NBT Bancorp Inc. Announces First Quarter Earnings of $0.43 per Share, Up 54% From the Fourth Quarter of 2007; Declares Cash Dividend

NBT Bancorp Inc. (NBT) (NASDAQ: NBTB) reported today that net income per diluted share for the three months ended March 31, 2008 was $0.43 per share, compared with $0.28 per share and $0.41 per share for the three months ended December 31, 2007 and March 31, 2007, respectively. Return on average assets and return on average equity were 1.07% and 13.68%, respectively, for the three months ended March 31, 2008, compared with 0.69% and 9.06%, respectively, for the three months ended December 31, 2007 and 1.13% and 14.06%, respectively, for the three months ended March 31, 2007. Net income for the three months ended March 31, 2008 was $13.7 million, up $4.7 million, or 52.7%, from the three months ended December 31, 2007, and down $0.4 million, or 2.9%, from net income of $14.1 million reported for the three months ended March 31, 2007. The increase in net income for the three months ended March 31, 2008 as compared with the three months ended December 31, 2007 was primarily the result of an increase in net interest income as well as a decrease in the provision for loan and lease losses in the first quarter of 2008. The decrease in net income for the three months ended March 31, 2008 as compared with the same period in 2007 was primarily the result of a $4.4 million increase in the provision for loan and lease losses from the prior period, as well as an increase in noninterest expense totaling $3.2 million. These increases were partially offset by a $3.4 million, or 8.5%, increase in net interest income for the three months ended March 31, 2008 as compared to the three months ended March 31, 2007. In addition, noninterest income for the three months ended March 31, 2008 was $16.1 million, up $3.4 million or 26.8% from noninterest income of $12.7 million reported for the same period in 2007.

Related Results

NBT President and CEO Martin A. Dietrich said, "The financial services industry continues to experience challenging market conditions in 2008. Given this difficult environment, I am pleased with our results for the first quarter. In particular, noninterest income was up 26.8% for the first quarter of 2008, compared with the first quarter of 2007, as we continue to focus on our fee initiatives as well as other areas of noninterest income that are so important to our future. In addition, our net interest income was up 8.5% from the first quarter of 2007, as we experienced growth in earning assets and an increase in our net interest margin of 21 basis points. We continue to closely monitor our asset quality and are encouraged by the improvement in the past due loans from $25.9 million to $19.7 million and the decrease in potential problem loans from $73.3 million to $58.5 million. As a result of the continued dedication and focus of our team, I am pleased and encouraged by our results in the first quarter of 2008."

Loan and Lease Quality and Provision for Loan and Lease Losses

Nonperforming loans at March 31, 2008 were $30.4 million or 0.87% of total loans and leases compared with $30.6 million or 0.88% at December 31, 2007. The allowance for loan and lease losses totaled $56.5 million at March 31, 2008, as compared to $54.2 million at December 31, 2007 and $50.6 million at March 31, 2007.

The Company recorded a provision for loan and lease losses of $6.5 million during the first quarter of 2008 compared with $13.4 million and $2.1 million for the three months ending December 31, 2007 and March 31, 2007, respectively. Net charge-offs totaled $4.2 million for the three month period ending March 31, 2008, down from $14.1 million for the three months ending December 31, 2007, and up from $2.1 million for the three months ended March 31, 2007. The decrease in the provision for loan and lease losses and net charge-offs from December 31, 2007 was due primarily to a charge-off related to one large commercial loan during the fourth quarter of 2007. The increase in the provision for loan and lease losses and net charge-offs from the three months ended March 31, 2007 was due primarily to an additional charge-off in the first quarter of 2008 related to the aforementioned commercial loan. Net charge-offs to average loans and leases for the three months ended March 31, 2008, were 0.48%, compared with 1.63% for the three months ended December 31, 2007, and 0.25% for the three months ended March 31, 2007. The Company's allowance for loan and lease losses was 1.61% of loans and leases at March 31, 2008, compared with 1.57% at December 31, 2007 and 1.49% at March 31, 2007.

Net Interest Income

Net interest income was up 5.3% to $44.1 million for the three months ended March 31, 2008 compared with the three months ended December 31, 2007, and up 8.5% compared with $40.6 million for the three months ended March 31, 2007. The Company's fully taxable equivalent (FTE) net interest margin increased from 3.61% and 3.63% for the three months ended December 31, 2007 and March 31, 2007, respectively, to 3.84% for the three months ended March 31, 2008. In addition, the Company experienced a 1.7% growth in average earning assets for the three months ending March 31, 2008 as compared to the three months ending March 31, 2007. The growth in average earning assets for the three months ended March 31, 2008, as compared to the three months ended March 31, 2007 was due primarily to an increase in average loans and leases. Although the yield on interest earning assets decreased 22 basis points, the yield on interest bearing liabilities declined 49 basis points, which contributed to the increase in the net interest margin from the three months ended March 31, 2007. The yield on money market deposit accounts declined from 3.45% for the three months ended March 31, 2007 to 2.37% for the three months ended March 31, 2008, while the yield on time deposits decreased 30 basis points for the same periods. The yield on short term borrowings declined 163 basis points for the three months ended March 31, 2008 as compared to the three months ended March 31, 2007, as a result of the 300 basis points drop in the Fed Funds Target Rate from 5.25% at March 31, 2007 to 2.25% at March 31, 2008.