NB&T Financial Reports Earnings For Second Quarter 2010

WILMINGTON, Ohio, July 20, 2010 (GLOBE NEWSWIRE) -- NB&T Financial Group, Inc. (Nasdaq:NBTF), parent company of The National Bank and Trust Company ("NB&T"), Wilmington, Ohio, announced net income for the second quarter of 2010 increased 57.0% to $1.3 million, or $.37 per diluted share, from net income of $809,000, or $.26 per diluted share, for the second quarter of 2009. Average earning assets for the second quarter of 2010 were $648.2 million, compared to $488.3 million, for the second quarter of 2009. Most of this growth is attributable to the acquisition of Community National Bank ("CNB") in December 2009 and American National Bank ("ANB") in March 2010. These acquisitions also contributed to net income for the first half of 2010 increasing to $6.9 million, or $2.02 per diluted share, from net income of $1.5 million, or $.47 per diluted share, for the first half of 2009.   The increase in net income over last year is primarily due to the bargain purchase pre-tax gain of approximately $7.6 million in the Federal Deposit Insurance Corporation ("FDIC") assisted acquisition of certain of the assets and liabilities of ANB.   In addition, the Company realized a pre-tax gain of $1.4 million on the sale of its insurance agency in January 2010. 

Commenting on these results, President & C.E.O. John J. Limbert, said, "Needless to say, we are pleased with the year over year increase in earnings. This continues to be the result of a lot of hard work by a dedicated group of bankers. Both acquisitions have already been converted to our systems to help us become one organization more quickly. Our on-going training has been expanded, and we continue to assess the value of our assets acquired. Like anything new, there are a few bumps, but so far we are pleased with the overall results."

Net interest income was $6.5 million for the second quarter of 2010, compared to $4.6 million for the second quarter of 2009. Net interest margin increased to 4.00% for the second quarter of 2010, compared to 3.81% for the same quarter last year. The net interest margin increased primarily due to two factors. First, average loans outstanding for 2010, which had an average rate of 6.41%, compared to 6.07% in 2009, increased $110.2 million, primarily due to the CNB and ANB acquisitions. Second, the average cost of interest-bearing liabilities declined from 1.84% in the second quarter of 2009 to 1.42% in the second quarter of 2010 on increased average deposits of $154.4 million. Due to increased liquidity, NB&T was able to lower rates on non-transaction accounts over the last year.

The provision for loan losses for the second quarter of 2010 was $525,000, compared to $225,000 in the same quarter last year. Net charge-offs were $326,000 in the second quarter of 2010, compared to $272,000 in the second quarter of 2009. The provision for loan losses was higher due to an increased general allowance related to the estimated negative impact of current economic conditions on commercial real estate collateral values and an increased level of non-performing loans. Non-performing loans increased approximately $800,000 during the second quarter of 2010 to $7.6 million, primarily due to one commercial real estate relationship of approximately $700,000. The provision for loan losses for the first half of 2010 was $960,000, compared to $475,000 for the first half of 2009.  

Total non-interest income was $2.0 million for the second quarter of 2010, compared to $2.1 million for the second quarter of 2009. Total non-interest income was $12.6 million for the first six months of 2010, compared to $4.1 million for the first six months of 2009. The increase in the six-month period is due to the bargain purchase gain of $7.6 million and the $1.4 million pre-tax gain on the sale of NB&T's insurance agency. 

Total non-interest expense was $6.3 million for the second quarter of 2010, compared to $5.6 million for the second quarter of 2009. Non-interest expense was $13.8 million for the first half of 2010, compared to $10.9 million for the first half of 2009. The increase for both periods was due to increased compensation costs, including benefits, and operating expenses related to the six new acquired branches. Data processing is up due to the systems conversions and number of accounts processed, and professional fees have increased due to acquisition-related services. 

On June 15, 2010 the Board of Directors declared a dividend of $0.29 per share, payable July 26, 2010 to shareholders of record on June 30, 2010. This dividend is unchanged from the dividend declared for the second quarter of 2009.   
CONTACT:  NB&T Financial Group, Inc.          Craig Fortin          937-283-3002

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