UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20547

                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended September 30, 1998
                              --------------------------------------------------
                                       or

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(D)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

Commission file Number              000-23419
                      ----------------------------------------------------------

                                    NMBT CORP
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                              <C>       
                         Delaware                                               06-1496548
-------------------------------------------------------------    -----------------------------------
(State or other jurisdiction of incorporation or organization)  (I.R.S. Employer Identification No.)

55 Main Street, New Milford, Connecticut                                       06776-2400
-------------------------------------------------------------    -----------------------------------
(Address of principal executive offices)                                      (ZIP Code)
</TABLE>


Registrant's telephone number, including area code (860) 355-1171
                                                  ------------------------------

     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. [ X ] Yes [ ] No

     The number of shares of Common Stock, par value $.01 per share, outstanding
as of November 12, 1998 was 2,663,358.


<PAGE>



NMBT CORP
Form 10Q
September 30, 1998


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                     Page
<S>                                                                                                  <C>

PART I-FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         Consolidated Statements of Condition (Unaudited)
              September 30, 1998 and December 31, 1997                                               3

         Consolidated Statements of Operations (Unaudited)
              Nine Months and Three Months Ended
              September 30, 1998 and September 30, 1997                                              4

         Consolidated Statements of Comprehensive Income (Unaudited)
              Nine Months and Three Months Ended
              September 30, 1998 and September 30, 1997                                              5

         Consolidated Statements of Cash Flows (Unaudited)
              Nine Months Ended September 30, 1998 and September 30, 1997                            6

         Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
              Nine Months Ended September 30, 1998 and September 30, 1997                            7

         Notes to Consolidated Financial Statements                                                  8

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                              12

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                 16


PART II-OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS                                                                          17

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                        17

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                                           17

SIGNATURES                                                                                          18
</TABLE>



                                       2


<PAGE>




                                    NMBT CORP
                CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
                   DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------- -------------------- ---------------------
                                                                                       September 30,         December 31,
                                                                                  -------------------- ---------------------
                                                                                         1998                  1997
                                                                                  -------------------- ---------------------
<S>                                                                                          <C>                   <C>     
ASSETS
Cash and due from banks                                                                       $18,647               $18,737
Interest-bearing deposits                                                                         710                 4,025
--------------------------------------------------------------------------------- -------------------- ---------------------
        Cash and cash equivalents                                                              19,357                22,762
--------------------------------------------------------------------------------- -------------------- ---------------------

Securities:
Available for sale, at fair value (amortized cost of $71,513 in 1998                           73,173                48,129
   and $47,556 in 1997)
Held to maturity, at amortized cost (fair value of $38,479 in 1998                             37,725                35,876
   and $36,240 in 1997)
--------------------------------------------------------------------------------- -------------------- ---------------------
        Total securities                                                                      110,898                84,005
--------------------------------------------------------------------------------- -------------------- ---------------------

Loans                                                                                         234,571               223,909
Less allowance for loan losses                                                                  3,921                 3,537
--------------------------------------------------------------------------------- -------------------- ---------------------
        Loans, net                                                                            230,650               220,372
--------------------------------------------------------------------------------- -------------------- ---------------------

Real estate owned, net                                                                              -                   212
Premises and equipment, net                                                                     3,666                 3,706
Excess of cost over fair value of net assets acquired, net                                        330                   506
Accrued interest and other assets                                                               5,299                 5,003
--------------------------------------------------------------------------------- -------------------- ---------------------

        Total assets                                                                         $370,200              $336,566
================================================================================= ==================== =====================

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
        Noninterest-bearing checking                                                          $43,377               $36,999
        Interest-bearing checking                                                              92,621                88,501
        Savings                                                                                67,019                60,782
        Time deposits under $100                                                               79,457                81,902
        Time deposits $100 or more                                                             17,315                17,411
--------------------------------------------------------------------------------- -------------------- ---------------------
        Total deposits                                                                        299,789               285,595
--------------------------------------------------------------------------------- -------------------- ---------------------

Advances from Federal Home Loan Bank of Boston (FHLB)                                          39,535                23,145
Accrued interest and other liabilities                                                          2,644                 2,496
--------------------------------------------------------------------------------- -------------------- ---------------------
        Total liabilities                                                                     341,968               311,236
--------------------------------------------------------------------------------- -------------------- ---------------------

Stockholders' equity:
        Common stock, $0.01 par value
        Shares authorized:    8,000,000
        Shares outstanding:  1998 - 2,644,058;  1997 - 2,614,858                                   26                    26
        Additional paid-in capital                                                             17,915                17,378
        Retained earnings                                                                       9,196                 7,548
        Accumulated other comprehensive income                                                  1,095                   378
--------------------------------------------------------------------------------- -------------------- ---------------------
        Total stockholders' equity                                                             28,232                25,330
--------------------------------------------------------------------------------- -------------------- ---------------------

        Total liabilities and stockholders' equity                                           $370,200              $336,566
================================================================================= ==================== =====================
</TABLE>

See notes to consolidated financial statements.

                                       3

<PAGE>



                                    NMBT CORP
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                       IN THOUSANDS, EXCEPT PER SHARE DATA

<TABLE>
<CAPTION>
-------------------------------------------------------------------------- ---------------------------- ---------------------------
                                                                                Nine Months Ended           Three Months Ended
                                                                                  SEPTEMBER 30,               SEPTEMBER 30,
                                                                               1998          1997           1998          1997
                                                                           ------------- -------------- ------------- -------------
INTEREST AND DIVIDEND INCOME
<S>                                                                             <C>            <C>            <C>           <C>   
Interest and fees on loans                                                      $13,638        $13,277        $4,659        $4,515
U.S. Treasury and agency securities                                               3,488          2,861         1,288           973
Municipal securities                                                                626            409           215           164
Dividends on FHLB stock                                                              87             79            30            28
Interest-bearing deposits                                                           252            193            51            91
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------
        Total interest and dividend income                                       18,091         16,819         6,243         5,771
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------

INTEREST EXPENSE
Interest-bearing checking                                                         1,143            990           398           373
Savings                                                                           1,121          1,118           396           378
Time deposits under $100                                                          3,185          3,274         1,045         1,122
Time deposits $100 or more                                                          724            657           235           224
FHLB advances and capital leases                                                  1,395            736           516           284
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------
        Total interest expense                                                    7,568          6,775         2,590         2,381
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------

Net interest and dividend income                                                 10,523         10,044         3,653         3,390
Provision for loan losses                                                           341            455            75           210
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------
Net interest and dividend income after provision for loan losses                 10,182          9,589         3,578         3,180
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------

NONINTEREST INCOME
Service charges on deposit accounts                                                 748            770           259           257
Other service charges, commissions and fees                                         285            273           104            91
Loan servicing fees                                                                  65             29            29            11
Gain on sale of securities                                                           51              -             -             -
Net gain on sale of loans                                                           718            259           323           107
Other income                                                                         96             98            41            43
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------
        Total noninterest income                                                  1,963          1,429           756           509
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------
<S>                                                                               <C>            <C>           <C>           <C>  
NONINTEREST EXPENSE
Compensation, payroll taxes and benefits                                          4,539          4,011         1,574         1,368
Occupancy                                                                           779            724           274           243
Furniture and equipment                                                             577            675           201           194
Data processing                                                                     278            199           111            75
Stationery, printing and supplies                                                   350            305           122           107
Marketing, advertising and investor relations                                       310            283            98            68
Legal and professional fees                                                         221            198           144            57
Other general and administrative expense                                          1,120            952           373           312
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------
        Total general and administrative expense                                  8,174          7,347         2,897         2,424
Operations of real estate owned                                                      46             15           (3)          (47)
Amortization of intangible assets                                                   176            176            59            59
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------
        Total noninterest expense                                                 8,396          7,538         2,953         2,436
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------

Income before provision for income taxes                                          3,749          3,480         1,381         1,253
Provision for income taxes                                                        1,417          1,384           531           488
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------

Net income                                                                       $2,332         $2,096          $850          $765
========================================================================== ============= ============== ============= =============

Basic earnings per share                                                          $0.88          $0.81         $0.32         $0.30
Diluted earnings per share                                                        $0.83          $0.76         $0.30         $0.27
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------

Average basic shares outstanding                                                  2,639          2,593         2,639         2,593
Average diluted shares outstanding                                                2,811          2,745         2,811         2,745
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------

Cash dividends per share                                                         $0.260         $0.155        $0.090        $0.055
-------------------------------------------------------------------------- ------------- -------------- ------------- -------------
</TABLE>

See notes to consolidated financial statements.


                                       4
<PAGE>



                                    NMBT CORP
           CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
                                  In thousands

<TABLE>
<CAPTION>
------------------------------------- ----------------------------------------- --------------------------------------------
                                                 NINE MONTHS ENDED                            THREE MONTHS ENDED
                                      SEPTEMBER 30, 1998   SEPTEMBER 30, 1997      SEPTEMBER 30, 1998   SEPTEMBER 30, 1997
------------------------------------- -------------------- -------------------- ----------------------- --------------------
<S>                                         <C>                   <C>                  <C>                     <C>    
Net Income                                  $ 2,332               $ 2,096              $   850                 $   765
Other comprehensive income,
net of tax:                                                                                                    
   Unrealized gains on                                                                                  
   securities:                                                                                    
    Unrealized holding gains                                                                             
    arising during period                   $   751               $   123              $   778                 $   162
    Less: reclassification                                                                                             
    adjustment for gains                                                                                    
    included in net income                      (34)                   --                   --                      -- 
                                            -------               -------              -------                 -------
Other comprehensive income                      717                   123                  778                     162
                                            =======               =======              =======                 =======
Comprehensive income                        $ 3,049               $ 2,219              $ 1,628                 $   927
                                            =======               =======              =======                 =======
</TABLE>


See notes to consolidated financial statements.


                                       5

<PAGE>



                                    NMBT CORP
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                  IN THOUSANDS

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                                              Nine Months Ended
                                                                                         SEPTEMBER 30,       SEPTEMBER 30,
                                                                                             1998               1997
                                                                                  -------------------- ---------------------
<S>                                                                                      <C>                   <C>     
OPERATING ACTIVITIES
Net Income                                                                               $  2,332              $  2,096
Adjustments to reconcile net income to net cash provided by
   Operating activities:
   Depreciation and amortization                                                              574                   687
   Provision for loan losses                                                                  341                   455
   Net amortization of securities                                                             154                   103
   Deferred income taxes                                                                      202                   (48)
   Realized securities gains, net                                                             (51)                   --
   Loans originated for sale                                                              (61,464)              (18,441)
   Proceeds from loans sold, net                                                           59,836                19,378
   Gains from loan sales, net                                                                (718)                 (259)
   Realized gains from real estate owned sales, net                                           (42)                 (102)
   Net increase in interest receivable                                                       (207)                 (419)
   Net (increase) decrease in other assets                                                   (176)                  122
   Net increase in interest payable                                                            61                    68
   Net increase in other liabilities                                                           66                   375
-------------------------------------------------------------------------------          --------              --------
   Net cash provided by operating activities                                                  908                 4,015
-------------------------------------------------------------------------------          --------              --------

INVESTING ACTIVITIES

Purchase of held to maturity (HTM) securities                                             (15,000)               (4,996)
Net loan originations                                                                      (8,731)               (9,117)
Purchases of available for sale (AFS) securities                                          (36,197)              (17,233)
Net purchases of premises and equipment                                                      (357)                 (584)
Proceeds from real estate owned sales                                                         267                   340
Proceeds from maturities of AFS securities                                                 10,046                 3,726
Proceeds from maturities of HTM securities                                                 13,046                 5,911
Proceeds from sales of AFS securities                                                       2,370                    --
Purchases of FHLB stock                                                                      (174)                 (218)
-------------------------------------------------------------------------------          --------              --------
   Net cash used for investing activities                                                 (34,730)              (22,171)
-------------------------------------------------------------------------------          --------              --------

FINANCING ACTIVITIES
Net increase in advances from FHLB                                                         16,390                 8,017
Net increase (decrease) in time deposits                                                   (2,541)                8,153
Net increase in checking and savings deposits                                              16,735                 6,208
Cash dividends                                                                               (685)                 (402)
Net proceeds from exercise of stock options                                                   537                    76
Other                                                                                         (19)                  (42)
-------------------------------------------------------------------------------          --------              --------
   Net cash provided by financing activities                                               30,417                22,010
-------------------------------------------------------------------------------          --------              --------

Increase (decrease) in cash and cash equivalents                                           (3,405)                3,854
Cash and cash equivalents, beginning of period                                             22,762                23,990

===============================================================================          ========              ========
Cash and cash equivalents, end of period                                                 $ 19,357              $ 27,844
===============================================================================          ========              ========

CASH PAID DURING PERIOD
Interest to depositors and creditors                                                     $  7,507              $  6,708
Income taxes                                                                                1,385                 1,062

NON-CASH TRANSFERS
Transfer of loans to real estate owned                                                         25                   525
Net change in unrealized gains on AFS securities                                              717                   123
Financed portion of sales of real estate owned                                                 12                   393
</TABLE>

See notes to consolidated financial statements.

                                       6

<PAGE>





                                    NMBT CORP
     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
                                  IN THOUSANDS

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                             TOTAL       COMPREHENSIVE     RETAINED     ACCUMULATED OTHER    COMMON     ADDITIONAL      SHARES
                                            INCOME         EARNINGS       COMPREHENSIVE       STOCK      PAID-IN     OUTSTANDING
                                                                             INCOME                      CAPITAL
-----------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                <C>           <C>                 <C>            <C>      <C>              <C>  
JANUARY 1, 1997             $22,565                          $5,195                $146         $26      $17,198          2,588
Net income                    2,096            $2,096         2,096
Unrealized                                                                              
gains on
securities                      123               123                               123
Proceeds from exercise                                                                                                          
of stock options                 76                                                                           76             12
Cash dividends                (402)                           (402)
                            ----------------------------------------------------------------------------------------------------
SEPTEMBER 30, 1997          $24,458            $2,219        $6,889                $269         $26      $17,274          2,600
                            ====================================================================================================

JANUARY 1, 1998             $25,330                          $7,548                $378         $26      $17,378          2,615
Net income                    2,332            $2,332         2,332
Unrealized                                                                              
gains on
securities                      717               717                               717
Proceeds from exercise                                                                                                          
of stock options                537                                                                          537             29
Cash dividends                (684)                           (684)
                            ----------------------------------------------------------------------------------------------------
SEPTEMBER 30, 1998          $28,232            $3,049        $9,196              $1,095         $26      $17,915          2,644
                            ====================================================================================================
</TABLE>


See notes to consolidated financial statements.

                                       7

<PAGE>



NMBT CORP
NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

NMBT CORP (the "Company"),  a Delaware corporation formed in November,  1997, is
the  bank  holding  company  for NMBT  (formerly  The New  Milford  Bank & Trust
Company), a state-chartered commercial bank. The Company's activity is currently
limited to the holding of NMBT's outstanding common stock.

The interim unaudited consolidated financial statements of the Company have been
prepared in conformity with generally accepted  accounting  principles.  Certain
financial  information  that is normally  included in the  financial  statements
prepared in accordance with generally accepted accounting principles,  but which
is not required for interim reporting  purposes,  has been condensed or omitted.
In preparing the interim  financial  statements,  Management is required to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  as of the date of the balance  sheet and  revenues and expenses for
the period. Actual results could differ significantly from those estimates.

In the opinion of management,  the accompanying  interim unaudited  consolidated
financial  statements  contain all adjustments  (consisting of normal  recurring
adjustments)  necessary to present fairly the Company's financial position as of
September 30, 1998, and the results of its operations and its cash flows for the
nine months then ended.  The results of operations for the periods shown are not
necessarily  indicative  of the  results  to be  expected  for the  year  ending
December 31, 1998. The accompanying  interim  unaudited  consolidated  financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's 1997 Annual Report.

NOTE 2. SECURITIES

The aggregate  amortized cost and estimated fair values of securities  available
for sale at September 30, 1998 and December 31, 1997 are as follows:

<TABLE>
<CAPTION>
         --------------------------------------------- -------------------------------------------------------
                                                                         SEPTEMBER 30, 1998
         --------------------------------------------- -------------------------------------------------------
         Dollars in thousands                              AMORTIZED COST         GROSS        ESTIMATED
                                                                               UNREALIZED     FAIR VALUE
                                                                                 GAINS
         --------------------------------------------- ----------------- --------------- ------------------
<S>                                                             <C>              <C>               <C>    
         U.S. Treasury and agency securities                    $48,055            $889            $48,944
         Municipal securities                                    20,099             750             20,849
         Mortgage-backed securities                               1,424              21              1,445
         --------------------------------------------- ----------------- --------------- ------------------
         Total debt securities                                   69,578           1,660             71,238
         FHLB Stock                                               1,935               -              1,935
         ============================================= ================= =============== ==================
         Total securities available for sale                    $71,513          $1,660            $73,173
         ============================================= ================= =============== ==================
</TABLE>


                                       8

<PAGE>



NMBT CORP
Form 10Q
September 30, 1998


<TABLE>
<CAPTION>
--------------------------------------------- ----------------------------------------------------------------------
                                                                        DECEMBER 31, 1997
--------------------------------------------- ----------------------------------------------------------------------
Dollars in thousands                                  AMORTIZED      GROSS             GROSS            ESTIMATED
                                                         COST     UNREALIZED         UNREALIZED        FAIR VALUE
                                                                     GAINS            LOSSES
--------------------------------------------- ----------------- ----------------- ---------------- -----------------
<S>                                                    <C>                   <C>              <C>           <C>    
U.S. Treasury and agency securities                    $24,615               $99              $19           $24,695
Municipal securities                                    16,968               418                1            17,385
Mortgage-backed securities                               4,213                80                4             4,289
--------------------------------------------- ----------------- ----------------- ---------------- -----------------
Total debt securities                                   45,796               597               24            46,369
FHLB Stock                                               1,760                 -                -             1,760
============================================= ================= ================= ================ =================
Total securities available for sale                    $47,556              $597              $24           $48,129
============================================= ================= ================= ================ =================
</TABLE>


The aggregate  amortized  cost and estimated  fair values of securities  held to
maturity at September 30, 1998 and December 31, 1997 are as follows:

<TABLE>
<CAPTION>
--------------------------------------------- ----------------------------------------------------------------------
                                                                       SEPTEMBER 30, 1998
--------------------------------------------- ----------------------------------------------------------------------
Dollars in thousands                                 AMORTIZED            GROSS             GROSS          ESTIMATED
                                                       COST            UNREALIZED        UNREALIZED       FAIR VALUE
                                                                          GAINS            LOSSES
--------------------------------------------- ----------------- ----------------- ---------------- -----------------
<S>                                                    <C>                  <C>                <C>          <C>    
U.S. Treasury and agency securities                    $21,395              $471               $-           $21,866
Mortgage-backed securities                              16,330               296               13            16,613
--------------------------------------------- ----------------- ----------------- ---------------- -----------------
Total securities held to maturity                      $37,725              $767              $13           $38,479
============================================= ================= ================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------- ----------------------------------------------------------------------
                                                                        DECEMBER 31, 1997
--------------------------------------------- ----------------------------------------------------------------------
Dollars in thousands                                 AMORTIZED              GROSS           GROSS          ESTIMATED
                                                       COST              UNREALIZED      UNREALIZED       FAIR VALUE
                                                                           GAINS           LOSSES
--------------------------------------------- ----------------- ----------------- ---------------- -----------------
<S>                                                    <C>                   <C>              <C>           <C>    
U.S. Treasury and agency securities                    $13,492               $96              $33           $13,555
Mortgage-backed securities                              22,384               310                9            22,685
--------------------------------------------- ----------------- ----------------- ---------------- -----------------
Total securities held to maturity                      $35,876              $406              $42           $36,240
============================================= ================= ================= ================ =================
</TABLE>

Securities  with a carrying  value of $3.0 million and $5.0 million were pledged
as  collateral  for public  deposits as of  September  30, 1998 and December 31,
1997, respectively.


                                       9

<PAGE>



NMBT CORP
Form 10Q
September 30, 1998


NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
------------------------------------------- ----------------------------- -----------------------------
In thousands                                          SEPTEMBER 30, 1998             DECEMBER 31, 1997
------------------------------------------- ----------------------------- -----------------------------
<S>                                                             <C>                           <C>     
LOANS
Real estate                                                     $196,910                      $188,868
Commercial and industrial                                         18,282                        17,818
Installment and education                                          7,705                         8,994
Construction and development                                      10,880                         7,299
Cash reserve and credit cards                                        794                           930
=========================================== ============================= =============================
Total Loans                                                     $234,571                      $223,909
=========================================== ============================= =============================
</TABLE>


Changes in the allowance for loan losses were as follows:

<TABLE>
<CAPTION>
                                                                                      PERIOD ENDED
                                                                   ----------------------------------------------------
In thousands                                                              SEPTEMBER 30, 1998         DECEMBER 31, 1997
------------------------------------------------------------------ -------------------------- -------------------------
<S>                                                                                   <C>                       <C>   
Allowance for loan losses at beginning of year                                        $3,537                    $3,212
Provision for loan losses charged against income                                         341                       582
Transfer to liability for estimated losses from off-balance                                                            
sheet credit instruments                                                                 (40)                      (20)
Loan losses, net of recoveries                                                            83                      (237)
================================================================== ========================== =========================
Allowance for loan losses at end of period                                            $3,921                    $3,537
================================================================== ========================== =========================
</TABLE>


Loans to executive officers,  principal  stockholders,  directors,  companies of
which directors are principal  owners,  and individuals  directly  related to or
affiliated with directors and executive  officers  aggregated  $2.52 million and
$2.50 million at September 30, 1998 and December 31, 1997, respectively.

NOTE 4. EARNINGS PER SHARE

Basic  earnings  per share are  computed by dividing  net income by the weighted
average number of common shares  outstanding  during the period. The computation
of diluted  earnings per share is similar to the  computation  of basic earnings
per share  except that the  denominator  is  increased  to include the number of
additional  common  shares  that would  have been  outstanding  if the  dilutive
potential common shares, consisting solely of stock options, had been issued.

Weighted  average common shares  outstanding used to calculate basic and diluted
earnings per share for the nine-month  periods ended September 30, 1998 and 1997
were as follows:

<TABLE>
<CAPTION>
                                                                              NINE MONTHS ENDED
                                                            -------------------------------------------------------
           In thousands                                        SEPTEMBER 30, 1998          SEPTEMBER 30, 1997
           ------------------------------------------------ -------------------------- ----------------------------
<S>                                                                             <C>                          <C>  
           Weighted average common shares:
              Basic                                                             2,639                        2,593
              Effect of dilutive stock options                                    172                          152
                                                            ========================== ============================
              Diluted                                                           2,811                        2,745
                                                            ========================== ============================
</TABLE>


                                       10

<PAGE>



NMBT CORP
Form 10Q
September 30, 1998


NOTE 5. COMPREHENSIVE INCOME

On January 1, 1998,  the  Company  adopted  Statement  of  Financial  Accounting
Standards  No.  130  (SFAS  130),  "Reporting  Comprehensive  Income".  SFAS 130
requires the  reporting of  comprehensive  income in addition to net income from
operations.  Comprehensive  income  is  a  more  inclusive  financial  reporting
methodology  that includes  disclosure  of certain  financial  information  that
historically has not been recognized in the calculation of net income.

The Company held  securities  classified  as available for sale at September 30,
1998 and December 31, 1997,  which had  unrealized  gains.  The  before-tax  and
after-tax   amounts   for   these   unrealized   gains,   as  well  as  the  tax
(expense)/benefits, are summarized as follows:

<TABLE>
<CAPTION>
                                                  September 30, 1998                               December 31, 1997
                                      -------------------------------------------      ------------------------------------------
In thousands                             BEFORE            TAX         AFTER TAX             BEFORE         TAX         AFTER TAX
                                           TAX          (EXPENSE)/                             TAX       (EXPENSE)/
                                                          BENEFIT                                         BENEFIT
------------------------------------- ------------- -------------- -------------- ---- ------------- --------------- -------------
<S>                                         <C>            <C>            <C>                  <C>           <C>             <C> 
Unrealized holding gains                    $1,710         ($581)         $1,129               $573          ($195)          $378
Reclassification adjustment for                (51)           17             (34)                 -              -              -
gains included in net income
===================================== ============= ============== ============== ==== ============= =============== =============
Accumulated other comprehensive             $1,659         ($564)         $1,095               $573          ($195)          $378
income
===================================== ============= ============== ============== ==== ============= =============== =============
</TABLE>




                                       11


<PAGE>



NMBT CORP
Form 10Q
September 30, 1998


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL
The Company,  a Delaware  corporation  formed in 1997,  is the  registered  bank
holding  company for NMBT  (formerly  The New Milford Bank & Trust  Company),  a
wholly owned subsidiary.  NMBT, headquartered in New Milford,  Connecticut, is a
state-chartered  bank and trust  company  founded in 1975.  The holding  company
structure  provides the Company with maximum  flexibility in pursuing  financial
opportunities.  The  Company's  activity is currently  limited to the holding of
NMBT's  outstanding  common stock. NMBT is the Company's only subsidiary and its
primary investment.  The net income of the Company is presently derived entirely
from the business of NMBT.

FORWARD-LOOKING STATEMENTS

The  Company  has  made,  and may  continue  to  make,  various  forward-looking
statements  with respect to earnings,  credit  quality and other  financial  and
business  matters for periods  subsequent  to September  30,  1998.  The Company
cautions  that  these   forward-looking   statements  are  subject  to  numerous
assumptions, risks and uncertainties, and that statements relating to subsequent
periods increasingly are subject to greater uncertainty because of the increased
likelihood  of changes in underlying  factors and  assumptions.  Actual  results
could differ materially from forward-looking statements.

In  addition  to those  factors  previously  disclosed  by the Company and those
factors  identified  elsewhere herein,  the following factors could cause actual
results to differ materially from such forward-looking  statements:  competitive
pressures on loan and deposit  product  pricing;  other actions of  competitors;
changes in economic conditions;  the extent and timing of actions of the Federal
Reserve  Board;  customer  deposit  disintermediation;   changes  in  customers'
acceptance  of NMBT's  products  and  services;  and the  extent  and  timing of
legislative and regulatory actions and reform.

The Company's forward-looking statements speak only as of the date on which such
statements  are made.  By making any  forward-looking  statements,  the  Company
assumes no duty to update them to reflect new, changing or unanticipated  events
or circumstances.

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Net income increased 11.1% to $0.85 million,  or $0.30 per diluted share for the
quarter ended September 30, 1998, as compared to net income of $0.77 million, or
$0.27 per diluted share for the third quarter of 1997. For the nine months ended
September 30, 1998, net income was $2.33 million, or $0.83 per diluted share, an
increase of 11.3% over the same nine-month period in 1997.

Net  interest  and  dividend  income for the quarter  ended  September  30, 1998
increased by $0.26  million or 7.8%.  Net  interest and dividend  income for the
first three quarters of 1998 increased by $0.48 million or 4.8%,  from the first
three quarters of 1997.  The net interest  spread,  the  difference  between the
yield  earned  on loans  and  investments  and the  rate  paid on  deposits  and
borrowings,  was 4.4% for the nine months ended September 30, 1998, and 4.7% for
the nine months ended September 30, 1997. The increase in net interest income is
a reflection of growth in interest-earning assets and was accomplished despite a
contraction  in the interest  rate spread caused by seasonal  factors,  customer
demand  for fixed  rate  loans and  increased  price  competition  for loans and
deposits.


                                       12

<PAGE>



NMBT CORP
Form 10Q
September 30, 1998


Management estimates the allowance for loan losses based on an evaluation of the
Company's  past loan  experience,  known and  inherent  risks in the  portfolio,
estimated  value of  underlying  collateral,  and current  economic  conditions.
Establishing  the  allowance  for loan losses  involves  significant  management
judgments using the best information  available at the time. Those judgments are
subject  to  further  review  by  various   sources,   including  the  Company's
regulators. Adjustments to the allowance for loan losses may be necessary in the
future based on changes in economic and real estate market  conditions,  further
information  obtained  regarding  known problem  loans,  the  identification  of
additional  problem loans, and other factors.  The provision for loan losses for
the quarter  ended  September 30, 1998 was $0.07 million and for the first three
quarters  of 1998 was $0.34  million  as  compared  to $0.21  million  and $0.46
million respectively for the same periods in 1997. In management's judgment, the
allowance for loan losses is adequate to absorb  probable losses in the existing
portfolio.

Also contributing to the Company's  improved  financial  performance was a 48.7%
increase in noninterest  income comparing the third quarter of 1998 to the third
quarter of 1997, and an increase of 37.4% in noninterest  income,  comparing the
first three  quarters of 1998 to the first three quarters of 1997, due to strong
activity in the mortgage banking area and increased fee income.

Noninterest  expenses  were up 21.3% from the third quarter of the previous year
and 11.4% from the first three quarters of the previous year, due principally to
the opening of the  Southbury  Office and formation of the holding  company.  In
addition,  the bank has added staff to handle increasing  mortgage volume.  This
increased  mortgage  activity  has been an  important  factor  in the  continued
growth.  From September 30, 1997 to September 30, 1998,  total assets have grown
12.1%,  loans grew 6.7% and  deposits  have grown 6.9%.  These growth rates have
contributed to increased overhead.

Total assets  increased  10.0% to $370.20  million as of September 30, 1998 from
$336.57  million as of December 31, 1997.  Deposits  grew by $14.19  million and
Federal  Home Loan Bank net advances of $16.39  million  were  borrowed to match
funds for selected fixed rate commercial loans and securities.

In  late  1997,  NMBT  opened  its  tenth  full  service  office  in  Southbury,
Connecticut.  This is the  bank's  first  office  in New Haven  County  and NMBT
intends to look for other  Fairfield  County and New Haven County  locations for
further expansion. The opening of the Southbury Office and the completion of the
reorganization  to a holding  company  structure  have had a negative  impact on
earnings as the cost of these changes are absorbed.

IMPAIRED LOANS

The recorded  investment in loans considered to be impaired was $3.01 million at
September  30, 1998,  and $3.59  million at December  31, 1997,  and consists of
loans for which an allowance of $0.34  million and $0.38  million,  for the same
periods  respectively,  has been established.  Income recorded on impaired loans
during the first nine  months of 1998 for the  portion of this  period that they
were impaired was $0.05  million.  Average  investment in impaired  loans during
this same period of 1998 was $3.09 million as compared to $3.54  million  during
the first three  quarters of 1997.  Nonaccruing  loans at  September  30,  1998,
included  $2.18  million of loans  considered  to be impaired,  as compared with
$2.22 million at December 31, 1997.


                                       13

<PAGE>



NMBT CORP
Form 10Q
September 30, 1998


NONPERFORMING ASSETS

Nonperforming  loans consist  principally  of residential  and commercial  loans
collateralized  by real estate and real  estate  acquired  through  foreclosures
(real estate owned). Nonperforming assets and relevant ratios were as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------ ------------------------- -------------------------
Dollars in thousands                                                           SEPTEMBER 30, 1998         DECEMBER 31, 1997
------------------------------------------------------------------------ ------------------------- -------------------------
<S>                                                                                        <C>                       <C>   
Total nonperforming loans                                                                  $2,744                    $3,208
Real estate owned                                                                               -                       212
======================================================================== ========================= =========================
Total nonperforming assets                                                                 $2,744                    $3,420
======================================================================== ========================= =========================

Total nonperforming loans/Total loans                                                        1.17%                     1.43%
Total nonperforming assets/Total assets                                                      0.74%                     1.02%
Allowance for loan losses/Total nonperforming loans                                        142.90%                   110.23%
</TABLE>


LIQUIDITY MANAGEMENT

For  information  about  the  Company's  liquidity  position,  see  Management's
Discussion  and Analysis in its 1997 Annual  Report to  Stockholders,  which was
also  incorporated  into the  Company's  Annual  Report  to the  Securities  and
Exchange  Commission on Form 10K. There has been no material change in that data
since it was reported.

CAPITAL

At September 30, 1998, the Company had $28.23 million in  stockholders'  equity,
compared with $25.33 million at December 31, 1997.  The growth in  stockholders'
equity  from  the  end of 1997  reflected  a $0.72  million  adjustment  for the
increase in unrealized gains on securities available for sale in accordance with
SFAS 115,  proceeds of $0.54  million  from the exercise of stock  options,  the
retention of $2.33  million in net  earnings,  less the cash  dividends  paid on
February 9, May 13, and August 5, 1998, totaling $0.69 million.

The following  reflects the Company's  capital ratios (which exclude  intangible
assets and the SFAS 115 adjustment):

<TABLE>
<CAPTION>
------------------------------------- --------------------------- --------------------------- ---------------------------
Dollars in thousands                          SEPTEMBER 30, 1998           DECEMBER 31, 1997          REGULATORY MINIMUM
------------------------------------- --------------------------- --------------------------- ---------------------------
<S>                                                    <C>                         <C>                             <C>  
Risk-based capital ratios:
   Tier 1 capital ratio                                   12.66%                      12.19%                       4.00%
   Total capital ratio                                    13.92%                      13.45%                       8.00%

Leverage ratio                                             7.39%                       7.36%                       3.00%

Tier 1 capital                                           $26,741                     $24,428
Total risk-based capital                                 $29,400                     $26,948
Total risk-adjusted assets                              $211,201                    $200,322
</TABLE>

There are no  significant  differences  between the Company's and NMBT's capital
and capital ratios.

For further information about the Company's capital, see Management's Discussion
and  Analysis  in its  1997  Annual  Report  to  Stockholders,  which  was  also
incorporated  into the Company's  Annual Report to the  Securities  and Exchange
Commission on Form 10K.


                                       14

<PAGE>



NMBT CORP
Form 10Q
September 30, 1998


YEAR 2000 READINESS

BACKGROUND
The Company's overall goal is to be "Year 2000 Ready," which means that critical
systems, devices, applications or business relationships have been evaluated and
are expected to be suitable for  continued use into and beyond the Year 2000. In
the event the  aforementioned are not suitable for continued use or malfunction,
contingency plans will be in place.

The  Company  began  addressing  Year 2000 in 1996 by  establishing  a Year 2000
committee to  identify,  monitor and document  Year 2000  activities  and report
those  findings to the Board of Directors.  Senior  management  and the Board of
Directors receive regular updates on the status of the Company's Year 2000 Plan.

The  Company  is  using a  multi-phase  approach  to Year  2000  which  includes
inventory,  assessment,  remediation,  testing  and  contingency  planning.  The
inventory  and  assessment  phases  were  completed  in  1997.  As a part of the
assessment  process,  remediation  strategies  were  identified and estimates of
remediation  costs were  developed.  The Company has utilized  both internal and
external  resources to remediate and test for Year 2000 readiness.  The majority
of the Company's systems  requiring  remediation have been modified or replaced.
The Company plans to test the remaining systems by the end of 1998.

The Company initiated formal communications with government agencies,  suppliers
and large  customers to determine  the extent to which the Company is vulnerable
to those third  parties'  failure to remediate  the Year 2000 Issue.  While this
information will be used to mitigate these risks, there can be no assurance that
any third party  systems  will be Year 2000  compliant on a timely basis or that
noncompliance will not have an adverse material impact on the Company.

COSTS
The Company  currently  plans to complete  the Year 2000 Issue by June 30, 1999.
The  total  remaining  cost of the Year  2000  issue is  estimated  at less than
$50,000.  To date,  the Company has  incurred  costs of $20,050  which have been
expensed as incurred. The costs of the project and the date on which the Company
plans to  complete  Year  2000  modifications  are  based on  management's  best
estimates,  which were derived utilizing  numerous  assumptions of future events
including the continued  availability of certain resources,  third parties' Year
2000 readiness and other factors.

RISK ASSESSMENT
At this time, the Company  believes that completed and planned  modifications of
its internal  systems and equipment will allow it to be Year 2000 compliant in a
timely manner. There can be no assurance,  however,  that the Company's internal
systems or equipment or those of third parties on which the Company  relies will
be Year  2000  compliant  in a  timely  manner  or that the  Company's  or third
parties'  contingency plans will mitigate the effects of any noncompliance.  The
failure of the systems or equipment of the Company or third  parties  (which the
Company  believes is the most likely  worst case  scenario)  could result in the
reduction or suspension of the  Company's  operations  and could have a material
adverse effect on the Company's business or consolidated financial statements.

CONTINGENCY PLANNING
The Company is revising its existing  contingency  plans to address internal and
external  issues  specific  to  Year  2000  to  the  extent  practicable.  These
contingency  plan  revisions are expected to be completed by September 30,


                                       15

<PAGE>



NMBT CORP
Form 10Q
September 30, 1998


1999. The plans, which are intended to enable the Company to continue to operate
to the extent that it can do so prudently,  include performing certain processes
manually;  repairing or obtaining replacement systems;  changing suppliers;  and
reducing or suspending  operations.  The Company believes,  however, that due to
the widespread nature of the potential Year 2000 Issue, the contingency planning
process  is an ongoing  one which  will  require  further  modifications  as the
Company  obtains  additional  information  regarding (1) the Company's  internal
systems and equipment during the remediation and testing phases of its Year 2000
project and (2) the status of third party Year 2000 readiness.

FORWARD-LOOKING STATEMENTS
The preceding "Year 2000 Readiness" discussion contains various  forward-looking
statements  which  represent the  Company's  beliefs or  expectations  regarding
future  events.  When used in the "Year  2000  Readiness"  discussion,  the word
"believes,"  "expects," and "estimates" and similar  expressions are intended to
identify forward-looking statements. Forward-looking statements include, without
limitation,  the  Company's  expectations  as  to  when  it  will  complete  the
remediation and testing phases of its Year 2000 project as well as its Year 2000
contingency plans; its estimated cost of achieving Year 2000 readiness;  and the
Company's  belief  that its  internal  systems and  equipment  will be Year 2000
compliant in a timely manner. All forward-looking statements involve a number of
risks and uncertainties that could cause the actual results to differ materially
from the projected  results.  Factors that may cause these differences  include,
but are not  limited  to, the  availability  of  qualified  personnel  and other
information technology resources; the ability to replace embedded computer chips
in affected  systems or  equipment;  and the actions of  government  agencies or
other third parties with respect to Year 2000 issues.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Quantitative  and  qualitative  disclosure  about  market risk is  presented  at
December  31, 1997 in the  Company's  Annual  Report on Form 10-K filed with the
Securities  and  Exchange  Commission  on March  31,  1998.  There  have been no
material changes in the Company's market risk at September 30, 1998, compared to
December  31,  1997.  The  following  is an  update of the  discussion  provided
therein:

GENERAL. The Company's largest component of market risk continues to be interest
rate risk.  Virtually  all of this risk  continues  to reside at the bank level.
NMBT still is not subject to foreign currency  exchange or commodity price risk.
At September  30, 1998,  neither the Company nor NMBT owned any trading  assets,
nor did they utilize hedging transactions such as interest rate swaps and caps.

ASSETS, DEPOSIT LIABILITIES AND BORROWINGS.  There have been no material changes
in the  composition of assets,  deposit  liabilities or borrowings from December
31, 1997 to September 30, 1998.

GAP  ANALYSIS.  There have been no material  changes in the one-year  cumulative
interest  sensitivity gap as a percentage of total assets at September 30, 1998,
from December 31, 1997.

INTEREST RATE RISK COMPLIANCE.  NMBT continues to monitor the impact of interest
rate  volatility  upon net interest income in the same manner as at December 31,
1997.  There  have been no changes in the board  approved  limits of  acceptable
variance in net interest  income and net portfolio  value at September 30, 1998,
and the projected  changes  continue to fall within the board approved limits at
all levels of potential interest rate volatility.


                                       16

<PAGE>



NMBT CORP
Form 10Q
September 30, 1998


PART II-OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

NMBT is a  defendant  in  certain  claims  and legal  actions  that arose in the
ordinary course of business.  In the opinion of management,  after  consultation
with legal counsel,  these  proceedings,  in the aggregate,  are not expected to
have  a  materially  adverse  effect  on  the  financial  position,  results  of
operations or liquidity of the Company.







ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of the  Stockholders  was held on May 5, 1998.  There were no
solicitations  in opposition to any of the Board of Directors'  nominees for the
Board of  Directors or other  motions  acted on at the  Meeting.  The  following
matters were  considered  and voted on, as certified by the Judge of Election at
the Meeting:

1.   Ruth  Henderson,  Terry C.  Pellegrini  and Arthur C.  Weinshank  were each
     elected to serve as Directors  until the Annual Meeting of  Stockholders to
     be held in the year 2001 who, with the six Directors, Kevin L. Dumas, Louis
     A. Funk, Jr., Lawrence Greenhaus, Robert W. X. Martin, Walter G. Southworth
     and Harry H.  Taylor,  Jr.,  whose  terms of office  did not  expire at the
     Meeting,  constitute  the  full  Board.  All  nominees  received  at  least
     2,202,745, or 96.47%, votes cast FOR.

2.   An  Amendment  to the 1994 Stock  Option  Plan of the  Company's  operating
     subsidiary,  NMBT,  increasing the number of shares issuable  thereunder to
     600,000 was approved. Votes cast FOR this amendment were 1,755,293.

3.   The  Directors'  appointment  of  Deloitte  & Touche  LLP as the  Company's
     independent  auditors for the year ending December 31, 1998 was ratified by
     2,238,283 votes cast FOR.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (A)  EXHIBITS

               Exhibit 27.  Financial  Data Schedule  (included  only with EDGAR
               filing).

     (B)  REPORTS ON FORM 8-K

               None


                                       17

<PAGE>



                                   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.

                                               NMBT CORP
                          ------------------------------------------------------
                                             (Registrant)

   November 12, 1998      /s/ Jay C. Lent                              
----------------------    ------------------------------------------------------
         Date             Jay C. Lent, Executive Vice President, Chief Financial
                            Officer and Secretary

    November 12, 1998      /s/ Deborah L. Fish                           
----------------------     -----------------------------------------------------
         Date              Deborah L. Fish, Treasurer





                                       18