007	18,768
Non-classified [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	$ 241,417	$ 253,120

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Commitments and Contingent Liabilities

6 Months Ended

Jun. 30, 2011

Commitments And Contingencies [Abstract]

Commitments and Contingent Liabilities

Note 4.                                Commitments and Contingencies

The Company is a party to financial instruments in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuating interest rates. These financial instruments include commitments to extend credit, unused lines of credit, and standby letters of credit. Exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to make loans and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit origination guidelines, portfolio maintenance and management procedures as other credit and off-balance sheet products.  Commitments to extend credit and unused lines of credit totaled $642.8 million at June 30, 2011 and $643.6 million at December 31, 2010.  Since commitments to extend credit and unused lines of credit may expire without being fully drawn upon, this amount does not necessarily represent future cash commitments. Collateral obtained upon exercise of the commitment is determined using management's credit evaluation of the borrower and may include accounts receivable, inventory, property, land and other items.

The Company guarantees the obligations or performance of customers by issuing standby letters of credit to third parties. These standby letters of credit are frequently issued in support of third party debt, such as corporate debt issuances, industrial revenue bonds and municipal securities. The credit risk involved in issuing standby letters of credit is essentially the same as the credit risk involved in extending loan facilities to customers, and they are subject to the same credit origination guidelines, portfolio maintenance and management procedures as other credit and off-balance sheet products. Typically, these instruments have terms of five years or less and expire unused; therefore, the total amounts do not necessarily represent future cash commitments. Standby letters of credit totaled $26.3 million at June 30, 2011 and $26.2 million at December 31, 2010. As of June 30, 2011, the fair value of standby letters of credit was not significant to the Company's consolidated financial statements.

The Company has also entered into commercial letter of credit agreements on behalf of its customers.  Under these agreements, the Company, on the request of its customer, opens the letter of credit and makes a commitment to honor draws made under the agreement, whereby the beneficiary is normally the provider of goods and/or services and the Company essentially replaces the customer as the payee.  The credit risk involved in issuing commercial letters of credit is essentially the same as the credit risk involved in extending loan facilities to customers, and they are subject to the same credit origination guidelines, portfolio maintenance and management procedures as other credit and off-balance sheet products.  Typically, these agreements vary in terms and the total amounts do not necessarily represent future cash commitments.  Commercial letters of credit totaled $15.7 million at June 30, 2011 and $16.3 million at December 31, 2010.  As of June 30, 2011, the fair value of commercial letters of credit was not significant to the Company's consolidated financial statements.

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Consolidated Statements of Comprehensive Income (Unaudited) Parenthetical (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Consolidated Statements of Comprehensive Income (Unaudited) Parenthetical [Abstract]
Unrealized net holding gains arising during the period, pre-tax amounts	$ 10,392	$ 3,733	$ 7,741	$ 5,749
Reclassification adjustment for net gains related to securities available for sale included in net income pre-tax amounts	59	63	86	91
Amortization of prior service cost and actuarial gains pre-tax amounts	$ 416	$ 393	$ 831	$ 786

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Operating activities
Net income	$ 28,962	$ 28,400
Adjustments to reconcile net income to net cash provided by operating activities
Provision for loan and lease losses	9,986	15,593
Depreciation and amortization of premises and equipment	2,652	2,663
Net accretion on securities	512	388
Amortization of intangible assets	1,504	1,561
Stock based compensation	1,723	1,984
Bank owned life insurance income	(1,695)	(1,789)
Purchases of trading securities	(353)	(116)
Unrealized (gains) losses in trading securities	(115)	31
Deferred income tax benefit	(4,003)	(7,938)
Proceeds from sales of loans held for sale	2,477	40,396
Originations and purchases of loans held for sale	(875)	(39,028)
Net gains on sales of loans held for sale	0	(478)
Net security gains	(86)	(91)
Net gain on sales of other real estate owned	(461)	(114)
Net decrease in other assets	2,696	4,592
Net increase (decrease) in other liabilities	158	(1,492)
Net cash provided by operating activities	43,082	44,562
Investing activities
Net cash used in Lattremore acquisition	(1,000)	0
Securities available for sale:
Proceeds from maturities, calls, and principal paydowns	247,959	285,615
Proceeds from sales	118	702
Purchases	(268,154)	(302,152)
Securities held to maturity:
Proceeds from maturities, calls, and principal paydowns	29,288	66,327
Purchases	(9,192)	(28,962)
Net increase in loans	(67,474)	(15,452)
Net (increase) decrease in Federal Reserve and FHLB stock	(179)	3,801
Proceeds from bank owned life insurance	0	2,767
Purchases of premises and equipment	(2,112)	(2,747)
Proceeds from sales of other real estate owned	953	1,678
Net cash (used in) provided by investing activities	(69,793)	11,577
Financing activities
Net (decrease) increase in deposits	(19,739)	8,285
Net increase in short-term borrowings	16,524	3,059
Repayments of long-term debt	(2,140)	(75,237)
Issuance of long-term debt	156	0
Excess tax benefit from exercise of stock options	33	123
Proceeds from the issuance of shares to employee benefit plans and other stock plans	767	1,288
Purchase of treasury stock	(21,164)	0
Cash dividends and payment for fractional shares	(13,752)	(13,781)
Net cash used in financing activities	(39,315)	(76,263)
Net decrease in cash and cash equivalents	(66,026)	(20,124)
Cash and cash equivalents at beginning of period	168,792	187,161
Cash and cash equivalents at end of period	102,766	167,037
Cash paid during the period for:
Interest	21,120	29,443
Income taxes paid, net of refunds received	14,834	21,149
Noncash investing activities:
Loans transferred to OREO	625	672
Fair value of assets acquired	3,460	0
Goodwill and identifiable intangible assets recognized in purchase combination	3,426	0
Fair value of debt issued in purchase combination	$ 2,460	$ 0

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Allowance for Loan and Lease Losses and Credit Quality of Loans and Leases (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Financing Receivable, Impaired [Line Items]
Recorded Investment Balance (Book)	$ 21,582		$ 21,582		$ 17,827
Unpaid Principal Balance (Legal)	32,546		32,546		21,137
Related Allowance	352		352		2,211
Average Recorded Investment	22,584	23,209	19,922	20,664
Interest Income Recognized Total	277	185	437	283
Interest Income Recognized Cash	277	185	437	283
Minimum Balance For Classified Loans to be Evaluated for Impairment	500		500
Nonperforming Loans Minimum Number of days Past Due For Classification (in days)	90		90
Commercial Financing Receivable [Member] | With No Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Balance (Book)	2,746		2,746		1,794
Unpaid Principal Balance (Legal)	5,956		5,956		2,145
Average Recorded Investment	3,349	1,754	3,041	1,813
Interest Income Recognized Total	26	24	73	29
Interest Income Recognized Cash	26	24	73	29
Commercial Real Estate Other Receivable [Member] | With No Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Balance (Book)	4,464		4,464		3,787
Unpaid Principal Balance (Legal)	7,116		7,116		4,467
Average Recorded Investment	4,315	3,401	4,039	3,785
Interest Income Recognized Total	24	5	45	14
Interest Income Recognized Cash	24	5	45	14
Agricultural Financing Receivable [Member] | With No Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Balance (Book)	2,451		2,451		2,657
Unpaid Principal Balance (Legal)	3,009		3,009		3,145
Average Recorded Investment	2,485	2,770	2,597	2,515
Interest Income Recognized Total	18	16	45	28
Interest Income Recognized Cash	18	16	45	28
Agricultural Real Estate Financing Receivable [Member] | With No Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Balance (Book)	1,606		1,606		1,283
Unpaid Principal Balance (Legal)	2,242		2,242		1,382
Average Recorded Investment	1,720	2,652	1,496	2,311
Interest Income Recognized Total	21	35	38	64
Interest Income Recognized Cash	21	35	38	64
Small Business Financing Receivable [Member] | With No Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Balance (Book)	7,552		7,552		1,982
Unpaid Principal Balance (Legal)	10,712		10,712		2,334
Average Recorded Investment	7,930	5,337	4,666	2,995
Interest Income Recognized Total	89	46	102	47
Interest Income Recognized Cash	89	46	102	47
With No Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Balance (Book)	18,819		18,819		11,503
Unpaid Principal Balance (Legal)	29,035		29,035		13,473
Average Recorded Investment	19,799	15,914	15,839	13,419
Interest Income Recognized Total	178	126	303	182
Interest Income Recognized Cash	178	126	303	182
Commercial Financing Receivable [Member] | With An Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Balance (Book)	553		553		3,925
Unpaid Principal Balance (Legal)	868		868		4,962
Related Allowance	275		275		1,907
Average Recorded Investment	558	2,308	1,226	2,477
Interest Income Recognized Total	19	0	49	1
Interest Income Recognized Cash	19	0	49	1
Commercial Real Estate Other Receivable [Member] | With An Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Balance (Book)	0		0		0
Unpaid Principal Balance (Legal)	0		0		0
Related Allowance	0		0		0
Average Recorded Investment	0	2,373	573	2,107
Interest Income Recognized Total	0	0	0	0
Interest Income Recognized Cash	0	0	0	0
Agricultural Financing Receivable [Member] | With An Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Balance (Book)	1,508		1,508		1,671
Unpaid Principal Balance (Legal)	1,866		1,866		1,918
Related Allowance	74		74		281
Average Recorded Investment	1,521	1,847	1,571	1,886
Interest Income Recognized Total	67	46	67	58
Interest Income Recognized Cash	67	46	67	58
Agricultural Real Estate Financing Receivable [Member] | With An Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Balance (Book)	702		702		728
Unpaid Principal Balance (Legal)	777		777		784
Related Allowance	3		3		23
Average Recorded Investment	706	767	713	775
Interest Income Recognized Total	13	13	18	42
Interest Income Recognized Cash	13	13	18	42
With An Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Balance (Book)	2,763		2,763		6,324
Unpaid Principal Balance (Legal)	3,511		3,511		7,664
Related Allowance	352		352		2,211
Average Recorded Investment	2,785	7,295	4,083	7,245
Interest Income Recognized Total	99	59	134	101
Interest Income Recognized Cash	99	59	134	101
Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing Receivable	1,631,097		1,631,097		1,580,371
Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing Receivable	1,469,075		1,469,075		1,481,241
Residential Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing Receivable	564,345		564,345		548,394
Commercial Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Financing Receivable	521,093		521,093		467,755
Commercial Real Estate Other Receivable [Member]
Financing Receivable, Impaired [Line Items]
Financing Receivable	750,302		750,302		737,235
Agricultural Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Financing Receivable	65,840		65,840		67,556
Agricultural Real Estate Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Financing Receivable	34,438		34,438		35,937
Small Business Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Financing Receivable	259,424		259,424		271,888
Indirect Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Financing Receivable	837,205		837,205		828,927
Home Equity Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Financing Receivable	558,099		558,099		575,678
Direct Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Financing Receivable	$ 73,771		$ 73,771		$ 76,636

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Description of Business

6 Months Ended

Jun. 30, 2011

Basis of Presentation [Abstract]

Description of Business

Note 1.                                Description of Business

NBT Bancorp Inc. (the "Registrant") is a registered financial holding company incorporated in the State of Delaware in 1986, with its principal headquarters located in Norwich, New York. The Registrant is the parent holding company of NBT Bank, N.A. (the "Bank"), NBT Financial Services, Inc. ("NBT Financial"), NBT Holdings, Inc. ("NBT Holdings"), CNBF Capital Trust I, NBT Statutory Trust I and NBT Statutory Trust II (the "Trusts").  Through the Bank, the Company is focused on community banking operations.  Through NBT Financial, the Company operates EPIC Advisors, Inc. ("EPIC"), a retirement plan administrator.  Through NBT Holdings, the Company operates Mang Insurance Agency, LLC ("Mang"), a full-service insurance agency.  The Trusts were organized to raise additional regulatory capital and to provide funding for certain acquisitions. The Registrant's primary business consists of providing commercial banking and financial services to customers in its market area. The principal assets of the Registrant are all of the outstanding shares of common stock of its direct subsidiaries, and its principal sources of revenue are the management fees and dividends it receives from the Bank, NBT Financial, and NBT Holdings.

The Bank is a full service commercial bank formed in 1856, which provides a broad range of financial products to individuals, corporations and municipalities throughout the upstate New York, northeastern Pennsylvania, and northwestern Vermont market areas.  The Bank has entered into an agreement to purchase four branches in western Massachusetts, which is expected to close in the fourth quarter of 2011.

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Commitments and Contingent Liabilities (Details) (USD $) In Millions	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011 Commitment To Extend Credit and Unused Lines of Credit [Member]	Dec. 31, 2010 Commitment To Extend Credit and Unused Lines of Credit [Member]	Jun. 30, 2011 Standby Letters of Credit [Member]	Dec. 31, 2010 Standby Letters of Credit [Member]	Jun. 30, 2011 Commercial Letters of Credit [Member]	Dec. 31, 2010 Commercial Letters of Credit [Member]
Guarantor Obligations [Line Items]
Commitments - maximum potential obligation		$ 642.8	$ 643.6	$ 26.3	$ 26.2	$ 15.7	$ 16.3
Obligation instrument term	5

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Earnings Per Share (Details) (USD $) In Thousands, except Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Basic EPS: [Abstract]
Weighted average common shares outstanding, basic (in shares)	34,044,000	34,288,000	34,189,000	34,259,000
Net income available to common shareholders	$ 14,655	$ 14,424	$ 28,962	$ 28,400
Basic EPS (per share)	$ 0.43	$ 0.42	$ 0.85	$ 0.83
Diluted EPS: [Abstract]
Weighted average common shares outstanding (in shares)	34,044,000	34,288,000	34,189,000	34,259,000
Dilutive effect of common stock options and restricted stock (in shares)	276,000	277,000	303,000	226,000
Weighted average common shares and common share equivalents (in shares)	34,320,000	34,565,000	34,492,000	34,485,000
Net income available to common shareholders	$ 14,655	$ 14,424	$ 28,962	$ 28,400
Diluted EPS	$ 0.43	$ 0.42	$ 0.84	$ 0.82
Stock options excluded from calculation of diluted EPS (in shares)	1,240,099	1,039,676	867,397	1,293,469

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Allowance for Loan and Lease Losses and Credit Quality of Loans and Leases (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2011	Dec. 31, 2010
Financing Receivable, Recorded Investment, Past Due [Abstract]
31 - 60 Days Past Due Accruing	$ 18,131	$ 23,116
61 - 90 Days Past Due Accruing	5,809	5,563
Greater Than 91 Days Past Due Accruing	1,459	2,325
Total Past Due Accruing	25,399	31,004
Non-Accrual	40,191	42,467
Current	3,598,927	3,536,535
Recorded Total Loans and Leases	3,664,517	3,610,006
Home Equity Loan amount, Percentage of Equity in Home, Maximum (in hundredths)	85.00%
Residential Real Estate Loan amount, percentage of appraised value or purchase price of the property, maximum (in hundredths)	85.00%
Troubled Debt Restructured Loans Amount	4,000
Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Abstract]
31 - 60 Days Past Due Accruing	3,918	4,140
61 - 90 Days Past Due Accruing	2,453	1,330
Greater Than 91 Days Past Due Accruing	0	94
Total Past Due Accruing	6,371	5,564
Non-Accrual	21,582	25,051
Current	1,603,144	1,549,756
Recorded Total Loans and Leases	1,631,097	1,580,371
Commercial Portfolio Segment [Member] | Commercial Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Abstract]
31 - 60 Days Past Due Accruing	203	136
61 - 90 Days Past Due Accruing	401	55
Greater Than 91 Days Past Due Accruing	0	94
Total Past Due Accruing	604	285
Non-Accrual	2,424	5,837
Current	518,065	461,633
Recorded Total Loans and Leases	521,093	467,755
Commercial Portfolio Segment [Member] | Commercial Real Estate Other Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Abstract]
31 - 60 Days Past Due Accruing	2,075	1,263
61 - 90 Days Past Due Accruing	1,739	0
Greater Than 91 Days Past Due Accruing	0	0
Total Past Due Accruing	3,814	1,263
Non-Accrual	5,871	5,687
Current	740,617	730,285
Recorded Total Loans and Leases	750,302	737,235
Commercial Portfolio Segment [Member] | Agricultural Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Abstract]
31 - 60 Days Past Due Accruing	0	63
61 - 90 Days Past Due Accruing	3	92
Greater Than 91 Days Past Due Accruing	0	0
Total Past Due Accruing	3	155
Non-Accrual	3,706	4,065
Current	62,131	63,336
Recorded Total Loans and Leases	65,840	67,556
Commercial Portfolio Segment [Member] | Agricultural Real Estate Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Abstract]
31 - 60 Days Past Due Accruing	161	108
61 - 90 Days Past Due Accruing	0	0
Greater Than 91 Days Past Due Accruing	0	0
Total Past Due Accruing	161	108
Non-Accrual	1,886	2,429
Current	32,391	33,400
Recorded Total Loans and Leases	34,438	35,937
Commercial Portfolio Segment [Member] | Small Business Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Abstract]
31 - 60 Days Past Due Accruing	1,479	2,570
61 - 90 Days Past Due Accruing	310	1,183
Greater Than 91 Days Past Due Accruing	0	0
Total Past Due Accruing	1,789	3,753
Non-Accrual	7,695	7,033
Current	249,940	261,102
Recorded Total Loans and Leases	259,424	271,888
Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Abstract]
31 - 60 Days Past Due Accruing	12,706	15,974
61 - 90 Days Past Due Accruing	2,965	4,107
Greater Than 91 Days Past Due Accruing	1,273	1,312
Total Past Due Accruing	16,944	21,393
Non-Accrual	9,641	8,765
Current	1,442,490	1,451,083
Recorded Total Loans and Leases	1,469,075	1,481,241
Consumer Portfolio Segment [Member] | Indirect Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Abstract]
31 - 60 Days Past Due Accruing	7,248	9,307
61 - 90 Days Past Due Accruing	1,542	2,193
Greater Than 91 Days Past Due Accruing	893	862
Total Past Due Accruing	9,683	12,362
Non-Accrual	1,185	1,971
Current	826,337	814,594
Recorded Total Loans and Leases	837,205	828,927
Consumer Portfolio Segment [Member] | Home Equity Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Abstract]
31 - 60 Days Past Due Accruing	4,717	5,740
61 - 90 Days Past Due Accruing	1,169	1,756
Greater Than 91 Days Past Due Accruing	273	396
Total Past Due Accruing	6,159	7,892
Non-Accrual	8,046	6,395
Current	543,894	561,391
Recorded Total Loans and Leases	558,099	575,678
Consumer Portfolio Segment [Member] | Direct Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Abstract]
31 - 60 Days Past Due Accruing	741	927
61 - 90 Days Past Due Accruing	254	158
Greater Than 91 Days Past Due Accruing	107	54
Total Past Due Accruing	1,102	1,139
Non-Accrual	410	399
Current	72,259	75,098
Recorded Total Loans and Leases	73,771	76,636
Residential Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Abstract]
31 - 60 Days Past Due Accruing	1,507	3,002
61 - 90 Days Past Due Accruing	391	126
Greater Than 91 Days Past Due Accruing	186	919
Total Past Due Accruing	2,084	4,047
Non-Accrual	8,968	8,651
Current	553,293	535,696
Recorded Total Loans and Leases	$ 564,345	$ 548,394

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Fair Values of Financial Instruments

6 Months Ended

Jun. 30, 2011

Fair Values of Financial Instruments [Abstract]

Fair Values of Financial Instruments

Note 9.    Fair Value Measurements and Fair Value of Financial Instruments

U.S. GAAP states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  Fair value measurements are not adjusted for transaction costs.  A fair value hierarchy exists within U.S. GAAP that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 -  Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

A financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities, many other sovereign government obligations, liquid mortgage products, active listed equities and most money market securities. Such instruments are generally classified within level 1 or level 2 of the fair value hierarchy.  The Company does not adjust the quoted price for such instruments.

The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency include most investment-grade and high-yield corporate bonds, less liquid mortgage products, less liquid agency securities, less liquid listed equities, state, municipal and provincial obligations, and certain physical commodities. Such instruments are generally classified within level 2 of the fair value hierarchy.

Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence. In the absence of such evidence, management's best estimate will be used. Management's best estimate consists of both internal and external support on certain Level 3 investments. Subsequent to inception, management only changes level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, offerings in the equity or debt markets, and changes in financial ratios or cash flows.

For the six months ended June 30, 2011, the Company has made no transfers of assets between Level 1 and Level 2, and has had no Level 3 activity.

The following tables set forth the Company's financial assets and liabilities measured on a recurring basis that were accounted for at fair value.  Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):

June 30, 2011:

			Quoted Prices in	Significant	Significant
			Active Markets for	Other	Unobservable	Balance
			Identical Assets	Observable Inputs	Inputs	as of
			(Level 1)	(Level 2)	(Level 3)	June 30, 2011
Assets:
	Securities Available for Sale:
		U.S. Treasury	81,813	-	-	81,813
		Federal Agency	-	240,374	-	240,374
		State & municipal	-	108,795	-	108,795
		Mortgage-backed	-	339,323	-	339,323
		Collateralized mortgage obligations	-	355,140	-	355,140
		Corporate	-	20,247	-	20,247
		Other securities	8,948	2,039	-	10,987
	Total Securities Available for Sale		$                90,761	$          1,065,918	$               -	$              1,156,679
	Trading Securities		3,276	-	-	3,276
Total			$                94,037	$          1,065,918	$               -	$              1,159,955

December 31, 2010:

			Quoted Prices in	Significant	Significant
			Active Markets for	Other	Unobservable	Balance
			Identical Assets	Observable Inputs	Inputs	as of
			(Level 1)	(Level 2)	(Level 3)	December 31, 2010
Assets:
	Securities Available for Sale:
		U.S. Treasury	$                 91,280	$                      -	$                -	$                   91,280
		Federal Agency	-	349,750	-	349,750
		State & municipal	-	114,937	-	114,937
		Mortgage-backed	-	244,808	-	244,808
		Collateralized mortgage obligations	-	297,888	-	297,888
		Corporate	-	20,489	-	20,489
		Other securities	8,190	2,026	-	10,216
	Total Securities Available for Sale		$                99,470	$          1,029,898	$               -	$              1,129,368
	Trading Securities		2,808	-	-	2,808
Total			$               102,278	$          1,029,898	$               -	$              1,132,176

Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices).  The majority of the other investment securities are reported at fair value utilizing Level 2 inputs.  The prices for these instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases and sales of investment securities.  Prices obtained from these sources include prices derived from market quotations and matrix pricing.  The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond's terms and conditions, among other things.  Management reviews the methodologies used in pricing the securities by its third party providers.

U.S. GAAP requires disclosure of assets and liabilities measured and recorded at fair value on a nonrecurring basis such as goodwill, loans held for sale, other real estate owned, lease residuals, collateral-dependent impaired loans, mortgage servicing rights, and held-to-maturity securities.  The only nonrecurring fair value measurement recorded during the six month period ended June 30, 2011 was related to impaired loans.  During the six month period ended June 30, 2011, the Company established specific reserves on impaired loans of approximately $1.0 million, which were included in the provision for loan and lease losses for the respective period.  The Company uses the fair value of underlying collateral, less costs to sell, to estimate the specific reserves for collateral dependent impaired loans.  Based on the valuation techniques used, the fair value measurements for collateral dependent impaired loans are classified as Level 3.

The following table sets forth information with regard to estimated fair values of financial instruments at June 30, 2011 and December 31, 2010:

	June 30, 2011		December 31, 2010
(In thousands)	Carrying amount	Estimated fair value	Carrying amount	Estimated fair value
Financial assets
Cash and cash equivalents	$     102,766	$     102,766	$     168,792	$     168,792
Securities available for sale	1,156,679	1,156,679	1,129,368	1,129,368
Securities held to maturity	76,878	78,357	97,310	98,759
Trading securities	3,276	3,276	2,808	2,808
Loans (1)	3,664,517	3,674,736	3,610,006	3,626,603
Less allowance for loan losses	70,484	-	71,234	-
Net loans	3,594,033	3,674,736	3,538,772	3,626,603
Accrued interest receivable	17,719	17,719	19,130	19,130
Financial liabilities
Savings, NOW, and money market	$ 2,288,515	$ 2,288,515	$  2,291,833	$  2,291,833
Time deposits	895,806	906,222	930,778	943,988
Noninterest bearing	930,292	930,292	911,741	911,741
Short-term borrowings	175,958	175,958	159,434	159,434
Long-term debt	370,350	427,895	369,874	423,350
Accrued interest payable	4,135	4,135	4,356	4,356
Trust preferred debentures	75,422	75,422	75,422	71,148
1. Lease receivables, although excluded from the scope of ASC 825-10-50-10, are included in the estimated fair value
amounts at their carrying amounts.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, the Company has a substantial trust and investment management operation that contributes net fee income annually. The trust and investment management operation is not considered a financial instrument, and its value has not been incorporated into the fair value estimates. Other significant assets and liabilities include the benefits resulting from the low-cost funding of deposit liabilities as compared to the cost of borrowing funds in the market, and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimate of fair value.

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Basis of Presentation

6 Months Ended

Jun. 30, 2011

Basis of Presentation [Abstract]

Basis of Presentation

Note 2.                                Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of the Registrant and its wholly owned subsidiaries, the Bank, NBT Financial and NBT Holdings.  Collectively, the Registrant and its subsidiaries are referred to herein as "the Company."  All intercompany transactions have been eliminated in consolidation. Amounts in the prior period financial statements are reclassified whenever necessary to conform to current period presentation.

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Allowance for Loan and Lease Losses and Credit Quality of Loans and Leases (Tables)

6 Months Ended

Jun. 30, 2011

Allowance for Loan and Lease Losses and Credit Quality of Loans and Leases [Abstract]

Allowance for loan and lease losses by portfolio

Allowance for Loan and Lease Losses
(in thousands)
Three months ended June 30			Residential
	Commercial	Consumer	Real Estate
	Loans	Loans	Mortgages	Unallocated	Total
Balance as of March 31, 2011	$        37,937	$      26,219	$           5,338	$             440	$      69,934
Charge-offs	(2,588)	(3,600)	(414)	-	(6,602)
Recoveries	474	654	3	-	1,131
Provision	3,324	2,445	446	(194)	6,021
Ending Balance as of June 30, 2011	$        39,147	$      25,718	$           5,373	$             246	$      70,484
Balance as of March 31, 2010	$        41,249	$      25,809	$           2,838	$             254	$      70,150
Charge-offs	(3,311)	(3,982)	(410)	-	(7,703)
Recoveries	711	791	1	-	1,503
Provision	236	5,214	866	34	6,350
Ending Balance as of June 30, 2010	$        38,885	$      27,832	$           3,295	$             288	$      70,300
Six months ended June 30			Residential
	Commercial	Consumer	Real Estate
	Loans	Loans	Mortgages	Unallocated	Total
Balance as of December 31, 2010	$        40,101	$      26,126	$           4,627	$             380	$      71,234
Charge-offs	(5,458)	(6,893)	(513)	-	(12,864)
Recoveries	894	1,230	4	-	2,128
Provision	3,610	5,255	1,255	(134)	9,986
Ending Balance as of June 30, 2011	$        39,147	$      25,718	$           5,373	$             246	$      70,484
Balance as of December 31, 2009	$        36,598	$      26,664	$           3,002	$             286	$      66,550
Charge-offs	(6,141)	(7,925)	(522)	-	(14,588)
Recoveries	1,236	1,502	7	-	2,745
Provision	7,192	7,591	808	2	15,593
Ending Balance as of June 30, 2010	$        38,885	$      27,832	$           3,295	$             288	$      70,300

The following tables illustrate the allowance for loan and lease losses and the recorded investment by portfolio segment as of June 30, 2011 and December 31, 2010:

Allowance for Loan and Lease Losses and Recorded Investment in Loans and Leases
(in thousands)
			Residential
	Commercial	Consumer	Real Estate
	Loans	Loans	Mortgages	Unallocated	Total
As of June 30, 2011
Allowance loan and lease losses	$         39,147	$       25,718	$           5,373	$              246	$       70,484
Allowance for loans and leases individually evaluated for impairment	$               352	$                 -	$                  -		$             352
Allowance for loans and leases collectively evaluated for impairment	$         38,795	$       25,718	$           5,373	$              246	$       70,132
Ending balance of loans and leases	$   1,631,097	$  1,469,075	$       564,345		$  3,664,517
Ending balance of loans and leases individually evaluated for impairment	$           7,718	$                 -	$                  -		$          7,718
Ending balance of loans and leases collectively evaluated for impairment	$   1,623,379	$  1,469,075	$       564,345		$  3,656,799
As of December 31, 2010
Allowance loan and lease losses	$         40,101	$       26,126	$           4,627	$              380	$       71,234
Allowance for loans and leases individually evaluated for impairment	$           2,211	$                 -	$                  -		$          2,211
Allowance for loans and leases collectively evaluated for impairment	$         37,890	$       26,126	$           4,627	$              380	$       69,023
Ending balance of loans and leases	$   1,580,371	$  1,481,241	$       548,394		$  3,610,006
Ending balance of loans and leases individually evaluated for impairment	$         11,419	$                 -	$                  -		$       11,419
Ending balance of loans and leases collectively evaluated for impairment	$   1,568,952	$  1,481,241	$       548,394		$  3,598,587

Past Due Financing Receivables

Loans on Nonaccrual Status
(In thousands)		June 30, 2011	December 31, 2010
Commercial Loans
	Commercial	$         2,424	$            5,837
	Commercial Real Estate	5,871	5,687
	Agricultural	3,706	4,065
	Agricultural Real Estate	1,886	2,429
	Small Business	7,695	7,033
		21,582	25,051
Consumer Loans
	Indirect	1,185	1,971
	Home Equity	8,046	6,395
	Direct	410	399
		9,641	8,765
Residential Real Estate Mortgages		8,968	8,651
Total Nonaccrual		$       40,191	$          42,467

The following tables set forth information with regard to past due and nonperforming loans by loan class as of June 30, 2011 and December 31, 2010:

Age Analysis of Past Due Loans
As of June 30, 2011
(in thousands)
				Greater Than				Recorded
		31-60 Days	61-90 Days	90 Days	Total			Total
		Past Due	Past Due	Past Due	Past Due			Loans and
		Accruing	Accruing	Accruing	Accruing	Non-Accrual	Current	Leases
Commercial Loans
	Commercial	$          203	$          401	$                 -	$       604	$           2,424	$   518,065	$   521,093
	Commercial Real Estate	2,075	1,739	-	3,814	5,871	740,617	750,302
	Agricultural	-	3	-	3	3,706	62,131	65,840
	Agricultural Real Estate	161	-	-	161	1,886	32,391	34,438
	Small Business	1,479	310	-	1,789	7,695	249,940	259,424
		3,918	2,453	-	6,371	21,582	1,603,144	1,631,097
Consumer Loans
	Indirect	7,248	1,542	893	9,683	1,185	826,337	837,205
	Home Equity	4,717	1,169	273	6,159	8,046	543,894	558,099
	Direct	741	254	107	1,102	410	72,259	73,771
		12,706	2,965	1,273	16,944	9,641	1,442,490	1,469,075
Residential Real Estate Mortgages		1,507	391	186	2,084	8,968	553,293	564,345
		$     18,131	$       5,809	$            1,459	$  25,399	$         40,191	$3,598,927	$3,664,517

Age Analysis of Past Due Loans
As of December 31, 2010
(in thousands)
					Greater Than					Recorded
		31-60 Days		61-90 Days	91 Days	Total				Total
		Past Due		Past Due	Past Due	Past Due				Loans and
		Accruing		Accruing	Accruing	Accruing	Non-Accrual	Current		Leases
Commercial
	Commercial		$          136	$            55	$            94	$      285	$         5,837	$    461,633		$    467,755
	Commercial
	Real Estate		1,263	-	-	1,263	5,687	730,285		737,235
	Agricultural		63	92	-	155	4,065	63,336		67,556
	Agricultural
	Real Estate		108	-	-	108	2,429	33,400		35,937
	Small Business		2,570	1,183	-	3,753	7,033	261,102		271,888
			4,140	1,330	94	5,564	25,051	1,549,756		1,580,371
Consumer
	Indirect		9,307	2,193	862	12,362	1,971	814,594		828,927
	Home Equity		5,740	1,756	396	7,892	6,395	561,391		575,678
	Direct		927	158	54	1,139	399	75,098		76,636
			15,974	4,107	1,312	21,393	8,765	1,451,083		1,481,241
Residential Real  Estate Mortgages			3,002	126	919	4,047	8,651		535,696		548,394
		$    23,116		$       5,563	$       2,325	$ 31,004	$       42,467	$ 3,536,535		$ 3,610,006

Impaired loans and specific reserve allocations

			June 30, 2011			December 31, 2010
			Recorded	Unpaid		Recorded	Unpaid
			Investment	Principal		Investment	Principal
			Balance	Balance	Related	Balance	Balance	Related
(in thousands)			(Book)	(Legal)	Allowance	(Book)	(Legal)	Allowance
With no related allowance recorded:
	Commercial Loans
		Commercial	$       2,746	$   5,956		$       1,794	$   2,145
		Commercial Real Estate	4,464	7,116		3,787	4,467
		Agricultural	2,451	3,009		2,657	3,145
		Agricultural Real Estate	1,606	2,242		1,283	1,382
		Small Business	7,552	10,712		1,982	2,334
			$      18,819	$  29,035		$     11,503	$ 13,473
With an allowance recorded:
	Commercial Loans
		Commercial	$          553	$      868	$        275	$       3,925	$   4,962	$     1,907
		Commercial Real Estate	-	-	-	-	-	-
		Agricultural	1,508	1,866	74	1,671	1,918	281
		Agricultural Real Estate	702	777	3	728	784	23
			2,763	3,511	352	6,324	7,664	2,211
Total:			$     21,582	$ 32,546	$        352	$    17,827	$ 21,137	$     2,211

The decrease in commercial loans with a related allowance recorded from December 31, 2010 to June 30, 2011 is primarily due to the repayment of a large commercial credit and the charge-off of another large commercial credit.

The following table summarizes the average recorded investments on impaired loans and the interest income recognized for the three months ended June 30, 2011 and June 30, 2010:

			June 30, 2011			June 30, 2010
			Average	Interest Income		Average	Interest Income
			Recorded	Recognized		Recorded	Recognized
(in thousands)			Investment	Accrual	Cash	Investment	Accrual	Cash
With no related allowance recorded:
	Commercial Loans
		Commercial	$       3,349	$      26	$ 26	$       1,754	$      24	$ 24
		Commercial Real Estate	4,315	24	24	3,401	5	5
		Agricultural	2,485	18	18	2,770	16	16
		Agricultural Real Estate	1,720	21	21	2,652	35	35
		Small Business	7,930	89	89	5,337	46	46
			$    19,799	$    178	$178	$    15,914	$    126	$126
With an allowance recorded:
	Commercial Loans
		Commercial	$          558	$      19	$ 19	$       2,308	$       -	$    -
		Commercial Real Estate	-	-	-	2,373	-	-
		Agricultural	1,521	67	67	1,847	46	46
		Agricultural Real Estate	706	13	13	767	13	13
			$       2,785	$      99	$ 99	$       7,295	$      59	$ 59
Total:			$    22,584	$    277	$277	$    23,209	$    185	$185

The following table summarizes the average recorded investments on impaired loans and the interest income recognized for the six months ended June 30, 2011 and June 30, 2010:

			June 30, 2011			June 30, 2010
			Average	Interest Income		Average	Interest Income
			Recorded	Recognized		Recorded	Recognized
(in thousands)			Investment	Accrual	Cash	Investment	Accrual	Cash
With no related allowance recorded:
	Commercial Loans
		Commercial	$       3,041	$      73	$ 73	$       1,813	$      29	$ 29
		Commercial Real Estate	4,039	45	45	3,785	14	14
		Agricultural	2,597	45	45	2,515	28	28
		Agricultural Real Estate	1,496	38	38	2,311	64	64
		Small Business	4,666	102	102	2,995	47	47
			$    15,839	$    303	$303	$    13,419	$    182	$182
With an allowance recorded:
	Commercial Loans
		Commercial	$       1,226	$      49	$ 49	$       2,477	$        1	$   1
		Commercial Real Estate	573	-	-	2,107	-	-
		Agricultural	1,571	67	67	1,886	58	58
		Agricultural Real Estate	713	18	18	775	42	42
			$       4,083	$    134	$134	$       7,245	$    101	$101
Total:			$    19,922	$    437	$437	$    20,664	$    283	$283

Financing Receivable Credit Quality by Loan Class

Credit Quality Indicators
As of June 30, 2011
Commercial Credit Exposure			Commercial		Agricultural
By Internally Assigned Grade:		Commercial	Real Estate	Agricultural	Real Estate	Total
	1 - Pass	$           487,398	$    658,469	$       57,263	$      29,415	$  1,232,545
	2 - Special Mention	6,175	35,810	366	463	42,814
	3 - Substandard	26,967	56,023	8,128	4,560	95,678
	4 - Doubtful	553	-	83	-	636
Total		$           521,093	$    750,302	$       65,840	$      34,438	$  1,371,673
Small Business Credit Exposure
By Internally Assigned Grade:		Small Business				Total
	Non-classified	$           241,417				$     241,417
	Classified	18,007				18,007
Total		$           259,424				$     259,424
Consumer Credit Exposure
By Payment Activity:		Indirect	Home Equity	Direct		Total
	Performing	$           835,127	$    549,780	$       73,254		$  1,458,161
	Nonperforming	2,078	8,319	517		10,914
Total		$           837,205	$    558,099	$       73,771		$  1,469,075
Residential Mortgage Credit Exposure		Residential
By Payment Activity:		Mortgage				Total
	Performing	$           555,191				$     555,191
	Nonperforming	9,154				9,154
Total		$           564,345				$     564,345

Credit Quality Indicators
As of December 31, 2010
Commercial Credit Exposure			Commercial		Agricultural
By Internally Assigned Grade:		Commercial	Real Estate	Agricultural	Real Estate	Total
	1 - Pass	$           441,834	$    654,974	$       61,195	$     30,483	$1,188,486
	2 - Special Mention	4,830	35,461	660	936	41,887
	3 - Substandard	21,091	46,800	5,606	4,518	78,015
	4 - Doubtful	-	-	95	-	95
Total		$           467,755	$    737,235	$       67,556	$     35,937	$1,308,483
Small Business Credit Exposure
By Internally Assigned Grade:		Small Business				Total
	Non-classified	$           253,120				$   253,120
	Classified	18,768				18,768
Total		$           271,888				$   271,888
Consumer Credit Exposure
By Payment Activity:		Indirect	Home Equity	Direct		Total
	Performing	$           826,956	$    569,283	$       76,237		$1,472,476
	Nonperforming	1,971	6,395	399		8,765
Total		$           828,927	$    575,678	$       76,636		$1,481,241
Residential Mortgage Credit Exposure		Residential
By Payment Activity:		Mortgage				Total
	Performing	$           539,743				$   539,743
	Nonperforming	8,651				8,651
Total		$           548,394				$   548,394

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Allowance for Loan and Lease Losses and Credit Quality of Loans and Leases (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Allowance for Loan and Lease Losses and Credit Quality of Loans and Leases [Abstract]
Loan portfolio segments			3
Commercial Real Estate Loan amount, percentage of appraised value of the property, maximum (in hundredths)	80.00%		80.00%
Agricultural Real Estate Loan amount, percentage of appraised value of the property, maximum (in hundredths)	75.00%		75.00%
Small Business Loans, Maximum Amount	$ 350		$ 350
Automobile Financing Approximate percentage of Indirect loans (in hundredths)	69.00%		69.00%
Automobile Financing Principal Repayment terms, Low End Of range (in years)	3		3
Automobile Financing Principal Repayment terms, High End Of range (in years)	6		6
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance as of Beginning of Period	69,934	70,150	71,234	66,550
Charge-offs	(6,602)	(7,703)	(12,864)	(14,588)
Recoveries	1,131	1,503	2,128	2,745
Provision	6,021	6,350	9,986	15,593
Balance as of Ending of Period	70,484	70,300	70,484	70,300
Allowance loan and lease losses
Allowance for loans and leases individually evaluated for impairment	352		352		2,211
Allowance for loans and leases collectively evaluated for impairment	70,132		70,132		69,023
Ending balance of loans and leases	3,664,517		3,664,517		3,610,006
Ending balance of loans and leases individually evaluated for impairment	7,718		7,718		11,419
Ending balance of loans and leases collectively evaluated for impairment	3,656,799		3,656,799		3,598,587
Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance as of Beginning of Period	37,937	41,249	40,101	36,598
Charge-offs	(2,588)	(3,311)	(5,458)	(6,141)
Recoveries	474	711	894	1,236
Provision	3,324	236	3,610	7,192
Balance as of Ending of Period	39,147	38,885	39,147	38,885
Allowance loan and lease losses
Allowance for loans and leases individually evaluated for impairment	352		352		2,211
Allowance for loans and leases collectively evaluated for impairment	38,795		38,795		37,890
Ending balance of loans and leases	1,631,097		1,631,097		1,580,371
Ending balance of loans and leases individually evaluated for impairment	7,718		7,718		11,419
Ending balance of loans and leases collectively evaluated for impairment	1,623,379		1,623,379		1,568,952
Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance as of Beginning of Period	26,219	25,809	26,126	26,664
Charge-offs	(3,600)	(3,982)	(6,893)	(7,925)
Recoveries	654	791	1,230	1,502
Provision	2,445	5,214	5,255	7,591
Balance as of Ending of Period	25,718	27,832	25,718	27,832
Allowance loan and lease losses
Allowance for loans and leases individually evaluated for impairment	0		0		0
Allowance for loans and leases collectively evaluated for impairment	25,718		25,718		26,126
Ending balance of loans and leases	1,469,075		1,469,075		1,481,241
Ending balance of loans and leases individually evaluated for impairment	0		0		0
Ending balance of loans and leases collectively evaluated for impairment	1,469,075		1,469,075		1,481,241
Residential Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance as of Beginning of Period	5,338	2,838	4,627	3,002
Charge-offs	(414)	(410)	(513)	(522)
Recoveries	3	1	4	7
Provision	446	866	1,255	808
Balance as of Ending of Period	5,373	3,295	5,373	3,295
Allowance loan and lease losses
Allowance for loans and leases individually evaluated for impairment	0		0		0
Allowance for loans and leases collectively evaluated for impairment	5,373		5,373		4,627
Ending balance of loans and leases	564,345		564,345		548,394
Ending balance of loans and leases individually evaluated for impairment	0		0		0
Ending balance of loans and leases collectively evaluated for impairment	564,345		564,345		548,394
Unallocated Financing Receivables [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance as of Beginning of Period	440	254	380	286
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	(194)	34	(134)	2
Balance as of Ending of Period	246	288	246	288
Allowance loan and lease losses
Allowance for loans and leases collectively evaluated for impairment	$ 246		$ 246		$ 380

XML



Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Consolidated Statements of Comprehensive Income (Unaudited) Parenthetical [Abstract]
Net income	$ 14,655	$ 14,424	$ 28,962	$ 28,400
Other comprehensive (loss) income, net of tax
Unrealized net holding gains arising during the period (pre-tax amounts of $10,392, $3,733, $7,741 and $5,749)	6,274	2,254	4,672	3,468
Reclassification adjustment for net gains related to securities available for sale included in net income (pre-tax amounts of $59, $63, $86 and $91)	(36)	(38)	(52)	(55)
Pension and other benefits:
Amortization of prior service cost and actuarial gains (pre-tax amounts of $416, $393, $831 and $786)	251	236	502	472
Total other comprehensive income	6,489	2,452	5,122	3,885
Comprehensive income	$ 21,144	$ 16,876	$ 34,084	$ 32,285

XML



Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2011

Earnings Per Share [Abstract]

Earnings Per Share

Three months ended June 30,	2011	2010
(in thousands, except per share data)
Basic EPS:
Weighted average common shares outstanding	34,044	34,288
Net income available to common shareholders	14,655	14,424
Basic EPS	$0.43	$0.42
Diluted EPS:
Weighted average common shares outstanding	34,044	34,288
Dilutive effect of common stock options and restricted stock	276	277
Weighted average common shares and common
share equivalents	34,320	34,565
Net income available to common shareholders	14,655	14,424
Diluted EPS	$0.43	$0.42
Six months ended June 30,	2011	2010
(in thousands, except per share data)
Basic EPS:
Weighted average common shares outstanding	34,189	34,259
Net income available to common shareholders	28,962	28,400
Basic EPS	$0.85	$0.83
Diluted EPS:
Weighted average common shares outstanding	34,189	34,259
Dilutive effect of common stock options and restricted stock	303	226
Weighted average common shares and common
share equivalents	34,492	34,485
Net income available to common shareholders	28,962	28,400
Diluted EPS	$0.84	$0.82

XML



Trust Preferred Debentures (Tables)

6 Months Ended

Jun. 30, 2011

Trust Preferred Debentures [Abstract]

Schedule of Debt of VIE Where Entity is Not Primary Beneficiary

Description	Issuance Date	Trust Preferred Securities Outstanding	Interest Rate	Trust Preferred Debt Owed To Trust	Final Maturity date
CNBF Capital Trust I	June 1999	18,000	3-month LIBOR plus 2.75%	$18,720	August 2029
NBT Statutory Trust I	November 2005	5,000	3-month LIBOR plus 1.40%	5,155	December 2035
NBT Statutory Trust II	February 2006	50,000	3-month LIBOR plus 1.40%	51,547	March 2036

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Consolidated Statements of Stockholders' Equity (Unaudited) (USD $) In Thousands	Total	Common Stock [Member]	Additional Paid-in- Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive (Loss) Income [Member]	Common Stock in Treasury [Member]
Beginning Balance at Dec. 31, 2009	$ 505,123	$ 380	$ 311,164	$ 270,232	$ 1,163	$ (77,816)
Net income	28,400	0	0	28,400	0	0
Cash dividends - $0.40 per share	(13,781)	0	0	(13,781)	0	0
Purchase of treasury shares	0	0	0	0	0	0
Net issuance of shares to employee benefit plans and other stock plans, including tax benefit	1,411	0	24	(229)	0	1,616
Stock-based compensation	1,984	0	1,984	0	0	0
Issuance of shares of restricted stock awards	0	0	(577)	0	0	577
Forfeiture of shares of restricted stock	0	0	46	0	0	(46)
Other comprehensive income	3,885	0	0	0	3,885	0
Ending Balance at Jun. 30, 2010	527,022	380	312,641	284,622	5,048	(75,669)
Beginning Balance at Dec. 31, 2010	533,572	380	314,023	299,797	(5,335)	(75,293)
Net income	28,962	0	0	28,962	0	0
Cash dividends - $0.40 per share	(13,752)	0	0	(13,752)	0	0
Purchase of treasury shares	(21,164)	0	0	0	0	(21,164)
Net issuance of shares to employee benefit plans and other stock plans, including tax benefit	800	0	(34)	(134)	0	968
Stock-based compensation	1,723	0	1,723	0	0	0
Issuance of shares of restricted stock awards	0	0	(554)	0	0	554
Forfeiture of shares of restricted stock	0	0	297	0	0	(297)
Other comprehensive income	5,122	0	0	0	5,122	0
Ending Balance at Jun. 30, 2011	$ 535,263	$ 380	$ 315,455	$ 314,873	$ (213)	$ (95,232)

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2011

Employee Benefit Plans [Abstract]

Employee Benefit Plans

Note 7.                       Defined Benefit Postretirement Plans

The Company has a qualified, noncontributory, defined benefit pension plan covering substantially all of its employees at June 30, 2011.  Benefits paid from the plan are based on age, years of service, compensation and social security benefits, and are determined in accordance with defined formulas. The Company's policy is to fund the pension plan in accordance with Employee Retirement Income Security Act ("ERISA") standards. Assets of the plan are invested in publicly traded stocks and bonds. Prior to January 1, 2000, the Company's plan was a traditional defined benefit plan based on final average compensation.  On January 1, 2000, the plan was converted to a cash balance plan with grandfathering provisions for existing participants.

In addition to the pension plan, the Company also provides supplemental employee retirement plans to certain current and former executives.  These supplemental employee retirement plans and the defined benefit pension plan are collectively referred to herein as "Pension Benefits."

Also, the Company provides certain health care benefits for retired employees.  Benefits are accrued over the employees' active service period. Only employees that were employed by the Company on or before January 1, 2000 are eligible to receive postretirement health care benefits.  The plan is contributory for participating retirees, requiring participants to absorb certain deductibles and coinsurance amounts with contributions adjusted annually to reflect cost sharing provisions and benefit limitations called for in the plan.  Eligibility is contingent upon the direct transition from active employment status to retirement without any break in employment from the Company.  Employees also must be participants in the Company's medical plan prior to their retirement.  The Company funds the cost of postretirement health care as benefits are paid. The Company elected to recognize the transition obligation on a delayed basis over twenty years.  These postretirement benefits are referred to herein as "Other Benefits."

The components of expense for Pension Benefits and Other Benefits are set forth below (in thousands):

	Pension Benefits		Other Benefits
	Three months ended June 30,		Three months ended June 30,
Components of net periodic benefit cost:	2011	2010	2011	2010
Service cost	$               668	$            462	$                 5	$                  5
Interest cost	874	873	57	53
Expected return on plan assets	(1,914)	(1,778)	-	-
Net amortization	407	401	9	(8)
Total cost (benefit)	$                 35	$            (42)	$               71	$                50
	Pension Benefits		Other Benefits
	Six months ended June 30,		Six months ended June 30,
Components of net periodic benefit cost:	2011	2010	2011	2010
Service cost	$            1,335	$            924	$               10	$                10
Interest cost	1,747	1,744	114	106
Expected return on plan assets	(3,828)	(3,555)	-	-
Net amortization	813	802	18	(16)
Total cost (benefit)	$                 67	$            (85)	$             142	$               100

The Company is not required to make contributions to the plans in 2011, and did not do so during the six months ended June 30, 2011.  The Company recorded approximately $0.3 million and $0.5 million, net of tax, as amortization of pension amounts previously recognized in Accumulated Other Comprehensive Income during the six months ended June 30, 2011 and 2010, respectively.

Market conditions can result in an unusually high degree of volatility and increase the risks and short term liquidity associated with certain investments held by the Company's defined benefit pension plan ("the Plan") which could impact the value of these investments.

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Employee Benefit Plans (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Components of net periodic benefit cost: [Abstract]
Amortization of Pension Amounts Out of AOCI to Periodic Benefit Cost			$ 300	$ 500
Pension Benefits [Member]
Components of net periodic benefit cost: [Abstract]
Service cost	668	462	1,335	924
Interest cost	874	873	1,747	1,744
Expected return on plan assets	(1,914)	(1,778)	(3,828)	(3,555)
Net amortization	407	401	813	802
Total cost (benefit)	35	(42)	67	(85)
Other Benefits [Member]
Components of net periodic benefit cost: [Abstract]
Service cost	5	5	10	10
Interest cost	57	53	114	106
Expected return on plan assets	0	0	0	0
Net amortization	9	(8)	18	(16)
Total cost (benefit)	$ 71	$ 50	$ 142	$ 100

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Use of Estimates (Policies)

6 Months Ended

Jun. 30, 2011

Use of Estimates [Abstract]

Use of Estimates

Preparing financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period, as well as the disclosures provided. Actual results could differ from those estimates. Estimates associated with the allowance for loan and lease losses, other real estate owned ("OREO"), income taxes, pension expense, fair values of financial instruments and status of contingencies are particularly susceptible to material change in the near term.

The allowance for loan and lease losses is the amount which, in the opinion of management, is necessary to absorb probable losses inherent in the loan and lease portfolio. The allowance is determined based upon numerous considerations, including local and national economic conditions, the growth and composition of the loan portfolio with respect to the mix between the various types of loans and their related risk characteristics, a review of the value of collateral supporting the loans, comprehensive reviews of the loan portfolio by the independent loan review staff and management, as well as consideration of volume and trends of delinquencies, nonperforming loans, and loan charge-offs.  As a result of the review of these factors and historical and current indicators, required additions or reductions to the allowance for loan and lease losses are made periodically by charges or credits to the provision for loan and lease losses.

The allowance for loan and lease losses related to impaired loans is based on discounted cash flows using the loan's initial effective interest rate or the fair value of the collateral for certain loans where repayment of the loan is expected to be provided solely by the underlying collateral (collateral dependent loans). The Company's impaired loans are generally collateral dependent loans. The Company considers the estimated cost to sell, on a discounted basis, when determining the fair value of collateral in the measurement of impairment if those costs are expected to reduce the cash flows available to repay or otherwise satisfy the loans.

Management believes that the allowance for loan and lease losses is adequate. While management uses available information to recognize loan and lease losses, future additions or reductions to the allowance for loan and lease losses may be necessary based on changes in economic conditions or changes in the values of properties securing loans in the process of foreclosure. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan and lease losses. Such agencies may require the Company to recognize additions to the allowance for loan and lease losses based on their judgments about information available to them at the time of their examination which may not be currently available to management.  In determining that we will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreements, we consider factors such as payment history and changes in the financial condition of individual borrowers, local economic conditions, historical loss experience and the conditions of the various markets in which the collateral may be liquidated.

OREO consists of properties acquired through foreclosure or by acceptance of a deed in lieu of foreclosure. These assets are recorded at the lower of fair value of the asset acquired less estimated costs to sell or "cost" (cost is defined as the fair value less costs to sell at initial foreclosure). At the time of foreclosure, or when foreclosure occurs in-substance, the excess, if any, of the loan over the fair value of the assets received, less estimated selling costs, is charged to the allowance for loan and lease losses and any subsequent valuation write-downs are charged to other expense. Operating costs associated with the properties are charged to expense as incurred. Gains on the sale of OREO are included in income when title has passed and the sale has met the minimum down payment requirements prescribed by U.S. GAAP.

Income taxes are accounted for under the asset and liability method. The Company files consolidated tax returns on the accrual basis. Deferred income taxes are recognized for the future tax consequences and benefits attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the available carryback period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Based on available carrybacks and expected future income, gross deferred tax assets will ultimately be realized and a valuation allowance was not deemed necessary at June 30, 2011 or December 31, 2010. The effect of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date.  Uncertain tax positions are recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities.  Tax positions that meet the more than likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement.

Management is required to make various assumptions in valuing its pension assets and liabilities. These assumptions include the expected long-term rate of return on plan assets, the discount rate, and the rate of increase in future compensation levels. Changes to these assumptions could impact earnings in future periods. The Company takes into account the plan asset mix, funding obligations, and expert opinions in determining the various assumptions used to compute pension expense. The Company also considers relevant indices and market interest rates in selecting an appropriate discount rate. A cash flow analysis for expected benefit payments from the plan is performed each year to assist in selecting the discount rate.  In addition, the Company reviews expected inflationary and merit increases to compensation in determining the expected rate of increase in future compensation levels.

Management is required to make various assumptions in determining the fair values of financial instruments.  Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Management is required to make various assumptions in determining the credit risk involved in issuing contingent obligations such as standby letters of credit, commercial letters of credit, and other lines of credit.  Since commitments to extend credit and unused lines of credit may expire without being fully drawn upon, this amount does not necessarily represent future cash commitments.  Based on historical experience and economic factors, the Company makes estimates of future cash commitments from these contingent obligations to determine their fair value and establish an allowance if necessary.

Income Tax Uncertainties Policy

Income taxes are accounted for under the asset and liability method. The Company files consolidated tax returns on the accrual basis. Deferred income taxes are recognized for the future tax consequences and benefits attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the available carryback period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Based on available carrybacks and expected future income, gross deferred tax assets will ultimately be realized and a valuation allowance was not deemed necessary at June 30, 2011 or December 31, 2010. The effect of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date.  Uncertain tax positions are recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities.  Tax positions that meet the more than likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement.

Pension Plans Policy

Management is required to make various assumptions in valuing its pension assets and liabilities. These assumptions include the expected long-term rate of return on plan assets, the discount rate, and the rate of increase in future compensation levels. Changes to these assumptions could impact earnings in future periods. The Company takes into account the plan asset mix, funding obligations, and expert opinions in determining the various assumptions used to compute pension expense. The Company also considers relevant indices and market interest rates in selecting an appropriate discount rate. A cash flow analysis for expected benefit payments from the plan is performed each year to assist in selecting the discount rate.  In addition, the Company reviews expected inflationary and merit increases to compensation in determining the expected rate of increase in future compensation levels.

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Assets
Cash and due from banks	$ 101,936	$ 99,673
Short-term interest bearing accounts	830	69,119
Securities available for sale, at fair value	1,156,679	1,129,368
Securities held to maturity (fair value $78,357 and $98,759, respectively)	76,878	97,310
Trading securities	3,276	2,808
Federal Reserve and Federal Home Loan Bank stock	27,425	27,246
Loans and leases	3,664,517	3,610,006
Less allowance for loan and lease losses	70,484	71,234
Net loans and leases	3,594,033	3,538,772
Premises and equipment, net	66,898	67,404
Goodwill	116,127	114,841
Intangible assets, net	18,402	17,543
Bank owned life insurance	76,996	75,301
Other assets	97,516	99,471
Total assets	5,336,996	5,338,856
Liabilities
Demand (noninterest bearing)	930,292	911,741
Savings, NOW, and money market	2,288,515	2,291,833
Time	895,806	930,778
Total deposits	4,114,613	4,134,352
Short-term borrowings	175,958	159,434
Long-term debt	370,350	369,874
Trust preferred debentures	75,422	75,422
Other liabilities	65,390	66,202
Total liabilities	4,801,733	4,805,284
Stockholders' equity
Preferred stock, $0.01 par value. Authorized 2,500,000 shares at June 30, 2011 and December 31, 2010	0	0
Common stock, $0.01 par value. Authorized 50,000,000 shares at June 30, 2011 and December 31, 2010; issued 38,035,539 at June 30, 2011 and December 31, 2010	380	380
Additional paid-in-capital	315,455	314,023
Retained earnings	314,873	299,797
Accumulated other comprehensive loss	(213)	(5,335)
Common stock in treasury, at cost, 4,447,490 and 3,532,732 shares at June 30, 2011 and December 31, 2010, respectively	(95,232)	(75,293)
Total stockholders' equity	535,263	533,572
Total liabilities and stockholders' equity	$ 5,336,996	$ 5,338,856

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Fair Values of Financial Instruments (Details) (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Dec. 31, 2010
Securities Available for Sale: [Abstract]
Securities Available for Sale	$ 1,156,679	$ 1,129,368
Trading Securities	3,276	2,808
Reserves on Impaired Loans	352	2,211
Reserves Established on Impaired Loans	1,000
Financial assets [Abstract]
Securities Available for Sale	1,156,679	1,129,368
Securities held to maturity	76,878	97,310
Trading securities	3,276	2,808
Loans and leases	3,664,517	3,610,006
Less allowance for loan and lease losses	70,484	71,234
Net loans and leases	3,594,033	3,538,772
Financial liabilities [Abstract]
Savings, NOW, and money market	2,288,515	2,291,833
Time deposits	895,806	930,778
Noninterest bearing	930,292	911,741
Short-term borrowings	175,958	159,434
Long-term debt	370,350	369,874
Trust preferred debentures	75,422	75,422
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Securities Available for Sale: [Abstract]
U.S. Treasury	81,813	91,280
Federal Agency	0	0
State & municipal	0	0
Mortgage-backed	0	0
Collateralized mortgage obligations	0	0
Corporate	0	0
Other securities	8,948	8,190
Securities Available for Sale	90,761	99,470
Trading Securities	3,276	2,808
Total	94,037	102,278
Financial assets [Abstract]
Securities Available for Sale	90,761	99,470
Trading securities	3,276	2,808
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Securities Available for Sale: [Abstract]
U.S. Treasury	0	0
Federal Agency	240,374	349,750
State & municipal	108,795	114,937
Mortgage-backed	339,323	244,808
Collateralized mortgage obligations	355,140	297,888
Corporate	20,247	20,489
Other securities	2,039	2,026
Securities Available for Sale	1,065,918	1,029,898
Trading Securities	0	0
Total	1,065,918	1,029,898
Financial assets [Abstract]
Securities Available for Sale	1,065,918	1,029,898
Trading securities	0	0
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities Available for Sale: [Abstract]
U.S. Treasury	81,813	91,280
Federal Agency	240,374	349,750
State & municipal	108,795	114,937
Mortgage-backed	339,323	244,808
Collateralized mortgage obligations	355,140	297,888
Corporate	20,247	20,489
Other securities	10,987	10,216
Securities Available for Sale	1,156,679	1,129,368
Trading Securities	3,276	2,808
Total	1,159,955	1,132,176
Financial assets [Abstract]
Securities Available for Sale	1,156,679	1,129,368
Trading securities	3,276	2,808
Estimate of Fair Value, Fair Value Disclosure [Member]
Securities Available for Sale: [Abstract]
Securities Available for Sale	1,156,679	1,129,368
Trading Securities	3,276	2,808
Financial assets [Abstract]
Cash and cash equivalents	102,766	168,792
Securities Available for Sale	1,156,679	1,129,368
Securities held to maturity	78,357	98,759
Trading securities	3,276	2,808
Loans and leases	3,674,736	3,626,603
Less allowance for loan and lease losses	0	0
Net loans and leases	3,674,736	3,626,603
Accrued interest receivable	17,719	19,130
Financial liabilities [Abstract]
Savings, NOW, and money market	2,288,515	2,291,833
Time deposits	906,222	943,988
Noninterest bearing	930,292	911,741
Short-term borrowings	175,958	159,434
Long-term debt	427,895	423,350
Accrued interest payable	4,135	4,356
Trust preferred debentures	75,422	71,148
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Securities Available for Sale: [Abstract]
Securities Available for Sale	1,156,679	1,129,368
Trading Securities	3,276	2,808
Financial assets [Abstract]
Cash and cash equivalents	102,766	168,792
Securities Available for Sale	1,156,679	1,129,368
Securities held to maturity	76,878	97,310
Trading securities	3,276	2,808
Loans and leases	3,664,517	3,610,006
Less allowance for loan and lease losses	70,484	71,234
Net loans and leases	3,594,033	3,538,772
Accrued interest receivable	17,719	19,130
Financial liabilities [Abstract]
Savings, NOW, and money market	2,288,515	2,291,833
Time deposits	895,806	930,778
Noninterest bearing	930,292	911,741
Short-term borrowings	175,958	159,434
Long-term debt	370,350	369,874
Accrued interest payable	4,135	4,356
Trust preferred debentures	$ 75,422	$ 75,422

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Securities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2011	Dec. 31, 2010
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	$ 1,130,946	$ 1,111,290
Unrealized gains	27,028	24,986
Unrealized losses	1,295	6,908
Estimated fair value	1,156,679	1,129,368
Amortized Cost of mortgage-backed securities comprised of Government Sponsored Enterprise Securities	304,000	208,900
Fair value of mortgage-backed securities comprised of Government Sponsored Enterprise Securities	314,600	217,900
Amortized Cost of mortgage-backed securities comprised of US Government Agency Securities	22,700	25,000
Fair value of mortgage-backed securities comprised of US Government Agency Securities	24,700	26,900
Amortized Cost of Collateralized Mortgage Obligations comprised of Government Sponsored Enterprise Securities	275,700	206,000
Fair Value of Collateralized Mortgage Obligations comprised of Government Sponsored Enterprise Securities	279,300	207,000
Amortized Cost of Collateralized Mortgage Obligations comprised of US Government Agency Securities	73,100	87,600
Fair Value of Collateralized Mortgage Obligations comprised of US Government Agency Securities	75,900	90,800
Amortized costs of securities available for sale pledged to secure public deposits	1,100,000	900,000
Amortized costs of securities available for sale pledged as collateral for repurchase agreements	195,300	187,700
Unrealized Loss Position, Fair Value [Abstract]
Unrealized Loss Position, Less Than 12 Months, Fair Value	190,461	327,056
Unrealized Loss Position, 12 Months or Longer, Fair Value	5,445	7,533
Unrealized Loss Position, Total, Fair Value	195,906	334,589
Unrealized Loss Position, Unrealized Losses [Abstract]
Unrealized Loss Position, Less Than 12 Months, Unrealized Losses	(1,087)	(6,570)
Unrealized Loss Position, 12 Months or Longer, Unrealized Losses	(208)	(338)
Unrealized Loss Position, Total, Unrealized Losses	(1,295)	(6,908)
Unrealized Loss Position, Number of Positions [Abstract]
Unrealized Loss Position, Less Than 12 Months, Number of Positions	15	54
Unrealized Loss Position, 12 Months or Longer, Number of Positions	12	19
Unrealized Loss Position, Total, Number of Positions	27	73
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Within One Year	33,084
From One to Five Years	311,206
From Five to Ten Years	265,352
After Ten years	512,384
Total, Amortized Cost	1,122,026
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Within One Year	33,420
From One to Five Years	312,850
From Five to Ten Years	275,182
After Ten Years	524,240
Total, Fair Value	1,145,692
Consolidated stockholders' equity threshold percentage that no single issuer of securities exceeded except for U.S. Government securities. (in hundredths)	10.00%
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost	76,878	97,310
Unrealized gains	1,479	1,449
Unrealized losses	0	0
Estimated fair value	78,357	98,759
Debt Securities Classified as Held to Maturity [Abstract]
Within One Year	28,556
From One to Five Years	35,870
From Five to Ten Years	8,660
After Ten Years	3,792
Securities held to maturity	76,878	97,310
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Within One Year	28,604
From One to Five Years	36,942
From Five to Ten Years	8,812
After Ten Years	3,999
Total, Fair Value	78,357
US Treasury [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	81,171	91,338
Unrealized gains	708	424
Unrealized losses	66	482
Estimated fair value	81,813	91,280
Unrealized Loss Position, Fair Value [Abstract]
Unrealized Loss Position, Less Than 12 Months, Fair Value	10,170	40,741
Unrealized Loss Position, 12 Months or Longer, Fair Value	0	0
Unrealized Loss Position, Total, Fair Value	10,170	40,741
Unrealized Loss Position, Unrealized Losses [Abstract]
Unrealized Loss Position, Less Than 12 Months, Unrealized Losses	(66)	(482)
Unrealized Loss Position, 12 Months or Longer, Unrealized Losses	0	0
Unrealized Loss Position, Total, Unrealized Losses	(66)	(482)
Unrealized Loss Position, Number of Positions [Abstract]
Unrealized Loss Position, Less Than 12 Months, Number of Positions	1	4
Unrealized Loss Position, 12 Months or Longer, Number of Positions	0	0
Unrealized Loss Position, Total, Number of Positions	1	4
Federal Agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	239,815	350,641
Unrealized gains	1,184	1,905
Unrealized losses	625	2,796
Estimated fair value	240,374	349,750
Unrealized Loss Position, Fair Value [Abstract]
Unrealized Loss Position, Less Than 12 Months, Fair Value	89,252	147,012
Unrealized Loss Position, 12 Months or Longer, Fair Value	0	0
Unrealized Loss Position, Total, Fair Value	89,252	147,012
Unrealized Loss Position, Unrealized Losses [Abstract]
Unrealized Loss Position, Less Than 12 Months, Unrealized Losses	(625)	(2,796)
Unrealized Loss Position, 12 Months or Longer, Unrealized Losses	0	0
Unrealized Loss Position, Total, Unrealized Losses	(625)	(2,796)
Unrealized Loss Position, Number of Positions [Abstract]
Unrealized Loss Position, Less Than 12 Months, Number of Positions	6	12
Unrealized Loss Position, 12 Months or Longer, Number of Positions	0	0
Unrealized Loss Position, Total, Number of Positions	6	12
State & municipal [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost	75,291	95,591
Unrealized gains	1,272	1,249
Unrealized losses	0	0
Estimated fair value	76,563	96,840
Debt Securities Classified as Held to Maturity [Abstract]
Securities held to maturity	75,291	95,591
State & municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	105,449	113,821
Unrealized gains	3,556	1,771
Unrealized losses	210	655
Estimated fair value	108,795	114,937
Unrealized Loss Position, Fair Value [Abstract]
Unrealized Loss Position, Less Than 12 Months, Fair Value	397	22,273
Unrealized Loss Position, 12 Months or Longer, Fair Value	5,445	7,533
Unrealized Loss Position, Total, Fair Value	5,842	29,806
Unrealized Loss Position, Unrealized Losses [Abstract]
Unrealized Loss Position, Less Than 12 Months, Unrealized Losses	(2)	(317)
Unrealized Loss Position, 12 Months or Longer, Unrealized Losses	(208)	(338)
Unrealized Loss Position, Total, Unrealized Losses	(210)	(655)
Unrealized Loss Position, Number of Positions [Abstract]
Unrealized Loss Position, Less Than 12 Months, Number of Positions	1	31
Unrealized Loss Position, 12 Months or Longer, Number of Positions	12	19
Unrealized Loss Position, Total, Number of Positions	13	50
Mortgage-backed [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost	1,587	1,719
Unrealized gains	207	200
Unrealized losses	0	0
Estimated fair value	1,794	1,919
Debt Securities Classified as Held to Maturity [Abstract]
Securities held to maturity	1,587	1,719
Mortgage-backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	326,777	233,861
Unrealized gains	12,713	11,666
Unrealized losses	167	719
Estimated fair value	339,323	244,808
Unrealized Loss Position, Fair Value [Abstract]
Unrealized Loss Position, Less Than 12 Months, Fair Value	43,314	44,340
Unrealized Loss Position, 12 Months or Longer, Fair Value	0	0
Unrealized Loss Position, Total, Fair Value	43,314	44,340
Unrealized Loss Position, Unrealized Losses [Abstract]
Unrealized Loss Position, Less Than 12 Months, Unrealized Losses	(167)	(719)
Unrealized Loss Position, 12 Months or Longer, Unrealized Losses	0	0
Unrealized Loss Position, Total, Unrealized Losses	(167)	(719)
Unrealized Loss Position, Number of Positions [Abstract]
Unrealized Loss Position, Less Than 12 Months, Number of Positions	3	3
Unrealized Loss Position, 12 Months or Longer, Number of Positions	0	0
Unrealized Loss Position, Total, Number of Positions	3	3
Collateralized Mortgage Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	348,812	293,565
Unrealized gains	6,555	6,574
Unrealized losses	227	2,251
Estimated fair value	355,140	297,888
Unrealized Loss Position, Fair Value [Abstract]
Unrealized Loss Position, Less Than 12 Months, Fair Value	47,328	72,595
Unrealized Loss Position, 12 Months or Longer, Fair Value	0	0
Unrealized Loss Position, Total, Fair Value	47,328	72,595
Unrealized Loss Position, Unrealized Losses [Abstract]
Unrealized Loss Position, Less Than 12 Months, Unrealized Losses	(227)	(2,251)
Unrealized Loss Position, 12 Months or Longer, Unrealized Losses	0	0
Unrealized Loss Position, Total, Unrealized Losses	(227)	(2,251)
Unrealized Loss Position, Number of Positions [Abstract]
Unrealized Loss Position, Less Than 12 Months, Number of Positions	4	3
Unrealized Loss Position, 12 Months or Longer, Number of Positions	0	0
Unrealized Loss Position, Total, Number of Positions	4	3
Corporate [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	20,002	20,005
Unrealized gains	245	484
Unrealized losses	0	0
Estimated fair value	20,247	20,489
Other securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	8,920	8,059
Unrealized gains	2,067	2,162
Unrealized losses	0	5
Estimated fair value	10,987	10,216
Unrealized Loss Position, Fair Value [Abstract]
Unrealized Loss Position, Less Than 12 Months, Fair Value	0	95
Unrealized Loss Position, 12 Months or Longer, Fair Value	0	0
Unrealized Loss Position, Total, Fair Value	0	95
Unrealized Loss Position, Unrealized Losses [Abstract]
Unrealized Loss Position, Less Than 12 Months, Unrealized Losses	0	(5)
Unrealized Loss Position, 12 Months or Longer, Unrealized Losses	0	0
Unrealized Loss Position, Total, Unrealized Losses	$ 0	$ (5)
Unrealized Loss Position, Number of Positions [Abstract]
Unrealized Loss Position, Less Than 12 Months, Number of Positions	0	1
Unrealized Loss Position, 12 Months or Longer, Number of Positions	0	0
Unrealized Loss Position, Total, Number of Positions	0	1