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       June 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 August 11, 1998 was 2,642,058.
<PAGE>
NMBT CORP
Form 10Q
June 30, 1998

                                    TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                    Page
                                                                                    ----
PART I-FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

<S>                                                                                   <C>
         Consolidated Statements of Condition (Unaudited)
                  June 30, 1998 and December 31, 1997                                  3

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

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

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

         Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
                  Six Months Ended June 30, 1998 and June 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                   15


PART II-OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS                                                            15

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                          16

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                             16

SIGNATURES                                                                            17
</TABLE>

                                       2
<PAGE>
                                    NMBT CORP
                CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
                   DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATE

<TABLE>
<CAPTION>
                                                                                  JUNE 30,        DECEMBER 31,
                                                                       -------------------------------------
                                                                             1998              1997
                                                                       -------------------------------------
<S>                                                                                <C>               <C>    
ASSETS
Cash and due from banks                                                            $21,942           $18,737
Interest-bearing deposits                                                           11,200             4,025
------------------------------------------------------------------------------------------------------------
        Cash and cash equivalents                                                   33,142            22,762
------------------------------------------------------------------------------------------------------------
Securities:
Available for sale, at fair value (amortized cost of $56,238 in 1998                56,718            48,129
   and $47,556 in 1997)
Held to maturity, at amortized cost (fair value of $39,895 in 1998                  39,554            35,876
   and $36,240 in 1997)
------------------------------------------------------------------------------------------------------------
        Total securities                                                            96,272            84,005
------------------------------------------------------------------------------------------------------------

Loans                                                                              233,590           223,909
Less allowance for loan losses                                                       3,659             3,537
------------------------------------------------------------------------------------------------------------
        Loans, net                                                                 229,931           220,372
------------------------------------------------------------------------------------------------------------

Real estate owned, net                                                                  76               212
Premises and equipment, net                                                          3,699             3,706
Excess of cost over fair value of net assets acquired, net                             389               506
Accrued interest and other assets                                                    5,690             5,003
------------------------------------------------------------------------------------------------------------

        Total assets                                                              $369,199          $336,566
============================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
        Noninterest-bearing checking                                               $42,647           $36,999
        Interest-bearing checking                                                   96,645            88,501
        Savings                                                                     66,616            60,782
        Time deposits under $100                                                    81,626            81,902
        Time deposits $100 or more                                                  17,567            17,411
------------------------------------------------------------------------------------------------------------
        Total deposits                                                             305,101           285,595
------------------------------------------------------------------------------------------------------------

Advances from Federal Home Loan Bank of Boston (FHLB)                               34,905            23,145
Accrued interest and other liabilities                                               2,468             2,496
------------------------------------------------------------------------------------------------------------
        Total liabilities                                                          342,474           311,236
------------------------------------------------------------------------------------------------------------

Stockholders' equity:
        Common stock, $0.01 par value
        Shares authorized:    8,000,000
        Shares outstanding:  1998 - 2,642,058;  1997 - 2,614,858                        26                26
        Additional paid-in capital                                                  17,799            17,378
        Retained earnings                                                            8,583             7,548
        Accumulated other comprehensive income                                         317               378
------------------------------------------------------------------------------------------------------------
        Total stockholders' equity                                                  26,725            25,330
------------------------------------------------------------------------------------------------------------

        Total liabilities and stockholders' equity                                $369,199          $336,566
============================================================================================================

See notes to consolidated financial statements.

============================================================================================================
</TABLE>

                                       3
<PAGE>
                                    NMBT CORP
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                  DOLLARS, IN THOUSANDS, EXCEPT PER SHARE DATA

<TABLE>
<CAPTION>
                                                                        SIX MONTHS ENDED       THREE MONTHS ENDED
                                                                            JUNE 30,                  JUNE 30,
                                                                        1998        1997          1998       1997
                                                                 -------------------------------------------------
<S>                                                                     <C>        <C>           <C>        <C>   
INTEREST AND DIVIDEND INCOME
Interest and fees on loans                                              $8,979     $8,762        $4,511     $4,453
U.S. Treasury and agency securities                                      2,200      1,888         1,168        962
Municipal securities                                                       411        245           212        133
Dividends on FHLB stock                                                     57         51            29         27
Interest-bearing deposits                                                  201        102            99         73
------------------------------------------------------------------------------------------------------------------
        Total interest and dividend income                              11,848     11,048         6,019      5,648
------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest-bearing checking                                                  745        617           380        324
Savings                                                                    725        740           368        371
Time deposits under $100                                                 2,140      2,152         1,063      1,088
Time deposits $100 or more                                                 489        433           244        231
FHLB advances and capital leases                                           879        452           488        227
------------------------------------------------------------------------------------------------------------------
        Total interest expense                                           4,978      4,394         2,543      2,241
------------------------------------------------------------------------------------------------------------------
Net interest and dividend income                                         6,870      6,654         3,476      3,407
Provision for loan losses                                                  266        245           125        120
------------------------------------------------------------------------------------------------------------------
Net interest and dividend income after provision for loan losses         6,604      6,409         3,351      3,287
------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Service charges on deposit accounts                                        489        513           247        264
Other service charges, commission and fees                                 181        182            92        100
Loan servicing fees                                                         36         18            21          9
Gain on sale of securities                                                  51          -             -          -
Net gain on sale of loans                                                  395        152           250         88
Other income                                                                55         55            29         27
------------------------------------------------------------------------------------------------------------------
        Total noninterest income                                         1,207        920           639        488
------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Compensation, payroll taxes and benefits                                 2,965      2,643         1,496      1,298
Occupancy                                                                  505        481           248        240
Furniture and equipment                                                    376        481           188        247
Data processing                                                            167        124            89         70
Stationery, printing and supplies                                          228        198           106        115
Marketing, advertising and investor relations                              212        215           111        117
Legal and professional fees                                                 77        141            29         78
Other general and administrative expense                                   747        640           359        357
------------------------------------------------------------------------------------------------------------------
        Total general and administrative expense                         5,277      4,923         2,626      2,522
Operations of real estate owned                                             49         62            48         29
Amortization of intangible assets                                          117        117            58         58
------------------------------------------------------------------------------------------------------------------
        Total noninterest expense                                        5,443      5,102         2,732      2,609
------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes                                 2,368      2,227         1,258      1,166
Provision for income taxes                                                 886        896           472        469
------------------------------------------------------------------------------------------------------------------
Net income                                                              $1,482     $1,331          $786       $697
==================================================================================================================
Basic earnings per share                                                 $0.56      $0.51         $0.30      $0.27
Diluted earnings per share                                               $0.53      $0.49         $0.28      $0.26
------------------------------------------------------------------------------------------------------------------
Average shares outstanding                                               2,637      2,590         2,637      2,590
Average shares and share equivalents outstanding                         2,810      2,729         2,810      2,729
------------------------------------------------------------------------------------------------------------------
Cash dividends per share                                                 $0.17      $0.10         $0.09      $0.05
------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
==================================================================================================================
</TABLE>

                                       4
<PAGE>
                                    NMBT CORP
           CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
                                  In thousands

<TABLE>
<CAPTION>
                                                  SIX MONTHS ENDED                               Three Months Ended
                                         JUNE 30, 1998         June 30, 1997               June 30, 1998         June 30, 1997
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>                     <C>                        <C>                     <C> 
Net income                                     $1,482                  $1,331                     $786                    $697
Other comprehensive
Income, net of tax:
   Unrealized gains (losses)
     on securities:
      Unrealized holding losses
          arising during period       ($27)                  ($39)                      $23                    $177
      Less: reclassification
          adjustment for gains
          included in net income       (34)                      -                        -                       -
                                  --------             ----------                ---------             -----------
Other comprehensive income                        (61)                    (39)                      23                     177
                                           ----------             -----------               ----------             -----------
Comprehensive income                           $1,421                  $1,292                     $809                    $874
                                           ==========             ===========               ==========             ===========

See Notes To Consolidated Financial Statements.
====================================================================================================================================
</TABLE>


                                       5
<PAGE>
                                    NMBT CORP
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                  IN THOUSANDS

<TABLE>
<CAPTION>
                                                                               SIX MONTHS ENDED
                                                                        JUNE 30, 1998          JUNE 30, 1997
                                                                    ----------------------------------------
<S>                                                                            <C>              <C>   
OPERATING ACTIVITIES
Net Income                                                                     $1,482           $1,331
Adjustments to reconcile net income to net cash provided by
   Operating activities:
   Depreciation and amortization                                                  380              484
   Provision for loan losses                                                      266              245
   Net amortization of securities                                                 102               65
   Deferred income taxes                                                          123             (46)
   Realized securities gains, net                                                (51)                -
   Loans originated for sale                                                 (35,400)         (11,168)
   Proceeds from loans sold, net                                               35,447           11,225
   Gains from loan sales, net                                                   (395)            (152)
   Realized gains from real estate owned sales, net                              (27)              (8)
   Net increase in interest receivable                                          (236)            (248)
   Net (increase) decrease in other assets                                      (236)              164
   Net increase in interest payable                                                60               27
   Net increase (decrease) in other liabilities                                 (109)              236
------------------------------------------------------------------------------------------------------
   Net cash provided by operating activities                                    1,406            2,155
------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of held to maturity (HTM) securities                                (15,000)          (4,996)
Net loan originations                                                         (9,757)          (7,590)
Purchases of available for sale (AFS) securities                             (20,898)          (8,143)
Net purchases of premises and equipment                                         (255)            (339)
Proceeds from real estate owned sales                                             176             (10)
Proceeds from maturities of AFS securities                                      9,880            2,003
Proceeds from maturities of HTM securities                                     11,249            4,793
Proceeds from sales of AFS securities                                           2,370                -
Purchases of FHLB stock                                                          (13)            (136)
------------------------------------------------------------------------------------------------------
   Net cash used for investing activities                                    (22,248)         (14,418)
------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase (decrease) in advances from FHLB                                  11,760            (290)
Net increase (decrease) in time deposits                                        (120)            6,557
Net increase in checking and savings deposits                                  19,626           10,200
Cash dividends                                                                  (447)            (259)
Net proceeds from exercise of stock options                                       421               52
Other                                                                            (18)             (36)
------------------------------------------------------------------------------------------------------
   Net cash provided by financing activities                                   31,222           16,224
------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents                                          10,380            3,961
Cash and cash equivalents, beginning of period                                 22,762           23,990
------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                                      $33,142          $27,951
======================================================================================================

CASH PAID DURING PERIOD
Interest to depositors and creditors                                           $4,918           $4,367
Income taxes                                                                      994              728

NON-CASH TRANSFERS
Transfer of loans to real estate owned                                             25              482
Net change in unrealized gains (losses) on AFS securities                        (61)             (39)
Financed portion of sales of real estate owned                                     12              129

See notes to consolidated financial statements.
------------------------------------------------------------------------------------------------------------
</TABLE>

                                       6
<PAGE>
                                    NMBT CORP
     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
                                  IN THOUSANDS


<TABLE>
<CAPTION>
                                Total        Comprehensive     Retained      Accumulated     Common   Additional       Shares
                                                Income         Earnings         Other        Stock      Paid-In      Outstanding
                                                                             Comprehensive             Capital
                                                                               Income
------------------------------------------------------------------------------------------------------------------------------------
<S>     <C>                        <C>                         <C>               <C>           <C>       <C>               <C>  
JANUARY 1, 1997                    $22,565                     $5,195            $146          $26       $17,198           2,588

Net income                           1,331       $1,331         1,331
   Other comprehensive
   Income, net of tax
      unrealized losses on 
           securities                  (39)         (39)                          (39)
Proceeds from exercise
    of stock options                    52                                                                    52               9
Cash Dividends                        (259)                      (259)
                            --------------------------------------------------------------------------------------------------------
JUNE 30, 1997                      $23,650       $1,292        $6,267            $107          $26       $17,250           2,597
                            --------------------------------------------------------------------------------------------------------



JANUARY 1, 1998                    $25,330                     $7,548            $378          $26       $17,378           2,615
Net income                           1,482       $1,482         1,482
   Other comprehensive
   Income, net of tax
      unrealized losses on
            Securities, Net
            of reclassification
            adjustment                 (61)         (61)                          (61)
Proceeds from exercise                 421                                                                   421              27
   of stock options
Cash Dividends                        (447)                      (447)
                            --------------------------------------------------------------------------------------------------------
June 30, 1998                      $26,725       $1,421        $8,583            $317          $26       $17,799           2,642
                            --------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements.
============================================================================================================================
</TABLE>

                                       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
June 30, 1998,  and the results of its operations and its cash flows for the six
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 June 30, 1998 and December 31, 1997 are as follows:

<TABLE>
<CAPTION>
                                                          JUNE 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         $34,066        $112         $12          $34,166
Municipal securities                         18,810         372          13           19,169
Mortgage-backed securities                    1,589          21           -            1,610
-----------------------------------------------------------------------------------------------------
Total debt securities                        54,465         505          25           54,945
FHLB Stock                                    1,773           -           -            1,773
-----------------------------------------------------------------------------------------------------
Total securities available for sale         $56,238        $505         $25          $56,718
=====================================================================================================
</TABLE>

                                       8
<PAGE>
NMBT CORP
Form 10Q
June 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 June 30, 1998 and December 31, 1997 are as follows:


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
                                                               JUNE 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        $110           $5        $21,500
Mortgage-backed securities                   18,159         239            3         18,395
-------------------------------------------------------------------------------------------
Total securities held to maturity           $39,554        $349           $8        $39,895
===========================================================================================
</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 June 30, 1998 and  December 31, 1997,
respectively.

                                       9
<PAGE>
NMBT CORP
Form 10Q
June 30, 1998

NOTE 3.  LOANS AND ALLOWANCE FOR LOAN LOSSES

In thousands                        JUNE 30, 1998     DECEMBER 31, 1997
-------------------------------------------------------------------------
LOANS

Real estate                              $198,646            $188,868
Commercial and industrial                  16,446              17,818
Installment and education                   7,879               8,994
Construction and development                9,825               7,299
Cash reserve and credit cards                 794                 930
-------------------------------------------------------------------------
Total loans                              $233,590            $223,909
========================================================++++=============


Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
                                                                          PERIOD ENDED
                                                                  -----------------------------------
In thousands                                                        JUNE 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                              266            582
Transfer to liability for estimated losses from off-balance
sheet credit instruments                                                     (40)           (20)
Loan losses, net of recoveries                                              (104)          (237)
-----------------------------------------------------------------------------------------------------
Allowance for loan losses at end of period                                 $3,659         $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  $1.82 million and
$2.50 million at June 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  six-month  periods ended June 30, 1998 and 1997 were
as follows:

                                               SIX MONTHS ENDED
                                      --------------------------------------
In thousands                           JUNE 30, 1998    JUNE 30, 1997
----------------------------------------------------------------------------
Weighted average common shares:
   Basic                                   2,637           2,590
   Effect of dilutive stock options          173             139
                                      --------------------------------------
   Diluted                                 2,810           2,729
                                      --------------------------------------



                                       10
<PAGE>
NMBT CORP
Form 10Q
June 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 June 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>
                                            JUNE 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           $531         ($180)         $351               $573      ($195)           $378
Reclassification adjustment        (51)             17          (34)                 -           -              -
for gains included in net
income
----------------------------------------------------------------------------------------------------------------------------
Accumulated other                  $480         ($163)         $317                $573      ($195)           $378
comprehensive income
===========================================================================================================================
</TABLE>

                                       11
<PAGE>
NMBT CORP
Form 10Q
June 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 June 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 12.8% to $0.79 million,  or $0.28 per diluted share for the
quarter  ended June 30,  1998,  as compared to net income of $0.70  million,  or
$0.26 per diluted share for the second quarter of 1997. For the six months ended
June 30, 1998,  net income was $1.48  million,  or $0.53 per diluted  share,  an
increase of 11.3% over the same six-month period in 1997.

Net interest and dividend  income for the quarter ended June 30, 1998  increased
by $0.07 million or 2.0%. Net interest and dividend income for the first half of
1998  increased by $0.22 million or 3.2%,  from the first half 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 six
months ended June 30, 1998, and 4.8% for the six months ended June 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
June 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 utilizing 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 June 30, 1998 was $0.13 million and for the first half of 1998
was $0.27 million as compared to $0.12  million and $0.25  million  respectively
for the same periods in 1997.  The  increased  provision is due to growth in the
loan  portfolio.  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 31.0%
increase in noninterest  income comparing the first quarter of 1998 to the first
quarter of 1997, and an increase of 31.2% in noninterest  income,  comparing the
first  half of 1998 to the first  half of 1997,  due to strong  activity  in the
mortgage banking area and increased fee income.

Noninterest  expenses  were up 4.7% from the first  quarter of the previous year
and 6.7%  from the first  half 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
in the Company's overall prosperity.  From June 30, 1997 to June 30, 1998, total
assets have grown  14.2%,  loans grew 6.7% and deposits  have grown 7.8%.  These
growth rates have contributed to increased overhead.

Total assets  increased 9.7% to $369.20 million as of June 30, 1998 from $336.57
million as of December 31,  1997.  Deposits  grew by $19.51  million and Federal
Home Loan Bank net  advances  of  $11.76  million  were  borrowed  enabling  the
continuation of the Company's leverage strategy.

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.  It is anticipated  that the
Southbury Office will be profitable within the next twelve months.

IMPAIRED LOANS

The recorded  investment in loans considered to be impaired was $3.55 million at
June 30, 1998, and $3.59 million at December 31, 1997, and consists of loans for
which an  allowance  of $0.39  million and $0.38  million,  for the same periods
respectively, has been established. Income recorded on impaired loans during the
first six months of 1998 for the portion of this period that they were  impaired
was $0.45  million,  none of which was  recognized  on the cash  basis.  Average
investment  in impaired  loans during this same period of 1998 was $3.60 million
as compared to $2.99 million during the first half of 1997. Nonaccruing loans at
June 30, 1998,  included  $2.39 million of loans  considered to be impaired,  as
compared with $2.22 million at December 31, 1997.

                                       13
<PAGE>
NMBT CORP
Form 10Q
June 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                              JUNE 30, 1998   DECEMBER 31, 1997
------------------------------------------------------------------------------
<S>                                                      <C>            <C>   
Total nonperforming loans                                $3,128         $3,208
Real estate owned                                            76            212
------------------------------------------------------------------------------
Total nonperforming assets                               $3,204         $3,420
==============================================================================
Total nonperforming loans/Total loans                     1.34%          1.43%
Total nonperforming assets/Total assets                   0.87%          1.02%
Allowance for loan losses/Total nonperforming loans     116.95%        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 June 30,  1998,  the  Company  had $26.72  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 $0.06  million  adjustment  for the
decrease in unrealized gains on securities available for sale in accordance with
SFAS 115,  proceeds of $0.42  million  from the exercise of stock  options,  the
retention of $1.48  million in net  earnings,  less the cash  dividends  paid on
February 9, and May 13, 1998, totaling $0.45 million.

The following  reflects the Company's  capital ratios (which exclude  intangible
assets and the SFAS 115 adjustment):
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Dollars in thousands              JUNE 30, 1998     DECEMBER 31, 1997   REGULATORY MINIMUM
------------------------------------------------------------------------------------------
Risk-based capital ratios:
<S>                                      <C>             <C>                <C>  
   Tier 1 capital ratio                  12.24%          12.19%             4.00%
   Total capital ratio                   13.50%          13.45%             8.00%

Leverage ratio                            7.32%           7.36%             3.00%

Tier 1 capital                          $25,971         $24,428
Total risk-based capital                $28,638         $26,948
Total risk-adjusted assets             $212,135        $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
June 30, 1998

YEAR 2000

The Company continues with its current plans to address the Year 2000 compliance
requirements.  Management  believes it remains on its current  schedule to be at
the  proper  stage  of  assessment,  remediation  and  testing  to be Year  2000
compliant,  by year-end 1998.  Further,  management  does not anticipate that it
will incur expenses in excess of $100,000,  although it may also need to replace
certain hardware and software, which costs would be capitalized.

For further  information about the Company's Year 2000 issues,  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.

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 June 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 June 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 June 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 June 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 June 30, 1998,  and
the projected  changes  continue to fall within the board approved limits at all
levels of potential interest rate volatility.

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.

                                       15
<PAGE>
NMBT CORP
Form 10Q
June 30, 1998

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






                                       16
<PAGE>
NMBT CORP
Form 10Q
June 30, 1998

                                   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.

<TABLE>
                                                 NMBT CORP
                        ------------------------------------------------------------------------------
                                                (Registrant)

<S>                     <C>                     
   August 12, 1998      s/ Jay C. Lent
---------------------   ------------------------------------------------------------------------------
         Date           Jay C. Lent, Executive Vice President, Chief Financial Officer and Secretary

    August 12, 1998     s/ Deborah L. Fish
---------------------   ------------------------------------------------------------------------------
         Date           Deborah L. Fish, Treasurer
</TABLE>














                                       17