After a decade on the sidelines, NBT Bancorp is back in the merger game.

The Norwich, N.Y., company has struck two deals in the last four months that would nearly double its size, to about $2.6 billion. In August, NBT said it would buy Lake Ariel (Pa.) Bancorp for about $93 million. This month the company announced a deal to buy Carbondale, Pa.-based Pioneer American Holding Co. - one of Lake Ariel's biggest rivals - for about $85 million.

The deals, expected to close in early 2000, would be NBT's first since buying four New York banks from Irving Trust Co. in 1989 and its first acquisitions outside its home state in its 153-year history. The two acquired banks would be merged into a single subsidiary that would rank as the largest community bank in northeastern Pennsylvania.

"Instead of having a $500 million bank in Pennsylvania, we're going to have a $900 million bank," said Daryl R. Forsythe, NBT's president and chief executive officer.

NBT has yet to come up with a name for the Pennsylvania subsidiary, which would target small businesses whose credit needs have outgrown the lending limits of the region's smaller banks, said Lake Ariel president John G. Martines.

"We compete with at least 10 banks all with assets in the $150 million to $500 million range," said Mr. Martines, who would be the chairman of the new NBT subsidiary. "There's never been that $1 billion bank here that can handle those large loans."

NBT's push into Pennsylvania may not end with its purchases of Lake Ariel and Pioneer. Mr. Martines said he is hoping that other community banks in the market will want to join the bank, which will have about 40 branches, rather than try to beat it.

"There are just too many community banks here, and it's hard to grind out the numbers year after year when you're all vying for the same deposit dollar,'' he said.

The Pennsylvania acquisitions would also be NBT's first under Mr. Forsythe.

He has held unsuccessful merger talks with other New York banks, he said. Then NBT shifted its focus to northeastern Pennsylvania, because the market is similar to that of central New York, he said.

Still, NBT has thrived without making acquisitions.

A former aerospace executive whose only banking experience was as an NBT board member, Mr. Forsythe took the helm in 1995 after the board decided not to renew the contract of former president Joseph Butare. Under Mr. Forsythe, NBT's loan portfolio has nearly doubled, to $900 million, and its efficiency ratio has improved from 70% in early 1995 to 52% as of Sept. 30.

"Management skills are management skills," said Mr. Forsythe of his transition from aviation to banking, "whether it's running a bank or making engine parts."

Mr. Forsythe said he recognizes that the double-digit loan growth is unlikely to continue in upstate New York or northeastern Pennsylvania, both areas where the economies are growing modestly. So last month, the company launched a subsidiary that will focus on buying brokerage firms, insurance agencies, and other nonbanking financial services.

The goal, said Mr. Forsythe, is for fee income to make up 40% of NBT's bottom line - double the current percentage.

"If you look at the markets we're in, you have to ask how realistic it is for the loan portfolio to be growing at 12% to 15% a year, when the economy is growing at just 2%," he said. "You have to be looking for other ways to make money."

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