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 March 31, 2000.
OR
__ 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
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 shorter periods 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
As of April 30, 2000, there were 18,101,302 shares outstanding of the
Registrant's common stock, $0.01 par value. There were no shares of the
Registrant's preferred stock, par value $0.01, outstanding at that date.
An index to exhibits follows the signature page of this FORM 10-Q.
-1-
NBT BANCORP INC.
FORM 10-Q--Quarter Ended March 31, 2000
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1 Interim Financial Statements (Unaudited)
Consolidated Balance Sheets at March 31, 2000, December 31, 1999
(Audited), and March 31, 1999
Consolidated Statements of Income for the three month periods ended
March 31, 2000 and 1999
Consolidated Statements of Stockholders' Equity for the three month
periods ended March 31, 2000 and 1999
Consolidated Statements of Cash Flows for the three month periods
ended March 31, 2000 and 1999
Consolidated Statements of Comprehensive Income for the three month
periods ended March 31, 2000 and 1999
Notes to Interim Consolidated Financial Statements at March 31,
2000
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
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
Discussion and Analysis.
PART II OTHER INFORMATION
Item 1 Legal Proceedings
Item 2 Changes in Securities
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on FORM 8-K
SIGNATURES
INDEX TO EXHIBITS
-2-
NBT BANCORP INC. AND SUBSIDIARY MARCH 31, December 31, March 31,
CONSOLIDATED BALANCE SHEETS 2000 1999 1999
- -----------------------------------------------------------------------------------------------------------------------
(in thousands, except share and per share data) (UNAUDITED) (Unaudited)
ASSETS
Cash $ 60,823 $ 64,431 $ 60,234
Securities available for sale, at fair value 497,528 500,423 491,502
Securities held to maturity (fair value - $75,808, $73,648
and $70,094) 78,772 76,706 70,386
Loans 1,295,651 1,222,654 1,081,971
Less allowance for loan losses 17,543 16,654 15,608
- -----------------------------------------------------------------------------------------------------------------------
Net loans 1,278,108 1,206,000 1,066,363
Premises and equipment, net 40,292 40,830 38,667
Other assets 73,583 73,042 60,356
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $2,029,106 $1,961,432 $1,787,508
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand (noninterest bearing) $ 210,579 $ 223,143 $ 189,659
Savings, NOW, and money market 490,328 487,746 464,058
Time 822,842 766,729 680,428
- -----------------------------------------------------------------------------------------------------------------------
Total deposits 1,523,749 1,477,618 1,334,145
Short-term borrowings 165,445 137,567 119,648
Long-term debt 161,793 172,575 149,887
Other liabilities 15,587 13,195 13,868
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities 1,866,574 1,800,955 1,617,548
- -----------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, $0.01 par value at March 31, 2000, no par,
stated value $1.00 at December 31, 1999 and
March 31, 1999; shares authorized-2,500,000 - - -
Common stock, $0.01 par value and 30,000,000 authorized
at March 31, 2000, no par, stated value $1.00 and 15,000,000
authorized at December 31, 1999 and March 31, 1999;
issued 18,623,435, 18,616,992, and
17,963,950 at March 31, 2000,
December 31, 1999 and March 31, 1999, respectively 186 18,617 17,964
Additional paid-in-capital 167,047 148,717 138,146
Retained earnings 24,225 23,060 26,296
Accumulated other comprehensive (loss) income (17,615) (18,252) 598
Common stock in treasury at cost 522,567, 538,936,
and 600,953 shares at March 31, 2000, December 31, 1999
and March 31, 1999, respectively (11,311) (11,665) (13,044)
- -----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 162,532 160,477 169,960
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,029,106 $1,961,432 $1,787,508
- -----------------------------------------------------------------------------------------------------------------------
See notes to interim consolidated financial statements.
-3-
NBT BANCORP INC. AND SUBSIDIARY Three months ended March 31,
CONSOLIDATED STATEMENTS OF INCOME 2000 1999
- -----------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data) (Unaudited)
Interest and fee income:
Loans $27,189 $22,679
Securities - available for sale 8,872 7,625
Securities - held to maturity 993 840
Other 402 458
- -----------------------------------------------------------------------------------------------------------------------
Total interest and fee income 37,456 31,602
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Interest expense:
Deposits 13,446 11,006
Short-term borrowings 2,054 1,139
Long-term debt 2,346 1,739
- -----------------------------------------------------------------------------------------------------------------------
Total interest expense 17,846 13,884
- -----------------------------------------------------------------------------------------------------------------------
Net interest income 19,610 17,718
Provision for loan losses 1,334 1,120
- -----------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 18,276 16,598
- -----------------------------------------------------------------------------------------------------------------------
Noninterest income:
Trust 860 835
Service charges on deposit accounts 1,620 1,408
Securities gains - 668
Other 1,135 1,365
- -----------------------------------------------------------------------------------------------------------------------
Total noninterest income 3,615 4,276
- -----------------------------------------------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 7,081 5,970
Office supplies and postage 592 637
Occupancy 1,232 1,024
Equipment 1,137 947
Professional fees and outside services 756 697
Data processing and communications 1,132 972
Amortization of intangible assets 312 329
Merger and acquisition costs 1,122 -
Other operating 1,619 1,240
- -----------------------------------------------------------------------------------------------------------------------
Total noninterest expense 14,983 11,816
- -----------------------------------------------------------------------------------------------------------------------
Income before income taxes 6,908 9,058
Income taxes 2,667 3,282
- -----------------------------------------------------------------------------------------------------------------------
NET INCOME $ 4,241 $ 5,776
- -----------------------------------------------------------------------------------------------------------------------
Earnings per share:
Basic $ 0.24 $ 0.32
Diluted $ 0.23 $ 0.32
- -----------------------------------------------------------------------------------------------------------------------
See notes to interim consolidated financial statements.
-4-
NBT BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------
Additional Accumulated
Paid-in- Other
Common Capital Retained Comprehensive Treasury
Stock Surplus Earning (Loss)/Income Stock Total
- -----------------------------------------------------------------------------------------------------------------------
(in thousands, except share and per share data) (Unaudited)
BALANCE AT DECEMBER 31, 1998 $17,946 $137,997 $23,132 $ 3,062 $(12,962) $169,175
Net income 5,776 5,776
Cash dividends - $0.162 per share (2,596) (2,596)
Payment in lieu of fractional shares (16) (16)
Issuance of 18,164 shares to stock plan 18 172 190
Purchase of 77,500 treasury shares (1,728) (1,728)
Sale of 76,054 treasury shares to
employee benefit plans and other
stock plans (23) 1,646 1,623
Unrealized loss on securities
available for sale, net of
reclassification adjustment,
and deferred taxes of $1,615 (2,464) (2,464)
- -----------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1999 $17,964 $138,146 $26,296 $ 598 $(13,044) $169,960
- -----------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999 $18,617 $148,717 $23,060 $(18,252) $(11,665) $160,477
Net income 4,241 4,241
Cash dividends - $0.170 per share (3,076) (3,076)
Issuance of 6,468 shares to stock
plan 6 63 69
Sale of 4,937 treasury shares to
employee benefit plans and other
stock plans (29) 107 78
Change $1.00 stated value per
share to $0.01 par value per
share (18,437) 18,437 -
Stock option exercise (141) 247 106
Unrealized loss on securities
available for sale, net of
reclassification adjustment,
and deferred taxes of $458 637 637
- -----------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 2000 $ 186 $167,047 $24,225 $(17,615) $(11,311) $162,532
- -----------------------------------------------------------------------------------------------------------------------
See notes to interim consolidated financial statements.
-5-
NBT BANCORP INC. AND SUBSIDIARY Three Months Ended March 31,
CONSOLIDATED STATEMENTS OF CASH FLOWS 2000 1999
- -----------------------------------------------------------------------------------------------------------------------
(in thousands) (Unaudited)
OPERATING ACTIVITIES:
Net income $ 4,241 $ 5,776
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 1,334 1,120
Depreciation of premises and equipment 1,007 1,017
Net accretion on securities (516) (182)
Amortization of intangible assets 312 329
Proceeds from sale of loans held for sale 1,943 5,140
Origination and purchases of loans held for sale (1,073) (10,000)
Net gains on sales of loans 122 (69)
Net gain on sale of other real estate owned (28) (188)
Net realized gains on sales of securities - (668)
Net (increase) decrease in other assets (1,518) 1,876
Net increase in other liabilities 2,392 1,096
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 8,216 5,247
- -----------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Securities available for sale:
Proceeds from maturities 7,324 31,233
Proceeds from sales 200 99,510
Purchases (3,027) (125,162)
Securities held to maturity:
Proceeds from maturities 6,885 4,961
Purchases (8,942) (11,986)
Net increase in loans (74,339) (27,070)
Purchase of premises and equipment, net (469) (1,928)
Proceeds from sales of other real estate owned 140 540
- -----------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (72,228) (29,902)
- -----------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net increase (decrease) in deposits 46,131 (22,802)
Net increase in short-term borrowings 27,878 19,776
Proceeds from issuance of long-term debt 5,000 25,000
Repayments of long-term debt (15,782) (743)
Proceeds from issuance of common stock to stock plan 69 190
Exercise of stock options 106 -
Proceeds from issuance of treasury shares to
employee benefit plans and other stock plans 78 1,623
Purchase of treasury stock - (1,728)
Cash dividends and payment for fractional shares (3,076) (2,612)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 60,404 18,704
- -----------------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (3,608) (5,951)
Cash and cash equivalents at beginning of period 64,431 66,185
- -----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 60,823 $ 60,234
- -----------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the
period for:
Interest $ 17,443 $ 14,186
Income taxes 320 388
- -----------------------------------------------------------------------------------------------------------------------
See notes to interim consolidated financial statements.
-6-
NBT BANCORP INC. AND SUBSIDIARY Three Months Ended March 31,
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2000 1999
- ---------------------------------------------------------------------------------------------------
(in thousands) (Unaudited)
Net Income $ 4,241 $ 5,776
- ---------------------------------------------------------------------------------------------------
Other comprehensive income, net of tax
Unrealized holding gains (losses) arising during
period [pre-tax amounts of $1,095 and $(3,411)] 637 (2,047)
Less: Reclassification adjustment for net gains included
in net income [pre-tax amounts of $- and $(668)] - (417)
- ---------------------------------------------------------------------------------------------------
Total other comprehensive income (loss) 637 (2,464)
- ---------------------------------------------------------------------------------------------------
Comprehensive income $ 4,878 $ 3,312
- ---------------------------------------------------------------------------------------------------
See notes to interim consolidated financial statements.
-7-
NBT BANCORP INC. AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements include the
accounts of NBT Bancorp Inc. (the Registrant) and its wholly-owned subsidiaries,
NBT Bank, N.A. (NBT) and LA Bank, N.A. (LA). 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.
The consolidated balance sheet at December 31, 1999 has been derived from
the audited supplemental consolidated financial statements at that date, which
appear in the Current Report on Form 8-K filed on March 31, 2000. The
accompanying unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to FORM 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Registrant's annual
report on FORM 10-K for the year ended December 31, 1999 and the supplemental
consolidated financial statements referred to above. The March 31, 1999 interim
consolidated financial statements have been restated to give effect to the
merger with Lake Ariel Bancorp, Inc., which closed on February 17, 2000 and was
accounted for as a pooling-of-interests.
EARNINGS PER SHARE
Basic earnings per share excludes dilution and is computed by dividing income
available to common shareholders 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. All share and per
share data has been adjusted retroactively for stock dividends and splits.
The following is a reconciliation of basic and diluted earnings per share
for the periods presented in the income statement.
- ----------------------------------------------------------------------------------------------------
Three months ended March 31, 2000 1999
- ----------------------------------------------------------------------------------------------------
(in thousands, except per share data)
Basic EPS:
Weighted average common shares outstanding 18,028 17,860
Net income available to common shareholders $ 4,241 $ 5,776
- ----------------------------------------------------------------------------------------------------
Basic EPS $ 0.24 $ 0.32
- ----------------------------------------------------------------------------------------------------
Diluted EPS:
Weighted average common shares outstanding 18,028 17,860
Dilutive common stock options 106 244
- ----------------------------------------------------------------------------------------------------
Weighted average common shares and common
share equivalents 18,134 18,104
Net income available to common shareholders $ 4,241 $ 5,776
- ----------------------------------------------------------------------------------------------------
Diluted EPS $ 0.23 $ 0.32
- ----------------------------------------------------------------------------------------------------
MERGERS AND ACQUISITIONS
On February 17, 2000, the stockholders of NBT Bancorp Inc. and Lake Ariel
Bancorp, Inc. (Lake Ariel) approved a merger whereby Lake Ariel was merged with
and into NBT Bancorp Inc. with each issued and outstanding share of Lake Ariel
exchanged for 0.9961 shares of NBT Bancorp Inc. common stock. The transaction
resulted in the issuance of 5.0 million shares of NBT Bancorp Inc. common stock,
bringing the Company's outstanding shares to 18.1 million after the merger. The
merger results in NBT Bancorp Inc. being the surviving holding company for NBT
Bank, N.A. and LA Bank, N.A., a former subsidiary of Lake Ariel. The merger is
being accounted for as a pooling-of-interests and qualifies as a tax-free
exchange for Lake Ariel shareholders.
-8-
LA Bank, N.A. is a commercial bank headquartered in northeast Pennsylvania
with twenty-two branch offices in five counties and approximately $587 million
in assets at March 31, 2000. The combined company, NBT Bancorp Inc., has
combined assets over $2.0 billion and fifty-eight branch locations.
On December 8, 1999, NBT Bancorp Inc. and Pioneer American Holding Company
Corp., the parent company of Pioneer American Bank, N.A., announced they entered
into a definitive agreement of merger. The merger is subject to the approval of
each company's shareholders and of banking regulators. The merger is expected to
close in the second quarter of 2000 and is intended to be accounted for as a
pooling-of-interests and qualify as a tax-free exchange for Pioneer American
shareholders. Shareholders of Pioneer American will receive a fixed ratio of
1.805 shares of NBT Bancorp Inc. common stock for each share exchanged. NBT
Bancorp Inc. will issue approximately 5.2 million shares and share equivalents
in exchange for all of the Pioneer American common stock and share equivalents
outstanding.
Pioneer American Bank, N.A. is a full service commercial bank with total
assets of approximately $415 million at March 31, 2000 and eighteen branches in
five counties in northeast Pennsylvania. Pioneer American Bank, N.A. will
ultimately be merged together with LA Bank, N.A. to form the largest community
bank headquartered in northeast Pennsylvania.
On March 28, 2000, NBT Bancorp Inc. and M. Griffith, Inc. jointly announced
that a definitive agreement has been signed for NBT Bancorp Inc. to acquire all
of the stock of M. Griffith, Inc. M. Griffith, Inc. is a Utica, New York based
securities firm offering investment, financial advisor and asset-management
services, primarily in the Mohawk Valley region. M. Griffith, Inc., a
full-service broker/dealer and a Registered Investment Advisor, will become a
wholly-owned subsidiary of NBT Financial Services, Inc. NBT Financial Services,
Inc. was created in September of 1999 to concentrate on expanding NBT Bancorp
Inc.'s menu of financial services beyond traditional bank product offerings.
On April 20, 2000, NBT Bancorp Inc. and BSB Bancorp, Inc., the parent
company of BSB Bank and Trust Company, announced the signing of a definitive
agreement to merge. The merger is subject to the approval of each company's
shareholders and of banking regulators. The merger is expected to close in the
fourth quarter of 2000 and is intended to be accounted for as a pooling-of-
interests and qualify as a tax-free exchange for BSB Bancorp, Inc.
shareholders. Shareholders of BSB Bancorp, Inc. will receive a fixed ratio
of 2.0 shares of NBT Bancorp Inc. common stock for each share exchanged.
BSB Bank and Trust Company is a full service commercial bank with total
assets of approximately $2.2 billion at March 31, 2000 and twenty-two branches
in six counties in central New York and the Southern Tier. As a result of the
merger, NBT Bank, N.A. and BSB Bank and Trust Company will be combined to create
one of the largest independent community banks in upstate New York. This
strategic alliance will create a bank holding company with assets of $4.7
billion and proforma market capitalization of approximately $539 million. The
holding company will adopt a new name before the merger occurs. The combined
company will have three direct operating subsidiaries including two community
banks and a financial services company.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133 "Accounting for Derivative
Instruments and Hedging Activities". This statement establishes comprehensive
accounting and reporting requirements for derivative instruments and hedging
activities. SFAS No. 133 requires companies to record derivatives on the balance
sheet as assets or liabilities, measured at fair value. The accounting for gains
or losses resulting from changes in the values of those derivatives would be
dependent on the use of the derivative and the type of risk being hedged. During
the second quarter of 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB No. 133". FASB No. 137 defers the effective date of FASB No. 133 by one
year from fiscal quarters of fiscal years beginning after June 15, 1999 to
fiscal quarters of fiscal years beginning after June 15, 2000. At the present
time, the Company has not fully analyzed the effect or timing of the adoption of
SFAS No. 133 on the Company's consolidated financial statements.
-9-
NBT BANCORP INC. AND SUBSIDIARY
Item 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The purpose of this discussion and analysis is to provide the reader with a
concise description of the financial condition and results of operations of NBT
Bancorp Inc. (Bancorp) and its wholly owned subsidiaries, NBT Bank, N.A. (NBT)
and LA Bank N.A. (LA) collectively referred to herein as the Company. This
discussion will focus on Results of Operations, Financial Position, 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 1999 FORM 10-K for an understanding
of the following discussion and analysis. In December 1999, the Company
distributed a 5% stock dividend, the fortieth consecutive year a stock dividend
has been declared. Throughout this discussion and analysis, amounts per common
share and common shares outstanding have been adjusted retroactively for stock
dividends and splits.
On April 24, 2000, NBT Bancorp Inc. announced the declaration of a regular
quarterly cash dividend of $0.17 per share. The cash dividend will be paid on
June 15, 2000 to stockholders of record as of June 1, 2000.
Certain statements in this release and other public releases by the Company
contain forward-looking information, 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," or other
similar terms. Actual results may differ materially from these statements since
such statements involve risks and uncertainties. Factors that may cause actual
results to differ materially from those contemplated by such forward-looking
statements include, among others, the following possibilities: (1) an increase
in competitive pressures in the banking industry; (2) changes in the interest
rate environment; (3) changes in the regulatory environment; (4) general
economic environment conditions, either nationally or regionally, may be less
favorable than expected, resulting in, among other things, a deterioration in
credit quality; and (5) changes may incur in business conditions and inflation.
YEAR 2000
Concerns over the arrival of the Year 2000 ("Y2K") and its impact on the
embedded computer technologies used by financial institutions, among others, led
bank regulatory authorities to require substantial advance testing and
preparations by all banking organizations, including the Company. As of the date
of this filing, the Company has experienced no material problems in connection
with the arrival of Y2K, either in connection with the services and products it
provides to its customers or in connection with the services and products it
receives from third party vendors or suppliers. However, while no such
occurrence has developed, Y2K issues may arise that may not become immediately
apparent. Therefore, the Company will continue to monitor and work to remedy any
issues that arise. Although the Company expects that its business will not be
materially impacted, such future events cannot be known with certainty.
OVERVIEW
Net income of $4.2 million ($0.23 per diluted share) was recognized in the first
quarter of 2000, down from first quarter 1999 net income of $5.8 million ($0.32
per diluted share). The decline in net income can be attributed to the $1.1
million in merger related expenses recognized during the first quarter of 2000.
Also contributing to the decline in net income as compared to the first quarter
of 1999 is the $0.7 million in securities gains recognized during the first
quarter of 1999. After taking these items into consideration, the Company's core
earnings remained at the strong level experienced in the first quarter of 1999.
Table 1 depicts several measurements of performance on an annualized basis.
Returns on average assets and equity measure how effectively an entity utilizes
its total resources and capital, respectively. Both the return on average assets
and the return on average equity ratios declined for the quarter compared to the
same period a year previous.
Net interest margin, net federal taxable equivalent (FTE) interest income
divided by average interest-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%.
-10-
TABLE 1
PERFORMANCE MEASUREMENTS
- -----------------------------------------------------------------------------------------
FIRST First
QUARTER Quarter
2000 1999
- -----------------------------------------------------------------------------------------
Return on average assets 0.86% 1.35%
Return on average equity 10.59% 13.84%
Net interest margin (FTE) 4.32% 4.52%
- -----------------------------------------------------------------------------------------
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 major determining factors in
a financial institution's performance as it is the principal source of earnings.
Table 2 represents an analysis of net interest income on a federal taxable
equivalent basis.
Federal taxable equivalent (FTE) net interest income increased $2.1 million
during the first quarter of 2000 compared to the same period of 1999. This
increase can be attributed to a $258.4 million increase in average earning
assets, primarily the result of continued loan growth.
Total FTE interest income increased $6.1 million compared to first quarter
1999, a result of the previously mentioned increase in average earning assets as
well as a 15 basis point increase in the yield earned on those earning assets.
The increase in the yield on earning assets can be primarily attributed to a 16
basis point increase in the yield on the securities available for sale
portfolio. During the same time period, total interest expense increased $4.0
million, primarily the result of a $229.4 million increase in average interest
bearing liabilities between reporting periods. Also contributing to the
increased interest expense was a 38 basis point increase in the cost of interest
bearing liabilities, the result of the rising interest rate environment during
late 1999 and the first quarter of 2000. Driving this increase in the cost of
funds was a 35 basis point increase in the cost of time deposits and an 86 basis
point increase in the cost of short-term borrowings. This increase in the cost
of funds resulted in a 23 basis point decline in the interest rate spread, as
the Company's liabilities repriced faster than the earning assets during the
rising rate environment.
Another important performance measurement of net interest income is the net
interest margin. This is computed by dividing annualized FTE net interest income
by average earning assets for the period. Net interest margin decreased to 4.32%
for first quarter 2000, down from 4.52% for the comparable period in 1999. The
decrease in the net interest margin can be attributed to the previously
mentioned decrease in the interest rate spread as the interest bearing
liabilities repriced faster than the earning assets during the recent rising
interest rate environment.
-11-
TABLE 2
COMPARATIVE ANALYSIS OF FEDERAL TAXABLE EQUIVALENT NET INTEREST INCOME
Three months ended March 31,
ANNUALIZED
YIELD/RATE AMOUNTS VARIANCE
2000 1999 (dollars in thousands) 2000 1999 TOTAL VOLUME RATE
---- ---- ---- ---- ----- ------ ----
5.12% 4.07% Interest bearing deposits $ 6 $ 4 $ 2 $ - $ 2
5.48% 4.62% Federal funds sold 42 131 (89) (119) 30
6.61% 6.77% Other 354 322 32 40 (8)
6.88% 6.72% Securities available for sale 9,043 7,734 1,309 1,111 198
Securities held to maturity:
6.13% 6.12% Taxable 357 371 (14) (14) -
7.11% 6.60% Tax exempt 977 722 255 193 62
8.75% 8.68% LOANS 27,387 22,791 4,596 4,506 90
-------------------------------------------------------------------------------------
8.12% 7.97% Total interest income 38,166 32,075 6,091 5,717 374
3.23% 2.85% Money market deposit accounts 903 793 110 - 110
1.38% 1.47% NOW deposit accounts 562 581 (19) - (19)
2.97% 2.99% Savings deposits 1,561 1,477 84 38 46
5.27% 4.92% Time deposits 10,420 8,155 2,265 178 2,087
5.58% 4.72% Short-term borrowings 2,054 1,139 915 884 31
5.62% 5.56% LONG-TERM DEBT 2,346 1,739 607 605 2
------------------------------------------------------------------------------------
4.49% 4.11% TOTAL INTEREST EXPENSE 17,846 13,884 3,962 1,705 2,257
-------------------------------------------------------------------------------------
Net interest income $20,320 $18,191 $ 2,129 $4,012 $( 1,883)
======================================================================================
3.63% 3.86% Interest rate spread
4.32% 4.52% Net interest margin
FTE adjustment $ 710 $ 473
============== ======= =======
For purposes of the above yield computations, nonaccrual loans are included in
the average loan balances outstanding and average securities are at amortized
cost. Average balances used to calculate the yields are daily averages.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is a valuation allowance established to provide
for the inherent risk of loss in the Company's loan portfolio. The allowance is
maintained at a level considered adequate to provide for loan loss exposure
based on management's estimate of probable losses in the portfolio considering
an evaluation of risk, economic factors, and past loss experience. Management
determines the provision and allowance for loan losses based on a number of
factors including a comprehensive loan review program conducted throughout the
year. The loan portfolio is continually evaluated in order to identify problem
loans, credit concentration, and other risk factors such as economic conditions
and trends. The allowance for loan losses to outstanding loans at March 31, 2000
was 1.35%, compared to 1.44% at March 31, 1999. Management considers the
allowance for loan losses to be adequate based on evaluation and analysis of the
loan portfolio.
Table 3 reflects changes to the allowance for loan 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
collectability of loan principal within a reasonable time is unlikely. Any
recoveries of previously charged-off loans are credited directly to the
allowance for loan losses. Net charge-offs for the first quarter of 2000 were
$0.4 million, or 0.14% of average loans, compared to $0.8 million, or 0.32% of
average loans for the same period of 1999.
-12-
TABLE 3
ALLOWANCE FOR LOAN LOSSES
- -------------------------------------------------------------------------------------------------------------
Three months ended March 31,
(dollars in thousands) 2000 1999
- -------------------------------------------------------------------------------------------------------------
Balance, beginning of period $16,654 $15,322
Recoveries 248 221
Charge-offs (693) (1,055)
- -------------------------------------------------------------------------------------------------------------
Net (charge-offs) (445) (834)
Provision for loan losses 1,334 1,120
- -------------------------------------------------------------------------------------------------------------
Balance, end of period $17,543 $15,608
- -------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET CHARGE-OFFS
Commercial and agricultural $ (97) 22% $ (376) 45%
Real estate mortgage (86) 18% (28) 3%
Consumer (262) 60% (430) 52%
- -------------------------------------------------------------------------------------------------------------
Net charge-offs $ (445) 100% $ (834) 100%
- -------------------------------------------------------------------------------------------------------------
Annualized net charge-offs to average loans 0.14% 0.32%
- -------------------------------------------------------------------------------------------------------------
Net charge-offs to average loans for the year ended
December 31, 1999 0.33%
- -------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Table 4 below presents noninterest income for the first quarter of 2000 and
1999. Total noninterest income for the first quarter of 2000, excluding security
gains, was stable when compared to first quarter 1999. Service charges on
deposit accounts increased $0.2 million in the first quarter of 2000 compared to
the same period of 1999. This improvement can be attributed to an increase in
service fee and overdraft income resulting from growth in demand deposit
accounts. Other income decreased $0.2 million in the first quarter of 2000
compared to the same period of 1999. This decrease can be attributed to a mark
to market adjustment as a result of a decline in the market value of the
Company's mortgage loans held for sale portfolio.
Security gains decreased $0.7 million for the first quarter 2000 as
compared to first quarter 1999.
TABLE 4
NONINTEREST INCOME
- ---------------------------------------------------------------------------------------------------------------
FIRST First
QUARTER Quarter
(dollars in thousands) 2000 1999
- ---------------------------------------------------------------------------------------------------------------
Trust income $ 860 $ 835
Service charges on deposit accounts 1,620 1,408
Securities gains - 668
Other income 1,135 1,365
- ---------------------------------------------------------------------------------------------------------------
Total noninterest income $3,615 $4,276
- ---------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE AND OPERATING EFFICIENCY
Table 5 presents components of noninterest expense as well as selected operating
efficiency ratios. Total noninterest expense increased $3.2 million between the
quarter ended March 31, 2000 and the same period for 1999. Contributing to this
increase in the first quarter of 2000 was $1.1 million in merger and acquisition
related expenses associated with the previously mentioned mergers. It is
anticipated that the Company will incur approximately $11.2 million in
additional merger and acquisition expenses related to the Lake Ariel and Pioneer
American mergers during 2000. In addition, during 2000 and 2001 the Company
anticipates incurring approximately $16.5 million of pre-tax merger and
acquisition expenses related to the BSB Bancorp, Inc. merger.
Salaries and employee benefits for the first quarter of 2000 increased $1.1
million compared to the same period of 1999, primarily the result of increased
salaries and performance based incentives.
Occupancy expense for the first quarter of 2000 experienced a $0.2 million
increase compared to the same period in 1999. This increase can be attributed to
an increase in security expense from a third party contract to enhance the
maintenance of the Company's security equipment. Also contributing to the
-13-
increase in occupancy expense was an increase in rental expense associated with
the addition of branch and ATM locations through out our market areas.
Equipment expense for the quarter ended March 31, 2000 experienced a $0.2
million increase compared to the same period in 1999, primarily attributable to
increased equipment depreciation and maintenance.
Other operating expense for the first quarter of 2000 experienced a $0.4
million increase compared to the first quarter of 1999. Included in the first
quarter 1999 other operating expense was a nonrecurring gain of $0.2 million on
the sale of other real estate owned.
One important operating efficiency measure that the Company closely
monitors is the efficiency ratio. The efficiency ratio is computed as total
noninterest expense (excluding nonrecurring charges) divided by net interest
income plus noninterest income (excluding net security gains and losses and
nonrecurring income). The efficiency ratio increased to 57.24% in the first
quarter of 2000 from 55.16% in the same period of 1999. This increase was a
result of the increase in noninterest expense between reporting periods.
TABLE 5
NONINTEREST EXPENSE AND PRODUCTIVITY MEASUREMENTS
- ---------------------------------------------------------------------------------------------
FIRST First
QUARTER Quarter
(dollars in thousands) 2000 1999
- ---------------------------------------------------------------------------------------------
Salaries and employee benefits 7,081 5,970
Office supplies and postage 592 637
Occupancy 1,232 1,024
Equipment 1,137 947
Professional fees and outside services 756 697
Data processing and communications 1,132 972
Amortization of intangible assets 312 329
Merger and acquisition costs 1,122 -
Other operating 1,619 1,240
- ---------------------------------------------------------------------------------------------
Total noninterest expense $14,983 $11,816
- ---------------------------------------------------------------------------------------------
Efficiency ratio 57.24% 55.16%
Average full-time equivalent
employees 656 661
Average assets per average
full-time equivalent employee
(millions) $ 3.0 $ 2.6
- ---------------------------------------------------------------------------------------------
INCOME TAXES
Income tax expense was $2.7 million for the first quarter of 2000 compared to
$3.3 million for the first quarter of 1999. The decrease in income taxes during
the first quarter of 2000 can be attributed to the decreased income before
income taxes between reporting periods. The effective tax rate was 38.6% for the
first quarter of 2000 and 36.2% for the same period of 1999. The increase in the
effective tax rate can be attributed to non-deductible merger and acquisition
costs.
BALANCE SHEET
The following table highlights the changes in the balance sheet. Since period
end balances can be distorted by one day fluctuations, the discussion and
analysis concentrates on average balances when appropriate to give a better
indication of balance sheet trends.
-14-
TABLE 6
AVERAGE BALANCES
- ----------------------------------------------------------------------------------------------------
Three months ended
March 31,
(dollars in thousands) 2000 1999
- ----------------------------------------------------------------------------------------------------
Cash and cash equivalents $ 53,078 $ 55,533
Securities available for sale, at fair value 496,279 471,104
Securities held to maturity 78,691 68,977
Loans 1,258,144 1,065,313
Deposits 1,493,278 1,334,062
Short-term borrowings 148,120 97,876
Long-term debt 168,004 126,812
Stockholders' equity 161,042 169,273
Assets 1,983,649 1,741,376
Earning assets 1,890,843 1,632,450
Interest bearing liabilities $1,599,924 $1,370,544
- ----------------------------------------------------------------------------------------------------
SECURITIES
Average total securities were $34.9 million greater for the first quarter of
2000 than for the same period of 1999. The majority of this increase was in the
available for sale portfolio. During the first quarter of 2000, the securities
portfolio represented 32.1% of average earning assets compared to 32.8% for the
first quarter of 1999. At March 31, 2000, the securities portfolio was comprised
of 86% available for sale and 14% held to maturity securities.
LOANS
The Company has continued to experience strong growth in the loan portfolio.
Average loan volume for the first quarter of 2000 was $192.8 million, or 18.1%
greater than the first quarter 1999 average. This growth has been present in all
loan categories, with increases in the average commercial, consumer and mortgage
portfolios of $125.1 million, $53.5 million and $14.2 million, respectively.
The Company has continued to experience an increase in the demand for
commercial loans, primarily in the business and real estate categories. The
Company does not engage in highly leveraged transactions or foreign lending
activities.
NONPERFORMING ASSETS AND PAST DUE LOANS
Nonperforming assets consist of nonaccrual loans and other real estate owned
(OREO). 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 market value, less any
estimated disposal costs.
Total nonperforming assets were $8.5 million at March 31, 2000 compared to
$7.9 million at March 31, 1999. An increase of $2.0 million in nonaccrual
commercial and agricultural loans was partially offset by a decrease in other
real estate owned of $1.1 million. A significant portion of the increase in
nonaccrual commercial loans can be attributed to two customers. Total assets
containing risk elements were $9.2 million, or 0.45% of assets at March 31, 2000
compared to $8.8 million, or 0.49% of assets at March 31, 1999. The reduction in
assets containing risk elements to assets indicates an improvement in asset
quality.
At March 31, 2000, the recorded investment in impaired loans was $6.4
million. Included in this amount is $3.2 million of impaired loans for which the
specifically allocated allowance for loan loss is $1.0 million. In addition,
included in impaired loans is $3.1 million of impaired loans that, as a result
of the adequacy of collateral values and cash flow analysis, do not have a
specific reserve. At December 31, 1999, the recorded investment in impaired
loans was $4.7 million, of which $0.9 million had a specific allowance
allocation of $0.5 million and $3.8 million for which there was no specific
reserve. At March 31, 1999, the recorded investment in impaired loans was $4.4
million, of which $1.5 million had a specific allowance allocation of $0.5
million and $2.8 million of which there was no specific reserve. The Company
classifies all commercial and small business nonaccrual loans as impaired loans.
-15-
TABLE 7
NONPERFORMING ASSETS AND RISK ELEMENTS
- --------------------------------------------------------------------------------------------------------------
MARCH 31, March 31,
(dollars in thousands) 2000 1999
- --------------------------------------------------------------------------------------------------------------
Commercial and agricultural $6,363 82% $4,385 73%
Real estate mortgage 531 7% 691 11%
Consumer 846 11% 953 16%
- --------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 7,740 100% 6,029 100%
- --------------------------------------------------------------------------------------------------------------
Other real estate owned 789 1,896
- --------------------------------------------------------------------------------------------------------------
Total nonperforming assets 8,529 7,925
- --------------------------------------------------------------------------------------------------------------
Loans 90 days or more past due and still accruing:
Commercial and agricultural 64 10% 21 3%
Real estate mortgage 423 67% 515 61%
Consumer 143 23% 299 36%
- --------------------------------------------------------------------------------------------------------------
Total 630 100% 835 100%
- --------------------------------------------------------------------------------------------------------------
Total assets containing risk elements $9,159 $8,760
- --------------------------------------------------------------------------------------------------------------
Total nonperforming loans to loans 0.60% 0.56%
Total loans containing risk elements to loans 0.65% 0.63%
Total nonperforming assets to assets 0.42% 0.44%
Total assets containing risk elements to assets 0.45% 0.49%
- --------------------------------------------------------------------------------------------------------------
DEPOSITS
Customer deposits represent the greatest source of funding assets. Average total
deposits for the quarter ended March 31, 2000 were $1.5 billion compared to $1.3
billion at March 31, 1999. This growth has been present in all deposit
categories, with increases in the average demand, savings and time deposits of
$21.3 million, $14.4 million and $123.6 million, respectively. As previously
mentioned, the increase in demand deposits has led to an increase in service
charge fee income.
BORROWED FUNDS
The Company's borrowed funds consist of short-term borrowings and long-term
debt. Average short-term borrowings for the first quarter of 2000 were $148.1
million compared to $97.9 million for the same period of 1999. Average long-term
debt for the first quarter of 2000 was $168.0 million compared to $126.8 million
for the same period of 1999. The increase in borrowed funds between reporting
periods can be attributed to the need for funding the strong loan growth.
CAPITAL AND DIVIDENDS
Stockholders' equity of $162.5 million represents 8.0% of total assets at March
31, 2000, compared with $170.0 million, or 9.5% a year previous, and $160.5
million, or 8.2% at December 31, 1999.
In December 1999, the Company distributed a 5% stock dividend, the fortieth
consecutive year a stock dividend has been declared. The Company does not have a
target dividend payout ratio, rather the Board of Directors considers the
Company's earnings position and earnings potential when making dividend
decisions.
Capital is an important factor in ensuring the safety of depositors'
accounts. During both 1999 and 1998, the Company earned the highest possible
national safety and soundness rating from two national bank rating services,
Bauer Financial Services and Veribanc, Inc. Their ratings are based on capital
levels, loan portfolio quality and security portfolio strength.
As the capital ratios in Table 8 indicate, the Company remains well
capitalized. Capital measurements are significantly 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 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.
-16-
TABLE 8
CAPITAL MEASUREMENTS
- -------------------------------------------------------------------------------------------------------------
FIRST First
QUARTER Quarter
2000 1999
- -------------------------------------------------------------------------------------------------------------
Tier 1 leverage ratio 8.61% 9.24%
Tier 1 capital ratio 12.93% 14.73%
Total risk-based capital ratio 14.08% 15.90%
Cash dividends as a percentage
of net income 72.53% 44.94%
Per common share:
Book value $ 8.98 $ 9.45
Tangible book value $ 8.53 $ 8.92
- -------------------------------------------------------------------------------------------------------------
The accompanying Table 9 presents the high, low and closing sales price for the
common stock as reported on the NASDAQ Stock Market, and cash dividends declared
per share of common stock. At March 31, 2000, total market capitalization of the
Company's common stock was approximately $262 million compared with $358 million
at March 31, 1999. The Company's price to book value ratio was 1.61 at March 31,
2000 and 2.10 a year ago. The Company's price was 16 times annualized earnings
at March 31, 2000, compared to 15 times a year previous.
TABLE 9
QUARTERLY COMMON STOCK AND DIVIDEND INFORMATION*
- ----------------------------------------------------------------------------------------------------------
Cash
Dividends
Quarter Ending High Low Close Declared
- ----------------------------------------------------------------------------------------------------------
1999
- ----------------------------------------------------------------------------------------------------------
March 31 $23.33 $19.89 $19.89 $0.162
June 30 21.19 19.05 19.52 0.162
September 30 20.90 16.43 16.49 0.162
December 31 17.98 14.63 15.50 0.170
- ----------------------------------------------------------------------------------------------------------
2000
- ----------------------------------------------------------------------------------------------------------
MARCH 31 $16.50 $11.38 $14.50 $0.170
- ----------------------------------------------------------------------------------------------------------
[FN]
*historical NBT Bancorp Inc. only
</FN>
LIQUIDITY AND INTEREST RATE SENSITIVITY MANAGEMENT
The primary objectives of asset and liability management are to provide for the
safety of depositor and investor funds, assure adequate liquidity, and maintain
an appropriate balance between interest sensitive earning assets and interest
bearing liabilities. Liquidity management 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 Asset/Liability Management Committee (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 must also provide the
flexibility to implement appropriate strategies and tactical actions.
Requirements change as loans grow, deposits and securities mature, and payments
on borrowings are made. Interest rate sensitivity management seeks to avoid
widely fluctuating net interest margins and to ensure consistent net interest
income through periods of changing economic conditions.
The Company's primary measure of liquidity is called the basic surplus,
which compares the adequacy of cash sources to the amounts of volatile funding
sources. 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. Accordingly, the Company has established borrowing
agreements with other banks (Federal Funds), the Federal Home Loan Bank (short
and long-term borrowings which are denoted as advances), and repurchase
agreements with investment companies. The Asset/Liability Management Committee
has determined that liquidity is adequate to meet the cash flow requirements of
the Company.
Interest rate risk is determined by the relative sensitivities of earning
asset yields and interest bearing liability costs to changes in interest rates.
The method by which banks evaluate interest rate risk is to look at the interest
sensitivity gap, the difference between interest sensitive assets and interest
sensitive liabilities repricing during the same period, measured at a specific
point in time. Through analysis of the interest sensitivity gap, the Company
-17-
attempts to position its assets and liabilities to maximize net interest income
in several different interest rate scenarios.
While the static gap evaluation of interest rate sensitivity is useful, it
is not indicative of the impact of fluctuating interest rates on net interest
income. Once the Company determines the extent of gap sensitivity, the next step
is to quantify the potential impact of the interest sensitivity on net interest
income. The Company measures interest rate risk based on the potential change in
net interest income under various rate environments. The Company utilizes an
interest rate risk model that simulates net interest income under various
interest rate environments. The model groups assets and liabilities into
components with similar interest rate repricing characteristics and applies
certain assumptions to these products. These assumptions include, but are not
limited to prepayment estimates under different rate environments, potential
call options of the investment portfolio and forecasted volumes of the various
balance sheet items. The following table presents the impact on net interest
income of a gradual twelve-month increase or decrease in interest rates compared
to a stable interest rate environment. The simulation projects net interest
income over the next year using the March 31, 2000 balance sheet position.
TABLE 10
INTEREST RATE SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
Change in interest rates Percent change in
(in basis points) net interest income
- --------------------------------------------------------------------------------
+200 (3.12%)
+100 (1.80%)
- -100 0.97%
- -200 1.13%
- --------------------------------------------------------------------------------
-18-
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings
In the normal course of business, there are various outstanding legal
proceedings. In the opinion of management, the aggregate amount involved in such
proceedings is not material to the financial condition or results of operations
of the Company.
Item 2 -- Changes in Securities
Following are listed changes in the Company's Common Stock outstanding during
the quarter ended March 31, 2000 as well as certain actions which have been
taken which may affect the number of shares of Common Stock (shares) outstanding
in the future. There was no Preferred Stock outstanding during the quarter ended
March 31, 2000.
At a Special Meeting of Stockholders held on February 17, 2000, the
stockholders of NBT Bancorp Inc. approved two amendments to the Company's
Certificate of Incorporation. The first amendment changed the Company's common
and preferred stock from no par value, $1.00 stated value per share to shares
having a par value of $.01 per share. The second amendment increased the number
of authorized shares of NBT Bancorp Inc. common stock from 15 million to 30
million.
Item 3 -- Defaults Upon Senior Securities
This item is omitted because there were no defaults upon the Company's senior
securities during the quarter ended March 31, 2000.
Item 4 -- Submission of Matters to a Vote of Security Holders
The Company held a Special Meeting of Stockholders on February 17, 2000.
Stockholders approved the following proposals:
a. Proposal to approve the amendment to Article Fourth of NBT's Certificate of
Incorporation to change NBT's authorized common stock and preferred stock from
no par value, stated value $1.00 per share to a par value of $.01 per share.
The proposal was approved, with 10,177,577 votes FOR, 489,762 votes
AGAINST, and 363,007 votes ABSTAINING.
b. Proposal to approve the amendment to Article Fourth of NBT's Certificate of
Incorporation to increase the number of authorized shares of common stock from
15 million to 30 million.
The proposal was approved, with 10,255,583 votes FOR, 556,831 votes
AGAINST, and 217,895 votes ABSTAINING.
c. To approve a proposal to ratify a change to Article III, Section 2 of the NBT
Bancorp Inc. Bylaws, relating to the number, classification and qualification of
directors, previously approved by the NBT Bancorp Inc. Board of Directors.
The proposal was approved, with 9,087,635 votes FOR, 929,423 votes AGAINST,
and 242,839 votes ABSTAINING.
d. To approve the Agreement and Plan of Merger, dated as of August 16, 1999, and
amended as of December 13, 1999 and further amended as of December 27, 1999, by
and between NBT Bancorp Inc. and Lake Ariel Bancorp, Inc. which, among other
things, Lake Ariel will merge with and into NBT Bancorp Inc., with NBT Bancorp
Inc. being the surviving corporation and NBT Bancorp Inc. will issue
approximately 4.8 million shares of common stock to the Lake Ariel stockholders
upon completion of the merger.
-19-
The proposal was approved, with 9,588,479 votes FOR, 518,735 votes AGAINST,
and 152,681 votes ABSTAINING.
Item 5 -- Other Information
Not Applicable
Item 6 -- Exhibits and Reports on FORM 8-K
(a) An index to exhibits follows the signature page of this FORM 10-Q.
(b) During the first quarter ended March 31, 2000, the Company filed the
following Current Reports on Form 8-K:
Current report on Form 8K filed with the Securities and Exchange
Commission on February 22, 2000
Current report on Form 8K filed with the Securities and Exchange
Commission on March 3, 2000
Current report on Form 8K filed with the Securities and Exchange
Commission on March 31, 2000
-20-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on FORM 10-Q to be signed on its behalf
by the undersigned thereunto duly authorized, this 15th day of May, 2000.
NBT BANCORP INC.
By: /S/ MICHAEL J. CHEWENS
-------------------------------
Michael J. Chewens, CPA
Executive Vice President
Chief Financial Officer and Treasurer
-21-
INDEX TO EXHIBITS
The following documents are attached as Exhibits to this FORM 10-Q or, if
annotated by the symbol *, are incorporated by reference as Exhibits as
indicated by the page number or exhibit cross-reference to the prior filings of
the Registrant with the Commission.
FORM 10-Q
Exhibit Exhibit
NUMBER CROSS-REFERENCE
- ------ ---------------
3.1 Certificate of Incorporation of NBT Bancorp Inc., as amended
through February 17, 2000 Herein
10.1 NBT Bancorp Inc. 1993 Stock Option Plan as amended through
January 24, 2000 Herein
10.2 Form of Employment Agreement between NBT Bancorp Inc. and
Daryl R. Forsythe made as of January 1, 2000 Herein
10.3 Supplemental Retirement Agreement between NBT Bancorp Inc., NBT
Bank, National Association and Daryl R. Forsythe made as of January 1,
1995 and as revised on April 28, 1998, and on January 1, 2000 Herein
10.4 Form of Employment Agreement between NBT Bancorp Inc. and
Martin A. Dietrich made as of January 1, 2000 Herein
10.5 Supplemental Retirement Agreement between NBT Bancorp Inc., NBT
Bank, National Association and Martin A. Dietrich made as of
January 1, 2000 Herein
10.6 Form of Employment Agreement between NBT Bancorp Inc. and
Joe C. Minor made as of January 1, 2000 Herein
10.7 Supplemental Retirement Agreement between NBT Bancorp Inc., NBT
Bank, National Association and Joe C. Minor made as of
January 1, 2000 Herein
10.8 Form of Employment Agreement between NBT Bancorp Inc. and
John G. Martines made as of February 17, 2000 Herein
10.9 Form of Change-In-Control Agreement between NBT Bancorp Inc.
and the following officers of NBT Bancorp Inc. or one or more of its
subsidiaries: John R. Bradley, Michael J. Chewens, Rita K. DeMarko,
Martin A. Dietrich, Joseph J. Earyes, Daryl R. Forsythe, John G. Martines,
Joe C. Minor, Jane Neal, David E. Raven, Kenneth C. Reilly, and
John D. Roberts Herein
10.10 NBT Bancorp Inc. 2000 Executive Incentive Compensation Plan Herein
27.1 Financial Data Schedule for period ending March 31, 2000 Herein
27.2 Financial Data Schedule for period ending March 31, 1999 Herein
-22-