NB&T Financial Reports Second Quarter Earnings

NB&T Financial Group, Inc. (Nasdaq: NBTF), parent company of The National Bank and Trust Company, Wilmington, Ohio, announced net income for the second quarter of 2008 of $864,000, or $.28 per diluted share, compared to $1.2 million, or $.39 per diluted share, for the same quarter last year. Net income for the first six months of 2008 was $1.9 million, or $.60 per diluted share, compared to $2.3 million, or $.71 per diluted share, for the first six months of 2007. Last year's net income included $324,000 of paid interest on non-accrual loans returned to accrual status in June 2007. In addition, the Bank opened three new branches in the first half of 2008, increasing its personnel and occupancy expenses approximately $370,000 over last year.

Commenting on these results, President & C.E.O. John J. Limbert said, "Our asset mix reflects lower loan balances and a higher investment portfolio, thus generating a lower asset income. This, coupled with the Federal Reserve's continued lowering of rates, has caused our net interest income to be lower than anticipated. Given the current economic climate, we believe our results are within market expectations.”

Net interest income was $4.6 million for the second quarter of 2008, a decrease of $394,000 compared to the second quarter of 2007. Net interest margin declined to 3.78% for the second quarter of 2008 from 3.98% for the second quarter of 2007. For the first six months of 2008, net interest income was $9.0 million compared to $9.3 million for the same period last year. One reason for the decrease is that the periods ending June 30, 2007 include $324,000 of paid interest on non-accrual loans returned to accrual status. Secondly, while average interest-earning assets decreased approximately 2.9%, or $14.6 million, to $483.9 million during the second quarter of 2008 compared to the second quarter of 2007, average loans decreased $40.6 million. The excess funds were reinvested in securities and short-term investments at lower yields due to the Federal Reserve dropping interest rates approximately 325 basis points from last year. As a result, the average yield on earning assets decreased from 6.94% for the second quarter of 2007 to 5.98% for the second quarter of 2008. Finally, offsetting the decrease in interest income was a decrease in interest expense of $1.0 million to $2.7 million during the second quarter of 2008 from $3.7 million for the same quarter last year. Average interest-bearing liabilities decreased 3.7% from last year to $408.7 million, and their cost decreased to 2.61% during the second quarter of 2008 from 3.48% for the same quarter last year.

The provision for loan losses was $95,000 in the second quarter of 2008 and $145,000 in the second quarter of 2007. Net charge-offs were $194,000, or 0.11% of total average loans, in the second quarter of 2008, compared to $765,000, or 0.78% of total average loans, in the second quarter of 2007. Non-performing loans totaled $3.2 million at June 30, 2008, compared to $3.3 million at June 30, 2007. The allowance for loan losses to total loans was 1.03% at June 30, 2008, compared to 1.04% at June 30, 2007.

Total non-interest income was $2.0 million for the second quarter of 2008, compared to $2.1 million for the same quarter last year. Total non-interest income was $4.3 million for the first half of 2008, compared to $4.2 million for the first half of 2007. The increase is largely due to increased deposit service charges and a gain of approximately $116,000 on the mandatory redemption of Visa shares as a result of the Visa initial public offering.

Total non-interest expense was $5.5 million for the second quarter of 2008, compared to $5.4 million for the second quarter of 2007. Non-interest expense was $10.9 million for the first half of 2008, compared to $10.6 million for the first half of 2007. The increase in non-interest expense is largely due to approximately $370,000 in increased personnel and occupancy costs associated with opening three new branches in the first half of 2008.

"Our earnings release," Mr. Limbert continued, "would not be complete without commenting on the impact of the potential DHL exit from Clinton County. While we have no direct loan relationships with DHL or its contract cargo carriers, we have reviewed our loan portfolios with regards to consumers who are employed by DHL or its contract cargo carriers and have found the vast majority have positive credit histories. If DHL does exit our market, we believe we are prepared to work with these clients to minimize any potential loss."

On June 17, 2008, the Board of Directors declared a dividend of $0.29 per share, payable July 21, 2008 to shareholders of record on June 30, 2008. This dividend represents a 3.6% increase from the second quarter of 2007.

FORWARD-LOOKING STATEMENTS Statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "estimates," "plans," "may increase," "may fluctuate," "will likely result," and similar expressions or future or conditional verbs such as "will," "should," "would," and "could" are generally forward-looking in nature and not historical facts. Results could differ materially from those expressed in such forward-looking statements due to a number of factors, including changes in interest rates and changes in national and local economic conditions, including significant employers in Southwest Ohio. Any forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions, and actual results could differ materially from those contemplated by those forward-looking statements. Many of the factors that will determine these results are beyond the Company's ability to control or predict. The Company disclaims any duty to update any forward-looking statements, all of which are qualified by the statements in this section.