updated 1/18/2011 3:48:43 PM ET 2011-01-18T20:48:43

WILMINGTON, Ohio, Jan. 18, 2011 (GLOBE NEWSWIRE) -- NB&T Financial Group, Inc. (Nasdaq:NBTF), parent company of The National Bank and Trust Company ("NB&T"), Wilmington, Ohio, announced higher net income for 2010 of $8.8 million, or $2.58 per share, compared to net income of $4.0 million, or $1.28 per share, for 2009. This increase is primarily attributable to the acquisitions of Community National Bank ("CNB") in December 2009 and American National Bank ("ANB") in March 2010. 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, as well as a $5.8 million increase in net interest income largely offset by a $4.0 million increase in non-interest expenses, and a $3.5 million increase in income taxes. In addition, NBTF realized a pre-tax gain of $1.4 million on the sale of its insurance agency subsidiary in January 2010. 

Net income for the fourth quarter of 2010 was $718,000, or $.20 per share, compared to $1.6 million, or $.49 per share, for the fourth quarter of 2009. NB&T took advantage of excess liquidity to prepay a $12.5 million Federal Home Loan Bank ("FHLB") advance with a relatively high interest rate, although such prepayment resulted in a prepayment penalty of approximately $416,000 in December 2010. NB&T also recognized compensation expense of $213,000 related to the early allocation of the remaining shares in NBTF's employee stock ownership plan in December 2010. In addition, a bargain purchase gain of $1.8 million from the CNB acquisition was recognized in the fourth quarter of 2009.

Net interest income was $24.3 million for 2010, compared to $18.4 million for 2009. Net interest margin increased to 3.83% for 2010, compared to 3.70% for last year. The net interest margin increased primarily due to two factors. First, average loans outstanding for 2010, which had an average rate of 6.25%, increased $87.4 million, largely a result of the CNB and ANB acquisitions. Second, the average cost of interest-bearing liabilities declined from 1.79% in 2009 to 1.40% in 2010 on increased average deposits of $134.1 million. Due to increased liquidity, NB&T was able to lower rates on non-transaction accounts over the last year. Net interest income was $6.0 million for the fourth quarter of 2010, compared to $4.6 million for the same quarter in 2009. Average earning assets for the fourth quarter of 2010 were $704.9 million, compared to $564.9 million for the fourth quarter of 2009. Net interest margin increased from 3.53% for the fourth quarter of 2009 to 3.69% for the fourth quarter of 2010.

Commenting on these results, President & CEO John Limbert said, "In these turbulent times, 2010 turned out to be one of our best years ever. It was the result of a lot of hard work and taking advantage of opportunities presented. Though we experienced a lot of success, we can still improve. Our non-performing loans increased approximately $4.1 million for the year on a total loan portfolio of $415.0 million. Although $41.7 million of the loans acquired from ANB is subject to FDIC loss sharing, minimizing losses on problem loans continues to be a priority of NB&T."

The provision for loan losses for 2010 was $1,610,000, compared to $1,550,000 last year. For the year, net charge-offs were $1.7 million, or .40% of average total loans, in 2010, compared to $1.2 million, or .39% of average total loans, in 2009. For the fourth quarter of 2010, the provision for loan losses was $425,000, compared to $900,000 for the same quarter last year. For the quarter, net charge-offs were $645,000, compared to $132,000 for the same quarter last year. Non-performing loans increased approximately $4.1 million during 2010 to $11.0 million.

Total non-interest income was $16.4 million for 2010, compared to $9.9 million for 2009. The increase in non-interest income for the year is largely due to the bargain purchase gains of $7.6 million from the ANB acquisition and the $1.4 million pre-tax gain on the sale of NB&T's insurance agency subsidiary discussed earlier. Total non-interest income for the fourth quarter of 2010 was $1.9 million, compared to $3.7 million for the fourth quarter of 2009. The decline in non-interest income for the quarter is the result of the $1.8 million bargain purchase gain recognized on the CNB acquisition in December 2009 and lost commission income from the sale of NB&T's insurance agency subsidiary in January 2010, partially offset by increased service charges and debit card interchange income from the deposit accounts acquired in December 2009 and March 2010.

Total non-interest expense was $26.5 million for 2010, compared to $22.5 million for 2009, with the increase primarily due to the recent acquisitions. Personnel and occupancy costs have increased with the addition of the six branches. Data processing expense is up due to the system conversions and the number of accounts processed. FDIC insurance expense and professional fees have increased with additional deposits and acquisition-related services, respectively. Finally, NB&T also accrued a bonus provision for 2010, compared to no bonus provision in 2009. Total non-interest expense was $6.5 million for the fourth quarter of 2010, compared to $6.0 million for the fourth quarter of 2009. The increase is largely a result of the prepayment penalty on the early payoff of the FHLB debt and the early allocation of the remaining shares in NBTF's employee stock ownership plan discussed earlier.

On December 14, 2010 the Board of Directors declared a dividend of $0.30 per share, payable January 24, 2011 to shareholders of record on December 31, 2010. This dividend represents a 3.4% increase over the $0.29 per share dividend declared in each of the previous eleven quarters.  

CONTACT: Craig Fortin
         NB&T Financial Group, Inc.
         937-283-3002

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