NB&T Financial Reports First 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 first quarter of 2009 of $659,000, or $.21 per diluted share, compared to net income of $1.0 million, or $.32 per diluted share, for the same quarter last year. The decrease in earnings from last year is primarily due to an increase in the provision for loan losses and lower non-interest income.

Net interest income was $4.4 million for the first quarter of 2009, which is comparable to the net interest income earned in the first quarter of 2008. Net interest margin also remained relatively unchanged at 3.72% for the first quarter of 2009, compared to 3.73% for the first quarter of 2008. Interest income declined to $6.4 million for the first quarter of 2009 from $7.5 million for the same quarter last year. Average interest-earning assets increased less than 1% to $483.4 million; however, the average yield decreased from 6.27% for the first quarter of 2008 to 5.36% for the first 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 $2.0 million during the first quarter of 2009 from $3.0 million for the same quarter last year. Average interest-bearing liabilities decreased less than 1% from last year to $401.2 million, and their cost decreased to 1.97% during the first quarter of 2009 from 3.02% for the same quarter last year.

Commenting on these results, President & C.E.O. John J. Limbert said, "Usually, reporting lower earnings is not seen as a positive; however, during this recession we are positive about our results. We continue to make money when many in our industry struggle. Our net interest margin is similar to last year's despite the Federal Reserve dropping rates to historical lows. We continue to address our loan issues as reflected in the increase in net charge-offs and related increase in the loan loss provision. While not good for our earnings, we are proud many of our checking customers are showing more fiscal restraint and reducing their overdrafts with us. We have controlled our expenses despite the increase in our FDIC insurance expense. And, finally, we're still out trying to serve our customers and communities."

The provision for loan losses was $250,000 in the first quarter of 2009 and $95,000 in the first quarter of 2008. Net charge-offs were $703,000 in the first quarter of 2009, compared to $155,000 in the first quarter of 2008. This quarter's net charge-offs included one loan charged-off for $511,000 for which specific reserves of $300,000 had been previously allocated. Non-performing loans totaled $2.9 million at March 31, 2009, compared to $3.3 million at March 31, 2008. The allowance for loan losses to total loans was 0.91% at March 31, 2009, compared to 1.03% at March 31, 2008.

Total non-interest income was $1.9 million for the first quarter of 2009, compared to $2.3 million for the same quarter last year. The decrease is largely due to decreased NSF fees and lower experience rating fees received by the Company's insurance agency subsidiary. In addition, last year's non-interest income includes 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 relatively unchanged at $5.4 million for the first quarter of 2009 and 2008. FDIC insurance premiums increased $165,000 in the first quarter of 2009 from the first quarter of 2008. This increased expense has been offset by reductions in compensation expense in 2009.

On March 17, 2009 the Board of Directors declared a dividend of $0.29 per share, payable April 20, 2009 to shareholders of record on March 31, 2009. This dividend is unchanged from the dividends declared for the first quarter of 2008.

To view the full report please go to:
http://www.nbtdirect.com/pdfs/2009_First_Quarter_Financial_Report.pdf.

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