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 2009 of $809,000, or $.26 per diluted share, compared to net income of $864,000, or $.28 per diluted share, for the same quarter last year. Net income for the first six months of 2009 was $1.5 million, or $.47 per diluted share, compared to $1.9 million, or $.60 per diluted share, for the first six months of 2008. The decrease in earnings from last year is primarily due to an additional Federal Deposit Insurance Corporation ("FDIC") assessment for insurance of deposits, an increase in the provision for loan losses and lower non-interest income for the six-month period.

Commenting on these results, President & C.E.O. John J. Limbert said, "This quarter includes the FDIC additional 5 basis point assessment of approximately $241,000. While this assessment obviously had a negative impact on earnings as it has for all FDIC insured institutions, we're proud to be part of the solution to a national problem. Additionally, we added $225,000 to our loan loss reserve, which is an increase of $130,000 over the second quarter of 2008. Given the mandated increase in the FDIC premiums and the continued economic recession, I am pleased with our results."

Net interest income was $4.6 million for the second quarter of 2009, which is comparable to the net interest income earned in the second quarter of 2008. Net interest margin increased to 3.81% for the second quarter of 2009, compared to 3.78% for the second quarter of 2008. Interest income declined to $6.5 million for the second quarter of 2009 from $7.2 million for the same quarter last year. Average interest-earning assets increased less than 1% to $488.3 million; however, the average yield decreased from 5.98% for the second quarter of 2008 to 5.34% for the second quarter of 2009 due to declining rates, slower loan volume, and reinvestment of funds into lower-yielding short-term investments. Total interest expense decreased a similar amount to $1.9 million during the second quarter of 2009 from $2.7 million for the same quarter last year. Average interest-bearing liabilities decreased less than 1% from last year to $407.1 million, and their cost decreased to 1.84% during the second quarter of 2009 from 2.61% for the same quarter last year. For the first six months of 2009, net interest income was $9.1 million compared to $9.0 million for the same period last year.

The provision for loan losses was $225,000 in the second quarter of 2009 and $95,000 in the second quarter of 2008. Net charge-offs were $272,000 in the second quarter of 2009, compared to $94,000 in the second quarter of 2008. Net charge-offs were $974,000 for the first six months of 2009, compared to $250,000 for the same period in 2008. Non-performing loans totaled $3.8 million at June 30, 2009, compared to $3.2 million at June 30, 2008. The allowance for loan losses to total loans was 0.88% at June 30, 2009, compared to 1.03% at June 30, 2008.

Total non-interest income was $2.1 million for the second quarter of 2009, compared to $2.0 million for the same quarter last year. For the first six months of 2009 and 2008, non-interest income was $4.1 million, compared to $4.3 million last year. This decrease for the year is primarily due to lower non-sufficient funds fees on checking accounts and lower insurance agency revenues.

Total non-interest expense was $5.6 million for the second quarter of 2009 and $5.5 million for the same quarter in 2008. FDIC insurance premiums increased $372,000 in the second quarter of 2009 from the second quarter of 2008. This increased expense has been offset by reductions in compensation expense in 2009. Total non-interest expense for the first half of 2009 was relatively unchanged from 2008 at $10.9 million. In total, our 2009 FDIC insurance premiums increased $536,000 over the first six months of 2008.

On June 16, 2009 the Board of Directors declared a dividend of $0.29 per share, payable July 20, 2009 to shareholders of record on June 30, 2009. This dividend is unchanged from the dividend declared for the second quarter of 2008.

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