NBT Bancorp Inc. Announces First-Quarter Results and Declares a 5.3% Increase in Quarterly Cash Dividend

Market Wire, April, 2007

NBT Bancorp Inc. (NBT) (NASDAQ: NBTB) reported today that net income for the three months ended March 31, 2007, was $14.1 million, up 4.0% or $0.5 million from net income of $13.6 million reported for the same period in 2006. Net income per diluted share for the three months ended March 31, 2007, was $0.41 per share, compared with $0.40 per share for the same period in 2006. Return on average assets and return on average equity were 1.13% and 14.06%, respectively, for the three months ended March 31, 2007, compared with 1.18% and 15.11%, respectively, for the same period in 2006. The increase in net income for the three months ended March 31, 2007, was primarily the result of a $0.5 million increase in net interest income and a $1.5 million increase in noninterest income. The aforementioned increases in income were partially offset by a $0.4 million increase in noninterest expense, a $0.4 million increase in provision for loan and lease losses and a $0.7 million increase in income tax expense.

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

NBT President and CEO Martin A. Dietrich stated, "Despite the challenges we face in the current interest rate environment, I am pleased with our earnings performance for the first quarter. Although our net interest margin continues to compress, we have been able to successfully mitigate this compression through growth in our earning assets. In addition, we have been able to reduce our reliance on interest income by continuing to post strong noninterest income results. This, coupled with the dedication, focus and perseverance of our employees, has enabled us to deliver strong earnings for the quarter. While 2007 promises to be a challenging year for the financial services industry, I am encouraged by our results for the first quarter."

Loan and Lease Quality and Provision for Loan and Lease Losses

Nonperforming loans at March 31, 2007, were $17.4 million or 0.51% of total loans and leases compared with $13.3 million or 0.41% of total loans and leases at March 31, 2006. This increase was mainly attributable to increases in nonperforming small business and agricultural loans, primarily due to regional flooding as well as falling milk prices. Net charge-offs for the three month period ended March 31, 2007, were $2.1 million, up $0.4 million from the three month period ended March 31, 2006. Net charge-offs to average loans and leases for the three months ended March 31, 2007, were 0.25%, compared with the 0.23% ratio for the three months ended March 31, 2006. For the three months ended March 31, 2007, the provision for loan and lease losses totaled $2.1 million, compared with $1.7 million for the same period in 2006. The Company's allowance for loan and lease losses was 1.49% of loans and leases at March 31, 2007, compared with 1.53% at March 31, 2006. The ratio of the allowance for loan and lease losses to nonperforming loans was 291.16% at March 31, 2007, compared with 373.56% at March 31, 2006.

Net Interest Income

Net interest income was up 1.3% to $40.6 million for the three months ended March 31, 2007, compared with $40.1 million for the same period a year ago. Despite a decrease in the Company's fully taxable equivalent (FTE) net interest margin, from 3.86% for the three months ended March 31, 2006, to 3.63% for the same period in 2007, the Company experienced an increase in net interest income that was attributable to an 8.3% growth in average earning assets. The growth in average earning assets was in large part due to organic loan growth, particularly consumer loans, as well as the acquisition of CNB in February 2006. The decline in the net interest margin is due largely to the effect from our borrowings, money market accounts and time deposits repricing in a higher interest rate environment. Earning assets, particularly those tied to a fixed rate, have not realized the benefit of the higher interest rate environment, since yields on earning assets with terms of three years or longer have remained relatively flat during this period. The Company anticipates that margin pressure will persist into the next several quarters, given the flat to inverted yield curve. If the yield curve remains flat or inverted, we expect net interest income to remain relatively flat through 2007.

Noninterest Income

Noninterest income for the three months ended March 31, 2007, was $12.7 million, up $1.5 million or 13.1% from $11.2 million for the same period in 2006. Fees from service charges on deposit accounts and ATM and debit cards collectively increased $0.5 million from growth in our debit card base as well as growth in our demand deposit accounts. Retirement plan administration fees for the three months ended March 31, 2007, increased $0.4 million, compared with the same period in 2006, as a result of our growing client base. Broker/dealer and insurance revenue for the three months ended March 31, 2007, increased $0.2 million in large part due to the growth in brokerage income from retail financial services as well as the addition of Hathaway Insurance Agency as part of the acquisition of CNB. Bank-owned life insurance income for the three months ended March 31, 2007, increased $0.1 million, compared with the same period in 2006. This increase was due in large part to the acquisition of CNB. Trust administration income increased $0.1 million for the three months ended March 31, 2007, compared with the same period in 2006. This increase stems from the increased market value of accounts, an increase in customer accounts as a result of the acquisition of CNB and successful business development. Other noninterest income for the three months ended March 31, 2007, decreased $0.6 million, compared with the same period in 2006, primarily as a result of a gain on the sale of a branch in 2006. Net securities losses for the three months ended March 31, 2007, were nominal, compared with net securities losses of $0.9 million for the three months ended March 31, 2006. Excluding the effect of these securities transactions, noninterest income increased $0.5 million, or 4.4%, for the three months ended March 31, 2007, compared with the same period in 2006.